Q3 2024 Ark Restaurants Corp Earnings Call
Speaker Change: [inaudible]
Unknown Speaker: [inaudible]......... Thanks for watching!
Operator: ...... Greetings and welcome to the Ark Restaurants third quarter 2024 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.
Speaker Change: Greetings and welcome to the ARC restaurant's third quarter 2024 results call. At this time all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
Speaker Change: 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, Mr. Christopher Love, Secretary for ARC Restaurants. Thank you. You may begin.
Operator: As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Christopher Love, Secretary for Ark Restaurants. Thank you. You may begin. Thank you, Operator.
Christopher Love: Thank you, operator. Good morning and thank you for joining us on our conference call for the third quarter ended June 29th, 2024.
Christopher Love: My name is Christopher Love and I am the Secretary of ARC Restaurants. With me on the call today is Michael Weinstein, our Chairman and CEO, Anthony Sirica, our CFO, and Sam Weinstein and Jennifer Jordan, our joint co-COOs.
Christopher Love: Good morning, and thank you for joining us on our conference call for the third quarter ended June 29, 2024. My name is Christopher Love, and I am the CEO of Ark Restaurants. With me on the call today is Michael Weinstein, our Chairman and CEO, Anthony Sirica, our CFO, and Sam Weinstein and Jennifer Jordan, our joint co-COOs. For those of you who have not yet obtained a copy of our press release, it was issued on the Newswire yesterday and is available on our website.
Speaker Change: 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.arkrestaurants.com.
Christopher Love: 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 put on you. We refer everyone to our filings 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 condition. I'll now turn the call over to Anthony, our CFO. Good morning, everyone. A couple of things I wanted to touch on before Michael provides his commentary. We ended the quarter with $11.5 million in cash.
Anthony Sirica: 5.7 million in debt. All of our debt is current now. We have three more quarterly payments of 435,000 to do in September, December, and February, and then on June 1st, we have a balloon payment of $4.4 million. We'll be meeting with the bank to discuss a new credit agreement over the next month. The other item of note is the impairment charge that we took on the Sequoia restaurant. We continued to look at the performance of the restaurant, and it was lower than expected.
Speaker Change: 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 put on them.
Speaker Change: We refer everyone to our filings 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 condition.
Anthony Sirica: So with that, what's considered a triggering event, we then engaged an independent third party to do a market rent study. And based on that and a discounted cash flow analysis, we had an impairment charge of $2.5 million, which was broken up between long-lived assets, I think it was $939,000, and the right-of-use asset of $1.5 million.
Anthony Sirica: We will continue to monitor that as we go forward based on revised projections. We hope things get better, and I think, other than that, the rest of the balance sheet was, you know, relatively stable compared to the prior quarter and year end. Michael.
Anthony Sirica: I'll now turn the call over to Anthony our CFO. Good morning everyone a couple of things I wanted to touch on before Michael provides his commentary We ended the quarter with 11.5 million of cash
Anthony Sirica: and 5.7 million of debt. All of our debt is current now.
Speaker Change: We have three more quarterly payments of $435,000.
Speaker Change: due in September, December, and February and then on June 1st we have balloon payments of 4.4 million. We'll be meeting with the bank to discuss a new credit agreement over the next month or two.
Speaker Change: The other item of note is the impairment charge that we took on the Sequoia restaurant.
Speaker Change: We continued to look at the performance of the restaurant and it was lower than expected.
Speaker Change: So with that was considered a triggering event. We then engaged an independent third party to do a market rent study
Speaker Change: And based on that, and a discounted cash flow analysis.
Speaker Change: We had an impairment charge of 2.5 million which was broken up between long-lived assets I think was $939,000 and the right-of-use asset of 1.5 million.
Speaker Change: We will continue to monitor that as we go forward based on revised projections. We hope things get better.
Speaker Change: And I think other than that...
Speaker Change: The rest of the balance sheet was, you know, relatively stable compared to the prior quarter and year end.
Michael Weinstein: Hi everybody. So obviously, we're struggling with sales here. I think if you remove the Gallagher's close down from last year and the amount of business we did in Gallagher's this year to try to compare apples to apples, we're down just slightly 3% in comp sales. The problem isn't just comp sales, obviously; the problem is payrolls, which, while they're not going up anymore in terms of trying to find qualified people for jobs. It's still hard for us to find people that fulfill the responsibilities we need them to fill at the management level.
Speaker Change: So Michael,
Michael Weinstein: Hi everybody. So obviously we're struggling with sales here.
Speaker Change: I think if you remove...
Speaker Change: The Gallagher's closed closed down from last year and
Speaker Change: the amount of business we did in Gallagher's this year to try to compare apples to apples. We're down just slightly, 3% in comp sales.
Speaker Change: The problem isn't just comm sales, obviously, the problem is payrolls, which, while they're not...
Speaker Change: going up anymore in terms of trying to find qualified people for jobs, it's still hard for us to find people that fulfill the responsibilities we need them to fill at the management level.
Michael Weinstein: Legislation in various venues where we operate has increased the minimum wage. Insurance costs are substantially higher, and other things that, you know. Other than food and beverage, and this is ?? throughout the year, responding to inflationary pressures, squeeze gross margins. I'm not unpleased with the $3.3 million result, given that scenario.
Speaker Change: Legislation in various venues where we operate has increased minimum wage, insurance costs are substantially higher.
Speaker Change: and other things that, you know.
Speaker Change: Responding to inflationary pressures, squeeze gross margins.
Michael Weinstein: Again, we haven't raised prices as aggressively as other companies. I think that has stood us well. I think it'll continue to put us in a better position as we come out of this lackluster period for restaurant sales. If I go by venue, the thing that hurt us most were the full-service restaurants in Florida. They were down substantially in headcounts. Vegas was all right. Alabama has been just great for us.
Speaker Change: I'm not unpleased with the $3.3 million result given that scenario.
Speaker Change: Again, we haven't raised prices as aggressively as other companies. I think that has stood us.
Speaker Change: Well, I think it'll continue to
Speaker Change: put us in a better position as we come out of this lackluster period.
Speaker Change: for Restaurant Sales.
Speaker Change: The, if I go by venue.
Speaker Change: The thing that hurt us most are the full-service restaurants in Florida. They were down substantially in headcounts.
Speaker Change: Vegas was all right. Alabama has been
Speaker Change: just great for us. New York has been good, driven by a lot of events and Brian Park and Robert.
Michael Weinstein: New York has been good, driven by a lot of events and Brian Park and Robert. Washington, Sequoia, has been a little difficult. We can point to, you know, the whole Washington, DC era seems to be suffering from just a lot of bad influence in the City. We have competition there, obviously, from other waterfront sites. We're spending a lot of time now trying to figure out what a better menu might be for Sequoia, one that is more affordable.
Speaker Change: Washington, Sequoia has been a little difficult. We can point to, you know, the whole Washington, D.C. era seems to be suffering from just a lot of.
Speaker Change: bad influences in the city.
Speaker Change: We have competition there obviously from other waterfront sites.
Speaker Change: We're spending a lot of time now trying to figure out what a better menu might be for Sequoia, more affordable, and we're doing that with all our restaurants, but basically Sequoia is probably the one.
Michael Weinstein: And we're doing that with all our restaurants. But basically, Sequoia is probably the one restaurant in the company that needs a refresh and a manual, and maybe even a new brand. We have lots of opportunities in terms of acquisitions that have been put in front of us in the last 3 months with follow up on those. We also have lots of responsibilities in terms of refurbishing costs in Las Vegas, contractual when we signed a new lease.
Speaker Change: restaurant in the company that needs a refresh in menu and maybe even in branding.
Speaker Change: We have lots of opportunities in terms of acquisitions that have been
Speaker Change: put in front of us in the last three months. We're following up on those. We also have lots of responsibilities in terms of refurbishing costs in Las Vegas, contractual when we signed a new lease.
Michael Weinstein: So given the sort of lackluster sales that seem to be continuing right now and the cashflow that's required to progress our company with new development and refurbishing in Vegas, we've decided to eliminate the dividend for the moment, just to preserve cash. That also sort of segues into the conversation about Bryan Park.
Speaker Change: So given the
Speaker Change: Sort of the lackluster sales that seem to be continuing right now
Speaker Change: and the cash flow that's required to progress our company with, you know, new development and refurbishing in Vegas, we've decided to eliminate the dividend for the moment, just to preserve cash.
Speaker Change: That also sort of segues into the conversation about Brian Park.
Michael Weinstein: We have still not, or the park has still not issued any judgment on whether or not we will continue with a new lease or if they're going to award it to somebody else. It's just been radio silence. There are always rumors, but we're not paying attention to those.
Speaker Change: we have still not or the park has still not issued any judgment on
Speaker Change: Whether or not we will continue with a new lease, or if they're going to award it to somebody else, it's just been radio silence. There are always rumors, but we're not paying attention to those.
Michael Weinstein: So we just think with the uncertainty of Bryan Park and what our responsibilities are, that eliminating the dividend for this quarter is a wise move. In relation to the Meadowlands, again, New York State has not moved on their casino applications. As we stated before, New Jersey is reluctant to do anything.
Speaker Change: So, we just think, with the uncertainty of Brian Park and what our responsibilities are, that eliminating dividend for this quarter is a wise move.
Speaker Change: In relation to the Meadowlands, again, New York State has not moved on their casino applications. As we stated before, New Jersey is reluctant to do anything.
Operator: Unless they see activity in downstate casinos in New York. New York City Casinos So that's been kind of quiet, even though we really believe we're going to be a licensee at some point. Would that, you know, like to entertain any questions? At this time, we will 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 queue.
Speaker Change: unless they see activity in downstate casinos in New York meetings.
Speaker Change: and some New York City casinos. So that's been kind of quiet, even though we really believe we're going to be a licensee at some point. With that, I'd like to entertain any questions.
Operator: 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. One moment, please, while we poll for questions. Once again, ladies and gentlemen, it is star number one to ask a question. Our first question comes from the line of Jeffrey Kaminsky with JJK Consultants. Please proceed with your question. Good morning, guys.
Speaker Change: Thank you.
Speaker Change: At this time we will 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 queue. You may press star 2 if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.
Jeffrey Kaminsky: You know, once again on the call, Michael, you're highlighting specifically weakness and flaws as Unknown Speaker 1????????????
Speaker Change: Once again, ladies and gentlemen, it is star one to ask a question.
Michael Weinstein: The industry is plagued with the same challenges, payroll and insurance costs, etc, etc. In Florida, in particular, it's a pretty robust market there, as discussed, or restaurants or changes being made. And I have a question that I really would have done a series for Rich and Unknown Attendee you. I would like to put that out there because this has been a very frustrating stage, and the news is getting worse, not better, and I'd like to hear what the vision is for the company in the immediate future. So, Jeff, you broke up a few times during that question, but I think I understand the gist of it.
Speaker Change: Our first question comes from the line of Jeffrey Kaminski with JJK Consultants. Please proceed with your question.
Speaker Change: Good morning, guys.
Speaker Change: You know, once again on the call, Michael, you're highlighting specifically weakness and flaw with self-hypnosis.
Alas: asked me to come up with a hand. [inaudible]
Speaker Change: in the middle of an old town. [inaudible]
Speaker Change: The industry is plagued with the same challenges.
Speaker Change: payroll and insurance costs, etc, etc. In Florida in particular, it's a pretty robust market. There, as discussed, there are new restaurants, there are changes being made. And I have a question that I really would
Speaker Change: I'd like an answer to the question.
Speaker Change: to discuss what is ARK's strategy going forward. The answer has always and consistently been we're always on the lookout to buy or acquire properties and fold it into the portfolio.
Speaker Change: you. Okay, you're still maintaining that, but you have a weakness in a big market, and a market that's generally flourishing.
Speaker Change: And I would like to hear something about the strategy in Florida on how you're going to change things around. Because there's never any discussion on these calls about what ARC is going to do with their current existing properties and how we're going to, you know,
Speaker Change: to move revenues forward, and so I'd like to put that out there because it's...
Speaker Change: This has been a very frustrating investment.
Speaker Change: and the business is getting worse not better, and I'd like to hear what the vision is for the company in the immediate future.
Speaker Change: So,
Speaker Change: Jeff, you broke up a few times during that.
Speaker Change: question but I think I get the gist of it and I hope I'm answering it correctly. So first of all when we've been looking at several businesses over the last 12 months
Michael Weinstein: And I hope I'm answering correctly, correctly. So, first of all, when we've been looking at several businesses over the last twelve months in Florida, well, established companies, you know, either companies or one-offs and, You know, we're looking at numbers, and every deal has fallen, fallen in part, in part because the numbers are deteriorating in those restaurants. When we talk to brokers in Florida, they will tell you everybody's down 15 to 20%.
Speaker Change: in Florida, well-established companies, either companies or one-offs.
Speaker Change: You know, we're looking at numbers and every deal has fallen apart in
Speaker Change: in part because numbers are deteriorating in those restaurants. When we talk to brokers in Florida, they will tell you everybody's down 15 to 20 percent.
