Financial Performance - For the fiscal year ended September 30, 2023, the company reported an operating loss of $4,840,000, a decrease of 149.1% compared to an operating income of $9,864,000 for the previous year[73]. - Total revenues for the year ended September 30, 2023, increased by 0.6% to $184,793,000 from $183,674,000 in the prior year[74]. - Same-store food and beverage sales remained consistent at $178,375,000 for the year ended September 30, 2023, compared to $178,311,000 for the year ended October 1, 2022[76]. - Other revenues increased by 8.4% to $3,973,000, primarily due to an increase in purchase service fees[74][80]. Expenses and Costs - Payroll expenses increased by 10.5% to $66,322,000, representing 35.9% of total revenues for the year ended September 30, 2023, up from 32.7% in the previous year[83][84]. - The company incurred a goodwill impairment charge of $10,000,000, which was not present in the prior year[73][83]. - Food and beverage cost of sales decreased by 5.6% to $49,624,000, representing 26.9% of total revenues, down from 28.6% in the previous year[83]. Cash Flow and Financing - Net cash provided by operating activities decreased to $8,386,000 for the year ended September 30, 2023, down from $20,347,000 for the year ended October 1, 2022, attributed to a decrease in consolidated net income and changes in net working capital[100]. - Net cash provided by investing activities was $1,276,000 for the year ended September 30, 2023, compared to net cash used of $(7,761,000) for the year ended October 1, 2022, primarily due to increased purchases of fixed assets[101]. - Net cash used in financing activities was $(19,686,000) for the year ended September 30, 2023, mainly from principal payments on notes payable of $16,334,000 and dividend payments of $2,252,000[102]. Operational Challenges - The company anticipates that ongoing geopolitical and macroeconomic factors may lead to further operational challenges, including potential government mandates and inflationary pressures[68]. - The company’s performance is highly seasonal, with the second quarter typically being the poorest performing due to cold weather, although this has been partially offset by locations in warmer climates[70][72]. Investments and Renovations - The Company extended its lease for Gallagher's Steakhouse, committing to spend a minimum of $1,500,000 for renovations, with total costs amounting to approximately $1,900,000[104]. - The Company has agreed to spend a minimum of $4,000,000 to refresh the premises of America at the New York-New York Hotel and Casino by December 31, 2024[105]. - The Company extended its lease for the Village Eateries, agreeing to spend a minimum of $3,500,000 for renovations by March 31, 2024[106]. Tax and Compliance - The overall effective tax rate will be influenced by factors such as the utilization of state and local net operating loss carryforwards and the generation of FICA tax credits[94]. - The Company was in compliance with all financial covenants under the Credit Agreement as of September 30, 2023, except for the minimum annual net income requirement[116]. Accounting and Financial Reporting - The Company’s revenue recognition policy includes recognizing revenues from restaurant operations net of discounts and upon satisfaction of performance obligations[120]. - The Company’s lease liabilities are recognized based on the present value of lease payments over the lease term, with lease expense recognized on a straight-line basis[129]. - The Company measures stock-based compensation cost at the grant date based on fair value and recognizes it as expense over the vesting period using the straight-line method[135]. - Recent accounting pronouncements adopted in fiscal 2023 are detailed in the consolidated financial statements[136]. - No significant changes or disagreements with accountants on accounting and financial disclosure were reported[137].
Ark Restaurants(ARKR) - 2023 Q4 - Annual Report