What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-12-19 compared with 2023-12-21 · 143 added, 116 removed, 214 unchanged (55% of the section changed)

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Please see the discussion of forward-looking statements at the beginning of this annual report under "Special Note Regarding Forward-Looking Statements".

COVID-19 Pandemic

Recent global events, including the COVID-19 pandemic ("COVID-19"), have adversely affected global economies, disrupted global supply chains and labor force participation and created significant volatility and disruption of financial markets.

As a result, we experienced significant and variable disruptions to our business as federal, state and local restrictions were mandated, among other remedial measures, to mitigate the spread of the COVID-19 virus.

While restrictions on the type of permitted operating model and occupancy capacity may continue to change, during fiscal 2022 all of our restaurants operated with no restrictions, other than in New York City where customers were required to show proof of vaccination through November 1, 2022.

In addition to the associated impacts of COVID-19, our operating results have been impacted by geopolitical and other macroeconomic factors, leading to increased commodity and wage inflation and other increased costs.

The ongoing effects of COVID-19 and its variants, along with other geopolitical and macroeconomic events, could lead to further government mandates, including but not limited to capacity restrictions, shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation and disruptions in our supply chain.

If these factors significantly impact our cash flow in the future, we may again implement mitigation actions such as suspending dividends, increasing borrowings or modifying our operating strategies.

Beginning in 2021, our operating results were impacted by geopolitical and other macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation.

While we have seen improvements in many of these areas, some of these factors continued to impact our operating results in fiscal 2024.

The ongoing impact of these events could lead to further shifts in consumer behavior, wage inflation, staffing challenges, product and services cost inflation, disruptions in our supply chain and delays in opening and acquiring new restaurants.

If these factors significantly impact our cash flow in the future, we may again implement mitigation actions such as continued suspension of dividends, increasing borrowings or modifying our operating strategies.

Some of these measures may have an adverse impact on our business, including possible impairments of assets.

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Under this method, certain years will contain 53 weeks.

The fiscal years ended September 30, 2023 and October 1, 2022 both included 52 weeks.

The fiscal years ended September 28, 2024 and September 30, 2023 both included 52 weeks.

The Company has substantial fixed costs that do not decline proportionally with sales.

Although our business is highly seasonal, our broader geographical reach as a result of recent acquisitions is expected to continue to mitigate some of the risk.

For instance, the second quarter of our fiscal year, consisting of the non-holiday portion of the cold weather season in New York and

Washington (January, February and March), is the poorest performing quarter;

Although our business is highly seasonal, our broader geographical reach as a result of prior acquisitions is expected to continue to mitigate some of the risk.

For instance, the second quarter of our fiscal year, consisting of the non-holiday portion of the cold weather season in New York and Washington (January, February and March), is the poorest performing quarter;

however, in recent years this has been partially offset by our locations in Florida as they experience increased results in the winter months.

We generally achieve our best results during the warm weather, attributable to our extensive outdoor dining availability, particularly at Bryant Park in New York and Sequoia in Washington, D.C.

We generally achieve our best results during the warmer weather, attributable to our extensive outdoor dining availability, particularly at Bryant Park in New York and Sequoia in Washington, D.C.

(our largest restaurants) and our outdoor cafes.

However, even during summer months these facilities can be adversely affected by unusually cool or rainy weather conditions.

Our facilities in Las Vegas are indoor and generally operate on a more consistent basis throughout the year.

Our facilities in Las Vegas are indoor and generally operate on a more consistent basis throughout the year, although in recent years the summer months have seen lower traffic.

Recent Developments

The Company's agreements with the Bryant Park Corporation (the “Landlord”), (a private non-profit entity that manages Bryant Park under agreements with the New York City Department of Parks & Recreation) for the Bryant Park Grill & Cafe and The Porch at Bryant Park expire on April 30, 2025.

During July 2023 (for the Bryant Park Grill & Cafe ) and September 2023 (for The Porch at Bryant Park) , the Company received requests for proposals (the "RFPs") from the Landlord to which we responded on October 26, 2023.

The agreements offered under the RFPs for both locations are for new 10-year agreements, with one five-year renewal option.

Any operator awarded the agreements must be approved by both the New York City Department of Parks & Recreation and the New York Public Library.

To date, the landlord has not announced the selection of a successful bidder;

however, the landlord has made public statements of its intention to select an operator other than the Company.

In response to these public statements and other information obtained by the Company, management has engaged outside advisors who have been assisting with our efforts to obtain the extensions by ensuring the RFP awards process is both fair and transparent.

We intend to pursue all available options to protect our interests.

The Bryant Park Grill & Cafe and The Porch at Bryant Park, collectively, accounted for $31.1 million and $30.4 million of our total revenues in fiscal 2024 and 2023, respectively, which represented approximately 17.35% and 16.78% of our total revenue for such periods, respectively.

The Company’s inability to extend or renew these leases on favorable terms, if at all, could have a material adverse effect on our business, financial condition, and results of operations.

Results of Operations

The Company’s operating loss for the year ended September 30, 2023 (which includes a goodwill impairment charge of $10,000,000) was $4,840,000, down 149.1% as compared to operating income of $9,864,000 for the year ended October 1, 2022.

