10-K: BT Brands Reports Increased Revenue but Widened Net Loss for Fiscal Year 2024

Sentiment:

Annual Results 31 March 2025 5:00 PM

BT Brands saw a revenue increase in 2024, driven by acquisitions and same-store sales growth, but also experienced a larger net loss due to impairment charges and increased operating costs.

Capital raiseBT Brands entered into an Equity Distribution Agreement with Maxim Group LLC to sell shares of common stock with maximum aggregate sales proceeds of up to $3,005,000 through an at-the-market offering program.

Worse than expectedThe net loss widened from $887,368 in 2023 to $2,311,208 in 2024, indicating a deterioration in financial performance.Restaurant operating costs increased as a percentage of sales, negatively impacting profitability.The company recorded a significant impairment charge related to the closure of Village Bier Garten, further contributing to the increased loss.

Summary

BT Brands, Inc. reported a revenue increase of 5.3% to $14.82 million for the fiscal year ended December 29, 2024, compared to $14.08 million in 2023.
The revenue growth was primarily driven by the acquisition of Schnitzel Haus, which contributed $710,000 in sales, and a 7% increase in Burger Time locations.
The average sales per Burger Time unit open at year-end increased by 12.8% to approximately $926,000 in 2024 from $821,000 in 2023.
Restaurant operating costs increased to 95.1% of restaurant sales in 2024 from 93.9% in 2023, due to price inflation on input costs, including food and labor.
The company's net loss widened to $2.31 million in 2024 from $0.89 million in 2023, impacted by an impairment charge of $371,872 related to the closure of Village Bier Garten and an increased share of loss from Bagger Daves.
The company closed the Village Bier Garten location in January 2025 and is exploring the sale of all Bagger Daves restaurant locations.
As of December 29, 2024, BT Brands had $4.27 million in cash and marketable securities and a net working capital of $3.56 million.
The company repurchased 91,394 shares under the 2024 Share Repurchase Program at an average price of $1.561 per share.
BT Brands has a material weakness in its internal control over financial reporting related to the accounting and reporting of significant, non-recurring events and complex transactions.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While revenue increased, the widening net loss and identified material weakness in internal controls raise concerns. The closure of a restaurant and exploration of selling another chain further contribute to a cautious outlook.

Positives

Revenue increased by 5.3% to $14.82 million in 2024.
Average sales per Burger Time unit open at year-end increased by 12.8% to $926,000 in 2024.
The company is exploring the sale of all Bagger Daves restaurant locations.
BT Brands has $4.27 million in cash and marketable securities as of December 29, 2024.
The company repurchased 91,394 shares under the 2024 Share Repurchase Program at an average price of $1.561 per share.

Negatives

The net loss widened to $2.31 million in 2024.
Restaurant operating costs increased to 95.1% of restaurant sales in 2024.
The company recorded an impairment charge of $371,872 related to Village Bier Garten.
The company closed the Village Bier Garten location in January 2025.
BT Brands has a material weakness in its internal control over financial reporting.

Risks

The company faces challenges in attracting food service workers and managing rapid inflation in input costs.
The company's financial performance depends on restaurants in Minnesota, North Dakota, South Dakota, Michigan, and Florida, making it susceptible to regional economic developments.
The company's growth strategy requires substantial additional capital, which may not be available.
Rising interest rates could negatively impact the company's performance and acquisition plans.
The company has a material weakness in its internal control over financial reporting, which could adversely affect its business and financial results.

Future Outlook

The company is evaluating its acquisition strategy in the restaurant industry and may consider additional acquisition opportunities in the future. The company is also exploring the sale of all Bagger Daves restaurant locations.

Management Comments

Management is focused on increasing sales in restaurant operations to optimize restaurant performance.
Management intends to develop and implement forward-looking branding strategies for its businesses.
Management is working to remediate the material weakness in internal control over financial reporting.

Industry Context

The restaurant industry is intensely competitive, with many well-established companies competing directly and indirectly. The industry is affected by changes in consumer tastes, dietary trends, local and national economic conditions, demographics, traffic patterns, consumer spending, and population trends. The industry also faces challenges related to attracting food service workers and managing rapid inflation in input items.

