Q4 2023 Ark Restaurants Corp Earnings Call
Greetings and welcome to Arc Restaurant's fourth quarter and fiscal year ended results. At this time all participants are...
Greetings and welcome to Ark restaurants fourth quarter and fiscal year ended results.
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. It is now my pleasure to introduce...
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.
It is now my pleasure to introduce your Christopher Love Secretary. Thank you you may begin.
Thank you operator. Good morning and thank you for joining us on our conference call for the fourth quarter and fiscal year ended September 30th, 2023. My name is Christopher Love and I am the secretary of our restaurant.
Christopher Love: Thank you operator, good morning, and thank you for joining us on our conference call for the fourth quarter and fiscal year ended September 32023. My name is Christopher last night, and the Secretary of Ark restaurants with me on the call today is Michael Weinstein, our chairman and CEO and Anthony Sirica, our president and Chief financial.
With me on the call today is Michael Weinstein, our Chairman and CEO , and Anthony Sarica, our President and Chief Financial Officer.
<unk> 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 Dot Ark restaurants Dot com.
For those of you who have not yet obtained a copy of our press release, it was issued over the news wires 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.arkrestaurants.com.
Before we begin, however, I'd like to read the safe harbor.
Before we begin however, I'd like to read the Safe Harbor statement I will 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.
I will 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 operating results, performance, and financial condition. I'll now turn the call to the committee.
Christopher Love: For a more detailed discussion of the risks that may have a direct bearing on our operating results performance and financial condition.
Speaker Change: I'll turn the call over to Michael.
Before I start, I want to bring in Anthony.
Michael Weinstein: Before I start I wanted to bring in Anthony <unk>.
Anthony Sirica: The president talks about our balance sheet and the write off of the goodwill to try to give you better explanation.
talk about our balance sheet and the write offs of the goodwill to try to give you better explanation. Good morning, everyone. Our balance sheet at year end continues to be strong. Our cash position was about $13.5 million. Actually it's probably tracking a little harder.
Speaker Change: Good morning, everyone. Our balance sheet at year end continues to be strong our cash position was about 13 and a half million dollars currently.
Speaker Change: Probably tracking a little higher than that.
Our debt is 7.2 million compared to 20 some odd million last year, 24 million last year. As you might be aware, we paid off about 16 million of our notes.
Speaker Change: That is $7 2 million compared to 20, some odd million last year, a 20 24 million last year as you might be aware, we paid off about $16 million of our notes.
late March, early April with our new credit agreement.
Speaker Change: Late March early April with our new credit agreement.
The only other significant change as you read in the release was the goodwill impairment of ten million dollars
Speaker Change: The only other significant change as you read in the release was a goodwill impairment of $10 million.
As we got into the quarter close, we realized that there was a triggering event related to our goodwill assessment due to the decline in the stock price.
Speaker Change: As we got into the quarter close.
Speaker Change: We realized that there was a triggering event related to our goodwill assessment due to the decline in the stock price.
and the upcoming expiration of the Bryant Park leases and the related RFPs that were issued for the spaces. So as a result, we performed a quantitative assessment based on the income approach utilizing a discounted cash flow analysis.
Speaker Change: The upcoming expiration of the Bryant Park leases and the related Rfps that were issued for the spaces.
Speaker Change: So as a result, we performed a quantitative assessment based on the income approach utilizing a discounted cash flow analysis.
the analysis into account, the estimating future after tax cash flows, discounting them back to present value.
Speaker Change: The analysis took into account.
Speaker Change: Estimating future after tax cash flows discounting them back to present value.
and the possibility that the leases may not be reduced.
Speaker Change: In the.
Speaker Change: Possibility that the leases may not be renewed so given all of that we also consulted with third party experts.
So given all that, we also consulted with third party experts.
The impairment came up to about $10 million.
Speaker Change: The impairment came up to about $10 million.
Speaker Change: And that's really.
the highlights of the balance sheet. The P&L Michael is going to talk about. Yeah. So the EBITDA for the year, and I'm going to get to the
The highlights of the balance sheet on the P&L, Michael is going to talk about so the EBITDA for the year.
Michael Weinstein: I'm going to get to.
Michael Weinstein: The larger of elephants in the room.
elephants in the room in a few seconds, but the P&L for the year or the EBITDOT for the year was about 9.6 million. I would say pretty much on the conservative side, the redo of Gallagher's in addition to the capital improvement cost of some $2 million.
Michael Weinstein: In a few seconds, but the P&L for the year or the EBITDA for the year was about $9 6 million.
Speaker Change: I would say you know pretty much on the conservative side are the redo of Kal Gallagher's.
Speaker Change: In addition to the capital that improvement a.
Speaker Change: Cost of some $2 million, probably cost us some 1.6 $1.7 million in cash flow.
cost us some $1.6, $1.7 million in cash flow. The reason for that is that our deal going in when we redid the leases at New York, New York is we agreed that even during the refurbishing periods, we would continue to pay rent.
Speaker Change: The reason for that is that our deal going in when we redid the leases that.
Speaker Change: New York, New York is we agreed that even during the refurbishing periods, we would continue to pay rent.
And in addition to paying rent, we were paying full payrolls, insurance,
In addition to paying rent we were painful payrolls.
Speaker Change: Insurance premiums everything related to the cost of operating a restaurant.
everything related to the cost of operating a restaurant with the exception of the purchase of food and beverages. So food and beverage costs, the Gallagher's run about $30,000.
Speaker Change: With the exception of the purchase of food and beverages, so food and beverage costs Gallegus worrying about 30.
30 percent, 32 percent.
Speaker Change: 30%, 32%.
between the closing and the slow, you know, the slow uptake on revenue when we reopened, there was about $2.2, $2.3 million in missing sales. Gallegos is actually now presently, at least this month, performing better than it ever performed. So we think the refurbishing is working in our favor in terms of revenue. But during that period of time, I would
Speaker Change: Between the closing and the slow.
