Risks Related to Our Business and Our Industry
−Removed: If we fail to successfully implement our growth strategy, which includes opening new restaurants, our ability to increase our revenue and operating profits could be adversely affected.
−Removed: Our growth strategy relies substantially upon new restaurant development by existing and new franchisees and we are continuously seeking to identify target markets where we can enter or expand, taking into account numerous factors such as the location of our current restaurants, demographics, traffic patterns, and information gathered from local employees.
−Removed: While we believe there is opportunity for our brand to grow to up to approximately 6,000 restaurants worldwide over the long term, we do not currently target a specific number of annual new restaurant openings over a multi-year period.
+Added: If we fail to successfully implement our growth strategy, which includes opening new restaurants, our ability to increase our revenue and operating profits could be materially adversely affected.
+Added: Our growth strategy relies substantially upon new restaurant development by existing and new franchisees and we are continuously seeking to identify target markets where we can enter or expand.
We and our franchisees face many challenges in opening new restaurants, including:
• availability of financing;
−Removed: • selection and availability of suitable restaurant locations;
−Removed: • competition for restaurant sites;
+Added: • selection and availability of and competition for suitable restaurant locations;
• negotiation of acceptable lease and financing terms;
• securing required governmental permits and approvals, including zoning approvals;
−Removed: • expansion into new markets, consumer tastes in new markets, and acceptance of our products;
−Removed: • employment and training of and wage rates for qualified personnel in local markets;
−Removed: • impact of inclement weather, natural disasters, and other acts of nature;
+Added: • employment and training of and wage rates for qualified personnel;
• general economic and business conditions;
• unanticipated increases in construction and development costs;
−Removed: • the general legal and regulatory landscape in which we and our restaurants operate.
−Removed: In particular, because the majority of our new restaurant development is funded by franchisee investment, our growth strategy is dependent on our franchisees’ (or prospective franchisees’) ability to access funds to finance such development.
−Removed: We do not provide our franchisees with direct financing and therefore their ability to access borrowed funds generally depends on their independent relationships with various financial institutions.
−Removed: Some of our existing franchisees utilize loans guaranteed by the U.S.
−Removed: Small Business Administration (“SBA”), which guarantees loans made by financial institutions to small businesses in the United States, including franchisees.
−Removed: If SBA-guaranteed loans are no longer available to our franchisees (or potential franchisees), their ability to obtain the requisite financing at attractive rates, or at all, could be adversely affected.
−Removed: Moreover, if our franchisees (or prospective franchisees) are not able to obtain financing from any source at commercially reasonable rates, or at all, they may be unwilling or unable to invest in the development of new restaurants, and our future growth could be adversely affected.
−Removed: As a result of the foregoing, we cannot predict the time period over which we may achieve our anticipated level of domestic restaurant growth or whether we will achieve this level of growth at all.
−Removed: In addition, as we continue to grow our business, our rate of expansion relative to the size of our restaurant base will eventually decline.
+Added: • the legal and regulatory requirements applicable to our industry.
+Added: In particular, because substantially all of our new restaurant development is funded by franchisee investment, our growth strategy is dependent on our franchisees’ (or prospective franchisees’) ability to access funds to finance such development.
+Added: We do not provide our franchisees with direct financing and therefore if our franchisees (or prospective franchisees) are not able to obtain independent financing at commercially reasonable rates, or at all, they may be unwilling or unable to invest in the development of new restaurants, and our future growth could be adversely affected.
To the extent our franchisees are unable to open new restaurants at the level that we anticipate, our revenue growth would come primarily from growth in same store sales.
−Removed: Our failure to add a significant number of new restaurants or grow domestic same store sales would adversely affect our ability to increase our revenue and operating income and could materially and adversely harm our business and operating results.
−Removed: Changes in food and supply costs could adversely affect our results of operations.
+Added: Our failure to add a significant number of new restaurants or grow domestic same store sales would adversely affect our ability to increase our revenue and operating income and could materially adversely affect our operating results.
+Added: As a result of the foregoing, we cannot predict whether our growth strategy will be successful.
+Added: Changes in food and supply costs could materially adversely affect our results of operations.
Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs.
−Removed: Any increase in the prices of the ingredients most critical to our menu, particularly chicken, could adversely affect our operating results.
−Removed: Bone-in chicken wing prices in our company-owned restaurants in 2019 averaged 18.1% higher than in 2018 and prices continue to stabilize and approximate 5-year averages.
−Removed: If there is a significant rise in the price or size of bone-in chicken wings, and we are unable to successfully adjust menu prices or otherwise make operational adjustments to account for the higher wing prices, our operating results could be adversely affected.
−Removed: For example, bone-in chicken wings accounted for approximately 28% and 25%
−Removed: of our costs of sales in fiscal 2019 and 2018, respectively.
−Removed: A hypothetical 10% increase in the bone-in chicken wing costs for fiscal 2019 would have increased cost of sales by approximately $1.2 million for fiscal 2019.
−Removed: Although we attempt to minimize the effect of price volatility by negotiating fixed price contracts for the supply of key ingredients, there are no established fixed price markets for bone-in chicken wings so we are subject to prevailing market conditions.
−Removed: As a result, we remain susceptible to increases in food costs as a result of factors beyond our control, such as general economic conditions, seasonal fluctuations, weather conditions, demand, food safety concerns, product recalls and government regulations.
−Removed: Inflation also increases the costs of our food.
+Added: There are no established fixed price markets for bone-in chicken wings.
+Added: As a result, we are subject to prevailing market conditions and remain susceptible to volatility in food costs.
+Added: Any increase in the prices of the ingredients most critical to our menu, particularly chicken, could materially adversely affect our operating results.
+Added: Food costs may also increase as a result of factors beyond our control, such as inflation, general economic conditions, seasonal fluctuations, weather conditions, demand, food safety concerns, product recalls and government regulations.
Additionally, avian influenza, or similar poultry-related diseases, may negatively affect the supply chain by increasing costs and limiting availability of chicken.
−Removed: As a result, we may not be able to anticipate or react to changing food costs by adjusting our purchasing practices or menu prices, which could cause our operating results to deteriorate.
−Removed: In addition, because we provide moderately-priced food, we may choose not to, or be unable to, pass along commodity price increases to our customers.
+Added: As a result, we may not be able to anticipate or successfully react to changing food costs, including the price of bone-in chicken wings, by adjusting our purchasing practices, increasing our menu prices to pass along commodity price increases to our customers or making other operational adjustments, which could materially adversely affect our operating results.
Our success depends in significant part on the future performance of existing and new franchise restaurants, and we are subject to a variety of additional risks associated with our franchisees.
A substantial portion of our revenue comes from royalties generated by our franchised restaurants.
−Removed: We anticipate that franchise royalties will continue to represent the substantial majority of our revenue in the future.
−Removed: As of December 28, 2019, we had 290 domestic franchisees operating 1,200 domestic restaurants and 9 international franchisees operating 154 international restaurants.
−Removed: Our largest franchisee operated 91 restaurants and our top 10 franchisees operated a total of 485 restaurants as of December 28, 2019.
Accordingly, we are reliant on the performance of our franchisees in successfully operating their restaurants and paying royalties to us on a timely basis.
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Our franchisees are an integral part of our business.
−Removed: We may be unable to successfully implement our growth strategy without the participation of our franchisees and the adherence by our franchisees of our restaurant operation guidelines.
+Added: We may be unable to successfully implement our growth strategy without the participation of our franchisees and the adherence by our franchisees to our restaurant operation guidelines.
Because our ability to control our franchisees is limited, our franchisees may fail to focus on the fundamentals of restaurant operations, such as quality, service, and cleanliness, which would have a negative impact on our success.
−Removed: In addition, our franchisees may fail to participate in our marketing initiatives, which could materially adversely affect their sales trends, average weekly sales, and results of operations.
+Added: In addition, our franchisees may fail to participate in our marketing initiatives, which could materially adversely affect their sales trends, average weekly sales, and
+Added: results of operations.
Although we provide frequent training opportunities to our franchisees to ensure consistency among our operations, there may be differences in the quality of operations at our franchised restaurants that impact the profitability of those restaurants.
−Removed: In addition, if our franchisees fail to renew their franchise agreements, our royalty revenue may decrease, which in turn could materially and adversely affect our business and operating results.
−Removed: It also may be difficult for us to monitor our international franchisees’ implementation of our growth strategy due to our lack of personnel in the markets served by such franchisees.
+Added: In addition, if our franchisees fail to renew their franchise agreements, our royalty revenue may decrease, which in turn could materially adversely affect our business and operating results.
Furthermore, a bankruptcy of any multi-unit franchisee could negatively impact our ability to collect payments due under such franchisee’s franchise agreements.
−Removed: In a franchisee bankruptcy, the bankruptcy trustee may reject its franchise agreements under the U.S.
−Removed: bankruptcy code, in which case there would be no further royalty payments from such franchisee.
+Added: In a franchisee bankruptcy, the bankruptcy trustee may reject its franchise agreements under the applicable bankruptcy code, in which case there would be no further royalty payments from such franchisee.
The amount of the proceeds, if any, that may ultimately be recovered in a bankruptcy proceeding of such franchisee may not be sufficient to satisfy a damage claim resulting from such rejection.
If we fail to identify, recruit and contract with a sufficient number of qualified franchisees, our ability to open new franchised restaurants and increase our revenue could be materially adversely affected.
−Removed: Additionally, our stated sales to investment ratio and target unlevered cash-on-cash return may not be indicative of future results of any new franchised restaurant.
The opening of additional franchised restaurants depends, in part, upon the availability of prospective franchisees who meet our criteria.
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Although we have developed criteria to evaluate and screen prospective franchisees, our franchisees may not ultimately have the business acumen or be able to access the financial or management resources that they need to open and successfully operate the restaurants contemplated by their agreements with us, or they may elect to cease restaurant development for other reasons and state franchise laws may limit our ability to terminate or modify these license agreements.