Comparison to Industry Standards

The document mentions Noble Romans, Inc., a public company operating pizza-focused food services, in which BT Brands has invested.
Bagger Daves Burger Tavern, Inc. is compared to other casual restaurant and bar concepts specializing in burgers, fries, and craft beers.
The document notes competition from national, regional, locally owned, quick-service, casual, and full-service restaurants.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Adoption of Insider Trading Policy	The company adopted an Insider Trading Policy that sets forth restrictions on trading in our securities and prohibits all of our directors, officers and certain employees, as well as any other person having access or potential access to material information, from entering into any purchases, sales, giving away or otherwise trading the Company's securities while in possession of material nonpublic information about the Company or providing that information to others outside the Company, entering into hedging or monetization transactions or similar arrangements with respect to the Company's securities; short sales; and puts, calls or other derivative securities on the Company's securities, unless advance approval is obtained from the Company's Chief Operating Officer.	March 14, 2024	This policy was adopted to promote compliance with federal securities laws and applicable Nasdaq requirements.
Adoption of Clawback Policy	In March 2024, our Board adopted a Clawback Policy that applies to all of our current and former executive officers. Under the Clawback Policy, if we are required to prepare an accounting restatement, we are required to recover from any current or former executive officers incentive-based compensation that was erroneously awarded during the three years preceding the date such a restatement was required.	March 2024	The Board will determine the method for recouping incentive compensation hereunder which may include, requiring reimbursement of cash incentive compensation previously paid; seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards; cancelling outstanding vested or unvested equity awards; and/or taking any other remedial and recovery action permitted by law, as determined by the Board.

Legal Proceedings

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business.
We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition or cash flows.

Related Party Transactions

Officers of BT Brands, Inc. also serve as officers and directors of NGI Corporation.
Our total investment in equity and loans to NGI Corporation (NGI) is $424,000, which includes $120,000 in demand loans to NGI during 2024, the notes bear interest at 15% with interest payable-in-kind, and the balance on NGI notes is convertible into NGI Series B preferred shares and warrants at any time at the option of the holder, $6,600 in accrued interest has not been recognized as the conversion option is evaluated.
Officers of BT Brands, Inc. also serve as officers and directors of Bagger Daves Burger Tavern, Inc.
BT Brands owns approximately 39.6% of the outstanding shares of Bagger Daves.
In connection with the refinancing of our mortgage debt in June 2021, Gary Copperud personally guaranteed each of the promissory notes evidencing loans on the real properties owned by the Company.

Stakeholder Impact

Shareholders: The widening net loss may negatively impact shareholder value.
Employees: The closure of Village Bier Garten resulted in job losses.
Customers: Changes in menu prices and restaurant locations may affect customer choices.
Suppliers: Changes in vendors may impact supplier relationships.
Creditors: The company's debt obligations and financial performance may affect its creditworthiness.

Next Steps

The company will continue to evaluate acquisition opportunities in the restaurant industry.
The company is exploring the sale of all Bagger Daves restaurant locations.
The company will continue to implement its remediation plan for the identified material weakness in internal control over financial reporting.

Key Dates

Date	Description
January 19, 2016	BT Brands, Inc. was incorporated as Hartmax of NY Inc.
July 31, 2018	BT Brands acquired 100% of BTND, LLC in exchange for common stock.
October 2019	Board of directors and stockholders adopted the 2019 Incentive Stock Plan.
December 18, 2020	BT Brands, Inc. was reincorporated in the State of Wyoming.
November 12, 2021	BT Brands completed its IPO of 2,400,000 units at $5.00 per unit.
March 2, 2022	BT Brands acquired substantially all the assets of Keegans Seafood Grille, Inc.
May 11, 2022	BT Brands acquired the assets of Pie In The Sky Coffee and Bakery.
June 2, 2022	BT Brands purchased 11,095,085 common shares of Bagger Daves Burger Tavern, Inc.
July 7, 2022	BT Brands entered into employment agreements with Gary Copperud and Kenneth Brimmer.
August 4, 2022	BT Brands acquired substantially all of the assets of Von Stephan Village Bier Garten.
February 27, 2023	Board of directors approved a total grant of 250,000 shares of common stock to two officers.
June 6, 2024	BT Brands authorized a stock repurchase program to repurchase up to 625,000 shares.
May 13, 2024	BT Brands acquired substantially all of the assets of Schnitzel Haus.
October 9, 2024	BT Brands completed the sale of the Hot-N-Now trademark.
December 13, 2024	BT Brands entered into an Equity Distribution Agreement with Maxim Group LLC.
January 2, 2025	BT Brands closed the Village Bier Garten location.
January 19, 2025	BT Brands closed the Burger Time location in Ham Lake, Minnesota.
March 1, 2025	Employee count as of this date.
March 15, 2025	Share count as of this date.
March 31, 2025	Date of report.

Keywords

BT Brands, restaurant, revenue, net loss, acquisition, Burger Time, Bagger Daves, financial results, operating costs, impairment charge

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