• Cash: Ended the year with $10.3 million; currently $10.5 million to $11 million.
• Debt: $5.2 million, with $4.4 million maturing on June 1.
• Goodwill Impairment: Additional $4 million impairment, following a $10 million impairment last year.
• Loss on Closure: $876,000 loss from the closure of El Rio Grande.
• Food Court Lease Termination: $5.5 million payment to vacate Tampa Food Court.

• Warning! GuruFocus has detected 6 Warning Signs with ARKR.

Release Date: December 17, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ark Restaurants Corp (NASDAQ:ARKR) ended the year with a stable balance sheet, holding $10.3 million in cash and $5.2 million in debt.
• The company successfully negotiated a favorable deal to vacate their Tampa Food Court, receiving $5.5 million, which will add approximately $3.5 million to $4 million to their cash reserves.
• Labor costs have stabilized, allowing Ark Restaurants Corp (NASDAQ:ARKR) to find good employees at competitive price points.
• The company is actively exploring new concepts, such as the Lucky Pig, which has potential for expansion.
• Ark Restaurants Corp (NASDAQ:ARKR) is focusing on improving existing businesses through enhanced social media and marketing efforts to drive more customer traffic.

Negative Points

• Ark Restaurants Corp (NASDAQ:ARKR) faces a challenging revenue environment, particularly in Florida and Washington DC, with reduced sales and persistent expenses.
• The company incurred a significant goodwill impairment of $4 million, following a $10 million impairment the previous year.
• The closure of El Rio Grande resulted in a loss of $876,000 due to stalled lease negotiations.
• Rising costs, such as insurance premiums and king crab prices, continue to pressure margins, limiting the company's ability to raise prices.
• The Meadowlands casino project remains uncertain, with legislative delays impacting potential development opportunities.

Q & A Highlights

Q: Can you provide an update on the potential casino developments in New York and how they might impact the Meadowlands project? A: Michael Weinstein, Chairman & CEO, explained that there are three downtown licenses available in New York, with several bidders including SL Green and Hudson Yards. The decision on these licenses will be a catalyst for New Jersey to move forward with its own casino plans. Weinstein emphasized that the Meadowlands location is strategically advantageous, potentially attracting both New Jersey and Manhattan patrons.

Q: What is the total amount of non-cash write-downs taken in the last two years, and are these related to the company's market cap? A: Michael Weinstein confirmed that the write-downs, totaling $16.5 million, are non-cash and largely related to the company's stock price. Anthony J. Sirica, CFO, specified that $14 million was for goodwill and $2.5 million for Sequoia assets.

Q: What are the financial implications of the lease termination in Tampa, and who are the outside investors involved? A: Anthony J. Sirica stated that Ark Restaurants will net approximately $3.5 million to $4 million from the $5.5 million payout, after distributing 35% to outside investors. These investors were part of a deal made 20 years ago to fund the project without impacting Ark's stock price.

Q: What steps is Ark Restaurants taking to address the challenges of rising costs and soft demand? A: Michael Weinstein noted that the company is focused on maintaining quality and service without raising prices significantly. They are also exploring payroll re-engineering and enhancing social media and marketing efforts to drive more traffic to existing locations.

Q: What is the status of the new Asian concept, Lucky Pig, and how does it fit into Ark's growth strategy? A: Michael Weinstein reported that Lucky Pig has been operational for a few weeks and is performing well. The concept is seen as expandable, and Ark is considering additional locations to test its viability outside of casino environments.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.