The slow uptake on revenue when we reopened.
Speaker Change: There was about two point to $2.3 million in missing sales.
Speaker Change: Gallagher's is actually now presently at least this month's performing better than it ever performed so.
Speaker Change: We think the refurbishing is working in our favor.
Speaker Change: In terms of revenue, but during that period of time.
Speaker Change: I would put a number.
put a number of, you know, 15, 16, 17, something in that area of lost cash flow. So the 9.6 million EB die, if we had not closed Gallagher's conceivably, could have been 11 million.
Speaker Change: 151617, something in that area of lost.
Speaker Change: The lost cash flow so the $9 6 million in EBITDA, if we had not closed gallagher's conceivably could've been $11 million plus.
Plus, we suffered dramatically the last four months and continued to suffer with sales at our Full Service restaurants in southern Florida. That means JBs, Blue Moon, Shuckers, and up until recently Rustic, which is now
Speaker Change: We suffer dramatically.
Speaker Change: Last four months and continue to suffer with sales in our full service restaurants in southern Florida.
Speaker Change: That means Jb's Blue Moon Shockers.
And up until recently rustic.
Speaker Change: Which is now.
revenues are on pace with the prior year. But in the other three, we're down 10%, 15% on a weekly basis.
Speaker Change: Revenues are on pace with.
Speaker Change: With the prior year, but in the other three we were down 10%, 15% on a weekly basis.
And it continues. Our Hollywood property, which is a fast food facility when the Hard Rock Casino has been doing well and comping well, it's just got to bump up because we now have table games, which were approved by the state for that casino. And we're seeing pretty early on,
Speaker Change: And and it continues.
Speaker Change: Our our Hollywood property, which is a fast food facility went in the <unk>.
Speaker Change: Hard rock casino as.
Speaker Change: It has been doing well and comping well.
Speaker Change: It just got a bump up because we now have a table.
Speaker Change: Games, which were approved by the state for for that Casino and we're seeing a pretty early on is we don't know how.
whether it's just a honeymoon period, but we're seeing a bump in sales in Hollywood and a slight bump in Tampa where gaming has been expanded to table games.
Speaker Change: Whether it's just a honeymoon period, but we're seeing a bump in sales and in Hollywood and a slight bump in Tampa, where were gaming has been expanded to table games.
Our properties in Alabama continue to perform well, our Las Vegas sales are very strong, the
Our.
Speaker Change: Properties in Alabama continued to perform well all of our Las Vegas said sales are very strong.
Speaker Change: The.
Speaker Change: The.
Efficiency in Vegas is up dramatically, we were forced when we
Speaker Change: Efficiency in Vegas is up dramatically.
Speaker Change: We were forced when we.
you know, replace management after Paul Gordon retired. We found that we were not strong enough in certain positions. We also had some poaching going on by other casinos found in the sphere, you know, came after some of our people.
Speaker Change: Yeah.
Speaker Change: Replace management.
Speaker Change: After Paul Gordon retired.
Speaker Change: We found that we were not strong enough in certain positions. We also had some poaching going on by other casinos.
Speaker Change: Fountain Bleu the sphere.
Speaker Change: <unk>.
Speaker Change: It came after some of our people.
In this particular, in the Vegas market, payrolls are way up because competition for too few good workers is very keen, so we're having payroll problems there.
Speaker Change: In this particular.
Speaker Change: Vegas market payrolls are way up.
Speaker Change: Because competition for two few good workers is very keen so we havent payroll problems there.
New York business was very good, continues to be driven.
New York, our business was very good continues to be driven in.
in large part by events where it doesn't seem to be price sensitivity. Washington, DC, we're doing
Speaker Change: In large part by events, where there doesn't seem to be price sensitivity.
Speaker Change: Washington D C. We're doing.
Good, but not great. That facility continues on to perform our expectations. We keep working on it.
Speaker Change: Good but not great.
Speaker Change: That facility continues to underperform our expectations.
Speaker Change: We keep working on it.
So all in all, you know, my job is to try to assess
Speaker Change: So all in all.
Speaker Change: My job is to try to assess.
on how we're performing at the restaurant levels.
How were performing at the restaurant levels.
I think our product is good. Our services are good. I think the people we have running these restaurants are doing an excellent job. I don't see any shortfall in.
Speaker Change: I think our product is good our service is a good I think the people we have running these restaurants are doing an excellent job.
Speaker Change: I don't see any shortfall in that at all.
If you look at the last couple of weeks, which did not make a year, obviously, we're seeing record sales, you know, in New York at Robert and
Speaker Change: If you look at the last couple of weeks, which did not make a year obviously.
Speaker Change: We've seen record sales.
Speaker Change: In New York at Robert.
Bryant Park, and we're seeing record sales in Las Vegas. So a lot of properties are really performing very, very well on the revenue side. The crimp in all of this is my reluctance to raise prices as much as everybody else's.
Speaker Change: Brian Park, and we've seen record sales.
Speaker Change: In Las Vegas so.
Speaker Change: A lot of properties are really performing very very well on the revenue side.
Speaker Change: Crimp in all of this as you know my reluctance to raise prices as much as everybody else's.
You know, and my feeling that customers, you know, will will have a negative reaction.
Speaker Change: And my feeling that.
Speaker Change: Customers will will have a negative reaction.
Speaker Change: No.
ridiculous prices from my point of view. So we've raised prices modestly and we're facing increased payroll costs, continued increased payroll costs everywhere, increased premiums on insurance, utilities. It's just been, you know, a tough
Speaker Change: Ridiculous prices.
Speaker Change: From my point of view, so we've raised prices modestly.
Speaker Change:
Speaker Change: And we're facing increased payroll costs continued increased payroll costs everywhere.
Increased premiums on insurance.
Speaker Change: Utilities.
Speaker Change: Justin.
Speaker Change: A tough.
tough period of time to keep margins anywhere near where they used to be. But in all...
