Carrols Restaurant (TAST) Financial Report Summaries

Risks

• We could be materially adversely affected by health concerns such as the COVID-19 pandemic, food-borne illnesses, as well as negative publicity regarding food quality, illness, injury or other health concerns.
• Intense competition in the restaurant industry could make it more difficult to profitably expand our business and could also have a negative impact on our operating results if customers favor our competitors or we are forced to change our pricing and other marketing strategies.
• Factors applicable to the quick-service restaurant segment may have a material adverse effect on our results of operations and financial condition, which may cause a decrease in earnings and restaurant sales.
• We are highly dependent on the Burger King and Popeyes systems and our ability to renew our franchise agreements with BKC and PLK. The failure to renew our franchise agreements or Burger King's or Popeyes' failure to compete effectively would materially adversely affect our results of operations.
• An increase in food costs could have a material adverse effect on our results of operations and financial condition.
• The efficiency and quality of our competitors' advertising and promotional programs and the extent and cost of our advertising could have a material adverse effect on our results of operations and financial condition.
• Our strategy may include pursuing acquisitions of additional Burger King and Popeyes restaurants and we may not find Burger King restaurants or Popeyes restaurants that are suitable acquisition candidates or successfully operate or integrate any acquired Burger King restaurants or Popeyes restaurants.
• We may incur significant liability or reputational harm if claims are brought against us or the Burger King and Popeyes brands.
• Changes in consumer taste could negatively impact our business.
• We could be adversely affected by our failure to acknowledge and sufficiently respond to the fast-moving influence of social media.
• If a significant disruption in service or supply by any of our suppliers or distributors were to occur, it could create disruptions in the operations of our restaurants, which could have a material adverse effect on our results of operations and financial condition.
• Supply shortages and price increases could delay or increase the cost of construction, which could have a material adverse effect on our results of operations and financial condition.
• Increases in fuel costs and transportation costs could adversely affect our results of operations and financial condition.
• If labor costs increase, we may not be able to make a corresponding increase in our prices and our results of operations and financial condition may be materially adversely affected.
• Higher labor costs due to statutory and regulatory changes could have a material adverse effect on our results of operations and financial condition.
• If we are not able to hire and retain qualified restaurant personnel it could create disruptions in the operation of our restaurants and lead to increases in labor costs which could have a material adverse effect on our results of operation and financial condition.
• Increases in income tax rates or changes in income tax laws could adversely affect our results of operations and financial condition.
• Our business is regional and we therefore face risks related to reliance on certain markets as well as risks for other unforeseen events.
• We could be materially adversely affected by external events such as extreme weather, natural disasters, terrorist actions, pandemics and civil unrest, among others.
• Climate change could adversely affect our results of operations and financial condition.
• We cannot assure you that the current locations of our restaurants will continue to be economically viable or that additional locations can be acquired at reasonable costs.
• Economic downturns may adversely impact consumer spending patterns.
• The loss of the services of our senior management could have a material adverse effect on our results of operations and financial condition.
• Government regulation could adversely affect our results of operations and financial condition.
• Federal, state and local environmental regulations relating to the use, storage, discharge, emission and disposal of hazardous materials could expose us to liabilities which could have a material adverse effect on our results of operations and financial condition.
• We are subject to all of the risks associated with leasing property subject to long-term, non-cancelable leases.
• Security breaches of confidential credit card, consumer, employee and other material information as well as other threats to our technical systems may have a material adverse effect on our results of operations and financial condition.
• Our results of operations, financial condition and reputation may be impacted by information technology system failures or network disruptions.
• Carrols Corporation is currently a guarantor under 17 restaurant property leases from the time when Fiesta Restaurant Group, Inc. ("Fiesta") was its subsidiary and any default under such property leases by Fiesta may result in substantial liabilities to us.
• The market price of our common stock may be highly volatile or may decline regardless of our operating performance.
• The concentrated ownership of our capital stock by insiders may limit our stockholders' ability to influence corporate matters.
• While we expect to pay regular quarterly cash dividends, there can be no assurance regarding whether or to what extent we will pay cash dividends on our common stock in the future.
• If securities analysts do not publish research or reports about our business or if they downgrade our stock, the price of our stock could decline.
• Provisions in our restated certificate of incorporation and amended and restated bylaws, as amended, or Delaware law might discourage, delay or prevent a change of control of our company or changes in our management and, therefore, depress the trading price of our common stock.
• Our substantial indebtedness could have a material adverse effect on our financial condition.
• Despite current indebtedness levels and restrictive covenants, we may still be able to incur more debt or make certain restricted payments, which could further exacerbate the risks described above.
• The agreements governing our debt restrict our ability to engage in some business and financial transactions and contain certain other restrictive terms.
• We may not have the funds necessary to satisfy all of our obligations under our Senior Credit Facilities, the Notes or other indebtedness in connection with certain change of control events.
• The announcement and pendency of the proposed Merger may adversely affect our business, financial condition and results of operations.
• Failure to complete the Merger could negatively impact the price of our common stock, as well as our future business and financial results.
• 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.
• Expenses related to the pending Merger are significant and will adversely affect our operating results.
• We are subject to business uncertainties and contractual restrictions while the Merger is pending, which could adversely affect our business.
• Litigation could result in substantial costs and may delay or prevent the Merger from being completed.
• Uncertainties associated with the Merger may cause a loss of management and other key employees and disrupt our business relationships, which could adversely affect our business.
• The Merger Agreement contains provisions that could discourage a potential competing acquirer of us.