10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 3, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 1-09453

ARK RESTAURANTS CORP.

(Exact name of registrant as specified in its charter)

New York	13-3156768
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

85 Fifth Avenue,	New York,	NY	10003
(Address of Principal Executive Offices)			(Zip Code)

Registrant’s telephone number, including area code:   (212) 206-8800  

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	ARKR	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller Reporting Company	☒
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Yes ☐    No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐    No ý

As of August 12, 2021, there were 3,551,556 shares of the registrant's common stock outstanding.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

On one or more occasions, we may make statements in this Quarterly Report on Form 10-Q regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events. All statements, other than statements of historical facts, included or incorporated by reference herein relating to management’s current expectations of future financial performance, continued growth and changes in economic conditions or capital markets are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “hopes,” “will continue” or similar expressions identify forward-looking statements. Forward-looking statements involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed. We caution that while we make such statements in good faith and we believe such statements are based on reasonable assumptions, including without limitation, management’s examination of historical operating trends, data contained in records and other data available from third parties, we cannot assure you that our projections will be achieved. Factors that may cause such differences include: economic conditions generally and in each of the markets in which we are located, the amount of sales contributed by new and existing restaurants, labor costs for our personnel, fluctuations in the cost of food products, adverse weather conditions, changes in consumer preferences and the level of competition from existing or new competitors.

While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of unknown factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this report in the context of the factors that could cause outcomes to differ materially from our expectations. These factors include, but are not limited to:

•the impacts of the novel coronavirus (COVID-19) pandemic on our company, our employees, our customers, our partners, our industry and the economy as a whole;

•the adverse impact of economic conditions on our (i) operating results and financial condition, (ii) ability to comply with the terms and covenants of our debt agreements, and (iii) ability to pay or refinance our existing debt or to obtain additional financing;

•the adverse impact of civil unrest on our (i) operating results and financial condition, (ii) ability to comply with the terms and covenants of our debt agreements, and (iii) ability to pay or refinance our existing debt or to obtain additional financing;

•our ability to open new restaurants in new and existing markets, including difficulty in finding sites and in negotiating acceptable leases;

•vulnerability to changes in consumer preferences and economic conditions;

•vulnerability to conditions in the cities in which we operate;

•vulnerability to natural disasters given the geographic concentration and real estate intensive nature of our business;

•changes to food and supply costs, especially for seafood, shellfish, chicken and beef;

•negative publicity, whether or not valid, and our ability to respond to and effectively manage the accelerated impact of social media;

•concerns about food safety and quality and about food-borne illnesses;

•our ability to service our level of indebtedness;

•the impact of any security breaches of confidential customer information in connection with our electronic process of credit and debit card transactions; and

•the impact of any failure of our information technology system or any breach of our network security.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the ways that we expect. The

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forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

From time to time, oral or written forward-looking statements are also included in our reports on Forms 10-K, 10-Q, and 8-K, our Schedule 14A, our press releases and other materials released to the public. Although we believe that at the time made, the expectations reflected in all of these forward-looking statements are and will be reasonable, any or all of the forward-looking statements may prove to be incorrect. This may occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this Quarterly Report on Form 10-Q, certain of which are beyond our control, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this Quarterly Report on Form 10-Q or other public communications that we might make as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent periodic reports filed with the Securities and Exchange Commission on Forms 10-Q, 10-K, 8-K and Schedule 14A.

Unless the context requires otherwise, references to “we,” “us,” “our,” “ARKR” and the “Company” refer specifically to Ark Restaurants Corp., and its subsidiaries, partnerships, variable interest entities and predecessor entities.

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Part I. Financial Information

Item 1. Consolidated Condensed Financial Statements

ARK RESTAURANTS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(In Thousands, Except Per Share Amounts)