Michael Weinstein: If you look at a city like Delray, which was very, very hot for a while, probably still is hot, the vacancies in restaurant spaces are coming up every day because they were getting top rents when things were hot, and now business has slowed down, and restaurants' cash flow has been squeezed, and they can't afford the rent. Unknown Speaker
Speaker Change: If you look at
Speaker Change: A city like Delray, which was very, very hot for a while, probably still is hot. The vacancies in restaurant spaces.
Michael Weinstein: Thank you. Our strategy is to try to buy institutions with good management. In every case in Florida, we think we've accomplished that. If, you know, maybe this doesn't satisfy what you're looking for.
Speaker Change: Our strategy is to try to buy institutions with good management. In every case in Florida, we think we've accomplished that.
Speaker Change: If, you know, maybe this doesn't satisfy
Michael Weinstein: But in my world, the way I look at things is that there are years in which you make more money than you deserve to. And there are years in which you just, you know, prove yourself. Contents Planning, Matthew Houg, Danny Hiquin, Joan G misleading, Danny Harren, Mattho Maronde, Benjamin Philipsen, Matthew Star, Daniel Friedlander Cassiszon, Michael Awlock, Pulitzer Prize Award, Daniel Craig heading, Bill Mason, David Fox, ishong Harding, Bill Reid, Josh Bailey, Gregory Bonnevard, Joseph Beege, Demetri Sheharte, Tyler Onagre, Michael Jason admit Excellent.
Speaker Change: what you're looking for. But in my world, the way I look at things is there are years in which you make more money than you deserve to, and there are years in which you just, you know, prove.
Operator: Greetings and welcome to the Ark Restaurants' third quarter of 2024 results call. At this time all participants are no listen only mode, a question and an interstession 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, Mr. Christopher Love, Secretary for Ark Restaurants.
Speaker Change: circumstances outside of your
Speaker Change: you know, performance.
Speaker Change: You don't make the money that you would like to make.
Speaker Change: right now the latter is true. We think...
Speaker Change: that we have great locations in Florida. One of the disadvantages of those locations, by the way, is that they're all on the water and wind insurance and property insurance have gone through the roof.
Speaker Change: and those properties and that's squeezing our margins.
Operator: Thank you. You may begin. Thank you operator. Good morning and thank you for joining us on our conference call for the third quarter ended June 29th, 2024. My name is Christopher Love and I am Secretary of Ark Restaurants. With me on the call today is Michael Weinstein, our chairman CEO, Anthony Sirica, our CFO, and Sam Weinstein and Jennifer Jordan, our joint co-COs. 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.
Speaker Change: Thank you.
Speaker Change: But from a performance level, if you look at the reviews of the restaurants, for the most part they're excellent.
Speaker Change: Every once in a while we see, you know, that our revenues are creeping up above last year But that doesn't mean that the headcounts are because there have been some price increases, but in general Florida has not been
Michael Weinstein: Every once in awhile, we see, you know, that our revenues are creeping up above last year, but that doesn't mean that the head pounds are. But, in general, Florida has not been as good for us these past 18 months as it has been in the past.
Speaker Change: as good for us this past 18 months as it had been in the past. It doesn't mean that...
Jeffrey Kaminsky: And perhaps that's where I broke up before. I recognize that your strategy continues to be acquiring properties where you think you could buy them at the right price and make some money. Let's put that aside. That hasn't happened recently. It may happen quickly. It may not happen at all.
Operator: Please go to our homepage at www.arcrestaurants.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 a future performance and therefore undue reliance should not be through. We refer everyone to our filings 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 condition.
Speaker Change: Let me interrupt for a second, I apologize, and perhaps that's where I broke up before. I recognize that your strategy continues to be acquiring properties where you think you could buy it at the right price and make some money.
Speaker Change: money. Let's put that aside for the moment.
Jeffrey Kaminsky: What is the strategy of the current properties and turning them around? Menu changes, happy hours, entertainment, the kind of thing that drives new people. Jeff, you're making the assumption that these things aren't doing well. They're performing well.
Speaker Change: That's not happened recently, it may happen quickly, it may not happen at all. What is the strategy of the current properties and turning them around? Menu changes, happy hours, entertainment, the kind of thing that drives new people.
Anthony Sirica: I'll now turn the call over to Anthony, our CFO. Good morning everyone. A couple of things I wanted to touch on before Michael provides his commentary. We ended the quarter with 11.5 million of cash and 5.7 million of debt. All of our debt is current now. We have three more quarterly payments of 435,000 due in September, December and February and then on June 1st we have balloon payments of 4.4 million.
Speaker Change: Jeff, you're making the assumption that these things aren't doing well.
Michael Weinstein: They're all making money. They just aren't making as much money as they used to. And that's a function of three things. Number one, traffic is not as strong as it used to be in general for all full-service restaurants down there. Now, you can point to the three or four hot restaurants in every market where you can't get a reservation after five o'clock or before 11 o'clock. That will always exist. Our restaurants are not like that. All right? They're not doing bottle service, and there are no DJs.
Speaker Change: They're performing well. They're all making money.
Speaker Change: They're just not making as much money as they used to make.
Speaker Change: and that's a function of three things.
Speaker Change: number one
Speaker Change: Traffic is not as strong as it used to be, in general, for all full-service restaurants down there. Now, you can point to the three or four hot restaurants in every market where you can't get a reservation after 5 o'clock or before 11 o'clock. That will always exist.
Anthony Sirica: We'll be meeting with the bank to discuss a new credit agreement over the next month the other item of note is the impairment charge that we took on the Sequoia restaurant. We continue to look at the performance of the restaurant and it was lower than expected. So with that was considered a triggering event. We then engaged and independent third party to do a market rent study and based on that and a discounted cash flow analysis.
Speaker Change: Our restaurants are not that, all right? They're not doing bottle service, there are no DJs, you know? We're not that. So...
Speaker Change: So, these restaurants are performing well at the level of sales that presently exist. So it's a question of three things. Number one, are they profitable? Yes.
Michael Weinstein: You know, we're not that. So these restaurants are performing well at the level of sales that presently exist. So it's a question of three things. Number one, are they profitable? Yes. Have they had strong reputations and strong brand identities in the past? And now do they?
Anthony Sirica: We had an impairment charge of 2.5 million which was broken up between long live assets. I think it was 939,000 and the right of use asset of 1.5 million. We will continue to monitor that as we go forward based on revised projections. We hope things get better and I think other than that the rest of the balance sheet was relatively stable compared to the prior quarter and year end.
Speaker Change: Have they had strong reputations and strong brand identity in the past and now do they? Yes.
Michael Weinstein: Yes. All right. The problem is traffic, and the problem is increased expenses. And the problem is my reluctance, as I read my customers, to raise prices to make up for the squeeze on gross margins. And honestly, you know, I don't.
Speaker Change: All right, the problem is traffic and the problem is increased expenses, and the problem is my reluctance, my reluctance, as I read my customers, to raise prices to make up for the squeeze on gross margins. And, honestly,
Michael Weinstein: You know, you can look at analogies that are not necessarily appropriate, but McDonald's is struggling because they raise prices beyond where the customer, you know, can absorb. Starbucks is having problems. There are a lot of people that are having problems trying to figure out pricing in relation to the current economic circumstances. So, given that these restaurants hold on given that these restaurants are profitable and that we think they're performing well with their menu execution and service execution.
Speaker Change: You know I
Speaker Change: You know you can look at analogies that not necessarily appropriate But McDonald's is struggling because they have raised prices beyond where the customer you know can absorb Starbucks is having problems
Michael Weinstein: So Michael. Hi everybody. So obviously we're struggling with sales here. I think if you remove the Gallagher's closed down from last year and the amount of business we did in Gallagher's this year should try to compare apples to apples. We're down just slightly 3% and come sales. The problem isn't just come sales obviously. The problem is payrolls which while they're next. Going up any more in terms of trying to find qualified people for jobs, it's still hard for us to find people that fulfill the responsibilities we need them to fill at the management level.
Speaker Change: There are a lot of people that are having problems trying to figure out pricing in relation to the current economic circumstances.
Speaker Change: So, given that these restaurants... hold on... given that these restaurants are profitable...
Speaker Change: And...
Speaker Change: that we think they're performing well with their menu execution and service execution and the fact that they're all in great locations, you know, we're prepared to stand there and accept less.
Michael Weinstein: And the fact that they're all in great locations, you know, we're prepared to stand there and accept less, you know, in terms of cash flow, because we don't think they need changing. Do they all look at menus and try to be more efficient and bring on new products to entice customers? Yes. But are we gonna rip them apart and start all over again? No.
Speaker Change: You know of In terms of cash flow because we don't think they need changing. Do they all Do they all look at menus and try to be more efficient and bring on new product to entice customers? Yes
Michael Weinstein: And if you look at, you know, we have one good laboratory that is very, very telling about Las Vegas. We're in. We're in a building in Las Vegas. We're in a building in Hollywood. All right, that are the major casinos and they all have full service restaurants and they have our fast food courts. All right.
Speaker Change: But are we going to rip them apart and start all over again? No!
Michael Weinstein: Legislation in various venues where we operate has increased minimum wage. Insurance costs are substantially higher and other things that other than improved and beverage pricing, other things are also going up. So the combination of lackluster sales and expenses responding to inflationary pressures, squeezed gross margins. I'm not unpleased with the $3.3 million result giving that scenario. Again, we haven't raised prices as aggressively as other companies. I think that is stood as well. I think it will continue to put us in a better position as we come out of this lackluster period for restaurant sales.
Speaker Change: And if you look at, you know, we have one good laboratory.
Speaker Change: that is very, very telling. Las Vegas, we're in a building in Las Vegas, we're in a building in Hollywood, all right, that a major casinos.
Speaker Change: and they all have full-service restaurants and they have our fast food courts, all right?
Michael Weinstein: Our fast food courts are going through the roof in terms of sales. I mean, I think we're up 10, 12, 13 percent. Anthony, is that probably true? Hollywood, yes. In Hollywood every single week, maybe even more, all right? And the restaurants, according to Hard Rock, are suffering, the full-service restaurants. Why are they suffering?
Speaker Change: Our fast food courts are going through the roof in terms of sales.
Speaker Change: I mean, I think we're up 10, 12, 13 percent, Anthony, is that probably true? Hollywood, yes. In Hollywood every single week, maybe even more, all right? And the restaurants, according to Hard Rock, are suffering, the full-service restaurants. Why are they suffering? Because people can't afford them right now.
Michael Weinstein: Because people can't afford them right now, all right? So they're switching to fast food. To our benefit, they're switching to fast food. I will tell you, our product is so good there that they closed their coffee shop because the coffee shop wasn't getting any traffic because our breakfast place sold eggs. There's a line every morning to get there. But there was no line at the coffee shop because it got a little bit too expensive.
Speaker Change: All right, so they're switching to fast food. To our benefit, they're switching to fast food. I will tell you, our product is so good there that they closed their coffee shop because the coffee shop wasn't getting any traffic because our breakfast place...
Speaker Change: Bold eggs, you know.
Michael Weinstein: If I go by venue, the thing that hurt us most are the full service restaurants in Florida. They were down substantially in head counts. Vegas was all right. Alabama has been just great for us. New York has been good driven by a lot of events in Bryan Park and Robert. Washington Sequoia has been a little difficult. We can point to, you know, the whole Washington DC area seems to be suffering from just a lot of bad influences in the city.
Speaker Change: There's a line every morning to get there. There was no line at the coffee shop because it got a little bit too expensive. In Vegas, you know, the village streets.
Michael Weinstein: In Vegas, you know, the village streets are doing extremely well. But we can be down in every single restaurant, but the Village Streets are doing great. It's telling where the customer's pocketbook is right now. They're sort of being stingy, and so that period of time in which they will continue to be stingy, we will not see the sales that we were used to prior to that, all right? But it doesn't mean we should rip apart everything.
Speaker Change: is doing extremely well. But we can be down in every single restaurant, but the Village Streets is doing great. It's telling where the customer's pocketbook is right now.
Speaker Change: They're sort of being stingy, and so that period of time in which they will continue to be stingy, we will not see the sales that we were used to prior to that.
Michael Weinstein: Okay, well, just to respond to what you said, I was not referring to restaurants in Florida where you need to have a reservation, you know, you can't get a reservation, you know, between five and not talking about the restaurant. Unknown Attendee, Michael Weinstein, Jed Litten, Michael Weinstein, whiskey master, okay.
Speaker Change: All right, but it doesn't mean we rip apart everything.
Speaker Change: Okay, well, just to respond to what you said, I was not referring to restaurants in Florida that you need to have a reservation, you know, you can't get a reservation, you know, between five and nine. I'm talking about the restaurants that you mentioned.
Michael Weinstein: We have competition there obviously from other waterfront sites. We're spending a lot of time now trying to figure out what a better menu might be for Sequoia, more affordable. We're doing that with all our restaurants, but basically Sequoia is probably the one restaurant in the company that needs a refresh and menu and maybe even in branding. We have lots of opportunities in terms of acquisitions that have been put in front of us in the last three months with following up on those. We also have lots of responsibilities in terms of refurbishing costs in Las Vegas, contractual when we signed a new lease.
