Item 1. Business
Item 1. Business.
In this Annual Report, and unless otherwise indicated, the terms “BT Brands,” the “Company,” “we,” “us,” “our,” “our Company,” and “our business” refer to BT Brands, Inc. together with its consolidated subsidiaries.
The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report. Due to rounding, figures in tables may not sum exactly.
Overview of Our Company
BT Brands owns and operates various restaurants in the eastern two-thirds of the United States. As of December 29, 2024, including our partially owned Bagger Dave’s business, we operated seventeen restaurants comprising the following:
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Eight Burger Time fast-food restaurants located in the North Central region of the United States, collectively (“BTND”), a Sioux Falls, South Dakota location was closed in February 2024 the total of eight locations includes a location in Ham Lake, Minnesota that was closed following the end of 2024 in January 2025;
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Bagger Dave’s Burger Tavern, Inc., a partially owned affiliate (39.6%), operates six Bagger Dave’s restaurants in Michigan, Ohio, and Indiana (“BDVB”);
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Keegan’s Seafood Grille in Indian Rocks Beach, Florida (“Keegan’s”);
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Pie In The Sky Coffee and Bakery in Woods Hole, Massachusetts (“PIE”).
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Schnitzel Haus is a German-themed fine dining restaurant and bar in Hobe Sound, Florida “Schnitzel”.
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Village Bier Garten is a German-themed restaurant, bar, and entertainment venue in Cocoa, Florida (“VBG”). This business ceased operations and was closed in January 2025.
Our objective is to build value for our shareholders in the food service industry. Our principal strategy is acquiring restaurant properties at attractive earnings multiples. In 2024, we continued to evaluate business opportunities. We operate our businesses with a shared central management organization. Additional elements of our growth strategy encompass increasing sales and efforts to lower costs and boost brand awareness.
Our Corporate History
The Company was incorporated in Delaware as Hartmax of NY, Inc. in January 2016. In 2020, we changed our corporate domicile from Delaware to Wyoming.
The Burger Time brand originated in August 1987 with the first restaurant in Fargo, North Dakota. In subsequent years, Burger Time restaurants were opened in Minnesota, North Dakota, and South Dakota.
On November 12, 2021, we completed an initial public offering of 2,400,000 units of our securities at a public offering price of $5.00 per unit, each unit comprising one share of common stock and one warrant to purchase one share of common stock at an initial exercise price of $5.50 per share (the “IPO”). The net proceeds from the IPO were approximately $10.7 million, excluding any proceeds from the exercise of warrants and after deducting underwriting discounts and commissions and payment of estimated offering expenses of approximately $1.3 million.
Following our IPO, we have pursued the acquisition of restaurant properties in diverse locations across the United States. Our acquisitions have diversified our operations into new restaurant segments and new geographic regions, reducing our dependency on the financial performance of our Burger Time restaurants.
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Our Restaurants
Burger Time
Burger Time restaurants feature a variety of burgers and other quick-serve foods. Our juicy, flame-broiled burgers, called “Bigger Burgers,” are made with approximately 25% more meat and are larger in diameter than our competitors’ typical quarter-pound burger offerings. Our burger patties are produced to our specifications by our supplier. We prepare each burger to a customer’s order and serve it hot and fresh. Other entrees include chicken sandwiches and chicken tenders. We offer an array of traditional and signature sides, many of which are regional favorites. We offer other reasonably priced food and beverage items. From time to time, we offer specialty sandwiches and wraps at competitive prices. Our limited menu is designed to deliver quality across all products, combining a high taste profile and speedy delivery. Our Burger Time brand appeals to a broad spectrum of consumers. We cater to consumers who appreciate the size and variety of our burgers and the value of our Bigger Burger, combined with the speed and efficiency provided by our single and double drive-thru windows. Subject to seasonal and local conditions, our restaurants are generally open seven days a week from 10 a.m. until 9 or 10 p.m. We offer online ordering through our website with curbside delivery and have initiated sales through third-party delivery services. Burger Time serves the drive-thru and take-out segment of the restaurant industry.
