What changed in this filing

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Item 2. Properties

2023-04-18 compared with 2022-03-17 · 51 added, 38 removed, 6 unchanged (94% of the section changed)

Corporate Offices

Our principal offices are in leased office space in West Fargo, North Dakota with additional leased space in Minnetonka, Minnesota.

Both locations are leased on a month-to-month basis for a total of $1,800 per month.

Burger Time Properties

The table below provides basic information about each of our Burger Time restaurants.

Business Owner

Fargo, North Dakota

Moorhead, Minnesota

Grand Forks, North Dakota

Waite Park, Minnesota

Bismarck, North Dakota

Sioux Falls, South Dakota

Sioux Falls, South Dakota (1)

Minot, North Dakota

Ham Lake, Minnesota (2)

BTND DQ, LLC (3)

Paul, Minnesota (6)

Richmond, Indiana (4)(5)

held for sale

BTND IN, LLC (4) (5)

Hazelwood, Missouri (5) (7)

held for sale

BTND MO, LLC (5)

The land is leased from a third party.

Dairy Queen franchise.

Restaurant operations are 99% owned by BTND, LLC, and 1% owned by the current restaurant manager.

Restaurant operations closed in December 2018.

Property for sale.

Paul property was sold for $496,000, and the sale closed in the first quarter of 2023 with a gain on sale of approximately $313,000.

The Company is in the process of abandoning the Hazelwood, Missouri, property in lieu of paying property taxes.

This abandonment is expected to be completed in the second quarter of 2023 at which time the Company will recognize a gain of approximately $180,000 upon the final disposition of the property.

A description of our restaurant properties appears above under the heading “BUSINESS—Locations.” We lease our executive offices, consisting of approximately 1,000 square feet, located at 405 West Main Street, West Fargo, North Dakota, on a month-to-month basis at the cost of $500 per month.

In addition, effective January 2, 2022, we have agreed to reimburse Brimmer Company, LLC for the monthly rent of approximately $1,300 on approximately 1100 square feet in Minnetonka, Minnesota, where certain administrative activities are performed.

We believe our current office space is suitable and adequate for its intended purposes and our near-term expansion plans.

On June 28, 2021, we refinanced most of our existing mortgage debt, which bore interest at 4.75%.

As of January 2, 2022, we had $3,049,971 in contractual obligations principally for amounts due under mortgages on the real property on which our stores are situated.

In addition, effective January 2, 2022, we have agreed to reimburse Brimmer Company, LLC, an affiliate of the Company, for the monthly rent of $1,250 on 1100 square feet in Minnetonka, Minnesota, at 10501 Wayzata Blvd Ave S, Suite 102 where administrative activities are performed.

Our office space is adequate for its intended purposes and our near-term expansion plans.

On June 28, 2021, we refinanced our BTND mortgage debt, bearing interest at 4.75%.

As of January 1, 2023, we had $2,826,093 in contractual obligations relating principally to amounts due under mortgages on the real property on which our Burger Time restaurants are situated.

Our monthly required payment is approximately $22,700.

Under the terms of the refinanced mortgage debt, we lowered the nominal interest cost from 4.75% to 3.45% fixed for the next ten years.

Rental Properties

We currently lease the land for one of our Sioux Falls, South Dakota locations on a month-to-month basis, and the monthly rent is $1,600.

We also pay a combined total of approximately $1,800 for office space in West Fargo, North Dakota and Minnetonka, Minnesota.

Both corporate locations are paid for and utilized on a month-to-month basis.

Regulation and Compliance

Our operations are subject to a wide range of federal, state, and local government regulations, including those relating to, among others, public health and safety, zoning and fire codes, labor, and franchising.

Our failure to obtain or retain food or other licenses and registrations or exemptions could adversely affect the operations of our restaurants.

We operate each of our restaurants in accordance with standards and procedures designed to comply with applicable laws, codes, and regulations.

To date, we have not experienced and do not anticipate any significant problems in obtaining required licenses, permits, or approvals;

however, any difficulties, delays, or failures in obtaining such licenses, permits, registrations, exemptions, or approvals in the future could delay or prevent the opening of, or adversely impact the viability of, a restaurant.

The development and construction of additional restaurants will be subject to compliance with applicable zoning, land use, and environmental regulations.

We believe federal and state environmental regulations have not had a material effect on operations, but more stringent and varied requirements of local government bodies with respect to zoning, land use, and environmental factors could delay construction and increase development costs for new restaurants.

We are also subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986, and various federal and state laws governing such matters as minimum wages, overtime, unemployment tax rates, workers’ compensation rates, citizenship requirements, and other working conditions.