	July 3, 2021		October 3, 2020
	(unaudited)		(Note 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (includes $676 at July 3, 2021 and $567 at October 3, 2020 related to VIEs)	$	18,280	$	16,886
Accounts receivable (includes $218 at July 3, 2021 and $162 at October 3, 2020 related to VIEs)	3,997		1,738
Employee receivables	373		385
Inventories (includes $29 at July 3, 2021 and $27 at October 3, 2020 related to VIEs)	2,172		2,553
Prepaid and refundable income taxes (includes $278 at July 3, 2021 and $274 at October 3, 2020 related to VIEs)	3,716		2,870
Prepaid expenses and other current assets (includes $47 at July 3, 2021 and $13 at October 3, 2020 related to VIEs)	2,895		2,469
Total current assets	31,433		26,901
FIXED ASSETS - Net (includes $219 at July 3, 2021 and $241 at October 3, 2020 related to VIEs)	36,338		37,682
OPERATING LEASE RIGHT-OF-USE ASSETS - Net (includes $2,406 at July 3, 2021 and $2,658 at October 3, 2020 related to VIEs)	57,633		54,191
INTANGIBLE ASSETS - Net	378		49
GOODWILL	17,440		15,570
TRADEMARKS	4,220		3,720
DEFERRED INCOME TAXES	5,215		5,897
INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK	6,915		6,874
OTHER ASSETS (includes $82 at July 3, 2021 and October 3, 2020 related to VIEs)	2,549		2,432
TOTAL ASSETS	$	162,121	$	153,316
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable - trade (includes $134 at July 3, 2021 and $119 at October 3, 2020     related to VIEs)	$	4,533	$	2,329
Accrued expenses and other current liabilities (includes $565 at July 3, 2021 and $331 at October 3, 2020 related to VIEs)	15,111		12,688
Current portion of operating lease liabilities (includes $243 at July 3, 2021 and $226 at     October 3, 2020 related to VIEs)	6,546		6,117
Current portion of notes payable (includes $77 at July 3, 2021 related to VIEs)	7,377		9,001
Total current liabilities	33,567		30,135
OPERATING LEASE LIABILITIES, LESS CURRENT PORTION (includes $2,257 at July 3, 2021 and $2,442 at October 3, 2020 related to VIEs)	54,626		49,960
NOTES PAYABLE, LESS CURRENT PORTION, net of deferred financing costs (includes $290 at July 3, 2021 and $723 at October 3, 2020 related to VIEs)	29,455		36,068
TOTAL LIABILITIES	117,648		116,163
COMMITMENTS AND CONTINGENCIES
EQUITY:
Common stock, par value $0.01 per share - authorized, 10,000 shares; issued and outstanding,     3,552 shares at July 3, 2021 and 3,502 shares at October 3, 2020	36		35
Additional paid-in capital	14,419		13,503
Retained earnings	29,056		22,989
Total Ark Restaurants Corp. shareholders’ equity	43,511		36,527
NON-CONTROLLING INTERESTS	962		626
TOTAL EQUITY	44,473		37,153
TOTAL LIABILITIES AND EQUITY	$	162,121	$	153,316

See notes to consolidated condensed financial statements.

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ARK RESTAURANTS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

(In Thousands, Except Per Share Amounts)

	13 Weeks Ended				39 Weeks Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
REVENUES:
Food and beverage sales	$	42,137	$	6,907	$	87,207	$	82,850
Other revenue	828		292		1,824		1,866
Total revenues	42,965		7,199		89,031		84,716
COSTS AND EXPENSES:
Food and beverage cost of sales	12,676		1,847		26,382		22,366
Payroll expenses	12,304		3,701		29,345		31,925
Occupancy expenses	4,251		3,004		11,248		12,274
Other operating costs and expenses	4,737		852		11,077		11,834
General and administrative expenses	2,802		2,437		7,625		7,888
Loss on termination of lease	—		—		—		364
Depreciation and amortization	1,082		981		3,045		3,188
Total costs and expenses	37,852		12,822		88,722		89,839
OPERATING INCOME (LOSS)	5,113		(5,623)		309		(5,123)
OTHER (INCOME) EXPENSE:
Interest expense	309		283		940		1,045
Interest income	(14)		(29)		(41)		(103)
Gain on forgiveness of PPP Loans	(3,195)		—		(7,318)		—
Total other (income) expense, net	(2,900)		254		(6,419)		942
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES	8,013		(5,877)		6,728		(6,065)
Provision (benefit) for income taxes	4,684		(3,118)		(155)		(3,213)
CONSOLIDATED NET INCOME (LOSS)	3,329		(2,759)		6,883		(2,852)
Net (income) loss attributable to non-controlling interests	(659)		233		(816)		61
NET INCOME (LOSS) ATTRIBUTABLE TO ARK RESTAURANTS CORP.	$	2,670	$	(2,526)	$	6,067	$	(2,791)
NET INCOME (LOSS) PER ARK RESTAURANTS CORP. COMMON SHARE:
Basic	$	0.76	$	(0.72)	$	1.73	$	(0.80)
Diluted	$	0.73	$	(0.72)	$	1.68	$	(0.80)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic	3,522		3,502		3,512		3,500
Diluted	3,648		3,502		3,602		3,500

See notes to consolidated condensed financial statements.