Our eight Burger Time restaurants, including our Ham Lake location, which was closed in January 2025, are in Minnesota, North Dakota, and South Dakota. We own the real estate on which our Burger Time restaurants are situated.
Our Burger Time units are free-standing facilities with single or double “drive-thru” and walk-up service windows. The menu, store layout and equipment are designed to work together to offer exceptional food with fast service times. This integrated design allows for maximum food output with minimal labor.
Each restaurant typically employs eight to sixteen employees, including a manager and an assistant manager. Work shifts are staggered to ensure superior customer service during our busiest times. We focus on customer service and quality and seek to staff our stores with friendly, customer-focused personnel. Our managers and assistant managers are full-time employees. We support our managers by offering competitive wages, including incentive bonuses for performance. Our experienced managers train new assistant managers in all aspects of operations. Our training stresses food quality, fast, friendly customer service, restaurant cleanliness, and proper management operations of a quick service restaurant. We also focus on food safety and sanitation, employment laws and regulations, and systems to control food and labor costs. All managers and assistant managers must obtain the required food safety (HACCP) certification applicable to their location.
Each restaurant has a point-of-sale system (POS) monitored by management. In 2024, we implemented a cloud-based POS in all Burger Time locations, enhancing our ability to monitor store operations. This system allows management to monitor sales, labor, customer counts, and other pertinent information. The general manager of each restaurant reports directly to the Director of Operations, who in turn reports to our Chief Operating Officer, who oversees all aspects of restaurant operations, including restaurant facility management, new restaurant openings and the roll-out of key operational initiatives. Our restaurants are managed using weekly operating budgets, comparing their actual results to planned results and results from the prior year.
In July 2024, we engaged a new primary food service vendor. We have agreed to a pricing structure with the new vendor, however, have not executed a contract. Under this arrangement, we purchase most of the food, paper, packaging, and related supplies for our Burger Time restaurants from Performance Food Services, one of the nation’s largest distributors of food products. Performance Food Services makes deliveries to our restaurants on a frequent and routine basis.
As of March 1, 2025, Burger Time restaurants employed approximately 92 individuals, including 13 full-time and 79 part-time employees. Our full-time employees are salaried managers and assistant managers; the remaining restaurant staff are hourly employees.
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Keegan’s Seafood Grille
On March 2, 2022, we acquired substantially all the assets of Keegan’s Seafood Grille, Inc. (“Keegan’s”), an operating restaurant located in Indian Rocks Beach, Florida, for $1,150,000. Keegan’s Seafood Grille has operated in the same location for over 35 years, serving the Clearwater, Florida market. We acquired the “Keegan’s Seafood Grille” tradename and website and plan to continue to operate as Keegan’s Seafood Grille. In November 2024, operations at Keegan’s were disrupted for approximately six weeks by Hurricane Helene, which caused significant damage to the Indian Rocks Beach community.
Keegan’s is a family-friendly casual restaurant located directly across the street from the beach. The establishment’s award-winning dishes are made in-house using the freshest local ingredients. Keegan’s motto is “Eat Fresh and Eat Wild.” Keegan’s is known for daily fish specials, innovative seafood dishes, and excellent service. Keegan’s also offers a selection of beer and wine. The restaurant features indoor and outdoor dining options, is open daily for lunch and dinner, and offers takeout and curbside pickup options.
As of March 1, 2025, Keegan’s employed 38 persons, including 12 full-time and 26 part-time employees. Our employees include a full-time salaried manager and a salaried kitchen manager; the remaining restaurant staff are hourly employees.
Pie In The Sky Coffee and Bakery
On May 11, 2022, we acquired the assets of Pie In The Sky Coffee and Bakery (“PIE”), a coffee shop and bakery restaurant located near the Steamship Authority ferry terminal in Woods Hole, Massachusetts. We acquired the assets for an aggregate purchase price of $1,150,000. We acquired the “Pie In The Sky” tradename and the piecoffee.com web address as part of the purchase.
