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What changed in NATHANS FAMOUS, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of NATHANS FAMOUS, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+336 added−334 removedSource: 10-K (2025-06-10) vs 10-K (2024-06-12)

Top changes in NATHANS FAMOUS, INC.'s 2025 10-K

336 paragraphs added · 334 removed · 280 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

90 edited+5 added−10 removed87 unchanged
Biggest changeThe fiscal year ended March 31, 2024 was on the basis of a 53 week reporting period and the fiscal year ended March 26, 2023 was on the basis of a 52 week reporting period. Restaurant Operations Company-owned restaurants As of March 31, 2024, we operated four Company-owned restaurants (including one seasonal unit), within the New York metropolitan area.
Biggest changeRestaurant Operations Company-owned restaurants As of March 30, 2025, we operated four Company-owned restaurants (including one seasonal unit), within the New York metropolitan area. Our seasonal location on the Coney Island Boardwalk was open from March 21, 2024 to November 3, 2024. It reopened for the summer season on March 28, 2025.
Provisions and Supplies Nathan’s World Famous Beef Hot Dogs are primarily manufactured by Smithfield Foods, Inc. for sale by our Branded Product Program, our restaurant system, and at retail. Smithfield Foods, Inc. and another hot dog manufacturer supply the hot dogs for our Company-owned and franchised restaurants.
Provisions and Supplies Nathan’s World Famous Beef Hot Dogs are primarily manufactured by Smithfield Foods, Inc. for sale at retail, for our Branded Product Program and for our restaurant system. Smithfield Foods, Inc. and another hot dog manufacturer supply the hot dogs for our Company-owned and franchised restaurants.
We believe Smithfield Foods, Inc. expects to continue to leverage this relationship with continued full-scale marketing efforts, both inside and outside of stores, highlighted by exciting customer events and brand representation and support of our Nathan’s Famous Hot Dog Eating Contests. We may offer the licensing of other signature products to other qualified manufacturers.
We believe Smithfield Foods, Inc. expects to continue to leverage this relationship with continued full-scale marketing efforts, both inside and outside of stores, highlighted by exciting customer events and brand representation and support of our Nathan’s Famous International Hot Dog Eating Contests. We may offer the licensing of other signature products to other qualified manufacturers.
Our major channels of distribution are as follows: ● Our licensing program contracts with certain third parties to manufacture, distribute, market and sell a broad variety of Nathan’s Famous branded products including our hot dogs, sausages, frozen crinkle-cut French fries and additional products through supermarkets, grocery channels and club stores throughout the United States.
Our major channels of distribution are as follows: ● Our licensing program contracts with certain third parties to manufacture, distribute, market and sell a broad variety of Nathan’s Famous branded products including our hot dogs, frozen crinkle-cut French fries and additional products through supermarkets, grocery channels and club stores throughout the United States.
We do not believe that current geopolitical events (including the Russia-Ukraine conflict and the Israel-Hamas war) have had or will have a serious impact on our operations. We are not aware of any pending franchise legislation in the United States that we believe is likely to significantly affect our operations.
We do not believe that current geopolitical events (including the Russia-Ukraine conflict and the Israel-Hamas conflict) have had or will have a serious impact on our operations. We are not aware of any pending franchise legislation in the United States that we believe is likely to significantly affect our operations.
We continue to believe that as consumers look to brands and products with high standards, and integrity with the superior quality of the food that they purchase, there is great potential to increase our sales by converting existing sales of non-branded products to Nathan’s branded products throughout the foodservice industry.
We continue to believe that as consumers look to brands and products with high standards, and integrity with the superior quality of the food that they purchase, there is potential to increase our sales by converting existing sales of non-branded products to Nathan’s branded products throughout the foodservice industry.
Our current standard Nathan’s Famous franchise agreement provides for, among other things, a one-time $30,000 franchise fee payable upon execution of the agreement, a monthly royalty payment based on 5.5% of restaurant sales and the expenditure of up to 2.0% of restaurant sales on advertising.
Our current standard Nathan’s Famous franchise agreement provides for, among other things, a one-time $30,000 franchise fee payable upon execution of the agreement, a monthly royalty payment based on 5.5% of restaurant sales and the expenditure of up to 2.5% of restaurant sales on advertising.
We believe that the Company’s overall sales and exposure have been complemented by the sales of Nathan’s World Famous Beef Hot Dogs and other Nathan’s products through the publicity generated by our Hot Dog Eating Contests and our affiliation with a number of high profile sports arenas.
We believe that the Company’s overall sales and exposure have been complemented by the sales of Nathan’s World Famous Beef Hot Dogs and other Nathan’s products through the publicity generated by our International Hot Dog Eating Contests and our affiliation with a number of high profile sports arenas.
We believe that as we continue to build brand awareness and expand our reputation for quality and value, we will continue to seek to grow existing markets and expand into new markets. The Nathan’s Famous brand continues to enjoy tremendous exposure and awareness from our Nathan’s Famous Hot Dog Eating Contests.
We believe that as we continue to build brand awareness and expand our reputation for quality and value, we will continue to seek to grow existing markets and expand into new markets. The Nathan’s Famous brand continues to enjoy tremendous exposure and awareness from our Nathan’s Famous International Hot Dog Eating Contests.
Branded Products – We expect to continue the growth of our Branded Products Program through the addition of new accounts and venues. We believe that the flexible design of the Branded Products Program makes it well positioned for sales to all business channels in the broad foodservice industry.
Branded Products – We expect to continue the growth of our Branded Product Program through the addition of new accounts and venues. We believe that the flexible design of the Branded Product Program makes it well positioned for sales to all business channels in the broad foodservice industry.
From our authentic origins on Coney Island to our popular Nathan’s Famous Hot Dog Eating Contest, the Nathan’s Famous brand has become synonymous with premium hot dogs enjoyed throughout the year including cookouts, and July 4 th celebrations.
From our authentic origins on Coney Island to our popular Nathan’s Famous International Hot Dog Eating Contest, the Nathan’s Famous brand has become synonymous with premium hot dogs enjoyed throughout the year including cookouts, and July 4 th celebrations.
We believe that there is potential to increase our sales by converting sales of non-branded products throughout the foodservice industry. High Margin Licensing Revenue Streams We earn stable and high-margin revenue through multiple licensing programs.
We believe that there is potential to increase our sales by converting sales of non-branded products throughout the foodservice industry. 5 High Margin Licensing Revenue Streams We earn stable and high-margin revenue through multiple licensing programs.
Lamb Weston, Inc. exercised its fourth option to extend the license agreement through July 2028, pursuant to which the minimum royalties will increase 5% annually. 12 During fiscal 2024, our licensee, Bran-Zan Holdings, LLC continued to produce and distribute miniature bagel dogs, franks-in-a-blanket, mozzarella sticks, corn dog nuggets, other hors d’oeuvres and bottled mustard through club stores, supermarkets, and other retail food stores.
Lamb Weston, Inc. exercised its fourth option to extend the license agreement through July 2028, pursuant to which the minimum royalties will increase 5% annually. 12 During fiscal 2025, our licensee, Bran-Zan Holdings, LLC continued to produce and distribute miniature bagel dogs, franks-in-a-blanket, mozzarella sticks, corn dog nuggets, other hors d’oeuvres and bottled mustard through club stores, supermarkets, and other retail food stores.
Multi-Channel Business Model Provides Diversified Revenue Streams We believe that our flexible business model enables us to diversify across multiple channels of distribution and customers. Our products are distributed through supermarkets, mass merchandisers, club stores, Company-owned restaurants, franchised restaurants, virtual kitchens, food service distributors and other food service operators such as gas stations, movie theaters and sporting venues.
Multi-Channel Business Model Provides Diversified Revenue Streams We believe that our flexible business model enables us to diversify across multiple channels of distribution and customers. Our products are distributed through supermarkets, mass merchandisers, club stores, Company-owned restaurants, franchised restaurants, virtual kitchens, food service distributors and other food service operators such as gas stations, movie theaters, amusement parks and sporting venues.
There is also active competition for management personnel, as well as for suitable commercial sites for Company-owned or franchised restaurants. We believe that our emphasis on our signature products and the reputation of these products for taste and quality set us apart from our major competitors. Many fast-food companies have adopted “value pricing” and/or deep discount strategies.
There is also active competition for management personnel, as well as for suitable commercial sites for Company-owned or franchised restaurants and qualified franchisees. We believe that our emphasis on our signature products and the reputation of these products for taste and quality set us apart from our major competitors. Many fast-food companies have adopted “value pricing” and/or deep discount strategies.
Some vendors that supply products to the Company and our restaurant system also contribute to the advertising fund based upon purchases made by our franchisees and at Company-owned restaurants.
Some vendors that supply products to the Company and our restaurant system also contribute to the advertising fund based upon purchases made by our franchisees and our Company-owned restaurants.
We believe that the overall exposure of the brand and opportunity for consumers to enjoy the Nathan’s World Famous Beef Hot Dog in their homes helps promote “Nathan’s Famous” restaurant patronage. Royalties earned under the retail agreement, including the foodservice program, were approximately 90% of our fiscal 2024 period license revenues.
We believe that the overall exposure of the brand and opportunity for consumers to enjoy the Nathan’s World Famous Beef Hot Dog in their homes helps promote “Nathan’s Famous” restaurant patronage. Royalties earned under the retail agreement, including the foodservice program, were approximately 90% of our fiscal 2025 period license revenues.
Our products are currently marketed for sale in approximately 79,000 locations, including supermarkets, mass merchandisers and club stores, selected foodservice locations and our Company-owned and franchised restaurants throughout the United States and in eighteen foreign countries. The Company considers itself to be in the foodservice industry and has pursued co-branding initiatives within other foodservice environments.
Our products are currently marketed for sale in approximately 79,000 locations, including supermarkets, mass merchandisers and club stores, selected foodservice locations and our Company-owned and franchised restaurants throughout the United States and in twenty foreign countries. The Company considers itself to be in the foodservice industry and has pursued co-branding initiatives within other foodservice environments.
Alcoholic beverage control regulations relate to numerous aspects of the daily operations of the restaurants, including minimum age of customers and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic beverages. Three of our Company-owned restaurants offer beer or wine coolers for sale.
Alcoholic beverage control regulations relate to numerous aspects of the daily operations of the restaurants, including minimum age of customers and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic beverages. Our four Company-owned restaurants offer beer or wine coolers for sale.
During fiscal 2025, we may seek to further expand our internal marketing resources along with our network of foodservice brokers and distributors. We may attempt to emphasize specific venues as we expand our broker network, focus management and broker responsibilities on a regional basis and expand the use of sales incentive programs.
During fiscal 2026, we may seek to further expand our internal marketing resources along with our network of foodservice brokers and distributors. We may attempt to emphasize specific venues as we expand our broker network, focus management and broker responsibilities on a regional basis and expand the use of sales incentive programs.
These regional contests culminate on July 4 th as the regional champions meet at our flagship restaurant in Coney Island for the national championship. 13 Nathan’s Famous continues to look to sports sponsorships as a strategic marketing opportunity to further brand recognition.
These regional contests culminate on July 4 th as the regional champions meet at our flagship restaurant in Coney Island for the international championship. 13 Nathan’s Famous continues to look to sports sponsorships as a strategic marketing opportunity to further brand recognition.
Nathan’s Famous franchisees are generally required to spend on local marketing activities or contribute to the advertising fund up to 2.0% of restaurant sales for advertising and promotion. Franchisee contributions to the advertising fund for national marketing support are generally based upon the type of restaurant and its location.
Nathan’s Famous franchisees are generally required to spend on local marketing activities or contribute to the advertising fund up to 2.5% of restaurant sales for advertising and promotion. Franchisee contributions to the advertising fund for national marketing support are generally based upon the type of restaurant and its location.
During fiscal 2024, Nathan’s marketing efforts for the Branded Product Program concentrated primarily on participation in national industry trade shows, as well as regional and local distributor trade events. We have also advertised our products in distributor and trade periodicals.
During fiscal 2025, Nathan’s marketing efforts for the Branded Product Program concentrated primarily on participation in national industry trade shows, as well as regional and local distributor trade events. We have also advertised our products in distributor and trade periodicals.
Unlike our licensing and franchise programs, we do not generate revenue from royalties, but rather by selling our hot dog products either directly to foodservice operators or to various foodservice distributors who resell the products to foodservice accounts. 4 ● Operating quick-service restaurants featuring Nathan’s World Famous Beef Hot Dogs, crinkle-cut French fries, and a variety of other menu offerings, which operate under the name “Nathan’s Famous,” the name first used at our original Coney Island restaurant which opened in 1916. ● Our franchised restaurant operations are comprised predominately of our Nathan’s Famous concept, which features a menu consisting of Nathan’s World Famous Beef Hot Dogs, crinkle-cut French fries and beverages as well as other items.
Unlike our licensing and franchise programs, we do not generate revenue from royalties, but rather by selling our hot dog products either directly to foodservice operators or to various foodservice distributors who resell the products to foodservice accounts. 4 ● Operating quick-service restaurants featuring Nathan’s World Famous Beef Hot Dogs, crinkle-cut French fries, and a variety of other menu offerings, which operate under the name “Nathan’s Famous,” the name first used at our original Coney Island restaurant which opened in 1916. ● Our franchised restaurant operations predominately feature a menu consisting of Nathan’s World Famous Beef Hot Dogs, crinkle-cut French fries and beverages as well as other items.
We may be subject to governmental imposed restrictions on our restaurant operations to reduce the spread of viruses, such as those experienced as a result of the spread of COVID-19.
We may be subject to governmental imposed restrictions on our restaurant operations to reduce the spread of viruses, such as those previously experienced as a result of the COVID-19 pandemic.
The Branded Products Program also distributes product in professional sports arenas with Nathan’s World Famous Beef Hot Dogs being served in stadiums and arenas that host the New York Yankees, New York Mets, Miami Marlins, Tampa Bay Rays, Brooklyn Nets, Dallas Cowboys, and Green Bay Packers.
The Branded Product Program also distributes product in professional sports arenas with Nathan’s World Famous Beef Hot Dogs being served in stadiums and arenas that host the New York Yankees, New York Mets, Tampa Bay Rays, Brooklyn Nets, Dallas Cowboys, and Green Bay Packers.
We negotiate directly with our suppliers on behalf of the entire system for all primary food ingredients and beverage products sold in the restaurants in an effort to ensure adequate supply of high-quality items at competitive prices.
We approve all products and product specifications. We negotiate directly with our suppliers on behalf of the entire system for all primary food ingredients and beverage products sold in the restaurants in an effort to ensure adequate supply of high-quality items at competitive prices.
We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2025. 11 As of March 31, 2024, the Branded Product Program distributed product in all 50 states, the District of Columbia, Puerto Rico, Canada, the U.S. Virgin Islands, Guam and Mexico.
We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2026. 11 As of March 30, 2025, the Branded Product Program distributed product in all 50 states, the District of Columbia, Puerto Rico, Canada, the U.S. Virgin Islands, Guam and Mexico.
We license the manufacture of the proprietary spices which are used to produce Nathan’s World Famous Beef Hot Dogs to Saratoga Specialties, Inc., a wholly-owned subsidiary of Solina. During fiscal 2024 and 2023, we earned royalties of $1,371,000 and $1,298,000, respectively, from this license. Through this agreement, we control the manufacture of all “Nathan’s Famous” branded hot dogs.
We license the manufacture of the proprietary spices which are used to produce Nathan’s World Famous Beef Hot Dogs to Saratoga Specialties, Inc., a wholly-owned subsidiary of Solina. During fiscal 2025 and 2024, we earned royalties of $1,559,000 and $1,371,000, respectively, from this license. Through this agreement, we control the manufacture of all “Nathan’s Famous” branded hot dogs.
We also provide annual training on sexual harassment. In addition, we maintain an anonymous hotline, which includes an 800 number where our employees can report theft or fraudulent behavior. Compensation and Benefits The Company is committed to providing market-competitive and equitable pay and benefits to attract and retain great talent.
We also provide annual training on sexual harassment. In addition, we maintain an anonymous hotline, which includes an 800 number where our employees can report theft or fraudulent behavior. Compensation and Benefits The Company is committed to providing market-competitive and equitable pay and benefits to attract and retain great talent regardless of gender or ethnicity.
Our Coney Island flagship location has been open for over 100 years and is the home of the annual Nathan’s Hot Dog Eating Contest, which has been broadcast on ESPN each 4 th of July since 2004 and achieved more than one million viewers in fiscal 2024. 7 We continue to focus on digital and social media initiatives, as well as direct mail, to enhance the customer experience; to increase customer traffic; and to promote off-premise capabilities.
Our Coney Island flagship location has been open for over 100 years and is the home of the annual Nathan’s International Hot Dog Eating Contest, which has been broadcast on ESPN each 4 th of July since 2004 and achieved more than one million viewers in fiscal 2025. 7 We continue to focus on digital and social media initiatives, as well as direct mail and point of purchase materials to enhance the customer experience; to increase customer traffic; and to promote off-premise capabilities.
The difference, if any, between 2.0% and the contribution to the advertising fund are to be expended on local programs approved by us as to form, content and method of dissemination. Certain franchisees, including those operating pursuant to our Branded Menu Program were not obligated to contribute to the advertising fund during fiscal 2024.
The difference, if any, between 2.5% and the contribution to the advertising fund are to be expended on local programs approved by us as to form, content and method of dissemination. Certain franchisees, including those operating pursuant to our Branded Menu Program were not obligated to contribute to the advertising fund during fiscal 2025.