−Removed: If we are unable to recruit suitable franchisees or if franchisees are unable or unwilling to open new restaurants as planned, our growth may be slower than anticipated, which could materially adversely affect our ability to increase our revenue and materially adversely affect our business, financial condition and results of operations.
+Added: If any of these situations occur, our growth may be slower than anticipated, which could materially adversely affect our ability to increase our revenue and materially adversely affect our business, financial condition and results of operations.
Also, the number of new franchised Wingstop restaurants that actually open in the future may differ materially from the number of signed commitments from potential existing and new franchisees.
−Removed: Historically, a portion of our commitments sold have not ultimately opened as new franchised Wingstop restaurants.
−Removed: On an annual basis for the past four years approximately 10% - 20% of the total domestic commitments sold have been terminated.
−Removed: Based on our limited history of international restaurant openings, we believe the termination rate of international commitments is likely to approximate the historic termination rate of domestic commitments.
+Added: Historically, a portion of our signed commitments have not ultimately opened as new franchised Wingstop restaurants.
The historic conversion rate of signed commitments to new franchised Wingstop locations may not be indicative of the conversion rates we will experience in the future, and the total number of new franchised Wingstop restaurants actually opened in the future may differ materially from the number of signed commitments disclosed at any point in time.
−Removed: Additionally, initial investment levels, AUV levels, restaurant-level operating costs and restaurant-level operating profit of any new restaurant may differ from average levels experienced by franchisees in prior periods due to a variety of factors, and these differences may be material.
+Added: Our stated sales to investment ratio and target unlevered cash-on-cash return may not be indicative of future results of any new franchised restaurant.
+Added: Initial investment levels, AUV levels, restaurant-level operating costs and restaurant-level operating profit of any new restaurant may differ from average levels experienced by franchisees in prior periods due to a variety of factors, and these differences may be material.
Accordingly, our stated sales to investment ratio and average unlevered cash-on-cash return may not be indicative of future results of any new franchised restaurant.
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Furthermore, performance of new restaurants is impacted by a range of risks and uncertainties beyond our or our franchisees’ control, including those described by other risk factors described in this report.
−Removed: Food safety, food-borne illness and other health concerns may have an adverse effect on our business.
+Added: Food safety and food-borne illness concerns may have a material adverse effect on our business.
Food safety is a top priority, and we dedicate substantial resources to ensure that our customers enjoy safe, quality food products.
However, food-borne illnesses, such as salmonella, E.
−Removed: coli infection, or hepatitis A, and food safety issues have occurred in the food industry in the past, and could occur in the future.
−Removed: Any report or publicity linking our restaurants to instances of food-borne illness or other food safety issues, including food tampering or contamination, could adversely affect our brand and reputation as well as our revenue and profits.
−Removed: Even instances of food-borne illness, food tampering or food contamination occurring solely at restaurants of our competitors could result in negative publicity about the food service industry or fast casual restaurants generally and adversely impact our restaurants.
+Added: coli infection, or hepatitis A, and food safety issues, including food tampering or contamination, have occurred in the food industry in the past, and could occur in the future.
+Added: Any report or publicity linking our restaurants to instances of food-borne illness or food safety issues could materially adversely affect our brand and reputation as well as our revenue and profits.
+Added: Even instances of food-borne illness or food safety issues occurring solely at our competitors' restaurants could result in negative publicity about the food service industry or fast casual restaurants generally and adversely impact our restaurants.
In addition, our reliance on third-party food suppliers and distributors increases the risk that food-borne illness incidents could be caused by factors outside of our control and that multiple restaurants would be affected rather than a single restaurant.
−Removed: We cannot ensure that all food items are properly maintained during transport throughout the supply chain and that our employees and our franchisees and their employees will identify all products that may be spoiled and should not be used in our restaurants.
−Removed: In addition, our industry has long been subject to the threat of food tampering by suppliers, employees, and others such as the addition of foreign objects in the food that we sell.
+Added: We cannot ensure that all food items are properly maintained during transport throughout the supply chain or that our employees and our franchisees and their employees will identify all products that may be spoiled and should not be used.
+Added: Our industry has also long been subject to the threat of food tampering by suppliers, employees, and others such as the addition of foreign objects in the food that we sell.
Reports, whether or not true, of injuries caused by food tampering have in the past severely injured the reputations and brands of restaurant chains in the quick service restaurant segment and could affect us in the future as well.
−Removed: If our customers become ill from food-borne illnesses, we could also be forced to temporarily close some restaurants.
+Added: If our customers become ill from food-borne illnesses or injured from food tampering, we could also be forced to
+Added: temporarily close some restaurants.
Moreover, any instances of food contamination, whether or not at our restaurants, could subject our restaurants or our suppliers to a food recall pursuant to the Food and Drug Administration Food Safety Modernization Act.
−Removed: Furthermore, the United States and other countries have also experienced, and may experience in the future, outbreaks of viruses, such as coronovirus, H1N1, avian influenza, various other forms of influenza, enterovirus, SARS, and Ebola.
−Removed: To the extent that a virus is transmitted by human-to-human contact, our employees or customers could become infected or could choose, or be advised, to avoid gathering in public places and avoid eating in restaurant establishments such as our restaurants, which could adversely affect our business.
+Added: Public health epidemics or outbreaks, such as COVID-19, could materially adversely impact our business.
+Added: Federal, state and local government responses to a pandemic, such as COVID-19, and our Company’s response to the pandemic have in the past disrupted and in the future may disrupt our business.
+Added: Because of COVID-19, in the United States and throughout much of the world, individuals are currently being encouraged to practice social distancing, restricted from gathering in groups and, in some areas, placed on complete restriction from non-essential movements outside of their homes.
+Added: In response to the COVID-19 pandemic and these changing conditions, we closed the dining rooms in all of our domestic restaurants, which at the time represented approximately 20% of our domestic system sales, and also closed the dining rooms in some of our international restaurants.
+Added: We also incurred additional operating expenses at our company-owned restaurants due to the payment of increased incentive compensation to our full-time team members and increased selling, general and administrative expense due to COVID-19-related support provided to international franchisees.
+Added: The COVID-19 pandemic and these responses to date have adversely affected and will continue to adversely affect our international guest traffic and sales and operating costs for our company-owned restaurants, and we cannot predict how long the pandemic will last or what other government responses may occur.
+Added: Continuing disruptions in operations due to pandemics, such as COVID-19-related social distancing, or other movement restricting policies put in place, could impact our revenues or result in our providing payment relief or other forms of support to franchisees, and could materially adversely affect our business and results of operations.
+Added: Restaurant operations could be further disrupted if any employees are diagnosed with a pandemic illness, such as COVID-19, since this could require some or all of a restaurant’s employees to be quarantined and restaurant facilities to be closed to disinfect.
+Added: If a significant percentage of the workforce is unable to work, whether because of illness, quarantine, limitations on travel, or other government restrictions in connection with a pandemic, including COVID-19, operations may be negatively impacted, potentially materially adversely affecting our liquidity, financial condition or results of operations.
+Added: In addition, any report or publicity linking our restaurants to instances of pandemic illness exposure could adversely impact our brand and reputation as well as our revenue and profits.
+Added: Our suppliers could also be adversely impacted by a pandemic, such as COVID-19.
+Added: If our suppliers’ employees are unable to work or our suppliers' operations are disrupted, we and our franchisees could face shortages of food items or other supplies, and our and our franchisees' operations and sales could be materially adversely impacted by such supply interruptions.
+Added: If the business interruptions caused by a pandemic, including COVID-19, last longer than we expect, we or our franchisees may need to seek additional sources of liquidity.
+Added: There can be no guarantee that additional liquidity, whether through the credit markets or government programs, will be readily available or available on favorable terms to our franchisees or us.
+Added: The ultimate impact of the COVID-19 pandemic, or pandemics in the future, on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 or other pandemic, the rate at which vaccinations become available, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic, and reduced operations.
Our expansion into new and existing markets may present increased risks.
−Removed: Some of our new restaurants are planned for markets where there may be limited or no market recognition of our brand.
+Added: Some of our new restaurants are located in markets where there may be limited or no market recognition of our brand.
Those markets may have competitive conditions, consumer tastes and discretionary spending patterns that are different from those in our existing markets, and we may encounter well-established competitors with substantially greater financial resources than us.
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In addition, we may have difficulty finding reliable suppliers or distributors or ones that can provide us, either initially or over time, with adequate supplies of ingredients meeting our quality standards.
−Removed: Restaurants opened in new markets may also have lower average restaurant sales than restaurants opened in existing markets.
−Removed: Sales at restaurants opened in new markets may take longer to ramp up and reach expected sales and profit levels, and may never do so, thereby affecting our
−Removed: overall profitability.
−Removed: Additionally, new markets may have higher rents and labor rates as compared to existing markets that could negatively affect unit economics.
+Added: Restaurants opened in new markets may also have lower average restaurant sales than restaurants opened in existing markets and may take longer to, or fail to, ramp up and reach expected sales and profit levels.
+Added: Additionally, new markets may have higher rents and labor rates.
+Added: These factors could negatively impact our unit economics and overall profitability.
We also intend to continue opening new franchised restaurants in our existing markets as a core part of our growth strategy.
−Removed: As a result, the opening of a new restaurant in or near markets in which our restaurants already exist could adversely affect the sales of these existing restaurants.
+Added: As a result, the opening of a new restaurant in or near markets in which our restaurants already exist could adversely affect the sales of our existing restaurants.
Our success depends on our ability to compete with many other restaurants.
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Our competitors include individual restaurants and restaurant chains that range from independent local operators to well-capitalized national and regional restaurant companies, including restaurants offering chicken wing products, as well as dine-in, carry-out, and delivery services offering other types of food.