Excluding the goodwill impairment charge of $10,000,000, operating income for the year ended September 30, 2023 decreased 47.7% to $5,160,000 as compared to $9,864,000 for the year ended October 1, 2022.

This decrease resulted primarily from increases in labor costs combined with increased base rents and inflationary pressures related to non-commodity items partially offset by an easing in commodity prices.

The following table summarizes the significant components of the Company’s operating results for the years ended September 30, 2023 and October 1, 2022, respectively:

The Company’s operating loss for the year ended September 28, 2024 (which includes a goodwill impairment charge of $4,000,000, a loss on the closure of El Rio Grande of $876,000 and impairment losses on right-of-use and long-lived assets in the amount of $2,500,000 related to Sequoia ) was $4,294,000, down 11.3% as compared to an operating loss for the year ended September 30, 2023 (which includes a goodwill impairment charge of $10,000,000) of $4,840,000 for the year ended September 30, 2023.

Excluding the goodwill impairment charges of $4,000,000 and $10,000,000, respectively, for the fiscal years ended 2024 and 2023 and the loss on the closure of El Rio Grande of $876,000 and the impairment losses on right-of-use and long-lived assets of $2,500,000 related to Sequoia for fiscal year ended 2024, operating income for the year ended September 28, 2024 decreased 40.3% to $3,082,000 as compared to $5,160,000 for the year ended September 30, 2023.

We attribute this decrease primarily to a decrease in same store sales as discussed below combined with increased base rents and inflationary pressures related to non-commodity items partially offset by the reversal of stock-based compensation expenses relating to forfeitures in the amount of $1,156,000 combined with the negative impact on the prior period of the temporary closure of Gallagher's Steakhouse for renovation on February 5, 2023 (which reopened on April 28, 2023).

The following table summarizes the significant components of the Company’s operating results for the years ended September 28, 2024 and September 30, 2023, respectively:

Year Ended Variance

September 28,

2023 October 1,

2024 September 30,

(in thousands)

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General and administrative expenses 12,263 12,407 (144) -1.2 %

Goodwill impairment 10,000 — 10,000 N/A

Depreciation and amortization 4,090 4,310 (220) -5.1 %

Loss on closure of El Rio Grande 876 — 876 N/A

Impairment losses on right-of-use and long-lived assets 2,500 — 2,500 N/A

Goodwill impairment 4,000 10,000 (6,000) N/A

Total costs and expenses 187,839 189,633 (1,794) -0.9 %

OPERATING INCOME (LOSS) $ (4,840) $ 9,864 $ (14,704) -149.1 %

During the year ended September 30, 2023, revenues increased 0.6% as compared to revenues for the year ended October 1, 2022.

This small increase was primarily as a result of the changes in same-store sales discussed below.

OPERATING LOSS $ (4,294) $ (4,840) $ 546 11.3 %

During the year ended September 28, 2024, revenues decreased -0.7% as compared to revenues for the year ended September 30, 2023.

We attribute this small decrease primarily to the changes in same-store sales discussed below.

Food and Beverage Same-Store Sales

On a Company-wide basis, same-store food and beverage sales for the year ended September 30, 2023 were consistent with the year ended October 1, 2022 as follows:

On a Company-wide basis, same-store food and beverage sales for the year ended September 28, 2024 decreased 1.1% as compared with the year ended September 30, 2023 as follows:

Year Ended Variance

September 28,

2023 October 1,

2024 September 30,

(in thousands)

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Food and beverage sales $ 179,110 $ 180,820

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Entries related to percentages in the table above marked " —% " indicate percentage less than 1%.

Same-store sales in Las Vegas increased marginally primarily as a result of increased customer traffic and targeted menu price increases partially offset by the negative impact of the temporary closure of Gallagher's Steakhouse for renovation from February 5, 2023 to April 27, 2023.

Same-store sales in New York increased 10.9% driven primarily by strong revenues from our event business and increased customer traffic.

Same-store sales in Washington, DC decreased marginally driven primarily by lower headcounts in the third and fourth quarters partially offset by strong revenues from our event business and targeted menu price increases in the first two quarters.

Same-store sales in Atlantic City decreased 15.6% as a result of lower customer traffic at the property where we are located.

Same-store sales in Alabama increased 2.5% primarily as a result of increased customer traffic and targeted menu price increases.

Same-store sales in Florida decreased 6.0% primarily as a result of lower headcounts as compared to the comparable prior period which benefited from outsized volumes as a result of the population increase in Southeast Florida as a result of the migration of people during the pandemic partially offset by targeted menu price increases.

Other food and beverage sales consist of sales related to new restaurants opened or acquired during the applicable period, sales related to properties that were closed ( Lucky 7 - see Liquidity and Capital Resources - Recent Restaurant Dispositions) and other adjustments and fees.

Prior to the COVID-19 pandemic, our restaurants generally did not achieve substantial increases in revenue from year to year, which we consider to be typical of the restaurant industry.

Same-store sales in Las Vegas increased marginally which we primarily attribute to the negative impact to the prior period as a result of the temporary closure of Gallagher's Steakhouse for renovation from February 5, 2023 to April 27, 2023, partially offset by a decrease in customer traffic in the current year.

Same-store sales in New York increased marginally which we primarily attribute to targeted menu price increases.

