Q1 2024 Ark Restaurants Corp Earnings Call

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Operator: Greetings and welcome to the ARC Restaurant First Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode.

Greetings and welcome to all restaurants first quarter 'twenty 'twenty four results conference call. At this time all participants are in a listen only mode. A brief question and answer session, which followed the formal presentation. If anyone should have quiet operator assistance during the conference. Please press star.

Operator: A brief 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 your host, Christopher Love, Secretary. Thank you, Mr. Love. You may be seated.

<unk> on your telephone keypad as a reminder, this conference is being recorded it is now my pleasure to introduce your host Christopher Love Secretary. Thank you. Mr. <unk> you may begin.

Christopher Love: Thank you, operator. Good morning, and thank you for joining us on our conference call for the first quarter ended December 30th, 2023. My name is Christopher Love, and I am the Secretary of Arc Restaurant.

Thank you operator, good morning, and thank you for joining us on our conference call for the first quarter ended December 30, <unk> 2023, My name is Chris Philosophy, and I'm Secretary of Ark restaurants with me on the call today is Michael Weinstein, our chairman and CEO and Vinny Pascal our CR for.

Christopher Love: With me on the call today is Michael Weinstein, our Chairman and CEO, and Vinnie Pascale, our COO. For those of you who have not yet obtained a copy of our press release, it was issued on NewsWise 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 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 file listed with the Securities and Exchange Commission for more detailed discussion of the risks that may have a direct bearing on our operating results, performance, and financial conditions. I'll now turn the call over to Michael. Thank you. Hi everybody.

For those of you who have not yet obtained a copy of our press release. It was issued over the newswire yesterday and is available on our website.

We view 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 statements I need to remind everyone that part of our discussion this morning.

Forward looking statements.

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 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 will turn the call over to me. Thank you hi, everybody.

Michael Weinstein: This quarter was a relatively clean quarter in terms of comparisons. We had no additional restaurants, bye, on working for us as compared to last year's first quarter, and there were no restaurants that were closed compared to last year's first quarter. So it's relatively clean.

This quarter it was a relatively clean quarter in terms of comparisons.

We had no additional restaurants.

Working for us.

As compared to last year's first quarter.

There was no restaurants that were closed compared to last year's first quarter. So it's relatively clean revenues were flat I'm sure you saw the press release.

Michael Weinstein: Revenues were flat. I'm sure you saw the press release. EBDA was 2.572 versus 3.018. Our balance sheet remains really clean, 12 million. $122,000 in cash, and total debt at the end of 12-30 was $6,740,000.

It was.

It was 2572.

Versus 3.018.

Our balance sheet remains really clean 12 million.

122000 in cash total debt at the end of 12 30 was $6 million 742.

Michael Weinstein: Um, The business, within having relatively flat sales, has shifts, obviously. Some of the restaurants are up, and some are down. We are experiencing, through 1230, very strong revenues in Las Vegas, but we also have rents that are much higher than they were in the comparable quarter last year. The Alabama restaurants are doing well, both in sales and in cash flow. The Florida restaurants are our biggest problem right now, the full-service restaurants, which include J.P.'s, Rustic, Blue Moon, and Shuckers. There are some weather issues there, but there are always weather issues.

The business, we didn't have a relatively flat sales.

Has shifts obviously some restaurants are up some are down.

We are experiencing through 12 30, very strong revenues in Las Vegas.

But we also have rents that are much higher than they were in.

Third quarter last year.

The.

Okay.

Alabama restaurants is doing well both in sales and cash flow.

Restaurants are our biggest problem right now with full service restaurants.

Jp's rustic blue Moon and shutters.

There is some weather issues there, but there are always weather issues.

Michael Weinstein: Volumes are down in those four restaurants, roughly 10%. That means two things: their customer counts are down, or whether they're not down, as much as revenues, people are sharing entrees, so we're finding, you know, just, we're just not making any headway in terms of increasing revenues in those restaurants. Washington, D.C., has been problematic because the city's problematic. New York has been very strong in all categories, including

I am sit down and those four restaurants roughly 10%.

That means two things because our customer counts are down.

Or where they're not down.

As much as revenues people are sharing entre so refining.

Yes.

We're just not making any headway in terms of increasing revenues in those restaurants, a Washington D. C has been problematic because the city is problematic.

New York has been very strong in all categories, including events.

Our biggest problems as a company.

Michael Weinstein: Our biggest problems as a company have nothing to do with customer experience. The food quality is very high, the places are maintained beautifully, and the services are excellent. We have no problems with the way our restaurants have functioned.

It had nothing to do with customer experience food quality is very high.

The places are maintained one to play services excellent.

We have no problems with the way our restaurants assumption.

Michael Weinstein: There have been two types of inflation over the last couple of years. One was inflation in the products that we buy, which in turn becomes the meal. That has stabilized, and a lot of products are actually starting to come down. So food costs should not be an issue, and we are now seeing some between. Since the downward movement in prices and us engineering our menus to have better food cost components, we've seen our food costs, by and large, are in very good shape. The other inflation was in labor.

There were two types of inflation over the last couple of years, what was inflation in the products that we buy which chart China become the meal.

That has stabilized in a lot of products actually are starting to.

Come down.

So food cost should not be an issue and we are now seeing between.

The downward movement in prices.

Engineering, our menus to have better food cost components.

A few close by and large very good shape. The other inflation was in labor.