Speaker Change: discussed in the past.
Speaker Change: The El Camino is Bartopo, I know you know the group that owns Key Grill and Henry's in Lauderdale, Boca and West Palm. These are all places that their happy hour is booming at 4 or 5 in the afternoon. They're capitalizing on the work from home crowd so that they get out, they leave home and they go to the bar at 4 or 5 o'clock.
Jeffrey Kaminsky: Unknown Speaker, Unknown Speaker And since this is a shareholder earnings call, just to remind you, the stock is going to trade near pandemic or COVID lows, it's 11 as we speak, and you've discontinued the dividend that had already been cut in half. You referenced McDonald's, Starbucks, the hospitality group has been under pressure, but most are way above pandemic lows, and we are now going to test that low and So I'm talking to you as a shareholder, not as a patron of your restaurant.
Speaker Change: and David Finner, that's what I'm referring to.
Speaker Change: And since this is a shareholder earnings call, just to remind you, the stock is going to trade here.
Speaker Change: near pandemic or COVID lows, it's 11 as we speak, and you've discontinued the dividend that had already been cut in half. You referenced McDonald's, Starbucks.
Speaker Change: The hospitality group has been under pressure, but most are way above pandemic lows, and we are now going to test that low and eliminate the dividends. So I'm talking to you as a shareholder, not as a patron of your restaurant.
Michael Weinstein: So given the lackluster sales that seemed to be continuing right now and the cash flow that's required to progress our company with new development and refurbishing in Vegas, we decided to eliminate the dividend for the moment just to preserve cash. That also sort of segues into the conversation about Brian Park. We have still not or the park has still not issued any judgment on whether or not we will continue with the new lease or if they're going to award it to somebody else.
Jeffrey Kaminsky: I sympathize with it, I'm certainly aware of it, it represents a significant part of my net worth. And certainly, I don't like seeing the stock at 11 or 12, you know, down from 20 a year ago. It doesn't make me happy.
Speaker Change: I sympathize with it. I'm certainly aware of it. It represents a significant part of my net worth.
Speaker Change: And certainly, I don't like seeing the stock at 11 or 12, you know, down from 20 a year ago. It doesn't make me happy. I feel like, you know, the company is, is
Michael Weinstein: I feel like, you know, the company is, is, maybe a little too conservative in the deals we looked at and passed on. But that has always held us in good stead. And one of the reasons I'm happy that Jennifer and Sam are on board is that they see things from a different point of view. And, and that's been helpful in sort of the way we're looking at things going forward. Um, but that's where we are. It's not a lack of effort on the part of the restaurants to perform. Nobody's falling down on the job.
Speaker Change: is maybe...
Speaker Change: a little too conservative in the deals we looked at and passed on.
Speaker Change: But that has always, in the past, held us in good stead.
Michael Weinstein: It's just been radio silence. They're always rumors, but we're not paying attention to those. So we just think with the uncertainty of Brian Park and what our responsibilities are that eliminating dividend to this quarter is wise, in relation to the metallands.
Speaker Change: and...
Speaker Change: and one of the reasons I'm happy that Jennifer and Sam are on board is they see things from a different point of view and that's been helpful in sort of
Michael Weinstein: Again, New York State has not moved on their casino applications. As we stated before, New Jersey is reluctant to do anything, unless they see activity in downstate casinos in New York, meaning some New York City casinos. So that's been kind of quiet, even though we really believe we're going to be a licensee at some point.
Speaker Change: But that's where we are.
Speaker Change: It's not it's not a lack of it's not a lack of effort on the restaurants to perform Nobody's falling down on the job We just haven't found new things to do
Michael Weinstein: We just haven't found new things to do that meet our former criteria. One of the things we're beginning, so as I said to you before, the deals we look at seem to fall apart in part because the numbers of the restaurants we're looking at are also falling apart.
Speaker Change: that meet with our former criteria. One of the things we're beginning, so when I said to you before, the deals we look at seem to fall apart in part
Michael Weinstein: With that, you know, I'd like to entertain any questions.
Speaker Change: because the numbers of the restaurants we're looking at are also falling apart. So what's what's happened on almost every deal we've looked at in the last year, they're pricing the numbers off of, you know, 2023.
Michael Weinstein: So what's happened with almost every deal we've looked at in the last year, they're pricing the numbers off of 2023. And then we look at the 2024 year-to-date comps to last year, and they're down 20% on sales and EBITDA. So they're trying to price it off of 2023 income, saying we want three or four times, you know, a million bucks. They want 4 million. Then we look at the numbers for the six months ended, and they're down 20-25%. And they don't want to take 20-25% less.
Operator: Thank you. At this time, we'll be conducting a question-and-answer session.
Operator: 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 hands up before pressing the star keys. When moment please, will we pull for questions? Once again, ladies and gentlemen, it is star one to ask a question.
Speaker Change: And then we look at the 2024 year-to-date comps to last year and they're down 20% on sales and EBITDA.
Speaker Change: So, they're trying to price it off of 2023 income, saying we want three or four times, you know, a million bucks. They want four million. Then we look at the numbers for the six months ended, and they're down 20-25 percent. And they don't want to take 20-25 percent less.
Michael Weinstein: So we're not going to overpay either. The other thing we are doing at a couple of the properties in Florida is working on an initiative to expand our event business down there. You know, we have a substantial event business in New York and D.C., and we have people in corporate working on expanding the event business, in particular at Blue Moon and JB's right now, because that's a very profitable end of the business.
Speaker Change: So we're not going to overpay either. The other thing we are doing
Speaker Change: at a couple of the properties in Florida. We are working on an initiative to expand our event business down there. You know, we have a substantial event business in New York and D.C. and we have people in corporate working on expanding the event business.
Jeffrey Kaminsky: Our first question comes from a line of Jeffrey Kaminsky with J.J. K. Consultants. Please proceed with your question. Good morning, guys. Once again, on the call, Michael, you're highlighting specifically weakness in Florida. The industry has played with the same challenges, payroll and insurance costs, et cetera, et cetera. In Florida, in particular, it's a pretty robust market as discussed, the restaurants, the changes being made.
Speaker Change: in particular at Blue Moon and J.B.'s right now because that's a very profitable end of the business.
Michael Weinstein: One of the other things we've seen, Jeff, just to hopefully, you know, argue for my premise that people are squeezed right now with disposable income. We're doing the same sales, or a little bit less or a little bit more right now, for the last four or five or eight weeks, maybe eight weeks at Rustic. All right, we were down 10, 12% consistently at Rustic. I would tell you that the product at Rustic, for what we want it to be, is always a five-star product.
Speaker Change: One of the other things we've seen, Jeff, just to hopefully, you know,
Speaker Change: Bye.
Speaker Change: argue for my premise that people are squeezed right now with the disposable income. We're we're doing
Jeffrey Kaminsky: I have a question that I really would like an answer to because if it had passed, you'd discuss what is our strategy going forward. The answer is always and consistently been, we're always on the lookout to buy acquired properties and fold it into the portfolio. Okay, you still maintain that, but you have a weakness in a big market and a market that's generally flourishing. I would like to hear something about the strategy in Florida.
Jeff: The same sales.
Speaker Change: or a little bit less or a little bit more right now, the last four or five or eight weeks, maybe eight weeks at Rustic. All right. We were down 10, 12% consistently at Rustic. I would tell you the product at Rustic for what we want it to be.
Speaker Change: is always a 5-star product. It's just great.
Michael Weinstein: It's just great, and But what they're seeing is their headcounts in the weeks before the last few weeks were the same, but people were sharing dishes. You know, King Crab Legs at Rustic, 1.8 pounds to 2 pound serving, you know, it's $135. People used to get that for themselves, but now people are sharing. So we just think the customer is having a difficult time at all price points. You know, it's, This may not resonate with everybody.
Speaker Change: and...
Speaker Change: But what they're seeing is their head counts, in the weeks before the last few weeks, their head counts were the same, but people were sharing dishes. You know, King Crab Legs had rusted 1.8 pounds to 2 pounds.
Jeffrey Kaminsky: How are you going to change things around? Because there's never any discussion on these calls about what ARC is going to do with the current existing properties and how we're going to move forward. I'd like to put that out there because this is going to be a very frustrating investment for me, and the business is getting worse, not better.
Speaker Change: serving, you know, it's $135. People used to get that
Speaker Change: for themselves, but now people are sharing. So we just think the customer is having a difficult time at all price points. You know it
Jeffrey Kaminsky: I'd like to hear what the vision is to company in the immediate future.
Michael Weinstein: Jeff, you broke up a few times during that question, but I think I get the gist of it, and I hope I'm answering correctly. First of all, we've been looking at several businesses over the last 12 months in Florida. Well-established companies or one-offs, and we're looking at numbers, and every deal has fallen in part because numbers are deteriorating in those restaurants. When we talk to brokers in Florida, they will tell you everybody's down 15 to 20 percent.
Michael Weinstein: I don't know how many people on the call are familiar with Nilo's in New York. You know, I go there once in a while because it's convenient to my house and, you know, it's a great restaurant.
Speaker Change: This may not resonate with everybody, I don't know how many people on the call are familiar with Nilo's in New York. I go there once in a while because it's convenient to my house and it's a great restaurant. Used to be you couldn't get in there. I can walk in any day now and there are empty tables.
Michael Weinstein: Used to be, you couldn't get in there. I can walk in any day now, and there are empty tables. And that's the price point where the argument used to be that if you're paying $125 a person to eat, you know, those people could afford it, and they're not going to cut back. Well, guess what?
Speaker Change: And that's the price point where the argument used to be that if you're paying $125 a person to eat, you know, those people could afford it and they're not going to cut back. Well, guess what? They're cutting back.
Michael Weinstein: They're cutting back. So this is the environment you're living in right now. Will it come back?
Michael Weinstein: Yes. I can't predict when, you know, but it will come back, and sales will increase, and margins will expand, and we'll be in good shape with the restaurants we have. The restaurants we would like to have as future acquisitions. People are finally starting to be more reasonable on pricing. It's no longer, well, it's a little blip, and, you know, we still want 2020 pricing.
Speaker Change: Yeah
Speaker Change: I can't predict when, you know, but it will come back and sales will increase and margins will expand and we'll be in good shape with the restaurants we have. The restaurants we would like to have future acquisitions.
Michael Weinstein: If you look at a city like Delray, which was very, very hot for a while, probably still is hot. The vacancies in restaurant spaces are coming up every day because they were getting top rents when things are hot and now businesses slow down and restaurants cash low have been squeezed and they can't afford the rents. Our strategy is to try to buy institutions with good management. In every case we in Florida, we think we've accomplished that.
Speaker Change: People are starting finally to be more reasonable on pricing. It's no longer well it's a little blip and you know we still want 2023 pricing. People are sellers are beginning to realize
Operator: People are, sellers are beginning to realize that they have to sell it on current numbers, not on, you know, pre-current numbers. So hopefully that'll help us. Thank you. I'm showing no other questions at this time. I'll turn the floor back to you.
Speaker Change: that they've got to sell it on current numbers, not on, you know, pre-current numbers. So hopefully that'll help us.
Speaker Change: Thank you for watching!
Michael Weinstein: And if, you know, maybe this doesn't satisfy what you're looking for, but in my world, the way I look at things is there are years in which you make more money than you deserve to, and there are years in which you just, you know, for circumstances outside of your, you know, performance, you don't make the money that you would like to make. Right now the ladder is true. We think that we have great locations in Florida.
Operator: I'm sorry, we do have one other question. We have a question coming from the line of Bruce Geller with Geller Ventures. Please proceed with your question. Hey, good morning, gentlemen. How are you?
Speaker Change: Thank you.
Mr. Weinstein: Mr. Weinstein, I'm showing no other questions at this time. I'll turn the floor back to you. I'm sorry, we do have one other question. We have a question coming from the line of Bruce Geller with Geller Ventures. Please proceed with your question.
Bruce Geller: Hey, good morning, gentlemen.
Bruce Geller: Good, thanks. Unknown Speaker, Rachel Orsman, You know, the pressures on both sales and cost, you know, based on the macro environment. It's hard to see much relief on either side of those at the moment. So I'm curious, you know, kind of adding on to the previous line of questioning. What additional self-help measures can you put into place?
Bruce Geller: Hey, how are you? Good, thanks.
Bruce Geller: Bye-bye.
Speaker Change: You discussed, uh...
Michael Weinstein: One of the disadvantages of those locations, by the way, is that they're all on the water and wind insurance and property insurance have gone through the roof and those properties and that's squeezing on margins. But from a performance level, if you look at the reuse of the restaurants, for the most part, they're excellent. Every once in a while we see, you know, that our revenues are creeping up above last year, but that doesn't mean that the head counts are because it have been some price increases. But in general, Florida has not been, has good for us this past 18 months as it had been in the past. It doesn't mean that.
