COMMITMENTS AND CONTINGENCIES

6 Months Ended

Apr. 01, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

(7) COMMITMENTS AND CONTINGENCIES:

Construction Contracts

(a) 2505 N. University Drive, Hollywood, Florida (Store #19 – “Flanigan’s”)

During the third quarter of our fiscal year 2019, we entered into an agreement with an unaffiliated third party architect for design and development services totaling $77,000 for the re-build of our restaurant located at 2505 N. University Drive, Hollywood, Florida (Store #19), which has been closed since October 2, 2018 due to damages caused by a fire, of which $62,000 has been paid. During the first quarter of our fiscal year 2022, we entered into an agreement with a third party unaffiliated general contractor to re-build our restaurant at this location totaling $2,515,000, of which $302,000 has been paid through April 1, 2023 and $314,000 has been paid subsequent to the end of the second quarter of our fiscal year 2023 through the date of filing this quarterly report.

(b) 14301 W. Sunrise Boulevard, Sunrise, Florida (Store #85 – “Flanigan’s”)

During the second quarter of our fiscal year 2022, we entered into an agreement with a third party unaffiliated general contractor for exterior renovations at this location totaling $ 343,000 and through the end of the second quarter of our fiscal year 2023 we agreed to change orders to the agreement increasing the total contract price by $327,000 to $670,000, of which $417,000 has been paid through April 1, 2023 and an additional $114,000 has been paid subsequent to the end of the second quarter of our fiscal year 2023 through the date of filing of this quarterly report.

(c) 11225 Miramar Parkway, #250, Miramar, Florida (“Flanigan’s”)

During the second quarter of our fiscal year 2022, we entered into an agreement with a third party unaffiliated general contractor for interior renovations at this location totaling $1,421,000, and through the second quarter of our fiscal year 2023 we agreed to change orders to the agreement increasing the total contract price by $426,000 to $1,847,000 of which $1,663,000 has been paid through April 1, 2023 and $13,000, has been paid subsequent to the end of the second quarter of our fiscal year 2023 through the date of filing of this quarterly report.

Leases

To conduct certain of our operations, we lease restaurant and package liquor store space in South Florida from unrelated third parties. Our leases have remaining lease terms of up to 50 years, some of which include options to renew and extend the lease terms for up to an additional 30 years. We presently intend to renew some of the extension options available to us and for purposes of computing the right-of-use assets and lease liabilities required by ASC 842, we have incorporated into all lease terms which may be extended, an additional term of the lesser of (i) the amount of years the lease may be extended; or (ii) 15 years.

Following adoption of ASC 842 during the year ended October 3, 2020, common area maintenance and property taxes are not considered to be lease components.

The components of lease expense are as follows:

	13 Weeks		13 Weeks
	Ended April 1, 2023		Ended April 2, 2022
Operating Lease Expense, which is included in occupancy costs	$	956,000	$	916,000

	26 Weeks		26 Weeks
	Ended April 1, 2023		Ended April 2, 2022
Operating Lease Expense, which is included in occupancy costs	$	1,913,000	$	1,834,000

Supplemental balance sheet information related to leases as follows:

Classification on the Condensed Consolidated Balance Sheet	April 1, 2023		October 1, 2022
Assets
Operating lease assets	$	28,290,000	$	29,517,000
Liabilities
Operating current liabilities	$	2,323,000	$	2,253,000
Operating lease non-current liabilities	$	27,106,000	$	28,281,000
Weighted Average Remaining Lease Term:
Operating leases		10.34 Years		10.82 Years
Weighted Average Discount:
Operating leases		4.75%		4.66%

The following table outlines the minimum future lease payments for the next five years and thereafter:

For fiscal year 2023	Operating
2023 (six (6) months)	$	1,765,000
2024		3,622,000
2025		3,616,000
2026		3,450,000
2027		3,353,000
Thereafter		25,194,000
Total lease payments
(Undiscounted cash flows)		41,000,000
Less imputed interest		(11,571,000	)
Total	$	29,429,000

Litigation

Our sale of alcoholic beverages subjects us to “dram shop” statutes, which allow an injured person to recover damages from an establishment that served alcoholic beverages to an intoxicated person. If we receive a judgment substantially in excess of our insurance coverage or if we fail to maintain our insurance coverage, our business, financial condition, operating results or cash flows could be materially and adversely affected. We currently have no “dram shop” claims.

From time to time, we are a party to various other claims, legal actions and complaints arising in the ordinary course of our business, including claims resulting from “slip and fall” accidents, claims under federal and state laws governing access to public accommodations, employment-related claims and claims from guests alleging illness, injury or other food quality, health or operational concerns. It is our opinion, after consulting with legal counsel, that all such matters are without merit or involve such amounts that an unfavorable disposition, some of which is covered by insurance, would not have a material adverse effect on our financial position or results of operations.