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ARK RESTAURANTS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY (unaudited)

(In Thousands, Except Per Share Amounts)

For the 13 weeks ended July 3, 2021
	Common Stock			Additional Paid-In Capital		Retained Earnings		Total Ark Restaurants Corp. Shareholders’ Equity		Non- controlling Interests		Total Equity
	Shares	Amount
Balance - April 3, 2021	3,532	$	35	$	14,062	$	26,386	$	40,483	$	736	$	41,219
Net income	—	—		—		2,670		2,670		659		3,329
Exercise of stock options	20	1		283		—		284		—		284
Stock-based compensation	—	—		74		—		74		—		74
Distributions to non-controlling interests	—	—		—		—		—		(433)		(433)
Balance - July 3, 2021	3,552	$	36	$	14,419	$	29,056	$	43,511	$	962	$	44,473
For the 39 weeks ended July 3, 2021
	Common Stock			Additional Paid-In Capital		Retained Earnings		Total Ark Restaurants Corp. Shareholders’ Equity		Non- controlling Interests		Total Equity
	Shares	Amount
BALANCE - October 3, 2020	3,502	$	35	$	13,503	$	22,989	$	36,527	$	626	$	37,153
Net income	—	—		—		6,067		6,067		816		6,883
Exercise of stock options	50	1		709		—		710		—		710
Stock-based compensation	—	—		207		—		207		—		207
Distributions to non-controlling interests	—	—		—		—		—		(480)		(480)
BALANCE - July 3, 2021	3,552	$	36	$	14,419	$	29,056	$	43,511	$	962	$	44,473

See notes to consolidated condensed financial statements.

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ARK RESTAURANTS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY (unaudited)

(In Thousands, Except Per Share Amounts)

For the 13 weeks ended June 27, 2020
	Common Stock			Additional Paid-In Capital		Retained Earnings		Total Ark Restaurants Corp. Shareholders’ Equity		Non- controlling Interests		Total Equity
	Shares	Amount
BALANCE - March 28, 2020	3,502	$	35	$	13,382	$	26,536	$	39,953	$	877	$	40,830
Net loss	—	—		—		(2,526)		(2,526)		(233)		(2,759)
Stock-based compensation	—	—		58		—		58		—		58
BALANCE - June 27, 2020	3,502	$	35	$	13,440	$	24,010	$	37,485	$	644	$	38,129
For the 39 weeks ended June 27, 2020
	Common Stock			Additional Paid-In Capital		Retained Earnings		Total Ark Restaurants Corp. Shareholders’ Equity		Non- controlling Interests		Total Equity
	Shares	Amount
BALANCE - September 28, 2019	3,499	$	35	$	13,277	$	28,552	$	41,864	$	843	$	42,707
Net loss	—	—		—		(2,791)		(2,791)		(61)		(2,852)
Exercise of stock options	3	—		50		—		50		—		50
Stock-based compensation	—	—		113		—		113		—		113
Distributions to non-controlling interests	—	—		—		—		—		(138)		(138)
Dividends paid and accrued - $0.50 per share	—	—		—		(1,751)		(1,751)		—		(1,751)
BALANCE - June 27, 2020	3,502	$	35	$	13,440	$	24,010	$	37,485	$	644	$	38,129

See notes to consolidated condensed financial statements.

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ARK RESTAURANTS CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

(In Thousands)

