What risk management techniques does Bojangles use in its purchasing contracts or pricing arrangements to minimize price volatility?

The Company purchases certain products that are affected by commodity prices and are, therefore, subject to price volatility caused by weather, market conditions and other factors which are not considered predictable or within our control. Although these products are subject to changes in commodity prices, certain purchasing contracts or pricing arrangements contain risk management techniques designed to minimize price volatility.

The purchasing contracts and pricing arrangements we use may result in unconditional purchase obligations, which are not reflected in our accompanying balance sheets. Typically, the Company uses these types of purchasing techniques to control costs as an alternative to directly managing financial instruments to hedge commodity prices. In many cases, the Company believes it will be able to address material commodity cost increases by adjusting our menu pricing, promotional mix, or changing our product delivery strategy. However, increases in commodity prices, without adjustments to our menu prices, could increase food and supplies costs as a percentage of Company-operated restaurant revenues and customers may react negatively to increases in our menu prices which could adversely impact customer traffic and revenues. In addition, the Company may seek to mitigate some of its commodity price risk by entering into commodity derivatives contracts.

Source: Item 22 — CONTRACTS (FDD page 82)