Nathans Famous Stock Price, News & Analysis

Nathan's Famous, Inc. (NASDAQ: NATH) is a Russell 2000 company in the full-service restaurants industry within the accommodation and food services sector. According to its public disclosures and earnings releases, Nathan's Famous operates a multi-segment business that includes a branded foodservice program, product licensing, and restaurant operations, supported by corporate activities such as an advertising fund.

Business Segments and Revenue Sources

The company reports four primary segments: Branded Product Program, Product Licensing, Restaurant Operations, and Corporate. This structure is described in its financial highlights tables and segment information in multiple press releases.

The Branded Product Program segment "features the sale of Nathan’s hot dogs to the foodservice industry." Earnings releases state that this segment derives revenue from selling hot dog products to foodservice operators, either directly or through foodservice distributors that resell to operators. Management commentary notes that sales in this segment are influenced by the volume of hot dogs sold, the average selling price, and the cost of beef and beef trimmings.

The Product Licensing segment generates license royalties. Company releases explain that license royalties are earned under retail and foodservice agreements, including a retail agreement with Smithfield Foods, Inc. Royalties from this agreement are highlighted as a significant component of licensing revenue, and the company notes that its licensing revenue and overall profitability are substantially dependent on this agreement in its forward-looking statements and risk factor summaries.

The Restaurant Operations segment includes sales from company-owned restaurants. Nathan's Famous discloses that these sales are affected by factors such as traffic levels, average check, weather conditions, and the performance of specific locations, including its Coney Island restaurants and other locations in New York. Segment tables in the earnings releases present restaurant revenues and income from operations for this segment.

The Corporate segment consists principally of administrative expenses not allocated to the operating segments. Disclosures describe these costs as including executive management, finance, information technology, legal, insurance, corporate office costs, incentive compensation, share-based compensation, compliance costs, and the operating results of the advertising fund. Corporate revenues primarily represent advertising fund revenue, which is recorded along with corresponding advertising fund expense.

Geographic Reach and Distribution

In the "About Nathan’s Famous" sections of its press releases, the company states that it "currently distributes its products in 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and" a specified number of foreign countries. Depending on the period, the company reports distribution in eighteen, nineteen, or twenty foreign countries. Products are distributed "through its restaurant system, foodservice sales programs and product licensing activities." This indicates that Nathan's Famous combines franchised and company-owned restaurant locations with foodservice programs and licensed retail products to reach customers across the United States, U.S. territories, and multiple international markets.

Franchise Operations and Restaurant System

Nathan's Famous operates a restaurant system that includes franchised locations. The company reports "franchise fees and royalties" or "revenues from franchise operations" as part of its results. It distinguishes between franchise restaurant sales and company revenues, noting that "franchise restaurant sales are not revenues of the Company and are not included in the Company’s Consolidated Financial Statements." Franchise-related revenues include royalties based on franchise restaurant sales and franchise fee income, including cancellation fees. The company regularly discloses the number of new franchised locations opened during a given fiscal period.

Restaurant sales performance is discussed in relation to specific locations and conditions. For example, the company notes that sales at its Coney Island locations can be influenced by weather and the continued viability of Coney Island as a destination. It also references other locations, such as restaurants in Oceanside and Yonkers, New York, when explaining variations in restaurant segment revenues.

Licensing Relationship with Smithfield Foods

Across multiple earnings releases, Nathan's Famous highlights royalties earned under a retail agreement, including a foodservice program, with Smithfield Foods, Inc.. The company quantifies these royalties and discusses percentage changes over time. It states in its forward-looking statements that its "licensing revenue and overall profitability" are substantially dependent on this agreement. This underscores the importance of the product licensing segment and the Smithfield relationship to the company’s overall business model.

Financial Reporting and Non-GAAP Measures

Nathan's Famous regularly reports results for revenues, income from operations, income before provision for income taxes, net income, and earnings per share. In addition to U.S. GAAP measures, the company discloses non-GAAP metrics such as EBITDA and Adjusted EBITDA. It defines EBITDA as net income excluding interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as EBITDA excluding items such as loss on debt extinguishment, loss on disposal of property and equipment, and share-based compensation, depending on the period.

The company explains that management uses EBITDA and Adjusted EBITDA to evaluate performance and that these measures are frequently used by securities analysts and investors as common performance measures. Each earnings release includes a reconciliation of EBITDA and Adjusted EBITDA to net income, emphasizing that these non-GAAP measures are not recognized terms under U.S. GAAP and should be viewed as complements to GAAP results.