Many of these settings may also be appropriate for expanding our Branded Menu Program or Branded Product Program. All of these units feature the Nathan’s Famous logo and utilize a contemporary design. Nathan ’ s Standard Franchise Program Franchisees are required to execute a standard franchise agreement prior to opening each Nathan’s Famous location.
Many of these settings may also be appropriate for expanding our Branded Menu Program or Branded Product Program. All of these units feature Nathan’s Famous branding and a contemporary design. Nathan ’ s Standard Franchise Program Franchisees are required to execute a standard franchise agreement prior to opening each Nathan’s Famous location.
Improve Company-owned restaurant profitability – In fiscal 2023 and fiscal 2024, our Company-owned restaurants were impacted by commodity and labor inflation. Additionally, on January 1, 2024, the minimum hourly wage in New York City, Long Island and Westchester increased from $15.00 to $16.00 impacting all of our Company-owned restaurants.
Improve Company-owned restaurant profitability – In fiscal 2024 and fiscal 2025, our Company-owned restaurants were impacted by commodity and labor inflation. Additionally, on January 1, 2025, the minimum hourly wage in New York City, Long Island and Westchester increased from $16.00 to $16.50 impacting all of our Company-owned restaurants.
As of March 31, 2024, packaged Nathan’s World Famous Beef Hot Dogs continued to be sold in supermarkets, mass merchandisers and club stores including Walmart, Kroger, Ahold, Publix, Albertsons, Safeway, ShopRite, Target, Sam’s Club, Costco and BJ’s Wholesale Club located in all 50 states.
As of March 30, 2025, packaged Nathan’s World Famous Beef Hot Dogs continued to be sold in supermarkets, mass merchandisers and club stores including Walmart, Kroger, Ahold, Publix, Albertsons, Safeway, ShopRite, Target, Sam’s Club, Costco and BJ’s Wholesale Club located in all 50 states.
As of March 31, 2024, packaged Nathan’s World Famous Beef Hot Dogs continued to be sold in supermarkets, mass merchandisers and club stores including Walmart, Kroger, Ahold, Publix, Albertsons, Safeway, ShopRite, Target, Sam’s Club, Costco and BJ’s Wholesale Club located in all 50 states.
As of March 30, 2025, packaged Nathan’s World Famous Beef Hot Dogs continued to be sold in supermarkets, mass merchandisers and club stores including Walmart, Kroger, Ahold, Publix, Albertsons, Safeway, ShopRite, Target, Sam’s Club, Costco and BJ’s Wholesale Club located in all 50 states.
We regularly monitor franchisee operations and inspect restaurants. Franchisees are required to furnish us with monthly sales or operating reports which assist us in monitoring the franchisee’s compliance with its franchise agreement. We make both announced and unannounced inspections of restaurants to ensure that our practices and procedures are followed.
We regularly monitor franchisee operations and inspect restaurants. Franchisees are required to furnish us with monthly sales or operating reports which assist us in monitoring the franchisee’s compliance with its franchise agreement. We make both announced and unannounced inspections of restaurants to review operations, including quality, service and cleanliness and to ensure that our practices and procedures are followed.
We believe that these initiatives play an important role in creating a more seamless and more efficient customer experience and meeting consumer expectations for speed and convenience. Franchise Operations At March 31, 2024, our franchise system, including our Branded Menu Program, consisted of 230 locations operating in 17 states and 13 foreign countries.
We believe that these initiatives play an important role in creating a more seamless and more efficient customer experience and meeting consumer expectations for speed and convenience. Franchise Operations At March 30, 2025, our franchise system, including our Branded Menu Program, consisted of 230 locations operating in 17 states and 12 foreign countries.
During the fiscal 2024 period, no single franchisee accounted for over 10% of our consolidated revenue. At March 31, 2024, Applegreen USA Welcome Centres, LLC operated seven franchised locations within highway travel plazas and HMS Host operated four franchised locations, including three units at airports, and one unit within a mall.
During the fiscal 2025 period, no single franchisee accounted for over 10% of our consolidated revenue. At March 30, 2025, Applegreen USA Welcome Centers, LLC operated seven franchised locations within highway travel plazas and HMS Host operated four franchised locations, including three units at airports, and one unit within a mall.
We carry liquor liability coverage as part of our existing comprehensive general liability insurance and have never been named as a defendant in a lawsuit involving “dram-shop” statutes.
We carry liquor liability coverage as part of our existing comprehensive general liability insurance to mitigate this risk and have never been named as a defendant in a lawsuit involving “dram-shop” statutes.
Arthur Treacher’s main product is its “Original Fish-n-Chips,” consisting of fish fillets coated with a special batter prepared under a proprietary formula, deep-fried golden brown, and served with English-style chips and corn meal “hush puppies.” As of March 31, 2024, Arthur Treacher’s, as a co-brand, was included within 23 Nathan’s Famous restaurants. Additionally, there are eight Arthur Treacher’s BMP locations.
Arthur Treacher’s main product is its “Original Fish-n-Chips,” consisting of fish fillets coated with a special batter prepared under a proprietary formula, deep-fried golden brown, and served with English-style chips and corn meal “hush puppies.” As of March 30, 2025, Arthur Treacher’s, as a co-brand, was included within 27 Nathan’s Famous restaurants. Additionally, there are four Arthur Treacher’s BMP locations.
Pursuant to this arrangement, we earned royalties of $1,611,000 and $1,310,000 during the fiscal 2024 and 2023 periods, respectively. The majority of these royalties were earned from one company.
Pursuant to this arrangement, we earned royalties of $1,720,000 and $1,611,000 during the fiscal 2025 and 2024 periods, respectively. The majority of these royalties were earned from one company.
We offer various training courses for management personnel of Company-owned and franchised restaurants. A restaurant manager from each restaurant must successfully complete our mandated management training program. We also offer additional operations and general management training courses for all restaurant managers and other managers with supervisory responsibilities.
We do not employ personnel on behalf of franchisees. We offer various training courses for management personnel of Company-owned and franchised restaurants. A restaurant manager from each restaurant must successfully complete our mandated management training program. We also offer additional operations and general management training courses for all restaurant managers and other managers with supervisory responsibilities.
In fiscal 2024, we continued to experience inflationary pressures on commodity prices, including beef and beef trimmings. Our average cost of hot dogs during fiscal 2024 was approximately 10% higher than during fiscal 2023. Our average cost of hot dogs during fiscal 2023 was approximately 1.4% higher than fiscal 2022.
In fiscal 2025, we continued to experience inflationary pressures on commodity prices, including beef and beef trimmings. Our average cost of hot dogs during fiscal 2025 was approximately 7% higher than during fiscal 2024. Our average cost of hot dogs during fiscal 2024 was approximately 10% higher than fiscal 2023.
The following table is a summary of our international operations for the fiscal years ended March 31, 2024 and March 26, 2023: See Item 1A-“Risk Factors.” March 31, March 26, 2024 2023 Total revenue $ 5,405,000 $ 5,898,000 Gross profit (a) $ 1,308,000 $ 1,387,000 (a) Gross profit represents the difference between revenue and cost of sales. 10 Location Summary The following table shows the number of our Company-owned and franchised restaurants in operation at March 31, 2024 and their geographical distribution: Domestic Locations Company Franchise (1) Total (1) Connecticut - 3 3 Florida - 21 21 Georgia - 4 4 Kentucky - 2 2 Maryland - 1 1 Massachusetts - 4 4 Missouri - 1 1 Nevada - 7 7 New Jersey - 22 22 New York 4 63 67 North Carolina - 4 4 Ohio - 2 2 Pennsylvania - 10 10 Rhode Island - 2 2 South Carolina - 3 3 Texas - 2 2 Virginia - 2 2 Domestic Subtotal 4 153 157 International Locations Company Franchise (1) Total (1) Brazil - 3 3 Dominican Republic - 6 6 Egypt - 3 3 France - 8 8 Kazakhstan - 3 3 Kingdom of Saudi Arabia - 10 10 Mexico - 2 2 Panama - 4 4 Philippines - 4 4 Spain - 1 1 Ukraine - 27 27 United Arab Emirates - 4 4 United Kingdom - 2 2 International Subtotal - 77 77 Grand Total 4 230 234 (1) Units operating pursuant to our Branded Product Program and our virtual kitchens are excluded.
The following table is a summary of our international operations for the fiscal years ended March 30, 2025 and March 31, 2024: See Item 1A-“Risk Factors.” March 30, March 31, 2025 2024 Total revenue $ 3,864,000 $ 5,405,000 Gross profit (a) $ 1,136,000 $ 1,308,000 (a) Gross profit represents the difference between revenue and cost of sales. 10 Location Summary The following table shows the number of our Company-owned and franchised restaurants in operation at March 30, 2025 and their geographical distribution: Domestic Locations Company Franchise (1) Total (1) Connecticut - 3 3 Florida - 21 21 Georgia - 3 3 Kentucky - 1 1 Maryland - 1 1 Massachusetts - 4 4 Missouri - 1 1 Nevada - 7 7 New Jersey - 21 21 New York 4 75 79 North Carolina - 4 4 Ohio - 1 1 Pennsylvania - 8 8 Rhode Island - 2 2 South Carolina - 4 4 Texas - 1 1 Virginia - 1 1 Domestic Subtotal 4 158 162 International Locations Company Franchise (1) Total (1) Brazil - 8 8 Dominican Republic - 6 6 Egypt - 3 3 France - 8 8 Kazakhstan - 3 3 Mexico - 2 2 Panama - 4 4 Philippines - 4 4 Spain - 1 1 Ukraine (2) - 27 27 United Arab Emirates - 4 4 United Kingdom - 2 2 International Subtotal - 72 72 Grand Total 4 230 234 (1) Units operating pursuant to our Branded Product Program and our virtual kitchens are excluded.
We continue to focus on managing our expenses in the operation of our Company-owned restaurants, with a particular emphasis on cost of goods sold, including food costs, paper costs and labor costs while not sacrificing on overall quality and service that our customers expect. We continue to explore opportunities and strategies to help mitigate the impact on our operations.
We continue to focus on managing our expenses in the operation of our Company-owned restaurants, with a particular emphasis on cost of goods sold, including food costs, paper costs and labor costs while not sacrificing on overall quality and service that our customers expect.
During fiscal 2024 and 2023, we earned royalties of $296,000 and $340,000, respectively, under this agreement. During fiscal 2024, our licensee, Hermann Pickle Packers, Inc. continued to produce and distribute Nathan’s Famous pickles. During fiscal 2024 and 2023, we earned royalties of $319,000 and $318,000, respectively, under this agreement.
During fiscal 2025 and 2024, we earned royalties of $350,000 and $296,000, respectively, under this agreement. During fiscal 2025, our licensee, Hermann Pickle Packers, Inc. continued to produce and distribute Nathan’s Famous pickles. During fiscal 2025 and 2024, we earned royalties of $271,000 and $319,000, respectively, under this agreement.
We currently utilize a cooperative distribution system pursuant to an agreement with UniPro Foodservice, Inc., National Distribution Alliance (formerly the Multi-Unit Group), which is comprised of institutional food and non-food distributors organized to procure, distribute, and market food service and non-food merchandise for the distribution needs of our domestic restaurant system.
We currently utilize a cooperative distribution system pursuant to an agreement with National Distribution Alliance, a UniPro Solutions Company, which is comprised of institutional food and non-food distributors organized to procure, distribute, and market food service and non-food merchandise for the distribution needs of our domestic restaurant system.
Pursuant to this agreement, Nathan’s earned royalties of approximately $28,456,000 in fiscal 2024 and $28,688,000 in fiscal 2023 representing approximately 21% and 22% of total revenues, respectively.
Pursuant to this agreement, Nathan’s earned royalties of approximately $31,869,000 in fiscal 2025 and $28,456,000 in fiscal 2024 representing approximately 22% and 21% of total revenues, respectively.
We believe that carts, kiosks, modular units and food court designs are particularly well-suited for placement in non-traditional sites, such as airports, travel plazas, stadiums, schools, convenience stores, entertainment facilities, military facilities, business and industry foodservice, within larger retail operations and other captive markets.
Our food trucks may carry the full Nathan’s Famous menu. 8 We believe that carts, kiosks, modular units and food court designs are particularly well-suited for placement in non-traditional sites, such as airports, travel plazas, stadiums, schools, convenience stores, entertainment facilities, military facilities, business and industry foodservice, within larger retail operations and other captive markets.
Pursuant to the Branded Product Program, Nathan’s World Famous Beef Hot Dogs are being offered in national restaurant chains such as Auntie Anne’s, Hot Dog On A Stick, Johnny Rockets and Lazy Dog; national movie theater chains such as Regal Entertainment, National Amusements and Cinemex in Mexico; amusement parks such as Universal Studios; casino hotels such as Foxwoods Casino in Connecticut; convenience store chains such as RaceTrac; and golf courses and country clubs.
Pursuant to the Branded Product Program, Nathan’s World Famous Beef Hot Dogs are being offered in national restaurant chains such as Auntie Anne’s, Johnny Rockets, Cheesecake Factory, Beef ‘O’ Brady’s and Lazy Dog; national movie theater chains such as Regal Entertainment and National Amusements; amusement parks such as Universal Studios, Disneyland California and Herschend Family Entertainment; casino hotels such as Foxwoods Casino in Connecticut; convenience store chains such as RaceTrac; and golf courses and country clubs.
Our franchise system includes among its franchisees such well-known companies as Applegreen USA Welcome Centres, LLC, HMS Host, Areas USA, National Amusements, Inc., Hershey Entertainment & Resorts Company, and Bruster’s Real Ice Cream.
Our franchise system includes among its franchisees such well-known companies as Applegreen USA Welcome Centers, LLC, HMS Host, Areas USA, National Amusements, Inc., Hershey Entertainment & Resorts Company, Fifth Avenue Restaurant Group, Concessions International, Compass Group and Bruster’s Real Ice Cream.
All of our licensing agreements combined produced $33,581,000 and $33,455,000 of high margin revenue for fiscal 2024 and 2023, respectively. 5 Business Strategies Our primary strategies include the following: Leverage Nathan ’ s Famous brand and iconic products to grow sales – We believe that our brand is widely recognized by virtue of our long history and broad geographic footprint, which allows us to enjoy high consumer awareness in the United States and abroad and allows us the opportunity to grow in markets and channels where the brand is known but has not yet achieved optimal market penetration.
Business Strategies Our primary strategies include the following: Leverage Nathan ’ s Famous brand and iconic products to grow sales – We believe that our brand is widely recognized by virtue of our long history and broad geographic footprint, which allows us to enjoy high consumer awareness in the United States and abroad and allows us the opportunity to grow in markets and channels where the brand is known but has not yet achieved optimal market penetration.
Additionally, 23 mobile carts were registered to operate in New York, NY. Twelve Bruster’s Real Ice Cream shops were selling Nathan’s products under our Branded Menu Program. During the fiscal 2024 period, 17 franchised locations opened, including seven Branded Menu Program locations. Additionally, 19 franchised locations closed, including 11 Branded Menu Program locations.
Additionally, 37 mobile carts were registered to operate in New York, NY. Nine Bruster’s Real Ice Cream shops were selling Nathan’s products under our Branded Menu Program. During the fiscal 2025 period, 25 franchised locations opened, including 16 Branded Menu Program locations. Additionally, 25 franchised locations closed, including 11 Branded Menu Program locations.
During fiscal 2024, our licensee, Lamb Weston Holdings, Inc., continued to produce and distribute Nathan’s Famous frozen crinkle-cut French fries and onion rings. These products were distributed within 40 states, primarily on the East Coast, Southwest and West Coast during fiscal 2024. During fiscal 2024 and 2023, we earned royalties of $1,528,000 and $1,501,000, respectively, under this agreement.
During fiscal 2025, our licensee, Lamb Weston Holdings, Inc., continued to produce and distribute Nathan’s Famous frozen crinkle-cut French fries and onion rings. These products were distributed within 41 states during fiscal 2025. During fiscal 2025 and 2024, we earned royalties of $1,649,000 and $1,528,000, respectively, under this agreement.
Individual Nathan’s restaurants supplement their core menu of Nathan’s World Famous Beef Hot Dogs, crinkle-cut French fries and beverages with a variety of other quality menu choices including: our fresh angus hamburgers and our hand-dipped chicken.
We believe the majority of sales in our Company-owned restaurants consist of Nathan’s World Famous Beef Hot Dogs, crinkle-cut French fries and beverages. Nathan’s restaurants supplement their core menu items with a variety of other quality menu choices including our fresh angus hamburgers and our hand-dipped chicken.
Smithfield Foods, Inc. brings superior sales and marketing resources to our brand through its national scale, broad distribution platform, strong retail relationships and research and development infrastructure capable of developing and introducing new products.
Retail licensing – We expect that our retail licensing program may continue to grow, centered around our licensing program with Smithfield Foods, Inc. Smithfield Foods, Inc. brings superior sales and marketing resources to our brand through its national scale, broad distribution platform, strong retail relationships and research and development infrastructure capable of developing and introducing new products.
Our smaller units may not have customer seating areas, although they may often share seating areas with other fast food or quick service outlets in food court settings. Other units generally provide seating for 45 to 125 customers. Carts, kiosks and modular units generally carry only the core menu. Our food trucks may carry the full Nathan’s Famous menu.
We have also developed various kiosks, mobile food carts and trucks, and modular units. Our smaller units may not have customer seating areas, although they may often share seating areas with other fast food or quick service outlets in food court settings. Other units generally provide seating for 45 to 125 customers.
Saratoga Specialties, Inc,. a wholly-owned subsidiary of Solina, produces Nathan’s proprietary spice formulations, and we have, in the past, engaged Newly Weds Foods, Inc. as an alternative source of supply. Our frozen crinkle-cut French fries have been produced primarily by Lamb Weston, Inc.