Same-store sales in Washington, D.C.

decreased 13.8% which we primarily attribute to

lower headcounts, especially during lunch and after-work hours, which we attribute to continued hybrid work schedules as well as the closure of the property from Monday through lunch on Thursdays during winter months.

Same-store sales in Atlantic City, NJ decreased 2.5% which we primarily attribute to lower customer traffic at the property where we are located.

Same-store sales in Alabama increased 4.1% which we primarily attribute to better than expected customer traffic and targeted menu price increases.

Same-store sales in Florida decreased 3.1% which we primarily attribute to lower headcounts as compared to the comparable prior period, which benefited from outsized volumes as a result of the population increase in Southeast Florida as a result of the migration of people during the pandemic partially offset by targeted menu price increases.

Other food and beverage sales consist of administrative fees and other charges related to catered events.

Our restaurants generally do not achieve substantial increases in revenue from year to year, which we consider to be typical of the restaurant industry.

To achieve significant increases in revenue or to replace revenue of restaurants that lose customer favor or which close because of lease expirations or other reasons, we would have to open additional restaurant facilities or expand existing restaurants.

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Included in other revenues are purchase service fees which represent commissions earned by a subsidiary of the Company for providing purchasing services to other restaurant groups, as well as merchandise sales, license fees, property management fees and other rentals.

The increase in other revenues for the year ended September 30, 2023 as compared to the year ended October 1, 2022 is primarily due to an increase in purchase service fees.

The increase in other revenues for the year ended September 28, 2024 as compared to the year ended September 30, 2023 is primarily due to an increase in purchase service fees.

Costs and Expenses

Costs and expenses for the years ended September 30, 2023 and October 1, 2022 were as follows (in thousands):

Costs and expenses for the years ended September 28, 2024 and September 30, 2023 were as follows (in thousands):

September 28,

Total Revenues Year Ended

September 30,

Total Revenues Increase

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General and administrative expenses 12,263 6.7 % 12,407 6.7 % (144) -1.2 %

Goodwill impairment 10,000 5.4 % — — % 10,000 N/A

Depreciation and amortization 4,090 2.2 % 4,310 2.3 % (220) -5.1 %

Loss on closure of El Rio Grande 876 0.5 % — — % 876 N/A

Impairment losses on right-of-use and long-lived assets 2,500 1.4 % — — % 2,500 N/A

Goodwill impairment 4,000 2.2 % 10,000 5.4 % (6,000) N/A

Total costs and expenses $ 187,839 $ 189,633 $ (1,794)

Food and beverage costs as a percentage of total revenues for the year ended September 30, 2023 decreased as compared to last year primarily as a result of a very strong event business in New York City and Washington, D.C., which has higher margins, combined with some easing in commodity prices.

Payroll expenses as a percentage of total revenues for the year ended September 30, 2023 increased as compared to last year primarily as a result of increased labor costs in connection with record low unemployment and ongoing COVID-related labor challenges combined with merit increases and increasing minimum wages in the states where we operate.

Occupancy expenses as a percentage of total revenues for the year ended September 30, 2023 increased as compared to last year primarily as a result of increases in base rents and increases in property and liability insurance premiums.

Food and beverage costs as a percentage of total revenues for the year ended September 28, 2024 were consistent with last year which we attribute to stabilized commodity prices.

Payroll expenses as a percentage of total revenues for the year ended September 28, 2024 were consistent with last year, which we attribute primarily to increased minimum wages in the states where we operate offset by better shift management and related overtime hours.

Occupancy expenses as a percentage of total revenues for the year ended September 28, 2024 increased as compared to last year, which we attribute primarily to increases in base rents and increases in property and liability insurance premiums.

Other operating costs and expenses as a percentage of total revenues for the year ended September 28, 2024 increased as compared to last year primarily as a result of inflation.

General and administrative expenses (which relate solely to the corporate office in New York City) for the year ended September 30, 2023 decreased as compared to last year primarily as a result of severance accruals in the prior period partially offset by annual merit increases.

Depreciation and amortization expense for the year ended September 30, 2023 increased slightly as compared to the same period of last year primarily as a result of the timing of additions in the prior period.

General and administrative expenses (which relate solely to the corporate office in New York City) for the year ended September 28, 2024 decreased as compared to the same period of last year primarily as a result of the reversal of compensation

expense in the amount of $1,134,000 related to options that expired or were cancelled unexercised partially offset by increased legal and consulting expenses and annual merit increases.

Depreciation and amortization expense for the year ended September 28, 2024 decreased slightly as compared to the same period of last year, which we attribute primarily to certain assets becoming fully depreciated.

Loss on Closure of El Rio Grande

The Company advised the landlord of El Rio Grande (a consolidated VIE) we would be terminating the lease and closing the property permanently on or around January 1, 2025.

In connection with this notification, the Company recorded a loss of $876,000 during the year ended September 28, 2024 consisting of:

(i) rent and other costs incurred in accordance with the termination provisions of the lease in the amount of $398,000, (ii) accrued severance and other costs in the amount of $94,000, (iii) an impairment charge related to long-lived assets in the amount of $269,000 and (iv) the write-off of our security deposit in the amount of $238,000, all partially offset by a gain related to the write-off of ROU assets and related lease liabilities in the net amount of $123,000.