Speaker Change: A tough period of time too.
To keep margins anywhere near where they used to be.
Speaker Change: But in all of them.
I think we're performing very well.
I'm sure you're all going to have questions about Prime Park, you know, as it was disclosed in, you know, in our 10K.
Speaker Change: I'm sure you're always going to have questions about prime parked.
Speaker Change: As it was disclosed.
Speaker Change: In our 10-K.
Speaker Change: But.
Somewhere in late spring, we were informed that the Parks Department was going to issue RFPs as per their policy for the Bryant Park operations as our lease was coming due in May of
Somewhere in late spring, we were informed that the parks department was going to issue Rfps as per policy.
For the Bryant Park operations.
And saw leases coming due.
Speaker Change: It may have.
2025. The RFPs came out. They were a bit vague. We got some
Speaker Change: 2025.
Speaker Change: The Rfps came out they were a bit vague.
Speaker Change: We got some better.
better color on what they were looking for in terms of RFP response. We responded on
Speaker Change: Better color on what they were looking for in terms of RFP response, we responded on.
November 1st, October 26th is when we responded. It was due on November 1st.
Speaker Change: Okay.
Speaker Change: No November 1st October 26 months to respond yes. It was.
Speaker Change: Due on November 1st.
Speaker Change:
All we know so far is that we're a finalist.
We all we all we know so far is that we are a finalist.
in the process. I really don't have very much to say about it. I've been...
Speaker Change: In the process.
Speaker Change: I really don't have very much to say about it I've been.
Not excited, not unexcited. I think we made a great presentation. We've done a great job for the park.
Speaker Change:
Speaker Change: Not excited not Unexcited I think we've made a great presentation.
Speaker Change: We've done a great job for the park.
That restaurant is one of the highest-grossing restaurants in the United States, considering that it's not allowed to do late-night service. We close for reservations on most nights at 9 o'clock because the park closes at 10.
Speaker Change: That restaurant is one of the highest grossing restaurants in the United States considering that it's not allowed to do late night service, we close for reservations on most nights at nine o'clock.
Speaker Change: Cause call closest 10.
There is a requirement that noise levels, because there's a residential around it, be kept to a minimum, so there's no such thing as parking or bottle service. And in the RFP, it mentioned that the restaurant was one of the largest grocery restaurants in the United States.
There is a requirement that noise levels because residential around it.
Speaker Change: Be kept to a minimum so there's no such thing as Porsche bottle service.
Speaker Change: And then the off T. As mentioned at the restaurant was one of the largest grossing restaurants in the United States. So.
So I have no indication of where we stand other than we're a finalist in the process. It went out to everybody and it's been whittled down to a few.
Speaker Change: I have no indication.
Speaker Change: Where we stand other than we were finalists in the process.
Speaker Change: It went out to everybody.
And it's been whittled down to a few.
Meadowlands, we continue to.
Speaker Change: Meadowlands.
Speaker Change: We continue to.
you know, be hopeful that there'll be a casino license issued at some point, but the plan is, for New Jersey, is that we don't think they're going to make a move.
Speaker Change: Be hopeful that there'll be a casino license issued at some point, but the.
Speaker Change: But the.
Speaker Change: The plan is.
Speaker Change: For New Jersey.
Speaker Change: Is that we don't think they're going to make a move.
until New York issues its downstate liquor licenses. We can't figure out what the legislature is doing, but we're in the best position to get it.
Speaker Change: Until New York issues, its downstate liquor licenses, we can't figure out what the legislature is doing.
Speaker Change: But we're in we're in the best position to get it.
license if the state moves to have a casino in the north.
Speaker Change: Casino license if the state moves to have the casino in the north.
I hope that gives you a little idea of how this business is performing.
Speaker Change: I hope that gives you a little.
Speaker Change: Idea of.
Speaker Change: Hi, This business for me and I'm open for questions.
Speaker Change: Thank you, ladies and gentlemen at this time.
Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. If you'd like to ask a question, you may press star 1.
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Our first question comes from the line of Jeffrey Kaminsky with JJK Consultants.
Speaker Change: Our first question comes from the line of Jeffrey Kaminsky with J J K consultants. Please proceed with your question.
Good morning, everybody. Good morning, Michael. Just reviewing the Goodwill and Cameron test.
Jeffrey Kaminsky: Oh good morning, good afternoon, good morning, Michael This morning.
Jeffrey Kaminsky: Ooh Ooh Ooh.
Alright.
Jeffrey Kaminsky: The goodwill impairment test.
Jeffrey Kaminsky: Hospitals.
And Anthony mentioned it again a few minutes ago that there was a triggering event, singular, a triggering event. And it follows, it says, due to the volatility of the company's stock.
Jeffrey Kaminsky: One minutes ago.
Jeffrey Kaminsky: There was a triggering event.
Jeffrey Kaminsky: Okay.
Jeffrey Kaminsky: And it follows it says due to the volatility of the company's stock price I've been doing this a while.
I've been doing this a while, from top to bottom in terms of the stock price, low trading volume stock price.
From top to bottom.
Jeffrey Kaminsky: If the stock price.
Jeffrey Kaminsky: Volume shop.
Maybe high 17s, low 18s, to high 14s, low 15s. That's from top to bottom, maybe 20% movement will stop. I don't know who considers that volatile to trigger events, so I'd like some call on that. And secondly, you include as part of the triggering event, and again, I.
Maybe.
Jeffrey Kaminsky: One equals two.
Okay.
Jeffrey Kaminsky: That's from top to bottom maybe 20%.
Jeffrey Kaminsky: I don't know what is that.
Yes.
Jeffrey Kaminsky: So I'd like to call on that and secondly.