Capital Structure, Dividends, and Credit Facilities

Nathan's Famous common stock, par value $0.01 per share, trades on The NASDAQ Global Market under the symbol NATH, as disclosed in its SEC filings. The company has a history of paying regular cash dividends. Numerous press releases state that the Board of Directors has declared quarterly cash dividends of $0.50 per share, and in one instance, the Board declared both a regular quarterly dividend and a special cash dividend of $2.50 per share. These releases specify payment dates and record dates for shareholders.

The company also reports on its debt and credit arrangements. For example, it has described the redemption of a portion of its 6.625% Senior Secured Notes due 2025 and the expected reduction in future cash interest expense. It has also disclosed entering into a five-year unsecured credit agreement providing for a term loan facility and a revolving credit facility, and using term loan borrowings to refinance and redeem outstanding senior secured notes. These actions are presented in the context of managing debt service and repayment obligations, which the company identifies as factors that can affect its ability to fund working capital, operations, and new investments.

Risk Factors and Operating Environment

In the forward-looking statements sections of its releases, Nathan's Famous lists factors that could cause actual results to differ from expectations. These include the impact of disease epidemics such as the COVID-19 pandemic; increases in the cost of food and paper products; the impact of price increases on customer visits; changes in the price of beef and beef trimmings; economic conditions, including inflationary pressures; weather, particularly its effect on restaurant sales during the summer months; legislative and business conditions; changes in consumer tastes; the collectability of receivables; and the continued viability of Coney Island as a destination.

The company also notes risks related to minimum wage legislation and other labor law changes, including regulations that could render a franchisor a "joint employer"; the impact of union contracts; the ability to attract franchisees; the ability to attract competent restaurant and managerial personnel; and the enforceability of international franchising agreements. It further mentions potential effects of food-borne illnesses, such as bovine spongiform encephalopathy (BSE) and E. coli, and references risk factors reported in its SEC filings.

Corporate Governance and Shareholder Matters

Nathan's Famous is incorporated in Delaware, as indicated in its 8-K filings. Its Definitive Proxy Statement (DEF 14A) provides information on corporate governance, including board leadership, committees, director independence, stock ownership guidelines, and risk oversight. The proxy statement describes the annual meeting of stockholders, the election of directors, and the ratification of the independent registered public accounting firm. It also outlines executive compensation, equity incentive plans, and policies such as an employee, officer, and director hedging policy.

The company’s proxy materials explain voting procedures, quorum requirements, the treatment of broker non-votes, and methods for shareholders to vote by mail, telephone, internet, or in person. Security ownership of certain beneficial owners and management, as well as information on delinquent Section 16 reports, is also presented.

Product Innovation and Brand Positioning

A news release distributed by Smithfield Foods describes a product under the Nathan's Famous brand: Hot & Spicy Beef Franks. The release characterizes Nathan's Famous as an "iconic brand" known for flavor and tradition and notes that the new hot and spicy beef franks are crafted with premium beef and a blend of spices. It states that these franks are available at major retailers nationwide and are intended to offer consumers a bold variation on the brand’s signature taste. This product is part of the brand’s licensed retail offerings, as indicated by the release’s attribution to Smithfield Foods and the description of Nathan’s Famous distribution through product licensing activities.

Scale and Market Classification

The company identifies itself as a Russell 2000 constituent in multiple press releases, which places it within a widely followed index of smaller U.S. public companies. While the releases do not provide employee counts or market capitalization figures, the consistent inclusion in the Russell 2000 and the breadth of its distribution—across all 50 U.S. states, several U.S. territories, and numerous foreign countries—provide context for its scale within the full-service restaurants and branded food products space.

Summary

Overall, Nathan's Famous, Inc. combines restaurant operations, a branded hot dog program for the foodservice industry, and product licensing arrangements to generate revenue. Its relationship with Smithfield Foods under a retail and foodservice agreement is a key driver of licensing royalties. The company emphasizes non-GAAP measures such as EBITDA and Adjusted EBITDA alongside GAAP results, maintains a regular dividend policy as described in its releases, and outlines a range of operating and financial risks in its forward-looking statements and SEC filings. Its stock trades on The NASDAQ Global Market under the symbol NATH, and it is included in the Russell 2000 index.