Q1 2022 Ark Restaurants Corp Earnings Call
Greetings and welcome to the Ark restaurants first quarter 2022 results call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like.
To turn the conference over to your host Chris loved Secretary for Ark restaurants. Thank you you may begin.
Thank you operator, good morning, and thank you for joining us on our conference call for the first quarter ended January <unk> 2022. My name is Christopher Love and I am the Secretary of Ark restaurants with me on the call today is Michael Weinstein, our chairman and CEO , Anthony Sirica, Our Chief Financial Officer, and Vinny Pascal, our Chief operating officer.
For those of you who have not yet obtained a copy of our press release. It was issued over the newswires yesterday and is available on our website to review the full text of that press release, along with the associated financial tables. Please go to our homepage at Www Dot Ark restaurants Dot com before we begin however, I'd like to read the safe.
Harbor statement I need to remind everyone that part of our discussion. This morning will include forward looking statements and that these statements are not guarantees of future performance and therefore undue reliance should not be placed on them. We refer everyone to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks that may have a direct bearing on our <unk>.
Operating results performance and financial condition.
I'll now turn the call over to Mike.
Hi, everybody.
I'm going to turn the call over to Anthony just to give you.
An overview of where we stand on in terms of our balance sheet.
So Anthony you want them you have to take that we had a really strong quarter as you've seen in the press release and as Michael will discuss.
As of the end of the quarter, we had approximately $20 million of cash our debt was approximately $31 million of that 4 million is still outstanding P. P. P loans of which we expect 3 million to be forgiven.
Within the next two to three months so the balance of that the $1 million would be repaid over at over 10 months.
We expect our cash based on our current thinking.
To grow continue to grow through year end as we.
As the spring and summer months, which we expect to be very strong.
Based on our projections. So our balance sheet is really strong and we think it will get stronger as the month's receivables progress we still have a in addition to what we have on hand as far as the cash reserves, we still have a.
$2.5 million receivable on the books for our tax refunds and we will be applying for additional refunds. Once we receive those refunds. The IRS has been substantially backed up these have to do with the carry backs. They allowed as part of the cares Act, allowing us to go back five years I think we've just.
Thus these before but.
But we have not received those funds yet from the IRS, but we are actually working with.
The tax Advocate's office to obtain those refunds.
I'll turn it back to Michael.
Oh, hi, everybody.
Blade to Valentine's day.
Okay.
So the quarter was strong but within the quarter.
Within win within our venues.
Not everything was strong we were particularly strong in Florida or Las Vegas, Alabama was normal.
Normal.
No no bump up in revenues from prior years just just.
The usual, Florida was particularly.
Rewarding.
And in New York.
We're still dealing with.
The crime and hesitancy for people to eat indoors.
A lack of event.
Participation in restaurants.
A lot of events, where still canceled or postponed to future periods. So new York remain weak and Sequoia in Washington D C.
So given.
The rest of the country that and and the weakness in New York.
The final results were were.
Very satisfying however.
If we can get New York back to where it used to be I think.
You will see some very strong results from the company.
We're still dealing with food cost problems.
As I have.
<unk> been in touch with all our managers.
We're not just raising prices because we think we can because everybody else is doing so and customers.
To be accepting of what we've been looking at is what is your.
Customer makeup so for instance in a blue Moon in Florida.
That's a very high end restaurant.
Entrees high $30 to low $40.
There, we've been able to raise prices because there is no customer that we're going to get.
Backlash from.
Seem to be well heeled in accepting and.
The increases are understanding the environment, but when you get to J B's, we haven't or rustic we have very mixed demographic and you just can't raise prices.
As aggressively because you know a portion of your customer base just can't afford the increases.
So there we have to be you know more careful so some of our restaurants are benefiting from.
People's knowledge of inflation inflationary pressures.
But but some of them you can't take full advantage of that and so.
So the price increases have been more modest than you would expect.
Especially from what your the publicity is about restaurant prices. We're also very concerned about the.
The future in terms of.
As things get normal and cross our fingers, we hope they get normal when there are other.
Entertainment opportunities for disposable income will people you know.
All of a sudden look at restaurant prices and say this is crazy because honestly they are crazy in many instances.