Speaker Change: you know, the pressures on both sales and costs.
Speaker Change: you know, based on the macro environment.
Speaker Change: It's hard to see much relief on either side of those at the moment.
Speaker Change: So, I'm curious, you know...
Speaker Change: kind of adding on to the previous line of questioning, what additional self-help measures
Speaker Change: Can you put into place...
Speaker Change: to address this environment because just waiting for the environment to get better.
Michael Weinstein: to address this environment because just waiting for the environment to get better isn't going to be enough. So, so, Bruce, we'll, we'll, we'll. One thing we're doing is we say, "We're six weeks away from opening up Let Lucky Pay." So we have, We've never done brands. We're looking to do brands. Abraham Lucky Pig, Um.., the The, That would be new for us, but it's something we're very excited about.
Speaker Change: isn't going to be enough.
Speaker Change: So Bruce, one thing we're doing is we're saying what six weeks away from opening up Lucky Pig.
Speaker Change: So, we have.
Jeffrey Kaminsky: Let me go into a second, I apologize, and perhaps that's where I'd woke up before. I recognize that your strategy continues to be acquired in properties where you think you can buy it at the right price and make some money. Let's put that aside for the moment. That's not happened recently. It may happen quickly. It may not happen at all.
Bruce Geller: We've never done brands. We're looking to do brands. A brand, Lucky Pig.
Bruce Geller: The
Michael Weinstein: And when we look in the marketplace, there's nothing like what we're doing, and we think that's expandable. And we have some further interest beyond New York, New York, if it's successful, to expand into the Las Vegas area almost immediately. So there's interest in what we're doing. We're also looking, one of the things we're looking at right now is a small brand in the South that's for sale. They have some issues with some of their leases. They're trying to correct that.
Michael Weinstein: What is the strategy of the current properties and turning them around? Then you change it. Happy hours. What kind of thing drives new people? Jeff, you're making this something that these things aren't doing well. They're performing well. They're all making money. They're just not making as much money as they used to make. That's a function of three things. Number one, traffic is not as strong as it used to be in general for all full service restaurants down there.
Speaker Change: that would be new for us but it's something we're very excited about and when we look in the marketplace there's nothing like what we're doing and we think that's expandable and we have some further interest beyond New York New York
Speaker Change: if it's successful to expand in the Las Vegas area almost immediately. So there's interest in what we're doing.
Speaker Change: We're also looking at, one of the things we're looking at right now is a small brand in the South.
Speaker Change: That's for sale. They have some issues with some of their leases. They're trying to correct that. They're speaking to their landlords.
Michael Weinstein: Now you can point to the three or four hot restaurants in every market where you can't get a reservation after five o'clock or before 11 o'clock. That will always exist. Our restaurants are not that. They're not doing bottle service. There are no DJs. We're not that. These restaurants are performing well at the level of sales that presently exist. It's a question of three things. Number one, are they profitable? Yes. Have they had strong reputations and strong brand identity in the past and now do they?
Michael Weinstein: They're speaking to their landlords. We can buy that at a very reasonable price, and we think we could do a better job than the current owners. The current owners think we could do a better job than them. And, you know, we could buy it at a fair price. And again, it's another brand that may be expandable.
Speaker Change: We can buy that at a very reasonable price and we think we could do a better job than the current owners. The current owners think we could do a better job than them. And, you know, we could buy it at a fair price.
Speaker Change: and again it's another brand that that may be expandable. So those are two things we're looking at. There are other things we're looking at but those are the two that are in the forefront. We've been looking at automation.
Michael Weinstein: So those are two things we're looking at. There are other things we're looking at, but those are the two that are in the forefront. We've been looking at automation. We will probably have a test with, within the next few months, a burger making machine that will save us some labor. We've looked at robotic janitors and dishwashers. And we're very active in trying to find ways to save on labor. The problem with that is that the robotic janitor, no, excuse me, the dishwashing that we looked at, which was sensational.
Speaker Change: We will probably have a test with.
Speaker Change: We'll end next.
Speaker Change: four months of a burger-making machine that will save us some labor. We've looked at robotic janitors.
Michael Weinstein: Yes. All right. The problem is traffic and the problem is increased expenses and the problem is my reluctance, my reluctance as I read my customers to raise prices to make up for the squeeze on gross margins. And honestly, you know, you can look at analogies that not necessarily appropriate, but McDonald's is struggling because they have raised prices beyond where the customer can absorb star boxes having problems. There are a lot of people having problems trying to figure out pricing and relation to the current economic circumstances.
Speaker Change: and dishwashers, and we're very active in trying to find ways
Speaker Change: to save on labor.
Speaker Change: The problem with that is one is
Speaker Change #100: that the robotic janitor, no, excuse me, the dishwashing...
Michael Weinstein: I mean, it was really sensational, but the company didn't have enough orders and enough capital to sustain their business plan. So they closed. Even the burger.
Speaker Change #101: that we looked at, which was sensational. I mean, it was really sensational, but the company didn't have enough orders and enough capital to sustain their business plan, so they closed. Even the burger,
Michael Weinstein: So given that these restaurants hold on, given that these restaurants are profitable and that we think they're performing well with their with their menu execution and service execution and the fact that they're all in great locations. You know, we're prepared to stand there and accept less, you know, of in terms of cash flow because we don't think they need changing. Do they all, do they all look at menus and try to be more efficient and bring on new product to entice customers? Yes. But are we going to rip them apart and start all over again? No.
Michael Weinstein: The maker that we've been looking at. I mean, they've sold 15 units in Korea, I think. They're coming here. They have established support here. But it's a young company. And one of the things you got to make sure of is that you're not changing your line, your cooking line, and winding up with a machine that has no maintenance support. So, but we're looking at this stuff. The biggest.
Speaker Change #101: maker that we've been looking at. I mean, they've sold 15 units in Korea, I think.
Speaker Change #103: They're coming here. They have established support here, but it's a young company, and one of the things you gotta make sure of, you're not.
Speaker Change #102: changing your line, your cooking line, and winding up with a machine that has no maintenance support. So, but we're looking at this stuff.
Michael Weinstein: The biggest area that we have problems with honestly is dishwashing. Dishwashers are hard to find at the hourly costs that we're that we're prepared to pay. And, and so the turnover is great. And, and if we can find something that can alleviate labor, and, you know, we would do it, you know, as long as we know that the equipment is, you know, supported by the manufacturer. So it's not like we're not looking at stuff to try to impact it.
Speaker Change #102: The biggest
Michael Weinstein: And if you look at, you know, we have we have one good laboratory that that is very, very telling Las Vegas, we're in we're in a building in Las Vegas, we're in a building in Hollywood, all right, that a major casinos and they all have full service restaurants and they have our fast food courts, all right. Our fast food courts are going through the roof in terms of sales. I mean, I think we're up 10, 12, 13% Anthony, is that probably what yes.
Speaker Change #103: The biggest area that we have problems with, honestly, is dishwashing. Dishwashers are hard to find at the...
Speaker Change #105: hourly costs that we're that we're prepared to pay and and so the turnover is great and and if we can find something that can alleviate labor and
Speaker Change #106: you know, we would do it, you know, as long as we know that the equipment is, you know, supported by the manufacturer. So it's not like we're not looking at stuff to try to impact it. We have insurance, we have
Michael Weinstein: We have insurance. We have conversations that are mammothly long with our insurance brokers. We just, we just switched health insurance companies. Bye-bye, and created some savings in doing that. Property insurance and wind insurance in Florida, you're lucky to get insured.
Michael Weinstein: In Hollywood, every single week, maybe even more, all right. And the restaurants according to hard rock are suffering the full service restaurants. Why are they suffering? Because people can't afford them right now, all right. So they're switching to fast food to our benefit deficient to switching to fast food. I would tell you our product is so good there that they closed their coffee shop because the coffee shop wasn't getting any traffic because our breakfast place hold eggs, you know, there's a line every morning to get there.
Speaker Change #107: conversations that are mammothly long with our insurance brokers. We just switched health insurance companies.
Speaker Change #107: and created some savings in doing that.
Speaker Change #108: property insurance and wind insurance in Florida that you're lucky to get insured.
Michael Weinstein: It's crazy. The only reason we're insured is because we stayed with, we've been with one company forever, and they're sort of acknowledging our relationship by writing the insurance. But I have restaurants calling me. How do we get insurance?
Speaker Change #109: It's crazy. You know, the only reason we're insured is because we've stayed with the, you know, we've been with one company forever and, you know, they're sort of acknowledging our relationship by writing the insurance. But I have restaurants calling me, honestly.
Michael Weinstein: There was no line at the coffee shop because it got a little bit too expensive and Vegas, you know, the village streets is doing extremely well, but we can be down in every single restaurant, but the village streets is doing great. It's telling where the customers pocketbook is right now. They're there. They're sort of being stingy and so that period of time in which they will continue to be stingy, we will not see the sales that we were used to prior to that, all right. But it doesn't mean we rip apart everything.
Michael Weinstein: You know, they can't find insurance. So, you know, I can't I can't do anything about those premiums. Um, it's very, very frustrating. We are looking at other costs and cutting other costs. We've worked on, you know, driving safety initiatives at the restaurants to keep workman's comp claims down, which has actually been pretty effective the last two years. Our premiums have gone down, and we just received a big refund on workers comp for the prior year based on their audit.
Speaker Change #110: How do we get insurance?
Speaker Change #111: You know, they can't find insurance. So, so, you know, I can't I can't do anything about those premiums
Speaker Change #112: It's very very frustrating. We are looking at other costs of cutting other costs we've worked on
Speaker Change #113: You know, driving safety initiatives at the restaurants to keep workman's comp claims down.
Jeffrey Kaminsky: Okay, well, just to respond to what you said, I was not referring to restaurants in Florida that you need to have a reservation, you know, you can't get a reservation, you know, between five and nine. I was talking about the restaurant. I know you know the dude that owns key grill and Henry's in the water bill, Boca, and West Palm. These are all places that they're happy hour is blooming at four or five in the afternoon. They're capitalizing on the work from home ground so that they get out, they leave home and they go to the bar at four or five o'clock, they stay for dinner. That's what I'm referring to.
Speaker Change #114: which has actually been pretty effective the last two years and our premiums have gone down and we just received a big refund on workers comp for the prior year based on their audit. I mean we're doing you know we're looking at every line item to see what we could you know save money.
Michael Weinstein: I mean, we're doing, you know, we're looking at every line item to see what we can do, you know, save money. What about other strategies to drive revenue in the existing restaurants? So one of the things we've never been good at and, you know, we're changing is our approach to social media. It'll take a little while, but we're becoming more active on social media. But, you know, it's hard to delineate the cause and effect. Unknown Speaker, I.
Speaker Change #114: What about other strategies to drive revenue in the existing restaurants?
Speaker Change #115: So one of the things we've never been good at and you know we're changing is our approach to social media. It'll take a little while but we're becoming more active in social media.
Jeffrey Kaminsky: And since this is a shareholder earnings call, just to remind you, the stock has been a trade near pandemic or coded loans. It's 11 as we speak, and you just continue the dividend that had already been cut and happened. We referenced McDonald's Starbucks, the hospitality group has been under pressure, but most of them are still available and then they're close and we are now going to test that well and eliminated the dividend.
Speaker Change #114: But, you know, it's hard to...
Michael Weinstein: We don't advertise. We've tried advertising in the past. It doesn't work for us because we're advertising one-offs, essentially. So you're spending a lot of money in a market to try to get people to drive to a single unit instead of many units with the same brand. So advertising is ineffective. Social media could be effective. But this is not... I don't want to...
Speaker Change #116: You know, we don't advertise. We've tried advertising in the past. It doesn't work for us because we're advertising one-offs, essentially. So you're spending a lot of money in a market to try to get people to drive to.
Speaker Change #117: you know, a single unit instead of many units of the same brand, so advertising is ineffective.
Jeffrey Kaminsky: So I'm talking to you as a shareholder, but that is a patient of the rest of us. I sympathize with it. I'm certainly aware of it. It represents a significant part of my network. And certainly I don't like seeing the stock at 11 or 12, you know, down from 20 years ago. It doesn't make me happy. I feel like, you know, the company is maybe a little too conservative in the deals we looked at and passed on.
Speaker Change #116: social media could be effective.
Michael Weinstein: I know this sounds defensive, but this is not a company that's falling apart. I mean, every unit we have is basically profitable. It's just making less money than it used to make. Go on. Yeah, go ahead.
Speaker Change #116: but this is not...
Speaker Change #118: You know, I don't want to, I know this sounds defensive, but this is not a company that's falling apart. I mean, every unit we have is basically profitable. It's just making less money than it used to make.
Bruce Geller: No, I was going to say on that note, I'm really surprised and just don't understand the thought behind suspending the dividend here. Shareholders have gotten very, very little return from the company over the past few years. And that was, you know, one minor source of return, and the company sitting here with net cash, and you're saying you're confident in the future, but suspending a dividend like that is a sign of really low confidence, so it's, it's really a disconnect, and I'm pretty disappointed to hear about this, so I'd love for you to elaborate more on it. So we have $4 or $5 million of refurbishing costs We've redone Gallagher's house.