−Removed: Some of our competitors have substantially greater financial and other resources than we do, which may allow them to react to changes in the restaurant industry better than we can.
−Removed: Other competitors are local restaurants that in some cases have a loyal guest base and strong brand recognition within a particular market.
As our competitors expand their operations or as new competitors enter the industry, we expect competition to intensify.
−Removed: Should our competitors increase their spending on advertising and promotions, we could experience a loss of customer traffic to our competitors.
−Removed: Also, if our advertising and promotions become less effective than those of our competitors, we could experience a material adverse effect on our results of operations.
−Removed: We and our franchisees also compete with other restaurant chains and other retail businesses for quality site locations, management, and hourly employees.
−Removed: Tightness in the labor market or union activity could also raise costs for our franchisees and us.
−Removed: Additionally, we face the risk that new or existing competitors will copy our business model, menu options, presentation, or ambiance, among other things.
+Added: Should our competitors increase their spending on advertising and promotions or if their advertising and promotions are more effective, we could experience a loss of customer traffic to our competitors and a material adverse effect on our results of operations.
+Added: We compete with other restaurant chains and other retail businesses for quality site locations, management, hourly employees, and qualified franchisees.
+Added: We also face the risk that new or existing competitors will copy our business model, menu options, presentation, or ambiance, among other things.
Consumer tastes, nutritional and dietary trends, traffic patterns, and the type, number, and location of competing restaurants often affect the restaurant business, and our competitors may react more efficiently and effectively to those conditions.
−Removed: In addition, many of our competitors offer lower-priced menu options or meal packages, or have loyalty programs.
−Removed: Several of our competitors compete by offering a broader range of menu items, including items that are specifically identified as low in carbohydrates or healthier, a strategy that we do not currently pursue.
−Removed: This competition in the variety of products offered and the price of products may adversely impact our sales.
−Removed: Moreover, we may also compete with companies outside the fast casual, quick service, and casual dining segments of the restaurant industry.
−Removed: For example, competitive pressures can come from deli sections and in-store cafés of several major grocery store chains and from home delivery meal plan services, including those targeted at customers who want healthier food, as well as from convenience stores and other dining outlets.
−Removed: These competitors may have, among other things, a more diverse menu, lower operating costs, better locations, better facilities, better management, more effective marketing, more efficient operations, and more convenient offerings than we have.
−Removed: If we are unable to compete effectively, it could decrease our traffic, sales and profit margins, which could adversely affect our business, financial condition, and results of operations.
−Removed: Interruptions in the supply of product to company-owned restaurants and franchisees could adversely affect our revenue.
+Added: Moreover, we may also compete with companies outside the fast casual, quick service, and casual dining segments of the restaurant industry, such as deli sections and in-store cafés of several major grocery store chains and from home delivery meal plan services, as well as from convenience stores and other dining outlets.
+Added: These competitors may have, among other things, a more diverse menu, lower operating costs, better locations, better facilities, better management, more effective marketing, more efficient operations, stronger brand recognition, loyal customer base and more convenient offerings than we have.
+Added: If we are unable to compete effectively, it could decrease our traffic, sales and profit margins, which could materially adversely affect our business, financial condition, and results of operations.
+Added: Interruptions in the supply of product to company-owned restaurants and franchisees could materially adversely affect our revenue.
In order to maintain quality-control standards and consistency among restaurants, we require through our franchise agreements that our franchisees obtain food and other supplies from preferred suppliers approved by us in advance.
−Removed: In this regard, we and our franchisees depend on a group of suppliers for food ingredients, beverages, paper goods, and distribution, including, but not limited to, four primary chicken suppliers, PFG for distribution, The Coca-Cola Company, and other suppliers.
−Removed: In 2019, we and our franchisees purchased products from approximately 118 approved suppliers, with approximately 10 of such suppliers providing 78%, based on dollar volume, of all products purchased.
−Removed: We look to approve multiple suppliers for most products, and require any single sourced supplier, such as The Coca-Cola Company, to have contingency plans in place to ensure continuity of supply.
−Removed: In addition, we believe that, if necessary, we could obtain readily available alternative sources of supply for each product that we currently source through a single supplier.
−Removed: To facilitate the efficiency of our franchisees’ supply chain, we have historically entered into several preferred-supplier arrangements for particular food or beverage items.
−Removed: In addition, our restaurants bear risks associated with the timeliness, solvency, reputation, labor relations, freight costs, price of raw materials, and compliance with health and safety standards of each supplier, including, but not limited to, risks associated with contamination to food and beverage products.
+Added: In this regard, we and our franchisees depend on a group of suppliers for food ingredients, beverages, paper goods, and distribution.
+Added: We and our franchisees bear risks associated with the timeliness, solvency, reputation, labor relations, freight costs, price of raw materials, and compliance with health and safety standards of each supplier.
We have little control over such suppliers.
−Removed: Disruptions in these relationships may reduce franchisee sales and, in turn, our royalty income.
−Removed: Overall difficulty of suppliers meeting restaurant product demand,
−Removed: interruptions in the supply chain, obstacles or delays in the process of renegotiating or renewing agreements with preferred suppliers, financial difficulties experienced by suppliers, or the deficiency, lack, or poor quality of alternative suppliers could adversely impact franchisee sales and our company-owned restaurant sales, which, in turn, would reduce our royalty income and revenue and could materially and adversely affect our business and operating results, and our focus on a limited menu could make these consequences more severe.
+Added: Disruptions in these relationships may reduce company-owned restaurant and franchisee sales and, in the case of reduced franchisee sales, our royalty income.
+Added: Overall difficulty of suppliers meeting restaurant product demand, interruptions in the supply chain, obstacles or delays in the process of renegotiating or renewing agreements with preferred suppliers, financial difficulties experienced by suppliers, or the deficiency, lack, or poor quality of alternative suppliers could adversely impact company-owned restaurant and franchisee sales, which could materially adversely affect our business and operating results and, in the case of reduced franchisee sales, would reduce our royalty income and revenue.
+Added: In addition, our focus on a limited menu could make these consequences more severe.
Our operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to certain factors, some of which are beyond our control, resulting in a decline in our stock price.
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• changes in interest rates;
−Removed: • increases and decreases in average weekly sales and domestic same store sales, including due to the timing and popularity of sporting and other events;
−Removed: • macroeconomic conditions, both nationally and locally;
+Added: • increases and decreases in average weekly sales and same store sales, including due to the timing and popularity of sporting and other events;
+Added: • macroeconomic conditions, globally, nationally and locally;
• changes in consumer preferences and competitive conditions;
−Removed: • impairment of long-lived assets and any loss on restaurant closures;
• increases in infrastructure costs;
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In that event, the price of our common stock would likely decrease.
−Removed: If we or our franchisees or licensees are unable to protect our customers’ credit card data and other personal information, cyber incidents or deficiencies in cybersecurity could result and negatively impact our business by causing data loss, a disruption to our operations, a compromise or corruption of confidential information, damage to our employee and business relationships and reputation, and/or litigation and liability, all of which could subject us to loss and harm our brand.
−Removed: Privacy protection is increasingly demanding, and as our reliance on technology increases, so have the risks posed to our systems, both internal and those we have outsourced.
−Removed: The use of electronic payment methods and collection of other personal information expose us and our franchisees to increased risk of cyber incidents, privacy and/or security breaches, and other risks.
−Removed: A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity, or availability of information resources.
−Removed: More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data, or steal confidential information about customers, franchisees, vendors, and employees.
−Removed: The majority of our restaurant sales are by credit or debit cards.
−Removed: In connection with credit or debit card transactions in-restaurant, we and our franchisees collect and transmit confidential information to card processors.
−Removed: Additionally, we collect and store personal information from individuals, including our customers, franchisees, and employees.
+Added: Cyber incidents or deficiencies in cybersecurity could negatively impact our business by causing data loss, a disruption to our operations, a compromise or corruption of confidential or personal information, damage to our employee and business relationships and reputation, and/or litigation and liability, all of which could subject us to loss and harm our brand.
+Added: As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced.
+Added: Additionally, there has been an increase in data integration and complexity of our technology systems, particularly in our international markets.
+Added: The use of electronic payment methods and the collection and storage of personal information from individuals expose us and our franchisees to increased risk of cyber incidents, privacy and/or security breaches, and other risks.
We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmitting, and storing such information.
The use of personally identifiable information by us is regulated by foreign, federal, and state laws, which continue to evolve, as well as by certain third-party agreements.
−Removed: As privacy and information security laws and regulations change, we may incur additional costs to ensure that it remains in compliance with those laws and regulations.
−Removed: See “ Changing regulations relating to privacy, information security, and data protection could increase our costs, affect or limit how we collect and use personal information, and harm our brand ” below for a further discussion on privacy, information security, and data protection regulations.
−Removed: Our franchisees, contractors, and third parties with whom we do business have experienced security breaches in which credit and debit card information could have been stolen and we, our franchisees, contractors, and third parties with whom we do business may experience security breaches in which credit and debit card information is stolen in the future.
−Removed: A number of retailers and other companies have also recently experienced serious cyber incidents and breaches of their information technology systems.
−Removed: Although our business uses secure means to transmit confidential information, third parties may have the technology or know-how to breach the security of the customer information transmitted in connection with credit and debit card
−Removed: sales, and our security measures and those of technology vendors may not effectively prohibit others from obtaining improper access to this information.
−Removed: The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often difficult to detect for long periods of time, which may cause a breach to go undetected for an extensive period of time.
−Removed: Advances in computer and software capabilities, new tools, and other developments may increase the risk of such a breach.
−Removed: Further, the systems currently used for transmission and approval of electronic payment transactions, and the technology utilized in electronic payments themselves, all of which can put electronic payment at risk, are determined and controlled by the payment card industry, not by us, through enforcement of compliance with the Payment Card Industry - Data Security Standards ("PCI DSS").