So we're increasing prices modestly.
We have labor problems everywhere, we can't find people.
Our labor costs are going.
Up significantly.
Ah well beyond minimum wage.
For certain functions that used to be minimum wage.
Exam.
For example, in New York, we used to pay hostess is.
Around $16 $17, an hour, we can't find them at 'twenty four 'twenty $5 an hour right now.
The the.
Whole dollar.
Amounts of our payroll in the individual restaurants has not moved that much. Despite these increases because we have unfilled jobs.
In Vegas for instance were short 50 people at New York, New York seems to be continuous I can't we just can't find people people, we find if we find them.
Are not trained.
And we would like them to be trained and they may work, two or three weeks in and leave.
It's very very hard to find competent people, but our whole dollar payrolls are not terrible.
We're paying a lot of overtime.
Because.
We can't we can't staff, all our ships unless we pay overtime.
For instance, in Robert and New York.
We're only opened six days, we can't find enough people to open the seventh day.
Our back of House kitchen employees are all working six days.
And they're all being paid over time so.
What I'm trying to express I think is the framework of how strong our business was.
Given given even the weakness in New York and the inflationary pressures, we're facing on food cost and labor costs.
Our hope is at some point.
We see.
Some normalization of food prices are they're not going up anymore by the way for us, they're pretty much stable or in some cases coming down a little bit, but there's still much higher than they were two years ago and I don't think labor costs are going to come down, but I do think you know as people come.
Back into the job market, we will not be paying the success of overtime fees. So I think our margins will expand.
And we'll just show better numbers for you.
Meadowlands.
Which we own.
On a fully diluted basis somewhere close to 8%.
Sports betting has been very helpful of we got a distribution this year.
Small distribution base.
Basically the equivalent of what our tax bill will be on on the our share of the K one earnings.
Our share was approximately $1 million this year.
Of which we got $200000 of distribution.
The rest of that money is going to pay down debt.
New York State just started the sports betting internet bedding that is certainly having some impact but not as much as we had thought.
<unk> remains the strong one of the stronger.
Sports betting venues in the United States.
New York State is now pushing forward.
Two two grand Casino licenses.
Bounce down state.
That means Yonkers, and and long island and Queens.
If they do that we think that'll be a big impetus for Jersey, two once again revisit putting in a casino in the north.
As I've said in the past.
The facility we have at the Meadowlands is already set up to house to house, a casino or a first phase of the casino.
All the environmental.
Licenses are in place.
There is no town.
Residential town.
Surrounding us which would oppose us.
So we think we have a very likely venue in new Jersey.
Sure.
Not much else to report.
The sort of similar to what we were doing.
Last last year in these various quarters.
The only thing else I should mention is our Vegas leases.
As most of you know they expire.
January 2023, we've been in.
Lease negotiations with MGM for our various leases at New York, New York that is going very very well.
We think in essence, we've had.
Half of meetings meeting of the minds nothing's been signed yet, but I think those extension it's unlikely.
So now ill open it up for questions.
Thank you at this time, we'll be conducting a question and answer.
If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Our first question comes from the line of Paul Johnson with private Investor. Please proceed with your question.
Yes, good morning, and congrats on the great results.
Just wanted to ask about the balance sheet. So hum.
First of all in an environment of rising interest rates, how much will that affect our interest expense or how much of it.
The debt is fixed at this point.
Working on.
Switching off of LIBOR with the bank. So it could be you know.
They are.
We have an ultimate rate pegged to prime.
I think interest will probably go up maybe 100 to 200000 a year.
Okay.
So there is an opportunity to refinance some of that debt or to lock it in.
We're talking to the bank, but I don't I don't think we'll be refinancing anything in the near future.
Okay.
And then along those lines.
Given the outlook is there a possibility of eventually reinstating the dividend.
Yeah.
Okay.
Let me answer that question.
So.
Obviously, we have for a company of our size and.
Given the history of the company, we have a lot of cash available to us now.
And that's growing.
So.
We have historically paid a dividend.
There have been a couple of times when we.
Interrupted that one was 2008 and then again with the pandemic.
It's in the company's interest.
