What the changes say
- The proposed Smithfield Foods merger now dominates the risk section, covering completion, regulatory approval, litigation, costs and operating restrictions.
- Smithfield royalty concentration remains material: fiscal 2026 royalties were $33.589 million, or 21% of revenue.
- Cyber risk is framed around third-party vendors supporting payments, payroll, accounting, ordering and transaction processing.
- COVID-19 and dividend-policy risks were removed, while public-health risk was narrowed to recurrence, new variants and other epidemics.
What changed since the prior 10-K
New
- NewRisks Related to the Merger with Smithfield Foods
The announcement and pendency of the proposed Merger with Smithfield Foods may adversely affect our business, financial condition and results of operations
The pending Smithfield Foods merger could disrupt operations, employees, customers, finances and stock price if delayed or not completed.
- NewRisks Related to the Merger with Smithfield Foods
Failure to complete the Merger could negatively impact the price of our common stock, as well as our future business and financial results
If merger conditions are not met, the stock price, management focus, employee reactions, customer relationships and future results could suffer.
- NewRisks Related to the Merger with Smithfield Foods
Our ability to complete the Merger is subject to certain closing conditions and the receipt of consents and approvals from government entities which may impose conditions that could adversely affect us or cause the Merger to be abandoned
Stockholder, regulatory, CFIUS and other closing conditions could delay, restrict or prevent the Smithfield Foods merger.
- NewRisks Related to the Merger with Smithfield Foods
Expenses related to the pending Merger are significant and will adversely affect our operating results
Merger legal and investment-banking costs will reduce results, and failure to close could require a $10.6 million termination fee.
- NewRisks Related to the Merger with Smithfield Foods
We are subject to business uncertainties and contractual restrictions while the Merger is pending, which could adversely affect our business
Merger-related operating restrictions could block attractive opportunities and divert management time while the transaction remains pending.
- NewRisks Related to the Merger with Smithfield Foods
Litigation could result in substantial costs and may delay or prevent the Merger from being completed
Shareholder litigation could impose substantial costs, divert management and delay, prevent or unwind the merger.
- NewRisks Related to Our Business and Operations
Aspects of our operations are reliant upon internet-based activities, including back-office functions such as accounting, processing payroll, making payments and transaction processing, including accepting credit card payments in our restaurants, as well as at third party online ordering and delivery businesses
Failures, capacity limits, cyberattacks or breaches at third-party vendors could disrupt Nathan’s payments, payroll, accounting, ordering and restaurant transactions.
Dropped
- DroppedRisks Related to Our Business and Operations
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
- DroppedRisks Related to Our Business and Operations
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
COVID-19 or other pandemics could reduce restaurant traffic, branded-product sales, licensing royalties and staffing.
- DroppedRisks Related to Our Business and Operations
Changing health or dietary preferences may cause consumers to avoid products offered by us in favor of alternative foods
- DroppedRisks Related to Our Business and Operations
Cyberattacks and breaches could cause operational disruptions, fraud or theft of sensitive information
- DroppedRisks Related to Our Common Stock and Organizational Structure
While we have approved a quarterly dividend policy, there can be no assurance as to the declaration of future dividends or the amount of such dividends
Reworded
- 100% rewrittenRisks Related to Our Business and Operations
Our results of operations could be adversely affected by pandemics, disease epidemics, or other public health concerns
The risk now expressly covers COVID-19 recurrence, new variants, other epidemics, government restrictions, off-premises sales, staffing and dining comfort.
Was: Our results of operations could be adversely affected by disease epidemics, public health concerns or other catastrophic events
- 50% rewrittenRisks Related to Our Business and Operations
Our licensing revenue and overall profitability is substantially dependent on our agreement with Smithfield Foods and the loss or a significant reduction of this revenue would have a material adverse effect on our financial condition and results of operations
The royalty figure is updated to $33.589 million, or 21% of fiscal 2026 revenue; the Smithfield agreement still expires in 2032.