Jeffrey Kaminsky: Include as part of the triggering event again.
make it sound event as if it's a singular event, but you also include that the upcoming expiration of the Bryant Park properties and, you know, released and related proposals. So what was the trigger? Is the trigger the volatility of the price or was the trigger the Bryant Park situation and the Bryant Park situation has not yet been resolved? So should it resolve favorably, are you then going to reverse the $10 million goodwill
Jeffrey Kaminsky: It makes it sound as if it's a single event, but you also include Oh I'm, an escalation of the problem.
Jeffrey Kaminsky: Yes.
Jeffrey Kaminsky: Loosely related.
Jeffrey Kaminsky: So what was the trigger.
Jeffrey Kaminsky: The volatility of the price what it was.
Jeffrey Kaminsky: The trigger the Boeing situation.
Jeffrey Kaminsky: Situations has not yet been resolved.
Jeffrey Kaminsky: So surely resolved favorably are you then going to the $10 million goodwill impairment.
Could you clarify that, it makes no sense. Yeah, sure. Well, okay, so the way the assessment works is the first test is you compare the value of your shares, you know, the entity value to the book value of the company. So what you do is you take your shares outstanding at the end of the quarter, it's a point in time test, multiplied by the publicly trading price.
Speaker Change: Could you quantify that at all.
Speaker Change: Yes, sure well, okay. So the way the assessment works is the first test as you compare the.
Speaker Change: The value of your shares.
Speaker Change: The value to the book value of the company. So what you do is you take your shares outstanding at the end of the quarter. It is a point in time test multiplied by the publicly trading price.
For all prior quarters, up until the fourth quarter, our stock was trading above $17.50, $18, and we were covered. Our fair value of the shares was higher than the book value of the equity.
For all prior quarters up until the fourth quarter, our stock was trading above $17 50 $18.
Speaker Change: And we were covered to our fair value of the shares was higher than the book value of the equity.
When at the end of the quarter, the stock was around 15, 15 and a quarter, which it was still at up until yesterday around that around that price. And when you did the test, there was a significant shortfall. It was, it was below.
Speaker Change: At the end of the quarter the stock was around $15 15 in the quarter, which was still that up until yesterday around that around that price and when you did the test there was a significant shortfall.
It was below the book value.
by about, I forget what the number was, six, $7 million. So.
Speaker Change: By about I forget what the number was $67 million.
Now you have to go to the second step of the Goodwill Impairment. The second step is you have to look at this kind of cash flow.
Speaker Change: <unk>.
Speaker Change: Now you have to go to the second step of the of the goodwill impairment. The second step is you have to look at discounted cash flows and you have to model it out and when you start looking at that you have to take into multiple taking into consideration multiple scenarios you couldn't just project out that you will get to keep.
and you have to model it out. And when you start looking at that, you had to take into consideration multiple scenarios. You couldn't just project out that you were gonna keep Brian Park for the next 10 years. You had to factor in a scenario, a weighted scenario that you could lose it and therefore lose the cash flows associated with that. And that's what we did. And that's how we came up with the impairment. He also has perhaps a sharp reversalism.
Speaker Change: Bryant Park for the next 10 years, you have to factor in a scenario of weighted scenario that you could lose it and therefore lose the cash flows associated with that and that's what we did and Thats. How we came up with the impairment you also asked what happens.
Speaker Change: <unk>.
Had the stock price held, then you wouldn't have had to consider the Brian Farr lease expiration. It was the triggering event was the stock price vis-a-vis the book value.
Speaker Change: And how the stock price held then.
Speaker Change: Wouldn't have had to consider.
Speaker Change: Our lease exploration there was it was the trigger.
Speaker Change: That was the.
Speaker Change: Ease of use.
Speaker Change: The book value.
Yes.
So, the answer to that, Jeffrey, is twofold. Number one, if the stock price had held, we wouldn't have gone through this process, and then the outside consultants and our own, you know, J.H. Cohn, who are our auditors, wouldn't have had to go further and say, what if, and what if, all right?
Speaker Change: So the answer to that Jeffrey.
Speaker Change: Is twofold.
Number one is the stock price it held we once we've gone through this process and then the outside consultants and our own.
Speaker Change: Cage cone, who are our orders once they've had to go further and say, what if and what if alright.
I don't want anybody to think that us considering Brian Park's lease.
Speaker Change: I don't want anybody to think that us considering Brian parks lease.
in this scenario of refiguring, you know, taking the right off a goodwill.
Speaker Change: In this scenario of re figuring taking the write off of goodwill.
has anything to do with characterizing our chances of renewing the lease.
Speaker Change: Has anything to do with characterizing our chances of renewing the lease.
This is strictly a mathematical.
This is strictly a mathematical.
computation. It doesn't take into account at all any
Speaker Change: Patient.
It doesn't take into account at all.
Speaker Change: Any.
of feelings about where we stand in the process of renewing that lease. It just says basically the lease comes through in May of 2025 and what happens if we don't get it and this would be the result. And it's all triggered by the stock price, you know,
Speaker Change: Our feelings about where we stand in the process of renewing that lease.
Speaker Change: It just says basically the lease comes due in may of 2025.
Speaker Change: And what happens if we don't get it and this would be the result, and it's all triggered by the stock price.
falling below a certain point where this whole process began, all right? It has nothing to do with our feelings about whether or not we're going to remove that.
Falling below a certain point, where this whole process beginning said, yeah, alright. It has nothing to do with our feelings about whether or not we're going to renew that rice.
Okay, so should you get the lease back and the stock should probably bounce, are you then going to have to reconsider the goodwill situation again because now you're going to have a lease for another 20 or 30 years and the stock is going to go down? No, under the accounting standards, once you write off the goodwill, it's gone.
Speaker Change: Okay. So should decide so should you should you get the lease back and the stock.
Probably bounce.
Speaker Change: We're gonna have to reconsider the goodwill situation.
Speaker Change: I have always loved the 20th or no.
Speaker Change: No.
The accounting standards. Once you once you write off the goodwill it's gone.
you don't put it back on the books. The stock could go to 50, you don't put it back on the books.