To reward shareholders.
With the dividend when excess cash is available.
So I think you know.
It's a little premature to start to look at that.
We're still worried about the pandemic and if there's another variant what that might do to our business.
That may be ultra conservative, but quickly through a lot here, especially in New York City.
So the answer is yeah.
Yes.
We do have discussions about it.
Have not made any decision when to pull the trigger on that.
There's also a little bit of clarity, we would like to see these las Vegas leases signed.
We think thats going to happen in the next couple of months.
But if those leases would not signed that would change our mind about what you know what needs we have for our cash.
The third thing is.
And this is unconventional thinking on my part.
We've been very successful buying restaurants.
Have the land underneath them as part of the deal.
If you look at when we bought rustic Inn ripped.
Repeating this for people who might not be aware.
We paid $7 $5 million for a restaurant at the time, we figured was making EMEA $1 a year.
So five times, but it came with the land and the land was appraised at $4 million.
And we looked at that deal and said you know.
You got to do the deal number one and number two if you are at that point wanted to do a sale leaseback.
And give somebody a million dollars without and not guarantee in rent.
Probably could've gotten $10 million for the for the restaurant.
Paying a million dollars in rent. So you put two and a half million dollars in your pocket and you still own 500000.
<unk> is a year in cash flow.
On top of that.
So we did.
Four of those deals we did another deal with Jbs, we're partner selling the project.
And those deals basically.
Dried up.
Especially in the South which were which is a focus for us.
When.
The pandemic.
Restrictions, where we're <unk>.
We removed in Florida, so essentially everybody rushed to restaurants volumes were higher than anybody expected and everybody who had gotten PPP money to save themselves.
Subsequently planned office business.
And those.
Those deals were not available to us.
Anymore, even though we were searching.
What's interesting to me is I think those deals become available now that we're further away.
The pandemic because those those restaurants.
That were for sale, where everybody was saying wait a minute you know I have an 88 year old owner, but.
The cash flows are.
Excessive.
I'm not prepared to do anything right now.
Now those deals are starting to come back a little bit.
As our sales become normalized and and.
Sort of the.
Extra sales with revenues that were available.
Two of these restaurants, because people were rushing out there was this overhang of demand.
As that subsides.
These owners are getting to the point, where they're saying well maybe it's now time for me to ask it so all of sudden in the last.
Month, we've seen three or four deals that are sort of interesting.
And we're investigating so all of that fits into the dividend but.
To summarize it's in our interest historically to pay a dividend and I think that's likely at some point.
That's all really helpful and I guess, we haven't realized that those kinds of deals in Florida could become available again, because if they do to be able to do another rustic inn deal at those kinds of multiples or J B's and that's first choice for sure over a dividend or buyback from our point of view we agree.
Thank you.
My pleasure.
Okay.
Thank you. Our next question comes from the line of Roger Lipton with Lyft in financial services. Please proceed with your question yes.
Yes, Hi, Michael and Anthony.
Good summary, mic as usual I was going to ask about the dividend, but that's been covered but just one quick question. You said you may have some further accounts received net tax receivable.
Maybe you can apply for once you've received with this initial one.
Roughly what kind of money is that.
So the million two 1 million and a half we believe.
Alright, that's all I've got it sounds like.
You're on top of you know on top of things my good work.
Thank you.
Yeah.
Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad. Our next question comes from the line of Jason Walters Private Investor. Please proceed with your question.
Hey, guys. Thanks for the summary today two quick questions.
The first on the balance sheet.
At the last call in December .
I believe there was $24 million in cash and $25 8 million.
And that I think you said Anthony that.
Now, we're looking at $20 million in cash and $30 million of debt I was wondering if you could just provide a little bit of a little bit of color on that change.
And then secondly, Michael you had mentioned the real estate and I was wondering if you might just have an estimate of the total value of the company's real estate holdings. Thank you.
Well I think the difference in the cash numbers today.
The numbers after float I think the previous number was probably before float because when you look at the balance sheet. The cash is essentially the same it was 19 one.
At year end and its 21 at the end of the quarter.