−Removed: We and our franchisees must abide by the PCI DSS, as modified from time to time, in order to accept electronic payment transactions.
−Removed: Furthermore, the payment card industry is requiring vendors to become compatible with smart chip technology for payment cards, or EMV-Compliant, or else bear full responsibility for certain fraud losses, referred to as the EMV Liability Shift, which could adversely affect our business.
−Removed: To become EMV-Compliant, merchants must utilize EMV-Compliant payment card terminals at the POS and must also obtain a variety of certifications.
−Removed: At present, our company-owned and franchised restaurants are not required to upgrade their POS systems to include such EMV-Compliant payment card terminals and as a result, may be at increased risk for breaches, which could adversely affect our business and operating results.
+Added: As privacy and information security laws and regulations change, we may incur additional costs to ensure that we remain in compliance with those laws and regulations.
+Added: See “ Changing regulations relating to privacy, information security, and data protection could increase our costs, affect or limit how we collect and use personal information ” below for a further discussion on privacy, information security, and data protection regulations.
+Added: Our franchisees, contractors and third parties with whom we do business have experienced cyber incidents and security breaches in which confidential or personal information could have been stolen and we, our franchisees, contractors and third parties with whom we do business may experience cyber incidents and security breaches in which confidential or personal information is stolen in the future.
+Added: Third parties may have the technology or know-how to breach the security of confidential or personal information collected, stored or transmitted by us or our franchisees, and our and their security measures and those of third parties with whom we do business, including technology vendors, solution providers, software manufacturers and supply chain vendors, may not effectively prohibit others from obtaining improper access to this information.
+Added: Third parties also may be able to develop and deploy viruses, worms and other malicious software programs, such as ransomware, that attack our, our franchisees’ and third parties with whom we do business’s systems or otherwise exploit any security vulnerabilities.The techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and are often difficult to detect for long periods of time, which may cause a breach to go undetected for an extensive period of time.
+Added: Advances in computer and software capabilities, technology, new tools, and other developments may increase the risk of such a breach.
+Added: If a person is able to circumvent the security measures of our business, our franchisees’ businesses or those of other third parties, he or she could destroy or steal valuable information or disrupt the operations of our business.
In addition, our franchisees, contractors or third parties with whom we do business or to whom we outsource business operations may attempt to circumvent our security measures in order to misappropriate confidential information and may purposefully or inadvertently cause a breach involving such information.
−Removed: Third parties may have the technology or know-how to breach the security of the personal information collected, stored, or transmitted by us or our franchisees, and our or their respective security measures, as well as those of our and their technology vendors, may not effectively prohibit others from obtaining improper access to this information.
−Removed: Advances in computer and software capabilities and encryption technology, new tools, and other developments may increase the risk of such a breach.
−Removed: If a person is able to circumvent the security measures of our business or those of third parties, he or she could destroy or steal valuable information or disrupt the operations of our business.
−Removed: If our employees, franchisees, or vendors fail to comply with applicable laws, regulations, or contract terms, and this information is obtained by unauthorized persons, used inappropriately, or destroyed, it could adversely affect our reputation and could disrupt our operations and result in costly litigation, judgments, or penalties resulting from violation of federal and state laws and payment card industry regulations.
+Added: Furthermore, due to the COVID-19 pandemic, we have allowed our team members in our corporate headquarters to work from home.
+Added: The significant increase in remote working, particularly for an extended period of time, could increase certain risks to our business, including an increased risk of cybersecurity events, vulnerability of our systems and improper dissemination of confidential or personal information, if our physical and cybersecurity measures or our corporate policies are not effective.
+Added: The costs to us to eliminate any of the foregoing cybersecurity vulnerabilities or to address a cyber incident could be significant and have material adverse impact on our financial condition, results of operations and cash flows.
+Added: If our employees, franchisees, or vendors fail to comply with applicable laws, regulations, or contract terms, and this information is obtained by unauthorized persons, used inappropriately, or destroyed, it could adversely affect our reputation, could disrupt our operations and result in costly litigation, judgments, or penalties resulting from violation of laws and payment card industry regulations.
+Added: Any such claim or proceeding could cause us to incur significant unplanned expenses and significantly harm our reputation, which could have a material adverse impact on our financial condition, results of operations and cash flows.
+Added: A cyber incident could also require us to provide notifications, result in adverse publicity, loss of sales and profits, increase fees payable to third parties, and result in penalties or remediation and other costs that could materially adversely affect the operation of our business and results of operations.
+Added: In addition, our cyber liability coverage may be inadequate or may not be available in the future on acceptable terms, or at all, and defending a suit, regardless of its merit, could be costly and divert management’s attention.
+Added: Our increasing reliance on debit or credit cards for payment increases the risk of regulatory compliance and security breaches, which could materially adversely impact our business or results of operations.
+Added: The majority of our restaurant sales are paid by credit or debit cards.
+Added: In connection with credit or debit card transactions in-restaurant, we and our franchisees collect and transmit confidential information to card processors.
+Added: The systems currently used for transmission and approval of electronic payment transactions, and the technology utilized in electronic payments themselves, all of which can put electronic payment at risk, are determined and controlled by the payment card industry, not by us, through enforcement of compliance with the Payment Card Industry - Data Security Standards (as modified from time to time, "PCI DSS").
+Added: We and our franchisees must abide by the PCI DSS in order to accept electronic payment transactions.
+Added: If we or our franchisees fail to abide by the PCI DSS, we or our franchisees could be subject to fines, penalties or litigation, which could adversely impact our results of operations.
+Added: Furthermore, the payment card industry is requiring vendors to become compatible with smart chip technology for payment cards, or EMV-Compliant, or else bear full responsibility for certain fraud losses, referred to as the EMV Liability Shift.
+Added: To become EMV-Compliant, merchants often utilize EMV-Compliant payment card terminals at the POS and obtain a variety of certifications.
+Added: At present, many of our company-owned and franchised restaurants have not upgraded their POS systems to include such EMV-Compliant payment card terminals and as a result, may be at increased risk for breaches, which could materially adversely affect our business and operating results.
We may become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card information, and we may also be subject to lawsuits or other proceedings relating to these types of incidents.
−Removed: A cyber incident could also require us to notify customers, employees, or other groups, result in adverse publicity, loss of sales and profits, increase fees payable to third parties, and result in penalties or remediation and other costs that could adversely affect the operation of our business and results of operations.
−Removed: Any such claim or proceeding could cause us to incur significant unplanned expenses, which could have an adverse impact on our financial condition, results of operations and cash flows.
−Removed: Further, adverse publicity resulting from these allegations could significantly harm our reputation and may have a material adverse effect on us and our restaurants.
−Removed: While we currently maintain a cyber liability insurance policy, our cyber liability coverage may be inadequate or may not be available in the future on acceptable terms, or at all.
−Removed: In addition, our cyber liability insurance policy may not cover all claims made against us, and defending a suit, regardless of its merit, could be costly and divert management’s attention.
−Removed: Changing regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information, and harm our brand.
+Added: Changing regulations relating to privacy, information security and data protection could increase our costs and affect or limit how we collect and use personal information.
The United States, the European Union, and other countries in which we operate are increasingly adopting or revising privacy, information security, and data protection laws and regulations that could have a significant impact on our current and planned privacy, data protection, and information security-related practices, our collection, use, sharing, retention, and safeguarding of consumer and/or employee information, and some of our current or planned business activities.
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Many of these laws and regulations provide consumers and employees with a private right of action if a covered company suffers a data breach related to a failure to implement reasonable data security measures.
−Removed: In the European Union, this includes the General Data Protection Regulation, which came into effect in May 2018.
−Removed: The legal framework around privacy issues is rapidly evolving, as various federal and state government bodies are considering adopting new privacy laws and regulations, which could result in significant limitations on or changes to the ways in which we can collect, use, host, store, or transmit the personal information and other data of our customers or employees.
−Removed: Compliance with privacy, data protection, and information security laws affecting customer or employee data to which we are subject could result in additional costs, and our failure to comply with such laws could result in potentially significant regulatory investigations or government actions, penalties or remediation, and other costs, as well as adverse publicity, loss of sales and profits, and an increase in fees payable to third parties.
−Removed: All of these implications could adversely affect our revenues, results of operations, business, and financial condition.
+Added: In the European Union, this includes the General Data Protection Regulation.
+Added: The legal framework around privacy issues is rapidly evolving, as various federal and state government bodies are considering adopting new privacy laws and regulations.
+Added: These laws and regulations could result in significant limitations on or changes to the ways in which we can collect, use, host, store, or transmit personal information and other data.
+Added: Compliance with privacy, data protection, and information security laws to which we are subject could result in additional costs, and our failure to comply with such laws could result in potentially significant regulatory investigations or government actions, penalties or remediation, and other costs, as well as adverse publicity, loss of sales and profits, and an increase in fees payable to third parties.
+Added: Each of these implications could materially adversely affect our revenues, results of operations, business, and financial condition.
We and our franchisees rely on computer systems to process transactions and manage our business, and a disruption or a failure of such systems or technology could harm our ability to effectively manage our business.
1 unchanged sentence
We utilize various computer systems, including our franchisee reporting system, by which our franchisees report their weekly sales and pay their corresponding royalty fees and required Ad Fund contributions.
−Removed: When sales are reported by a franchisee, a withdrawal for the authorized amount is initiated from the franchisee’s bank on a set date each week based on gross sales during the week ended the prior Saturday.
−Removed: This system is critical to our ability to accurately track sales and compute royalties and Ad Fund contributions due from our franchisees.
+Added: This system is critical to our ability to accurately track sales and compute and receive royalties and Ad Fund contributions due from our franchisees.
