New York City / NY. (arc) Ark Restaurants Corporation reported financial results for the fourth quarter and fiscal year ended October 02, 2021. The Company’s fiscal year ends on the Saturday nearest September 30. Accordingly, the fiscal years ended October 02, 2021 and October 03, 2020 included 52 and 53 weeks, respectively, and the quarters ended October 02, 2021 and October 03, 2020 included 13 and 14 weeks, respectively.
Financial Results
Total revenues for the 13-weeks ended October 2, 2021 were USD 42,839,000 versus USD 21,774,000 for the 14-weeks ended October 3, 2020. The 13 weeks ended October 2, 2021 includes revenues of USD 1,348,000 related to Blue Moon Fish Company in Lauderdale-by-the Sea, FL, which was acquired on December 1, 2020 (see below) and USD 145,000 related to Clyde Frazier’s Wine and Dine in New York, NY, which was closed on September 1, 2021 (see below). The 13 weeks ended October 3, 2020 includes revenues of USD 312,000 related to Clyde Frazier’s Wine and Dine and Gallagher’s Steakhouse and Gallagher’s Burger Bar in Atlantic City, NJ, which was closed on January 2, 2021 (see below).
Total revenues for the year ended October 2, 2021 were USD 131,870,000 versus USD 106,490,000 for the year ended October 3, 2020. The year ended October 2, 2021 includes revenues of USD 5,929,000 related to Blue Moon Fish Company, which was acquired on December 1, 2020 and USD 1,296,000 related to Clyde Frazier’s Wine and Dine and Gallagher’s Steakhouse and Gallagher’s Burger Bar which were closed during fiscal 2021. The year ended October 3, 2020 includes revenues of USD 5,278,000 related to Thunder Grill in Washington, D.C., which was closed March 20, 2020 (see below), Clyde Frazier’s Wine and Dine and Gallagher’s Steakhouse and Gallagher’s Burger Bar.
The Company’s Ebitda, as adjusted, excluding a gain on the forgiveness of Paycheck Protection Program Loans (“PPP Loans”), as set out below, for the 13 weeks ended October 2, 2021 was USD 5,210,000 versus USD (1,785,000) for the 14-week period ended October 2, 2020. The Company’s Ebitda, including the gain on forgiveness of PPP Loans, for the 13 weeks ended October 2, 2021 was USD 9,565,000 versus USD (1,717,000) for the 14-week period ended October 2, 2020. Net income attributable to Ark Restaurant Corp. for the 13-weeks ended October 2, 2021 was USD 6,828,000 or USD 1.93 per basic share (USD 1.89 per diluted share), compared to a net loss of USD (1,897,000) or USD (0.54) per basic and diluted share, for the 14-week period ended October 2, 2020.
The Company’s Ebitda, as adjusted, excluding a gain on the forgiveness of PPP Loans, as set out below, for the year ended October 2, 2021 was USD 7,955,000 versus USD (3,182,000) for the year ended October 2, 2020. The Company’s Ebitda, including the gain on forgiveness of PPP Loans, for the year ended October 2, 2021 was USD 20,237,000 versus USD (3,652,000) for the year ended October 2, 2020. Net income attributable to Ark Restaurants Corp. for the year ended October 2, 2021 was USD 12,895,000 or USD 3.67 per basic share (USD 3.58 per diluted share), compared to a net loss of USD (4,688,000) or USD (1.34) per basic and diluted share, for the year ended October 2, 2020.
Covid-19 Update
On March 11, 2020, in light of the rapid spread of the novel Coronavirus («Covid-19» or «Coronavirus»), the World Health Organization declared the Covid-19 outbreak to be a global pandemic and the United States declared a National Public Health Emergency. The Covid-19 pandemic has significantly disrupted consumer demand, as well as the Company’s restaurant operations. Following the pandemic declaration in March 2020, federal, state and local governments began to respond to the public health crisis by requiring social distancing, “stay at home” directives, and mandatory closure of all of our locations.