Was: Our licensing revenue and overall profitability is substantially dependent on our agreement with Smithfield Foods, Inc. and the loss or a significant reduction of this revenue would have a material adverse effect on our financial condition and results of operations
- 45% rewrittenRisks Related to Our Business and Operations
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
The discussion drops several listed cost and operating factors, including shipping, marketing, taxes and impairment, and adds general macroeconomic conditions worldwide.
- 38% rewrittenRisks Related to Regulatory Matters
Our business is subject to an increasing focus on Environmental, Social, and Governance (ESG) matters
The risk now focuses on damage to brand image rather than explicitly heightening other disclosed risks, while retaining ESG concerns.
- 37% rewrittenRisks Related to Regulatory Matters
Changes in franchise regulations and laws could impact our ability to obtain or retain licenses or approvals and adversely affect our business, financial condition, results of operations and prospects
No substantive change is apparent; it still covers FTC and state franchise requirements and required licenses, exemptions or approvals.
- 37% rewrittenRisks Related to Our Business and Operations
The quick-service restaurant business is highly competitive, and that competition could lower revenues, margins and market share
Dietary preferences were added as a competitive factor, while the discussion no longer specifically lists locations, service speed, facilities, digital engagement or product development.
- 36% rewrittenRisks Related to Our Business and Operations
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
Restaurant coverage changed from 17 states and 12 foreign countries to 19 states and 11 foreign countries, excluding virtual kitchens.
- 36% rewrittenRisks Related to Regulatory Matters
Changes in tax laws and unfavorable resolution of tax contingencies could adversely affect our tax expense
No substantive change is apparent; the risk still covers tax-law changes, higher effective rates and unfavorable tax audits.
- 34% rewrittenRisks Related to Our Business and Operations
Our results of operations could be adversely affected by increases in the cost of food, commodities and paper
- 32% rewrittenRisks Related to Our Business and Operations
The sophistication and buying power of our customers could have a negative impact on profits
- 30% rewrittenRisks Related to Our Business and Operations
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
- 28% rewrittenRisks Related to Regulatory Matters
Failure by third-party manufacturers or suppliers of raw materials to comply with food safety, environmental or other regulations may disrupt our supply of certain products and adversely affect our business
- 27% rewrittenRisks Related to Our Business and Operations
Price increases may impact customer visits
- 25% rewrittenRisks Related to Regulatory Matters
Changes to minimum wage rates have increased our labor costs
- 25% rewrittenRisks Related to Our Business and Operations
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
- 24% rewrittenRisks Related to Our Business and Operations
We rely extensively on computer systems, our point-of-sales system and information technology to manage our business. Any disruption in our computer systems, our point-of-sales system or information technology may adversely affect our ability to run our business
- 21% rewrittenRisks 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
All 45 risk factors
Headings as the filing states them, in filing order.
Risks Related to the Merger with Smithfield Foods
- 01The announcement and pendency of the proposed Merger with Smithfield Foods may adversely affect our business, financial condition and results of operationsNew
- 02Failure to complete the Merger could negatively impact the price of our common stock, as well as our future business and financial resultsNew
- 03Our ability to complete the Merger is subject to certain closing conditions and the receipt of consents and approvals from government entities which may impose conditions that could adversely affect us or cause the Merger to be abandonedNew
- 04Expenses related to the pending Merger are significant and will adversely affect our operating resultsNew
- 05We are subject to business uncertainties and contractual restrictions while the Merger is pending, which could adversely affect our businessNew
- 06Litigation could result in substantial costs and may delay or prevent the Merger from being completedNew
Risks Related to Our Business and Operations
- 07Our results of operations could be adversely affected by pandemics, disease epidemics, or other public health concerns100% rewritten
- 08Our results of operations could be adversely affected by increases in the cost of food, commodities and paper34% rewritten
- 09We 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
- 10Price increases may impact customer visits27% rewritten
- 11Our licensing revenue and overall profitability is substantially dependent on our agreement with Smithfield Foods and the loss or a significant reduction of this revenue would have a material adverse effect on our financial condition and results of operations50% rewritten
- 12A 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 results25% rewritten
- 13Smithfield Foods currently has two manufacturing facilities producing different Nathan ’ s products and a long-term significant interruption of a primary facility could potentially disrupt our operations