PIE has served the local community and ferry travelers to Martha’s Vineyard for nearly forty years. PIE serves a variety of breakfast and lunch sandwiches prepared on store-baked bread; pastries, soups and salads are all freshly made on-site. In addition, we offer patrons fresh, on-site roasted coffee beverages, smoothies, and brand merchandise. The store is open seven days a week, year-round, except for Christmas.
As of March 1, 2025, PIE employed 23 people, including three full-time and 20 part-time employees. Our full-time employees include three full-time managers, including one manager dedicated to coffee roasting operations, assistant managers, and a varying number of staff, all of whom are hourly employees.
Schnitzel Haus
On May 13, 2024, we acquired substantially all of the assets, including the trade name of Schnitzel Haus, a German-themed fine dining restaurant and bar in Hobe Sound, Florida (“Schnitzel”). Schnitzel has served the local community for more than 10 years. Schnitzel serves a variety of traditional German and American menu offerings, wine, beer, and cocktails in an elegant, upscale setting. Schnitzel is open year-round, Monday through Saturday.
As of March 1, 2025, Schnitzel employed 20 people, including three full-time and 20 part-time employees. Our employees include a full-time salaried manager and a salaried kitchen manager; the remaining restaurant staff are hourly employees.
Village Bier Garten
On August 4, 2022, we acquired substantially all of the assets, including the trade names and social media accounts of Von Stephan Village Bier Garten. Village (“VBG”) is a German-themed, family-friendly casual restaurant and bar concept in Cocoa, Florida. Effective January 2, 2025, we closed the VBG location, sold equipment for $34,500 and assigned the lease to an unrelated party.
Bagger Dave’s Burger Tavern
In June 2022, we acquired common stock of Bagger Dave’s Burger Tavern, Inc. (“BDVB”), initially representing 41.2% ownership. In 2024, our ownership share was reduced to 39.6% due to a sale of newly issued shares by BDVB. BDVB is a publicly traded company that owns and operates six Bagger Dave’s restaurants. Bagger Dave’s is a casual restaurant and bar concept providing an inviting, entertaining atmosphere specializing in burgers, tavern-style pizzas, hand-cut fries, local craft beers, milkshakes, salads, and other items. BDVB opened its first location in Berkley, Michigan, in January 2008 and currently operates four restaurants in Michigan, one in Ft. Wayne, Indiana, and one in Centerville, Ohio. BDVB has approximately 150 employees, including 20 salaried managers, 40 full-time, and 90 part-time employees.
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Marketing and Advertising
Our marketing and advertising expenditures are principally allocated to social media, with limited advertisements in newspapers and on the radio. In addition, we have employed product discount coupons, live remote broadcasts, customer contests, and direct mailings. We also utilize marketing incentives from our suppliers whenever possible. Our restaurants offer online ordering capability and a curbside delivery program through our websites. We emphasize direct database marketing supplemented by social media tools to promote our brand and local stores. Marketing-related expenditures have typically been less than 1% of net revenues. Generally, restaurant sales are derived from drive-by traffic and dedicated return visits from loyal customers. Increasing our restaurant revenues may require an increase in marketing and advertising expenditure.
We expect to develop more sophisticated marketing programs, including an expanded social media presence, to build consumer brand awareness of our restaurants.
Growth Strategy
We seek to increase value for our shareholders in the food service industry. Our strategy is to acquire restaurant concepts and individual properties at attractive earnings multiples. Other key elements of our growth strategy include increasing same-store sales and introducing a campaign to boost brand awareness.
As we develop and extend our business into new food concepts and geographic areas, we expect to pursue strategies that will leverage our multiple brands, capacity, and reach, which may include:
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creating dual concept locations, allowing for two or more of our brands to share physical assets;
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offering third-party (e.g., Uber Eats, GrubHub) and local delivery services;
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entering into licensing agreements allowing the third-party sale of our products and
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employing direct database marketing, including social media, to drive business.