Speaker Change: You don't put it back on the books the stock could go to 50, you don't put it back on the boats.
That's the accounting standards. I mean, it's not, you know.
That's the that's the accounting standards I mean, that's not at all.
Okay, last point, in hindsight 2020, there have been people on this call that have mentioned, you know, perhaps having some sort of buyback in place, stabilizing a mechanism in a very, very illiquid stock, which ARK has been. And, you know, we're paying interest on a $7 million loan that for the moment we don't need. And again, hindsight 2020, but it might have been prudent to have a small buyback in place. And you might have this exercise wouldn't have been necessary, because it wouldn't have taken much to keep the stock at $17, $18.
Speaker Change: Okay.
Speaker Change: Last point on the hindsight is 2020 now there have been people on this call would have mentioned you know, perhaps having some sort of buyback in place is stabilizing a mechanism very very illiquid stock, which always has been.
Speaker Change: You know what we're paying interest on the $7 million alone for the moment, we don't need and again hindsight is 2020.
Speaker Change: Well have a small buyback in place and you might have.
Speaker Change: This exercise and the necessary because it wouldn't take much to keep the stock at 17 eight.
So that's a good point.
So.
Speaker Change: That's a good point.
Speaker Change:
Speaker Change: The.
Speaker Change: The best way for me to answer this.
is there's a certain, there's a certain,
Speaker Change:
Speaker Change: Is this a certain.
Speaker Change: There are certain moving parts.
Speaker Change:
Speaker Change: Yeah.
Okay.
in the way this occurred, or even with the stock at $15,000, $16,000.
Speaker Change: And the way this occurred or even with the stock at 15 16.
We have, we continue to have.
Speaker Change: <unk>.
Speaker Change: We have we continue to have.
an ally on making some acquisition.
Speaker Change: And I am making.
Speaker Change: Some acquisitions.
So we like the fact that we have this $14, $15 million
Speaker Change: So we like the fact that we have this $14 $15 million.
Speaker Change: Yeah.
balance to make acquisitions, and we're constantly looking at it. And, you know, I'd rather have, I'd rather be buying what I consider reliable cash flow.
Speaker Change: Balance.
To make acquisitions and we're constantly looking at it.
Speaker Change: And you.
Speaker Change: I, rather have I'd, rather be buying what I consider.
Speaker Change: Reliable cash flow.
then buy back my stock and have to borrow money to make acquisitions so that's part of
Speaker Change: And then buyback my stock and have to borrow money to make acquisitions. So that's part of this.
The second part, honestly, is
Speaker Change: The second part.
Speaker Change: Honestly is.
The stock is very, very thin. It's very hard to buy it. I assume.
Speaker Change: The stock is very very thin.
Speaker Change: It's very hard to buy it.
Speaker Change: I I.
Speaker Change: Assume.
Speaker Change:
that at some point the stock price will rationalize itself if we perform well.
Speaker Change: That at some point the stock price will rationalize itself, if we perform well.
Speaker Change: Uh huh.
I'm not interested in being a support for the stock.
Speaker Change: I'm not interested in being a support for the stock.
unless I had a hoard of money that I didn't see having anything
Speaker Change: Unless I had a whole lot of money that I didn't see having anything.
you know, any targets out there to use the money for.
Speaker Change: Any targets out there to use the money for so if we if we were in that position, yes would I buy back the stock, yes, but how much am I going to be up to buyback its not going to be meaningful.
So if we were in that position, yes, would I buy back the stock? Yeah, but how much am I going to be able to buy back? It's not going to be meaningful. What's more meaningful is having the money available to make, quote, a meaningful acquisition that gives us long-term cash flow. So that's been my position. Would we do, you know,
What's more meaningful as having the money available.
Speaker Change: To make quote a meaningful acquisition that gives us.
Speaker Change: Long term cash flow.
Speaker Change: So that's been my position.
Speaker Change: What would we do.
Speaker Change: You know.
a transaction to try to take the company private. Well, you know, that presents problems also because certainly
Speaker Change: A transaction to try to take the company private.
Speaker Change: That presents problems also.
Certainly.
Certain shareholders would get screwed by that, others would do well, but the big problem would be how do you evaluate the value of our deal at the medallion?
Speaker Change: Certain shareholders, who get screwed by that.
Others would do well, but the big problem would be how do you.
Speaker Change: Evaluate the value of our deal at the Meadowlands.
And, you know, if that were to become a casino, everybody that was bought out would feel that we knew something and took advantage of some information that wasn't available to them, which is not the case. But it'd be still viewed that way. So, I'm comfortable at the moment in terms of the companies
Speaker Change: And if that were to become a casino everybody that would split out we feel that we that we knew something and took advantage of some information that wasn't available to them, which is not the case.
It would be still viewed that way.
Speaker Change: So I'm comfortable at the moment in terms of the companies.
Speaker Change: Yeah.
Speaker Change: Cash balances to leave those in place and try to find something that enhances the company's cash flow long term.
to leave those in place and try to find something that enhances the company's cash flow long term.
Speaker Change: Yeah.
Okay. Well, thank you, Anthony. Thank you, Michael. I'm a fan. I know that.
Speaker Change: Okay well. Thank you Anthony Thank you Michael on the phone.
Speaker Change: Thanks, Jeff.
Our next question comes from the line of Peter Jackson, a private investor. Please receive your question.
Speaker Change: Our next question comes from the line of Peter Jackson, a private Investor. Please proceed with your question.
Yes, good morning. A couple questions. First of all, do you have any sense of timing on when the Bryant Park decision would be made?
Peter Jackson: Yes, good morning couple.
Peter Jackson: Couple of questions first of all do you have any sense of timing on when the Bryant Park decision would be made.
We are told sometime in spring of this year, this coming year.
Speaker Change: We are told sometime in spring of this year.
Speaker Change: This coming year.
Speaker Change: Okay.
