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Shares of Ark Restaurants Corp. ARKR have gained 1.1% since the company reported its earnings for the quarter ended Dec. 28, 2024. This compares to the S&P 500 Index’s 0.4% gain over the same time frame. Over the past month, the stock lost 10.9% versus the S&P 500’s 3.4% rise.
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Financial Performance
Ark Restaurants reported total revenues of $44.9 million for the first quarter of fiscal 2025, a decline of 5.3% from $47.5 million in the year-ago period. Same-store sales, excluding revenue from the now-closed El Rio Grande and Tampa Food Court locations, declined 2.3% year over year. Net income attributable to Ark Restaurants was $3.2 million, or $0.88 per share, compared with $1.4 million, or $0.38 per share, in the prior-year quarter.
Despite the year-over-year decline in revenues, the company’s operating income increased to $5.7 million from $1.6 million in the prior-year quarter. However, this figure includes a $5.2 million gain from the termination of the Tampa Food Court lease, offset by a $146,000 loss on the closure of El Rio Grande. Excluding these items, adjusted EBITDA fell 46.4% to $1.4 million from $2.6 million a year ago.
Ark Restaurants Corp. Price, Consensus and EPS Surprise
Ark Restaurants Corp. price-consensus-eps-surprise-chart | Ark Restaurants Corp. Quote
Other Key Business Metrics
Food and beverage costs increased 0.3% to $12.11 million from $12.07 million in the prior-year quarter, making up 26.9% of total revenues compared with 25.4% in the previous year. Payroll expenses declined 3.4% to $16.4 million but increased as a percentage of total revenue due to wage inflation.
Occupancy expenses of $6.1 million and general administrative costs of $3.1 million also declined 2.9% and 5.2% year over year, respectively, reflecting cost-saving measures. However, inflationary pressures continued to impact the company’s margins. Depreciation and amortization expenses decreased 28.8% year over year to $0.8 million due to certain assets becoming fully depreciated.
Management Commentary
CEO Michael Weinstein noted that cost pressures, particularly in wages and insurance premiums, remain a challenge. The company has resisted raising menu prices to maintain its value proposition for customers. Weinstein also highlighted efforts to improve operational efficiency, including consolidating functions and reducing payroll expenses where feasible.
Regarding demand trends, Weinstein cited strong sales in Alabama and steady performance in Las Vegas, while Washington, D.C., continues to struggle with weak traffic, particularly during lunch and after-work hours. The company has brought in experienced management to improve performance at its Sequoia location in D.C., but demand remains a challenge.