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Note A - Description and Organization of Business
12 Months Ended
Mar. 27, 2022
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE A - DESCRIPTION AND ORGANIZATION OF BUSINESS

 

Nathan’s Famous, Inc. and subsidiaries (collectively the “Company” or “Nathan’s”) has historically operated or franchised a chain of retail fast food restaurants featuring the “Nathan’s World Famous Beef Hot Dog”, crinkle-cut French-fried potatoes and a variety of other menu offerings. Nathan’s has also established a Branded Product Program, which enables foodservice retailers to sell select Nathan’s proprietary products outside of the realm of a traditional franchise relationship. Nathan’s also licenses the manufacture and sale of “Nathan’s Famous” packaged hot dogs, crinkle-cut French fries and a number of other products to a variety of third parties for sale to supermarkets, club stores and grocery stores. The Company is also the owner of the Arthur Treacher’s brand. Arthur Treacher’s main product is its "Original Fish & Chips" product 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." The Company considers itself to be a brand marketer of its products to the foodservice and retail industries, pursuant to its various business structures. Nathan’s has also pursued co-branding and co-hosting initiatives.

 

At March 27, 2022, the Company’s restaurant system included four Company-owned units in the New York City metropolitan area and 239 franchised or licensed units, located in 18 states and 12 foreign countries. It also included 287 virtual kitchens operating in 20 states and 6 foreign countries.

 

Covid-19 Pandemic and Inflation

 

In March 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19), a global pandemic. The COVID-19 pandemic has had and may continue to have a significant impact on our business and results of operations. During the peak of the pandemic in 2020 and during subsequent resurgences of the virus, governmental restrictions and public perceptions of the risks associated with COVID-19 caused consumers to avoid or limit non-essential travel, gatherings in public places and others social interactions. The COVID-19 pandemic may continue to impact traffic at our Company-owned restaurants and franchised restaurants, as well as sales to our Branded Product Program customers.

 

Our restaurant operations have been and could continue to be disrupted by COVID-19 related employee absences or due to changes in the availability and cost of labor. We remain in regular contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain.

 

Inflationary pressures on labor and rising commodity prices have directly impacted our consolidated results of operations during fiscal 2022, most notably within our restaurant operations and Branded Product Program segments.  We expect this trend to continue into fiscal 2023.  Our average cost of hot dogs between April 2021 and March 2022 was approximately 19% higher than between April 2020 and March 2021.  Beginning in July 2021, the cost of hot dogs has increased significantly due to higher costs for beef and beef trimmings, labor, packaging and transportation, as well as supply chain challenges associated with increased consumer demand as a result of the continued recovery from the COVID-19 pandemic.

 

We continue to monitor the dynamic nature of the COVID-19 pandemic on our business, results and financial condition; however, we cannot predict the impact that resurgences of the COVID-19 virus and new variants of the virus will have on our business in the short or long-term.