A significant portion of the hourly staff is paid at rates consistent with the applicable federal or state minimum wage.

Accordingly, increases in the minimum wage will increase labor costs.

We are also subject to various laws and regulations relating to any future franchise operations.

We are also subject to the Americans with Disabilities Act, which prohibits discrimination based on disability in public accommodations and employment, which may require us to design or modify our restaurants to make reasonable accommodations for disabled persons.

Many states, counties, and cities have enacted menu labeling laws requiring multi-unit restaurant operators to disclose to consumers certain nutritional information or have enacted legislation restricting the use of certain types of ingredients in restaurants.

Many of these requirements are inconsistent or interpreted differently from one jurisdiction to another.

These requirements may be different or inconsistent with requirements that we are subject to under the ACA, which establishes a uniform, federal requirement for certain restaurants to post nutritional information on their menus.

Specifically, the ACA requires chain restaurants with 20 or more locations in the United States operating under the same name and offering substantially the same menus to publish the total number of calories of standard menu items on menus and menu boards, along with a statement that puts this calorie information in the context of a total daily calorie intake.

The ACA also requires covered restaurants to provide to consumers, upon request, a written summary of detailed nutritional information for each standard menu item and to provide a statement on menus and menu boards about the availability of this information upon request.

While our ability to adapt to consumer preferences is a strength of our concepts, the effect of such labeling requirements on consumer choices, if any, is unclear at this time.

Currently, the Company is not engaged in the business as a “franchisor” and operates a Dairy Queen unit as a “franchisee” of Dairy Queen.

Franchise operations will be governed by state laws that regulate the offer and sale of franchises and the franchisor-franchisee relationship.

Such laws generally require registration of the franchise offering with state authorities and regulate the franchise relationship by, for example, requiring the franchisor to deal with its franchisees in good faith, prohibiting interference with the right of free association among franchisees, limiting the imposition of standards of performance on a franchisee and regulating discrimination against franchisees in charges, royalties or fees.

In addition, such laws may restrict a franchisor in the termination of a franchise agreement by, for example, requiring “good cause” to exist as a basis for the termination, advance notice to the franchisee of the termination, an opportunity to cure a default and a repurchase of inventory or other compensation.

Environmental Matters

Our operations are subject to extensive federal, state, and local laws and regulations relating to environmental protection, including regulation of discharges into the air and water, storage and disposal of waste, and clean-up of contaminated soil and groundwater.

Under various federal, state, and local laws, an owner or operator of real estate may be liable for the costs of removal or remediation of hazardous or toxic substances on, in, or emanating from such property.

Such liability may be imposed without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances.

We have not conducted a comprehensive environmental review of our properties or operations.

No assurance can be given that we have identified potential environmental liabilities at our properties or that such costs would not have a material adverse effect on our financial condition if assessed.

We currently lease the land for one of our Sioux Falls, South Dakota, Burger Time locations on a month-to-month basis, and the monthly rent is $1,600.

Keegan’s Restaurant

Concurrent with our acquisition of Keegan’s assets in March 2022, we entered into a 132-month triple-net lease for the property occupied by Keegan’s with an unrelated landlord.

Terms of the lease provide for an initial rent of $5,000 per month, increasing annually at the greater of 3% or the increase in the Consumer Price Index over that period.

The location comprises approximately 2,900 square feet of dining, kitchen, and storage space and includes typical features for a full-service restaurant.

Pie In The Sky Restaurant

Concurrent with our purchase of PIE assets in May 2022, we entered into a five-year triple-net lease for the property occupied by PIE with the seller of the assets that provides us with three five-year extensions at our option.

Terms of the lease provide for an initial rent of $10,000 per month, increasing annually to approximately $11,000 per month during the first five-year term.

The location comprises approximately 3,500 square feet of dining, kitchen and storage space on two levels, with a production kitchen and storage and office space on the lower level;

there is also approximately 1,500 square feet of outdoor dining, which is serviced by an outdoor service bar.

The landlord granted us a right of first refusal to purchase the property on terms it receives from a third party during the entire term and any lease extension.

Village Bier Garten Restaurant

Concurrent with our acquisition of the Village Bier Garten assets, we entered a five-year lease with the seller for approximately 3,000 square feet of restaurant space and access to an additional 3,000 square feet of shared entertainment and seating area and includes all of the features typical for a full-service restaurant.

The terms of the triple-net 60-month lease provide for an initial rent of $8,200 per month with an annual escalation of 3%.

The lease includes three five-year renewal option periods.

Legal Proceedings.

3 unchanged sentences

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 2. Properties