How does it work in terms of the way they view if another restaurant group that's larger and well-financed, better financed arguably?
Speaker Change: And.
Speaker Change: How does it work in terms of the way they view.
Speaker Change: If another restaurant group, that's larger and well find out better financed arguably.
Um, comes along does, you know, does Ty go to the runner? Does the fact that you've been in there and performed well, do you?
Speaker Change: Comes along does this.
Speaker Change: This tie go to the runner does.
Speaker Change: The fact that you've been in there performed well do.
Do we have sort of the lead position there, or is it completely starting from scratch and they'll look at anybody equally? I have no idea what they're trying to do.
Speaker Change: We have sort of the lead position there or is it completely.
Speaker Change: From scratch and they'll look at anybody equally.
I have no idea what they are trying to do in.
in terms of their goals or I think this is a requirement of the parks department at the end of the lease and we submitted our proposal.
Speaker Change: In terms of the goals or.
Speaker Change: I think this is a requirement of the parks department.
Speaker Change: At the end of the lease.
Speaker Change: And we submitted our proposal.
You know, we know other people who submitted their proposals, as I said, we're finalists. We do not know what their goals are, or, you know, other than.
Speaker Change: We know other people who submitted their proposals as I said, we were finalists.
Speaker Change: Do not know what their goals are or.
Speaker Change: Other than to.
Speaker Change: To put out an RFP.
Speaker Change: Okay.
In terms of acquisition, obviously, we've disciplined ourselves here, not to drive ourselves crazy by speculating.
Speaker Change:
Speaker Change: In terms of accuracy and by the way obviously right.
Speaker Change: Alright.
Speaker Change: Excuse me, we have disciplined ourselves here not to drive ourselves crazy by speculating.
Speaker Change: Okay.
Speaker Change:
You mentioned you want to – you're always taking a hard look at acquisitions and certainly the prices you've paid in the past have been fantastic.
Speaker Change: You mentioned you want out you're always take a hard look at acquisitions and certainly the prices you paid in the past have been fantastic.
Speaker Change:
But.
Given I guess I want to just understand about the price increases so totally understand that you don't want to raise prices.
Speaker Change: Given.
Speaker Change: I wanted to just understand about the price increases so totally understand that you don't want to raise prices.
or you want to keep them down as low as possible. On the other hand, you have increased payroll costs, insurance utilities, which presumably all your competitors face as well in varying degrees. At what point,
Speaker Change: Or you want to keep them down as low as possible I'm never had you wouldnt have increased payroll costs insurance utilities, which presumably all your competitors face as well in varying degrees at what point.
I mean, the problem is that that's not doing a lot for margins when you're not raising prices and you have these increased costs. So what gives there and why are we in a different position from any other restauranteur? So good question.
Speaker Change: I mean, the problem is that that's not doing a lot for margins when you're not raising prices and you have these increased costs. So what gibbs there and why are we in a different position for many other restaurant tour.
So good question and thank you.
Speaker Change: <unk>.
Speaker Change: Yeah.
So, I will mention something that's in our response to the RFP and Brian Park post pandemic, post pandemic, we raised our prices 7%.
Speaker Change: So I will mention something.
Speaker Change: That's in our response to the RFP and Bryant Park.
Speaker Change: Post pandemic post pandemic, we raised our.
Speaker Change: Prices, 7%.
So, you're talking, you know, a couple of years here, that's the average price increase, our revenues this year, excuse me, our revenues post-pandemic are up 12%, which means we're adding headcount.
Speaker Change: So you're talking a couple of years here.
C E.
Speaker Change: The average price increase.
Speaker Change: Our revenues this year.
Speaker Change: Our revenues post pandemic are up 12%, which means we're adding head counts.
I would tell you the same thing is true in Vegas. Now Vegas, it's not necessarily us adding the headcounts. Vegas is exploding, but we're adding headcounts in Vegas. We're very, very sensitive to headcounts as opposed to revenues.
I would tell you. The same thing is true in Vegas, now Vegas, it's not necessarily offsetting the head counts Vegas.
Speaker Change: Is exploding, but we're adding head counts in Vegas.
We're at.
Sure.
Speaker Change: We're very very sensitive to head counts.
Speaker Change: As opposed to revenues and.
You know, we have long-term leases where, you know, where we're
Speaker Change: We have long term leases.
Speaker Change: You know where we are.
Rustic is a great example. We were forced to raise prices in Rustic by more than 7% because the price of crabs went from $23 a pound to $54 a pound.
Speaker Change: Rustic is a great example.
Speaker Change: We were forced to raise prices in rustic by more than 7% because the price of crabs went from $23 a pound of 54.
You know, at one point, you know, we were charging and we put two pounds on the plate.
Speaker Change: At.
Speaker Change: At one point.
Speaker Change: Charging and we put two pounds on a plate. So we're at $135 right now for something at one point, which was costing us $108 to put on the plate.
So, we're at $135 right now for something at one point, which was costing us $180 to put on the plate.
But, you know, I have a blue collar, a large segment of my customer base at Rustic is blue collar, you know, and they use that restaurant for celebrations and anniversaries, birthday parties, blah, blah, blah. You know, some people don't care. They're very wealthy and they want.
Speaker Change: But you know I have blue collar.
Speaker Change: A large segment of my customer base at rustic is blue collar.
Speaker Change: And they use that restaurant for celebration, some anniversaries birthday parties blah blah blah, yeah, some people don't care.
Speaker Change: Very wealthy and that.
Speaker Change: They want.
great meal of crabs and they come to rustic but in all of our restaurants we have you know
Speaker Change: Great meal of crabs, and they they come to rustic, but in all of our restaurants, we have you know.
a pretty broad spectrum of people where they stand on the economic ladder. I don't want to get a reputation that would too expect.
A pretty broad spectrum of people.
Speaker Change: Where they stand on the economic ladder I don't want to get a reputation that way too expensive.