We also rely on computer systems and network infrastructure across other areas of our operations, including marketing programs, employee engagement, management of our supply chain and POS processing in our restaurants.
−Removed: Our operations depend upon our ability to protect our computer equipment and systems against damage from physical theft, fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches, viruses, worms and other disruptive problems.
+Added: Our operations depend upon our ability to protect our computer equipment and systems against damage from physical theft, fire, power loss, computer, network and telecommunications failure or other catastrophic events, as well as from internal and external security breaches, viruses and other disruptive software, worms, improper usage by employees and other disruptive problems.
Any damage or failure of our computer systems or network infrastructure that causes an interruption in our operations could have a material adverse effect on our business and subject us to litigation or actions by regulatory authorities.
−Removed: Despite the implementation of protective measures, our systems are subject to damage and/or interruption as a result of power outages, computer and network failures, computer viruses and other disruptive software, security breaches, catastrophic events, and improper usage by employees.
−Removed: Such events could result in a material disruption in operations, a need for a costly repair, upgrade or replacement of systems, or a decrease in, or in the collection of, royalties and Ad Fund contributions paid to us by our franchisees.
+Added: In addition, such events could result in a need for a costly repair, upgrade or replacement of systems, or a decrease in, or in the collection of, royalties and Ad Fund contributions paid to us by our franchisees.
To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability which could materially affect our results of operations.
−Removed: It is also critical that we establish and maintain certain licensing and software agreements for the software we use in our day-to-day operations.
+Added: It is also critical that we
+Added: establish and maintain certain licensing and software agreements for the software we use in our day-to-day operations.
A failure to procure or maintain these licenses could have a material adverse effect on our business operations.
−Removed: There are risks associated with our increasing dependence on digital commerce platforms to maintain and grow sales, and aspects of our information technology systems may experience disruptions, which could harm our ability to compete and conduct our business.
−Removed: Customers are increasingly using e-commerce websites and apps, both domestically and internationally, like wingstop.com and our mobile ordering application, to order and pay for our products.
−Removed: As a result, we and our franchisees are increasingly reliant on digital ordering and payment as a sales channel.
−Removed: These digital ordering and payment platforms could be damaged or interrupted by power loss, technological failures, user errors, cyber-attacks, other forms of sabotage or acts of God.
−Removed: In particular, we and our franchisees rely on digital orders for a significant portion of our sales and could experience interruptions of our digital ordering platform, which could limit or delay customers’ ability to order through such platforms.
−Removed: Any such limitation or delay could negatively impact our and our franchisees’ sales and customer experience and perception.
−Removed: In addition, if our digital ordering platforms do not meet customers’ expectations in terms of security, speed, attractiveness, or ease of use, customers may be less inclined to return to such digital ordering platforms, which could negatively impact our sales, results of operations and financial condition.
−Removed: As we expand our third party delivery service to additional markets nationwide, any failure by us or our third party delivery partners to provide timely and reliable delivery services may materially and adversely affect our business and reputation.
−Removed: In 2017, we initiated a delivery test in three markets, partnering with a third party delivery service provider.
−Removed: Late in 2018, we began a process of rolling out delivery nationwide, and by the end of 2019, delivery was available to approximately 94% of our domestic system.
+Added: There are risks associated with our increasing dependence on digital commerce platforms to maintain and grow sales, and limitations, disruptions or unavailability of our digital commerce platforms, or our ability to distribute our apps, could harm our ability to compete and conduct our business.
+Added: Customers are increasingly using e-commerce websites and apps, both domestically and internationally, like wingstop.com and our mobile ordering application, to order and pay for our products and select optional delivery and curbside services.
+Added: As a result, we and our franchisees are increasingly reliant on digital ordering and payment for such sales, and portions of our digital commerce platforms depend on third party services, including cloud-based technologies and platforms.
+Added: Our apps and other digital ordering and payment platforms could be damaged or interrupted by power loss, technological failures, cyber-attacks, other forms of sabotage or acts of God.
+Added: In addition, the availability, distribution and functionality of our apps and updates to our apps are dependent on mobile app stores and their related policies, terms and conditions.
+Added: Because we and our franchisees rely on digital orders for a significant portion of our sales, any limitations in functionality, interruptions or unavailability of any of our digital ordering or payment platforms could limit or delay customers’ ability to order through such platforms.
+Added: Further, if our digital ordering and payment platforms do not meet customers’ expectations in terms of security, speed, attractiveness, or ease of use, customers may be less inclined to return to such platforms.
+Added: Any such limitation, damage, interruption or unavailability of our digital commerce platforms or failure of those platforms to meet customers’ expectations could materially adversely affect our and our franchisees' sales and our results of operations and financial condition.
+Added: Any failure by us or our third-party delivery providers to provide timely and reliable delivery services may materially adversely affect our business and reputation.
+Added: As of December 26, 2020, delivery services were available at substantially all Wingstop restaurants throughout the United States.
Interruptions or failures in our delivery services could prevent the timely or successful delivery of our products.
−Removed: These interruptions may be due to unforeseen events that are beyond our control or the control of our delivery partners, such as inclement weather, natural disasters, transportation disruptions, or labor unrest.
−Removed: The occurrence of food safety or product quality issues may also result in interruptions or failures in our delivery service.
−Removed: If our products are not delivered on time and in proper condition, customers may refuse to accept our products and have less confidence in our services, in which case our business and reputation may suffer.
−Removed: If our third party delivery service provider fails to follow the quality standards or other terms that they agreed to with us, it could result in harm to our business and reputation and could also force us to pursue arrangements with alternative delivery
−Removed: service providers, which could result in an interruption to our delivery services.
−Removed: Delivery is a relatively new service for our business, and it is difficult for us to anticipate the level of sales that delivery may generate, operational challenges we may face or the experiences our guests will have with this offering.
−Removed: These factors may adversely impact our sales and our brand reputation.
−Removed: We also incur additional costs associated with delivery orders, and it is possible that these orders could cannibalize more profitable in-restaurant visits or carry out orders.
−Removed: Uncertainty in the law with respect to the assignment of liabilities in the franchise business model could adversely impact our profitability.
+Added: These interruptions may be due to unforeseen events that are beyond our control or the control of our delivery providers, such as inclement weather, natural disasters, transportation disruptions, sabotage by an outside party, civil protests or labor unrest.
+Added: In addition, changes in business practices of our delivery providers and governmental regulations could materially adversely impact delivery services and/or profitability.
+Added: If our products are not delivered on time and in safe and proper condition, customers may refuse to accept our products and have less confidence in our services, in which case our business and reputation may suffer.
+Added: If our third-party delivery service providers fail to follow the quality standards or other terms that they agreed to with us, it could result in harm to our business and reputation and could force us to pursue arrangements with alternative delivery service providers, which could result in an interruption to our delivery services.
+Added: These factors may materially adversely impact our sales and our brand reputation.
+Added: We also incur additional costs associated with delivery orders, and it is possible that these orders could cannibalize more profitable carry-out or in-restaurant orders.
+Added: Uncertainty in the law with respect to the assignment of liabilities in the franchise business model could materially adversely impact our profitability.
One of the legal foundations fundamental to the franchise business model has been that, absent special circumstances, a franchisor is generally not responsible for the acts, omissions, or liabilities of its franchisees, whether with respect to the franchisees’ employees or otherwise.
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A determination that we are a “joint employer” with our franchisees or that our franchisees are part of one unified system subject to joint and several liability could subject us and/or our franchisees to liability for employment-related and other liabilities of our franchisees and could cause us to incur other costs that have a material adverse effect on our results of operations.
−Removed: Our business activities subject us to litigation risk that could affect us adversely by subjecting us to significant money damages and other remedies or by increasing our litigation expense.
−Removed: We and our franchisees are, from time to time, the subject of, or potentially the subject of, complaints or litigation, including customer claims, personal-injury claims, environmental claims, employee allegations of improper termination and discrimination, claims related to violations of the Americans with Disabilities Act of 1990 ("ADA"), religious freedom laws, the Fair Labor Standards Act, other employment-related laws, the Occupational Safety and Health Act, the Employee Retirement Income Security Act of 1974, as amended, advertising laws and intellectual property claims.
−Removed: Each of these claims may increase costs and limit the funds available to make royalty payments and reduce the execution of new franchise agreements.
+Added: Our business activities subject us and our franchisees to litigation risk that could subject us to significant money damages and other remedies or by increasing our and our franchisees' litigation expense.
+Added: We and our franchisees are, from time to time, the subject of, or potentially the subject of, complaints or litigation, including customer claims, class-action lawsuits, personal-injury claims, environmental claims, intellectual property claims, employee allegations of improper termination and discrimination and claims related to violations of laws, such as the Americans with
+Added: Disabilities Act of 1990 ("ADA"), religious freedom laws, the Fair Labor Standards Act, other employment-related laws, the Occupational Safety and Health Act, the Employee Retirement Income Security Act of 1974, as amended, advertising laws and state and local “dram shop” laws.
+Added: Each of these claims may increase our and our franchisees’ costs, limit the funds of our franchisees available to make royalty payments and reduce the execution of new franchise agreements.
Litigation against a franchisee or its affiliates by third parties or regulatory agencies, whether in the ordinary course of business or otherwise, may also include claims against us by virtue of our relationship with the defendant-franchisee, whether under vicarious liability, joint employer, or other theories.
−Removed: In addition to decreasing the ability of a defendant-franchisee to make royalty payments in the event of such claims and diverting our management and financial resources, adverse publicity resulting from such allegations may materially and adversely affect us and our brand, regardless of whether these allegations are valid or whether we are liable.
−Removed: Our international operations may be subject to additional risks related to litigation, including difficulties in enforcement of contractual obligations governed by foreign law due to differing interpretations of rights and obligations, compliance with multiple and potentially conflicting laws, new and potentially untested laws and judicial systems, and reduced or diminished protection of intellectual property.