- 14The loss of one or more of our key suppliers could lead to supply disruptions, increased costs and lower operating results
- 15Our earnings and business growth strategy depend in large part on the success of our product licensees and product manufacturers. Our reputation and the reputation of our brand may be harmed by actions taken by our product licensees or product manufacturers that are otherwise outside of our control
- 16The quick-service restaurant business is highly competitive, and that competition could lower revenues, margins and market share37% rewritten
- 17Changes in economic, market and other conditions could adversely affect us and our franchisees, and thereby our operating results
- 18Current restaurant locations may become unattractive, and attractive new locations may not be available for a reasonable price, if at all, which may reduce our revenue
- 19We 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
- 20Negative 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 prospects30% rewritten
- 21We 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
- 22Our earnings and business growth strategy depend in part on the success of our restaurant franchisees and on new restaurant openings. Our corporate reputation or brand reputation may be harmed by actions taken by restaurant franchisees that are otherwise outside of our control
- 23We rely on the performance of major retailers, wholesalers, specialty distributors and mass merchants for the success of our business, and should they perform poorly or give higher priority to other brands or products, our business could be adversely affected
- 24The sophistication and buying power of our customers could have a negative impact on profits32% rewritten
- 25Our 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 decline45% rewritten
- 26Our operations are influenced by adverse weather conditions
- 27Climate change could adversely affect our results of operation and financial condition
- 28Due 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 whole36% rewritten
- 29We rely extensively on computer systems, our point-of-sales system and information technology to manage our business. Any disruption in our computer systems, our point-of-sales system or information technology may adversely affect our ability to run our business24% rewritten
- 30Aspects of our operations are reliant upon internet-based activities, including back-office functions such as accounting, processing payroll, making payments and transaction processing, including accepting credit card payments in our restaurants, as well as at third party online ordering and delivery businessesNew
- 31Our international operations are subject to various factors of uncertainty
- 32Our business operations and future development could be significantly disrupted if we lose key personnel
- 33We face risks of litigation and pressure tactics, such as strikes, boycotts and negative publicity from customers, franchisees, suppliers, employees and others, which could divert our financial, and management resources and which may negatively impact our financial condition and results of operations
Risks Related to Regulatory Matters
- 34Changes to minimum wage rates have increased our labor costs25% rewritten
- 35Changes in franchise regulations and laws could impact our ability to obtain or retain licenses or approvals and adversely affect our business, financial condition, results of operations and prospects37% rewritten
- 36We are subject to health, employment, environmental and other government regulations, and failure to comply with existing or future government regulations could expose us to litigation, damage our corporate reputation or the reputation of our brands and lower profits
- 37Failure by third-party manufacturers or suppliers of raw materials to comply with food safety, environmental or other regulations may disrupt our supply of certain products and adversely affect our business28% rewritten
- 38We are subject to many federal, state and local laws, as well as statutory and regulatory requirements. Failure to comply with, or changes in these laws or requirements, could have an adverse impact on our business
- 39Our business is subject to an increasing focus on Environmental, Social, and Governance (ESG) matters38% rewritten
- 40Changes in tax laws and unfavorable resolution of tax contingencies could adversely affect our tax expense36% rewritten
Risks Related to Our Common Stock and Organizational Structure
- 41The market price of our common stock may be highly volatile or may decline regardless of our operating performance
- 42Our certificate of incorporation and by-laws and other corporate documents include anti-takeover provisions which may deter or prevent a takeover attempt
Risks Related to our Indebtedness
- 43Our 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 obtain21% rewritten
- 44imposing 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
- 45If drawn upon, our undrawn revolving credit facility would subject us to interest rate risk, which could cause our debt service obligations to increase
Other Nathans Famous 10-Ks
- FY2025 10-K risk factors43 risks
Licensing revenue heavily depends on Smithfield Foods and a small group of Branded Product Program customers. Commodity price volatility, particularly for beef, and rising minimum wages pressure operating margins. Restaurant and licensing operations face intense competition and stringent food safety regulations.
Filed Jun 10, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.