Ark Restaurants Corp (ARKR) 2024 Q1 法說會逐字稿

Greetings, and welcome to Ark Restaurant first quarter 2024 results conference call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Christopher Love, Secretary. Thank you. Mr. Love, you may began.

Thank you, operator. Good morning, and thank you for joining us on our conference call for the first quarter ended December 30, 2023. My name is Christopher Love, and I am the Secretary of Ark Restaurants. With me on the call today is Michael Weinstein, our Chairman and CEO; and Vincent Pascal, our COO.

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.

Before we begin, however, I'd like to read the Safe Harbor statement. I need to remind everyone that part of our discussion this morning will include forward-looking statements and that these statements are not guarantees of future performance and therefore, undue reliance should not be placed on it.

We refer everyone to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks that may have a direct bearing on our operating results, performance and financial condition.

I'll now turn the call over to Michael. Thank you.

Hi, everybody. This quarter was a relatively clean quarter in terms of comparisons, we had no additional restaurants on working for us as compared to last year's first quarter. And there were no restaurants that were closed compared to last year's first quarter.

So it's relatively clean. Revenues were flat up. I'm sure you saw the press release. Our EBITDA was [$2,572,000 versus $3,018,000]. Our balance sheet remains really clean, $12,122,000 in cash. Total debt at the end of [1230] was [$6,742,000].

The business within having relatively flat sales on has shifts obviously some restaurants are up, some are down. We are experiencing through [1230], very strong revenues in Las Vegas, but we also have rents that are much higher than they were in the comparable quarter last year.

The Alabama restaurants are doing well, both in sales and cash flow. The Florida restaurants are a big problem right now with full service restaurants, which include JP's, Rustic, Blue Moon and Shuckers. There's some weather issues there. But there are always weather issues of volumes down in those four restaurants, roughly 10%. That means two things, our customer counts are down of or within not down as much as revenues people are sharing on-trade.

So we're finding just, we're just not making any headway in terms of increasing revenues in those restaurants. Our Washington, DC has been problematic because the city is problematic and New York has been very strong in all categories, including events. Our biggest problems as a company have nothing to do with customer experience. Food quality is very high. The places are maintained wonderfully, services excellent.

We have no problems with the way our restaurants assumption. There were two types of inflation over the last couple of years. One was inflation in the products that we buy, which turn, yeah, in turn become the meal. That has stabilized and a lot of products actually are starting to come down.

So food cost should not be an issue. And we are now seeing between the downward movement in prices and us engineering our menus to have better food cost components. We've seen our food costs by and large, very good shape.

The other inflation was in labor, that is not coming there. Legislation is underway, especially Las Vegas right now, but also Florida and also New York to increase minimum wage. And there's no offset that we can garner from that other than to raise menu prices. And as I've said repeatedly in the past we're not raising menu prices. We think our menus represent a fair value to the customer. We're still below what others are charging. However, these menu prices up [7% to 10%] since the pandemic are still sticker shock. And it seems to me that's in part why our customer counts are down. As I said, especially in Florida.

So that's a problem, difficult to solve. We need more demand. We are taking certain initiatives to create more demand, but that will take a while to flow through. We still looking at deals constantly to acquire operating income or find our selves able to take advantage of locations that are close to what we think we operate at significant revenue levels.

So that's really, yeah, it's a demand problem right now in Florida in Vegas, it's a rent problem, but we think the revenues in Vegas is strong enough that we will not be penalized with a higher on rent. And we think the revenues that are coming our way because we run a much better operation than in previous years in terms of efficiency, we think we will not be challenged in terms of cash flow there that will remain very stable pre the rent increases.

So I'll take questions at this point.

(Operator Instructions)

There are no further questions at this time. We have reached the end of question and answer session. I would now like to turn the floor over to Michael Weinstein for closing comments.

Alright. There are two other things to address. One is the Meadowlands racetrack as you know, we have a minority interest in the race track and our hopes is that we will get a casino license at some point. As I've said in the past, is that the leverage for New Jersey to approve a casino license in the northern part of the state really is a function of when New York state issues, downstate casino licenses standard state meeting in Queens or Yonkers or even [MN act] there has been delays.

[Sparton] has the governor's office and the state legislature to issues license. But we think once they do we'll issue those licenses in New Jersey will be very quick to move to license by upstate New Jersey, northern New Jersey casino. Bryant Park, as you know, at least becomes due in March -- excuse me, May of 2025. There is a request for proposals that was sent out in October of this past year.

We put in a proposal, we think is a very strong proposal with the help of our finalists or we have a certain amount of confidence that it's not that subject to our control. We've had meetings with Bryant Park to get fully vetted on our proposal. They have not made any decisions as of yet. No one is expected. And so latter part of this month or next month once we have a decision on that, whether positive or negative, we will send out a press release.

Thank you. I'll speak to you next quarter.

So love. We have one question. Should we go ahead.

Yes, please.

Yes, that question [or] has popped down. Not a problem, we have no more questions at this time. So this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.