Saratoga Specialties, Inc,. a wholly-owned subsidiary of Solina, produces Nathan’s proprietary spice formulations. In the past, we engaged Newly Weds Foods, Inc. as an alternative source of supply. Our frozen crinkle-cut French fries have been produced primarily by Lamb Weston, Inc. Most other Company provisions are purchased from multiple sources to prevent disruption in supply and to obtain competitive prices.
International Development As of March 31, 2024, Nathan’s Famous franchisees operated 77 locations in 13 foreign countries. Through separate licensed manufacturing agreements, Nathan’s World Famous Beef Hot Dogs are currently manufactured in Brazil, Germany and the United Arab Emirates. We continue to pursue international expansion opportunities.
International Development As of March 30, 2025, Nathan’s Famous franchisees operated 72 locations in 12 foreign countries. Through separate licensed manufacturing agreements, Nathan’s World Famous Beef Hot Dogs are currently manufactured in Brazil, Germany, Egypt and the United Arab Emirates. We continue to pursue international expansion opportunities. During fiscal 2025, we opened five franchised locations in Brazil.
Our branded products are delivered to our ultimate customers throughout the country by numerous distributors, including US Foodservice, Inc., SYSCO Corporation, Performance Food Group Company, McLane Company, Inc. and DOT Foods.
The strategic distribution partners under this agreement include: DiCarlo Distributors, Inc., Tapia Brothers Company and Feesers, Inc. Our branded products are delivered to our ultimate customers throughout the country by numerous distributors, including US Foodservice, Inc., SYSCO Corporation, Performance Food Group Company, McLane Company, Inc. and DOT Foods.
During fiscal 2024, we opened franchised locations in Egypt, Mexico and the United Arab Emirates. We may seek to continue granting exclusive territorial rights for franchising and for the manufacturing and distribution rights in foreign countries, and we expect to require that an exclusivity fee be conveyed for these rights.
We may seek to continue granting exclusive territorial rights for franchising and for the manufacturing and distribution rights in foreign countries, and we expect to require that an exclusivity fee be conveyed for these rights.
In most cases, we compete against other nationally recognized brands that may have significantly greater resources than those at our disposal. 18 Segment Reporting The Company is comprised of the following segments: (1) Branded Product Program, (2) Product licensing, and (3) Restaurant operations.
In most cases, we compete against other nationally recognized brands that may have significantly greater resources than those at our disposal. 18 Segment Reporting We aggregate our reportable segments for purposes of discussion in this report into three main segments: (1) Branded Product Program, (2) Product licensing, and (3) Restaurant operations.
We believe that future revenues and profits will continue to be highest during our first two fiscal quarters, with the fourth fiscal quarter representing the slowest period.
We believe that future revenues and profits will continue to be highest during our first two fiscal quarters, with the fourth fiscal quarter representing the slowest period. Working capital requirements may vary throughout the year to support these seasonal trends.
The FTC’s “Trade Regulation Rule Concerning Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures” (the “FTC Franchise Rule”) requires us to disclose certain information to prospective franchisees. Fifteen states, including New York, also require similar disclosure.
We are also subject to a number of state laws which regulate substantive aspects of the franchisor-franchisee relationship. The FTC’s “Trade Regulation Rule Concerning Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures” (the “FTC Franchise Rule”) requires us to disclose certain information to prospective franchisees. Fifteen states, including New York, also require similar disclosure.
Historically, sales from our Company-owned restaurants, principally at Coney Island, and franchised restaurants and virtual kitchens from which franchise royalties are earned and the Company’s earnings have been highest during our first two fiscal quarters, with the fourth fiscal quarter typically representing the slowest period.
Seasonality Our routine business pattern is affected by seasonal fluctuations, including the effects of weather and economic conditions. Historically, sales from our Company-owned restaurants, principally at Coney Island, and franchised restaurants from which franchise royalties are earned and the Company’s earnings have been highest during our first two fiscal quarters, with the fourth fiscal quarter typically representing the slowest period.
Our current professional sports sponsorships include: ● Baseball: Yankee Stadium – New York Yankees; Citi Field – New York Mets; LoanDepot Park – Miami Marlins; Tropicana Field – Tampa Bay Rays; and ● Basketball: The Barclays Center – Brooklyn Nets; and ● Football: AT&T Stadium – Dallas Cowboys; Lambeau Field – Green Bay Packers.
Our current professional sports sponsorships include: ● Baseball: Yankee Stadium – New York Yankees; Citi Field – New York Mets; Tropicana Field – Tampa Bay Rays (temporarily relocated to Steinbrenner Field due to damage sustained by Hurricane Milton in October 2024); and ● Basketball: The Barclays Center – Brooklyn Nets; and ● Football: AT&T Stadium – Dallas Cowboys; Lambeau Field – Green Bay Packers.
As of March 31, 2024, approximately 49% of our employees were female and approximately 80% of our employee population were comprised of racial and ethnic minorities. We generally employ approximately 270-300 seasonal employees during the spring and summer months.
As of March 30, 2025, approximately 44% of our employees were female and approximately 68% of our employee population were comprised of racial and ethnic minorities. We generally employ approximately 240-250 seasonal employees during the spring and summer months.
We continue to upgrade our social media platforms by enhancing and expanding our use of Facebook, Instagram and X (formerly known as Twitter). 14 Human Capital As of March 31, 2024, the Company employed 147 people, 32 of whom were corporate management and administrative employees, 21 of whom were restaurant managers and 94 of whom were hourly full-time and part-time foodservice employees.
We continue to expand our use of Facebook, Instagram and X (formerly known as Twitter). 14 Human Capital As of March 30, 2025, the Company employed 131 people, 30 of whom were corporate management and administrative employees, 18 of whom were restaurant managers and 83 of whom were hourly full-time and part-time foodservice employees.
We earn royalties on Nathan’s products purchased from Nathan’s approved distributors by our BMP franchise operators. We also own the Arthur Treacher’s Fish & Chips brand and trademarks. We use the Arthur Treacher’s Fish & Chips brand, products and trademarks as a branded seafood menu-line extension for inclusion in certain Nathan’s Famous restaurants.
We earn royalties on Nathan’s products purchased from Nathan’s approved distributors by our BMP franchise operators. We also own the Arthur Treacher’s Fish & Chips brand and trademarks.
The objective of our Branded Product Program has historically been to seek to provide our foodservice operator customers with value-added, premium quality products supported with differentiated point of sale materials and other forms of operational support.
The social media objectives include increasing our reach among our core customer base, while building brand awareness amongst the engaged younger generation. The objective of our Branded Product Program has historically been to seek to provide our foodservice operator customers with value-added, premium quality products supported with differentiated point of sale materials and other forms of operational support.
We have historically used the Arthur Treacher’s Fish & Chips brand, products and trademarks as a branded seafood menu-line extension for inclusion in certain Nathan’s Famous restaurants.
We use the Arthur Treacher’s Fish & Chips brand, products and trademarks as a branded seafood menu-line extension for inclusion in certain Nathan’s Famous restaurants, as well as online platforms for third party delivery, such as UberEats, GrubHub and DoorDash.
We are also committed to providing a safe and healthy environment for our restaurant patrons. We remain focused on quality and cleanliness by reviewing cleaning procedures and maintaining an adequate supply of cleaning materials. We promote a culture of safety awareness and strive to provide an environment that is free of hazards and prevents accidents or injuries.
We are also committed to providing a safe and healthy environment for our restaurant patrons. We remain focused on quality and cleanliness by reviewing cleaning procedures at our Company-owned restaurants and maintaining an adequate supply of cleaning materials.
Through licensing programs with such companies as Smithfield Foods, Inc., and Lamb Weston, Inc., over fifteen Nathan’s Famous branded SKUs are sold through grocery retail channels.
Through licensing programs with such companies as Smithfield Foods, Inc., and Lamb Weston, Inc., over fifteen Nathan’s Famous branded SKUs are sold through grocery retail channels. All of our licensing agreements combined produced $37,418,000 and $33,581,000 of high margin revenue for fiscal 2025 and 2024, respectively.
Nathan’s markets our own form of “value pricing,” selling combinations of different menu items for a total price lower than the usual sale price of the individual items and other forms of price sensitive promotions. We also compete with many restaurant franchisors and other business concepts for the sale of franchises to qualified and financially capable franchisees.
Nathan’s markets our own form of “value pricing,” selling combinations of different menu items for a total price lower than the usual sale price of the individual items and other forms of price sensitive promotions. Continued price discounting and the emphasis on value meals may adversely impact the Company’s business.
In fiscal 2024, Nathan’s marketing efforts were largely focused on the annual July 4 th Hot Dog Eating Contest and its sports sponsorships, as well as digital and social media to drive customers directly to the online menus of our franchisees. This included geo-targeted efforts and direct mail to generate awareness and sales through third party delivery platforms.
In fiscal 2025, Nathan’s marketing efforts were largely focused on the annual July 4 th International Hot Dog Eating Contest and its sports sponsorships, as well as digital and social media to promote the brand, to drive awareness of menu offerings, and to generate traffic.
Nathan’s World Famous Beef Hot Dogs are flavored with our secret blend of spices created by Ida Handwerker in 1916, which historically have distinguished Nathan’s World Famous Beef Hot Dogs. Our hot dogs are prepared and served in accordance with procedures which have not varied significantly since our inception over 100 years ago in our Company-owned and franchised restaurants.
Nathan’s World Famous Beef Hot Dogs are flavored with our secret blend of spices created by Ida Handwerker in 1916, which historically have distinguished Nathan’s World Famous Beef Hot Dogs from other hot dogs.
Branded Product Program Our Branded Product Program contributed $86,489,000 and $78,884,000 in revenue in fiscal 2024 and fiscal 2023, respectively. The total volume of hot dogs sold in the Branded Product Program achieved its highest historic levels in fiscal 2024 and increased by approximately 2% over fiscal 2023.
(2) Two locations are temporarily closed due to construction. Branded Product Program Our Branded Product Program contributed $91,828,000 and $86,489,000 in revenue in fiscal 2025 and fiscal 2024, respectively. The total volume of hot dogs sold in the Branded Product Program achieved its highest levels in fiscal 2025 topping the previous volume records established in fiscal 2024.
The non-core menu items at the Company-owned restaurants, tend to have lower margins than the core menu. Our Company-owned restaurants contributed $12,103,000 and $12,161,000 in revenue for fiscal 2024 and fiscal 2023, respectively. Customer traffic at our Company-owned restaurants during the fiscal 2024 period decreased by approximately 2% over the fiscal 2023 period.
Our Company-owned restaurants contributed $12,714,000 and $12,103,000 in revenue for fiscal 2025 and fiscal 2024, respectively. The average check at our Company-owned restaurants during the fiscal 2025 period increased by approximately 10% over the fiscal 2024 period.
It also included 196 virtual kitchens located in 17 states and 6 foreign countries. Our franchise operations contributed $4,356,000 and $4,292,000 in revenue for fiscal 2024 and fiscal 2023, respectively. We experienced higher sales across our franchise system including airport locations, highway travel plazas and movie theaters.
It also included 143 virtual kitchens located in 25 states and 4 foreign countries. Our franchise operations contributed $4,148,000 and $4,356,000 in revenue for fiscal 2025 and fiscal 2024, respectively.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSpecifically, our high level of indebtedness could have important potential consequences, including, but not limited to: ● increasing our vulnerability to, and reducing our flexibility to plan for and respond to, adverse economic and industry conditions and changes in our business and the competitive environment; ● make it more difficult for us to satisfy our other financial obligations, including our obligations relating to the Notes; ● requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, dividends, share repurchases or other corporate purposes; 33 ● make it more difficult for us to satisfy our obligations to the holders of the Notes, resulting in possible defaults on and acceleration of such indebtedness; ● limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; ● place us at a competitive disadvantage compared to our competitors that have less debt; ● increasing our vulnerability to a downgrade of our credit rating, which could adversely affect our cost of funds, liquidity, value and trading of the Notes and access to capital markets; ● restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; ● limit our ability to borrow additional funds or increase our cost of borrowing; ● placing us at a disadvantage compared to other less leveraged competitors or competitors with comparable debt at more favorable interest rates; ● increasing our exposure to the risk of increased interest rates insofar as current and future borrowings are subject to variable rates of interest; ● making it more difficult for us to repay, refinance or satisfy our obligations relating to the Notes; ● limiting our ability to borrow additional funds in the future and increasing the cost of any such borrowing; ● imposing restrictive covenants on our operations as the result of the terms of our indebtedness, which, if not complied with, could result in an event of default, which in turn, if not cured or waived, could result in the acceleration of our debts, including the Notes.
Biggest changeIf new debt is added to our existing debt levels, the related risks that we face would intensify and we may not be able to meet all our debt obligations, including the repayment of the Credit Agreement which matures in July 2029. 33 Specifically, our high level of indebtedness could have important potential consequences, including, but not limited to: ● increasing our vulnerability to, and reducing our flexibility to plan for and respond to, adverse economic and industry conditions and changes in our business and the competitive environment; ● make it more difficult for us to satisfy our other financial obligations; ● requiring the dedication of a substantial portion of our cash flow from operations to the payment of principal on, and interest on, indebtedness, which amount could increase if prevailing interest rates rise, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, acquisitions, dividends, share repurchases or other corporate purposes; ● place us at a competitive disadvantage compared to our competitors that have less debt or competitors with comparable debt levels at more favorable interest rates; ● restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; ● increasing our exposure to the risk of increased interest rates insofar as current and future borrowings are subject to variable rates of interest; ● making it more difficult for us to repay, refinance or satisfy our obligations with respect to our debt; ● limiting our ability to borrow additional funds in the future and increasing the cost of any such borrowing; ● imposing restrictive covenants on our operations as the result of the terms of our indebtedness, which, if not complied with, could result in an event of default, which in turn, if not cured or waived, could result in the acceleration of our debt.
Our operations are influenced by adverse weather conditions. Weather, which is unpredictable, can impact our sales. Harsh weather conditions that keep customers from dining out result in lost opportunities for our Company-owned and our franchisees’ restaurants.
Our operations are influenced by adverse weather conditions. Weather, which is unpredictable, can impact our sales. Harsh weather conditions that keep customers from dining out result in lost opportunities for our Company-owned restaurants and our franchisees’ restaurants.
In the event that we are unable to find one or more alternative suppliers of hot dogs or French fries on a timely basis, there could be a disruption in the supply of product to our Company-owned restaurants, franchised restaurants and Branded Product Program accounts, which would damage our business, our franchisees and our Branded Product Program customers and, in turn, negatively impact our financial results.
In the event that we are unable to find one or more alternative suppliers of hot dogs or French fries on a timely basis, there could be a disruption in the supply of product to our Company-owned restaurants, franchised restaurants and Branded Product Program customers, which would damage our business, our franchisees and our Branded Product Program customers and, in turn, negatively impact our financial results.
The trading price of our common stock might also decline in reaction to events that affect other companies in our industry or related industries even if these events do not directly affect us. In the past, following periods of volatility in the market price of a company's securities, class action securities litigation has often been brought against that company.
The trading price of our common stock might also decline in reaction to events that affect other companies in our industry or related industries even if these events do not directly affect us. 32 In the past, following periods of volatility in the market price of a company's securities, class action securities litigation has often been brought against that company.
It is possible that adverse economic conditions in states or regions that contain a high concentration of Nathan’s restaurants could have a material adverse impact on our business, results of operations and financial condition. 27 We rely extensively on computer systems, our point-of-sales system and information technology to manage our business.
It is possible that adverse economic conditions in states or regions that contain a high concentration of Nathan’s restaurants could have a material adverse impact on our business, results of operations and financial condition. We rely extensively on computer systems, our point-of-sales system and information technology to manage our business.
Also, to the extent that the terms and conditions of any of these license agreements change or we change any of our product licensees, our business, results of operations and financial condition could be materially affected. The quick-service restaurant business is highly competitive, and that competition could lower revenues, margins and market share.
Also, to the extent that the terms and conditions of any of these license agreements change or we change any of our product licensees, our business, results of operations and financial condition could be materially affected. 22 The quick-service restaurant business is highly competitive, and that competition could lower revenues, margins and market share.
In the event that our franchisees and licensees fail to do so, our trademark and service mark rights could be diluted. Our earnings and business growth strategy depend in large part on the success of our restaurant franchisees and on new restaurant openings.
In the event that our franchisees and licensees fail to do so, our trademark and service mark rights could be diluted. 25 Our earnings and business growth strategy depend in large part on the success of our restaurant franchisees and on new restaurant openings.
Some states require that certain materials be filed for a franchisor to be registered and approved (or exempt from the applicable state franchise law) before a franchisor can offer or sell franchises in that state.
Some states require that certain materials be filed in order for a franchisor to be registered and approved (or exempt from the applicable state franchise law) before a franchisor can offer or sell franchises in that state.
Our declaration and payment of future cash dividends are subject to the final determination by our Board of Directors that (i) the dividend will be made in compliance with laws applicable to the declaration and payment of cash dividends, including Section 170 of the Delaware General Business Corporation Law, (ii) the dividend complies with the terms of the Indenture, and (iii) the payment of dividends remains in our best interests, which determination will be based on a number of factors, including the impact of changing laws and regulations, economic conditions, our results of operations and/or financial condition, capital resources, the ability to satisfy financial covenants and other factors considered relevant by the Board of Directors.