As a public company, we may be presented with other opportunities, including a reverse merger opportunity, whereby a significantly larger company avails itself of our public company status by merging with our business. We will evaluate these opportunities if and when they are presented.
Acquisitions
We are evaluating our acquisition strategy in the restaurant industry. Acquisitions may provide an entrance into targeted restaurant segments and geographic areas. Restaurant businesses frequently become available for acquisition. We may purchase either individual restaurant properties or multi-unit businesses at prices expected to provide attractive returns on our investment. In addition, we may acquire operating assets where a franchise program is the focus of the acquired food service business. We evaluate acquisition opportunities to determine if the transaction will be accretive and if we can efficiently integrate the business into our existing operations.
In evaluating opportunities, we consider the following characteristics, among others, relevant to each opportunity:
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the value proposition when comparing the purchase price to the potential return on our investment;
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established, recognized brands within a geographic footprint;
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a historical record of consistent and growing cash flow;
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record of operating performance;
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sustainable operating results;
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geographic diversification, and
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growth potential.
We operate our businesses with a shared central management organization. Following an acquisition, we may pursue a plan to expand the number of locations and increase the comparable store sales and profits, as described below. By leveraging our management services platform, we seek to achieve post-acquisition cost benefits by reducing the acquired business’s corporate overhead. If we acquire restaurant chains or individual units near each other, concentration could provide economic synergies for management functions, marketing, advertising, supply chain assistance, staff training, and operational oversight.
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Increase Sales
Our primary goal is to grow sales in our restaurant operations to optimize restaurant performance. One of the metrics we use to measure an increase in sales is same-store sales growth, which reflects the change in year-over-year sales for the comparable store base. We apply techniques proven in the restaurant industry to increase same-store sales at all our restaurants. We also may develop new approaches that reflect our corporate character and restaurant composition. We utilize customer feedback and analyze sales data to introduce, test, and hone existing and new menu items. Our strategies to increase same-store sales will evolve as we acquire new restaurant concepts in new markets.
Increase Brand Awareness
Increasing brand awareness is essential to our Company’s growth. We intend to develop and implement forward-looking branding strategies for our businesses. We may seek to leverage social media and employ targeted digital advertising to expand the reach of our brands and drive traffic to our stores. We expect our branding initiatives to evolve as we complete acquisitions.
Trademarks and Service Marks
We operate under several trade names and have acquired a variety of trade and service marks. We have registered “It’s Burger Time” with the United States Patent and Trademark Office. Our trademarks and service marks, whether or not formally registered, are valuable to us and essential to our marketing efforts. We may develop additional marks in the future. Our policy is to pursue registration of our marks when appropriate and to oppose infringement vigorously .
Competition
We own restaurants in the industry’s quick service, fast casual, and casual dining categories. The competitive environment in each category is intense in terms of price, service, location, and food quality. We face significant competition from a variety of restaurants on a national, regional, and local level. Dining choices continue to expand with the increasing popularity of food delivery services. The restaurant industry is affected by, among other things, changes in consumer tastes, dietary trends, local and national economic conditions, demographics, traffic patterns, consumer spending, population trends, and local traffic patterns. The restaurant industry has few barriers to entry, and new competitors may emerge at any time.
Seasonality
Seasonal factors and the timing of holidays cause our revenue to fluctuate from quarter to quarter. Our BTND revenue is typically lower in the first and fourth quarters because of winter weather. PIE is highly seasonal, with a significant portion of its business occurring during the summer. Our Florida locations reach peak revenue during the winter travel season.
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 would adversely affect the operations of our restaurants. We operate each restaurant with standards and procedures that comply with applicable laws, codes, and regulations. To date, we have not experienced and do not anticipate any problems in obtaining required licenses, permits, or approvals; however, any difficulties, delays, or failures in obtaining such licenses, permits, registrations, exemptions, or permissions in the future could delay or prevent the opening of a location and adversely impact the viability of a restaurant.