Impairment Losses on Right-of-Use and Long-lived Assets

During the year ended September 28, 2024, impairment indicators were identified at our Sequoia property located in Washington, D.C.

due to lower-than-expected operating results.

Accordingly, the Company tested the recoverability of Sequoia's ROU and long-lived assets and concluded they were not recoverable.

Based on a discounted cash flow analysis, the Company recognized impairment charges of $1,561,000 and $939,000 related to Sequoia's ROU assets and long-lived assets, respectively.

No impairment charges were recognized related to long-lived assets or ROU assets during the year ended September 30, 2023.

Given the inherent uncertainty in projecting results of restaurants, the Company will continue to monitor the recoverability of the carrying value of the assets of Sequoia and several other restaurants on an ongoing basis.

If expected performance is not realized, further impairment charges may be recognized in future periods, and such charges could be material.

Goodwill Impairment

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Goodwill is not presently amortized but tested for impairment annually or when the facts or circumstances indicate a possible impairment of goodwill as a result of a continual decline in performance or as a result of fundamental changes in a market.

In performing its goodwill impairment test as of September 30, 2023, the Company determined that a triggering event had occurred and the Company performed a qualitative and quantitative impairment test to determine if the carrying value of our equity, including goodwill, exceeded its fair value.

The fair value of our equity was determined using the income-based approach.

In the income approach, we utilized a discounted cash flow analysis, which involved estimating the expected future after-tax cash flows generated and then discounting those cash flows to present value, reflecting the relevant risks associated with the achievement of projected cash flows, the possibility that the Bryant Park Grill & Cafe and The Porch at Bryant Park leases may not be renewed beyond their expirations on April 30, 2025 (see Note 11 - Commitments and Contingencies to the Consolidated Financial Statements), and the time value of money.

This approach requires the use of significant estimates and assumptions, including forecasted revenue growth rates, forecasted EBITDA margins, and discount rates that reflect the risk inherent in the future cash flows.

Based on the impairment analysis, the carrying amount of our equity exceeded its estimated fair value, which indicated an impairment of the carrying value of our goodwill.

Accordingly, during the fourth quarter of fiscal 2023, the Company recorded a

goodwill impairment charge of $10,000,000, of which $8,000,000 was deductible for tax purposes and resulted in a deferred income tax benefit of $2,300,000.

In performing its goodwill impairment test as of September 30, 2023, the Company determined that a triggering event had occurred.

Due to the volatility of the Company's stock price in the fourth quarter of fiscal 2023, the upcoming expiration of the current Bryant Park Grill & Cafe and The Porch at Bryant Park leases on April 30, 2025 and the related requests for proposals from the landlord for both locations received in July 2023 and September 2023, respectively (see Note 11 - Commitments and Contingencies to the Consolidated Financial Statements), the Company determined that there were indicators of potential impairment of its goodwill as of September 30, 2023.

As of September 28, 2024, there had been a lack of communication from the landlord regarding our proposals.

In August 2024, the Company became aware that the landlord was in discussions with another operator.

Accordingly, the Company performed qualitative and quantitative assessments of its goodwill as of September 28, 2024 and September 30, 2023.

The fair value of our equity was determined using the income approach.

Given the relatively low volume of shares traded as of September 28, 2024 and September 30, 2023, the Company determined the income approach provided the best approximation of fair value.

This approach requires the use of significant estimates and assumptions, including forecasted revenue growth rates, forecasted cash flows from operations, and discount rates that reflect the risk inherent in the future cash flows.

Based on the impairment analysis, the carrying amount of our equity exceeded its estimated fair value, which indicated an impairment of the carrying value of our goodwill at September 28, 2024 and September 30, 2023.

Accordingly, during the fourth quarters of fiscal 2024 and 2023, the Company recorded goodwill impairment charges of $4,000,000 and $10,000,000, respectively, of which $4,000,000 and $8,000,000, respectively, was deductible for tax purposes and resulted in a deferred income tax benefit of $1,074,000 and $2,300,000, respectively.

Such impairments have been attributed to factors such as, but not limited to, a decrease in the market price of the Company's common stock and lower than expected profitability.

Our income tax expense, deferred tax assets and liabilities, and liabilities for uncertain tax positions reflect management’s best estimate of current and future taxes to be paid.

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Significant judgment and estimates are required in the determination of consolidated income tax expense.

The provision for income taxes reflects federal income taxes calculated on a consolidated basis and state and local income taxes which are calculated on a separate entity basis.

The provision for income taxes

reflects federal income taxes calculated on a consolidated basis and state and local income taxes which are calculated on a separate entity basis.

For state and local income tax purposes, certain losses incurred by a subsidiary may only be used to offset that subsidiary’s income, with the exception of the restaurants operating in the District of Columbia.

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The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.

The Inflation Reduction Act of 2022 (the “Act”) was signed into U.S.

law on August 16, 2022.

The Act includes various tax provisions, including an excise tax on stock repurchases, expanded tax credits for clean energy incentives, and a corporate alternative minimum tax that generally applies to U.S.

corporations with average adjusted financial statement income over a three-year period in excess of $1 billion.

The Company does not expect the Act to materially impact its financial statements.

On December 27, 2020, the Consolidated Appropriations Act of 2021 (“CAA”) was enacted and provided clarification on the tax deductibility of expenses funded with PPP loans as fully deductible for tax purposes.

