Ark Restaurants Corp.

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. 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.

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 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. 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.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 of future performance and therefore, undue reliance should not be put on them. 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 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. We'll be meeting with the bank to discuss a new credit agreement over the next month or two. 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 so with that was 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 chart 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. 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. So, Michael?

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. Legislation in various venues where we operate has increased minimum wage. Insurance costs are substantially higher. And other things that, you know, other than food and beverage pricing, other things are also going up. So the combination of lackluster sales and expenses responding to inflationary pressures squeeze gross margins. I'm not unpleased with the $3.3 million result, given that scenario. 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 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 Brian Park and Robert. 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 bad influences 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, more affordable. And we're doing that with all our restaurants. But basically, Sequoia is probably the one restaurant in the company that needs a refreshing 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. 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. So given the sort of the lackluster sales that seem to be continuing right now 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. That also sort of segues into the conversation about Brian Park. We have still not Well, 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. So we just think with the uncertainty of Bryant Park and what our responsibilities are that eliminating dividend to 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 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. With that, you know, I'd like to entertain any questions.

Thank you. At this time, we'll be conducting a question and answer session. If you'd 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 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 pull for questions. Once again, ladies and gentlemen, it is star one to ask a question. Our first question comes from the line of Jeffrey Kaminski with JJK Consultants. Please proceed with your question.

Good morning, guys. You know, once again on the call, Michael, you're highlighting specifically weakness in Florida, which I'll be asking. And, you know, although the industry is plagued with the same challenges, you know, payroll and insurance costs, et cetera, et cetera. In Florida, in particular, it's a pretty robust market. As discussed, there are new restaurants, there are changes being made. And I have a question that I really would like an answer to, because in the past, we discussed what is ARC'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. Okay. that maintains that you're still maintaining that, but you have a weakness in a big market and a market that's generally flourishing. And I would like to hear something about the strategy in Florida. 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, you know, move revenues forward. Uh, And so I'd like to put that out there because this has been a very frustrating investment for me. 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 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 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 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%. 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 rents. Our strategy is to try to buy institutions with good management. In every case in Florida, we think we've accomplished that. 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 performance, you don't make the money that you would like to make. Right now, the latter is true. We think 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 in those properties, and that's squeezing our margins. But from a performance level, if you look at the reviews 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 headcounts are because there have been some price increases. But in general, Florida has not been as good for us this past 18 months as it had been in the past.

It doesn't mean that... Let me interrupt for a second. I apologize. 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. Let's put that aside for the moment. 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.

Jeff, you're making the assumption 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. 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 5 o'clock or before 11 o'clock. That will always exist. Our restaurants are not that, all right? They're not doing bottle service. There are no DJs. You know, we're not that. So these restaurants are performing well at the level of sales that presently exists. So 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? 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 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 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. And if you look at, you know, we have one good laboratory 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 are major casinos and they all have full service restaurants and they have our fast food courts, 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 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, all right? So they're switching to fast food. To our benefit, they're 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 called Eggs, you know, 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 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. 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. But it doesn't mean we rip apart everything.

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 5 and 9. Talking about the restaurants that we've discussed in the past, the El Camino, 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 blooming at 4 or 5 in the afternoon. They're capitalizing on the work-from-home crowd. So they leave home and they go to the bar at 4 or 5 o'clock. They stay for dinner. That's what I'm referring to. 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 eliminate the dividend. So I'm talking to you as a shareholder, not as a patron of your restaurant.

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. I feel like, you know, the company is maybe a little too conservative in the deals we looked at and passed on. But that has always in the past held us in good stead. 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 effort on the restaurants to perform. Nobody's falling down on the job. We just haven't found new things to do that meet with our former criteria. One of the things with 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.

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 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 2023-2024. income, saying we want three or four times 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. The other thing we are doing at a couple of the properties in Florida, we are working on an initiative to expand our event business down there. 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.

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 the disposable income. 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 were down 10%, 12% consistently at Rustic. I would tell you the product at Rustic for what we want it 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, their head counts were the same, but people were sharing dishes. You know, king crab legs at Rustic, 1.8 pounds to two 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 our price points. 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. 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? They're cutting back. So it's the environment you're living in right now. 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 we'll 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 going, well, it's a little blip and, you know, we still want 2023 pricing. People are, sellers are beginning to realize that they've got to sell it on current numbers, not on, you know, pre-current numbers. So hopefully that'll help us.

Thank you. 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.

Hey, good morning, gentlemen. Hey, how are you? Good, thanks. You discussed the pressures on both sales and costs. Based on the macro environment, it's hard to see much relief on either side of those at the moment. So I'm curious, 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 just waiting for the environment to get better isn't going to be enough.

So, Bruce, one thing we're doing is we're, Sam, what, six weeks away from opening up Lucky Pig? So we have... We've never done brands. We're looking to do brands.

A brand, Lucky Pig.

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 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. And, you know, 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. 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 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 robot 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 to sustain their business plans, so they closed. Even the burger 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've got to make sure of, changing your line, your cooking line, and winding up with a machine that has no maintenance support. But we're looking at this stuff. The biggest area that we have problems with, honestly, is dishwashing. Dishwashers are hard to find at the hourly costs 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, 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 conversations that are mammothly long with our insurance brokers. We just switched health insurance companies and created some savings in doing that. Property insurance and wind insurance in Florida, you're lucky to get insured. It's crazy. The only reason we're insured is because 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, how do we get insurance? You know, they can't find insurance. So, you know, I can't do anything about those premiums.