On the balance sheet. So I think maybe last quarter I might have said the cash balances on hand as opposed to you know after after float I think that was my fault tolerant to rep. Anthony Anthony doesn't make those mistakes I think I talked flows.
And with that I'm, sorry, you said what was your question on the desk I mean, <unk> 5 million.
And now it's 30.
But says well that's total debt.
The last million last quarter.
I said it was $25 million of debt long term.
Over the long term debt, yes, I'm sorry.
About the total debt today.
So the long term is now 23, eight and last quarter. It was 25 five.
Those would reflect the principal payments that we made our bank debt, we pay quarterly on December one.
So we made principal payments there we made some principal payments on the notes to the seller of Blue Moon, and we repaid about five or 600000 of PPP loans that we're not forgiving.
[noise].
Does that answer your question.
Yes. Thank you and then the second question was just about what the approximate value of the company's real estate.
No.
The real estate could.
It could be looked at only.
In terms of.
The restaurants that occupy that real estate.
And that's a function of interest rates.
On a on a sale leaseback.
I think that's the only way to look at it.
So we think that without an arc guarantee.
That real estate is a seven cap right now.
Whether or not guarantee we get more and privately if we syndicated deals or we can get much more.
I really havent explored what much more could be because I.
I'm not interested in selling the real estate.
But but.
If you look at let's go back to rustic again.
If you look at rustic and you said, hey, I'm prepared to give up a million dollars of.
Of.
Cash flow.
To rent.
You know.
And this interest rate environment with a knock guarantee where we we feel very very comfortable guaranteeing that transaction I still think you can get $10 million if interest rates go go higher.
Maybe you can get a little bit less.
With that without an off guarantee you're probably getting a seven and a half million seven seven and a half million for if I syndicated and we've done syndications before.
With you know.
With our.
Hollywood and Tampa hard rock deals.
We syndicated those that same group, which is get gotten enormous returns.
Would be interested in and doing that for you now probably an 8% return. So maybe you get 12 and a half times the million dollars.
So I would say conservatively on the pieces of property, we own which are the two Alabama properties and the.
The rustic and shuck as property those four properties, probably $25 million right now.
Give or take a few dollars based upon how you go about.
Structuring the deal whether with third party sale lease backs are syndicating it ourselves.
Yeah, I think $25 million.
Pretty easily achievable.
Paul.
Thank you.
Yeah.
Thank you once again as a reminder, its star one to ask a question. Our next question comes from the line of Steve Olsen Private Investor. Please proceed with your question.
This is Tim.
Good morning, congratulations on the quarter.
Regarding restaurant level operating margins.
Last few quarters, they've been very strong.
Some of which may be the challenge, it's finding staff, but long term how is your outlook for operating margins.
Proved either from you know changed labor labor staffing or the changes in just the units being operated as you've added several new ones in the past few years and you've closed a few.
So.
That's a multi level answer I have to give up.
First of all.
I think.
The pressures on food costs will.
You don't subside somewhat.
Not so on labor costs.
I. Thank you.
Where we have rental deals.
We're going to see a substantial I'm.
Going over the cost in general not just margins.
Gross margin.
Obviously, our the impact of the new Vegas.
Lease requirements are going to be.
Greater than what our lease requirements were.
And in the past however.
With increases in revenue.
And then I guess and more aggressive pricing, where we feel comfortable with that pricing and we've already tested it and.
We have no pushback whatsoever.
I think.
The increased lease expenses in Vegas are not going to substantially.
Interrupt.
Our overall operating cash flow come Vegas.
We also have other expenses, which are our.
Our difficult to campaign insurance premiums.
<unk> premiums this insurance market I'm told this was worse.
It's been in decades.
We had trouble finding.
Companies that wanted to bid on our you know our liability package.
We're just renewing our insurance and that's coming up.
The mid six figures.
Health care.
Premiums on our health care of.
Going to rise.
So whether or not this is all offset by.
Increases in pricing that will stick.
Uh huh.
I wish I could tell you with confidence that.
So those price increases will you know.
Menu price increases will stick and and we won't lose head counts, but I think we lose some head counts along the way the question is whether or not.
The increased revenue.
Overcomes.
Portion of the head count that we lose either.
The people, who just don't see it as value anymore.