During the years ended September 30, 2023 and October 1, 2022, the Company recorded income of $272,000 and $2,420,000, respectively (including $6,000 and $65,000 of accrued interest, respectively), for financial reporting purposes related to the forgiveness of its PPP loans.

During the years ended September 28, 2024 and September 30, 2023, the Company recorded income of $285,000 and $272,000, respectively, for financial reporting purposes related to the forgiveness of its PPP loans.

The forgiveness of these amounts is not taxable.

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We believe that our operating lease arrangements provide appropriate leverage of our capital structure in a financially efficient manner.

The Company had a working capital deficit of $5,932,000 at September 30, 2023 as compared to working capital of $4,210,000 at October 1, 2022.

This decrease is primarily the result of the prepayment of a promissory note in the amount of $6,666,000 on March 30, 2023 and the prepayment of three promissory notes in the aggregate amount of $6,046,000 on April 4, 2023.

The Company had a working capital deficit of $10,659,000 at September 28, 2024 as compared to working capital deficit of $5,932,000 at September 30, 2023.

This increase in the deficit is primarily the result of all of our note payments becoming current as they mature through May 31, 2025.

The Company is currently working with its lender on a new credit agreement which we expect to be completed in the second fiscal quarter of 2025;

however, there can be no assurances that this agreement will be completed.

We believe that our existing cash balances and current banking facilities will be sufficient to meet our liquidity and capital spending requirements and finance our operating activities for at least the next 12 months.

The country is currently experiencing multi-decade high inflation.

Our profitability is dependent on, among other things, our ability to anticipate and react to changes in the cost of food and other raw materials, labor, energy and other supplies and services.

While we have not had material disruptions in our supply chain, we have experienced some product shortages and higher costs for many commodities.

There has also been a general shortage in the availability of restaurant staff and hourly workers in certain

geographic areas in which we operate and has caused increases in the costs of recruiting and compensating such employees.

In addition, certain operating and other costs, including health benefits, taxes, insurance, and other outside services, continue to increase with the general level of inflation and may also be subject to other cost and supply fluctuations outside of our control.

Beginning in 2021, our operating results were impacted by geopolitical and other macroeconomic events, causing supply chain challenges and significantly increased commodity and wage inflation.

While we have seen improvements in many of these areas, some of these factors continued to impact our operating results in fiscal 2024.

Some of these measures may have an adverse impact on our business, including possible impairments of assets.

While we have been able to offset inflation and other changes in the costs of key operating resources by targeted increases in menu prices, coupled with more efficient purchasing practices, there can be no assurance that we will be able to continue to do so in the future.

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There can be no assurance that all of our future cost increases can be offset by higher menu prices or that higher menu prices will be accepted by our restaurant customers without any resulting changes in their visit frequencies or purchasing patterns.

Cash Flows for the Years Ended September 30, 2023 and October 1, 2022

Net cash provided by operating activities for the year ended September 30, 2023 decreased to $8,386,000 as compared to $20,347,000 for the year ended October 1, 2022.

This decrease was attributable to a decrease in consolidated net income and changes in net working capital primarily related to accounts receivable, inventory, prepaid, refundable and accrued income taxes and accounts payable and accrued expenses.

Net cash provided by investing activities for the year ended September 30, 2023 was $1,276,000 compared to net cash used in investing activities for the year ended October 1, 2022 of $(7,761,000).

This increase resulted primarily from increased purchases of fixed assets associated with the renovation of Gallagher's Steakhouse and, in the current period, the proceeds from the maturity of a certificate of deposit.

Cash Flows for the Years Ended September 28, 2024 and September 30, 2023

Net cash provided by operating activities for the year ended September 28, 2024 decreased to $4,654,000 as compared to $8,386,000 for the year ended September 30, 2023 and resulted primarily from changes in net working capital primarily related to prepaid, refundable and accrued income taxes and accounts payable and accrued expenses.

Net cash used in investing activities for the year ended September 28, 2024 was $2,392,000 compared to net cash provided by investing activities of $1,276,000 for the year ended September 30, 2023.

This decrease resulted primarily from proceeds from the maturity of certificates of deposit in the prior period partially offset by lower purchases of fixed assets at existing restaurants in the current period.

Net cash used in financing activities for the year ended September 28, 2024 was $5,404,000 and resulted primarily from principal payments on notes payable in the amount of $1,987,000, the payment of dividends in the amount of $2,028,000 and the payment of distributions to non-controlling interests in the amount of $1,389,000.

Net cash used in financing activities for the year ended September 30, 2023 was $19,686,000 and resulted primarily from principal payments on notes payable of $16,334,000 (including the prepayment of a promissory note in the amount of $6,666,000 on March 30, 2023 and the prepayment of three promissory notes in the aggregate amount of $6,046,000 on April 4, 2023), the payment of dividends in the amount of $2,252,000 and the payment of distributions to non-controlling interests in the amount of $1,139,000.

Net cash used in financing activities for the year ended October 1, 2022 was $(8,318,000) and resulted primarily from principal payments on notes payable of $6,512,000, the resumption of the payment of dividends in the amount of $894,000 and the payment of distributions to non-controlling interests in the amount of $1,615,000.