It's very, very frustrating. We are looking at other costs, cutting other costs. We've worked on... 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. I mean, we're looking at every line item to see what we could 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 we're changing, is our approach to social media. It'll take a little while, but we're becoming more active in social media. But it's hard 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-offs, 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 of the same brand. So advertising is ineffective. Social media could be effective. But this is not, you know, I know this sounds defensive, but this is not a company that's falling apart. Every unit we have is basically profitable. It's just making less money than it used to make. Go ahead.

I was going to say on that note, I'm really surprised and just don't understand the thought behind suspending the dividend here. I mean, 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 is 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. 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. 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 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 American next year. So we're in the process of finalizing designs for America's refurbishing, and we may be closed a 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 not be inexpensive. So that's another reason to try to preserve cash. 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 communication has not been great. The process has been not transparent. So, you know, if tomorrow morning we find out that, you know, that we're not awarded this thing, you know, I don't want to be sitting paying out, you know, $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 could expand take care of its obligations in Las Vegas and pay for things that will expand our cash flow. 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 hasn't happened. We just don't know. You've been talking about potential acquisitions for quite some time. I could see maybe...

And Bruce, 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 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 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, and it was a board-level decision. I mean, this was the board decided.

Yeah. 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 are 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.

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 anything. But in 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 spending on some of these obligations, but it's not bringing the company forward. Your results remain the same or even a little worse.

No, they're worse.

And so the capital is being spent, but there's no... there's no visible return on those investments. I mean, Sequoia is a great example. You spent a ton of capital to completely redo that restaurant when you signed a new lease, and it hasn't gone well, and now you've taken a right down there.

It has not worked out.

In the past, you've purchased some of the real estate in some of these deals. I'm just curious. I'm looking at the stock with the current enterprise value in the 30s. 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 kind of underlying real estate value there is in a company that... Enterprise value is less than $40 million.

The value of owning the properties would be on a sale leaseback. That's the value. 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, 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.

So I can't tell you what the value of those properties are.

Thank you. Our next question comes from the line of Walter Child with, I'm sorry, Private Investor. Please proceed with your question.

Thank you. I'm hoping you can elaborate more on the Bryant Park lease piece, because 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 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 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 cash flow from Brian 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 the business is going full out, meaning all the cafes are open and everything. We did for ourselves 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 the house and who are general managers, essentially, for either back of the house or front of the house operations, of those 25 people, 19 have been with us for over 25 years in Brian Parker and other operations in ARC. 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, tipped employees, have an average working time with the company for over 11 years. So 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 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 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 instead of six. so you know so you know it would be very painful and the the the net result would be after you get rid of all of that overhead and uh probably you know uh other things 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 be done Anthony shaking his head like I gave the right number, which is unusual. He used to sit me and says, ah, that ain't the right number. But it would be a three and a half to four. It would be a three and a half to $4 million hit. So that also was part of our thinking by eliminating the dividend. You know, how do we make up that three and a half, $4 million? 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. But the, you know, so, and New York is a very hostile environment to work in. Construction costs are, you know, unreasonably high. Rents are unreasonably high, even in this environment. And the legislature is, you know, every year we're fighting. We have our own lobbyists. I think we've been effective. But the next shoe to drop is going to be 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 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 but we you know in Florida and Alabama We don't have those problems. We have those problems in Washington DC where they legislated higher minimum wages for tipped employees and You know, our complaint has always been, hey, you know, we have waiters and waitresses at Bryant Park that make $3,000 to $4,000 a week in tips. 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. Honestly, I think we're pretty efficient now. for what we have, but 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, 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 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 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 New York State is moving downstate casinos. You know, we still pursue that. That's what we are. You know, Bryan Park would have a significant impact, you know, on our EBDOT if we don't have it.

Thank you for explaining 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 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. If you could expand, tip credits have been an issue for a long time. We've seen a huge 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. 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, 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 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?

The only properties where we own the land are the two properties in Alabama. The Rustic Inn and Shucker's. Condos. And the Shucker's property is a restaurant that used to be in a hotel that 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 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. 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 probably in the $350,000 area. 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 assessments in all condos to upgrade to the new building standards. 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 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 that may be more receptive to that model where you've seen an inflation, say, from a tipped credit wage a few years ago now to a march towards $15?

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 we don't see a lot of activity.

Thank you for the clarity. My pleasure. Thank you.

Thank you. Gentlemen, we have a follow-up from the line of Jeffrey Kaminski 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. 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, et cetera, et cetera. There wasn't any real answer regarding changing the menu, adding craft cocktails, or any of that. He 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 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, you know, revenues to the company?

So the question's coming a little muffled.

Anthony, can you help me with it?

Lucky Pig projections and scalability if it's successful?

The scalability on Lucky Pig, you know, we would move very quickly.

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.

But, you know, we think the menu is very attractive. We have a 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 a follow-up to the Betterlands. Did the decision out of Nassau County the other day, where I guess they're approving... The casino was the Nassau Coliseum in Nassau County. There's something like that if it should proceed and they build out.

I think it was resorts. 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. 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 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 the last time they tried to do a referendum, the referendum was messy. 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 wasn't investing any money in it, that this would be, you know, 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 or the governor, which I do not have conversations with, but my partners do, is, you know, to demonstrate people of leaving New Jersey to gamble in another state. Thank you. You're welcome.

Thank you. Mr. Weinstein, there are no other questions. I'll turn the floor back to you for final comments.

Thank you, see you all next quarter. Thank you everyone.