8-K: Ark Restaurants Q4 & FY25 Losses Hit by Litigation

Ark Restaurants Corp. reported significant net losses for the fourth quarter and fiscal year 2025, primarily impacted by ongoing litigation expenses and operational challenges in key markets.

Summary

• Net loss attributable to Ark Restaurants Corp. for the fourth quarter ended September 27, 2025, was $(1,919,000) or $(0.53) per basic and diluted share, compared to a net loss of $(4,457,000) or $(1.24) per share in the prior year comparable quarter.
• Net loss attributable to Ark Restaurants Corp. for the fiscal year ended September 27, 2025, was $(11,466,000) or $(3.18) per basic and diluted share, compared to a net loss of $(3,896,000) or $(1.08) per share for the prior fiscal year.
• Adjusted EBITDA for the fourth quarter 2025 was $(1,071,000), down from $503,000 in the prior year comparable quarter.
• Adjusted EBITDA for the fiscal year 2025 was $1,407,000, down from $6,128,000 in the prior fiscal year.
• Total revenues for the fourth quarter 2025 were $37,323,000, a decrease from $43,406,000 in the prior year comparable quarter.
• Total revenues for the fiscal year 2025 were $165,751,000, a decrease from $183,545,000 in the prior fiscal year.
• Company-wide same-store sales (excluding closed locations) decreased 10.1% for the 13 weeks and 4.2% for the 52 weeks ended September 27, 2025, compared to the same periods last year.
• Litigation expenses related to Bryant Park operations exceeded $400,000 in the fourth quarter 2025.
• The fiscal year 2025 net loss includes a full valuation allowance related to deferred tax assets in the amount of $4,799,000.
• The Company recognized additional impairment charges of $2,940,000 (Right-of-Use assets) and $1,760,000 (long-lived assets) for its Sequoia property in Washington, D.C. during fiscal year 2025.
• A non-cash goodwill impairment charge of $3,440,000 was recognized in fiscal year 2025.
• The Company received a termination payment of $5,500,000 for the Tampa Food Court lease, resulting in a net gain of $5,235,000 during fiscal year 2025.
• Cash and cash equivalents stood at $11,324,000, and total outstanding debt was $3,609,000 as of September 27, 2025.

Sentiment

Score: 3

Explanation: While Q4 net loss showed some improvement, the full fiscal year results are significantly worse, driven by substantial impairment charges, ongoing litigation costs, and declining revenues. The positive performance of some individual restaurants and a strong balance sheet are overshadowed by major operational challenges and uncertainties, particularly with the Bryant Park leases and the D.C. market.

Positives

• Net loss for the fourth quarter 2025 improved to $(1,919,000) from $(4,457,000) in the prior year 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, and other portfolio restaurants are meeting expectations.
• The balance sheet remains strong, with $11,324,000 in cash and cash equivalents and $3,609,000 in total outstanding debt as of September 27, 2025, supporting future growth.
• A gain of $5,235,000 was recognized from the termination of the Tampa Food Court lease.
• A gain of $173,000 was recognized from refinements of estimates related to the closure of El Rio Grande.

Negatives

• The fiscal year 2025 net loss significantly worsened to $(11,466,000) from $(3,896,000) in fiscal year 2024, partly due to a $4,799,000 deferred tax asset valuation allowance.
• Adjusted EBITDA for the fourth quarter 2025 was negative $(1,071,000), a decline from positive $503,000 in the prior year, largely due to over $400,000 in litigation expenses.
• Total revenues decreased for both the fourth quarter and the full fiscal year 2025 compared to the prior year.
• Company-wide same-store sales (excluding closed locations) decreased 10.1% for the fourth quarter and 4.2% for the full fiscal year 2025.
• The event business at Bryant Park Grill has suffered due to the uncertainty and negative publicity surrounding ongoing litigation, impacting revenue and cash flow.
• The D.C. market has been a difficult environment, leading to additional impairment charges of $4,700,000 for the Sequoia property in fiscal year 2025.
• A non-cash goodwill impairment charge of $3,440,000 was recognized in fiscal year 2025 due to a decline in stock price and uncertainty regarding Bryant Park leases.

Risks

• The outcome and timing of the ongoing litigation involving Bryant Park operations cannot be predicted with certainty, and the dispute has already materially adversely impacted business, financial condition, and results of operations.
• There is a risk of being unable to prevail in the Bryant Park lease actions or to extend or renew these leases on favorable terms, if at all, which would significantly impact revenue (Bryant Park locations accounted for 15.4% of total revenue in FY 2025).
• There are no assurances that the New Jersey casino referendum will be included in the November 2026 election ballot or that it will pass if it is included, potentially leading to substantial impairment of the $5,256,000 investment in New Meadowlands Racetrack LLC.
• The Company's interests in New Meadowlands Racetrack LLC will be diluted if it does not contribute to the substantial capital needed for a marketing campaign to support the New Jersey casino referendum or if NMR raises outside capital.
• Adverse impacts from the current political climate and economic conditions, including inflation, could affect operating results, cash flows, financial condition, ability to comply with debt agreements, obtain financing, and projected cash flows for impairment assessment.
• Difficulty in finding suitable sites and negotiating acceptable leases for new restaurants poses a risk to future growth.
• Vulnerability to changes in consumer preferences and broader economic conditions could negatively affect performance.

