Flanigan's Enterprises(BDL) - 2023 Q4 - Annual Report

Business Operations - As of fiscal year 2023, the total company-owned/operated units increased to 31 from 30 in fiscal year 2022, with 11 package liquor stores and 9 restaurants[10] - The company opened a new package liquor store in Miramar, Florida, during the second quarter of fiscal year 2023, bringing the total to 11[11] - The company plans to operationalize a new stand-alone restaurant in Hollywood, Florida, during fiscal year 2024, replacing a previous location destroyed by fire[20] - The company currently franchises five restaurants, all operating under the "Flanigan's Seafood Bar and Grill" brand[21] - The company operates three franchised package liquor stores, two of which are jointly operated with restaurants[17] - The company has not entered into new franchise arrangements since 1986 and does not anticipate doing so in the foreseeable future[21] - The company operates its restaurants in a casual dining atmosphere, with hours of operation from 11:00 a.m. to 1:00-5:00 a.m. depending on demand[19] - The company has invested in eleven limited partnerships that own and operate restaurants under the "Flanigan's Seafood Bar and Grill" service mark[23] - The company manages "The Whale's Rib" restaurant, generating $400,000 in revenue from management services for both fiscal years ended September 30, 2023, and October 1, 2022[37] - The company has a 25% limited partnership interest in a restaurant in Fort Lauderdale, which has returned all cash invested but does not provide an annual management fee due to the company's non-general partner status[36] Financial Performance - Food sales accounted for approximately 78.71% of total restaurant sales, while bar sales represented about 21.29%[13] - As of September 30, 2023, all limited partnerships, except for the 2022 Sunrise Restaurant and the 2023 Miramar Restaurant, have returned all cash invested, allowing the company to receive an annual management fee equal to 50% of cash available for distribution[24] - The company has total loans of approximately $23.13 million, with $21.61 million owed to an institutional lender[66] - The company received forgiveness for $3.98 million in loans under the Paycheck Protection Program during fiscal year 2022[64] - As of September 30, 2023, the company is in compliance with financial covenants under its loans, with a calculated ratio of 1.40 to 1.00 against a required minimum of 1.15 to 1.00[68] - The company has a discretionary matching contribution of $70,000 to its 401(k) retirement plan for the fiscal year ended September 30, 2023[62] - The company has donated over $100,000 to HOPE mission for disaster and hunger relief, and $10,000 annually to local Breast Cancer Support organizations[60] - The company has a general liability insurance policy with coverage of $1 million per occurrence and excess liability insurance of $10 million above the primary coverage[70] - For the fiscal year 2023, the company paid approximately $3.281 million in insurance premiums, which includes $658,000 for franchisee coverage[72] Supply Chain and Risk Management - The company is actively monitoring its food suppliers to mitigate supply chain risks and has identified alternative supply sources[66] - The company emphasizes high volume business in its package liquor stores by offering competitive pricing and a wide selection of products[16] - The company has identified alternative supply sources in key product categories to mitigate potential supply availability risks[66] - The company has a significant reliance on liquor sales, which constitute a large share of its revenue, and any delays in obtaining liquor licenses could adversely affect operations[50] Pricing and Market Position - The company increased menu prices for food offerings by approximately 2.06% annually and for bar offerings by approximately 5.65% annually to offset rising costs[75] - The company has adjusted pricing strategies in response to competitive pressures in the liquor and hospitality industries[74] - The company has a competitive market position due to strong brand recognition of "Big Daddy's" and "Flanigan's" names[74] - The company operates under several service marks, including "Big Daddy's Liquors" and "Flanigan's Seafood Bar and Grill," with registered federal trademarks[78] Employee Management - The company employs 1,855 staff members, with 707 full-time and 1,148 part-time employees, and none are represented by collective bargaining organizations[58] - The company has a robust training program to maximize staff potential and fill management positions internally[56] - The company emphasizes systematic operations and control across all units, with an incentive cash bonus program for managers and salespersons based on performance[38] Insurance and Compliance - The company has secured property insurance with a fixed deductible of $100,000 plus 5% of all insured losses for windstorm-related damages[72] - The company is uninsured against liability claims exceeding $11 million per occurrence and in the aggregate[70] - The company has secured general liability and excess liability insurance for the period commencing after December 30, 2023, with increased self-insured retention amounts[70] - The company has no significant pending matters concerning its licenses that could lead to revocation or other significant actions[51]