Ark Restaurants Corp (ARKR) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Ark Restaurants fourth-quarter and full-year 2013 results conference call. (Operator Instructions). I would now like to turn the conference over to Bob Stewart, the Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Good morning and thank you for joining us on our conference call for the fourth quarter and full year ended December 28, 2013. With me on the call today is Michael Weinstein, our Chairman and CEO.

For those of you who haven't yet obtained a copy of our press release, it was issued over the newswire Friday 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 home page 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 afternoon will include forward-looking statements and that these statements are not guarantees of future performance, and therefore, undue reliance should not be placed on them. We refer everyone to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks that may have a direct variance on all our operating results, performance and financial conditions.

I will now turn the call over to Michael.

Hi, everybody. Thank you for joining us.

This was a difficult year for us. There were some outside influences not under our control. There were some influences that were in our control, but I'd like to go over this with you.

Our biggest problem was same-store sales. On the East Coast, those were impacted by Sandy, especially in Washington and Atlantic City. Atlantic City has its own problems as gaming continues to spread through states surrounding New Jersey. Maryland, Delaware, and Pennsylvania are definitely taking business away from Atlantic City. We still are profitable and doing reasonably well at resorts where we have two operations, the Burger Bar and Gallagher's Steakhouse, and we recently opened in Tropicana a Burger Bar, which we thought given the location the bandwidth would do well and is profitable and doing pretty well as a return on investment. We hope that continues to gain further traction.

In Washington DC, our same-store sales were down for the year. Some of that was Sandy. Not very much. More importantly, we have significant competition that wasn't present last year at the Washington Harbour location where Sequoia is, and we also lost our restaurant America a while back, and in Union Station, our lease is up that we do at Union Station. That space is no longer available to us. We continue to run the Center Cafe and our Thunder Grill there, and they are actually doing very, very well.

Las Vegas, we are being hurt by same-store sales. Las Vegas is still not seeing the demand that we need to have positive same-store sales. It's not down much. It's down about 3.6% on the year. Part of that is New York New York is undergoing major construction projects right now, and that, without a question, is helping to determine our sales there. We think once that construction is finished, we will benefit from it. But right now there are two major entrances into New York New York, and when new construction is done, there will be nine entrances into New York New York. There will be a park that will be a huge arena. We think that that will be a game changer to the extent that we think we ought to comp well once that's done, and we think that starts some time in late spring.

Florida. Florida we've always done well. It's still a huge return on original investment. The Hard Rocks in both Tampa and Hollywood where we are have changed their comping procedures there. They are no longer issuing comp specific instances at the food court or didn't for some while. They are about to start again. Without a question, that's hurt our sales.

New York and Boston. Boston is down just slightly. I think that is all attributable to Sandy. New York City is doing very, very well despite Sandy. We had -- we were closed for a significant period of time with Sandy and closed two restaurants, which we did not reopen at the South Street Seaport. But New York remains the bubble. The restaurant business in New York is spectacular for everyone, not just for us. We have -- that's a very good location.

On top of all of this, we did not have the same spring and early summer weather that we had last year. Last year that weather was spectacular. We had almost 100% utilization of our many outdoor cafe seats in New York and Washington DC. This year I think it was really late June or early July before we had any utilization of those seats, whether it was cold, it was damp, especially at night it would really be 70 degrees or better to get utilization of those seats, and we just couldn't achieve it.

So we had bad weather. We had Sandy. It certainly affected our sales on the East Coast. We had Las Vegas where our main restaurants and most of our volume is done in New York New York. That's under construction. We had a change in the way comping is done at our Florida casinos where we are present. So we had a lot of negative stuff, not in our control. I think we're running our businesses pretty well. What we're missing is volume.

The only place where we are struggling still is Clyde's in New York. Our losses are much less than in the prior year, but they are still significant. We still continue to see it building. But, you know, it's a long way for something that we are very proud of and we think we're doing a good job at. We want to give it a little while longer and see how it goes, but I think at the end we'll be happy we don't (inaudible) right now.

In terms of new things going on, it's hard to say that the excitement of new things is -- should distract you from a tough year, but there are new things going on that we think will benefit shareholders dramatically. I mentioned the Burger Bar in Tropicana. That's new. We think we'll do well. The big thing for us, the two big things are, we have a contract to purchase the Rustic Inn in Fort Lauderdale, Florida. The Rustic Inn has been around forever. It's an institution. We think the purchase can be completed sometime in February of this year. That restaurant does $11 million and throws off a lot of money, and we can improve on that. But we also think it's something we have an opportunity to take other areas in Florida where it's well known, and we're just excited about that purchase.

It has great management. The general manager has been there 20 someodd years, so he's staying. The family that we bought it from has some kids in the business who are going to stay. They are all great people. The employees are the type of employees we want. They've been working at the restaurants for many, many years. It's a good -- it's a strong deal for us.

The other thing that we did this year is we purchased and we have 11% interest with some significant partners, one of them being the Hard Rock people. Another, Jeff Gural, a huge real estate holder in New York through his company Newmark. We purchased a 40-year lease and built a new grandstand for the Meadowlands racetrack in northern New Jersey. About a month and a half ago, we opened a significant number of beverage operations in the new grandstand that we built or the project built. The new grandstand is great-looking. It's -- it will be more efficient than the old grandstand that has been there for some 30 or 40 years. It's cherry hip, very modern looking. We are overseeing the food and beverage operations at Ark, but it will not hit our P&L either in terms of losses or gains. We're doing it for a very small management team.

Our interest in the Meadowlands part is to invest something around $5 million -- just short of $5 million. Along with our interest in the Meadowlands comes the right to food and beverage at the Meadowlands, if there is an expansion of the Meadowlands to include casino gaming.

We believe strongly -- whether we are right or wrong, we still believe it -- that with the decline of Atlantic City, volume has gone from $5 billion several years ago to a little over $3 billion now, given the extensive gaming in Pennsylvania, Maryland and Delaware and the expansion of gaming in New York, the state of New York. We believe that the state of New Jersey will have to expand gaming in non-Atlantic City, and the strongest location for that in Atlantic City and New Jersey we believe is the Meadowlands. It is closer to Manhattan and either Yonkers or [Afuduqs] or Raceways where there is presently gaming. The Meadowlands has the ability to do as much revenue for the state as the 11 casinos combined in Atlantic City right now.

So we think and there's some curtailation of activity in the state legislature to dodge and discuss legislation to expand gaming through other venues. And it will be in northern New Jersey, and again, Meadowlands is a perfect location.

So that's why we made the investment. If that were to happen, it would be a significant gamechanger here, not only in terms of our investment in the racetrack, but also the opportunity to do significant food and beverage revenues as the owner of those food and beverage outlets.

So that's where we are right now. I'm happy to take any questions.

(Operator Instructions). I'm showing there are no questions. I'll turn the call back to Michael Weinstein for closing comments.

Well, thank you. I didn't think I did that good of a job, not to have any questions, but people will tolerate me, I guess. Thank you. We'll see you in three months. Have a happy holiday season, everybody. Bye-bye.

Ladies and gentlemen, this concludes our conference for today. Thank you for your participation. You may now disconnect.