8-K: Ark Restaurants Q1: EBITDA Up, Net Income Down, Lease Dispute

Ark Restaurants Corp. reported increased adjusted EBITDA but a significant drop in net income for Q1 2026, primarily impacted by an ongoing lease dispute at its Bryant Park locations and renovations.

Summary

• Adjusted EBITDA increased by approximately $150,000 to $1,529,000 for the first quarter ended December 27, 2025, compared to $1,378,000 in the prior year.
• Net income attributable to Ark Restaurants Corp. for the quarter was $896,000, or $0.25 per basic and diluted share, a decrease from $3,164,000, or $0.88 per share, in the prior year comparable quarter.
• Total revenues for the 13 weeks ended December 27, 2025, were $40,749,000, down from $44,988,000 in the prior year.
• Excluding the Tampa Food Court (closed December 19, 2024), company-wide same-store sales decreased by 7.3%.
• The decline in revenue and net income is largely attributed to the ongoing lease dispute at Bryant Park Grill & Cafe and The Porch at Bryant Park, and lower revenues at the America property in Las Vegas due to partial closure for renovations.
• Cash and cash equivalents stood at $9,139,000, with total outstanding debt of $2,987,000 as of December 27, 2025.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a challenging quarter. While adjusted EBITDA saw a modest increase and some portfolio segments performed well, the significant drop in net income and revenue, coupled with the material adverse effect of the ongoing Bryant Park lease dispute, indicates substantial operational and legal headwinds.

Positives

• Adjusted EBITDA increased by $150,000 to $1,529,000 compared to the prior year's comparable quarter.
• Operations at the New York-New York Hotel and Casino in Las Vegas continued to show increased cash flow despite lower customer traffic on the Las Vegas Strip.
• The Rustic Inn property in Florida and Robert in NYC continue to perform better than last year.
• The rest of the portfolio restaurants continue to meet expectations.
• The balance sheet remains strong, with $9,139,000 in cash and cash equivalents and $2,987,000 in total outstanding debt.

Negatives

• Net income attributable to Ark Restaurants Corp. significantly decreased to $896,000 ($0.25 per share) from $3,164,000 ($0.88 per share) in the prior year comparable quarter.
• Total revenues decreased to $40,749,000 from $44,988,000 in the prior year.
• Company-wide same-store sales, excluding the closed Tampa Food Court, decreased by 7.3%.
• Business at Bryant Park Grill & Cafe and The Porch at Bryant Park continued to suffer due to uncertainty regarding lease renewals and related negative publicity, contributing to revenue decreases.
• The D.C. market has been a difficult environment for the company and most restaurants.
• Lower revenues at the America property in Las Vegas resulted from partial closure for renovations.

Risks

• The ongoing legal dispute regarding the Bryant Park Grill & Cafe and The Porch at Bryant Park leases creates significant uncertainty, which has had and is expected to continue to have a material adverse effect on business, financial condition, and results of operations.
• If the company is ultimately unable to retain the Bryant Park locations on favorable terms, or at all, it would significantly impact revenues, as these locations accounted for 19.5% of total revenue in Q1 2026.
• There is no assurance that the New Jersey constitutional amendment for casino gambling at Meadowlands Racetrack will be included in the November 2026 election ballot or that it will pass if included.
• If the casino gambling referendum does not pass, the company's investment in New Meadowlands Racetrack LLC (NMR) may be subject to substantial impairment.
• The company's interest in NMR could be diluted if it does not contribute to the marketing campaign for the referendum or if NMR raises outside capital.
• Forward-looking statements involve unknown risks and uncertainties that may cause actual results to differ materially from those anticipated.

Future Outlook

Management is unable to predict the outcome of the ongoing litigation regarding the Bryant Park leases, which is expected to continue to have a material adverse effect. There is a possibility of a New Jersey voter referendum in November 2026 to allow casino gambling at Meadowlands Racetrack, potentially leading to a temporary facility by 2027 and a permanent one by 2028, though there are no assurances of its passage or inclusion on the ballot.