Our declaration and payment of future cash dividends are subject to the final determination by our Board of Directors that (i) the dividend will be made in compliance with laws applicable to the declaration and payment of cash dividends, including Section 170 of the Delaware General Business Corporation Law, (ii) the dividend complies with the terms of our Credit Agreement, and (iii) the payment of dividends remains in our best interests, which determination will be based on a number of factors, including the impact of changing laws and regulations, economic conditions, our results of operations and/or financial condition, capital resources, the ability to satisfy financial covenants and other factors considered relevant by the Board of Directors.
We are subject to risks affecting the food industry generally, including risks posed by the following: food spoilage or food contamination; consumer product liability claims; product tampering; and the potential cost and disruption of a product recall. 23 Our products are susceptible to contamination by disease-producing organisms, or pathogens, such as salmonella, norovirus, hepatitis A, trichinosis and generic E. coli.
We are subject to risks affecting the food industry, including risks posed by the following: food spoilage or food contamination; consumer product liability claims; product tampering; and the potential cost and disruption of a product recall. Our products are susceptible to contamination by disease-producing organisms, or pathogens, such as salmonella, norovirus, hepatitis A, trichinosis and generic E. coli.
Because a significant portion of our restaurant operating costs is fixed or semi-fixed in nature, the loss of sales during these periods adversely impacts our operating margins and can result in restaurant operating losses. For these reasons, a quarter-to-quarter comparison may not be a good indication of our performance or how it may perform in the future.
Because a significant portion of our restaurant operating costs is fixed or semi-fixed in nature, the loss of sales during these periods adversely impacts our operating margins and can result in restaurant operating losses. For these reasons, a quarter-to-quarter comparison may not be a good indication of our performance or how we may perform in the future.
The Company cannot predict if new variants of COVID-19 will be discovered, what restrictions may be enacted by local, state and the federal government, to what extent it can maintain off-premises sales volumes, whether it can maintain sufficient staffing levels at our Company-owned restaurants, or if individuals will be comfortable congregating in our dining rooms or public venues such as professional sports arenas, amusement parks, shopping malls or movie theaters, and what long-lasting effects COVID-19 may have on the Company as a whole.
The Company cannot predict if new variants of COVID-19 will be discovered, other health epidemics or pandemics may arise, what restrictions may be enacted by local, state and the federal government, to what extent it can maintain off-premises sales volumes, whether it can maintain sufficient staffing levels at our Company-owned restaurants, or if individuals will be comfortable congregating in our dining rooms or public venues such as professional sports arenas, amusement parks, shopping malls or movie theaters, and what long-lasting effects COVID-19 or other health epidemics or pandemics may have on the Company as a whole.
Risks Related to the Notes Our substantial indebtedness makes us more sensitive to adverse economic conditions, may limit our ability to plan for or respond to significant changes in our business, and requires a significant amount of cash to service our debt payment obligations that we may be unable to generate or obtain.
Risks Related to our Indebtedness Our significant amount of indebtedness makes us more sensitive to adverse economic conditions, may limit our ability to plan for or respond to significant changes in our business, and requires a significant amount of cash to service our debt payment obligations that we may be unable to generate or obtain.
A decrease in profitability or the closing of a significant number of franchised restaurants could significantly impact our business (as well as our franchisees’ businesses), and we may also be impacted if the NLRB or a private party, successfully brought an action alleging that we are a “joint employer” of our franchisees’ staff, all of which might impact our results of operations and financial condition.
A decrease in profitability or the closing of a significant number of franchised restaurants could significantly impact our business (as well as our franchisees’ businesses), and we may also be impacted if a government agency or private party, successfully brought an action alleging that we are a “joint employer” of our franchisees’ staff, all of which might adversely impact our results of operations and financial condition.
Although we have not experienced significant resistance to our past price increases, future price increases may deter customers from visiting our Company-owned and franchised restaurants, may decrease demand for our products at our Company-owned and franchised restaurants and may adversely affect our restaurant operations.
Although we have not experienced significant resistance to our past price increases, future price increases may deter customers from visiting our Company-owned and franchised restaurants, may decrease our ability to attract new customers, may decrease demand for our products at our Company-owned and franchised restaurants and may adversely affect our restaurant operations.
We remain in regular contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain; however, during fiscal 2023 and fiscal 2024 costs for certain supplies and ingredients, such as packaging, beef and beef trimmings, and freight, increased materially and rapidly, which combined with inflationary pressures could continue.
We remain in regular contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain; however, during fiscal 2025 the Company experienced increased costs for certain supplies and ingredients, such as packaging, beef and beef trimmings, and freight, which combined with inflationary pressures could continue.
On January 1, 2024, the minimum hourly wage in New York City, Long Island and Westchester increased from $15.00 to $16.00 which will be followed by $0.50 annual increases in 2025 and 2026. Further, beginning in 2027, the minimum wage across New York State will increase annually according to the Consumer Price Index.
On January 1, 2025, the minimum wage increased from $16.00 to $16.50 in New York City, Long Island and Westchester which will be followed by an additional $0.50 increase in 2026. Further, beginning in 2027, the minimum wage across New York State will increase annually according to the Consumer Price Index.
As of March 31, 2024, we and our franchisees (including locations operated pursuant to our Branded Menu Program) operated Nathan’s restaurants in 17 states and 13 foreign countries. As of March 31, 2024, the highest concentration of operating units was in the Northeast, principally in New York and New Jersey.
As of March 30, 2025, we and our franchisees (including locations operated pursuant to our Branded Menu Program) operated Nathan’s restaurants in 17 states and 12 foreign countries. As of March 30, 2025, the highest concentration of operating units was in the Northeast, principally in New York and New Jersey.
Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects or business. The harm may be immediate without affording us an opportunity for redress or correction. Such platforms could also be used for dissemination of trade secret information, compromising valuable Company assets.
Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects or business. The harm may be immediate without affording us an opportunity to investigate, respond to and address an issue. Such platforms could also be used for dissemination of trade secret information, compromising valuable Company assets.
Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image. Injury to our brand’s reputation would likely reduce revenue and profits.
Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any assertion that our products caused illness or injury could adversely affect our reputation with existing and potential customers and our corporate and brand image.
The failure to obtain or retain licenses or approvals to sell franchises could have a material adverse effect on our business, financial condition, results of operations and prospects.
The failure to obtain or retain licenses, exemptions or approvals (as applicable) to offer and award franchises could have a material adverse effect on our business, financial condition, results of operations and prospects.
The California Consumer Privacy Act (“CCPA”) took effect at the beginning of 2020, and imposes stringent data security standards, which might apply more broadly than only within the borders of that state (for example, if a California resident buys products or has them shipped into the state and pays with a credit or debit card).
California also adopted legislation to address data privacy. The California Consumer Privacy Act (“CCPA”) imposes stringent data security standards which might apply more broadly than only within the borders of that state (for example, if a California resident buys products or has them shipped into the state and pays with a credit or debit card).
We earned license royalties from Smithfield Foods, Inc. of approximately $30,067,000 in fiscal 2024 and approximately $29,998,000 in fiscal 2023 representing 22% and 23% of total revenues, respectively.
We earned license royalties from Smithfield Foods, Inc. of approximately $33,589,000 in fiscal 2025 and approximately $30,067,000 in fiscal 2024 representing 23% and 22% of total revenues, respectively.
We also license third party franchisees and other licensees to use our trademarks and service marks. We enter into franchise agreements with our franchisees and license agreements with our licensees which govern the use of our trademarks and service marks.
We enter into franchise agreements with our franchisees and license agreements with our licensees which govern the use of our trademarks and service marks.
We must comply with the Fair Labor Standards Act and various federal and state laws governing minimum wages. Increases in the minimum wage and labor regulations have increased our labor costs.
Risks Related to Regulatory Matters Changes to minimum wage rates have increased our labor costs. We must comply with the Fair Labor Standards Act and various federal and state laws governing minimum wages. Increases in the minimum wage and labor regulations have increased our labor costs.
If prevailing health or dietary preferences, perceptions and governmental regulation cause consumers to avoid the products we offer in favor of alternative or healthier foods, demand for our products may be reduced and could materially adversely affect our business, results of operations and financial condition. 24 We may not be able to adequately protect our intellectual property, which could decrease the value of our business or the value of our brands and products.
If prevailing health or dietary preferences, perceptions and governmental regulation cause consumers to avoid the products we offer in favor of alternative or healthier foods, demand for our products may be reduced and could materially adversely affect our business, results of operations and financial condition.
Negative publicity, including complaints on social media platforms and other internet-based communications, could damage our reputation and harm our guest traffic, and in turn, negatively impact our business, financial condition, results of operations and prospects.
Injury to our brand’s reputation would likely reduce revenue and profits. 24 Negative publicity, including complaints on social media platforms and other internet-based communications, could damage our reputation and harm our guest traffic, and in turn, negatively impact our business, financial condition, results of operations and prospects.
The opportunity for dissemination of information, including inaccurate information, organizing collective actions such as boycotts and other brand-damaging behaviors is seemingly limitless and readily available. Information concerning our business and products may be posted on such platforms at any time.
The availability of information on these social media platforms and internet-based communications is virtually immediate, as is its impact. The opportunity for dissemination of information, including inaccurate information, organizing collective actions such as boycotts and other brand-damaging behaviors is seemingly limitless and readily available. Information concerning our business and products may be posted on such platforms at any time.
Consequently, these strategies could have the effect of drawing customers away from companies which do not engage in discount pricing and could also negatively impact the operating margins of competitors which attempt to match their competitors’ price reductions.
Consequently, these strategies could have the effect of drawing customers away from companies which do not engage in discount pricing and could also negatively impact the operating margins of competitors which attempt to match their competitors’ price reductions. We may be unable to change our pricing strategies sufficiently to compete in such an environment.
There has been an increase in the use of social media platforms and other forms of internet-based communications, including video sharing and instant messaging platforms, that allow individuals to access a broad audience of consumers and other interested persons. The availability of information on these social media platforms and internet-based communications is virtually immediate, as is its impact.
There has been an increase in the use of social media platforms and other forms of internet-based communications, including video sharing, blogs, chat platforms and instant messaging platforms, that allow individuals to access a broad audience of consumers and other interested persons.
We have been subject to these types of claims in the past, and if one or more of these claims were to be successful or if there is a significant increase in the number of these claims, our business, results of operations and financial condition could be harmed. 29 Risks Related to Regulatory Matters Changes to minimum wage rates have increased our labor costs.
We have been subject to these types of claims in the past, and if one or more of these claims were to be successful or if there is a significant increase in the number of these claims, our business, results of operations and financial condition could be harmed.
We may continue to experience increases in the cost of food, commodity and paper products which, in turn, may adversely affect our business, results of operations and financial condition.
While inflationary pressures eased slightly during fiscal year 2025, we may continue to experience increases in the cost of food, commodity and paper products which, in turn, may adversely affect our business, results of operations and financial condition.
These events and factors include: ● changes in customer demand; ● sales promotions by Nathan’s and its competitors; ● variations in the timing and volume of Nathan’s sales and franchisees’ sales; ● changes in the terms of our existing license/supply agreements and/or the replacement of existing licenses or suppliers; ● changes in average same-store sales and customer visits; ● variations in the price, availability and shipping costs of supplies; ● tax expense, asset impairment charges and other non-operating costs; ● seasonal effects on demand for Nathan’s products; ● unexpected slowdowns in new store development efforts; ● changes in competitive and macroeconomic conditions in the United States and in other regions of the world, including the Russia-Ukraine conflict and the Israel-Hamas war; ● changes in the cost or availability of commodities, including beef and beef trimmings or labor and our inability to offset these higher costs with price increases; ● weather and acts of God; and ● changes in the number of franchises sold and franchise agreement renewals.
These events and factors include: ● changes in the cost or availability of commodities, including beef and beef trimmings, or labor and our inability to offset these higher costs with price increases; ● variations in the price, availability and shipping costs of supplies; ● changes in customer demand and customer visits; ● increases in marketing or promotional expenses; ● seasonal variations in the timing and volume of Company-owned restaurant sales, Branded Product Program sales, licensees’ sales and franchisees’ sales; ● changes in the terms of our existing license/supply agreements and/or the replacement of existing licenses or suppliers; ● tax expense, asset impairment charges and other non-operating costs; ● unexpected slowdowns in new store development efforts; ● changes in the number of franchises sold and franchise agreement renewals; ● changes in competitive and macroeconomic conditions in the United States and in other regions of the world; and ● weather and acts of God.
Additionally, there is no assurance that any supplemental sources of supply would be capable of meeting our specifications and quality standards on a timely and consistent basis or that the financial terms of such supply arrangement will be as favorable as our present terms with our hot dog or French fry supplier, as the case may be.
Additionally, there is no assurance that any supplemental sources of supply would be capable of meeting our specifications and quality standards on a timely and consistent basis or that the financial terms of such supply arrangement will be comparable to our present terms.
To the extent that our franchisees use the cash from their Nathan’s restaurants to subsidize their other businesses or experience financial distress, due to over-leveraging, delayed or reduced payments of royalties, advertising fund contributions and rents for properties we lease to them, or otherwise, it could have a material adverse effect on our business, results of operations and financial condition.
To the extent that our franchisees use the cash from their Nathan’s restaurants to subsidize their other businesses or experience financial distress, due to over-leveraging, it could have a material adverse effect on our business, results of operations and financial condition.
Other key competitive factors include the number and location of restaurants, quality and speed of service, attractiveness of facilities, effectiveness of digital and social media engagement, and new product development. We anticipate competition will continue to focus on quality, convenience and pricing. Many of our competitors have substantially larger marketing budgets which may provide them with a competitive advantage.
Other key competitive factors include the number and location of restaurants, quality and speed of service, attractiveness of facilities, effectiveness of digital and social media engagement, and new product development. We anticipate competition will continue to focus on quality, convenience and pricing.
In total, 14 states have adopted laws that apply (or that will apply as of the effective date) to data and other biometric technology, which may be broadly interpreted. It remains uncertain whether the CCPA and the data privacy laws adopted in other states will have a material impact on our operations or that of our franchisees.
In total, 14 states have adopted laws that apply (or that will apply as of the effective date) to data and other biometric technology, which may be broadly interpreted.
We cannot assure that our Company-owned restaurants or our franchised restaurants will be able to purchase its food, commodity or paper products at reasonable prices, or that the cost of such food, commodity or paper products will remain stable in the future.
We cannot assure that our Company-owned restaurants or our franchised restaurants will be able to purchase its food, commodity or paper products at reasonable prices, or that the cost of such food, commodity or paper products will remain stable in the future. 20 We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2026.
As of March 31, 2024, we had total outstanding indebtedness of $60,000,000 of Notes which are due November 1, 2025. Subject to the terms of any future agreements, we and our subsidiaries may be able to incur additional indebtedness in the future, which would increase the risks related to our high level of indebtedness.
As of March 30, 2025, we had total outstanding indebtedness of $50,800,000. Subject to the terms of our Credit Agreement, we and our subsidiaries may be able to incur additional indebtedness in the future, which would increase the risks related to our level of indebtedness.
Furthermore, any perception of a failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change or other sustainable business practices could lead to adverse publicity and have a material adverse effect on our business, results of operations and financial conditions.
Furthermore, any perception of a failure to act responsibly with respect to the environment or to effectively respond to regulatory requirements concerning climate change or other sustainable business practices could lead to adverse publicity and have a material adverse effect on our business, results of operations and financial condition. 27 Due to the concentration of our restaurants in particular geographic regions, our business results could be impacted by the adverse economic conditions prevailing in those regions regardless of the state of the national economy as a whole.
In addition, a licensee’s failure to effectively market the licensed products may result in decreased sales, which would adversely affect our business, results of operations and financial condition.
Any shortcoming in the quality, quantity and/or timely delivery of a licensed product could cause reputational damage to us, potentially adversely affecting our business, results of operations and financial condition. In addition, a licensee’s failure to effectively market the licensed products may result in decreased sales, which would adversely affect our business, results of operations and financial condition.
We are experiencing and may continue to experience a shortage of labor for positions in our Company-owned and franchised restaurants, due to the current competitive labor market.
We are experiencing and may continue to experience a shortage of labor for positions in our Company-owned and franchised restaurants, due to the current competitive labor market. We and our franchisees have experienced and may continue to experience challenges in hiring and retaining restaurant employees which may result in decreased employee and customer satisfaction.
The Company’s results could materially differ from those anticipated in these forward-looking statements as a result of certain factors, including the risks it faces described below and elsewhere. See “Forward-Looking Statements” above.
The Company’s results could materially differ from those anticipated in these forward-looking statements as a result of certain factors, including the risks it faces described below and elsewhere. See “Forward-Looking Statements” above. Risks Related to Our Business and Operations Our results of operations could be adversely affected by disease epidemics, public health concerns or other catastrophic events.
Further, we may be subject to employee, franchisee and other claims in the future based on, among other things, mismanagement of the system, unfair or unequal treatment, discrimination, harassment, wrongful termination and wage, rest break and meal break issues, including those relating to overtime compensation.
In the future, these actions or the threat of these actions may force us to change our business practices or pricing policies, which may have a material adverse effect on our business, results of operations and financial condition. 29 Further, we may be subject to employee, franchisee and other claims in the future based on, among other things, mismanagement of the system, unfair or unequal treatment, discrimination, harassment, wrongful termination and wage, rest break and meal break issues, including those relating to overtime compensation.
Our future effective tax rates could be adversely affected by changes in tax laws, both domestically and internationally. From time to time, the United States Congress and foreign, state and local governments consider legislation that could increase our effective tax rates. If changes to applicable tax laws are enacted, our results of operations could be negatively impacted.
We are subject to federal, state, and local tax laws and regulations in the United States. Our future effective tax rates could be adversely affected by changes in tax laws. From time to time, federal, state and local governments consider legislation that could increase our effective tax rates.
