Thin Net MarginsPersistently low single-digit net margins leave limited buffer against input cost inflation, wage pressure, or rent increases common in restaurants. Even with rising revenue, small margin shifts materially impact profits and cash flow, making sustainable profitability improvements a key medium-term risk to financial strength.
Weak Free-cash-flow ConversionFCF materially trailing net income points to investment intensity or working-capital strains that limit true cash available for debt reduction or shareholder returns. Poor conversion undermines the benefit of accounting profits and constrains strategic optionality, especially if capex or inventory needs persist.
Remaining Meaningful Debt BurdenAlthough leverage has improved, the company still carries significant debt relative to its scale, which narrows room to maneuver during demand shocks. Interest and principal obligations could constrain reinvestment or require operational trade-offs if revenues soften, making balance-sheet risk a structural consideration.