Management Comments

• "The current quarter Earnings before Interest, Taxes, Depreciation and Amortization ('EBITDA'), as adjusted, of $1,529,000, increased approximately $150,000 as compared to EBITDA, as adjusted, of $1,378,000 in the prior year comparable quarter and Net income attributable to Ark Restaurants Corp. for the current quarter was $896,000 or $0.25 per basic and diluted share compared to net income of $3,164,000 or $0.88 per basic and diluted share, in the prior year comparable quarter." Michael Weinstein, Chairman and Chief Executive Officer.
• "As stated in prior quarters, our business, both catered events and a la carte, at the Bryant Park Grill & Caf continued to suffer due in large part to the uncertainty of our lease situation which has created confusion in the marketplace as many visitors and residents were led to believe that the restaurant was closed." Michael Weinstein.
• "The D.C. market has been a difficult environment for us and most restaurants, but we remain committed to this location." Michael Weinstein.
• "The rest of our portfolio performed well. Significantly, our operations at the New York-New York Hotel and Casino in Las Vegas continued to show increased cash flow despite lower customer traffic on the Las Vegas Strip. Our Rustic Inn property in Florida and Robert in NYC continue to perform better than last year and the rest of our portfolio restaurants continue to meet expectations." Michael Weinstein.
• "Further, our balance sheet remains strong, supporting future growth." Michael Weinstein.

Industry Context

StockSavvy.ai notes that the restaurant industry, particularly in urban centers like D.C., continues to face headwinds, as evidenced by Ark Restaurants' challenges in that market. The company's ability to generate increased cash flow in its Las Vegas operations, despite lower Strip traffic, suggests effective management in a competitive entertainment hub. The ongoing legal dispute over prime New York City locations highlights the significant impact of real estate and lease terms on restaurant profitability and market perception, a common challenge for established urban dining establishments.

Legal Proceedings

• The company has initiated legal proceedings in New York State Supreme Court challenging the lease award process for the Bryant Park Grill & Cafe and The Porch at Bryant Park, asserting contractual rights including a right of first lease for the Bryant Park Cafe.
• The litigation is ongoing, with discovery continuing and motions pending, including a motion for summary judgment filed by the landlord.
• The court has required the company to make use and occupancy payments during the pendency of the case.

Stakeholder Impact

• Shareholders: Significant decrease in net income and EPS, along with ongoing legal uncertainty and potential dilution of NMR investment, could negatively impact shareholder value.
• Employees: Continued operation of Bryant Park locations provides employment stability for now, but an unfavorable outcome in the lease dispute could lead to job losses at those specific locations.
• Customers: Confusion in the marketplace regarding the Bryant Park locations' status has already impacted customer traffic and revenue. Renovations at the America property in Las Vegas also temporarily affected customer experience.
• Creditors: A strong balance sheet with significant cash and low debt suggests the company is in a stable position to meet its obligations despite operational challenges.

Next Steps

• Continue legal proceedings in New York State Supreme Court regarding the Bryant Park leases, with discovery continuing and motions pending.
• Operate Bryant Park Grill & Cafe and The Porch at Bryant Park unless ordered to vacate or awarded lease extensions.
• Host a conference call on February 10, 2026, to review results and discuss other topics.
• New Meadowlands Racetrack LLC (NMR) will continue pursuing a full casino license, which requires a potential constitutional amendment vote in New Jersey, possibly in November 2026.
• NMR will need to raise substantial capital for a marketing campaign to support the referendum.

Key Dates

Recommendation

While Ark Restaurants reported a significant decline in net income and revenue, the increase in adjusted EBITDA and a strong balance sheet provide some stability. The ongoing, material legal dispute over the Bryant Park leases and the speculative nature of the New Meadowlands Racetrack casino license present substantial uncertainties and risks. Given these mixed signals and significant unresolved issues, a 'hold' recommendation is appropriate as investors await clarity on these critical strategic and legal matters before making a definitive move.

Keywords

Ark Restaurants, ARKR, Restaurant Earnings, Q1 2026, Financial Results, EBITDA, Net Income, Same Store Sales, Bryant Park Lease Dispute, New Meadowlands Racetrack, Casino Gambling, Restaurant Industry, Las Vegas Operations, Florida Restaurants, Corporate Governance, SEC Filing