Sales to our five largest Branded Product Program customers were 77% and 76% of our Branded Product Program revenues in fiscal 2024 and fiscal 2023, respectively.
A small number of our Branded Product Program customers account for a significant portion of our Branded Product Program revenues. Sales to our five largest Branded Product Program customers were 79% and 77% of our Branded Product Program revenues in fiscal 2025 and fiscal 2024, respectively.
Extensive price discounting in the quick-service restaurant business could have an adverse effect on our financial results. 22 In addition, if patrons have a poor experience at a Company-owned or a franchised restaurant, we may experience a decrease in customer counts which, in turn, may result in a decline in Company-owned restaurant sales or franchise royalties.
In addition, if patrons have a poor experience at a Company-owned or a franchised restaurant, we may experience a decrease in customer counts which, in turn, may result in a decline in Company-owned restaurant sales or franchise royalties.
If the price of beef, beef trimmings or other food products that we use in our operations significantly increases, particularly in the Branded Product Program, and we choose not to pass, or cannot pass, these increases on to our customers, our operating margins will decrease and such decrease in operating margins could have a material adverse effect on our business, results of operations or financial condition. 20 From time to time, we have sought to lock in the cost of a portion of our beef purchases by entering into various commitments to purchase hot dogs during certain periods in an effort to ensure supply of product at a fixed cost of product.
If the price of beef, beef trimmings or other food products that we use in our operations significantly increases or remains elevated for a sustained period of time, particularly in the Branded Product Program, and we choose not to pass, or cannot pass, these increases on to our customers, our operating margins will decrease and such decrease in operating margins could have a material adverse effect on our business, results of operations or financial condition.
The sophistication and buying power of our customers could have a negative impact on profits. Our customers, such as supermarkets, warehouse clubs, and food distributors, have continued to consolidate, resulting in fewer customers with which to do business.
Our customers, such as supermarkets, warehouse clubs, and food distributors, have continued to consolidate, resulting in fewer customers with which to do business and increasing our exposure to loss of certain customers.
Additionally, state and local laws such as the recently passed California Fast Food Accountability and Standards Recovery Act (the “FAST Act”) may require wage increases and working hours and working condition standards that may increase our costs without corresponding benefits.
Additionally, state and local laws (such as the California Fast Food Accountability and Standards Recovery Act, referred to as the “FAST Act”) require wage increases as well as working hours and working condition standards that may increase our costs and those of our franchisees. It is possible that other jurisdictions may pass similar laws.
We cannot assure you that franchisees will renew their franchise agreements or that franchised restaurants will remain open. Closings of franchised restaurants are expected in the ordinary course and may cause our royalty revenues and financial performance to decline.
Closings of franchised restaurants are expected in the ordinary course and may cause our royalty revenues and financial performance to decline.
In May 2023, the World Health Organization declared an end to the global health emergency. However, a recurrence of COVID-19 or new variants of COVID-19 could substantially impact customer traffic at our Company-owned and franchised restaurants, as well as sales to our Branded Product Program customers and royalties earned from our licensing activities.
A recurrence of coronavirus (“COVID-19”) or the emergence of other health epidemics or pandemics could substantially impact customer traffic at our Company-owned and franchised restaurants, as well as sales to our Branded Product Program customers and royalties earned from our licensing activities.
However, we may be unable to enter into similar purchase commitments in the future. In addition, we do not have the ability to effectively hedge our beef purchases using futures or forward contracts without incurring undue financial cost and risk. Price increases may impact customer visits.
In addition, we do not have the ability to effectively hedge our beef purchases using futures or forward contracts without incurring undue financial cost and risk. Price increases may impact customer visits. The Company and our franchisees have increased prices on selected menu items in order to offset rising food and commodity costs.
Any operational shortcoming of a franchised restaurant is likely to be attributed by consumers to an entire brand or our system, thus damaging our corporate or brand reputation, potentially adversely affecting our business, results of operations and financial condition. 25 Growth in our restaurant revenue and earnings is significantly dependent on new restaurant openings.
Any operational shortcoming of a franchised restaurant is likely to be attributed by consumers to an entire brand or our system, thus damaging our corporate or brand reputation, potentially adversely affecting our business, results of operations and financial condition. We cannot assure you that franchisees will renew their franchise agreements or that franchised restaurants will remain open.
We purchase large quantities of beef and beef trimmings and our beef costs represent approximately 80% to 90% of our cost of sales. The market for beef is particularly volatile and is subject to significant price fluctuations due to seasonal shifts, climate conditions, industry demand, inflationary pressures and other macroeconomic factors beyond our control.
The market for beef is particularly volatile and is subject to significant price fluctuations due to seasonal shifts, adverse weather conditions, including the impact of climate change, environmental regulations, industry demand, inflationary pressures, the potential impacts of tariffs and other macroeconomic factors beyond our control.
Any problems caused by these third parties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyberattacks and security breaches at a vendor could adversely affect our ability to deliver products and services to conduct our business.
Any problems caused by these third parties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher volumes, cyberattacks and security breaches at a vendor could adversely affect our ability to deliver products and services to conduct our business. 28 Although we have taken measures to protect our technology systems and infrastructure, including investing in our existing information technology systems and providing employee training around phishing, malware and other cyber risks, there can be no assurance that we will be successful and fully protected against cyber risks and security breaches.
Such events could result in additional costs related to operational inefficiencies, damages, claims or fines and may adversely affect our business, results of operations and financial condition. Catastrophic events may disrupt our business.
A cyberattack or security breach could result in operational disruptions, theft or fraud, or exposure of sensitive information to unauthorized parties. Such events could result in additional costs related to operational inefficiencies, damages, claims or fines and may adversely affect our business, results of operations and financial condition. Our international operations are subject to various factors of uncertainty.
A significant amount of our Branded Product Program revenue is from a small number of accounts. The loss of any one or more of those accounts could harm our profitability and operating results. A small number of our Branded Product Program customers account for a significant portion of our Branded Product Program revenues.
We cannot assure you that we will be able to renew the license agreement with Smithfield Foods, Inc. A significant amount of our Branded Product Program revenue is from a small number of accounts. The loss of any one or more of those accounts could harm our profitability and operating results.
In the future, our customers may not continue to purchase our products or provide our products with adequate levels of promotional support. A significant decline in the purchase of our products would have a material adverse effect on our business, results of operations and financial condition.
In the future, our customers may not continue to purchase our products or provide our products with adequate levels of promotional support.
Any inability to generate sufficient cash flow or refinance our indebtedness on favorable terms could have a material adverse effect on our business and financial condition. 34
Any inability to generate sufficient cash flow or refinance our indebtedness on favorable terms could have a material adverse effect on our business and financial condition. If drawn upon, our undrawn revolving credit facility would subject us to interest rate risk, which could cause our debt service obligations to increase.
COVID-19 has heightened many of the other risks described in this Item 1A, “Risk Factors.” Increases in the cost of food and paper products could harm our profitability and operating results. General economic conditions, including increases in inflation, have adversely affected our food, commodity and paper costs and may continue to do so.
Our results of operations could be adversely affected by increases in the cost of food, commodities and paper. General economic conditions, including increases in inflation, have adversely affected our food, commodity and paper costs and may continue to do so.
Some provisions of our certificate of incorporation, by-laws, other corporate documents, including the terms and condition of our Notes, and provisions of Delaware law may discourage takeover attempts and hinder a merger, tender offer or proxy contest targeting us, including transactions in which stockholders might receive a premium for their shares.
Some provisions of our certificate of incorporation, by-laws, other corporate documents, including the terms and conditions of our Credit Agreement (the “Credit Agreement”) dated as of July 10, 2024 among the Company, as borrower, direct and indirect subsidiaries of the Company, as guarantors, the lenders from time to time party thereto (the “Lenders”) and Citibank, N.A., as administrative agent, swing line lender, L/C issuer and a Lender, and provisions of Delaware law may discourage takeover attempts and hinder a merger, tender offer or proxy contest targeting us, including transactions in which stockholders might receive a premium for their shares.
Our tax returns and positions (including positions regarding jurisdictional authority of foreign governments to impose tax) are subject to review and audit by federal, state, local and international taxing authorities. An unfavorable outcome to a tax audit could result in higher tax expense, thereby negatively impacting our results of operations.
If changes to applicable tax laws are enacted, our results of operations could be negatively impacted. Our tax returns and positions are subject to review and audit by the Internal Revenue Service and other tax authorities. An unfavorable outcome to a tax audit could result in higher tax expense, thereby negatively impacting our results of operations.
Department of Labor and agencies such as the Occupational Safety and Health Administration and NLRB take a more aggressive position on defining and enforcing joint employer status, or if Congress passes the proposed “PRO Act” and it is signed into law, that might change the status quo and expose Nathan’s to the possibility of being deemed a “joint employer” of our franchisees’ staff (together with our franchisees) and also to the possibility that some franchisees might be reclassified as Nathan's “employees.” Among other things, a determination that Nathan's and its franchisees are joint employers of one or more franchisees’ staff may make it easier to organize our franchisees’ staff into unions, provide the staff and their union representatives with bargaining power to request that we have our franchisees raise wages, and make it more expensive and less profitable to operate a Nathan’s franchised restaurant.
Among other things, a determination that Nathan's and its franchisees are joint employers of one or more franchisees’ staff may make it easier to organize our franchisees’ staff into unions, provide the staff and their union representatives with bargaining power to request that we have our franchisees raise wages, and make it more expensive and less profitable to operate a Nathan’s franchised restaurant.
Consolidation also increases the risk that adverse changes in our customers’ business operations or financial performance will have a corresponding material adverse effect on us.
Consolidation also increases the risk that adverse changes in our customers’ business operations or financial performance will have a corresponding material adverse effect on us. For example, if our customers cannot access sufficient funds or financing, then they may delay, decrease, or cancel purchases of our products, or delay or fail to pay us for previous purchases.
For example, if our customers cannot access sufficient funds or financing, then they may delay, decrease, or cancel purchases of our products, or delay or fail to pay us for previous purchases. 26 Our annual and quarterly financial results may fluctuate depending on various factors, many of which are beyond our control, and, if we fail to meet the expectations of investors, our share price may decline.
Our annual and quarterly financial results may fluctuate depending on various factors, many of which are beyond our control, and, if we fail to meet the expectations of investors, our share price may decline. Our sales and operating results can vary from quarter to quarter and year to year depending on various factors, many of which are beyond our control.
A temporary closure at either of these plants could potentially cause a temporary disruption to our source of supply, potentially causing some or all of certain shipments to customers to be delayed.
A temporary closure at either of these plants could potentially cause a short-term disruption to the production or distribution of certain products to customers.
We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2025. To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations.
To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations.
Neighborhood or economic conditions where restaurants are located could decline in the future, thus resulting in potentially reduced sales in those locations. If we and our franchisees cannot obtain desirable additional and alternative locations at reasonable prices, our results of operations would be adversely affected.
Neighborhood or economic conditions where restaurants are located could decline in the future, thus resulting in potentially reduced sales in those locations.
Securities litigation could result in substantial costs and divert management's attention and resources from our business and could also require us to make substantial payments to satisfy judgments or to settle litigation. 32 Our certificate of incorporation and by-laws and other corporate documents include anti-takeover provisions which may deter or prevent a takeover attempt.
Due to the potential volatility of our stock price, we may be the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management's attention and resources from our business and could also require us to make substantial payments to satisfy judgments or to settle litigation.
The techniques and sophistication used to conduct a cyberattack change frequently and the measures that we have taken do not guarantee that a cyberattack or security breach could not occur. A cyberattack or security breach could result in operational disruptions, theft or fraud, or exposure of sensitive information to unauthorized parties.
The techniques and sophistication used to conduct a cyberattack change frequently and the measures that we have taken do not guarantee that a cyberattack or security breach could not occur. The rapid evolution and increased adoption of artificial intelligence technologies to carry out more sophisticated attacks may intensify our cybersecurity risks.
Although the FAST Act is stayed pending a referendum in November 2024, it is possible that it will pass, and that other jurisdictions may pass similar laws. 31 Our business is subject to an increasing focus on Environmental, Social, and Governance (ESG) matters.
It remains uncertain whether the CCPA and the data privacy laws adopted in other states will have a material impact on our operations or that of our franchisees. 31 Our business is subject to an increasing focus on Environmental, Social, and Governance (ESG) matters.
Any perceived or real health risks related to the food industry could adversely affect our ability to sell our products .
We may not be able to re-negotiate our current lease terms. If we cannot renew our leases on attractive terms, it could adversely affect our business, results of operations and financial condition. Any perceived or real health risks related to the food industry could adversely affect our ability to sell our products .
These events could negatively impact consumer discretionary spending, thereby reducing demand for our products, or the ability to receive products from suppliers. We do not have insurance policies that insure against certain of these risks.
Additionally, unforeseen or other catastrophic events including natural disasters, military conflicts, terrorism, labor unrest and other political unrest could have an adverse impact on our operations, disrupt the operations of franchisees, suppliers or customers. These events could negatively impact consumer discretionary spending, thereby reducing demand for our products and/or the ability to receive products from suppliers.
In the future, these actions or the threat of these actions may force us to change our business practices or pricing policies, which may have a material adverse effect on our business, results of operations and financial condition.
However, if we are unable to continue to execute or to renew these sales agreements, our operating margins could be negatively affected and could have a material adverse effect on our business, results of operations or financial condition.
Any of the foregoing occurrences may cause disruptions in the supply of our hot dog or French fry products and may damage our franchisees and our Branded Product Program customers, which could result in a material adverse effect on our business, results of operations or financial condition.
A significant decline in the purchase of our products would have a material adverse effect on our business, results of operations and financial condition. 26 The sophistication and buying power of our customers could have a negative impact on profits.
Removed
Risks Related to Our Business and Operations The COVID-19 pandemic previously impacted our business and could continue to adversely affect our business, financial condition, and results of operations in the future . COVID-19 had a substantial impact on our operations in fiscal 2021 and to a lesser extent in fiscal 2022 and fiscal 2023.
Added
We purchase large quantities of beef and beef trimmings and our beef costs represent approximately 80% to 90% of our cost of sales.
Removed
The imposition of restrictions or a return to shutdowns imposed by local, state and/or the federal government may have a material adverse effect on our business, results of operations and financial condition.
Added
We attempt to offset cost increases resulting from inflation by increasing prices and entering into sales agreements with our Branded Product Program customers that are correlated to our cost of beef and beef trimmings.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

10 edited+3 added−3 removed8 unchanged
Biggest changeAt least annually, the Board of Directors receives a cybersecurity update as part of our Company’s risk management program. Such updates are designed to ensure that the Company’s senior management team remain informed about and can monitor the prevention, detection, mitigation, and remediation of potential cybersecurity incidents.
Biggest changeSuch updates are designed to ensure that the Company’s senior management team remain informed about and can monitor the prevention, detection, mitigation, and remediation of potential cybersecurity incidents. At a management level, our cybersecurity program is led by our Information Technology manager, who reports to the Chief Financial Officer. Our Information Technology manager is supported by our third-party consultants.
We obtain System and Organizational Controls (“SOC”) 1 or SOC 2 reports on an annual basis from vendors that host our significant financial applications to aid in our assessment of information security risk amongst our relationships with the host vendors. We also perform quarterly access reviews for these systems that are subject to SOX oversight.
We obtain System and Organizational Controls (“SOC”) 1 or SOC 2 reports on an annual basis from vendors that host our significant financial applications to aid in our assessment of information security risk amongst our relationships with the host vendors. We also perform quarterly access reviews for these systems that are subject to Sarbanes-Oxley oversight.
To supplement our internal controls and processes and to meet these objectives, the Company engages third-party consultants who work closely with the Company’s Information Technology manager to collectively manage our cybersecurity, information technology and data privacy programs, as well as perform application security reviews and penetration tests.
Our programs fall under the oversight of our Information Technology manager. To supplement our internal controls and processes and to meet these objectives, the Company engages third-party consultants who work closely with the Company’s Information Technology manager to collectively manage our cybersecurity, information technology and data privacy programs, as well as perform application security reviews, scans and penetration tests.
Furthermore, there is no interface between the Company-owned restaurants point-of-sale system and the Company’s network and no interface between the Company’s primary manufacturer, Smithfield Foods, Inc. and the Company’s network. 35 The Company routinely leads training exercises, at least annually, for its employees to reinforce the risk from common tactics and scams like email phishing campaigns to defend against potential business email and network compromise.
Furthermore, there is no interface between the Company-owned restaurants point-of-sale system and the Company’s network and no interface between the Company’s primary manufacturer, Smithfield Foods, Inc. and the Company’s network. 35 The Company routinely leads training exercises, at least annually, for its employees to reinforce the risk from common tactics and scams like email phishing campaigns, as well as more sophisticated descendants (i.e. spear phishing and smishing) to defend against potential business email and network compromise.
Cybersecurity threats include any potential unauthorized occurrence on or conducted through our information technology systems or information technology systems of a third party that we utilize in our business that may result in adverse effects on the confidentiality, integrity or access to our information technology systems.
Cybersecurity threats include any potential unauthorized occurrence on or conducted through our information technology systems or information technology systems of a third party that we utilize in our business that may result in adverse effects on the confidentiality, integrity or access to our information technology systems. Our cybersecurity risk management program includes a cybersecurity incident response plan.
Our information technology infrastructure includes firewalls, and intrusion detection tools, as well as multi-factor authentication to provide a multi-layered approach to protecting our information technology systems from unauthorized access, use, disclosure, disruption, or destruction.
Our information technology infrastructure includes firewalls, modern endpoint protections, intrusion detection tools and alerts, as well as multi-factor authentication to provide a multi-layered approach to protecting our information technology systems from unauthorized access, use, disclosure, disruption, or destruction. Such applications are regularly monitored and reviewed for adequacy and potential enhancements.
