Ark Restaurants (NASDAQ:ARKR) Q2 2022 Earnings Call

0:00 Greetings. Welcome to Arc Restaurant's second quarter 2022 results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Chris Love, Secretary for Arc Restaurants. Thank you. You may begin. Operator, good morning and thank you for joining us on our conference call for the second quarter ended April 2nd, 2022. My name is Christopher Love and I am the Secretary of Arc Restaurants. With me on the call today is Michael Weinstein, our Chairman and CEO, Anthony Sirica, our President and Chief Financial Officer, and Vinnie Pascal, our Chief Operating Officer.

0:52 For those of you who have not yet obtained a copy of our press release, It was issued over the newswire yesterday and is available on our website. To review the full text of that press release, along with the associated financial tables, please go to our homepage at www.offrestaurants.com. Before we begin, however, I'd like to read the Safe Harbor Statement. I need to remind everyone that part of our discussion this morning will include forward-looking statements and that these statements are not guarantees of future performance and therefore undue reliance should not be placed on them. We refer everyone to our filings with the Securities and Exchange Commission for more detailed discussion of the risks that may have direct bearing on our operating results, performance and financial conditions. I'll now turn the call over to Michael.

1:44 Hi, everybody. Before I sort of review the business, I think it's a good idea if Anthony reviews the balance sheet. Thanks, Michael. Yeah, we had a great quarter as everyone saw in the press release, better than we expected. Our balance sheet at the end of the second quarter remains really strong. We have close to $19 million of cash. We've collected since the end of the quarter our carryback claims on our tax carryback, so that was $2.1 million. Those were collected subsequent to the end of the quarter. all of our long-lived and intangible assets we've reviewed for impairment. We don't have any indicators of impairment.

2:31 Our debt is down to $28.5 million from 32.6 at year end. We had $1.1 million of forgiveness of PPP loans in the quarter, which you saw on the P&L. Of the $28.5 million of debt, $2.6 million is remaining PPP loans, of which we expect 1.7 to be forgiven and approximately $900,000 to be repaid when we get the final forgiveness decisions based on the paperwork that we submitted. Other than that, there's not a lot of changes on the balance sheet. It remains strong. Other than the fact that we did really well, it's a pretty uneventful quarter as far as unusual transactions.

3:20 I'll turn it over to Michael. Thanks, Anthony. If Anthony gave you the $19 million cash figure, which was at the end of the quarter, presently, today, we have approximately $28 million in cash on our balance sheet. And that is... Before float. Before float. So our net debt is pretty much zero at this point. Business in general. during the quarter. The business was surprisingly strong in Las Vegas and Florida, more than we had projected. What you should know about this quarter, which I think is interesting, is that New York City and Sequoia in Washington, D.C.

4:12 lost a combined $1.4 million during the quarter. So the fact that We were profitable despite the poor performance of the two northeast locations, New York City and Sequoia. Just shows you the inherent strength that we witnessed in Las Vegas, Alabama, and Florida. The main points that I think we want to talk about is the dividend calculation. We resumed our dividend which you saw in the announcement. Basically, we extended a projection to the end of fiscal 2023, which is September 2023, and said if things go according to what we're projecting, this is the amount of cash that we'll have on a balance sheet after paying debt, after an acquisition that we're projecting we may do the payment of debt, payment of taxes, payment of interest, and we decided that conservatively we can resume our dividend payments and still not encroach on any things we want to do in terms of expanding the business.

5:45 The Meadowlands, we've become With what New York City is doing in terms of downstate casinos, we become constantly more confident that within the next two to three years, we'll have a casino license at the Meadowlands. There are conversations going on that make us feel that we're on the right path to getting that. So, you know, we're looking forward to that possibility. Leases at New York, New York Hotel and Casino, which can't come due at the end of this year. We have signed, there are three major leases in the hotel, between the hotel and us. We have signed and New York, New York has executed one of those leases.

6:41 We have signed and are waiting for New York, New York to execute a second lease. All of these leases require the REITs to sign off on it. So there's some period of time from the time we execute until the time we get all the proper parties to sign on the lease. That's what's happening with the America lease, but we've signed it and We expect to get that back in executed form by New York, New York in the next couple of days. And actually last night, we just got the third lease to review, which we haven't had time to review yet. So one lease is completely executed. Another lease is about to be executed.