So, and that's the way we ran this company from day one. We've always had sort of an umbrella of safety as opposed to the quality of our product and services and our architecture and decor as compared to other restaurants, you know, in cities.
Speaker Change: So and that's the way we ran this company from day, one we've always had sort of an umbrella of safety as opposed to the quality of our products and services and our architecture and decor.
Speaker Change: As compared to other restaurants.
Speaker Change: And.
Cities in which we were competing.
So, it may be stubbornness, but I think in the long run, you know, in the past it served this very, very well.
Speaker Change: So it may be stubbornness, but I think in the long run as you know in the past it served us very very well.
Right now, what we're seeing is stability in food prices, stability in alcohol prices. In some cases, certain prices are coming down, crab legs are coming down.
Speaker Change: Right now what we're seeing is stability in food prices stability in alcohol prices and in some cases certain prices are coming down crab legs coming down.
Speaker Change: All of a sudden we don't have the 70% costing king crab legs, we had probably a 50% cost of whats on the on the plate.
Speaker Change: This will swing back in our favor I mean, payrolls aren't going to come down, but they're going to stabilize.
you know, insurance premiums or the worst they've ever been, they're going to come down.
Speaker Change: Insurance premiums or the worst they've ever been and they're going to come down so that it requires a little bit of patients to get your margins back but in the in the meantime, you're not changing the reputation as a company has been good.
So it requires a little bit of patience to get your margins back. But in the meantime, you're not.
Changing the reputation of the company is being you know good quality at fair prices, and that's what we're trying to do you know the Reciprocal of that is we don't discount
Speaker Change: Good quality at fair prices and that's what we're trying to do.
Speaker Change: The.
Speaker Change: The reciprocal of that is we don't discount.
You know, you're never going to see us with, you know, coupon books out there or, or, or deals because, you know, our statement to the world is, listen, you're getting good quality, good service in a nice atmosphere, and the prices are fair. We don't need to discount to get more people into the place. And that's the reciprocal of it. So I think we're being consistent. And that's the way we want to run a business.
You know you're never going to see us with coupon books out there or or.
Speaker Change: <unk> deals.
Speaker Change: Because our statements to the world is listen you're getting good quality, good service and a nice atmosphere and the prices of fair, we don't need to discount to get more people into the place and that's the reciprocal of it. So I think we're being consistent and that's the way we want to run our business.
Okay, that makes sense. Going back to Bryant Park, did you, I don't think you disclosed, or maybe it was in the 10K, but have you disclosed what the revenue is there and what would be lost if for some reason we didn't get it? So we don't disclose revenues.
Speaker Change: Okay that makes sense going back to Bryant Park did you I don't think you've disclosed or maybe it was in the 10-K, but have you disclosed.
Speaker Change: What the revenue was there and what would be lost if for some reason we didn't get it.
Speaker Change: So we don't disclose revenues.
Speaker Change: For any individual restaurant.
No our profits.
All right. In this case, the landlord knows what the revenues are, because, you know, we have a percentage lease there, but we've never allowed, you know, individual restaurants to promulgate, you know, through us, you know, what their revenues are. We think that's a disadvantage to landlord negotiations.
Speaker Change: Alright in this case the landlord knows what the revenues are because.
Speaker Change: We have a percentage lease there.
Speaker Change: But we've never allowed individual restaurants to promulgate through us.
Speaker Change: Their revenues are we.
Speaker Change: We think that.
That's a disadvantage to landlord negotiations.
Okay. And then going back to Metalands, I certainly as a long-term investor appreciate your point about, you know, not wanting to take the company private because you'd potentially deprive shareholders of the upside from the Metalands. But with that said, obviously, that's something that
Okay, and then Greg going back to a metal lands.
Speaker Change: Certainly as a long term investor I appreciate your point about not wanted to take the company private because you'd potentially deprived.
Speaker Change: Shareholders of the upside from the Netherlands.
Speaker Change: That said obviously.
Speaker Change: That's something that.
may not happen or may not happen for a long time and obviously it's hard to make a plan when it involves governments and legislation. It's hard to really handicap when that's going to happen, if it happens. Would it ever make sense, you said in prior call,
Speaker Change: May not happen or may not happen for a long time, and obviously, it's hard to make our plan.
Speaker Change: All governments in legislation and it's hard to really.
Speaker Change: Handicap.
Speaker Change: When that is going to happen if it happens would it ever make sense.
Speaker Change: You said in prior calls I think at.
maybe hard rock, hard rock would be the natural people too.
Speaker Change: Maybe hard rock hard rock would be the natural people too.
bias out of our interest there. Presumably, they see the value there. They're not going to pay as much today as they would if it were a sure thing, right? And if it was a sure thing, it wouldn't make sense to do anything now. But is there a way to sort of bake into some kind of price with hard rock where they give us some value that reflects the potential while also on their side reflecting the fact that may not happen? I'm not really saying that in the proper way, but you know, I'm getting that.
Speaker Change: By its out of our interests there, presumably basically the value they are they're not going to pay as much today as they would if it were a sure thing right and that's what was a sure thing that would make sense to do anything now but is there a way to sort of bake into some kind of price with hard rock, where they where they give us some value of that.
Speaker Change: Reflects the potential while also on their side reflected the fact that it may not happen I'm, not really saying that in a proper way, but you know what I'm getting at.
Yeah, so first of all, hard rock is a 20% owner of the limited partnership.
Speaker Change: Yeah. So first of all hard rock is a 20% owner.
Speaker Change: The limited partnership.
Speaker Change:
Speaker Change: Debt.
That's the partnership in the Meadowlands. But since when we made those statements...
Speaker Change: That's the partnership.
Speaker Change: In the Meadowlands.
But since when we made those statements.
you know, like three, four quarters ago, and before that, that they would be a natural buyer. Hard Rock is now part of a bidding process with Steve Cohn to put a casino
Speaker Change: Like three or four quarters ago.