	39 Weeks Ended
	July 3, 2021		June 27, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)	$	6,883	$	(2,852)
Adjustments to reconcile consolidated net income (loss) to net cash provided by (used in) operating activities:
Stock-based compensation	207		113
Gain on forgiveness of PPP Loans	(7,318)		—
Loss on termination of lease	—		364
Deferred income taxes	682		(1,360)
Accrued interest on note receivable from NMR	(41)		(39)
Depreciation and amortization	3,045		3,188
Amortization of operating lease assets	1,653		261
Amortization of deferred financing costs	47		33
Operating lease deferred credit	—		(197)
Changes in operating assets and liabilities:
Accounts receivable	(2,259)		1,328
Inventories	420		(438)
Prepaid, refundable and accrued income taxes	(846)		(2,044)
Prepaid expenses and other current assets	(426)		(745)
Other assets	(87)		115
Accounts payable - trade	2,204		(665)
Accrued expenses and other current liabilities	2,484		428
Net cash provided by (used in) operating activities	6,648		(2,510)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets	(1,650)		(2,004)
Loans and advances made to employees	(37)		(75)
Payments received on employee receivables	49		93
Purchase of Blue Moon Fish Company, net of cash acquired	(1,817)		—
Net cash used in investing activities	(3,455)		(1,986)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable	(2,140)		(1,350)
Borrowings under credit facility	—		6,300
Proceeds from PPP Loans	111		14,995
Payments of debt financing costs	—		(63)
Dividends paid	—		(1,750)
Proceeds from issuance of stock upon exercise of stock options	710		50
Distributions to non-controlling interests	(480)		(138)
Net cash provided by (used in) financing activities	(1,799)		18,044
NET INCREASE IN CASH AND CASH EQUIVALENTS	1,394		13,548
CASH AND CASH EQUIVALENTS, Beginning of period	16,886		7,177
CASH AND CASH EQUIVALENTS, End of period	$	18,280	$	20,725
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	802	$	1,001
Income taxes	$	7	$	192
Non-cash financing activities:
Accrued dividend	$	—	$	876
Note payable in connection with the purchase of Blue Moon Fish Company	$	1,000	$	—

See notes to consolidated condensed financial statements.

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ARK RESTAURANTS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

July 3, 2021

(Unaudited)

1.    BASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIES

The consolidated condensed balance sheet as of October 3, 2020, which has been derived from the audited consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended October 3, 2020 (“Form 10-K”), and the unaudited interim consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. All adjustments that, in the opinion of management are necessary for a fair presentation for the periods presented, have been reflected as required by Article 10 of Regulation S-X. Such adjustments are of a normal, recurring nature. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K.

COVID-19 PANDEMIC — The COVID-19 pandemic has adversely affected, and is expected to continue to adversely affect, our operations and financial results for the foreseeable future. As of July 3, 2021, all of our restaurants have re-opened and currently, national, state and local jurisdictions have removed their capacity restrictions on businesses and therefore our restaurants are serving customers in our dining rooms without social distancing requirements. However, we cannot predict whether we will be required to limit capacity or close again in the future, as these decisions will depend primarily on the actions of a number of governmental bodies over which we have no control. It is possible additional outbreaks could require us to reduce our capacity, implement social distancing or further suspend our in-restaurant dining operations, and there is no guarantee that state and local jurisdictions, that have currently eased restrictions, will not reverse or roll-back the restrictions, as many have done in the past. Additionally, our restaurant operations have been and could continue to be disrupted by employee staffing issues because of illness, fear of contracting COVID-19 or caring for family members due to COVID-19, or for other reasons. Furthermore, we remain in regular contact with our major suppliers and while to date we have not experienced significant disruptions in our supply chain due to COVID-19, we could see significant future disruptions should the impacts of COVID-19 extend for a considerable amount of time.

As a result of the COVID-19 pandemic, the Company experienced a significant negative impact on its revenues, results of operations and cash flows, and has a working capital deficiency of $(2,134,000) as of July 3, 2021. However, we believe that our existing cash balances, current banking facilities and cash provided by operations will be sufficient to meet our liquidity and capital spending requirements through August 18, 2022.

PRINCIPLES OF CONSOLIDATION — The consolidated condensed financial statements include the accounts of Ark Restaurants Corp. and all of its wholly-owned subsidiaries, partnerships and other entities in which it has a controlling interest, collectively herein referred to as the “Company”. Also included in the consolidated condensed financial statements are certain variable interest entities (“VIEs”). All significant intercompany balances and transactions have been eliminated in consolidation.

USE OF ESTIMATES — The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The accounting estimates that require management’s most difficult and subjective judgments include: projected cash flows, allowances for potential bad debts on receivables, assumptions regarding discount rates related to lease accounting, the useful lives and recoverability of its assets, such as property and intangibles, fair values of financial instruments and share-based compensation, estimates made in connection with acquisitions and impairment analyses, the realizable value of its tax assets and determining when investment impairments are other-than-temporary. Because of the uncertainty in such estimates, actual results may differ from these estimates. The results of operations for the 13 and 39 weeks ended July 3, 2021 are not necessarily indicative of the results to be expected for any other interim period or for the year ending October 2, 2021.

NON-CONTROLLING INTERESTS — Non-controlling interests represent capital contributions, income and loss attributable to the shareholders of less than wholly-owned and consolidated entities.