On November 9, 2022, February 9, 2023, May 9, 2023 and August 8, 2023, the Board of Directors of the Company (the "Board") declared quarterly cash dividends of $0.125, $0.125, $0.1875 and $0.1875, respectively, per share, which were paid on December 13, 2022, March 14, 2023, June 13, 2023 and September 13, 2023 to the stockholders of record of the Company's common stock at the close of business on November 30, 2022, February 28, 2023, May 31, 2023 and August 31, 2023.

Future decisions to pay or to increase or decrease dividends are at the discretion of the Board and will depend upon operating performance and other factors.

On November 8, 2023, February 6, 2024, and May 7, 2024, the Board of Directors of the Company (the "Board") declared quarterly cash dividends of $0.1875, $0.1875, and $0.1875, respectively, per share, which were paid on December 13, 2023, March 13, 2024, and June 12, 2024, respectively, to the stockholders of record of the Company's common stock at the close of business on November 30, 2023, February 29, 2024, and May 31, 2024, respectively.

The Board has not declared any dividends since May 7, 2024.

Future decisions to pay dividends are at the discretion of the Board and will depend upon operating performance and other factors.

Restaurant Expansion and Other Developments

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On June 24, 2022, the Company extended its lease for America at the New York-New York Hotel and Casino in Las Vegas, NV through December 31, 2033.

In connection with the extension, the Company has agreed to spend a minimum of $4,000,000 to materially refresh the premises by December 31, 2024, subject to various extensions as set out in the agreement.

No amounts have been expended to date related to this refresh.

In connection with the extension, the Company has agreed to spend a minimum of $4,000,000 to materially refresh the premises by December 31, 2025 (as extended from December 31, 2024, subject to further extension as set out in the agreement.

To date approximately $100,000 has been spent on this refresh.

On July 21, 2022, the Company extended its lease for the Village Eateries at the New York-New York Hotel and Casino in Las Vegas, NV through December 31, 2034.

As part of this extension, the Broadway Burger Bar and Grill and Gonzalez y Gonzalez , were carved out of the Village Eateries footprint and the extended date for those two locations is December 31, 2033.

In connection with the extension, the Company has agreed to spend a minimum of $3,500,000 to materially refresh all three of these premises by March 31, 2024 (as extended from June 30, 2023), subject to various extensions as set out in the agreement.

In connection with the extension, the Company has agreed to spend a minimum of $3,500,000 to materially refresh all three of these premises by December 31, 2025 (as extended from June 30, 2023), subject to further extension as set out in the agreement.

To date approximately $950,000 has been spent on this refresh.

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We have and will continue to pay all rent as required by the leases without abatement during construction.

Note that our substantial completion of work set forth in plans approved by the landlord shall constitute our compliance with the requirements

of the completion deadlines, regardless of whether or not the amount actually expended in connection therewith is less than the minimum.

On September 19, 2023, the Company extended the lease for its corporate office through December 31, 2038.

The amended lease provides for rents, beginning on January 1, 2024, approximately 19% lower than the Company is currently paying.

The lease also provides for, among other things, the ability for the Company to vacate the premises upon 12 months' notice.

The opening of a new restaurant is invariably accompanied by substantial pre-opening expenses and early operating losses associated with the training of personnel, excess kitchen costs, costs of supervision and other expenses during the pre-opening period and during a post-opening “shake out” period until operations can be considered to be functioning normally.

The amount of such pre-opening expenses and early operating losses can generally be expected to depend upon the size and complexity of the facility being opened.

Note that our substantial completion of work set forth in plans approved by the landlord shall constitute our compliance with the requirements of the completion deadlines, regardless of whether or not the amount actually expended in connection therewith is less than the minimum.

Our restaurants generally do not achieve substantial increases in revenue from year to year, which we consider to be typical of the restaurant industry.

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Recent Restaurant Dispositions

On July 5, 2022, the Company terminated its lease for Lucky 7 at the Foxwoods Resort Casino.

The closure did not result in a material change to the Company's operations.

During the 26 weeks ended April 1, 2023, the Company dissolved the entity which owned Clyde Frazier's Wine and Dine , which was closed in September of 2021.

In connection with the dissolution, the Company reclassified the remaining non-controlling interest balance to additional paid-in capital.

Investment in and Receivable from New Meadowlands Racetrack

The Company advised the landlord of El Rio Grande (a consolidated VIE) we would be terminating the lease and closing the property permanently on or around January 1, 2025.

In connection with this notification, the Company recorded a loss of $876,000 during the year ended September 28, 2024 consisting of:

Investment in and Receivable from New Meadowlands Racetrack LLC

On March 12, 2013, the Company made a $4,200,000 investment in the New Meadowlands Racetrack LLC (“NMR”) through its purchase of a membership interest in Meadowlands Newmark, LLC, an existing member of NMR with a 63.7% ownership interest.

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In February 2017, the Company funded its proportionate share ($222,000) of a $3,000,000 capital call bringing its total investment to $5,108,000 with no change in ownership.

During the years ended September 30, 2023 and October 1, 2022, the Company received distributions from NMR in the amounts of $52,000 and $421,000, respectively, which are included in other income in the consolidated statements of operations for the years then ended.