Speaker Change #118: I was going to say, on that note, I'm really surprised and just don't understand.
Jeffrey Kaminsky: But that is always in the past, held us in good state. And one of the reasons I'm happy that Jennifer and Sam are on board is they see things from a different point of view and that's been helpful in sort of the way we're looking at things going forward. But that's where we are. It's not a lack of the effort on the restaurants to perform. Nobody's falling down on the job. We just haven't found the things to do that meet with our former criteria.
Speaker Change #118: the thought behind suspending the dividend here.
Speaker Change #119: I mean, shareholders have gotten very little return from the company over the past few years, and that was, you know, one...
Speaker Change #120: minor source of return and the company sitting here with net cash and you're saying you're
Speaker Change #121: confident in the future, but suspending a dividend like that is a sign of really low confidence, so it's really a disconnect, and I'm pretty disappointed to hear about this, so I'd love for you to elaborate more on it.
Speaker Change #121: So we have
Speaker Change #121: $4 or $5 million of refurbishing costs that we are
Jeffrey Kaminsky: One of the things we're beginning, so when I said to you before the deals we look at seem to fall apart in part because the numbers of the restaurants we're looking at are also falling apart. So go ahead. So what's happened on almost every deal we've looked at in the last year? They're pricing the numbers off of, you know, 2023 and then we look at the 2024 year that they've come to last year and they're down 20% on sales in the EBITDA.
Speaker Change #122: are responsible for in Las Vegas by, you know, when we signed the new lease that was part of the deal.
Michael Weinstein: We're in the process of redoing the food court. I don't think what we're doing in the food court and the building of Lucky Pig in the food court will inhibit revenues in the food court. I mean, as one unit closes in the food court, people will gravitate to other units. So I don't think that will have an impact, but it may have an impact when we do America Next.
Speaker Change #122: So we've redone
Speaker Change #123: Gallagher's we read we're in the process of redoing the food court I don't think what we're doing in the food court in the building of Lucky Pig in the food court will inhibit revenues in the food court I mean as one unit closes in the food court people will gravitate to other units
Speaker Change #124: So I don't think that will have an impact, but it may have an impact when we do America next year.
Jeffrey Kaminsky: So they're trying to price it off of 2023 income saying we want three or four times, you know, a million bucks. They want four million. Then we look at the numbers for the six months ended and they're down 20, 25% and they don't want to take 20, 25% less. So we're not going to overpay either.
Michael Weinstein: So we're in the process of finalizing designs for America's refurbishing, and we may be closed for a period of time there. And that will, again, impact cash flow from America while we're closed, and we'll be spending money there as well. So that's one issue. We're looking at two acquisitions right now that will not be inexpensive. So that's another reason to try to preserve cash. And then the question becomes, what happens with Bryan Park?
Speaker Change #125: So, we're in the process of finalizing designs for America's refurbishing.
Speaker Change #126: and we may be closed a period of time there and that will again impact...
Michael Weinstein: The other thing we are doing at a couple of the properties in Florida, we are working on initiative to expand our event business down there, the way, you know, we have a substantial event business in New York and DC and we have people in corporate working on expanding the event business at, particularly at the Blue Moon and JB's right now because that's a very profitable end of the business. One of the other things we've seen Jeff just to, to hopefully, you know, argue for my premise that people are squeezed right now with the disposable income.
Speaker Change #127: cashflow from America while we're closed, and we'll be spending money there as well. So that's one issue. We're looking at two acquisitions right now that will not be inexpensive.
Speaker Change #127: So, that's another reason to try to preserve cash.
Michael Weinstein: I mean, they can make a decision tomorrow or next week, or it could drag on for another four months. But who knows where they are on this? And communication has not been great. You know, not transparent.
Speaker Change #128: And then the question becomes, what happens with Brian Park? I mean, they can make a decision tomorrow or next week, or it could drag another four months. But who knows where they are on this? And, you know, communication has not been great. The process has been...
Michael Weinstein: So, you know, if tomorrow morning we find out that we don't we're not awarded this thing, I don't want to be sitting paying out $3 million plus a year with that uncertainty. So that's the thinking behind it. The thinking behind it is to preserve cash for the company so that it can expand. You know, take care of its obligations and in Las Vegas and pay for things that will expand and invest, you know, our cash, and that's what we're trying to do. Yeah, but some of these are things that haven't happened yet.
Speaker Change #129: You know, not not transparent. So, you know, if tomorrow morning we find out that, you know, that we don't we're not awarded this thing.
Michael Weinstein: We're doing the same sales or a little bit less or a little bit more right now, the last four or five or eight weeks, maybe eight weeks at Rustic. All right, we would down 10, 12% consistently at Rustic. I would tell you the product at Rustic for what we wanted to be is always a five-star product. It's just great. And but what they're seeing is their head counts in the weeks before the last few weeks.
Speaker Change #130: You know, I don't want to be sitting paying out, you know, three million plus a year with that uncertainty. So that that's the thinking behind it. The thinking behind it is to preserve cash for the company so that it could expand
Speaker Change #131: take care of its obligations in Las Vegas and pay for things that will expand our cashflow.
Michael Weinstein: Their head counts were the same, but people were sharing dishes. You know, King Crab Lakes had Rustic 1.8 pounds to 2 pound serving, you know, it's $135. People used to get that food themselves, but now people are sharing. So we just think the customer is having a difficult time at all price points.
Speaker Change #132: And that's what we're trying to do. Yeah, but some of these are things that haven't happened yet. Like Bryant Park, we just don't know. And acquisition...
Bruce Geller: Like Bryant Park, we just don't know. An acquisition, has it happened? We just don't know. You've been talking about potential acquisitions for quite some time. I could see, maybe, once and once.
Speaker Change #133: has it happen we just don't know you've been talking about potential acquisitions for quite some time. I could see maybe...
Bruce Geller: Yeah, every single one of them. And there have been four or five of them that we've been close to. And what's happening is the numbers have been falling apart, just like everybody else's numbers have been falling apart. And the seller doesn't want to adjust the price, and we're not going to overpay. No, I totally understand that.
Speaker Change #134: Once and once every yeah, every every every one of them and there have been Four or five of them that we've been close to and what's happening is the numbers have been falling apart Just like everybody else's numbers have been falling apart and the seller Doesn't want to adjust the price and we're not going to overpay
Michael Weinstein: You know, this may not resonate with everybody. I don't know how many people on the call are familiar with Milos in New York. You know, I go there once in a while because it's convenient to my house and, you know, it's a great restaurant. You used to be, you couldn't get in there. I can walk in any day now when there are empty tables. And that's a price point where the argument used to be that if you're paying $125 a person to eat, you know, those people could afford it and they're not going to cut back. Well, guess what? They're cutting back. So it's the environment you're living in right now.
Bruce Geller: I totally understand and respect that. My point was, But Bruce, right now, what we're finally seeing is sellers that are reasonable because they see their business falling apart. They don't want to operate in this environment for whatever reason, or they have other pressures on other deals that they may own. And they're prepared to take three or four times current cash flow projections, not past. And this is the first time we're really seeing it.
Speaker Change #135: No, I totally understand and respect that. My point was... But Bruce...
Speaker Change #136: Right now, what we're finally seeing is sellers that are reasonable because they see their business falling apart. They don't want to operate in this environment for whatever reason, or they have other pressures on other deals that they may own.
Speaker Change #137: and they're prepared to take three or four times current cash flow projections, not past, and this is the first time we're really seeing that.
Michael Weinstein: Will it come back? Yes. I can't predict when, you know, but it will come back. And sales will increase and margins will expand and will be in good shape with the restaurants we have. The restaurants we would like to have future acquisitions, people are starting finally to be more reasonable on pricing. It's no longer about, well, it's a little blip. And, you know, we still want 20, 23 pricing. People are sellers are beginning to realize that they got to sell it on current numbers, not on, you know, free current numbers.
Michael Weinstein: So hopefully that'll help us. Thank you.
Michael Weinstein: So we think, you know, we may be able to secure some additional property. So that's the reason for the dividend. Decision. Oh, there was a board-level decision. I mean, this was, yeah, the board decided. Yeah, I just feel like it was a preemptive cut.
Speaker Change #137: So, we think, you know...
Speaker Change #137: We may be able to secure some additional properties.
Speaker Change #137: So that's the reason for the dividend.
Speaker Change #138: decision. Oh, there was a board level decision. I mean this was the board decided. Yeah, I just feel like it was a preemptive cut.
Bruce Geller: August 16, 2012, Discussing as Possibilities or Definitive. It's also a little discouraging to see the, you know, you have a lot of spending obligations. It sounds like but, It's like you're spending a lot of money to kind of stay in the same place you make a lot of these investments, but I don't, I don't disagree with those options. I don't disagree with the optics; you're right.
Speaker Change #138: as opposed to cutting it at a point where some of these items you're
Speaker Change #139: discussing as possibilities are definitive. It's also a little discouraging to see, to see the, you know, you have a lot of spending obligations.
Speaker Change #140: It sounds like, but...
Speaker Change #141: It's like you're spending a lot of money to kind of stay in the same place, like you make a lot of these investments, but... I don't...
Operator: Mr. Weinstein, I'm showing you no other questions at this time.
Michael Weinstein: I'll turn the floor back to you.
Operator: I'm sorry, we do have one other question.
Speaker Change #141: I don't disagree with those optics.
Bruce Geller: We have a question coming from the line of Bruce Geller with Geller Ventures. Please proceed with your question. Hey, good morning, gentlemen. Hey, how are you? Good, thanks. You discuss, you know, the pressure is on both sales and costs. You know, based on the macro environment, it's hard to see much relief on either side of those at the moment.
Speaker Change #141: I don't disagree with the optics.
Michael Weinstein: But that's not what's going on here. You know, internally, we really are trying to progress the business. But the optics, you're absolutely right.
Speaker Change #142: You're right.
Speaker Change #143: But that's not what's going on here, you know. Internally, we really are trying to progress the business, but the optics, you're absolutely right. It doesn't look like we're doing anything.
Michael Weinstein: It doesn't look like we're doing it, and truth be told, we're working to try to, you know, capture more cashflow. Well, it's not that it doesn't look like you're not doing anything.
Speaker Change #143: and truth
Speaker Change #143: We're working to try to, you know, capture more cash flow.
Bruce Geller: It looks like you're, you know, you're spending on some of these obligations, but it's not bringing the company forward; your results, you know, remain the same or even a little worse. And so the capital is being spent, but there's no visible return on those investments. I mean, Sequoia is a great example, a ton of capital to completely redo that restaurant when you sign a new lease, and you know it hasn't gone well, and now you've taken a right down there. It hasn't worked out.
Speaker Change #144: Well, it's not that it doesn't look like you're not doing anything, it looks like you're, you know, you're spending on some of these obligations, but it's not bringing the company forward. Your results...
Michael Weinstein: So I'm curious, you know, kind of adding on to the previous line of questioning, what additional self-help measures can you put into place to address this environment because it's just waiting for the environment to get better isn't going to be enough. So Bruce, with one thing we're doing is we're saying what, six weeks away from opening you up, let's lucky pay. So we have, we've never done brands, we're looking to do brands, A brand, lucky pay.
Speaker Change #145: remain the same or even a little worse.
Speaker Change #146: No, they're worse, but yeah. And so the capital is being spent, but there's no visible return on those investments. I mean, Sequoia is a great example.
Speaker Change #147: a ton of capital to completely redo that restaurant when you sign a new lease.
Speaker Change #148: and you know, it hasn't gone well and now you've taken a right down there. It has not worked out.
Bruce Geller: In the past, you've purchased some real estate and some of these deals. I'm just curious, you know; I'm looking at the stock. Current Enterprise Value in the 30s. What would be a ballpark estimate if you had to estimate it? What is the value of the underlying real estate you own? Some of these are properties in great waterfront locations. I'm just curious about, you know, what kind of underlying real estate value there is in a company whose enterprise value is less than $40 million.
Speaker Change #149: In the past, you've purchased some of the real estate in some of these deals. I'm just curious...
Speaker Change #149: You know, I'm looking at the stock.
Speaker Change #150: With the current enterprise value in the 30s, what would be a ballpark estimate if you had to
Michael Weinstein: That would be new for us, but it's something we're very excited about and when we look in the marketplace, there's nothing like what we're doing and we think that's expandable and we have some further interest beyond New York, New York, if it's successful to expand in the Las Vegas area, a meat almost immediately. So there's interest in what we're doing. We're also looking, one of the things we're looking at right now is a small brand in the south, that's for sale, they have some issues with some of their leases, they're trying to correct that, they're speaking to their landlords, we can buy that at a very reasonable price and we think we could do a better job than the current owners, the current owners think we could do a better job than them.
Speaker Change #150: estimate
Speaker Change #151: What is the value of the underlying real estate you own? Some of these are properties in great waterfront locations. I'm just curious what...