−Removed: A substantial judgment against us or one of our subsidiaries could materially and adversely affect our business and operating results.
−Removed: We could also become subject to class action or other lawsuits related to the above-described or different matters in the future.
−Removed: Regardless, however, of whether any claim brought against us in the future is valid or whether we are liable, such a claim would be expensive to defend and may divert time, money and other valuable resources away from our operations and, thereby, hurt our business.
−Removed: We and our franchisees are also subject to state and local “dram shop” statutes, which may subject us and our franchisees to uninsured liabilities.
−Removed: These statutes generally allow a person injured by an intoxicated person to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.
−Removed: Because a plaintiff may seek punitive damages, which may not be fully covered by insurance, this type of action could have an adverse impact on our financial condition and results of operations.
−Removed: A judgment in such an action significantly in excess of insurance coverage could adversely affect our financial condition, results of operations or cash flows.
−Removed: Further, adverse publicity resulting from any such allegations may adversely affect us and our restaurants taken as a whole.
−Removed: Although we maintain what we believe to be adequate levels of insurance, insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters.
−Removed: A judgment or other liability in excess of our insurance coverage for any claims or any adverse publicity resulting from claims could adversely affect our business and results of operations.
+Added: Regardless of whether any claim brought against us or a franchisee in the future is valid or whether we or they are liable, such a claim would be expensive to defend and may divert time, money and other valuable resources away from our or their operations and, thereby, hurt our business.
+Added: In addition, the ability of a defendant-franchisee to make royalty payments in the event of such claims may be decreased and adverse publicity resulting from such allegations may materially adversely affect us and our brand, regardless of whether these allegations are valid or whether we or they are liable.
+Added: Our international business may be subject to additional risks related to litigation, including difficulties in enforcement of contractual obligations governed by foreign law due to differing interpretations of rights and obligations, compliance with multiple and potentially conflicting laws, new and potentially untested laws and judicial systems, and reduced or diminished protection of intellectual property.
+Added: A substantial judgment against us could materially adversely affect our business and operating results.
+Added: Insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to any of these or other matters.
+Added: A substantial judgment, or judgment or other liability in excess of our or our franchisees’ insurance coverage, resulting from claims could materially adversely affect our business and results of operations.
We may engage in litigation with our franchisees.
7 unchanged sentences
Our success depends in part upon effective advertising and marketing campaigns, which may not be successful, and franchisee support of such advertising and marketing campaigns.
−Removed: We believe the Wingstop brand is critical to our business and expend resources in our marketing efforts using a variety of media.
+Added: We believe the Wingstop brand is critical to our business and expend resources in our marketing efforts using a variety of media outlets.
We expect to continue to conduct brand awareness programs and customer initiatives to attract and retain customers.
1 unchanged sentence
The support of our franchisees is critical for the success of the advertising and marketing campaigns we seek to undertake, and the successful execution of these campaigns will depend on our ability to maintain alignment with our franchisees.
−Removed: Our franchisees are currently required to contribute 4% of their gross sales to a common Ad Fund to support the development of new products, brand development and national marketing programs.
−Removed: Our current form of franchise agreement also requires franchisees to spend at least 1% of gross sales directly on local advertising.
−Removed: Franchisees also may be required to contribute approximately 2% of gross sales to a cooperative advertising association when a franchisee and at least one other restaurant operator have opened restaurants in the same DMA (the cooperative advertising contribution is credited toward the one percent minimum local advertising spend).
+Added: Our franchisees are currently required to contribute specified percentages of their gross sales to certain advertising funds and programs.
+Added: There can be no assurances that these funds will be sufficient to meet our marketing needs or that additional funds will be provided by our franchisees in the future.
+Added: The lack of continued financial support for our advertising activities could hinder our marketing efforts, which may adversely affect our business and operating results.
While we maintain control over advertising and marketing materials and can mandate certain strategic initiatives pursuant to our franchise agreements, we need the active support of our franchisees if the implementation of these initiatives is to be successful.
−Removed: If our initiatives are not successful, resulting in expenses incurred without the benefit of higher revenue, our business, financial condition and results of operations could be materially adversely effected.
+Added: If our initiatives are not successful, resulting in expenses incurred without the benefit of higher revenue, our business, financial condition and results of operations could be materially adversely affected.
We are vulnerable to changes in consumer preferences and regulation of consumer eating habits that could harm our business, financial condition, results of operations and cash flow.
−Removed: Consumer preferences often change rapidly and without warning, moving from one trend to another among many product or retail concepts.
+Added: Consumer preferences and eating habits often change rapidly and without warning, moving from one trend to another among many product or retail concepts.
We depend on some of these trends, including the trend regarding away-from-home or take-out dining.
−Removed: Consumer preferences towards away-from-home and take-out dining or certain food products might shift as a result of, among other things, health concerns or dietary trends related to cholesterol, carbohydrate, fat and salt content of certain food items, including chicken wings, in favor of foods that are perceived as more healthy.
+Added: Consumer preferences towards away-from-home and take-out dining or certain food products might shift as a result of, among other things, new information, attitudes regarding diet and health concerns or dietary trends related to cholesterol, carbohydrate, fat and salt content of certain food items, including chicken wings, in favor of foods that are perceived as healthier.
Our menu is currently comprised primarily of chicken wings and fries, and a change in consumer preferences away from these offerings would have a material adverse effect on our business.
−Removed: Negative publicity over the health aspects of the food items we sell may adversely affect demand for our menu items and could have a materially adverse effect on traffic, sales and results of operations.
−Removed: Our continued success will depend in part on our ability to anticipate, identify and respond to changing consumer preferences.
−Removed: Regulations and consumer eating habits may continue to change as a result of new information and attitudes regarding diet and health.
+Added: Negative publicity over the health aspects of, or animal welfare or other social or environmental concerns related to, the food items we sell may adversely affect demand for our menu items and could have a material adverse effect on traffic, sales and results of operations.
+Added: Regulations may also continue to change as a result of new information and attitudes regarding diet and health.
These changes may include regulations that impact the ingredients and nutritional content of our menu items.
−Removed: The federal government and a number of states, counties and cities, have enacted menu labeling laws requiring multi-unit restaurant operators to make certain nutritional information available to customers and/or have enacted legislation prohibiting the sales of certain types of ingredients in restaurants.
+Added: The federal government and a number of states, counties and cities, have enacted laws requiring multi-unit restaurant operators to make certain nutritional information available to customers and/or legislation prohibiting the sales of certain types of ingredients in restaurants.
If our customers perceive our menu items to contain unhealthy caloric, sugar, sodium, or fat content, our results of operations could be adversely affected.
−Removed: The success of our restaurant operations depends, in part, upon our ability to effectively respond to changes in consumer health and disclosure regulations and to adapt our menu offerings to fit the dietary needs and eating habits of our customers without sacrificing flavor.
−Removed: To the extent we are unable to
−Removed: respond with appropriate changes to our menu offerings, it could materially affect customer traffic and our results of operations.
−Removed: Furthermore, a change in our menu could result in a decrease in customer traffic.
+Added: The success of our restaurant operations depends, in part, upon our ability to effectively respond to changes in consumer preferences and eating habits, negative publicity and consumer health and disclosure regulations and to adapt our menu offerings to fit the dietary needs, preferences and eating habits of our customers without sacrificing flavor.
+Added: To the extent we are unable to respond with appropriate changes to our menu offerings, it could materially adversely affect customer traffic and our results of operations.
+Added: Furthermore, any change in our menu could result in a decrease in existing customer traffic.
Because many of our restaurants are concentrated in certain geographic areas, we are susceptible to economic and other trends and developments, including adverse weather conditions, in these areas.
As of December 26, 2020, 55% of our 1,359 domestic restaurants were spread across Texas (28%), California (21%) and Illinois (6%).
−Removed: Given our geographic concentrations, negative publicity regarding any of our restaurants in these areas could have a material adverse effect on our business and operations, as could other regional occurrences such as local strikes, terrorist attacks, increases in energy prices, or natural or man-made disasters, or the enactment of more stringent state and local laws and regulations.
−Removed: In particular, adverse weather conditions, such as regional winter storms, floods, severe thunderstorms, earthquakes, tornadoes, and hurricanes could negatively impact our results of operations.
−Removed: Our business is subject to various laws and regulations and changes in such laws and regulations, and/or our failure to comply with existing or future laws and regulations, could adversely affect us.
−Removed: We are subject to state franchise registration requirements, the rules and regulations of the FTC various state laws regulating the offer and sale of franchises in the United States through the provision of franchise disclosure documents containing certain mandatory disclosures, various state laws regulating the franchise relationship, and certain rules and requirements regulating franchising arrangements in foreign countries.
−Removed: Although we believe that our franchise disclosure documents, together with any applicable state-specific versions or supplements, and franchising procedures that we use comply in all material respects with both the FTC guidelines and all applicable state laws regulating franchising in those states in which we offer and grant new franchise arrangements, noncompliance could reduce anticipated royalty income, which in turn could materially and adversely affect our business and operating results.
+Added: Given our geographic concentrations, economic conditions and other unforeseen events, including but not limited to negative publicity, local strikes, terrorist attacks, increases in energy prices, natural or man-made disasters, adverse weather conditions or the enactment of more stringent state and local laws and regulations in these areas, could have a disproportionate adverse effect on our business and results of operations.
+Added: Our business is subject to various laws and regulations and changes in such laws and regulations, and/or our failure to comply with existing or future laws and regulations, could materially adversely affect us.
+Added: We are subject to certain state franchise registration requirements, the rules and regulations of the FTC and various state laws regulating the offer and sale of franchises in the United States through the provision of franchise disclosure documents containing certain mandatory disclosures, various state laws regulating the franchise relationship, and certain rules and requirements regulating franchising arrangements in foreign countries.