Future Outlook

The Company intends to continue operating the Bryant Park Grill & Cafe and The Porch at Bryant Park until it is either awarded lease extensions or ordered to vacate the premises, pursuing all available options to protect its interests. New Meadowlands Racetrack LLC is actively pursuing a full casino license in New Jersey, with a potential ballot referendum in November 2026, aiming for a temporary facility opening in 2027 and a permanent one by 2028 if the referendum passes. The New York State Gaming Commission is expected to issue casino licenses for three approved applications by December 31, 2025.

Management Comments

• "The current quarter showed negative Earnings before Interest, Taxes, Depreciation and Amortization ('EBITDA'), as adjusted, of $1,071,000, down from positive EBITDA, as adjusted, of $503,000 in the prior year comparable quarter, due in large part to the expense of our ongoing litigation involving our Bryant Park operations which exceeded $400,000 in the quarter."
• "Net loss attributable to Ark Restaurants Corp. for the current quarter was $(1,919,000) or $(0.53) per basic and diluted share compared to a net loss of $(4,457,000) or $(1.24) per basic and diluted share, in the prior year comparable quarter."
• "Also, because the outcome and timing of the litigation cannot be predicted with certainty, our event business at the Bryant Park Grill has suffered which has impacted our revenue and cash flow."
• "In addition, the D.C. market has been a difficult environment for us and most restaurants, but we remain committed to this location."
• "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."
• "Further, our Balance Sheet remains strong, supporting future growth."

Industry Context

The D.C. market is identified as a challenging environment for the restaurant industry generally, impacting the Company's Sequoia property. Despite lower customer traffic on the Las Vegas Strip, the Company's operations at the New York-New York Hotel and Casino demonstrated increased cash flow, indicating resilience in a competitive market. The pursuit of casino licenses in New York and New Jersey reflects a broader trend of expanding gaming and entertainment opportunities, which could impact the hospitality sector.

Legal Proceedings

• Ongoing litigation involving Bryant Park operations, which incurred over $400,000 in expenses in the fourth quarter 2025.
• A lawsuit filed by the Company to protect its rights regarding the Bryant Park Grill & Cafe and The Porch at Bryant Park leases, which expired on April 30, 2025, and March 31, 2025, respectively.
• Management, after consultation with legal counsel, is unable to predict the outcome of this matter at this time.

Stakeholder Impact

• Shareholders: Significant net losses, declining revenues, and substantial impairment charges could negatively impact share value. Uncertainty surrounding key leases and casino investments adds considerable risk. Potential dilution of investment in New Meadowlands Racetrack LLC if the company does not contribute to capital raising.
• Employees: Continued operation of Bryant Park locations provides temporary job stability, but potential closure due to lease disputes could lead to job losses. Operational challenges in the D.C. market may also affect employment.
• Customers: Uncertainty at Bryant Park locations may affect customer experience and event bookings. Closures of El Rio Grande and Tampa Food Court reduce dining options.
• Creditors: A strong balance sheet with $11.3 million in cash and $3.6 million in debt suggests current ability to meet obligations, but ongoing losses, litigation risks, and potential future capital needs could impact future creditworthiness.

Next Steps

• Continue operating Bryant Park Grill & Cafe and The Porch at Bryant Park until awarded lease extensions or ordered to vacate.
• Pursue all available legal options to protect the Company's interests regarding the Bryant Park leases.
• Host a conference call on December 16, 2025, at 11:00 a.m. Eastern Time to review results and discuss other topics.
• Monitor the New York State Gaming Commission's expected issuance of casino licenses by December 31, 2025.
• New Meadowlands Racetrack LLC will continue actively pursuing a full casino license in New Jersey.
• Monitor the progress of the New Jersey Senate Concurrent Resolution for a ballot referendum, aiming for the November 2026 ballot.
• If the New Jersey referendum passes, New Meadowlands Racetrack LLC aims for a temporary casino facility opening in 2027 and a permanent one by 2028.
• New Meadowlands Racetrack LLC will need to raise substantial capital for a marketing campaign to support the New Jersey referendum.

Key Dates

Recommendation

The company faces significant headwinds, including substantial net losses for the fiscal year, declining revenues, and negative adjusted EBITDA in the latest quarter. The ongoing, costly litigation and uncertainty surrounding the Bryant Park leases, which represent a material portion of total revenue, pose a critical threat to future operations. Furthermore, the D.C. market continues to underperform, leading to further impairment charges, and the investment in New Meadowlands Racetrack carries considerable risk and potential for dilution. While the balance sheet shows some strength, the overall financial performance and unresolved operational challenges suggest a negative outlook, warranting a sell recommendation for investors.

Keywords

Restaurant, Hospitality, Financial Results, Earnings, SEC Filing, 8-K, Q4 2025, FY 2025, Net Loss, EBITDA, Revenue, Same-Store Sales, Litigation, Bryant Park, Lease Expiration, Impairment, Goodwill, New Meadowlands Racetrack, Casino Licenses, Washington D.C., Las Vegas, New York City, Florida