Michael Weinstein: That is not coming, legislation is underway, especially in Las Vegas right now, but also Florida and also New York to increase the minimum wage, and there is no offset that we can garner from that other than to raise menu prices, and as I've said repeatedly in the past, we're not raising menu prices. We think our menus represent fair value to the customer. We're still below what others are charging, however. These menu prices, up 7% to 10% It seems to me that's in part why our customer counts are down, you know, as I said, it's special and far. So that's a problem difficult to solve. We need more demand. We are taking certain initiatives to create more demand, but that'll take a while to pull through. We're still looking at deals constantly to acquire operating income or find ourselves able to take advantage of locations that are closed. So that's really it.

That is not coming down.

Legislation is.

Underway, especially in Las Vegas, right now, but also Florida also New York to.

To increase minimum wage.

And there is no offset that we can garner from that.

Other than to raised menu prices and as I've said repeatedly in the past, we're not raising menu prices, we think about menus represent.

Fair value to the customer.

Hum.

We're still below what others are charging.

However.

These menu prices up 7% to 10% since the pandemic are still sticker shock.

It seems to me that's in part why our customer counts are down.

Yes, as I said, especially in Florida.

So that's a problem difficult to solve.

We need more demand.

We are taking certain initiatives to create more demand.

But that will take a while to flow through.

We're still looking at deals.

But constantly to acquire operating income.

For a fine there.

So stable to take advantage of locations that are closed.

Can.

Operate at significant revenue levels.

So that's really it.

Operator: It's a demand problem right now in Florida and Vegas. It's... It's a rent problem, but we think the revenues in Vegas are strong enough that we will not be penalized with a higher... on uh, rent. We think the revenues that are coming our way because we're running a much better operation than in previous years in terms of efficiency, we think we will not be challenged with cash flow there and that will remain pretty stable pre the. So I'll take questions at this point. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question area. You may press star 2 if you would like to remove your questions from the call. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

It's a demand problem right now.

In Florida and Vegas.

It was it's a rent problem.

But we think the revenues in Vegas is strong enough.

We will not be penalized with a higher.

Rent.

The revenue said.

Are coming our way because we are running at a much better operation.

In previous years in terms of efficiency, we think we will not be challenged in terms of cash flow to the area that will remain pretty stable.

The ranking cruises.

So I'll take questions at this point.

Thank you.

We'll now be conducting a question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is it the question queue you've met the start to if you would like to remove your questions from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the stock east one woman piece, while we pull for questions.

Operator: One moment, please, while we poll for questions. A reminder to all the participants that you may press star and 1 to ask a question. Once again, a reminder to all the participants that you may press star and 1 to ask a question.

A reminder to all the participants that you May press star one to ask a question.

Once again, a reminder to all the participants that do my best on him one last quick question.

Operator: There are no further questions at this time. We have reached the end of the question and answer session. I would now like to turn the floor over to Michael Weinstein for closing. All right, there are two other things to address. One is the Meadowlands Racetrack.

There are no further questions at this time.

We have reached the end of question and answer session.

I would now like to turn the floor over to Michael Weinstein for closing comments.

Alright, there are two other things to address.

One is the Meadowlands race track as you know we have a minority interest in the race track and our hopes is that we will get a casino license at some point.

Michael Weinstein: As you know, we have a minority interest in the racetrack, and our hoax is that we will get a casino license at some point. As I've said in the past, the leverage for New Jersey to approve a casino license in the northern part of the state really is a function of when New York State issues casino licenses downstate. In Queens or Yonkers or even in Manhattan, there have been delays. Fine, at the governor's office in the state legislature to issue those licenses.

As I've said in the past.

Is that the leverage for new Jersey to approve a casino license in the northern part of the state really is a function of when New York State issues Downstate casinos license at San Jose meeting in Queens, Yonkers, or even in Manhattan.

There has been delays.

Got it.

At the Governor's office and the state legislature to issue this license.

Michael Weinstein: But we think once they do issue those licenses, New Jersey will be very quick to move the license to Upstate New Jersey for a northern New Jersey casino. Brian Park, as you know, our lease becomes due in March of, excuse me, May of 2025. There was a request for proposal that was sent out in October of this past year. We put in a proposal. We think it's a very strong proposal. We've been told we are finalists. We have a certain amount of confidence, but it's not subject to our control.

But we think once they do issue those licenses in New Jersey will be very quick to move.

License.

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Upstate in New Jersey.

Northern New Jersey Casino.

Brian pockets, you know at least becomes too.

March.

Excuse may of 2025.

There is a request for proposal.

Sent out in October.

Of this past year.

We put in a proposal we think are some very strong proposal with the total of our finalists.

B, we have a certain amount of confidence, but it's not that.

Subject to our control.

We've had meetings with Bryant Park.

To get fully embedded on our proposal.

They have not made any decisions as of yet.

No one no one as expected.

Until.

The latter part of this month or next month once we have a decision on that whether it's positive or negative.

Michael Weinstein: We've had meetings with Bryant Park to get fully vetted on our proposal, but they have not made any decisions as of yet. No one is expected until the latter part of this month or next month. Once we have a decision on that, whether positive or negative, we will send out a press release. Thank you. I'll speak to you next quarter.

We will send out a press release.

You.

I will speak to you next quarter.

I will speak to you next quarter.

Oh, we have one question should we go ahead.

Oh, yes. Please.

Yes that question has stopped them or not.

We have no more questions at this time. So this concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

Thank you.

Yeah.

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Operator: Yes, that question has dropped. Not a problem. We have no more questions at this time. So this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Okay.

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