+Added: Noncompliance with applicable laws, regulatory requirements and governmental guidelines regulating franchising could reduce anticipated royalty income, which in turn could materially adversely affect our business and operating results.
We and our franchisees are subject to various existing U.S.
−Removed: federal, state, local, and foreign laws affecting the operation of restaurants, including various health, sanitation, fire, and safety standards.
−Removed: Franchisees may in the future become subject to regulation (or further regulation) seeking to tax or regulate high-fat foods, to limit the serving size of beverages containing sugar, to ban the use of certain packaging materials, or to require the display of detailed nutrition information.
+Added: federal, state, local, and foreign laws affecting the operation of restaurants and the sale of food and alcoholic beverages, including various license and permit requirements, health, sanitation, fire, and safety standards.
+Added: We and our franchisees may in the future become subject to regulation (or further regulation) seeking to tax or regulate high-fat foods, to limit the serving size of beverages containing sugar, to ban the use of certain packaging materials, or to require the display of detailed nutrition information.
Each of these regulations would be costly to comply with and/or could result in reduced demand for our products.
+Added: The failure of our restaurants to comply with applicable regulations and obtain and maintain required licenses, permits, and approvals (including those for the sale of alcoholic beverages) could adversely affect our existing restaurants and delay or result in our decision to cancel the opening of new restaurants, which would materially adversely affect our results of operations.
We and our franchisees may also have a substantial number of hourly employees who are required to be paid pursuant to applicable federal or state minimum wage laws.
−Removed: The federal minimum wage has been $7.25 per hour since July 24, 2009.
−Removed: From time to time, various federal and state legislators have proposed changes to the minimum wage requirements, especially for fast-food workers.
−Removed: Certain regions, such as Los Angeles, Seattle, San Francisco and New York, have approved phased-in increases that either have or eventually will increase the minimum wage in such regions to up to $15 an hour or higher.
−Removed: These and any future similar increases in other regions in states in which our restaurants operate may negatively affect our and our franchisees profit margins as we and our franchisees may be unable to increase our menu prices in order to pass future increased labor costs on to our guests.
+Added: From time to time, various federal and state legislators have proposed or approved changes to the minimum wage requirements, especially for fast-food workers.
+Added: These and any future similar increases in other regions in which our restaurants operate will increase the cost of labor and may negatively affect our and our franchisees profit margins as we and our franchisees may be unable to increase our menu prices in order to pass future
+Added: increased labor costs on to our guests.
Also, reduced margins of franchisees could make it more difficult to sell franchises.
If menu prices are increased by us and our franchisees to cover increased labor costs, the higher prices could adversely affect transactions which could lower sales and thereby reduce our margins and the royalties that we receive from franchisees.
−Removed: Although we require all workers to provide us with government-specified documentation evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers.
+Added: Although we require all workers in our company-owned restaurants and in our corporate support office to provide us with government-specified documentation evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers.
We currently participate in the “E-Verify” program, an Internet-based, free program run by the U.S.
−Removed: government to verify employment eligibility, in all of our restaurants and in our corporate support office.
+Added: government to verify employment eligibility, in all of our company-owned restaurants and in our corporate support office.
However, use of the “E-Verify” program does not guarantee that we will successfully identify all applicants who are ineligible for employment.
Unauthorized workers may subject us to fines or penalties, and if any of our workers are found to be unauthorized, we could experience adverse publicity that negatively impacts our brand and it may be more difficult to hire and keep qualified employees.
−Removed: Failure by our franchisees to comply with immigration laws may also result in additional adverse publicity and reputational harm to our brand.
−Removed: We could also become subject to fines, penalties and other costs related to claims that we did not fully comply with all recordkeeping obligations of federal and state immigration compliance laws.
+Added: We could also become subject to fines, penalties and other costs related to claims that we did not fully comply with all recordkeeping obligations of federal and state employment eligibility or immigration compliance laws.
+Added: Failure by our franchisees to comply with employment eligibility or immigration laws may also result in adverse publicity and reputational harm to our brand and could subject them to fines, penalties and other costs.
These factors could materially adversely affect our business, financial condition or results of operations.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other costs of doing business and therefore have an adverse effect on our results of operations.
−Removed: Failure to comply with the laws and regulatory requirements of federal, state, local and foreign authorities could result in, among other things, revocation of required licenses, administrative
−Removed: enforcement actions, fines and civil and criminal liability.
−Removed: In addition, certain laws, including the ADA, could require us or our franchisees to expend significant funds to make modifications to our restaurants if we failed to comply with applicable standards.
+Added: Failure to comply with the laws and regulatory requirements of federal, state, local and foreign authorities could result in, among other things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability.
+Added: In addition, certain laws, including the ADA, could require us or our franchisees to expend significant funds to make modifications to our restaurants if we fail to comply with applicable standards.
Compliance with all of these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings.
−Removed: Failure to obtain and maintain required licenses and permits or to comply with alcoholic beverage or food control regulations could lead to the loss of liquor and food service licenses and, thereby, harm our business.
−Removed: The restaurant industry is subject to various federal, state and local government regulations, including those relating to the sale of food and alcoholic beverages.
−Removed: Such regulations are subject to change from time to time.
−Removed: The failure of our restaurants to obtain and maintain these licenses, permits, and approvals could adversely affect our operating results.
−Removed: Typically, licenses must be renewed annually and may be revoked, suspended, or denied renewal for cause at any time if governmental authorities determine that a restaurant’s conduct violates applicable regulations.
−Removed: Difficulties or failure to maintain or obtain the required licenses and approvals could adversely affect our existing restaurants and delay or result in our decision to cancel the opening of new restaurants, which would adversely affect our results of operations.
−Removed: Alcoholic beverage control regulations require each of our restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license or permit to sell alcoholic beverages on-premises and to provide service for extended hours and on Sundays.
−Removed: Alcoholic beverage control regulations relate to numerous aspects of daily operations of our restaurants, including minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcohol manufacturers, wholesalers and distributors, inventory control and handling, and storage and dispensing of alcoholic beverages.
−Removed: Any future failure to comply with these regulations and obtain or retain liquor licenses could adversely affect our results of operations.
Our current insurance and the insurance of our franchisees may not provide adequate levels of coverage against claims.
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Moreover, any loss incurred could exceed policy limits and policy payments made to franchisees may not be made on a timely basis.
−Removed: Any such loss or delay in payment could have a material and adverse effect on a franchisee’s ability to satisfy obligations under the franchise agreement, including the ability to make royalty payments.
+Added: Any such loss or delay in payment could have a material adverse effect on a franchisee’s ability to satisfy obligations under the franchise agreement, including the ability to make royalty payments.
We also require franchisees to maintain general liability insurance coverage to protect against the risk of product liability and other risks and demand strict franchisee compliance with health and safety regulations.
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Further, a franchisee’s failure to comply with health and safety regulations, including requirements relating to food quality or preparation, could subject them, and possibly us, to litigation.
−Removed: Any litigation, including the imposition of fines or damage awards, could adversely affect the ability of a franchisee to make royalty payments or could generate negative publicity or otherwise adversely affect us.
−Removed: Damage to our reputation or lack of acceptance of our brand in existing or new markets could negatively impact our business, financial condition and results of operations.
+Added: Any litigation, including the imposition of fines or damage awards, could exceed or be excluded from insurance coverage, and, as a result, adversely affect the ability of a franchisee to make royalty payments or could generate negative publicity or otherwise adversely affect us.
+Added: Damage to our reputation could negatively impact our business, financial condition and results of operations.
We believe we have built our reputation on the high quality and bold, distinctive, and craveable flavors of our food, value, and service, and we must protect and grow the value of our brand to continue to be successful in the future.
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We may also be adversely affected by customers’ experiences with third-party delivery from our restaurants.
−Removed: We may be adversely affected by news reports or other negative publicity, regardless of their accuracy, regarding food quality issues, public health concerns, illness, safety, injury, security breaches of confidential guest or employee information, employee related claims relating to alleged employment discrimination, wage and hour violation, labor standards or health care and benefit issues, or government or industry findings concerning our restaurants, restaurants operated by other food service
−Removed: providers, or others across the food industry supply chain.
+Added: We may be adversely affected by news reports or other negative publicity, regardless of their accuracy, regarding food quality issues, public health concerns, illness, safety, injury, security breaches of confidential guest or employee information, employee related claims relating to alleged employment discrimination, wage and hour violation, labor standards or health care and
+Added: benefit issues, or government or industry findings concerning our restaurants, restaurants operated by other food service providers, or others across the food industry supply chain.
The risks associated with such negative publicity cannot be eliminated or completely mitigated and may materially affect our business.
−Removed: Also, there has been a marked increase in the use of social media platforms and similar channels, including weblogs (blogs), websites and other forms of internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons.
The availability of information on social media platforms is virtually immediate as is its impact.
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The harm may be immediate without affording us an opportunity for redress or correction.
−Removed: Ultimately, the risks associated with any such negative publicity or incorrect information cannot be eliminated or completely mitigated and may materially adversely affect our reputation, business, financial condition and results of operations.
+Added: Negative publicity or incorrect information may materially adversely affect our reputation, business, financial condition and results of operations.
Our expansion into international markets exposes us to a number of risks that may differ in each country where we have franchise restaurants.
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However, international operations are in early stages.
−Removed: Expansion in international markets may be affected by local economic and market conditions.
−Removed: Therefore, as we expand internationally, our franchisees may not experience the operating margins we expect, and our results of operations and growth may be materially and adversely affected.
+Added: Expansion in international markets may be affected by local economic, market and cultural conditions.
+Added: Therefore, as we expand internationally, our franchisees may not experience the operating margins we expect, and our results of operations and growth may be materially adversely affected.
