arkr-20220702

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 2, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 1-09453

ARK RESTAURANTS CORP.

(Exact name of registrant as specified in its charter)


New York						13-3156768
(State or Other Jurisdiction of Incorporation or Organization)						(IRS Employer Identification No.)


85 Fifth Avenue,	New York,	NY	10003
(Address of Principal Executive Offices)			(Zip Code)

Registrant’s telephone number, including area code: (212) 206-8800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, par value $.01 per share

ARKR

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller Reporting Company

☒

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No ý

As of August 12, 2022, there were 3,600,407 shares of the registrant's common stock outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

On one or more occasions, we may make statements in this Quarterly Report on Form 10-Q regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events. All statements, other than statements of historical facts, included or incorporated by reference herein relating to management’s current expectations of future financial performance, continued growth and changes in economic conditions or capital markets are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “hopes,” “will continue” or similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed. We caution that while we make such statements in good faith and we believe such statements are based on reasonable assumptions, including without limitation, management’s examination of historical operating trends, data contained in records and other data available from third parties, we cannot assure you that our projections will be achieved. Factors that may cause such differences include: economic conditions generally and in each of the markets in which we are located, the amount of sales contributed by new and existing restaurants, labor costs for our personnel, fluctuations in the cost of food products, adverse weather conditions, changes in consumer preferences and the level of competition from existing or new competitors.

While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of unknown factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this report in the context of the factors that could cause outcomes to differ materially from our expectations. These factors include, but are not limited to:

•the risk associated with the continued impacts of the COVID-19 pandemic on our company, our employees, our customers, our partners, our industry and the economy as a whole, including the potential for a complete shutdown of our restaurants, supply chain disruptions, demonstrations, political unrest and potential damage to our restaurants;

•the adverse impact of current and future economic conditions, including inflation, on our (i) operating results and financial condition, (ii) ability to comply with the terms and covenants of our debt agreements, and (iii) ability to pay or refinance our existing debt or to obtain additional financing;

•the adverse impact of the current political climate on our (i) operating results and financial condition, (ii) ability to comply with the terms and covenants of our debt agreements, and (iii) ability to pay or refinance our existing debt or to obtain additional financing;

•increases in food, beverage and supply costs, especially for seafood, shellfish, chicken and beef;

•increases in wages and benefit costs, including the cost of group medical insurance;

•our ability to open new restaurants in new and existing markets, including difficulty in finding sites and in negotiating acceptable leases;

•vulnerability to changes in consumer preferences and economic conditions;

•vulnerability to conditions in the cities in which we operate;

•vulnerability to adverse weather conditions and natural disasters given the geographic concentration and real estate intensive nature of our business;

•our ability to extend existing leases on favorable terms;

•negative publicity, whether or not valid, and our ability to respond to and effectively manage the accelerated impact of social media;

•concerns about food safety and quality and about food-borne illnesses;

•the reliance of the Company on the continued service of its executive officers;

•the impact of any security breaches of confidential customer information in connection with our electronic process of credit and debit card transactions; and

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•the impact of any failure of our information technology system or any breach of our network security.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the ways that we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

From time to time, oral or written forward-looking statements are also included in our reports on Forms 10-K, 10-Q, and 8-K, our Schedule 14A, our press releases and other materials released to the public. Although we believe that at the time made, the expectations reflected in all of these forward-looking statements are and will be reasonable, any or all of the forward-looking statements may prove to be incorrect. This may occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this Quarterly Report on Form 10-Q, certain of which are beyond our control, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this Quarterly Report on Form 10-Q or other public communications that we might make as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent periodic reports filed with the Securities and Exchange Commission on Forms 10-Q, 10-K, 8-K and Schedule 14A.

Unless the context requires otherwise, references to “we,” “us,” “our,” “ARKR” and the “Company” refer specifically to Ark Restaurants Corp., and its subsidiaries, partnerships, variable interest entities and predecessor entities.

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Part I. Financial Information

Item 1. Consolidated Condensed Financial Statements


ARK RESTAURANTS CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (In Thousands, Except Per Share Amounts)


	July 2, 2022		October 2, 2021
	(unaudited)		(Note 1)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents (includes $782 at July 2, 2022 and $785 at October 2, 2021 related to VIEs)	$	26,602	$	19,171
Accounts receivable (includes $389 at July 2, 2022 and $358 at October 2, 2021 related to VIEs)	4,652		4,113
Employee receivables	369		380
Inventories (includes $43 at July 2, 2022 and $35 at October 2, 2021 related to VIEs)	4,020		3,510
Prepaid and refundable income taxes (includes $277 at July 2, 2022 and $278 at October 2, 2021 related to VIEs)	1,398		3,896
Prepaid expenses and other current assets (includes $18 at July 2, 2022 and $277 at October 2, 2021 related to VIEs)	1,970		3,205
Total current assets	39,011		34,275
FIXED ASSETS - Net (includes $222 at July 2, 2022 and $218 at October 2, 2021 related to VIEs)	34,797		36,174
OPERATING LEASE RIGHT-OF-USE ASSETS - Net (includes $2,144 at July 2, 2022 and $2,342 at October 2, 2021 related to VIEs)	74,970		56,336
INTANGIBLE ASSETS - Net	293		376
GOODWILL	17,440		17,440
TRADEMARKS	4,220		4,220
DEFERRED INCOME TAXES	3,040		3,700
INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK	6,455		6,425
OTHER ASSETS (includes $40 at July 2, 2022 and $82 at October 2, 2021 related to VIEs)	2,554		2,270
TOTAL ASSETS	$	182,780	$	161,216

