Risk Factors Update Summary

• Failure to develop North Italia and other concepts could materially adversely affect financial performance.
• Increased cybersecurity risks due to remote and hybrid work arrangements, leading to vulnerabilities in managing assets and security. This could result in operational disruption.
• Increased commodity and wage inflation significantly impacted costs, contributing to increased prices.
• Enhanced risk and uncertainty related to expanding less-established restaurant concepts, aiming for accelerated growth. This could impact financial performance significantly.
• Risks related to information technology and cybersecurity, with potential for cyber incidents impacting confidentiality, integrity, and availability of information systems. Cyberattacks are expected to increase in frequency and sophistication.
• Delays in opening new restaurants due to supply chain challenges and permitting issues.
• Increased price increases above historical levels to support long-term margin objectives. Pricing actions were and future increases may be above historical norms.
• Growing focus on ESG matters, with potential regulatory requirements and increasing scrutiny. Failure to address ESG matters could adversely affect brand and financial performance.
• Risks related to privacy laws and regulations, including the California Privacy Laws, could result in significant costs and liabilities if not complied with. Compliance involves substantial costs and potential legal proceedings.
• Menu price increases above historical levels to offset inflation and protect margins.
• Significant supply shortages and price volatility experienced in fiscal 2023, particularly with sustainable products. Challenges largely resulted from the COVID-19 pandemic.
• Increased average sales per location for North Italia from $7.8 million to $8 million.
• Expansion of licensing agreements internationally, with restaurants in Hong Kong, Beijing, and Thailand.
• Increased average sales per location for Flower Child from $4.5 million to $5.8 million.