The development and construction of new restaurants will be subject to compliance with applicable zoning, land use, and environmental regulations. Federal and state environmental regulations have not had a material effect on operations. However, more stringent and varied requirements of local governments concerning zoning, land use, and environmental factors could delay construction and increase development costs for any 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. Most of our hourly staff, except for BDVB’s Michigan tip-compensated employees, are paid above the applicable federal or state minimum wage. Accordingly, increases in the minimum wage likely will not have a significant impact on labor costs. We may also be subject to various laws and regulations related to future operations. We are also subject to the Americans with Disabilities Act, which prohibits discrimination based on disability in public accommodations and employment.
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States, counties, and cities have enacted menu labeling laws requiring restaurant operators to disclose certain nutritional information to consumers or have enacted legislation restricting the use of certain ingredients in restaurants. Many of these requirements are inconsistent or interpreted differently from one area to another. These requirements may be different or inconsistent with requirements that we are subject to under the Patient Protection and Affordable Care Act of 2010 (“ACA”), as amended, which establishes federal requirements applicable to chain restaurants with 20 or more locations to post nutritional information on their menus. In addition, the ACA mandates that restaurant businesses with more than 50 full-time employees offer health benefits to full-time employees and their dependents or face possible penalties. The ACA imposes significant reporting requirements on restaurant businesses, including certifying whether they offer minimum essential coverage to full-time employees. The failure to comply with ACA is substantial, and new regulations, increasing coverage requirements and costs could adversely affect our business. We are not engaged in the business as a “franchisor.”
Environmental Matters
We are subject to extensive federal, state, and local laws and regulations relating to environmental protection, including regulating discharges into the air and water, storing and disposing of waste, and cleaning 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. As a result, no assurance can be given that we have identified potential environmental liabilities at our properties or that such liabilities will not adversely affect our financial condition.
Employees
As of March 1, 2025, our corporate office has four employees. In addition, each of our restaurants has a General Manager, an assistant manager or supervisor, and a varied number of restaurant staff, all hourly employees. Including wholly owned subsidiaries of the Company, as of March 1, 2025, we had approximately 180 employees, including 40 full-time and 140 part-time employees. None of our employees are unionized or covered by collective bargaining agreements, and we consider our current employee relations to be good.
Marketable Securities
From time to time, we purchase publicly traded marketable securities. Historically, these securities comprised investments in exchange-listed common stocks with published prices per share readily available.
Investments
Bagger Dave’s-
Our investments include our net investment of $304,439 in Bagger Dave’s as determined under the “Equity Method” of accounting, net of recording our equity share in Bagger Dave’s losses.
NGI related party investment-
Our total investment in NGI Corporation (“NGI”) is $424,000, which includes $120,000 in loans to NGI during 2024 and $304,000 in prior equity investment in NGI. The NGI investment includes equity in the form of 179,000 common shares received in 2020 as consideration for BTND extending the maturity of a note receivable repaid in August 2020. Under the Note modification terms, we acquired 179,000 NGI common shares from its founders. We also received warrants expiring on March 31, 2029, to purchase 358,000 shares of common stock for $1.00 per share. We attributed $75,000 to the value of the equity received. This amount was reflected as interest income in 2020. On February 12, 2022, we invested $229,000 in 138,788 shares of NGI Series A1 8% Cumulative Convertible Preferred Stock, convertible share for share into NGI common shares. This investment is reflected at the cost of $229,000. The preferred investment included a five-year warrant to purchase 34,697 shares at $1.65. Our CEO, Gary Copperud, is Chairman of the board of directors of NGI. Our COO, Kenneth Brimmer, is also an NGI board member and serves as its CFO. The investment in NGI does not have a readily determinable market value, and it is carried at the historic cost determined by BT Brands, which the Company believes is reasonable relative to recent stock sales by NGI.
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