Or who.
Pocketbooks aren't as deep.
Or we lose it from competition.
But so far.
I would say is that I'm optimistic.
And I do think wholesale prices will come down.
We're doing something new here.
Matter of fact, we have a meeting today.
We really haven't.
We haven't been smart enough to do in the past.
And you know our.
Our chefs make.
Menu changes.
Constantly to attract customers to menus that are changing and offer more options.
But now what we're doing is before we put those menu items and to place we're going to our purchasing department, which is really very statistic hated we purchase for not only for ourselves, but for 100 other restaurants that pay us fees to do so.
And saying Hey.
What what would be a substitute for this.
Product on the plate, which you know which is maybe too expensive.
And the customers, who will accept another product equally as well where are we with it's not supply chain problems and so what we have.
<unk>.
A lot of.
Goodwill from purveyors, who appreciate all the volume that we give them and they're prepared to cut prices for us if we use that particular product.
So.
Be a little bit more sophisticated in how we ended at the end of these menus and hopefully get cost of goods sold back down to where they were pre pandemic, it's going to be an actor.
This supply chain disruption stuff is not over.
Yeah.
<unk> to people a.
A couple of months ago, they were three or four days and southern Florida, where you can't couldn't get franchise.
Because because they couldn't find truck drivers to you know.
To deliver on them.
It's crazy.
My letter in the annual report, which went out a couple of days ago, who said you know we've been managing chaos.
Every day I mean every day I got a call yesterday from Jb's.
You know that they've got to give increases to some of our line cooks because it being poached by the restaurant next door to us.
Three miles away next door.
They've been offered $3 an hour or more.
The long term employees, but you know $3 an hour more another.
$120 a week in their pocket plus some overtime is significant to them. So we're negotiating with three guys to stay.
If they leave we have no one else.
The problem has been in New York by the way, where the volumes I mean, we used to do I mean, we do $800000 a week at Bryant Park into summer and good weeks that drops down to 120 to 140000 in the winter when all the outdoor areas.
Lows.
Brian Park has 180 seats inside and.
About 900 seats outside.
So it drops down.
This year, we weren't doing 120, <unk> hundred and $30000 a week, we were doing 40.
Because of Corona.
Because of some cold weather the cold weather, we always get.
Because of a lack of events because theres no one in the office buildings to have lunch.
To walk across the street in a half lives.
6 million square feet of office building chasing Brian Bahr there empty.
So we're doing $40000 did we cut payroll now.
You can't cut payroll because if we tell people you're on furlough. They go get another job and we never see them again, and we can't replace them. So.
We've been so inefficient we've been.
Now dealing with.
With these problems every day and the chaos of supply change.
It's been mind Boggling and you know the only reason we're here.
Honestly with these kind of results is the people in the restaurants, who have been doing extraordinary job I mean.
Yesterday liked to.
Over time money.
Of course, but you know the front end as people.
Because they're working.
Double shifts in and instead of having six tables at lunch or dinner. They have nine tables at lunch and dinner, they're making more tips and they've been made before.
But they are working too hard they're exhausted.
And when I say exhausted I really mean exhausted and they're working in the pace of people, who they work with two days before sitting out with Covid.
In addition to managing chaos, they're trying to manage their health and in many cases not as successfully as we would like to see them. So we're here because of that effort of employees at the restaurants and.
I know these results look good to you, but believe me we're kind of <unk>.
<unk>.
As opposed to where we had been historically.
We will get it efficient again and the results will improve.
And I think the margins will improve.
But it's going to take a while.
But we've been good at managing K chaos, we've learned.
Well based on the results you should have been because you know when I look at your leisure.
Labor as a percent to sales.
It's.
A few percentage points less than what it's been.
Historical and am I correct for at least the last three quarters, yeah, well, that's because of the bump in revenues in Vegas in Florida.
And the fact that we're short staffed.
We were.
Keeping people on payroll without the revenue, yes, so as the revenues go up you know.
As a percentage of total revenues the payroll comes down and it's been coming down a little bit.
But there's been nothing wrong with it.
Yeah, well I'm, hoping good luck in trying to kind of retain or if not improve but those those benefits because it looks like there's an opportunity to improve.
