ARK Restaurants Corp. (ARKR) - 10-Q Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 28, 2026 (Fiscal Q2 2026) and the 26 weeks ended March 28, 2026. Ark Restaurants Corp. operates 16 restaurants and bars, 12 fast food concepts, and catering operations exclusively in the United States. The company is classified as a non-accelerated filer and a smaller reporting company. As of May 8, 2026, there were 3,606,157 shares of common stock outstanding.
Key Financial Metrics
| Metric | 13 Weeks Ended Mar 28, 2026 | 26 Weeks Ended Mar 28, 2026 |
|---|---|---|
| Total Revenues | $36.6 million | $77.3 million |
| Operating Income (Loss) | ($1.7 million) | ($0.6 million) |
| Net Loss (Consolidated) | ($1.7 million) | ($0.6 million) |
| Net Loss Attributable to ARKR | ($1.8 million) | ($0.9 million) |
| Diluted EPS | ($0.50) | ($0.25) |
| Cash and Cash Equivalents | $11.5 million | $11.5 million |
| Total Debt | $7.6 million | $7.6 million |
| Working Capital | ($2.5 million deficit) | ($2.5 million deficit) |
Margins: Food and beverage cost of sales was 28.4% of revenue for the quarter and 27.2% for the year-to-date period. Payroll expenses were 37.3% and 36.0% respectively.
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 7.9% for the quarter and 8.7% year-to-date compared to the prior year. Same-store sales declined 7.6% for the quarter and 7.5% year-to-date.
- Regional Performance: New York same-store sales dropped 12.3% (quarter) and 14.1% (YTD) due to the Bryant Park lease dispute and weather. Washington, D.C. sales fell 18.7% (quarter) and 4.6% (YTD). Las Vegas sales decreased 6.6% (quarter) due to renovations at the America property.
- Operating Loss Improvement: The operating loss for the quarter narrowed 64.1% compared to the prior year, which included a $3.4 million goodwill impairment charge. Excluding non-recurring items, the adjusted operating loss decreased 17.2%.
- Expense Reductions: General and administrative expenses decreased 28.7% for the quarter, driven by lower commissions and litigation-related consulting fees. Food costs decreased 9.5% due to menu engineering.
- One-Time Charges: The company recorded a $566,000 non-recurring charge to write off prepaid rent related to the Bryant Park locations, included in occupancy expenses.
Guidance, Outlook, and Risks
Management Commentary: Management expects capital expenditures for fiscal 2026 to be approximately $4.0 million, primarily for leasehold improvements and Las Vegas renovations. The company believes existing cash and credit facility availability are sufficient to meet obligations for the next 12 months.
Key Risks and Contingencies:
- Bryant Park Litigation: Leases for Bryant Park Grill, Bryant Park Café, and The Porch expired in March/April 2025. The landlord selected a new operator, but the company is litigating to enforce its right of first lease. These locations represented 13.3% of revenue for the 26 weeks ended March 28, 2026. The outcome remains uncertain and could materially impact operations.
- New Meadowlands Racetrack (NMR) Investment: The company holds a $6.7 million investment in NMR. A constitutional amendment for casino gaming at the Meadowlands is pending a voter referendum in November 2026. Failure to approve gaming could lead to material impairment of this investment.
- Debt Covenants: The company has a $20 million credit facility with Bank Hapoalim B.M., extended to June 2028. It currently has $12.4 million in available borrowing capacity and is in compliance with all financial covenants.
Investor Verification Checklist
- Bryant Park Lease Status: Verify the current status of the New York State Supreme Court litigation and the likelihood of lease renewal for the Bryant Park properties, which are critical to revenue.
- NMR Investment Valuation: Monitor the progress of the New Jersey constitutional amendment for casino gaming at the Meadowlands Racetrack, as failure could trigger a significant impairment charge.
- Seasonality Impact: Assess the impact of the "poorest performing quarter" (Q2) on full-year guidance, noting that the company relies heavily on warmer weather for outdoor dining revenue.
- Debt Capacity: Confirm continued compliance with the tangible net worth covenant ($25 million) and fixed charge coverage ratio under the amended credit agreement.
- Prepaid Rent Recovery: Determine if the $566,000 prepaid rent write-off is recoverable should the company prevail in the Bryant Park litigation.