Speaker Change: Before that they would be a natural buyer hardrock is now part of bidding process.
Speaker Change: With Steve cone to put a casino.
Speaker Change: Hum.
in, you know, in Queens by say stadium.
Speaker Change: In Queens by Shea Stadium.
So, you know, if that were to go through, we're not so sure Hard Rock would continue with us as an operator. They certainly would continue as an investor unless, you know, we bought them out or some other operator bought them out. So that conversation.
Speaker Change: So.
Speaker Change: If that were to go through we're not so sure hard rock, we continue with us as an operator, they certainly will continue as an investor unless you know we bought them out.
Speaker Change: Or some other operator put them out so that conversation.
with hard rock you know doesn't make sense at this point and it would make sense perhaps if if
Speaker Change: With hard rock.
Speaker Change: It doesn't make sense at this point and it would make sense perhaps.
Speaker Change: If.
you know, if they are the operator and there seems to be some movement favorably toward getting a casino license in the North.
Speaker Change: If they are the operator and and they seem to be some movement favorably toward getting casino license in the north.
So, that's not a conversation you can have right now. By the way, it's a conversation I don't think I want to have because we still are of the opinion that the likelihood of us getting a casino license there is, you know, pretty strong. It's just a matter of time.
The so that's not a compensation you can have right now.
Speaker Change: By the way is conversation and I don't think I want to have.
Because we still are of the opinion that the likelihood of us getting a casino license there is pretty strong.
Speaker Change: It's just it's just a matter of.
You know, when does New York, New Jersey's legislature react to downstate casino licenses in New York, which have not been issued?
Speaker Change: When does the legend, New York, New Jersey Legislature react to Downstate casino licenses in New York, which have not been issued yet.
And we don't think they're going to be issued for another year to 18.
Speaker Change: We don't think they're going to be issued for another year to 18 months.
um in terms of trying to
Speaker Change:
Speaker Change: In terms of trying to.
Your question sort of begs an answer to taking this thing private.
Speaker Change: Your question sort of begs an answer to.
Speaker Change: Taking this thing private.
Speaker Change:
You know, I go back to my statement. I rather, you know, buy recurring cash flow.
I go back to my statement I rather.
Speaker Change: No.
By recurring cash flow.
for our shareholders than to get our shareholders out of the way and, you know, try to take advantage of, you know,
Speaker Change: Uh huh.
Speaker Change: For our shareholders.
Speaker Change: Then to get our shareholders out of the way in.
Speaker Change: Try to take advantage of.
of a price, but I have a board of directors and that's
Speaker Change: So the price, but I have a board of directors and that's.
that in large part becomes their decision and it's a discussion that does come up.
Speaker Change: That that in large part becomes their decision and it's a discussion that does come up.
So, you know, I'm just, you know, as one member of the board, I'm giving you my opinion, you know, I've had a look at this.
Speaker Change: So.
Speaker Change: I'm just.
Speaker Change: One member of the Board I'm, giving you my opinion.
Speaker Change:
Speaker Change: Has had to look at this thing.
Speaker Change:
Speaker Change: And.
Speaker Change: <unk>.
You know, look, I've been at this for a long time.
Speaker Change: Yeah.
Speaker Change: Look I've been at this for a long time.
Speaker Change:
Other than from my foundation, I've never sold a share of stock. I've never bought a share of stock. If I may be sort of dumb in terms of saying to myself, the stock price will be rationalized at some point. As investors see value, obviously this quarter, investors are looking at the headline, which is this right-off at $10 million, which is the non-cash right-off,
Other than from My Foundation I've never sold a share of stock I've never bought a share of stock.
Speaker Change: I may be.
Sort of them in terms of field.
Speaker Change: St and myself to stock price will be rationalized at some point.
Speaker Change: As investors see value.
Speaker Change: Obviously this quarter and investors are looking at the headline which is right off the $10 million, which is a noncash write off.
does not affect the operations of the company at all. If you add back Gallagher's in Las Vegas, you still have $11 million plus EBDA with Southern Florida performing terribly. That will change. The product that we have there, the sites, you know, are just too good, you know, and we perform well down there.
Speaker Change: It does not affect the operations of the company at all.
Speaker Change: If you add back Gallagher's in Las Vegas, you still have some $11 million plus EBITDA with with southern Florida, performing terribly that will change the product.
Speaker Change: That we have there the sites.
Speaker Change: Or just too good.
Speaker Change: And.
Speaker Change: We perform well down there so.
So that will change also. Vegas will get better, and it's already great, but it's gonna get better still, you know? And I know your questions, too.
Speaker Change: That will change also Vegas will get better.
And it's already great, but it's going to get better still.
Speaker Change: And New York restaurants.
you know, very strong. Our Alabama restaurants perform well. We will find things to, you know, enhance cash flow here through acquisition. So somewhere along the line, you know, that'll be recognized. You know, a balance sheet is good for a company our size. You know, that's, so that's the way we look at this.
Speaker Change: Very strong our Alabama restaurants perform well.
Speaker Change: We will find things too.
Speaker Change: Enhanced cash flow here through acquisition, so somewhere along the line.
That'll be recognized.
Speaker Change: Our balance sheet is good for a company our size.
Yeah. That's so that's the way we look at this.
Speaker Change: Thank you that's very helpful.
There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.
There are no further questions in the queue I'd like to hand, the call back to management for closing remarks.
Alright, thank you. There's some good questions. I appreciate the time you're spending with us, and we look forward to our next call with you.
Speaker Change: Alright. Thank you there's some good questions I appreciate the time, you're spending with us and we look forward to.
Our next call with you.
Speaker Change: Have a happy holiday season everybody.
Ladies and gentlemen, this does conclude today's conference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
Speaker Change: Ladies and gentlemen, this does conclude today some of you would have some signal Donaldson.
Speaker Change: You may disconnect your lines at this time and have a wonderful day.