Improved from the historical restaurant level operating margins.
There is an opportunity yes.
Good luck. Thank you.
Thank you for the question.
Yes.
Thank you. Our next question comes from the line of Roger Lipton with Lyft in financial services. Please go ahead.
Yes, Mike.
In rough order of magnitude.
New York was what was our revenue base in the fourth quarter versus a couple of years ago. When it was.
What do we lose I don't have those numbers in front of me, but its way down.
740.
Right.
Roughly 30, 40%, yes, yeah okay.
Alright, well and and then secondly, it sounds to me like.
As things normalize people come back you'll do less overtime, but still.
Price rises it probably lagged.
The increases in minimum wage and so forth. So it sounds like there's a good chance that the industry wide price rises are yet to come more probably more menu prices.
Are yet to come.
That's all I would tell you I'm not looking at the industry I'm looking at my customers and.
I'm not trying to leave too much money on the table you know it was.
Like to get price increases if my customers will accept it but.
You get to the point.
And we can use Brian Park.
All of those executives coming for launch there are people that had reservations for a table everyday of the week.
They use it but I also have secretaries.
Come there and.
And that's what my eyes on if I lose them you know I'm, losing.
10, 15% of my customer counts.
I'm not going to lose them.
I'm going to.
Make every effort to keep them.
And.
And that's true in most of my restaurants.
Certainly when you get to Hollywood and Tampa is a food courts.
Well you have a captive audience.
Because with the food courts in what's happened to restaurant prices.
In the hard rock Hollywood.
The cheapest alternative.
By far so all of a sudden you get almost $6 for a slice of pizza, which is ridiculous.
But you get it because people are <unk>.
Send it to a certain degree by the prices at the restaurants in the hard rock.
The foods good in those restaurants, and they fill up because of the volume.
Uh huh.
People that go through that place every single day.
For a certain number of people the food court as the option in all food is really really good here.
And in Tampa.
Its restaurant quality food in a quick search environment.
So.
The only thing is not way to service, but you get a great meal.
There, we can be aggressive because a customer doesn't have another choice other than to pack their own sandwich and theyre not doing that.
In in Vegas.
We have a captive audience, but again with it.
Other than Gallagher's steakhouse, where in.
Our middle income environment, with New York, New York, I would even say middle income to high low income.
The whales and not government.
Coming to New York, New York, they're going.
Two.
With <unk> and win so we just can't go Crazy, we got to keep our eye on that Guy that's driving from somewhere to New York, New York too.
Sleep Inn.
100, dollar 98 dollar amount and a $350 room.
<unk>.
And if you stand at the end.
Our reception in New York, New York, you'll be amazed at how many people walk in with Rice cookers.
They're going out shopping and a good cook in the wrong. So every restaurant is different where we can be aggressive.
Trying to be aggressive right now I can tell you at rustic that's a restaurant that used to make 80 $90000 a week every week.
The bias at this time of year. This EMEA the buy and the volume is there I mean, we're doing great volumes, but the problem is one out of four people that go to a restaurant and order king crab legs. The price of King crab legs is gone as I said before from $23 a pound to $55 a pound in 18 months alright.
We've gone from $75 on the menu.
And five steps to now where we're getting at $125 and we're about at the point, where you know.
Half of our customer base, if we raised it another $1 50, I think would leave I mean, we are really pushing it.
That that place gets a big blue collar craft.
And it doesn't take a genius to stand there and see who's coming in.
Certain people, who are coming within Mercedes and BMW and Audi <unk> and the other guys are driving.
10 year old flatbed trucks.
The truck drivers to Ceos.
Is that restaurants amazing and the breadth of the customers that it has but we don't want to lose a guy driving the 10 year old flatbed truck.
And so we're charging 125 right now to put two pounds of King crab legs on my plate, it's costing us $106.
Alright, so yeah, we're making.
We're making nothing.
But.
I want to keep those customers and somewhere along the line the price the king crab legs.
You know as supply chains, loosen up and there's histories go out and fish again, you know.
Last year by the way and we did it again this year, but there was a point about a year ago. My manager said to me look these things are going way up they are in short supply I could buy.