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Accounts payable - trade (includes $307 at July 2, 2022 and $213 at October 2, 2021 related to VIEs)	$	5,393	$	4,886
Accrued expenses and other current liabilities (includes $499 at July 2, 2022 and $374 at October 2, 2021 related to VIEs)	15,094		13,679
Current portion of operating lease liabilities (includes $266 at July 2, 2022 and $249 at October 2, 2021 related to VIEs)	6,345		6,165
Current portion of notes payable (includes $0 at July 2, 2022 and $95 at October 2, 2021 related to VIEs)	6,690		6,973
Total current liabilities	33,522		31,703
OPERATING LEASE LIABILITIES, LESS CURRENT PORTION (includes $1,991 at July 2, 2022 and $2,193 at October 2, 2021 related to VIEs)	71,565		52,552
NOTES PAYABLE, LESS CURRENT PORTION, net of deferred financing costs (includes $0 at July 2, 2022 and $101 at October 2, 2021 related to VIEs)	18,199		25,509
TOTAL LIABILITIES	123,286		109,764
COMMITMENTS AND CONTINGENCIES
EQUITY:
Common stock, par value $0.01 per share - authorized, 10,000 shares; issued and outstanding, 3,595 shares at July 2, 2022 and 3,551 at October 2, 2021	36		36
Additional paid-in capital	15,345		14,492
Retained earnings	43,959		35,884
Total Ark Restaurants Corp. shareholders’ equity	59,340		50,412
NON-CONTROLLING INTERESTS	154		1,040
TOTAL EQUITY	59,494		51,452
TOTAL LIABILITIES AND EQUITY	$	182,780	$	161,216

See notes to consolidated condensed financial statements.

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ARK RESTAURANTS CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) (In Thousands, Except Per Share Amounts)


	13 Weeks Ended				39 Weeks Ended
	July 2, 2022		July 3, 2021		July 2, 2022		July 3, 2021
REVENUES:
Food and beverage sales	$	52,069	$	42,137	$	134,127	$	87,207
Other revenue	1,149		828		2,662		1,824
Total revenues	53,218		42,965		136,789		89,031
COSTS AND EXPENSES:
Food and beverage cost of sales	14,740		12,676		39,536		26,382
Payroll expenses	16,205		12,304		43,926		29,345
Occupancy expenses	5,966		4,251		15,814		11,248
Other operating costs and expenses	5,996		4,737		15,974		11,077
General and administrative expenses	3,872		2,802		9,854		7,625
Depreciation and amortization	1,018		1,082		3,245		3,045
Total costs and expenses	47,797		37,852		128,349		88,722
OPERATING INCOME	5,421		5,113		8,440		309
OTHER (INCOME) EXPENSE:
Interest expense	291		309		838		940
Interest income	(38)		(14)		(60)		(41)
Other income	(37)		—		(384)		—
Gain on forgiveness of PPP Loans	(1,298)		(3,195)		(2,420)		(7,318)
Total other (income) expense, net	(1,082)		(2,900)		(2,026)		(6,419)
INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES	6,503		8,013		10,466		6,728
Provision (benefit) for income taxes	905		4,684		1,290		(155)
CONSOLIDATED NET INCOME	5,598		3,329		9,176		6,883
Net income attributable to non-controlling interests	(343)		(659)		(657)		(816)
NET INCOME ATTRIBUTABLE TO ARK RESTAURANTS CORP.	$	5,255	$	2,670	$	8,519	$	6,067

NET INCOME PER ARK RESTAURANTS CORP. COMMON SHARE:
Basic	$	1.48	$	0.76	$	2.40	$	1.73
Diluted	$	1.46	$	0.73	$	2.37	$	1.68

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic	3,555		3,522		3,553		3,512
Diluted	3,597		3,648		3,599		3,602

See notes to consolidated condensed financial statements.

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ARK RESTAURANTS CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY (unaudited) (In Thousands, Except Per Share Amounts)

For the 13 weeks ended July 2, 2022

Common Stock

Additional
Paid-In Capital

Retained Earnings

Total Ark
Restaurants
Corp.
Shareholders’ Equity

Non-
controlling Interests

Total Equity

Amount

Balance - April 2, 2022

3,552

SEC Form 10-Q filed by Ark Restaurants Corp.