We are subject to continued risks and uncertainties as a result of the outbreak of, and local, state and federal governmental responses to, the Covid-19 pandemic. We experienced significant disruptions to our business as suggested and mandated social distancing and shelter-in-place orders led to the temporary closure of all of our restaurants. In the third quarter of fiscal 2020, certain jurisdictions began allowing the reopening of restaurant dining rooms, and we began to reopen dining rooms. While restrictions on the type of permitted operating model and occupancy capacity may continue to change, as of October 2, 2021, all of our restaurants were operating with no indoor dining restrictions. We cannot predict how long the Covid-19 pandemic will last, whether vaccines will be effective at eliminating or slowing the spread of the virus or variants, whether it will reoccur or whether variants will spike, what additional restrictions may be enacted, to what extent we can maintain sales volumes during or following any resumption of mandated social distancing protocols or vaccination or mask mandates and what long-lasting effects the Covid-19 pandemic may have on the restaurant industry as a whole. The ongoing effects of the Covid-19 pandemic, including, but not limited to, labor-related impacts, supply chain disruption and consumer behavior, will determine the continued significance of the impact of the Covid-19 pandemic to our operating results and financial position.
Other Matters
On November 13, 2020, the Company was advised by the landlord that it would have to vacate Gallagher’s Steakhouse and Gallagher’s Burger Bar at the Resorts Casino Hotel located in Atlantic City, NJ which were on a month-to-month, no rent lease. The closure of these properties occurred on January 2, 2021 and did not result in a material charge to the Company’s operations.
On December 1, 2020, the Company, through a newly formed, wholly-owned subsidiary, acquired the assets of Bear Ice, Inc. and File Gumbo Inc., which collectively operated a restaurant and bar named Blue Moon Fish Company located in Lauderdale-by-the Sea, FL. The total purchase price of USD 2,820,000 was paid with cash in the amount of USD 1,820,000 and a four-year note held by the sellers in the amount of USD 1,000,000 payable monthly with 5 percent interest. The acquisition was accounted for as a business combination. Concurrent with the acquisition, the Company assumed the related lease which expires in 2026 and has four, five-year extension options. Rent payments under the lease are approximately USD 360,000 per year and increase by approximately 15 percent as each option is exercised.
As of January 2, 2021, the Company determined that it would not reopen Thunder Grill in Washington, D.C. which had been closed since March 20, 2020. This closure did not result in a material charge to the Company’s operations.
On January 26, 2021, the Company exercised its right-of-first-refusal to acquire the land, building and parking lot associated with JB’s on the Beach and immediately contributed such rights and interest to an unrelated entity (Newco) that purchased the properties on March 22, 2021. In exchange, the Company received a 5 percent interest in Newco, which plans future development of the sites. In addition, all rights and privileges under the current lease were assigned to Newco, as landlord and the lease terms remain unchanged.
On September 1, 2021, the Company advised the landlord of Clyde Frazier’s Wine and Dine in New York, NY that we would be closing the property permanently and terminating the lease. In connection with this notification, the Company recorded a gain of USD 810,000 during the year ended October 2, 2021.
As of October 2, 2021, the Company received loan proceeds from several banks in the aggregate amount of USD 15,106,000 (the «PPP Loans») under the Paycheck Protection Program (the «PPP») of the CARES Act. Under the terms of the PPP Loans, some or all of the amounts thereunder, including accrued interest, may be forgiven if they are used for qualifying expenses as described in and in compliance with the CARES Act. During the 13 and 52 weeks ended October 2, 2021, USD 3,082,000 and USD 10,400,000 of PPP Loans (including accrued interest), respectively, were forgiven. To the extent, if any, that any or all of the remaining PPP Loans are not forgiven, beginning one month following expiration of the applicable deferral period, and continuing monthly until 24 months from the date of each applicable Note (the «Maturity Date»), each respective Borrower is obligated to make monthly payments of principal and interest to the Lender with respect to any unforgiven portion of the Notes, in such equal amounts required to fully amortize the principal amount outstanding on such Notes as of the last day of the applicable deferral period by the applicable Maturity Date.