The objectives of our programs are to protect the confidentiality, integrity, use and availability of the Company’s data; to protect against unauthorized access to the Company’s data, the Company’s network and information technology applications; and to maintain recovery plans regarding the Company’s informational technology. Our programs fall under the oversight of our Information Technology manager.
The objectives of our programs are to protect the confidentiality, integrity, use and availability of the Company’s data; to protect against unauthorized access to the Company’s data, the Company’s network and information technology applications; and to maintain disaster recovery plans to prepare for and respond to the potential for a disruption in the Company’s informational technology.
With over 25 years of Company experience, our Information Technology manager along with the support of our third-party consultants, is equipped to help navigate the landscape of cybersecurity risks and challenges.
Our Information Technology manager along with the support of our third-party consultants, is equipped to help navigate the landscape of cybersecurity risks and challenges and to implement and to manage a comprehensive security strategy.
Governance The full Board of Directors has overall responsibility for risk oversight, including cybersecurity matters. It is supported by the Audit Committee, which reports to the full Board of Directors. The Audit Committee receives updates from management on the cybersecurity landscape and cybersecurity risks impacting the Company.
It is supported by the Audit Committee, which reports to the full Board of Directors. The Audit Committee receives updates from management, as necessary, on the cybersecurity landscape and cybersecurity risks impacting the Company. At least annually, the Board of Directors receives a cybersecurity update as part of our Company’s risk management program.
We maintain cyber risk insurance coverage that is intended to mitigate the financial impact of cybersecurity and data privacy incidents experienced by the Company. There can be no assurance that our cyber insurance policies will be sufficient in scope or amount to cover the costs and expenses related to any future cybersecurity incidents.
We maintain cyber risk insurance coverage that is intended to mitigate the financial impact of cybersecurity and data privacy incidents experienced by the Company.
Removed
We maintain technology and cybersecurity programs and follow the guidelines of the National Institute of Standards and Technology Cybersecurity Framework to help manage information security risk within the Company.
Added
We design and assess our program primarily following the guidelines of the National Institute of Standards and Technology and Payment Card Industry Data Security Standard.
Removed
The Company has been certified as compliant with the Payment Card Industry Security Standard intended to ensure that the processing, storing and transmission of credit card information in the Company’s point-of-sale software in our Company-owned restaurants is maintained in a secure manner .
Added
This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use these frameworks as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Removed
At a management level, our cybersecurity program is led by our Information Technology manager, who reports to the Chief Financial Officer. Our Information Technology manager is supported by our third-party consultants.
Added
There can be no assurance that our cyber insurance policies will be sufficient in scope or amount to cover the costs and expenses related to any future cybersecurity incidents and it does not remedy the reputational and future business impacts. Governance The full Board of Directors has overall responsibility for risk oversight, including cybersecurity matters.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt March 31, 2024, in addition to the leases listed above, we were the sub-lessor of one property to a franchisee located within the metropolitan New York area. Aggregate rental expense, net of sublease income, under all current leases amounted to $1,686,000 in fiscal 2024.
Biggest changeAt March 30, 2025, in addition to the leases listed above, we were the sub-lessor of one property to a franchisee located within the metropolitan New York area. Aggregate rental expense, net of sublease income, under all current leases amounted to $1,873,000 in fiscal 2025.
At March 31, 2024, other Company-owned restaurants that were operating were located in leased space with terms expiring as shown in the following table: Nathan’s Restaurants Location Current Lease Expiration Date Approximate Square Footage Coney Island Brooklyn, NY December 2027 10,000 Coney Island Boardwalk (a) Brooklyn, NY November 2028 3,800 Long Beach Road Oceanside, NY April 2030 4,100 Central Park Avenue Yonkers, NY December 2028 3,500 (a) Seasonal satellite location.
At March 30, 2025, other Company-owned restaurants that were operating were located in leased space with terms expiring as shown in the following table: Nathan’s Restaurants Location Current Lease Expiration Date Approximate Square Footage Coney Island Brooklyn, NY December 2027 10,000 Coney Island Boardwalk (a) Brooklyn, NY November 2027 3,800 Long Beach Road Oceanside, NY April 2030 4,100 Central Park Avenue Yonkers, NY December 2028 3,500 (a) Seasonal satellite location.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeNevertheless, litigation is subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include monetary damages and, in such event, could result in a material adverse impact on our results of operations for the period in which the ruling occurs.
Biggest changeNevertheless, litigation is subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include monetary damages and, in such event, could result in a material adverse impact on our results of operations for the period in which the ruling occurs. Item 4. Mine Safety Disclosures. Not applicable. 37 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring fiscal 2023, the Company declared and paid three quarterly dividends of $0.45 per share and one quarterly dividend of $0.50 per share. During fiscal 2024, the Company declared and paid four quarterly dividends of $0.50 per share.
Biggest changeThe Company paid quarterly cash dividends of $0.50 per share of common stock during each of the first, second, third and fourth quarters of fiscal 2024 and 2025.
Market Information and Dividend Policy Our common stock is quoted on the NASDAQ Global Market (“Nasdaq”) under the symbol “NATH.” As of June 6, 2024 we had approximately 311 shareholders of record, excluding shareholders whose shares were held by brokerage firms, depositories and other institutional firms in “street name” for their customers.
Market Information and Dividend Policy Our common stock is quoted on the NASDAQ Global Market (“Nasdaq”) under the symbol “NATH.” As of June 5, 2025 we had approximately 290 shareholders of record, excluding shareholders whose shares were held by brokerage firms, depositories and other institutional firms in “street name” for their customers.
In addition to the terms of the Indenture, the payment of any cash dividends in the future will be dependent upon our earnings and financial requirements and the terms of any other indebtedness that we may incur in the future and there can be no assurance that we will declare and pay any dividends subsequent to the July 2, 2024 dividend.
In addition to the terms of the Credit Agreement, the payment of any cash dividends in the future will be dependent upon our earnings and financial requirements and the terms of any other indebtedness that we may incur in the future and there can be no assurance that we will declare and pay any dividends subsequent to the July 1, 2025 dividend.
Issuer Purchases of Equity Securities The Company did not repurchase any of its common stock during the quarter ended March 31, 2024.
Issuer Purchases of Equity Securities The Company did not repurchase any of its common stock during the quarter ended March 30, 2025.
Effective June 12, 2024, the Board declared its first quarterly cash dividend of $0.50 per share for fiscal year 2025 which is payable on July 2, 2024 to stockholders of record as of the close of business on June 24, 2024.
Effective June 10, 2025, the Board declared its first quarterly cash dividend of $0.50 per share for fiscal year 2026 which is payable on July 1, 2025 to stockholders of record as of the close of business on June 23, 2025. Our ability to pay future dividends is limited by the terms of our Credit Agreement.
Removed
Our ability to pay future dividends is limited by the terms of an Indenture , dated November 1, 2017, between the Company, certain of its wholly-owned subsidiaries, as guarantors and U.S. Bank Trust Company, National Association (formerly known as U.S. Bank National Association), as Trustee and Collateral Trustee (the “Indenture”).
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In addition, the payment of any cash dividends in the future are subject to final determination of the Board and will be dependent upon our earnings and financial requirements and the terms of our Credit Agreement.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOther income, net was $18,000 in the fiscal 2023 period, which primarily relates to sublease income from a franchised restaurant, offset by a net loss on disposal of assets for capitalized software no longer in use of $87,000. 44 Provision for Income Taxes The effective income tax rate for the fiscal 2024 period was 28.5% compared to 26.8% for the fiscal 2023 period.
Biggest changeThe increase is due to higher levels of invested cash earning interest at higher rates in the fiscal 2025 period as compared to the fiscal 2024 period. Other income, net was $87,000 in the fiscal 2025 period, which primarily relates to sublease income from a franchised restaurant as compared to $86,000 in the fiscal 2024 period.
Impairment Intangible Asset The Company’s intangible asset consists of the trademarks, and the trade name and other intellectual property in connection with the Arthur Treacher’s Fish & Chips brand. The Company determined its intangible asset to have a finite useful life based on the expected future use of this intangible asset.
Impairment of Intangible Asset The Company’s intangible asset consists of the trademarks, and the trade name and other intellectual property in connection with the Arthur Treacher’s Fish & Chips brand. The Company determined its intangible asset to have a finite useful life based on the expected future use of this intangible asset.
For those trade accounts receivable that no longer share similar risk characteristics with its pool and potential loss is evident, a specific reserve is recorded. Reserves can be subject to a degree of judgment and can be subject to macroeconomic factors, including inflation and forecasts of future economic conditions.
For those trade accounts receivable that no longer share similar risk characteristics with its pool and potential loss is evident, a specific reserve is recorded. 41 Reserves can be subject to a degree of judgment and can be subject to macroeconomic factors, including inflation and forecasts of future economic conditions.
Based upon the review of its Arthur Treacher’s Fish & Chips co-branding agreements, the Company determined that the remaining useful lives of these agreements is four years concluding in fiscal 2028 and the intangible asset is subject to annual amortization.
Based upon the review of its Arthur Treacher’s Fish & Chips co-branding agreements, the Company determined that the remaining useful lives of these agreements is three years concluding in fiscal 2028 and the intangible asset is subject to annual amortization.
New Accounting Standards Not Yet Adopted See Note B item 23 to the consolidated financial statements included in Part IV, Item 15 of this Form 10-K for a summary of new accounting standards applicable to us.
New Accounting Standards Not Yet Adopted See Note B item 24 to the consolidated financial statements included in Part IV, Item 15 of this Form 10-K for a summary of new accounting standards applicable to us.
We do not believe that the additional week of operations had a significant impact on license royalties as our licensees continued to report based upon their fiscal reporting periods.
We do not believe that the additional week of operations during fiscal 2024 had a significant impact on license royalties as our licensees continued to report based upon their fiscal reporting periods.
While we do not expect to significantly increase the number of Company-owned restaurants, we may opportunistically and strategically invest in a small number of new units as showcase locations for prospective franchisees and master developers as we seek to grow our franchise system.
While we do not expect to significantly increase the number of Company-owned restaurants, we may opportunistically and strategically invest in a small number of new units as showcase locations for prospective franchisees and master developers as we seek to grow our franchise system. As described in Item 1A.
“Risk Factors” and other sections in this Annual Report on Form 10-K for the year ended March 31, 2024, our future results could be impacted by many developments including the impact of the inflationary pressures on our business, as well as our dependence on Smithfield Foods, Inc. as our principal supplier, and the dependence of our licensing revenue and overall profitability on our agreement with Smithfield Foods, Inc.
“Risk Factors” and other sections in this Annual Report on Form 10-K for the year ended March 30, 2025, our future results could be impacted by many developments including the impact of the inflationary pressures on our business, as well as our dependence on Smithfield Foods, Inc. as our principal supplier, and the dependence of our licensing revenue and overall profitability on our agreement with Smithfield Foods, Inc.
Assumptions used to determine projected undiscounted cash flows include future trends and projected sales. Based on the quantitative test performed, the Company determined that the definite-lived intangible asset was recoverable and no impairment charge was recorded for the fiscal years ended March 31, 2024 and March 26, 2023. Cash flow and sales projections require significant estimates and assumptions by management.
Assumptions used to determine projected undiscounted cash flows include future trends and projected sales. Based on the quantitative test performed, the Company determined that the definite-lived intangible asset was recoverable and no impairment charge was recorded for the fiscal years ended March 30, 2025 and March 31, 2024. Cash flow and sales projections require significant estimates and assumptions by management.
The Company has also provided Adjusted EBITDA, a non-GAAP financial measure, which is defined as EBITDA, excluding (i) the loss on disposal of property and equipment; (ii) loss on debt extinguishment; and (iii) share-based compensation that the Company believes will impact the comparability of its results of operations.
The Company has also provided Adjusted EBITDA, a non-GAAP financial measure, which is defined as EBITDA, excluding (i) loss on debt extinguishment; and (ii) share-based compensation that the Company believes will impact the comparability of its results of operations.
We have experienced competitive pressure on labor rates as a result of the increase in the minimum hourly wage for fast food workers where our Company-owned restaurants are located. On January 1, 2024, the minimum wage increased to $16.00 in New York City, Long Island and Westchester which will be followed by $0.50 annual increases in 2025 and 2026.
We have experienced competitive pressure on labor rates as a result of the increase in the minimum hourly wage for fast food workers where our Company-owned restaurants are located. On January 1, 2025, the minimum wage increased from $16.00 to $16.50 in New York City, Long Island and Westchester which will be followed by an additional $0.50 increase in 2026.
Nathan’s estimates that its unrecognized tax benefit excluding accrued interest and penalties could be further reduced by up to $46,000 during the fiscal year ending March 30, 2025, due primarily to the lapse of statutes of limitations which would favorably impact the Company’s effective tax rate, although no assurances can be given in this regard.
Nathan’s estimates that its unrecognized tax benefit excluding accrued interest and penalties could be further reduced by up to $55,000 during the fiscal year ending March 29, 2026, due primarily to the lapse of statutes of limitations which would favorably impact the Company’s effective tax rate, although no assurances can be given in this regard.
The Company intends to declare and pay quarterly cash dividends; however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any. Our ability to pay future dividends is limited by the terms of the Indenture for the 2025 Notes.
The Company intends to declare and pay quarterly cash dividends; however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any. Our ability to pay future dividends is limited by the terms of our Credit Agreement.
If the Company pays regular quarterly cash dividends for the remainder of fiscal 2025 at the same rate as declared in the first quarter of fiscal 2025, the Company’s total cash requirement for dividends for all of fiscal 2025 would be approximately $8,169,000 based on the number of shares of common stock outstanding at June 6, 2024.
If the Company pays regular quarterly cash dividends for fiscal 2026 at the same rate as declared in the first quarter of fiscal 2026, the Company’s total cash requirement for dividends for all of fiscal 2026 would be approximately $8,179,000 based on the number of shares of common stock outstanding at June 5, 2025.
Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $56,000 during the fiscal 2024 period as compared to the fiscal 2023 period primarily due to higher royalties earned on sales of French fries, onion rings, and proprietary spices offset, in part, by lower royalties on the sales of franks-in-a-blanket, mozzarella sticks and other hors d’oeuvres.
Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $316,000 during the fiscal 2025 period as compared to the fiscal 2024 period primarily due to higher royalties earned on sales of French fries, onion rings, proprietary spices, franks-in-a-blanket, mozzarella sticks and bottled mustard offset, in part, by lower royalties earned on sales of pickles.
We also operate four Company-owned restaurants (including one seasonal unit), within the New York metropolitan area. 39 Our primary focus is to expand the market penetration of the Nathan’s Famous brand by increasing the number of distribution points for our products across all of our business platforms, including our Licensing Program for distribution of Nathan’s Famous branded consumer packaged goods, our Branded Products Program for distribution of Nathan’s Famous branded bulk products to the foodservice industry, and our namesake restaurant system comprised of both Company-owned and franchised restaurants, including virtual kitchens.
Our primary focus is to expand the market penetration of the Nathan’s Famous brand by increasing the number of distribution points for our products across all of our business platforms, including our Licensing Program for distribution of Nathan’s Famous branded consumer packaged goods, our Branded Products Program for distribution of Nathan’s Famous branded bulk products to the foodservice industry, and our namesake restaurant system comprised of both Company-owned and franchised restaurants, including virtual kitchens.
March 31, 2024 March 26, 2023 Beginning balance 232 239 Opened 17 11 Closed (19 ) (18 ) Ending balance (a) 230 232 (a) Units operating pursuant to our Branded Product Program and our virtual kitchens are excluded.
March 30, 2025 March 31, 2024 Beginning balance 230 232 Opened 25 17 Closed (25 ) (19 ) Ending balance (a) 230 230 (a) Units operating pursuant to our Branded Product Program and our virtual kitchens are excluded.
A shrinking supply of cattle, combined with drought conditions and inflationary pressures have resulted in higher commodity prices, including beef and beef trimmings, driving the increase in the average cost per pound of our hot dogs. We did not make any purchase commitments for beef during the fiscal 2024 period or the fiscal 2023 period.
A shrinking supply of cattle, combined with industry demand and inflationary pressures have resulted in higher commodity prices, including beef and beef trimmings, contributing to the increase in the average cost per pound of our hot dogs. We did not make any purchase commitments for beef during the fiscal 2025 and 2024 periods.
Delays in implementing price increases, competitive pressures, a decline in consumer discretionary spending levels and other factors may limit our ability to offset these rising costs. Volatility in commodity prices, including beef and beef trimmings could have a significant adverse effect on our results of operations.
We attempt to manage inflationary pressure, and rising commodity costs, at least in part, through raising prices. Delays in implementing price increases, competitive pressures, consumer spending levels and other factors may limit our ability to offset these rising costs. Volatility in commodity prices, including beef and beef trimmings, could have a significant adverse effect on our results of operations.
The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such assets. If the projected undiscounted future cash flows are less than the carrying value of the assets, the Company will record an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the assets.
If the projected undiscounted future cash flows are less than the carrying value of the assets, the Company will record an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the assets. The Company generally measures fair value by considering discounted estimated future cash flows from such assets.
As of March 31, 2024, Nathan’s had $345,000 of accrued interest and penalties in connection with unrecognized tax benefits.
As of March 30, 2025, Nathan’s had $395,000 accrued interest and penalties in connection with unrecognized tax benefits.