7:34 and we have the paperwork on the third lease. So we're certainly feeling that those leases are essentially complete and gives us a lot of runway to continue our operations within New York New York Casino. Area by area, just to repeat, Vegas is extremely strong. We're seeing I've been watching carefully comments by retailers in general about what's happening to their business with interest rates going up and a recession predicted and inflation on the consumer's balance sheet. Groceries are costing more gas prices.

8:27 We're not seeing that in our location in Vegas. We're certainly not seeing it in New York, which I'll get to in a second. And we weren't seeing it in Florida or Alabama as of last week. Last week may have been one of the best weeks this company ever had in terms of sales. We are beginning to see a seasonal fall off in Florida. at our full-service locations. We are not seeing that at the two Hard Rock locations where we do fast food. We're seeing a dramatic pickup in New York and Washington, D.C., and in part driven by a very strong event calendar, which is in May and June.

9:23 To give you a for instance, Brian Park, which was struggling throughout the early part of this year to do 200,000 to 300,000 a week. Our facilities in Brian Park did 800,000 last week. A lot of that driven by events, and we have a calendar that is full to the end of June. Sequoia is seeing the same thing, a lot of events on their calendar. So we expect the momentum of cash flow and earnings to continue through the June quarter. We should have an extremely strong June quarter. So with that, I hope I sort of covered the high points. Please, if you would have any questions, let's go.

10:16 Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Sandy Meza with Evaluate Research. Please proceed. Yes, good morning and congratulations on a strong revenue quarter. You talked a little bit about a possible acquisition. Now that your balance sheet has strengthened considerably, are you still able to see deals at three or four times cash flow?

11:02 And what size acquisition may you contemplate? Thank you. Sandy, thank you. So the balance sheet is strong enough to do anything that we think we could absorb. The answer is we are seeing deals. They don't come across the desk every week, maybe every three or four months. We see something that's worthwhile looking at. The minimum threshold is we don't want to do anything with the cash flow generated by operations is less than a million dollars.

11:49 They have to be well-established restaurants. We've been very fortunate here. Our acquisitions are Rustic, Sequoia, JB's, Blue Moon, the two oyster houses in Alabama. Management is the same as the day we bought them. We've had very little, if not none, of our key employees have left other than for retirement purposes. But all the key people have remained with us. We're looking at deals where we can expect that same result where key management will stay. We're seriously looking right now at one possibility.

12:38 And yes, it will come at three to four times operating profit. There are others that we look at that are a little more expensive than that. I don't think we want to reach beyond three or four times. And I think they're available. We're unique, I believe, in that if you're a seller and you have a good property and you go locally, You're likely to find a buyer who will put down a third and give you notes over eight years. That's always been the format that restaurants are sold under.

13:28 If you're standing there as an independent, the big brands who have much better balance sheets than we do don't want you because it doesn't extend the brand unless they feel your brand is worth... multiplying, but we're there with a balance sheet where we can pay you all cash. We're not interested whether or not we think we can expand the brand. We're only interested in your cash flow and trying to make you more efficient once we acquire you. So that's our business now, quite honestly, and so far we've been successful at that business.

14:15 Great. Thank you so much. My pleasure. Our next question is from Jeffrey Kaminski with JAK Consulting. Please proceed. Good morning, Michael and team. Congratulations. Another strong quarter. Mike, on last quarter and some conversations that we've had, you discussed the pressures in terms of cost of food, and inflation. We all see the headlines and know that the prices are still going up. So I'm sure that continues to impact performance and pricing for the restaurants. Maybe you can discuss that a little bit. But secondarily, one thing that I'm unclear on is the labor situation. I know that you folks in the whole hospitality industry, probably more than just the hospitality industry, is facing labor shortages and difficulty finding jobs. Servers and Busboys and the like.

15:14 Could you talk about that a little bit as well? Thanks. Yeah. So sometimes the results are good. I feel the business is managing us rather than us managing the business. We're dealing with chaos all the time. It's sort of unpredictable in terms of Food costs or other services that we buy, which one is going up the most next week? We've had lots of discussions about king crab legs here. We stopped a million dollars worth of king crab legs for a rustic inn. I'm repeating myself.

15:59 We made a purchase that we thought was the same purchase and we were looking at Costs that had more than doubled over a year and looked like they were going higher. They did go higher, and then all of a sudden they dropped. So, you know, not that we're stuck with an inventory that we've overpaid for, but it's just unpredictable. There's no stability in these markets of crisis. So in that regard, we're dealing with chaos. Our cost of goods is definitely up, you know, most of our restaurants. If you get a Mother's Day, prices go up right before Mother's Day or Valentine's Day because, you know, there seems to be some element of gouging.

16:51 But my managers and, you know, our buying department are doing the best they can. It's just A little bit unpredictable what you're going to be paying for certain things. So that gives you some idea of what's going on. I'll talk about an advantage we have over, I think, the major brands in terms of purchasing. Labor is still a problem. We are paying a significant amount of overtime in these restaurants because everybody's working double shifts. We still can't open one of our restaurants seven days a week. I wouldn't say the situation is desperate because we seem to be giving good service and customers seem to be happy.

17:45 The amount we're paying in overtime is sort of offset by the fact that we have fewer people in our kitchens and hourly paid people as opposed to tip pay people, both of which are in shortage. We're operating these kitchens with fewer people. There are fewer people on the floor. There are fewer hostesses. In some cases, there are fewer managers. But everybody's working really, really hard. And, you know, I've said this in the past. The results that we're having has to do with a very loyal labor force that is going to work and and working 14-hour days instead of eight-hour days.

18:35 It's extraordinary the loyalty we have in this company. So how did we offset this? Wild fluctuations on the upside in commodities and overtime. Well, obviously, we raised menu prices. We think, and I've had this discussion with other investors who invest in places like Cheesecake Factory and other large chains. When I look at the Cheesecake Factory's research reports about how they're handling menu prices, they're not going Location by location and saying, you know, we can't raise prices in Akron because, you know, the demand and the customer is different than La Jolla, California.

19:35 They're just saying, well, we're trying to, we'll raise menu prices 3% this year as opposed to 2% last year. And that's across the board. We're dealing with, you know, a multitude of different concepts with different customers. at each concept. So there are places we feel very comfortable where we could get a 7%, 8%, 9% raise, which we did. And there are places where we said, you know, I'm not so sure that's the number. Maybe it should be 3%, 4%. And maybe it shouldn't be on everything, you know, because we're really looking at the items that sell the most. It's not going to be You know, worthwhile to raise something that you sell two of a day.

20:22 You're looking to raise prices on something you sell a hundred of a day at a restaurant. So, you know, we're small enough that we've had the flexibility to look at every single item on every menu in each of our restaurants and say, hey, we think we can get more for this. You know, and we're also looking at what the plate looks like. I'll stand in the kitchen as we're pricing these things and say, hey, I know the product's good to the chef, but this plate doesn't look like it's worth more. How do we make it look like it's worth more? Do we put another vegetable on it or whatever? So we're finessing these things as best we can to try to get the revenues to where we can support the chaos in food and labor costs.

21:17 So that's how we're dealing with it. Thank you. Our next question is from Jason Walters, private investor. Please proceed. Good morning, guys. Great quarter. I had a question about the Meadowlands. Michael, I know you've touched upon this in the past to some degree, but if you could just provide some color on Just roughly speaking, what the financial impact of a casino license at the Meadowlands might look like in relation to the company's business. I'm happy to do that, but you go ahead. Secondarily, I was just going to ask whether there's any tentative plans in motion about getting a referendum ready to go in New Jersey soon.

22:16 I just wondered whether there's anything in motion on that. Okay, so let me answer that the best I can without getting everybody too excited. So the last referendum, which took place three or four years ago, was designed to fail. The legislative body in New Jersey was basically accommodating Christie's promise to investigate the possibility of putting a casino on the North. And that referendum was worded in a way where it didn't say where the casino would be.

23:04 It didn't say who was putting up the money for the casino. It didn't say, you know, it made it sound, by the way, as if the state had to put money into it. and it didn't say what the tax rate was going to be or be specific about how it was going to be used. So there was no location, there was no, you know, there was no specific information that would help a voter decide. We did polling at that time and we were prepared to, you know, put it, not we, the group that owns the Meadowlands, we prepared That includes Hard Rock and includes real estate developers and the hedge fund in California that makes casino, not in California, in Canada that makes casino investments called ClearVest.

23:55 And we were prepared to do a significant marketing campaign to try to educate the public on why this was important. And it was important to the state, which has always had financial problems in that Atlantic City had declined substantially and the amount of tax revenue the state was getting from Atlantic City was less than 50% of what it had been five years before that time when this referendum came up. Right now the Meadowlands last month If my memory is correct, and it should be, we did 65% of the sports betting that took place in the state, either in person, which is called retail, at the Meadowlands, or over the internet.

24:58 I think we were the only profitable entity handling sports betting in the state, which means the Atlantic City Casinos actually were unable to make a profit on their sports betting enterprises last month. I think we made $4 million last month. FanDuel is our partner. So there are, the deal with FanDuel essentially is that the expenses that FanDuel encouraged running the sports betting for us come out of the the take first and then we split 50-50 with FanDuel and essentially although we can't show it because it's K-1 income that's not distributed we can only show what was distributed but essentially last year again before New York started with sports betting but last year the value of the sports betting enterprise at the Meadowlands to ARC, given our percentage of ownership, was about a million dollars.

26:12 Of which, Anthony, if I'm correct, they distributed $200,000 for tax payments. Is that correct? There was another distribution this quarter. So for the year, it's about $350,000. $350,000. So we're seeing roughly one-third of our share that hits our P&L. So, Murphy has had conversations with Jeff Gural and others that he's very much in favor of a casino and he is focused on the Meadowlands.

26:59 Why the Meadowlands? Well, first of all, there is no community around the Meadowlands, that residential community, there's a lot of acreage in the Meadowlands. So community lawsuits are unlikely. Secondly, much like what's happened historically with casinos in other areas of the country, the licenses have gone to places where there's already Betting of some sort and those likely racetracks. Hey, we own the racetrack. The third reason, honestly, is all the environmental studies and everything needed to support the construction of a casino elsewhere on vacant land would take several years. We already have a building.

27:59 We have plans to expand that building. Hard Rock is our partner. They would operate it. Hard Rock's been unusually successful in their casino operations and hotel operations. So what we're likely to propose to the state is not only a casino, but a new 1,000-room hotel and convention center, which we're prepared to fund without any help from the state. So we think that's what the state wants. We think the state wants New York is well on its way to not issuing these licenses, but implementing the licenses, meaning revenue coming from the state's downstate locations into New York state's coffers.

28:59 We think that that referendum will be quick to be passed by the Senate and the legislature in New Jersey. We think that timetable is about two years. We are doing polling. We are starting a polling process in the next couple of weeks to try to figure out how we should be marketing that referendum if it is passed by the legislature. So we are in the works of pointing toward getting a casino license. I think it's going to be successful. If I had confidence five years ago when we made this investment, my confidence has consistently risen, primarily because Atlantic City is over. It's really over.

29:55 And a new gleaming Casino on the Hill, I think is what the state would look forward to. So I hope that answers your question. Yeah, if I could just follow up really quickly, Michael, I just didn't know if maybe you could comment on what the financial impact would be. I know we're talking about very rough numbers, and I don't know if you can provide any color on that. The only thing I would say is, first of all, as you know, we have an exclusive on all food and beverage, with the exception of a carve-out by Hard Rock for one Hard Rock Cafe. But all food and beverage operations in a casino at the Meadowlands would belong to us.

30:45 How we would finance it... certainly our written deal, our contract between us and the Meadowlands. And again, remember, we're a partial owner of the new Meadowlands LLC. So we're sort of dealing with ourselves, but we're certainly the minority partner there. That requires an investment by the new Meadowlands in terms of tenant improvement money. which will have to be negotiated. But it would be a big investment for us to do the eight or nine restaurants and all the bars, but I think those projections would be positive enough that we would be able to finance it pretty easily between our balance sheet and maybe bank loans.

31:46 or maybe bringing in other investors. But I'm not too concerned if there's a license issue about that. On the other side, what is this casino worth in terms of cash flow? I could tell you a conversation that when we were first looking for a partner because the original referendum that was done way back, that referendum also required any casino in the north to have an operating partner that had a casino in Atlantic City. So we had conversations with MGM and their projection at that time was that prior to paying any taxes to the state that they thought a casino of a certain size which is bigger than the current footprint of the of the racetrack, but a casino of a certain size that they thought could easily do $500 million a year in cash flow. So whatever that means to us, it would be a significant, significant alteration of our projected EBITDA.

33:10 But I've said this in the past. I don't think it ever gets to that. My guess is we're a minority partner in the casino that's being run by Hard Rock. I think we wouldn't get to see that cash flow. I think there'd probably be a strategy on the part of Hard Rock in terms of just our ownership in the casino, not our ownership of the restaurants, but in terms of our ownership in the casino. to buy us out of that minority stake. That would be my guess. I've never had a conversation with Jim Allen at Hard Rock about that. It's a projection way into the future. But they behave that way in terms of the Hollywood and Tampa casinos when they built them. They bought out the minority partners.

34:03 And I would expect that that would be their preferred transaction. So, anyway, that's as much as I really know at this point. Thank you. Our next question is from Robert Plum, private investor. Please proceed. Hey, guys. Congratulations on the quarter, and it's good to be a shareholder again. Can you tell me, is it a safe assumption that to presume that moving forward, generally speaking, you guys are going to be moving capital out of the Northeast down to the Gulf Coast area. So first of all, moving capital out of the Northeast, the real answer is not putting any more capital in the Northeast.

35:02 We're not going to sell anything that we own in New York. and those restaurants that we have had prior to the pandemic and recently been very good investments and strong cash flows. And we expect that to continue. Gulf Coast is not necessarily the answer. What we've learned over the years is how to manage restaurants that we're not close to. So we manage Gulf Coast and literally from New York between, you know, the two planes we have to catch in the drive to get there.

35:50 That used to be nine hours. You know, so we have strong management controls that allow us to do this either with Zoom calls or just You know, just being in touch. We do visit these properties. We want to taste the food. We want to look at the facilities to make sure they're maintained. But that's probably once every four months. Florida is a little bit easier from New York, so we're down there more frequently. Las Vegas, we've always had strong management in Las Vegas. And, you know, the guy that runs that, Paul Gordon, has been with us for 36 years. And when he says he has a problem, I'll get on a plane or Vinnie Pascal will get on a plane and we'll go out there because we know when he says he has a problem, it's a real problem.

36:42 But if we're not hearing from him, we know that the maintenance is good. We know the operation is going well. He's been very effective for 25 years in Vegas now and there's no reason why that management team going forward won't be as effective. So we can do this anywhere. It really depends upon the economics of the deal. Again, our preference is to buy operating restaurants that own the land underneath them where we can purchase the two as a package or to purchase restaurants that have, you know, are institutional in nature.

37:29 well-run that have long leases with landlords who we trust. So that's our preference. The reason not to be in New York is we have a very progressive legislature in New York. To a certain extent, I would describe them as socialist and their labor laws are getting to be such that is very, very difficult to operate restaurants in New York profitable. So we would not look at anything in New York unless the mood of the legislature and the response of the legislatures to restaurants' needs change dramatically.

38:23 Okay. Well, thank you very much for that detailed explanation there. And then you'll forgive me, but A couple minutes late to the call, but is there any news on the renewal of the Las Vegas lease? Yes, we've executed two leases. One we've got back from New York, New York, fully executed. The second lease, which we executed, we expect to get back the executed copies from New York, New York by the end of this week, honestly. and we just received the third lease, the draft of the third lease last night. So I haven't even looked at it, but one would expect it would be, it would mirror the term sheets and I don't, and those are the three leases that are up for renewal.

39:13 So I think we're just fine with all three of those leases. Well, congratulations on that. And last question, kind of a off the wall question here, but For your inventory of shellfish like lobsters, crabs, stuff such as that, do you carry any of that as live inventory or is it all frozen? It's all frozen. It's all in the south in Florida. We rent freezer lockers essentially. It's nearby. We also insure the products. So, but it's all frozen.

40:00 Okay, very good. Thank you. And once again, congratulations to you guys and all the workers at ARC on the great results and the resumption of the dividend. That means a lot to our shareholders. Thank you. Thank you very much. Our next question is from Moe Shalit with RMR Capital Partners. Please proceed. Yeah, hi, congratulations on a great quarter. I'm happy to finally be a shareholder here. I had two questions that were sort of go hand in hand. So the first one is with the Vegas lease renewals. Are there any stipulations in terms of, you know, renovations that have to be done? And if you know sort of a ballpark figure of what that would cost? And then the second question is...

40:52 Yeah, on a previous call, you had mentioned something about the sale-leaseback and, you know, you can unlock about $20 or $25 million worth of value. You know, right now with the Fed situation and the rates just, you know, are going up, there's an argument to be made that, you know, the federal funds rate is going to go up another 400,500 basis points. You know, that might influence or impact whatever value you can unlock out of there. That's something you guys are considering to sort of get Your value out of that before a potential recession for future acquisitions? So the answer to the second question is we're not considering it. Our balance sheet is really, really strong at this point, and we expect that to continue to be strong and give us enough capital to do things that will help the company move forward with additional operating profits.

41:54 The first question, we have projected roughly $7 million of improvements that we're going to have to make in Vegas. Some of those improvements would have taken place anyway, but for the last year, you know, in the normal course of business. But in the last year and a half with not being able to be certain that these leases would be extended, we postponed some of those improvements. So to catch up with those delayed improvements and to move forward with what MGM has specified that we would be responsible for, We put all of that in about a $7 million number.

42:50 Not all of it will be spent in the next 12 months. I think it's, you know, figure over a 24-month period. That's the likelihood, you know, that it will be spread out. Got it. Thank you. Okay, good. Thank you. Our next question is from Roger Lipton with Lipton Financial Services. Please proceed. Yeah. Hi, Michael. My concerns have been adequately discussed already, so I'll talk to you soon. So thank you very much. Thank you, Roger. And our next question is from Peter Katz with WIS Direct.

43:40 Please proceed. Hi, Michael. Congratulations again. In light of your comments on the New York environment, I was just curious, are you looking to renew or continue your stay at Bryant Park? And what's going on at the Robert? So Bryant Park lease renewals will come up probably the middle of next year. It's too early to discuss them now. Obviously, we want to retain that. It's a profitable, you know, it's been a good experience there for us. So, yes, we will renew those leases.

44:26 And there's enough room for us even to absorb increased labor costs if New York State chooses to remove the TIP credit for TIP employees. That's a big issue right now. and essentially tip employees in New York are the minimum wage is reduced by five dollars an hour because you know historically the legislature has said hey these people are getting tips you know why then should you have to pay full minimum wage that that Sentiment is changing.

45:16 So if you would eliminate the tip credit from, let's say, Brian Park, that would cost us another $700,000 a year in labor expenses. But at this point, prior to the pandemic, Brian Park could afford to continue and be profitable despite increased labor costs by virtue of elimination of tip credit. There are also other changes in the labor law that are making it extremely difficult. But Bryant Park is big enough and there's enough revenue to absorb all of that. So we would like to continue with that lease.

46:02 Robert has another 20 some odd years on the lease. And so that doesn't come up for a long time. Robert has struggled dramatically, even recently, because it was statistic released last month that only 8% of New York City workers are back full-time. It doesn't mean that these buildings are only 8% occupied. It means that only 8% are coming five days a week. Buildings are now 30%, 40% occupied. We're in the midst of January. They were 9%, 10% occupied.

46:49 That's when they had the spike in the new Omicron virus. Robert is on the ninth floor of the Museum of Art and Design. The people coming into that building were greatly reduced, certainly during the pandemic, even though we were allowed to be open. Social distancing when you have 135 seats reduced the restaurant down to some 64 seats. There were no events. It's been a struggle at Robert. It's only in the last two or three weeks that with, you know, some events being on the books and scheduled and with I would say a reduced concern on the part of the population that would want to be dining at Robert that the business is picked up.

47:54 We probably have a break even there of $85,000 a week. We used to do $160,000 a week. We broke that $85,000 revenue barrier about three weeks ago for the first time. So it's really been difficult. But Robert is a spectacular location, has a very good operating lease. We have a good relationship with the museum. So we'll continue there. El Rio Grande, which is the other restaurant that we operate in New York, is an institution. It's also struggled, but we do have outdoor seats there, and we are starting to see a flow of business that allows us to generally operate in positive operating cash flow.

48:50 And then aspirationally, are there other markets you would like to get into outside the Northeast? You know, Maybe I should be embarrassed at this statement, but we don't look at markets. We look at deals. You know, I don't care where the deal is. If it makes sense and has good management and good cash flow and we could buy it at a multiple of cash flow that falls within our parameters, we'll go after it. Obviously, we've based a lot of our New Acquisitions in Southern Florida.

49:35 That will always probably be our top preference. But get me something in Omaha, Nebraska that I could fly to within four or five hours with good management and good cash flow and as a one-off so that we could apply our acquisition equation to it. We'll go to Omaha, Nebraska. to a certain degree would be becoming known as somebody who could monetize a restaurant ownership for somebody who wants to retire and give them a check where they don't have to worry about notes in the future and they would also have the confidence that their employees are going to be retained.

50:28 that their management is going to be retained. And hopefully we see opportunities to improve the cash flow. The best example, I can tell you of all the six restaurants that we acquired, four in Florida and the two in Gulf Coast, in Alabama, All of those restaurants are throwing off more cash flow now than at the time we purchased them. And some of it has to do with increased menu prices, obviously, and better controls, and maybe pent-up demand from the pandemic, but you don't take You know, a rustic end that was making, you know, doing cash flow of about $1.5 million when we acquired it three years before the pandemic, three or four years, that the year before the pandemic did almost $4 million in cash flow.

51:32 And I will tell you, if we can get stabilization of menu prices, excuse me, of commodity prices there, that number is going to go higher as well. What we were able to do there with great management in place when we bought it. Great management in place. But great management that was being hampered by ownership who was constantly pulling all the cash out that made it tight for the restaurant to operate. They couldn't take advantage of discounts. their purveyors were being paid, you know, not on a timely basis.

52:20 And that's generally, you know, what we see in many of these cases. The owners are living off of the restaurant, so there's a conflict between what's good for the business and what's good for the owners. You know, we go in with the opposite, you know, maintain these things so that it looks new all the time, get consistency, you know, in product and what comes out of the kitchen. We can get more if we can establish that consistency, if we can make the place more amenable to the likes of our customers, and then revenues seem to creep up. So I think that's something we're good at. We're also very good, you know, there aren't many restaurant companies out there operating thousand seat restaurants.

53:16 You know, we now have with the outdoor cafes open in Bryan Park, we now have some 1300 seats operating in Bryan Park. We have 600 and some odd seats operating out of Ruston. We have 1100 seats operating out of Sequoia. God knows, you know, We're doing million-dollar weeks at New York, New York. I don't know how you can count the seats there. But we're good at this stuff. And it's not like operating Robert, which is a 135-seat restaurant, which we're good at also. But we can operate complex facilities.

54:02 and teach, you know, when we buy those facilities or establish those facilities, teach those managements how to be more effective, how to do a better job for their customers and how to reap the benefits from doing a better job, which, you know, is what we want to see. So I don't care where the operation is, honestly. I just, you know, we have these parameters that we're going to stick with. Thank you. We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing comments. I guess what we're seeing here, and we're six weeks into a 13-week quarter, the June quarter, we're seeing extremely strong results from the restaurants.

54:58 So I expect the June quarter to exceed our own Projections and Expectations. And then we'll see from there. Thank you for all getting on this call. Again, if you have any questions that haven't been answered and you think of them after the call, my cell phone number is 646-322-9197. You're welcome to use it. Have a good day and speak to you in another few weeks. Bye. Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.