During the years ended September 28, 2024 and September 30, 2023, the Company received distributions from NMR in the amounts of $26,000 and $52,000, respectively, which are included in other income in the consolidated statements of operations for the years then ended.

In addition to the Company’s ownership interest in NMR, if casino gaming is approved at the Meadowlands and NMR is granted the right to conduct said gaming, the Company shall be granted the exclusive right to operate the food and beverage concessions in the gaming facility with the exception of one restaurant.

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The note may be prepaid, in whole or in part, at any time without penalty or premium.

The principal and accrued interest related to this note in the amounts of $1,399,000 and $1,357,000, are included in Investment In and Receivable From New Meadowlands Racetrack in the consolidated balance sheets

at September 30, 2023 and October 1, 2022, respectively.

The principal and accrued interest related to this note in the amounts of $1,442,000 and $1,399,000, are included in Investment In and Receivable From New Meadowlands Racetrack in the consolidated balance sheets at September 28, 2024 and September 30, 2023, respectively.

On April 30, 2023, the due date of the note was extended to June 30, 2029.

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On March 30, 2023, the Company entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), with its lender, Bank Hapoalim B.M.

This facility, which matures on June 1, 2025, replaced our revolving credit facility which was entered into in June 1, 2018 (the "Prior Credit Agreement").

This facility, which matures on June 1, 2025, replaced our revolving credit facility which was entered into on June 1, 2018 (the "Prior Credit Agreement").

Under the terms of the Credit Agreement:

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The replacement of LIBOR with SOFR as a reference rate in our debt agreements did not have a material adverse effect on our financial position or materially affect our interest expense.

Borrowings under the Credit Agreement, which include the promissory notes as discussed in Note 10 of the consolidated financial statements in the aggregate amount of $6,909,000, are secured by all tangible and intangible personal property (including accounts receivable, inventory, equipment, general intangibles, documents, chattel paper, instruments, letter-of-credit rights, investment property, intellectual property and deposit accounts) and fixtures of the Company.

Borrowings under the Credit Agreement, which include the promissory notes as discussed in Note 10 of the consolidated financial statements in the aggregate amount of $5,167,000, are secured by all tangible and intangible personal property (including

accounts receivable, inventory, equipment, general intangibles, documents, chattel paper, instruments, letter-of-credit rights, investment property, intellectual property and deposit accounts) and fixtures of the Company.

The loan agreements provide, among other things, that the Company meet minimum quarterly tangible net worth amounts, maintain a minimum fixed charge coverage ratio and meet minimum annual net income amounts.

The loan agreements also contain customary representations, warranties and affirmative covenants as well as customary negative covenants, subject to negotiated exceptions on liens, relating to other indebtedness, capital expenditures, liens, affiliate transactions, disposal of assets and certain changes in ownership.

The Company was in compliance with all of its financial covenants under the Credit Agreement as of September 30, 2023 except for the minimum annual net income requirement (as a result of the non-cash goodwill impairment).

The Company was in compliance with all of its financial covenants under the Credit Agreement as of September 28, 2024 except for the minimum annual net income requirement.

On December 11, 2024, BHBM agreed to waive applicability of this covenant (and any breach arising therefrom) as of September 28, 2024.

Paycheck Protection Program Loans

During the year ended October 3, 2020, subsidiaries and consolidated VIEs (the “Borrowers”) of the Company received loan proceeds from several banks (the “Lenders”) in the aggregate amount of $14,995,000 (the “PPP Loans”) under the Paycheck Protection Program (the “PPP”) of the CARES Act, which was enacted March 27, 2020.

In addition, during the 13 weeks ended April 3, 2021, one of our consolidated VIEs received a second draw PPP Loan in the amount of $111,000.

The PPP Loans were evidenced by individual promissory notes of each of the Borrowers (together, the “Notes”) in favor of the Lender, which Notes bore interest at the rate of 1.00% per annum.

Funds from the PPP Loans were to be used only for payroll and related costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations that were incurred by a Borrower prior to February 15, 2020 (the “Qualifying Expenses”).

Prior to fiscal 2023, the Company received loan proceeds from several banks in the aggregate amount of $15,106,000 (the “PPP Loans”) under the Paycheck Protection Program of the CARES Act, which was enacted March 27, 2020.

Under the terms of the PPP Loans, some or all of the amounts thereunder, including accrued interest, were to be forgiven if they were used for Qualifying Expenses as described in and in compliance with the CARES Act.

During the years ended September 30, 2023 and October 1, 2022, $272,000 and $2,420,000 of PPP Loans, respectively (including $6,000 and $66,000 of accrued interest, respectively), were forgiven.

During the years ended September 30, 2023 and October 1, 2022, the Company made payments related to the unforgiven portion of PPP Loans in the aggregate amount of $531,000 and $1,571,000, respectively.

As of September 30, 2023, no PPP Loans were outstanding;

During the year ended September 30, 2023, $272,000 of PPP Loans (including $6,000 of accrued interest), were forgiven.

During the year ended September 30, 2023, the Company made payments related to the unforgiven portion of PPP Loans in the aggregate amount of $531,000.

As of September 28, 2024 and September 30, 2023, no PPP Loans were outstanding;

however, the Company was denied forgiveness of one PPP Loan in fiscal 2023 in the amount of $285,000 and accordingly such amount was repaid.