Our revenues are generated primarily from selling products under Nathan’s Branded Product Program, operating Company-owned restaurants, licensing agreements for the sale of Nathan’s products within supermarkets, grocery stores and club stores, the sale of Nathan’s products directly to other foodservice operators, the manufacture of certain proprietary spices by third parties and the royalties, fees and other sums we can earn from franchising the Nathan’s restaurant concept (including the Branded Menu Program and virtual kitchens).
Our revenues are generated primarily from selling products under Nathan’s Branded Product Program, operating Company-owned restaurants, licensing agreements for the sale of Nathan’s products within supermarkets, grocery stores and club stores, the manufacture of certain proprietary spices by third parties and the royalties, fees and other sums we can earn from franchising the Nathan’s restaurant concept (including the Branded Menu Program and virtual kitchens). 39 The following summary reflects the openings and closings of the Nathan’s franchise system (including the Branded Menu Program) for the fiscal years ended March 30, 2025 and March 31, 2024.
In the past, we entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices. We may attempt to enter into similar purchase arrangements for hot dogs and other products in the future.
To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations. In the past, we entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices. We may attempt to enter into similar purchase arrangements for hot dogs and other products in the future.
Our gross profit (calculated as total Branded Product sales plus total Company-owned restaurants sales less cost of sales) was $15,410,000 during the fiscal 2024 period as compared to $15,873,000 during the fiscal 2023 period. 43 Cost of sales in the Branded Product Program increased by approximately 12% to $75,966,000 during the fiscal 2024 period as compared to $67,646,000 in the fiscal 2023 period, primarily due to the 2% increase in the volume of hot dogs sold as discussed above, as well as a 10% increase in the average cost per pound of our hot dogs.
Our gross profit (calculated as total Branded Product sales plus total Company-owned restaurants sales less cost of sales) was $14,835,000 or 14% of sales during the fiscal 2025 period as compared to $15,410,000 or 16% of sales during the fiscal 2024 period. 43 Cost of sales in the Branded Product Program increased by 9% to $82,462,000 during the fiscal 2025 period as compared to $75,966,000 in the fiscal 2024 period, primarily due to the 1.2% increase in the volume of hot dogs sold, as well as a 7% increase in the average cost per pound of our hot dogs.
The Company calculates an allowance for credit losses by pooling financial assets based on similar risk characteristics and delinquency status under an aging method at the measurement date.
The Company is exposed to credit losses through its trade accounts receivable. The Company calculates an allowance for credit losses by pooling its trade accounts receivable based on similar risk characteristics and delinquency status under an aging method at the measurement date.
We remain contingently liable for all costs associated with this property including: rent, property taxes and insurance. We may incur future cash payments with respect to such property, consisting primarily of future lease payments, including costs and expenses associated with terminating such lease.
We may incur future cash payments with respect to such property, consisting primarily of future lease payments, including costs and expenses associated with terminating such lease.
General and administrative expenses increased by $1,551,000 to $15,612,000 in the fiscal 2024 period as compared to $14,061,000 in the fiscal 2023 period.
General and administrative expenses decreased by $1,082,000 to $14,530,000 in the fiscal 2025 period as compared to $15,612,000 in the fiscal 2024 period.
Our contractual obligations primarily consist of the 2025 Notes and the related interest payments, operating leases, and employment agreements with certain executive officers. These contractual obligations impact our short-term and long-term liquidity and capital resource needs.
At March 30, 2025, our contractual obligations primarily consist of the Term Loan borrowings under our Credit Agreement and the mandatory debt principal repayments and the related interest payments, operating leases, and employment agreements with certain executive officers. These contractual obligations impact our short-term and long-term liquidity and capital resource needs.
Prepaid expenses and other current assets increased by $281,000 due primarily to an increase in prepaid income taxes of $712,000 which were offset, in part, by a reduction in prepaid marketing and other expenses of $325,000.
Prepaid expenses and other current assets decreased by $128,000 due primarily to a decrease in prepaid income taxes of $365,000 which were offset, in part, by an increase in prepaid marketing and insurance expenses of $347,000.
A change in these factors could have a material impact on the allowance for credit losses. 41 Income Taxes The Company’s current provision for income taxes is based upon its estimated taxable income in each of the jurisdictions in which it operates, after considering the impact on taxable income of temporary differences resulting from different treatment of items for tax and financial reporting purposes.
Historically, actual customer rebates have not differed materially from estimated amounts. Income Taxes The Company’s current provision for income taxes is based upon its estimated taxable income in each of the jurisdictions in which it operates, after considering the impact on taxable income of temporary differences resulting from different treatment of items for tax and financial reporting purposes.
Royalties earned under the Branded Menu Program were $744,000 in the fiscal 2024 period as compared to $630,000 in the fiscal 2023 period. Royalties earned under the Branded Menu Program are not based upon a percentage of restaurant sales but are based upon product purchases.
Royalties earned under the Branded Menu Program are not based upon a percentage of restaurant sales but are based upon product purchases. Virtual kitchen royalties were $61,000 in the fiscal 2025 period as compared to $81,000 in the fiscal 2024 period. Traditional franchise royalties were $2,962,000 in the fiscal 2025 period as compared to $3,061,000 in the fiscal 2024 period.
Summary of Cash Flows The following table presents a summary of our cash flows from operating, investing and financing activities: (In thousands) Fiscal year 2024 2023 Net cash provided by operating activities $ 20,002 $ 19,837 Net cash used in investing activities (313 ) (584 ) Net cash used in financing activities (28,523 ) (39,455 ) Net decrease in cash $ ( 8,834 ) $ (20,202 ) Operating activities Cash provided by operations is primarily attributable to net income of $19,616,000 in addition to other non-cash operating items of $2,558,000, offset by changes in other operating assets and liabilities of $2,172,000.
Summary of Cash Flows The following table presents a summary of our cash flows from operating, investing and financing activities: (In thousands) Fiscal year 2025 2024 Net cash provided by operating activities $ 25,240 $ 20,002 Net cash used in investing activities (225 ) (313 ) Net cash used in financing activities (18,240 ) (28,523 ) Net increase (decrease) in cash and cash equivalents $ 6,775 $ ( 8,834 ) 46 Operating activities Cash provided by operations is primarily attributable to net income of $24,026,000 in addition to other non-cash operating items of $2,532,000, offset by changes in other operating assets and liabilities of $1,318,000.
No long-lived assets were deemed impaired during the fiscal years ended March 31, 2024 and March 26, 2023. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairment charges in future periods and such impairments could be material.
Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairment charges in future periods and such impairments could be material.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. Introduction Recent Events Affecting Our Results of Operations Inflationary pressures impacted our results of operations during fiscal 2024, including (i) rising labor costs and (ii) higher commodity prices, including beef and beef trimmings.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. Introduction Recent Events Affecting Our Results of Operations Inflationary Pressures Inflationary pressures impacted our consolidated results of operations during fiscal 2025, and we anticipate continued inflationary pressures on commodity prices, including beef and beef trimmings, as well as labor inflation during fiscal 2026.
Our future operating results could be impacted by supply constraints on beef or by increased costs of beef, beef trimmings and other commodities due to inflationary pressures compared to earlier periods.
Our future operating results could be impacted by supply constraints on beef or by increased costs of beef, beef trimmings and other commodities due to inflationary pressures compared to earlier periods. Critical Accounting Estimates Our consolidated financial statements and the notes to our consolidated financial statements contain information that is pertinent to management’s discussion and analysis.
Inflationary Pressures Inflationary pressures on labor and rising commodity prices, most notably for beef and beef trimmings, have impacted our consolidated results of operations during the fiscal 2024 period, and this trend may continue into fiscal 2025. From April 2023 through September 2023, we experienced significant increases in the cost of beef and beef trimmings.
Inflationary Pressures Inflationary pressures on labor and rising commodity prices, most notably for beef and beef trimmings, have impacted our consolidated results of operations during the fiscal 2025 period, and this trend may continue into fiscal 2026. Our average cost of hot dogs during the fiscal 2025 period was approximately 7% higher than during the fiscal 2024 period.
Total royalties earned on sales of hot dogs from our license agreement with Smithfield Foods, Inc. at retail and foodservice, increased to $30,068,000 for the fiscal 2024 period as compared to $29,998,000 for the fiscal 2023 period.
Total royalties earned on sales of hot dogs from our license agreement with Smithfield Foods, Inc. at retail and foodservice, increased to $33,589,000 for the fiscal 2025 period as compared to $30,068,000 for the fiscal 2024 period. The increase is due to an 11% increase in retail volume. The net selling price at retail was comparable year over year.
Such repurchases, if any, will depend on market conditions, our liquidity requirements, and other factors. 47 We expect that in the future we will make investments in certain existing restaurants, support the growth of the Branded Product and Branded Menu Programs, service the outstanding debt, fund our dividend program and may continue our stock repurchase programs, funding those investments from our operating cash flow.
Cash Flow Outlook We expect that in the future we will make investments in certain existing restaurants, support the growth of the Branded Product and Branded Menu Programs, service the principal and interest obligations under the Credit Agreement, fund our dividend program and may continue our stock repurchase programs, funding those investments from our operating cash flow.
Fiscal Year (In thousands) 2024 2023 Net income $ 19,616 $ 19,623 Interest expense 5,355 7,742 Provision for income taxes 7,835 7,181 Depreciation and amortization 1,135 1,135 EBITDA 33,941 35,681 Loss on disposal of property and equipment - 87 Loss on debt extinguishment 169 357 Share-based compensation 733 258 ADJUSTED EBITDA $ 34,843 $ 36,383 45 Liquidity and Capital Resources Sources and uses of cash Cash at March 31, 2024 aggregated $21,027,000, a $8,834,000 decrease during the fiscal 2024 period as compared to cash of $29,861,000 at March 26, 2023.
Fiscal Year (In thousands) 2025 2024 Net income $ 24,026 $ 19,616 Interest expense 4,106 5,355 Provision for income taxes 8,735 7,835 Depreciation and amortization 957 1,135 EBITDA 37,824 33,941 Loss on debt extinguishment 389 169 Share-based compensation 993 733 ADJUSTED EBITDA $ 39,206 $ 34,843 45 Liquidity and Capital Resources Sources and uses of cash Cash and cash equivalents at March 30, 2025 aggregated $27,802,000, a $6,775,000 increase during the fiscal 2025 period as compared to cash and cash equivalents of $21,027,000 at March 31, 2024.
Franchise restaurant sales increased to $68,417,000 in the fiscal 2024 period as compared to $63,739,000 in the fiscal 2023 period primarily due to higher sales at airport locations, movie theaters and shopping malls. We estimate that the additional week of operations during fiscal 2024 resulted in $1,215,000 of additional franchise restaurant sales or royalties of approximately $60,000.
Franchise restaurant sales declined to $66,905,000 in the fiscal 2025 period as compared to $68,417,000 in the fiscal 2024 period. We estimate that the additional week of operations during fiscal 2024 resulted in $1,215,000 of additional franchise restaurant sales or royalties of approximately $60,000.
During the fiscal 2024 period, the Company declared and paid four quarterly dividends of $0.50 per share aggregating $8,161,000. Effective June 12, 2024, the Board declared its first quarterly cash dividend of $0.50 per share for fiscal 2025 which is payable on July 2, 2024 to stockholders of record as of the close of business on June 24, 2024.
Effective June 10, 2025, the Board declared its first quarterly cash dividend of $0.50 per share for fiscal 2026 which is payable on July 1, 2025 to stockholders of record as of the close of business on June 23, 2025.
In connection with the partial redemptions, the Company recorded a loss on early extinguishment of debt of $169,000 and $357,000 in the fiscal 2024 period and the fiscal 2023 period, respectively, that reflected the write-off of a portion of previously recorded debt issuance costs.
During fiscal 2024, the Company completed the partial redemption, in the principal amount of $20,000,000 of the 2025 Notes. In connection with this transaction, the Company recorded a loss on extinguishment of debt of $169,000 that reflected the write-off of a portion of previously recorded debt issuance costs.
Inherent volatility experienced in certain commodity markets, such as those for beef and beef trimmings due to seasonal shifts, climate conditions, industry demand, inflationary pressures and other macroeconomic factors could have an adverse effect on our results of operations. This impact will depend on our ability to manage such volatility through price increases and product mix.
Our average cost of hot dogs during the fiscal 2024 period was approximately 10% higher than during the fiscal 2023 period. Inherent volatility experienced in certain commodity markets, such as those for beef and beef trimmings due to seasonal shifts, climate conditions, industry demand, inflationary pressures and other macroeconomic factors could have an adverse effect on our results of operations.
At March 31, 2024, there were 98,116 shares remaining to be repurchased pursuant to the sixth stock repurchase plan. The plan does not have a set expiration date. Purchases under the Company’s stock repurchase program may be made from time to time, depending on market conditions, in open market or privately negotiated transactions, at prices deemed appropriate by management.
Purchases under the Company’s stock repurchase program may be made from time to time, depending on market conditions, in open market or privately negotiated transactions, at prices deemed appropriate by management. There is no set time limit on the repurchases. There were no stock repurchases during the fiscal 2025 period.
Foodservice sales from the Branded Product Program were $86,489,000 for the fiscal 2024 period as compared to $78,884,000 for the fiscal 2023 period. We estimate that the additional week of operations during fiscal 2024 represented approximately $1,202,000 of additional Branded Product Program sales.
We estimate that the additional week of operations during fiscal 2024 represented approximately $1,202,000 of additional Branded Product Program sales. During the fiscal 2025 period, the total volume of hot dogs sold in the Branded Product Program increased by approximately 1.2% as compared to the fiscal 2024 period.
Results of Operations Fiscal year ended March 31, 2024 compared to fiscal year ended March 26, 2023 Revenues Total revenues increased by approximately 6% to $138,610,000 for the fifty-three weeks ended March 31, 2024 (“fiscal 2024”) as compared to $130,785,000 for the fifty-two weeks ended March 26, 2023 (“fiscal 2023”).
Results of Operations Fiscal year ended March 30, 2025 compared to fiscal year ended March 31, 2024 Revenues Total revenues increased by approximately 7% to $148,182,000 for the fifty-two weeks ended March 30, 2025 (“fiscal 2025”) as compared to $138,610,000 for the fifty-three weeks ended March 31, 2024 (“fiscal 2024”). 42 Foodservice sales from the Branded Product Program increased by approximately 6% to $91,828,000 for the fiscal 2025 period as compared to $86,489,000 for the fiscal 2024 period.
With respect to Company-owned restaurants, our cost of sales during the fiscal 2024 period was $7,216,000 or 60% of restaurant sales, as compared to $7,526,000 or 62% of restaurant sales in the fiscal 2023 period. Food and paper costs as a percentage of Company-owned restaurant sales were 28%, down from 29% in the comparable period of the prior year.
With respect to Company-owned restaurants, our cost of sales during the fiscal 2025 period was $7,245,000 or 57% of restaurant sales, as compared to $7,216,000 or 60% of restaurant sales in the fiscal 2024 period.
Our primary cash requirements are to fund our quarterly dividends, to satisfy the debt service on the 2025 Notes, capital expenditures, working capital and general corporate needs.
Our primary cash requirements are to fund our quarterly dividends, to satisfy the debt service under our credit facility, capital expenditures, working capital and general corporate needs. 2025 Notes On May 1, 2024, we paid our first semi-annual interest payment on the 2025 Notes of $1,987,500 for the fiscal 2025 period.
Franchise fees and royalties increased by $64,000 to $4,356,000 in the fiscal 2024 period as compared to $4,292,000 in the fiscal 2023 period. Total royalties were $3,886,000 in the fiscal 2024 period as compared to $3,636,000 in the fiscal 2023 period.
Franchise fees and royalties decreased by $208,000 to $4,148,000 in the fiscal 2025 period as compared to $4,356,000 in the fiscal 2024 period. Total royalties were $3,767,000 in the fiscal 2025 period as compared to $3,886,000 in the fiscal 2024 period. Royalties earned under the Branded Menu Program were $744,000 in the fiscal 2025 and 2024 periods.
Inherent volatility in commodity markets, including beef and beef trimmings, could have a significant impact on our results of operations. Delays in implementing price increases, competitive pressures, a decline in consumer spending levels and other factors may limit our ability to implement further price increases in the future.
Delays in implementing price increases, competitive pressures, recession fears, a decline in consumer spending levels and other factors may limit our ability to implement further price increases in the future. Uncertainty in the current macroeconomic environment, including the impact of tariffs, may have an adverse impact on our sales or increase our cost of goods sold.
Net working capital decreased to $23,203,000 from $30,652,000 at March 26, 2023 due primarily to the partial redemption of $20,000,000 of the Company’s 2025 Notes. Our primary sources of liquidity are cash flows from operations.
Net working capital increased to $28,371,000 at March 30, 2025 as compared to $23,203,000 at March 31, 2024. Our primary sources of liquidity are cash flows from operations.
Costs and Expenses Overall, our cost of sales increased by approximately 11% to $83,182,000 in the fiscal 2024 period as compared to $75,172,000 in the fiscal 2023 period.
Advertising fund revenue, after eliminating Company contributions, was $2,074,000 in the fiscal 2025 period as compared to $2,081,000 during the fiscal 2024 period. Costs and Expenses Overall, our cost of sales increased by approximately 8% to $89,707,000 in the fiscal 2025 period as compared to $83,182,000 in the fiscal 2024 period.
Comparable domestic franchise sales (consisting of 59 Nathan’s locations, excluding sales under the Branded Menu Program and excluding the impact of the additional week of operations) were $54,031,000 during the fiscal 2024 period as compared to $51,607,000 during the fiscal 2023 period.
Comparable domestic franchise sales (consisting of 58 Nathan’s locations, excluding sales under the Branded Menu Program) were $51,250,000 during the fiscal 2025 period as compared to $53,108,000 during the fiscal 2024 period. At March 30, 2025, 230 franchised locations, including domestic, international and Branded Menu Program units were operating.