X amount of pounds do you want to put a million dollars worth of King crab legs.
And the freezer at $43, a pound and we said.
If you could get to me into it you know.
And we got them in a week.
We just did it again.
Right now, we probably overpay because the market is softening.
That product was in short supply, there where restaurants, all around us who are known as well as having king crab legs on the menu not no matter, where we weren't the only ones that had the product literally the only ones I called one restaurant G. G switches.
Not far from us.
Excuse me on my cellphone.
G fees.
I said, how much C king crab legs, she said $180, but we don't have them and they serve a pound and a half when they have them nobody had we had them. So we're trying to.
Make sure we retain customers. So that's that's the only song playing out.
How do we keep this customer comment here and part of that equation.
Yeah, It certainly its quality.
The product that service.
Price is part of it.
This is certainly part of it.
So you know it's been tough prospectuses.
Prospectuses useful.
You want to lead you will lead the way, but the industry. If everybody is charging more elsewhere you inch up.
Along the way.
Cope you'll cope.
But your perspective is worth hearing thank you.
Youre welcome.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Weinstein for any final comments.
So I just wanted to give you.
A little insight into what's going on in this quarter.
Historically, the March quarter is a very rough quarter for us because of bad weather in the northeast and we have these thousands seat restaurants since coy in Bryant Park.
They don't have very many events during that time of year.
And business is just generally slow.
That is slower now than it historically has been a week.
We've always had a tough time, making money in the March quarter of being cash flow positive.
<unk>.
With all my crime.
Extending its way into January .
That was a.
A really rough month for us.
February seems to be getting a little better.
People are out in New York, Although again the office.
Community.
[laughter] is not there.
The same thing could be said at Sequoia in Washington D. C. We.
Court in Washington D. C has $400000 of weeks right now, they're having 40000 dollar weeks again with full employment, we can't afford to lose anybody.
Uh huh.
January was very difficult for us February will be somewhat difficult for us.
But an improvement over January I think March will get back to normal to normal.
If we break even during the March quarter that would be an achievement.
That I think we'd all be hugging each other here are saying, Hey, we did a great job, but I think that's achievable.
And obviously when you get into the June quarter and September quarter, that's gangbusters for us, especially as New York comes back and if Theres not another there in New York will come back.
I don't expect the authors.
Sin.
It's an interesting perspective, I have a friend of mine and my College roommate Ron Barron.
Who.
Runs considerable.
The amount of money $60 billion right now I think he has 200 people in his office and he cannot yet enforced that people have to come back into the office.
People are reluctant and I think a lot of companies are facing that.
But on the other hand for the first time I've seen some big companies, saying you have to be in starting February 28.
We expect to have five days a week I haven't seen that before so there is some improvement we hope in New York and Washington D. C. As you know office is thought to be populated again as people get comfortable that they can do with Vince.
We had so many.
<unk>.
They're not canceled but push forward.
At the last minute at the last minute I mean, I think there was one company a big huge company that had a big.
Big event scheduled to Brian Parkinson CEO got Covid.
And they pushed it forward into.
Sometime this coming year.
The good news I would say in terms of one area, where we can pretty well predict.
What what what's happening to demand.
Obviously, we'd be interrupted if there was another variant of Covid that you got in the way, but our event business. Our people are really really busy right now with phone calls I mean extraordinarily so.
They've been in the office every single day, when the office was empty.
Just trying to handle.
An overflow of phone calls so we think that you know when we get into especially the September quarter and the first quarter of 2023, which is thought to this the calendar December quarter that the events scheduled bookings are going to be enormous.
So.
Again, I think we're doing well with chaos and in very difficult times.
I.
Just hoping that there is no further COVID-19 interruptions and then I think you're going to see this company fly in terms of you know.
What we bring it down to the bottom line, we're all set up for.
Really really excited here.
And hopefully that becomes some opportunities to acquire.
Some very.
Good institutional quality restaurants, where owners have just decided to monetize it positions.
And that would be good news as well so thank you for sticking with us.
I really.
Appreciate the questions today I hope you got a good flavor.
Flavor for what's going on and.
And we'll see you next quarter.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.