Speaker Change #152: What kind of underlying real estate value there is in a company that enterprise value is less than $40 million?
Michael Weinstein: The value of owning the properties would be on the sale lease value. That's the value if you if you want to.
Speaker Change #152: The value of owning the properties would be on a sale lease back.
Michael Weinstein: And we could buy it at a fair price and again, it's another brand that may be expandable. So those are two things we're looking at. There are other things we're looking at, but those are the two that are in the forefront.
Speaker Change #153: That's the value. If you if you want to...
Michael Weinstein: Look at them as development sites. We haven't included that there's any, you know, value to them because we've never investigated them as such. You know, there are hotels all around Rustic; we own that property, it's a big piece of property, maybe somebody would like to do a hotel, but we've never investigated it. The only value to us would be in terms of the sales lease back if we, if we wanted to, you know, use that to finance additional expansion. So I can't tell you what the value of those properties is.
Speaker Change #153: look at them as development sites. We haven't...
Speaker Change #153: conclude that there's any...
Speaker Change #154: valued to them because we've never investigated them as a development site.
Speaker Change #155: You know, there are hotels all around Rustic we own that property. It's a big piece of property. Maybe somebody would like to do a hotel event Yeah but we've never investigated it the only value to us would be in terms of the sales lease back if we if we
Michael Weinstein: We've been looking at automation, we will probably have a test within the next four months of a burger-making machine that will save us some labor, we've looked at robotic janitors and diswarsers and we're very active in trying to find ways to save on labor. The problem with that is that the robotic janitor, no, excuse me, the diswashing robot that we looked at, which was sensational, it was really sensational, but the company didn't have enough orders and enough capital to sustain their business plans so they closed.
Speaker Change #155: wanted to, you know...
Speaker Change #155: use that to finance additional expansion. So I can't tell you what the value of those properties are.
Speaker Change #155: [inaudible]
Operator: Thank you. Our next question comes in line from Walter Child with, I'm sorry, Private Investor. Please proceed with your question. I thank you.
Speaker Change #155: Thank you.
Speaker Change #155: Our next question comes in the line of Walter Schild with, I'm sorry, Private Investor. Please proceed with your question.
Walter Child: I'm hoping you can elaborate more on the Bryant Park lease piece. If you can share some information on the impact, either top line and or bottom line, if the lease is not renewed, and given the historical New York presence of our from an SG&A standpoint, and the move south, including real estate acquisitions, and future investments, which I'm supportive of, I think it's been smart given the challenge of operating in New York. Is there something transformational you would do if that's not picked up? What's the hit on the top and bottom line?
Walter Schild: I thank you. I'm hoping you can elaborate more on the Bryant Park lease piece. If you could share some information on the impact, either top line and or bottom line, if the lease is not renewed.
Michael Weinstein: And would you, you know, relocate, move the back office? You've got a lot of back office there from a business from 20 years ago, that's clearly shifting south. I'd love to hear more about your plans. All right, that's a good question. So, the cash flow from Bryant Park is substantial. Bye, you know, we would, First of all, you know, at the restaurant level, there's something just shy of 300 people who work for us there when the business is going full out, meaning all the cafes are open and everything.
Speaker Change #157: and given the historical New York presence of ARC.
Speaker Change #157: from an SG&A standpoint in the move south
Michael Weinstein: Even the burger maker that we've been looking at, I mean, they've sold 15 units in career I think, they're coming here, they have established support here, but it's a young company and one of the things you've got to make sure of, you're not changing your cooking line and winding up with a machine that has no maintenance support, but we're looking at this stuff.
Speaker Change #157: including
Speaker Change #157: Real estate acquisitions and in future investments, which I'm supportive of I think it's been smart given the challenge of
Speaker Change #158: of Operating in New York. Is there something transformational you would do if that's not picked up? What's the hit on the top and bottom line? And would you, you know, relocate, move back office? You've got a lot of back office there from a business from 20 years ago that's clearly shifting south. I'd love to hear more about your plans.
Michael Weinstein: The biggest area that we have problems with, honestly, is dishwashing. Dishwash is a hard to find at the hourly cost that we're prepared to pay, and so the turnover is great, and if we can find something that can alleviate labor, and, you know, we would do it. As long as we know that the equipment is, you know, supported by the manufacturer, so it's not like we're not looking at stuff to try to impact it.
Speaker Change #158: I-
Speaker Change #185: Go to Beadaholique.com for all of your beading supply needs!
Speaker Change #159: First of all, at the restaurant level, there's something just shy of 300 people who work for us there when the business is going full out, meaning all the cafes are open and everything.
Michael Weinstein: We did a study of the people who work there, and this is probably going on too much, you know, and I'm sorry, but of the 25 people who manage front of house and who are general managers, essentially, for the back of the house, the front of house operations, of those 25 people, 19 have been with us for over 25 years, and Brian Parker and other operations in Ark. Four of them have been with us for 15 years or more, and the rest have all been with us for over five years.
Speaker Change #159: did for ourselves a study of
Speaker Change #159: the people who work there and this
Speaker Change #159: is probably going on too much, you know, and I'm sorry, but.
Michael Weinstein: We have insurance, we have conversations that are mammothly long with our insurance brokers, we just, we just switched health insurance companies and creating some savings and doing that. Property insurance and wind insurance and Florida, you're lucky to get insured. It's crazy. You know, the only reason we're insured is because we stayed with one company forever, and you know, this sort of acknowledging our relationship by writing the insurance.
Speaker Change #160: of the 25 people who manage front of the house and who are general managers essentially for you the back of the house the front of the house operations of those 25 people 19 have been with us for over 25 years
Speaker Change #161: and Brian Parker and other operations in ARC.
Michael Weinstein: The service people, tipped employees, have an average working time with the company of over 11 years. That's extraordinarily painful if we would have to terminate those jobs, and we had a discussion yesterday, I think, you know, What are our, not legal responsibilities, but what are our ethical responsibilities if we don't get that? And how do we take care of these people?
Speaker Change #161: 15 years or more and the rest have all been with us over five years. The service people, tipped employees, have an average working time with the company for over 11 years.
Speaker Change #161: that's extraordinarily painful if we would have to terminate those jobs and we had a discussion
Michael Weinstein: But I have restaurants calling me, honestly, how do we get insurance, you know, they can't find insurance, so, so, you know, I can't, I can't do anything about those premiums. It's very, very frustrating. We are looking at other costs, we've worked on, you know, driving safety initiatives at the restaurants to keep workman's comp claims down, which has actually been pretty effective the last two years, and our premiums have gone down, and we just received a big refund on workers comp for the prior year based on their audit. I mean, we're doing, you know, we're looking at every line item to see what we could, you know, save money.
Speaker Change #161: yesterday I think, you know.
Michael Weinstein: Because we're not expanding in New York. And therefore, you know, What can we offer them to sort of you know, help them, you know, over the next few months while they're looking for other jobs? The event planning department in New York would essentially be. We're all gutted because, you know, the only event space that we would be left with would be Robert, and that probably requires one person in the office instead of six. Um, So, you know, so, you know, it would be very painful and then the.
Speaker Change #162: what what can we offer them to sort of you know help them
Speaker Change #162: The
Speaker Change #162: The event planning department in New York would essentially be...
Michael Weinstein: What about other strategies to drive revenue in the existing restaurants? So, one of the things we've never been good at, and, you know, with changing is our approach to social media. It'll take a little while, but we're becoming more active in social media. But, you know, it's hard to, to, you know, to, to delineate the cause and effect. You know, we don't advertise, we've tried advertising in the past. It doesn't work for us because we're advertising one walks essentially. So, you're spending a lot of money in a market to try to get people to drive to, you know, a single unit instead of many units saying brand, so advertising is ineffective.
Speaker Change #163: gutted because you know we would be left with the only event space that we would be left with would be Robert and that probably requires one person in the office instead of six.
Speaker Change #163: So, you know, so, you know, it would be very painful and the net result would be after you get rid of all of that overhead and probably, you know,
Michael Weinstein: The net result would be after you get rid of all of that overhead and, probably, you know, other things unrelated to the direct operation of the restaurant that we would save on. You may have a three and a half, $4 million hit for you to be thought. Anthony's shaking his head like I gave the right number, which is unusual. He used to sit me down and said, "But it would be a three and a half to four."
Speaker Change #163: and other things.
Speaker Change #164: unrelated to the direct operation of the restaurant that we would save on, you may have a three and a half, four million dollar hit to you.
Speaker Change #164: Anthony's shaking his head like I gave the right number, which is unusual. He used to sit me and say, ah, that ain't the right number.
Michael Weinstein: It would be a three and a half to $4 million hit. I so that that also was part of our thinking by eliminating the dividend. You know, how do we make up that three and a half million dollars? And, you know, not that I'm saying that the dividend is the reason for the cut; we don't know that, you know, we've heard nothing, nor has anybody else, but the, you know, so, so, and New York is a very hostile environment to work in. Construction costs are, you know, unreasonably high, rents are on a reasonably high, even in this environment, and the legislature is, you know, every year we're fighting.
Michael Weinstein: Social media could be effective, but this is not, you know, I don't want to, I know this sounds defensive, but this is not a company that's fallen apart. I mean, every unit we have is basically profitable. It's just making less money than it used to make. Go ahead.
Speaker Change #165: But it would be a $3.5 to $4 million hit.
Speaker Change #165: I.
Speaker Change #165: So
Speaker Change #165: that that also
Speaker Change #166: was part of our thinking by eliminating the dividend, you know, how do we make up that three and a half four million dollars and You know not that I'm saying that the dividend is the reason for the cut is that we don't know that You know, we've heard nothing nor has anybody else I believe
Michael Weinstein: No, I was going to say on that note, I'm really surprised and just don't understand, and the thought behind suspending the dividend here. I mean, chairholder has gotten very, very little return from the company over the past few years, and that was, you know, one minor source of return and the company sitting here with net cash and you're saying you're confident in the future, but, you know, suspending a dividend like that is a sign of really low confidence.
Speaker Change #166: but the
Speaker Change #166: So, and New York is a very hostile environment to work in, construction costs are, you know.
Speaker Change #167: Unreasonably high, rents are unreasonably high even in this environment and the legislature is, you know, every year we're fighting
Michael Weinstein: We have our own lobbyists. I think we've been effective. But the next shooter drop is going to be eliminated, the elimination of the tip credit, and a higher minimum wage for tipped employees. And in Bryant Park alone, that would cost us close to a million dollars in additional payroll.
Speaker Change #168: We have our own lobbyists, I think we've been effective, but the next shooter drop is going to be elimination of the TIP credit and a higher minimum wage for TIP employees, and in Bryant Park alone that would cost us close to a million dollars.
Michael Weinstein: So it's really a disconnect and I'm pretty disappointed to hear about this, so I'd love for you to elaborate more on it. So we have four or five million dollars of refurbishing costs that we are responsible for in Las Vegas by, you know, when we signed the new lease, that was part of the deal. So we've redone Gallagher's, we're in the process of redoing the food court. I don't think what we're doing in the food court and the building a lucky pig in the food court will inhibit revenues in the food court.
Michael Weinstein: I mean, as one unit closes and the food court, people will gravitate to other units. So I don't think that will have an impact, but it may have an impact when we do America next year. So we're not, we're in the process of finalizing designs for America's refurbishing and we may be closed the period of time there and that will, again, impact, you know, cash flow from America while we're closed and we'll be spending money there as well. So that's one issue. We're looking at two acquisitions right now that will, you know, not be inexpensive. So that's another reason to try to preserve cash.
Michael Weinstein: So, you know, we don't have those problems in Florida. We have those problems in Las Vegas because they legislated higher minimum wages. But we, you know, in Florida and Alabama, we don't have those problems.
Speaker Change #169: and additional payrolls. So, we don't have those problems in Florida. We have those problems in Las Vegas.
Speaker Change #170: because they've legislated higher minimum wages, but we, you know, in Florida and Alabama, we don't have those problems. We have those problems in Washington, D.C., where they've legislated higher minimum wages for tipped employees.
Michael Weinstein: We have those problems in Washington, D.C., where they legislated higher minimum wages for tipped employees. You know, our complaint has always been, hey, you know, we have waiters and waitresses at Bryant Park that make three to $4,000 a week in tips. You know, why am I, why are you eliminating the tip credit?
Speaker Change #171: You know, our complaint has always been, hey, you know, we have waiters and waitresses at Bryan Park that make $3,000 to $4,000 a week in tips.
Michael Weinstein: So, yes, you're right. New York is hostile. We're aggressive. I'm trying to expand our business in the South.
Speaker Change #172: You know, why am I, why are you eliminating the tip credit? So, so, yes, you're right. And New York is hostile. What we're, we're, we're aggressively
Michael Weinstein: There will probably come a point where the overhead in New York does not make as much sense. Not that we're all going to move to the south, but you know, there's something to be said that we could be more efficient with General Corporate Overhead. Honestly, I think we're pretty efficient now for what we have.
Speaker Change #172: trying to expand our business in the South.
Speaker Change #172: with general corporate overhead.