Our financial condition and results of operations may be adversely affected if the global markets in which our franchised restaurants compete are affected by changes in political, economic, or other factors.
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• anti-American sentiment in certain locations and the identification of the Wingstop brand as an American brand;
−Removed: • the impact of the United Kingdom’s pending exit from the European Union;
+Added: • the impact of the United Kingdom’s exit from the European Union;
• political and economic instability;
+Added: Foreign Corrupt Practices Act and other similar anti-bribery and anti-kickback laws;
• other external factors.
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Therefore, as we continue to expand internationally, we or our franchisees may not experience the operating margins we expect, our results of operations may be negatively impacted, and our common stock price may decline.
−Removed: The terms of our securitized debt financing through certain of our wholly-owned subsidiaries include restrictive terms, and our failure to comply with any of these terms could result in a default, which would have an adverse effect on our business and prospects.
+Added: We depend upon our executive officers and other key employees and may not be able to retain or replace these individuals or recruit additional personnel, which could harm our business.
+Added: We believe that we have already benefited and expect to benefit substantially in the future from the leadership and experience of our executive officers and management team.
+Added: Additionally, our business strategy includes successfully attracting and retaining talented employees.
+Added: The market for highly skilled employees and leaders in the restaurant industry is extremely competitive.
+Added: Our inability to successfully recruit and retain highly-skilled and talented executive officers and other key employees, or successfully execute succession planning, could have a material adverse effect on our business and prospects and impair our growth, as we may not be able to find suitable individuals to replace such personnel on a timely basis.
+Added: In addition, the departure of any of our executive officers or key employees could be viewed in a negative light by investors and analysts, which could cause the price of our common stock to decline.
+Added: Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive position or the value of our brand.
+Added: We believe that our trademarks and other proprietary rights are important to our success and our competitive position, and, therefore, we devote resources to the protection of our trademarks and proprietary rights.
+Added: The protective actions that we take, however, may not be enough to prevent unauthorized use or imitation by others, which could harm our image, brand or competitive position.
+Added: If we commence litigation to enforce our rights, we will incur significant legal fees.
+Added: We cannot assure you that third parties will not claim infringement by us of their proprietary rights in the future.
+Added: Any such claim, whether or not it has merit, could be time-consuming and distracting for executive management, result in costly litigation, cause changes to existing menu items or delays in introducing new menu items, or require us to enter into royalty or licensing agreements.
+Added: As a result, any such claim could have a material adverse effect on our business, results of operations, and financial condition.
+Added: Risks Related to our Indebtedness
+Added: The terms of our securitized debt financing through certain of our wholly-owned subsidiaries include restrictive terms, and our failure to comply with any of these terms could result in a default, which would have a material adverse effect on our business and prospects.
Unless and until we repay all outstanding borrowings under our securitized debt facility, we will remain subject to the restrictive terms of these borrowings.
−Removed: The securitized debt facility, under which certain of our wholly-owned subsidiaries issued
−Removed: and guaranteed fixed rate notes and variable funding notes, contain a number of covenants, with the most significant financial covenant being a debt service coverage calculation.
+Added: The securitized debt facility, under which certain of our wholly-owned subsidiaries issued and guaranteed fixed rate notes and variable funding notes, contain a number of covenants, with the most significant financial covenant being a debt service coverage calculation.
These covenants limit our ability and the ability of certain of our subsidiaries to, among other things:
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If amounts owed under the securitized debt facility are accelerated because of a default and we are unable to pay such amounts, the investors may have the right to assume control of substantially all of the securitized assets.
+Added: In the event that a rapid amortization event occurs under the indenture governing the securitized debt (including, without limitation, upon an event of default under the indenture or the failure to repay the securitized debt at the end of the applicable term), the funds available to us would be reduced or eliminated, which would in turn reduce our ability to operate or grow our business and materially adversely affect our results of operations.
If we are unable to refinance or repay amounts under the securitized debt facility prior to the expiration of the applicable term, our cash flow would be directed to the repayment of the securitized debt and, other than management fees sufficient to cover minimal selling, general and administrative expenses, would not be available for operating our business.
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There can be no assurance that market conditions will be favorable at the times that we require new or additional financing.
−Removed: We may be unable to generate sufficient cash flow to satisfy our significant debt service obligations, which would adversely affect our financial condition and results of operations.
−Removed: Our ability to make principal and interest payments on and to refinance our indebtedness will depend on our ability to generate cash in the future.
−Removed: This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.
−Removed: If our business does not generate sufficient cash flow from operations, in the amounts projected or at all, or if future borrowings are not available to us under our variable funding notes in amounts sufficient to fund our other liquidity needs, our financial condition and results of operations may be adversely affected.
+Added: We may be unable to generate sufficient cash flow to satisfy our significant debt service obligations, which would materially adversely affect our financial condition and results of operations.
+Added: Our ability to make principal and interest payments on and to refinance our indebtedness will depend on our ability to generate cash in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.
+Added: If our business does not generate sufficient cash flow from operations, in the amounts projected or at all, or if future borrowings are not available to us under our variable funding notes in amounts sufficient to fund our other liquidity needs, our financial condition and results of operations may be materially adversely affected.
If we cannot generate sufficient cash flow from operations to make scheduled principal amortization and interest payments on our debt obligations in the future, we may need to refinance all or a portion of our indebtedness on or before maturity, sell assets, delay capital expenditures, or seek additional equity investments.
−Removed: If we are unable to refinance any of our indebtedness on commercially reasonable terms or at all or to effect any other action relating to our indebtedness on satisfactory terms or at all, our business may be harmed.
−Removed: The indenture governing the securitized debt restricts the cash flow from the entities subject to the securitization to any of our other entities and upon the occurrence of certain events, cash flow would be further restricted.
−Removed: In the event that a rapid amortization event occurs under the indenture governing the securitized debt (including, without limitation, upon an event of default under the indenture or the failure to repay the securitized debt at the end of the applicable term), the funds available to us would be reduced or eliminated, which would in turn reduce our ability to operate or grow our business.
−Removed: We depend upon our executive officers and other key employees and may not be able to retain or replace these individuals or recruit additional personnel, which could harm our business.
−Removed: We believe that we have already benefited and expect to benefit substantially in the future from the leadership and experience of our executive officers and management team.
−Removed: Additionally, our business strategy includes successfully attracting and retaining talented employees.
−Removed: The market for highly skilled employees and leaders in the restaurant industry is extremely competitive.
−Removed: Our inability to successfully recruit and retain talented executive officers and other key employees could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace such personnel on a timely basis.
−Removed: In addition, the departure of any of our executive officers or key employees could be viewed in a negative light by investors and analysts, which could cause our common stock price to decline.
−Removed: As our business expands, our future success will depend greatly on our continued ability to attract and retain highly-skilled and qualified executive-level personnel and other key employees.
−Removed: Our inability to attract and retain qualified executive officers and other key employees in the future could impair our growth and harm our business.
−Removed: Our failure or inability to enforce our trademarks or other proprietary rights could adversely affect our competitive position or the value of our brand.
−Removed: We believe that our trademarks and other proprietary rights are important to our success and our competitive position, and, therefore, we devote resources to the protection of our trademarks and proprietary rights.
−Removed: The protective actions that we take, however, may not be enough to prevent unauthorized use or imitation by others, which could harm our image, brand or competitive position.
−Removed: If we commence litigation to enforce our rights, we will incur significant legal fees.
−Removed: We cannot assure you that third parties will not claim infringement by us of their proprietary rights in the future.
−Removed: Any such claim, whether or not it has merit, could be time-consuming and distracting for executive management, result in costly litigation, cause changes to existing menu items or delays in introducing new menu items, or require us to enter into royalty or licensing agreements.
−Removed: As a result, any such claim could have a material adverse effect on our business, results of operations, and financial condition.
−Removed: An impairment in the carrying value of our goodwill or other intangible assets could adversely affect our financial condition and consolidated results of operations.
−Removed: We review goodwill for impairment annually, or whenever circumstances change in a way which could indicate that impairment may have occurred, and record an impairment loss whenever we determine impairment factors are present.
−Removed: Significant impairment charges could have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Ownership of our Common Stock
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This choice of forum provision may limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or employees, which may discourage such lawsuits against us and our directors, officers and employees even though an action, if successful, might benefit our stockholders.
−Removed: Stockholders who do bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware.
+Added: Stockholders who do bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such claim.
The Court of Chancery may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders.
In addition, the enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in such action.
−Removed: Specifically, the choice of forum provision requiring that the Court of Chancery in the State of Delaware be the exclusive forum for certain suits would (i) not be enforceable with respect to any suits brought to enforce any liability or duty created by the Exchange Act, and (ii) have uncertain enforceability with respect to claims under the Securities Act.
−Removed: The choice of forum provision in our amended and restated certificate of incorporation does not have the effect of causing our stockholders to have waived our obligation to comply with the federal securities laws and the rules and regulations thereunder.
We may not continue to declare cash dividends in the future.
−Removed: In August 2017, we announced that our board of directors authorized a regular dividend program under which we intend to pay quarterly dividends on our common stock, subject to quarterly declarations by our board of directors.
−Removed: In addition, we have paid special dividends in connection with refinancings of our credit facilities.
+Added: In August 2017, we announced that our board of directors authorized a regular dividend program under which we have paid, and intend to continue paying, quarterly dividends on our common stock, subject to quarterly declarations by our board of directors.
+Added: In addition, we have paid special dividends in connection with refinancings of our indebtedness.
Any future declarations of dividends, as well as the amount and timing of such dividends, are subject to capital availability and the discretion of our board of directors, which must evaluate, among other things, whether cash dividends are in the best interest of our stockholders and are in compliance with all applicable laws and any agreements containing provisions that limit our ability to declare and pay cash dividends.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.