Ark Restaurants Corp.

Arc Restaurant First Quarter 2024 Results Conference column. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Christopher Love, Secretary. Thank you, Mr. Love. You may begin.

Thank you, Operator. Good morning, and thank you for joining us on our conference call for the first quarter ended December 30th, 2023. My name is Christopher Love, and I am the Secretary of Arc Restaurant. With me on the call today is Michael Weinstein, our Chairman and CEO, and Vinnie Pascal, our COO. For those of you who have not yet obtained a copy of our press release, it was issued over the NewsWise yesterday and is available on our website. To review the full text of that press release, along with the associated financial tables, please go to our homepage at www.arkrestaurants.com. Before we begin, however, I'd like to read the safe harbor statement. I need to remind everyone that part of our discussion this morning will include forward-looking statements and that these statements are not guarantees of future performance, and therefore, undue reliance should not be placed on them. We refer everyone to our 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 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. It's relatively clean. Revenues were flat. I'm sure you saw the press release. EBITDA was 2.572 versus 3.018. Our balance sheet remains really clean, $12,122,000 in cash. Total debt at the end of 12-30 was $6,742,000. The business, within having relatively flat sales, 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 comparative quarter last year. The Alabama restaurants are doing well. both in sales and in cash flow. The Florida restaurants are our biggest problem right now, the full-service restaurants, which include JB's, Rustic, Blue Moon, and Shucker's. There is some weather issues there, but there are always weather issues. Volumes are down in those four restaurants, roughly 10%. That means two things. Our customer counts are down, or were they not down, as much as revenues people are sharing entrees. So we're finding we're just not making any headway in terms of increasing revenues in those restaurants. Washington DC has been problematic because the city's problematic. New York has been very strong in all categories including events. Our biggest problems as a company have nothing to do with customer experience. The food quality is very high. The places are maintained wonderfully. Service is excellent. We have no problems with the way our restaurants have functioned. There were two types of inflation over the last couple of years. One was inflation in the products that we buy, which in turn become the meal. That has stabilized, and a lot of products actually are starting to come down. So food costs 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're seeing our food costs, by and large, in very good shape. The other inflation was in labor. That is not coming down. Legislation is underway, especially in Las Vegas right now, but also Florida and also New York, to increase minimum wage. And there is no offset that we can garner from that other than to raise menu prices. And as I've said repeatedly in the past, we're not raising menu prices. We think of menus represent 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'll take a while to flow through. We're still looking at deals constantly to acquire operating income or find ourselves able to take advantage of locations that have closed where we think we can operate at significant revenue levels. So that's really it. It's a demand problem right now in Florida. In Vegas, it's a rent problem, but we think the revenues in Vegas are strong enough that we will not be penalized with a higher rent We think the revenues that are coming our way because we're running a much better operation than in previous years in terms of efficiency, we think we will not be challenged in terms of cash flow there. That will remain pretty stable pre the rent increases.

So I'll take questions at this point. Thank you.

We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

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

All right, there are two other things to address. One is the Meadowlands Racetrack. As you know, we have a minority interest in the racetrack, and our hopes is that we will get a casino license at some point. As I've said in the past, the leverage for New Jersey to approve a casino license in the northern part of the state really is a function of when New York State issues downstate casino licenses downstate, meaning in Queens or Yonkers or even in Manhattan. There have been delays at the governor's office and the state legislature to issue those licenses. But we think once they do issue those licenses, New Jersey will be very quick to move the license upstate New Jersey Northern New Jersey casino. Brian Park, as you know, our lease becomes due in March of, excuse me, May of 2025. There is a request for proposal that was sent out in October of this past year. We put in a proposal. We think it's a very strong proposal. We've been told we're finalists. We have a certain amount of confidence, but it's not subject to our control. We've had meetings with Brian Park to get fully vetted on our proposal. They have not made any decisions as of yet. No one is expected until the latter part of this month or next month. Once we have a decision on that, whether positive or negative, we will send out a press release.

Thank you. I'll speak to you next quarter. Mr. Love, we have one question.

Should we go ahead?

Yes, please.

Yes, that question has dropped 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.