In addition, the payment of any cash dividends in the future are subject to final determination of the Board and will be dependent upon our earnings and financial requirements and the terms of any other indebtedness that we may incur in the future.
In addition, the payment of any cash dividends in the future are subject to final determination of the Board and will be dependent upon our earnings and financial requirements and the terms of our Credit Agreement. Purchase Commitments At March 30, 2025 and March 31, 2024, Nathan’s did not have any open purchase commitments to purchase hot dogs.
The Company generally measures fair value by considering discounted estimated future cash flows from such assets. Key inputs to determine estimated future cash flows include forecasted Company-owned restaurant sales and a discount rate. We use a weighted average cost of capital discount rate to calculate future cash flows.
Key inputs to determine estimated future cash flows include forecasted sales growth at individual Company-owned restaurants and a discount rate. We use a weighted average cost of capital discount rate to calculate future cash flows. During recent years, we have faced periods of inflation, led by labor inflation and commodity inflation.
The effective tax rates are higher than the statutory rates primarily due to state and local taxes, as well as non-deductible executive compensation under the Internal Revenue Code Section 162(m). The amount of unrecognized tax benefits at March 31, 2024 was $465,000 all of which would impact Nathan’s effective tax rate, if recognized.
The effective income tax rate for the fiscal 2024 period reflected income tax expense of $7,835,000 recorded on $27,451,000 of pre-tax income. The effective tax rates are higher than the U.S. Federal statutory rates primarily due to state and local taxes, as well as non-deductible executive compensation under the Internal Revenue Code Section 162(m).
Advertising fund expense, after eliminating Company contributions, was $1,998,000 in the fiscal 2024 period as compared to $1,988,000 in the fiscal 2023 period. Other Items Interest expense of $5,355,000 in the fiscal 2024 period represented interest expense of $5,010,000 on the 2025 Notes and amortization of debt issuance costs of $345,000.
Advertising fund expense, after eliminating Company contributions, was $2,112,000 in the fiscal 2025 period as compared to $1,998,000 in the fiscal 2024 period.
The effective income tax rate for the fiscal 2024 period reflected income tax expense of $7,835,000 recorded on $27,451,000 of pre-tax income. The effective income tax rate for the fiscal 2023 period reflected income tax expense of $7,181,000 recorded on $26,804,000 of pre-tax income.
Provision for Income Taxes The effective income tax rate for the fiscal 2025 period was 26.7% compared to 28.5% for the fiscal 2024 period. The effective income tax rate for the fiscal 2025 period reflected income tax expense of $8,735,000 recorded on $32,761,000 of pre-tax income.
At March 31, 2024 and March 26, 2023, Nathan’s did not have any open purchase commitments to purchase hot dogs. Nathan’s may enter into purchase commitments in the future as favorable market conditions become available.
Nathan’s may enter into purchase commitments in the future as favorable market conditions become available.
Our business could be negatively impacted if the decrease in margins for our franchisees results in the potential loss of new franchisees or the closing of a significant number of franchised restaurants. 48 We expect to continue experiencing volatility in oil and gas prices on our distribution costs for our food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from the uncertainty of the insurance markets.
Our business could be negatively impacted if the decrease in margins for our franchisees results in the potential loss of new franchisees or the closing of a significant number of franchised restaurants.
Management believes that available cash and cash generated from operations should provide sufficient capital to finance our operations, satisfy our debt service requirements, fund dividend distributions and stock repurchases for at least the next 12 months. At March 31, 2024, we sublet one property to a franchisee that we lease from a third party.
Such voluntary prepayments, if any, will depend on market conditions, our liquidity requirements, satisfactory compliance of covenants and conditions pursuant to our Credit Agreement and other factors. 48 Management believes that available cash and cash equivalents and cash generated from operations should provide sufficient capital to finance our operations, satisfy our debt service requirements, fund dividend distributions and, if any, stock repurchases for at least the next 12 months.
The increase is due primarily to higher occupancy expenses of $85,000, higher insurance costs of $35,000, and higher credit card bank fees of $73,000. Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, was $1,135,000 in the fiscal 2024 period and the fiscal 2023 period.
Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, and the amortization of a definite-lived intangible asset, was $957,000 in the fiscal 2025 period as compared to $1,135,000 in the fiscal 2024 period.
Restaurant sales were impacted by reduced traffic due primarily to unfavorable summer weather conditions. 42 License royalties increased by approximately $126,000 to $33,581,000 in the fiscal 2024 period as compared to $33,455,000 in the fiscal 2023 period.
Restaurant sales were primarily impacted by higher sales at our Coney Island locations due to an increase in our average check. License royalties increased by approximately 11% to $37,418,000 in the fiscal 2025 period as compared to $33,581,000 in the fiscal 2024 period.
Domestic franchise fee income was $106,000 in the fiscal 2024 period as compared to $110,000 in the fiscal 2023 period. International franchise fee income was $241,000 in the fiscal 2024 period as compared to $280,000 in the fiscal 2023 period. We recognized $123,000 and $266,000 of forfeited fees in the fiscal 2024 and fiscal 2023 periods, respectively.
Total franchise fee income was $381,000 in the fiscal 2025 period as compared to $470,000 in the fiscal 2024 period. Domestic franchise fee income was $108,000 in the fiscal 2025 period as compared to $106,000 in the fiscal 2024 period. International franchise fee income was $237,000 in the fiscal 2025 period as compared to $241,000 in the fiscal 2024 period.
We may also incur capital and other expenditures or engage in investing activities in connection with opportunistic situations that may arise on a case-by-case basis. During the fiscal year ending March 30, 2025, we expect to make interest payments of $3,975,000. On May 1, 2024, we made the first semi-annual interest payment of $1,987,500 for fiscal 2025.
We may also incur capital and other expenditures or engage in investing activities in connection with opportunistic situations that may arise on a case-by-case basis.
We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during the remainder of fiscal 2025. To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations.
This impact will depend on our ability to manage such volatility through price increases and product mix. We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2026.
At March 31, 2024, our franchise system consisted of 230 Nathan’s franchised locations, including 116 Branded Menu locations located in 17 states, and 13 foreign countries.
At March 30, 2025, our franchise system consisted of 230 Nathan’s franchised locations, including 121 Branded Menu locations located in 17 states, and 12 foreign countries. We also operate four Company-owned restaurants (including one seasonal unit), within the New York metropolitan area.
The increase in general and administrative expenses was primarily attributable to a discretionary bonus payment of $500,000 to our current Chairman of the Board, an incentive compensation accrual of $500,000, higher share-based compensation expense of $475,000, higher professional fees of $251,000, and higher travel expenses of $48,000 which were offset, in part, by lower bad debt expense of $300,000.
The reduction in general and administrative expenses was primarily attributable to higher share-based compensation expense of $259,000, and a higher provision for credit losses of $119,000 which were offset by lower professional fees of $291,000 and a cash bonus payout of $1,000,000 to the Company’s Executive Chairman of the Board in fiscal 2024.
Total Company-owned restaurant sales decreased by approximately $58,000 to $12,103,000 during the fiscal 2024 period as compared to $12,161,000 during the fiscal 2023 period.
Our average selling prices increased by approximately 5% as compared to the fiscal 2024 period. Total Company-owned restaurant sales increased by approximately 5% to $12,714,000 during the fiscal 2025 period as compared to $12,103,000 during the fiscal 2024 period. We estimate that the additional week of operations during fiscal 2024 represented approximately $120,000 of additional sales.
We may also return capital to our stockholders through stock repurchases, subject to any restrictions in the Indenture, although there is no assurance that the Company will make any repurchases under its existing stock repurchase plan. We may from time to time seek to redeem additional portions of our 2025 Notes, through open market purchases, privately negotiated transactions or otherwise.
We may return capital to our stockholders through stock repurchases, subject to any restrictions in our Credit Agreement, although there is no assurance that the Company will make any repurchases under its existing stock repurchase plan. Common Stock Dividends As discussed above, we had cash and cash equivalents at March 30, 2025 aggregating $27,802,000.
Accounts payable, accrued expenses and other current liabilities decreased by $1,232,000 due principally to a decrease in accrued interest expense of $467,000 due to the partial redemption of our 2025 Notes and a decrease in accounts payable of $717,000 due to the timing of product purchases for our Branded Products Program.
Accounts payable, accrued expenses and other current liabilities decreased by $1,227,000 due principally to lower incentive compensation accruals of $253,000 as well as a decrease in accrued interest expense of $1,528,000 resulting from the timing of our debt service payments under our Credit Agreement.
Interest income of $383,000 for the fiscal 2024 period represented amounts earned by the Company on its certificates of deposit, as well as interest bearing bank and money market accounts, as compared to $440,000 in the fiscal 2023 period. Other income, net was $86,000 in the fiscal 2024 period, which primarily relates to sublease income from a franchised restaurant.
See NOTE J – LONG-TERM DEBT in the accompanying consolidated financial statements for further information. 44 Interest and dividend income of $672,000 in the fiscal 2025 period represented amounts earned by the Company on its interest bearing bank and money market accounts and money market funds as compared to $383,000 in the fiscal 2024 period.
Interest expense of $7,742,000 in the fiscal 2023 period represented interest expense of $7,234,000 on the 2025 Notes and amortization of debt issuance costs of $508,000.
Other Items Interest expense of $4,106,000 in the fiscal 2025 period represented interest expense of $1,449,000 and $2,504,000 on the 2025 Notes and the Term Loan borrowings under the Credit Agreement, respectively, and amortization of debt issuance costs of $104,000 and $49,000 on the 2025 Notes and the Term Loan borrowings, respectively.
Offsetting these decreases was an increase in accrued payroll and other benefits of $112,000 due primarily to higher incentive compensation accruals. 46 Investing activities Cash used in investing activities of $313,000 is primarily comprised of capital expenditures incurred for our Branded Product Program and our Coney Island restaurants.
Accounts payable increased by $419,000 due to the timing of product purchases for our Branded Product Program and Company-owned restaurants. Investing activities Cash used in investing activities of $225,000 is primarily attributable to capital expenditures incurred for our Branded Product Program and our Coney Island restaurants.
In 2016, the Board authorized increases to the sixth stock repurchase plan for the repurchase of up to 1,200,000 shares of its common stock on behalf of the Company. As of March 31, 2024, Nathan’s has repurchased 1,101,884 shares at a cost of approximately $39,000,000 under the sixth stock repurchase plan.
As of March 30, 2025, Nathan’s has repurchased 1,101,884 shares at a cost of approximately $39,000,000 under the sixth stock repurchase plan. At March 30, 2025, there were 98,116 shares remaining to be repurchased pursuant to the sixth stock repurchase plan. The plan does not have a set expiration date.
Continued increases in labor costs, commodity prices and other operating expenses, including health care, could adversely affect our operations. We attempt to manage inflationary pressure, and rising commodity costs, at least in part, through raising prices.
We expect to continue experiencing volatility in oil and gas prices on our distribution costs for our food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from rising rates. Continued increases in labor costs, commodity prices and other operating expenses, including health care, could adversely affect our operations.
Labor and related expenses as a percentage of Company-owned restaurant sales were 32%, down from 33% in the comparable period in the prior year due to tighter management and staffing stabilization. Restaurant operating expenses increased by $193,000 to $4,177,000 in the fiscal 2024 period as compared to $3,984,000 in the fiscal 2023 period.
Food and paper costs as a percentage of Company-owned restaurant sales were 25%, down from 28% in the fiscal 2024 period driven, in part, by price increases across most menu offerings. Labor and related expenses as a percentage of Company-owned restaurant sales were 32%, which was comparable to the fiscal 2024 period.
Please refer to Note J – Long Term Debt in the accompanying consolidated financial statements for a further discussion regarding the Company’s indebtedness.
See NOTE J – LONG TERM DEBT and NOTE L – STOCKHOLDERS’ EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS in the accompanying consolidated financial statements for further information.
Non-cash operating expenses consist principally of a loss on debt extinguishment of $169,000, depreciation and amortization of $1,135,000, amortization of debt issuance costs of $345,000, share-based compensation expense of $733,000 and bad debt expense of $157,000.
Non-cash operating expenses consist principally of a loss on debt extinguishment of $389,000, depreciation and amortization of $957,000, amortization of debt issuance costs of $153,000, share-based compensation expense of $993,000 and a provision for credit losses of $275,000. In the fiscal 2025 period, inventories increased by $379,000 due to timing and Branded Product Program inventory in transit.
The Company completed the partial redemption by paying cash of $20,177,000, inclusive of accrued interest of $177,000, and recognized a loss on early extinguishment of $169,000 that reflected the write-off of a portion of previously recorded debt issuance costs.
During fiscal 2025, the Company refinanced and redeemed the 2025 Notes. In connection with the refinancing, the Company recorded a loss on extinguishment of debt of $334,000 that reflected the write-off of the remainder of the debt issuance costs on the 2025 Notes.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2025. Factors that affect beef prices are outside of our control and include foreign and domestic supply and demand, inflation, weather and seasonality.
Biggest changeOur average cost of hot dogs during fiscal 2025 was approximately 7% higher than during fiscal 2024. We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2026.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Cash and Cash Equivalents We have historically invested our cash in money market funds or short-term, fixed rate, highly rated and highly liquid instruments which are generally reinvested when they mature.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Cash and Cash Equivalents We have historically invested our cash in money market accounts, money market funds or short-term, fixed rate, highly rated and highly liquid instruments which are generally reinvested when they mature.
We have attempted to enter sales agreements with our customers that are correlated to our cost of beef, thus reducing our market volatility, or have passed through permanent increases in our commodity prices to our customers that are not on formula pricing, thereby reducing the impact of long-term increases on our financial results.
We have attempted to enter sales agreements with our Branded Product Program customers that are correlated to our cost of beef, thus reducing our market volatility, or have passed through permanent increases in our commodity prices to our Branded Product Program customers that are not on formula pricing, thereby reducing the impact of long-term increases on our financial results.
Although these existing investments are not considered at risk with respect to changes in interest rates or markets for these instruments, our rate of return on short-term investments could be affected at the time of reinvestment as a result of intervening events. As of March 31, 2024, Nathan’s cash balance aggregated $21,027,000.
Although these existing investments are not considered at risk with respect to changes in interest rates or markets for these instruments, our rate of return on short-term investments could be affected at the time of reinvestment as a result of intervening events. As of March 30, 2025, Nathan’s cash and cash equivalents balance aggregated $27,802,000.
A short-term increase or decrease of 10% in the cost of our food and paper products for the year ended March 31, 2024 would have increased or decreased our cost of sales by approximately $7,734,000.
A short-term increase or decrease of 10% in the cost of our food and paper products for the year ended March 30, 2025 would have increased or decreased our cost of sales by approximately $8,338,000.
To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations. In the past, we have entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices. We may attempt to enter into purchase arrangements for hot dogs and other products in the future.
In the past, we have entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices. We may attempt to enter into purchase arrangements for hot dogs and other products in the future.
Additionally, we expect to continue experiencing volatility in oil and gas prices on our distribution costs for our food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from rising rates.
Additionally, we expect to continue experiencing volatility in oil and gas prices on our distribution costs for our food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from rising rates. We have not attempted to hedge against fluctuations in the prices of the commodities we purchase using future, forward, option or other instruments.
With the exception of purchase commitments, we have not attempted to hedge against fluctuations in the prices of the commodities we purchase using future, forward, option or other instruments. As a result, we expect that the majority of our future commodity purchases will be subject to market changes in the prices of such commodities.
As a result, we expect that the majority of our future commodity purchases will be subject to market changes in the prices of such commodities.
Commodity Costs Inflationary pressures on labor and rising commodity prices have directly impacted our consolidated results of operation during fiscal 2024, most notably within our restaurant operations and Branded Product Program segments. We expect this trend to continue into fiscal 2025. Our average cost of hot dogs during fiscal 2024 was approximately 10% higher than during fiscal 2023.
Commodity Costs We are exposed to market price fluctuations in commodities, most notably beef and beef trimmings. Inflationary pressures on commodity prices have directly impacted our consolidated results of operations during fiscal 2025, most notably within our Restaurant Operations and Branded Product Program segments. We expect this trend to continue into fiscal 2026.
Earnings on this cash would increase or decrease by approximately $53,000 per annum for each 0.25% change in interest rates. Borrowings At March 31, 2024, we had $60,000,000 principal amount of 6.625% 2025 Notes outstanding which are due in November 2025.
Earnings on this cash would increase or decrease by approximately $70,000 per annum for each 0.25% change in interest rates. Borrowings On July 10, 2024, we entered into the Credit Agreement and borrowed $60,000,000 in Term Loan borrowings to refinance and redeem the 2025 Notes.
Interest expense on these borrowings would increase or decrease by approximately $150,000 per annum for each 0.25% change in interest rates. We currently do not anticipate entering into interest rate swaps or other financial instruments to hedge our borrowings.
A hypothetical 100 bps increase in the interest rate on our $50,800,000 of outstanding unsecured Term Loan borrowings at March 30, 2025 would lead to an increase of approximately $508,000 in cash interest costs over the next twelve months. We currently do not anticipate entering into interest rate swaps or other financial instruments to hedge our borrowings.
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Borrowings under our Credit Agreement bear interest at a fluctuating interest rate based on SOFR or a base rate plus a spread adjustment. Accordingly, a rising interest rate environment would result in higher interest expense due on borrowings.
Added
Factors that affect beef prices are outside of our control and include foreign and domestic supply and demand, inflation, weather and seasonality. To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations.

Other NATH 10-K year-over-year comparisons