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Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The accounting estimates that require management’s most difficult and subjective judgments include allowances for potential bad debts on receivables, the useful lives and recoverability of its assets, such as property and intangibles, fair values of financial instruments and share-based compensation, the realizable value of its tax assets and determining when investment impairments are other-than-temporary.

Because of the uncertainty in such estimates, actual results may differ from these estimates.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates are used for, but are not limited to:

(i) projected cash flows related to asset impairments, including goodwill and intangibles, (ii) income tax valuation allowances for deferred tax assets, (iii) allowances for potential credit losses on receivables, (iv) assumptions regarding

discount rates related to lease accounting, (v) the useful lives and recoverability of our long-lived assets, such as fixed assets and intangibles, (vi) fair values of financial instruments, (vii) share-based compensation, (viii) estimates made in connection with acquisition purchase price allocations, (ix) uncertain tax positions, and (x) determining when investment impairments are other-than-temporary.

The Company’s accounting estimates require the use of judgment as future events and the effect of these events cannot be predicted with certainty.

The accounting estimates may change as new events occur, as more experience is acquired and as more information is obtained.

The Company evaluates and updates assumptions and estimates on an ongoing basis and may use outside experts to assist in the Company’s evaluation, as considered necessary.

Actual results could differ from those estimates.

Long-Lived Assets

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Various factors including estimated future sales growth and estimated profit margins are included in this analysis.

The Company considers a triggering event related to long-lived assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s cash flows for the last 12 months are less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets.

The Company considers a triggering event related to long-lived or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s cash flows for the last 12 months are less than a minimum threshold or if consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets.

Additionally, the Company considers a triggering event related to ROU assets to have occurred related to a specific lease if the location has been subleased and future estimated sublease income is less than current lease payments.

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If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods, and such charges could be material.

Based on the results of this analysis, no impairment charges were recognized related to long-lived assets and ROU assets during the years ended September 30, 2023 and October 1, 2022.

Given the inherent uncertainty in projecting results of restaurants under the current circumstances, the Company is monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis.

For these restaurants, if expected performance is not realized, an impairment charge may be recognized in future periods, and such charge could be material.

During the year ended September 28, 2024, impairment indicators were identified at our Sequoia property located in Washington, D.C.

due to lower-than-expected operating results.

Accordingly, the Company tested the recoverability of Sequoia's ROU and long-lived assets and concluded they were not recoverable.

Based on a discounted cash flow analysis, the Company recognized impairment charges of $1,561,000 and $939,000 related to Sequoia's ROU assets and long-lived assets, respectively.

No impairment charges were recognized related to long-lived assets or ROU assets during the year ended September 30, 2023.

If expected performance is not realized, further impairment charges may be recognized in future periods, and such charges could be material.

Recoverability of Investment in New Meadowlands Racetrack (“NMR”)

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An arrangement contains a lease if it implicitly or explicitly identifies an asset to be used and conveys the right to control the use of the identified asset in exchange for consideration.

As a lessee, we include operating leases in Operating lease right-of-use assets and Operating lease liabilities in our consolidated balance sheet.

Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease right-of-use assets and liabilities are recognized upon commencement of the lease based on the present value of the lease payments over the lease term.

As a lessee, we include operating leases in Operating lease ROU assets and Operating lease liabilities in our consolidated balance sheet.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating lease ROU assets and liabilities are recognized upon commencement of the lease based on the present value of the lease payments over the lease term.

As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments.

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When performing the quantitative test, an impairment loss is recognized if the carrying value of our equity, including goodwill, exceeds its fair value.

In performing its goodwill impairment test as of September 30, 2023, the Company determined that a triggering event had occurred.

As such, the Company performed a qualitative and quantitative assessment

for its goodwill and recorded a pre-tax noncash goodwill impairment charge of $10,000,000 in the fourth quarter of 2023 (see Note 7 – Goodwill, Trademarks and Intangible Assets to the Consolidated Financial Statements).

As of September 28, 2024, there had been a lack of communication from the landlord regarding our proposals.

In August 2024, the Company became aware that the landlord was in discussions with another operator.

Accordingly, the Company performed qualitative and quantitative assessments for its goodwill as of September 28, 2024 and September 30, 2023.

The fair value of the equity was determined using the income approach.

Given the relatively low volume of shares traded and the lack of reliable market data as of September 30, 2023, the Company determined the income approach provided the best approximation of fair value.

Given the relatively low volume of shares traded as of September 28, 2024 and September 30, 2023, the Company determined the income approach provided the best approximation of fair value.

More specifically, the weighted average cost of capital is a sensitive estimate as it reflects the market conditions including the risk that the Bryant Park Grill & Café and The Porch at Bryant Park leases will not be renewed.

The Company did not record any impairment to its goodwill during the year ended October 1, 2022.

Our impairment analysis for trademarks consists of a comparison of the fair value to the carrying value of the assets.

This comparison is made based on a review of historical, current and forecasted sales and profit levels, as well as a review of any factors that may indicate potential impairment.

For the years ended September 30, 2023 and October 1, 2022, our impairment analysis did not result in any other charges related to trademarks.

For the years ended September 28, 2024 and September 30, 2023, our impairment analysis did not result in any other charges related to trademarks.

Stock-Based Compensation

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis