BT Brands, Inc. (BTBD) - Q1 2025 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the 13-week period ended March 30, 2025. BT Brands, Inc. operates a portfolio of restaurants including seven Burger Time locations, Keegan's Seafood Grille, Pie In The Sky Coffee and Bakery, and Schnitzel Haus. The Company also holds a 40.7% equity interest in Bagger Dave's Burger Tavern, Inc. (Bagger Dave's). During the quarter, the Company closed two locations: Village Bier Garten and a Burger Time unit in Ham Lake, Minnesota.
Key Financial Metrics
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Sales | $3,231,073 | $3,190,147 |
| Net Loss | $(329,849) | $(445,700) |
| Loss Per Share (Basic/Diluted) | $(0.05) | $(0.07) |
| Operating Loss | $(292,196) | $(630,829) |
| Restaurant-Level EBITDA | $315,233 | $(15,672) |
| Cash and Cash Equivalents | $1,070,101 | $4,668,295 |
| Marketable Securities | $2,748,409 | $2,319,555 |
| Total Debt (Current + Long-Term) | $2,230,824 | $2,276,344 |
| Net Cash Used in Operating Activities | $(306,739) | $(408,875) |
Material Changes vs. Prior Period
- Profitability Improvement: Net loss decreased by $115,851 (26%) compared to Q1 2024, driven by a significant reduction in operating loss from $(630,829) to $(292,196).
- Cost Management: Food and paper costs decreased to 37.1% of sales (from 40.1%), and labor costs dropped to 37.7% (from 43.5%) due to menu price increases, menu changes (hand-cut fries), and cost-cutting measures.
- Investment Activity: The Company recorded a realized investment gain of $95,038 and an unrealized loss on marketable securities of $(44,024). In contrast, Q1 2024 showed an unrealized gain of $114,763.
- Equity in Affiliate Loss: The Company's share of Bagger Dave's loss increased to $(134,300) from $(94,500) in the prior year.
- Liquidity: Cash and cash equivalents declined by approximately $881,000 during the quarter, primarily due to operating cash outflows and net investing activities.
Guidance, Outlook, and Risks
Management Commentary: Management notes that Burger Time sales are showing a slight upward trend. The acquisition of Schnitzel Haus contributed approximately $500,000 in sales. The Company is assessing alternatives for the closed Ham Lake location, including a potential sale of the property.
Risks and Contingencies:
- Internal Controls: The Company disclosed a material weakness in internal control over financial reporting, concluding that disclosure controls were not effective as of March 30, 2025.
- Related Party Transactions: A significant transaction occurred with NGI Corporation. Effective April 2, 2025, notes totaling $180,000 were converted into the purchase of approximately 200,000 Disney-character aluminum bottles from NGI's subsidiary. BT Brands holds an option to purchase 10% of NGI's fully-diluted equity.
- Capital Requirements: The Company relies on operating cash flows and existing cash balances to fund working capital and debt service. It operates with negative working capital typical of the restaurant industry.
- Market Risks: Risks include inflation, labor shortages, competition, and the impact of public health matters or tariffs on the economy.
Investor Verification Checklist
- Internal Control Weakness: Verify the remediation plan for the material weakness in internal controls over financial reporting.
- NGI Transaction: Review the terms of the April 2025 conversion of debt to inventory (bottles) and the option to acquire 10% equity in NGI Corporation.
- Asset Disposition: Monitor the status of the Ham Lake property sale and the Richmond, Indiana property held for sale.
- Liquidity Position: Assess the sustainability of cash burn given the negative operating cash flow and reliance on marketable securities.
- Equity Method Investment: Evaluate the financial health of Bagger Dave's, which contributed a significant portion of the consolidated loss.