Michael Weinstein: But, you know, one of the big unknowns for us, and it's not a Hail Mary by any means. But we've been dealing with the Meadowlands for five or six years now. I thank you that we're going to get a license because New York is going to move forward. We have a state legislature in New Jersey that seems to be as amenable as they've ever been to giving a license to, you know, a casino in the North.
Michael Weinstein: And then the question becomes, what happens with Brian Park? I mean, they can make a decision tomorrow or next week or could drag another four months, but who knows where they are on this? And, you know, communication has not been great. The process has been, you know, not transparent. So, you know, if tomorrow morning we find out that, you know, that we don't, we're not awarded this thing. You know, I don't want to be sitting paying out, you know, three million plus a year with that uncertainty.
Michael Weinstein: And the Meadowlands is the, I would tell you, the only location where they give it because all the environmental work's been done. We could be open literally in a month and a half with the first phase of the casino. I think everybody's aware of that. We just, There seems to be a reluctance to do an amendment which needs to be voted on by the public for a casino license in the north unless, they don't feel the vote would be successful unless, you know, New York State is moving ahead. Upstate, Mass.
Speaker Change #172: and it's not a Hail Mary by any means, but we've been, you know, dealing with the Meadowlands for five or six years now.
Speaker Change #173: thinking that we're going to get licensed because New York is going to move forward. We have a state legislature in New Jersey that seems to be as amenable as they've ever been to giving a license.
Michael Weinstein: So that's the thinking behind it. The thinking behind it is to preserve cash for the company so that it could expand, you know, take care of its obligations in Las Vegas and pay for things that will expand. Yeah, invest in that, you know, our cash flow. And that's what we're trying to do.
Speaker Change #174: to, you know, for a casino in the north and the Meadowlands is the, I would tell you the only location where they give it because all the environmental work's been done. We could be open literally in a month and a half.
Speaker Change #174: with the first phase of the casino. I think everybody's aware of that we just
Speaker Change #175: There seems to be a reluctance.
Michael Weinstein: Yeah, but some of these are things that haven't happened yet. Like, Brian Park, we just don't know. An acquisition hasn't happened. We just don't know.
Michael Weinstein: You've been talking about potential acquisitions for quite some time. I could see maybe once every every every one of them and there have been four or five of them that we've been close to and what's happening is the numbers have been falling apart. Just like everybody else's numbers have been falling apart and the seller doesn't want to adjust the price and we're not going to overpay. No, I totally understand and totally understand and respect that.
Speaker Change #175: for a casino license in the North, unless
Speaker Change #176: They don't feel the vote would be successful unless New York State is moving downstate.
Walter Child: So, you know; we still pursue that. That's where we are, you know, Bryan Park would have a significant impact on our EB Dots. We don't have enough. Thank you for commenting on that. That was helpful. It was very helpful. And also, while certainly Meadowlands would be attractive, if New Jersey can move forward and not seem to protect or be concerned about Atlantic City as much as competing with New York, I do hope that that comes to fruition. But that may be years away; it may never happen.
Speaker Change #176: That's where we are. You know, Bryan Park would have a significant impact.
Michael Weinstein: My point was, but Bruce, right now what we've finally seen is sellers that are reasonable because they see their business falling apart. They don't want to operate in this environment for whatever reason and would have other pressures on other deals that they may own and they're prepared to take three or four times current cash flow projections. Not past and this is the first time we're really seeing, in that. So we think, you know, we may be able to secure some additional properties. So that's the reason for the dividend decision. Oh, that was a board level decision. I mean, this was the board decided. Yeah.
Speaker Change #176: You know, on our EB-DOTs, we don't have it.
Speaker Change #177: Thank you for commenting on that. That was helpful. It was very helpful.
Speaker Change #177: and also while certainly Meadowlands would be attractive if New Jersey can move forward and not seem to protect.
Speaker Change #177: be concerned about Atlantic City as much as
Speaker Change #177: competing with New York. I do hope that that comes to fruition, but that may be years away. It may never happen.
Walter Child: TIP credits have been an issue for a long time. We've seen a huge tipped employee cost increase of greater than 50% in a lot of these markets. In Florida, there seems to be some movement there. Not there seems to be, but there has been movement there as well. Have you looked at investing in other jurisdictions that are more favorable and for those where you have a presence? Is there something you can do with an administrative fee, service charge, and other elements?
Speaker Change #178: If you could expand, tip credits have been an issue for a long time. We've seen a huge tipped employee cost increase, greater than 50% in a lot of these markets. In Florida, there seems to be some movement there, not there seems to be, there has been movement there as well.
Speaker Change #179: Have you looked at investing in other jurisdictions that are more favorable, and for those where you have a presence, is there something you can do with administrative fees, service charge, other elements?
Bruce Geller: I just feel like it was a preemptive cut as opposed to cutting it at a point where some of these items you're discussing as possibilities or definitive. It's also a little discouraging to see the, you know, you have a lot of spending obligations. It sounds like, but it's like you're spending a lot of money to kind of stay in the same place. Like, you make a lot of these investments, but I don't disagree with those optics.
Walter Child: to make up for some of the huge increase in front of house expenses tied to the minimum wage. And then, on the real estate piece, like the prior investor mentioned, that's a big part of the strategy I support. Are the properties, are you on leased land, or do you own fee simple rights on all of the properties from a standpoint of enterprise value, where it's not just a leasehold tenancy, but you have the land rights as well?
Speaker Change #180: to make up for some of the huge increase in front-of-house expense tied to minimum wage. And then finally, on the real estate piece, like the prior investor mentioned, that's a big part of the strategy I support.
Speaker Change #181: Are you on leased land or do you own fee simple rights on all of the properties from a standpoint of enterprise value where it's not just a leasehold tenancy but you have the land rights as well?
Michael Weinstein: The only properties where we own the land are the two properties in Alabama, the Rustic Inn and Shuckers Condos. And the Shuckers property is a restaurant that used to be in a hotel that would, the hotel portion, well, the restaurant portion, sits in four commercial condos, which we own. Then there are 62 One Bedroom Apartments, with two exceptions that are two bedroom apartments, and and what used to be a Ramada hotel that has been converted into these apartments; we own 13 of those apartments as well. We bought most of those apartments in the $180,000 to $250,000 range.
Bruce Geller: I don't disagree with the optics. You're right. But that's not what's going on here. You know, internally, we really are trying to progress the business, but the optics, you're absolutely right. It doesn't look like we're doing it. And truth, we're working to try to, you know, capture more cash flow. Well, it's not that it doesn't look like you're not doing anything. It looks like you're, you know, you're spending on some of these obligations, but it's not bringing the company forward.
Bruce Geller: Your, your results, you know, remain the same or even a little worse. No, it works. But yeah, and so, and so the capital is being spent, but there, but there's no, there's no, for, there's no visible return on, on those investments.
Speaker Change #182: The only properties where we own the land are the two properties in Alabama.
Speaker Change #182: the Rustic Inn and Shuckers. The Shuckers property is a restaurant that used to be in a hotel that was the hotel portion
Speaker Change #182: Oh, well, the restaurant portion, uh...
Speaker Change #183: sits in four commercial condos.
Speaker Change #183: which we own. Then there are 62...
Speaker Change #183: one-bedroom apartments with two exceptions that are two-bedroom apartments.
Speaker Change #183: and what used to be a Ramada hotel that has been converted
Speaker Change #184: these apartments. We own 13 of those apartments as well.
Bruce Geller: I mean, it's a quite a great example. You spent a ton of capital to completely redo that restaurant when you sign the new lease. And, you know, it hasn't gone well. And now you've taken a right down there. It has not worked. It has not worked out.
Michael Weinstein: They're now trading at $400,000. We tested the market with one just to see where we are, then we withdrew it. But I think safely you can get out of those 13 apartments safely, probably in the $350,000 area. One of the problems with selling those apartments now and why we withdrew the test to find out what they were worth is that Florida passed that law after the building collapsed, which required significant assessments in all condos to upgrade to the new building standards. It's on the beach.
Speaker Change #183: We bought most of those apartments in the two.
Speaker Change #183: $180,000 to $250,000 range.
Speaker Change #183: They're now trading at $400,000. We've tested the market with one just to see where we are, then we withdrew it, but I think safely you can get out of those 13 apartments.
Michael Weinstein: In the past, you've, you've purchased some of the real estate and some of these deals. I'm just curious. You know, I'm looking at the stock with the current enterprise value in the 30s. What, what would be a ballpark estimate if you had to estimate? What is the value of the underlying real estate you own? Some of these are properties in great waterfront locations. I'm just curious. What, you know, what kind of underlying real estate value there is in the company, the enterprise value is less than $40 million.
Speaker Change #183: probably in the $350,000 area.
Speaker Change #183: One of the problems with selling those apartments now and why we withdrew, you know, the test to find out what they were worth, is Florida passed that law after the building collapsed, which required significant
Speaker Change #183: assessments in all condos.
Speaker Change #186: to upgrade to the new building standards. So, I... It's on the beach. Yeah, we're on the beach. So, I think each one of those units now was spending $40,000, $50,000, some number like that in assessments to upgrade to the new building.
Michael Weinstein: Yeah, we're on the beach. So I think each one of those units now, we're spending $40,000, $50,000, some number like that in assessments to upgrade to the new building codes. So that has, you know, temporarily closed down transaction, for apartments and buildings that are on the beach pretty much, and options for service charges or other fees. Have you tested that in markets where you have a clientele, a full service clientele that may be more receptive to that model, where you've seen inflation, say from, you know, a tipped credit wage a few years ago, now, you know, a march towards $15. Yeah, we really haven't.
Michael Weinstein: The, the, the value of owning the properties would be on a sale lease back. That's the value. If you, if you want to look at them as development sites, we haven't concluded that there's any, you know, value to them because we've never investigated them as a development site. You know, there are hotels all around rustic. We own that property. It's a big piece of property. Maybe somebody would like to do a hotel, but, you know, but we've never investigated it. The only value to us would be in terms of the sales lease back. If we, wanted to, you know, use that to finance additional expansion.
Speaker Change #186: codes. So that that has, you know, temporarily
Speaker Change #186: closed down transactions.
Speaker Change #186: for apartments and buildings that are on the beach, pretty much.
Speaker Change #187: Options for service charge or other fees, have you tested that in markets where you have a clientele, full service clientele that may be more receptive to that model where you've seen an inflation, say from a tipped credit wage?
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Speaker Change #187: a few years ago now to, you know, a march towards $15.
Michael Weinstein: We don't get a lot of activity shown from other states. You know, maybe once or twice a year, we see something that we start to investigate. But, we don't see a lot of that.
Walter Child: So I can't tell you what the value of those properties are. Thank you.
Speaker Change #187: You know, maybe once or twice a year we see something that we start to investigate, but we don't see a lot of activity.
Walter Child: Our next question comes in line of Walter Child with, I'm sorry, private investor, please proceed with your question. I thank you. I'm hoping you can elaborate more on the Bryant Park lease piece that you can share some information on the impact either top line and or bottom line if the lease is not renewed. And given the historical New York presence of Ark from an SG&A standpoint and the move south, including real estate acquisitions and in future investments, which I'm supportive of, I think it's been smart given the challenge of operating New York.
Speaker Change #187: Thank you for the clarity.
Walter Child: Thank you for the clarification. My pleasure. Thank you. Thank you. Gentlemen, we have a follow-up from the line of Jeffrey Kaminsky with JJK Consultants. Please proceed with your question. Michael, just to follow up to Bruce's comment earlier, he kind of asked the same question that I did, but he used different terminology, so I'll repeat his. He asked about, you know, self-help measures that can be undertaken to, you know, stem losses, drive traffic, etc., etc.
Speaker Change #188: My pleasure. Thank you.
Walter Child: Is there something transformational you would do if that's not picked up? What's the head on the top and bottom line? And would you, you know, relocate, move back office? You've got a lot of back office there from a business from 20 years ago that's clearly shifting south. I'd love to hear more about your plans. That's a good question. So the, the, the, the caselo from Bryant Park is substantial. You know, we would, first of all, you know, at the restaurant level, there's something just shy of 300 people who work for us there when, when the business is going full out, meaning all the cafes are open and everything.
Walter Child: You know, there wasn't any real answer regarding the menu, adding craft cocktails, or any of that. You did mention the Lucky Pig. So I'm just curious, what are your projections in terms of revenue, you know, based on the Footage, square footage, and property? And how quickly do you think it will be successful enough that you'll be able to scale this to any meaningful enterprise that would actually contribute revenues to the company?
Speaker Change #188: Thank you. Gentlemen, we have a follow-up from the line of Jeffrey Kaminsky with JJK Consultants. Please proceed with your question.
Speaker Change #188: Michael, just to follow up to Bruce's comment earlier, he kind of asked the same question that I did.
Speaker Change #189: He used a different terminology, so I'll repeat his. He asked about self-help measures that can be undertaken to stem losses, drive traffic, etc. There wasn't any real answer regarding...
Speaker Change #190: changing the menu, adding craft cocktails, or any of that. You did mention the Lucky Pig, so I'm just curious, what are your projections in terms of revenue, you know, based on this?
Speaker Change #191: the footage, square footage, and the property, and how quickly do you think, if it's successful, that you'll be able to scale this to any meaningful enterprise that would actually contribute revenues to the company?
Jeffrey Kaminsky: So the question is coming a little muffled, Anthony, can you help me with? Lucky Pig projections, scalability, if it's successful, the scalability of Lucky Pig, you know, we would move very quickly. I mean, the outlet in Vegas is small, right?
Michael Weinstein: Yeah. A counter, basically. It's a test. You know, we're gonna test the concept there. But, but, you know, we think the menu is very attractive. We have another casino that we think we could go into immediately with a bigger space, and we would be very aggressive about testing it in different markets. So, you know, that's one of the reasons we want the capital. I'd like to follow up with a better lens.
Speaker Change #192: I mean, the outlet in Vegas is small, right? Yeah.
Walter Child: We, we did for ourselves a study of the people who work there and this is probably going on too much, you know, I'm sorry, but of the 25 people who manage front of the house and who are general managers, essentially, for you, the back of the house, the front of the house operations of those 25 people. 19 have been with us for over 25 years in, in Bryant Park, or in other operations in ARC.
Speaker Change #193: it's a counter basically it's it's a test you know we're going to test the concept there
Speaker Change #194: But, you know, we think the menu is very attractive. We have another casino that we think we could go into immediately with a bigger space.
Speaker Change #194: and we would be very aggressive about testing it in different markets, so you know that's one of the reasons we want the capital.
Jeffrey Kaminsky: I did the decision out of Nassau County the other day, where I guess they're approving a casino at the Nassau Coliseum in Nassau County. There's something like that, if it should proceed. And they build out, I think it was resorts.
Speaker Change #194: So, you know...
Speaker Change #195: A follow-up to the Betterlands, did the decision out of Nassau County the other day, where I guess they're approving...
Walter Child: Four of them have been with us for 15 years or more and the rest have all been with us over five years. The service people, tip employees have an average working time with the company for over 11 years.
Speaker Change #196: of the Nassau Coliseum in Nassau County. There's something like that, if it should proceed, and they build out... I think it was resorts... I think you're not...
Michael Weinstein: I think, you know. I, Jeff, all of that help. You know, we just got to get Jersey to do a referendum at a time when they think it will pass. They're not trying to do a referendum, and, you know, the public has to vote on this, and there has to be clear reasons why the public will vote positively for it. The clearest reason is people going outside of Bergen County and going across the bridge to gamble as opposed to staying in New Jersey.
Speaker Change #197: Jeff, all of that helps, you know, we just got to get Jersey to do a referendum.
Michael Weinstein: So that's extraordinarily painful if we would have to terminate those jobs. And we had a discussion yesterday, I think, you know, what, what are not legal responsibilities, but what are our ethical responsibilities? If we don't get that and how do we take care of these people because we're not expanding in New York and therefore, you know, what, what can we offer them to sort of, you know, help them over the next few months while they're looking for other jobs.
Speaker Change #197: at a time when they think it will pass.
Speaker Change #198: They're not trying to do a referendum, you know, the public has to vote on this and there has to be clear reasons why the public will vote positively for it. The clearest reason is people going...
Speaker Change #198: outside of Bergen County and going across the bridge to gamble as opposed to staying in New York, in New Jersey.
Michael Weinstein: That's what we need. We need that evidence. And the last time they tried to do a referendum, the referendum was messy. It did not specifically say what the state would use the money for, and it didn't make clear that the state wasn't investing any money in it. This would be, you know, an investment by a company without any state aid. So, you know, they've got to get very specific about the referendum.
Speaker Change #198: That's what we need. We need that evidence and
Speaker Change #199: You know, the last time they tried to do a referendum, it was, the referendum was messy. It did not specifically say what, you know, what the state would use the money for. It even...
Michael Weinstein: The event planning department in New York would essentially be gutted because we would be left with the only event space that we would be left with would be Robert and that probably requires one person in the office since that was six. It would be very painful and the net result would be after you get rid of all of that overhead and probably other things unrelated to the direct operation of the restaurant that we would save on.
Speaker Change #198: didn't make clear that the state wasn't investing any money in it, that this would be, you know...
Speaker Change #198: an investment by a company without the help, without any state aid, so you know they've got to get very specific about the referendum and they have to be clear that this is going to benefit the state of New Jersey and the easiest way when you speak to the legislatures
Michael Weinstein: And they have to be clear that this is going to benefit the state of New Jersey. And the easiest way, when you speak to the legislatures, or the governor, which I do not have conversations with, but my partners do, is to demonstrate that people are leaving New Jersey to gamble in another state.
Speaker Change #198: or the governor, which I do not have conversations with, but my partners do, is.
Speaker Change #198: you know, to demonstrate people are leaving New Jersey to gamble in another state.
Jeffrey Kaminsky: Thank you. You're welcome. Thank you. Mr. Weinstein, there are no other questions.
Speaker Change #198: Thank you.
Michael Weinstein: You may have a three-and-a-half-four-million-dollar hit for you, Anthony shaking his head like I gave the right number, which is unusual. He used to sit me and said, ah, that ain't the right one. But it would be a three-and-a-half support. It would be a three-and-a-half-to-four-million-dollar hit. So, that also was part of our thinking by eliminating the dividend. How do we make up that three-and-a-half-four-million-dollar and not that I'm saying that the dividend is the reason for the cut is that we don't know that.
Operator: I'll turn the floor back to you for final comments. Thank you. See you all next quarter. Thank you, everyone. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change #200: You're welcome.
Speaker Change #201: Thank you. Mr. Weinstein, there are no other questions. I'll turn the floor back to you for final comments.
Mr. Weinstein: Thank you. See you all next quarter.
Speaker Change #202: Thank you, everyone.
Speaker Change #203: Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change #203: [inaudible]
Michael Weinstein: We've so, and New York is a very hostile environment to work in. Construction costs are, you know, unreasonably high, rents are uneaseably high, even in this environment. And the legislature is, you know, every year with fighting. We have our own lobbyists. I think we've been effective. But the next shoe to drop is going to be a elimination of the tip credit and a higher minimum wage for tip employees and in Bryan Park alone.
Speaker Change #203: [inaudible]
Michael Weinstein: That would cost us close to a million dollars in additional payrolls. So, you know, we don't have those problems in Florida. We have those problems in Las Vegas because they've legislated higher minimum wages. But we, you know, in Florida and Alabama, we don't have those problems. We have those problems in Washington, D.C, with a legislative higher minimum wages for tip employees. You know, our complaint has always been, hey, you know, we have wages and waitresses at Bryan Park that make $3,4,000 a week in tips.
Michael Weinstein: You know, why am I, why are you eliminating the tip credit? So, yes, you're right. New York is hostile. We're aggressively trying to expand our business in the south. There will probably come a point where the overhead in New York does not make as much sense. Not that we're all going to move to the south, but, you know, there's something to be said that we can be more efficient, with General Corporate Overhead.
Michael Weinstein: Honestly, I think we're pretty efficient now for what we have, but you know, one of the big unknowns for us, and it's not a hell-mayory by any means, but we've been, you know, dealing with the Netherlands for five or six years now, thinking that we're going to get licensed, because New York is going to move forward. We have a state legislature in New Jersey that seems to be, as amenable as they've ever been to giving a license to, you know, for Casino and the North.
Michael Weinstein: And the Netherlands is the, I would tell you, the only location where they give it, because all the environmental work's been done. We could be open literally in a month and a half with the first phase of the Casino. I think everybody's aware of that. We just, it seems to be a reluctance to do a amendment, which needs to be voted on by the public, for Casino license of the North, unless they don't feel the vote would be successful unless, you know, New York state is moving down state.
Michael Weinstein: So, you know, we still pursue that. So, what we are, you know, a prime park would have a significant impact, you know, on our EB dots, we don't have it. Thank you for coming on that that was helpful. And it was very helpful. And also, while certainly Netherlands would be attractive, if New Jersey can move forward and not seem to protect, even from about Atlantic City, as much as competing with New York, I do hope that that, that comes to fruition.
Michael Weinstein: But that may be years away and they never happen. The, you could expand a tip credits have been an issue for a long time. We've seen a huge, a, a tipped employee cost increase in greater than 50% in a lot of these markets. In Florida, there seems to be some movement there, not there seems to be, there has been movement there as well. Having looked at investing in other jurisdictions that are more favorable.
Michael Weinstein: And for those where you have a presence, is there something you can do with administrative, the service charge, other elements to make up for some of the huge increase in front of house expense tied to minimum wage. And then finally, on the real estate piece, like the prior investor mentioned, that's a big part of the strategy I support. Are the properties, are you on least land or, or do you own fee simple rights on all of the properties from a standpoint of enterprise value, where it's not just a leasehold tenancy, but you have the land rights as well.
Michael Weinstein: The only properties where we own the land are the two properties in Alabama, the rust again and structures on those. And in the, the structures property is a restaurant that used to be in a hotel that with the hotel portion, well, the restaurant portion. It sits in four commercial condos, which we own. Then there are a 62 one bedroom apartments with two exceptions that are two bedroom apartments. And, and what used to be a remodel hotel that have been converted into these apartments, we own 13 of those apartments as well.
Michael Weinstein: We bought most of those apartments in the two, two to 250,000, well, 180 to 250,000 dollar range. They're now trading at $400,000. We've tested the market with one, just to see where we are, then we would drew it. But I think, safely, you can get at it as 13 apartments, probably in the $350,000 area. One, one of the problems with selling those apartments now and why we withdrew, you know, the tests, it's find out what they will work, is Florida passed that law after the building collapsed, with required significance, and all condos to upgrade to the new building standards.
Michael Weinstein: So we're on the beach. So I think each one of those units now was spending $40,000, $50,000, some number like that in assessments to upgrade to the new building codes. So that has temporarily closed down transactions for apartments and buildings that are on the beach. Pretty much. And options for service charge or other fees. Have you tested that in markets where you have a clientele, full service clientele, maybe more receptive to that model, where you've seen an inflation say from a tipped credit wage a few years ago, we've reached towards $15.
Michael Weinstein: Yeah, we really haven't, we don't get a lot of activity shown from other states. You know, maybe once or twice a year, we see something that we start to investigate. But, but we don't see a lot of activity. Thank you for the clarity. My pleasure, thank you.
Jeffrey Kaminsky: Thank you, gentlemen, we have a follow up from the line of Jeffrey Kaminsky with J.J.K. Consultants. Please proceed with your question. Michael, just a follow up to Bruce's comment earlier, he kind of asked the same question that I did. He used a different terminology. So I'll repeat is he asked about, you know, self-measures that can be undertaken to, you know, STEM losses, drive traffic, et cetera, et cetera. You know, there wasn't any real answer regarding changing the menu, adding cocktails or any that. He did mention the wealth of goods.
Michael Weinstein: So I'm just curious, what are your projections in terms of revenue, you know, based on the footage, and the property, and how quickly do you think it's successful that you'll be able to scale this to any meaningful enterprise that would actually contribute, you know, revenues to the company? So the question's coming a little muffled and they do nothing with lucky pig projections, scalability, if it's successful. The scalability on lucky pig, you know, we would move very quickly.
Michael Weinstein: I mean, the outlet in Vegas is small, right? Yeah. It's a counter, basically. It's a test. You know, we're going to test the concept there. Yeah, but, but, you know, we think the menus very attractive. We have, we have another casino that we think we could go into immediately with the bigger space. And, and we would be very aggressive about testing it in different markets. So, you know, that's one of the reasons we want the capital.
Jeffrey Kaminsky: So, a follow-up to the better lands did the decision out of national county the other day, where I guess they're improving casino, if it was the national policy in the national county. There's something like that if it should proceed and they build out. I think this resort, I think, you know. Jeff, all of that helps. You know, we just got to get Jersey to do a referendum at a time when they think it will pass.
Jeffrey Kaminsky: They're not trying to do a referendum. You know, the public has to vote on this and that has to be clear reasons why the public will vote positively for it. The clearest reason is people going outside of Bergen County and going across the bridge to gamble as opposed to staying in New Jersey. That's what we need. We need that evidence. And you know, the last time they tried to do a referendum, it was the referendum was messy.
Jeffrey Kaminsky: It did not specifically say what, you know, what the state would use the money for. It even didn't make clear that the state was investing any money in it, that this would be, you know, an investment by a company without any state aid. So, you know, they've got to get very specific about the referendum and they have to be clear that this is going to benefit the state of New Jersey. And the easiest way, when you speak to the legislators, or the governor, which I do not have conversations with, but my partner's do is, you know, to demonstrate people of leaving New Jersey to gamble in another state. Thank you. You're welcome. Thank you.
Operator: Mr. Weinstein, there are no other questions.
Michael Weinstein: I'll turn the floor back to you for final comments. Thank you. See you all next quarter. Thank you, everyone. Thank you.
Operator: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.