SEASONALITY — The Company has substantial fixed costs that do not decline proportionally with sales. The first and second fiscal quarters, which include the winter months, usually reflect lower customer traffic than in the third and fourth fiscal quarters. However, sales in the third and fourth fiscal quarters can be adversely affected by inclement weather due to the significant amount of outdoor seating at the Company’s restaurants.

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FAIR VALUE OF FINANCIAL INSTRUMENTS — The carrying amount of cash and cash equivalents, receivables, accounts payable and accrued expenses approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair values of notes receivable and payable are determined using current applicable rates for similar instruments as of the balance sheet dates and approximate the carrying value of such debt instruments.

CASH AND CASH EQUIVALENTS — Cash and cash equivalents include cash on hand, deposits with banks and highly liquid investments generally with original maturities of three months or less. Outstanding checks in excess of account balances, typically vendor payments, payroll and other contractual obligations disbursed after the last day of a reporting period are reported as a current liability in the accompanying consolidated condensed balance sheets.

CONCENTRATIONS OF CREDIT RISK — Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company reduces credit risk by placing its cash and cash equivalents with major financial institutions with high credit ratings. At times, such amounts may exceed federally insured limits. Accounts receivable are primarily comprised of normal business receivables, such as credit card receivables, that are collected in a short period of time and amounts due from the hotel operators where the Company has a location, and are recorded upon satisfaction of the performance obligation. The Company reviews the collectability of its receivables on an ongoing basis, and provides for an allowance when it considers the entity unable to meet its obligation. The concentration of credit risk with respect to accounts receivable is generally limited due to the short payment terms extended by the Company and the number of customers comprising the Company’s customer base.

As of July 3, 2021, the Company had accounts receivable balances due from one hotel operator totaling 31% of total accounts receivable. As of October 3, 2020, the Company had accounts receivable balances due from two hotel operators totaling 46% of total accounts receivable.

For the 13-week period ended July 3, 2021, the Company made purchases from two vendors that accounted for 22% of total purchases. For the 13-week period ended June 27, 2020, the Company made purchases from three vendors that accounted for 46% of total purchases.

For the 39-week period ended July 3, 2021, the Company made purchases from two vendors that accounted for 23% of total purchases. For the 39-week period ended June 27, 2020, the Company made purchases from one vendor that accounted for 10% or greater of total purchases.

As of July 3, 2021 and October 3, 2020, all debt outstanding, other than Paycheck Protection Program loans and the note payable to the sellers of the Blue Moon Fish Company, is with one lender (see Note 8 – Notes Payable).

GOODWILL AND TRADEMARKS — Goodwill and trademarks are not amortized, but are subject to impairment analysis. We assess the potential impairment of goodwill and trademarks annually (at the end of our fourth quarter) and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If we determine through the impairment review process that goodwill or trademarks are impaired, we record an impairment charge in our consolidated condensed statements of operations.

Due to the recent impact of the COVID-19 pandemic to the global economy, including but not limited to, the volatility of the Company's stock price, temporary closures of the Company's restaurants and the challenging environment for the restaurant industry in general, the Company determined that there were indicators of potential impairment of its goodwill and trademarks during the 13 weeks ended July 3, 2021. As such, the Company performed a qualitative assessment for both goodwill and its trademarks and concluded that the fair value of these assets exceeded their carrying values. Accordingly, the Company did not record any impairment to its goodwill or trademarks during the 13 and 39 weeks ended July 3, 2021. The ultimate severity and longevity of the COVID-19 pandemic is unknown, and therefore, it is possible that impairments could be identified in future periods, and such amounts could be material.

LONG-LIVED AND RIGHT-OF-USE ASSETS — Long-lived assets, such as property, plant and equipment, purchased intangibles subject to amortization, and right-of-use assets ("ROU assets") are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the evaluation of the fair value and future benefits of long-lived assets, the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value. Various factors including estimated future sales growth and estimated profit margins are included in this analysis.

The Company considers a triggering event related to long-lived assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s cash flows for the last 12 months are less than a minimum threshold or if

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consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. Additionally, the Company considers a triggering event related to ROU assets to have occurred related to a specific lease if the location has been subleased and future estimated sublease income is less than current lease payments. If the Company concludes that the carrying value of certain long-lived and ROU assets will not be recovered based on expected undiscounted future cash flows, an impairment loss is recorded to reduce the long-lived or ROU assets to their estimated fair value. The fair value is measured on a nonrecurring basis using unobservable (Level 3) inputs. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis, which requires the use of estimates and assumptions. If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods, and such charges could be material.

Based on the results of this analysis, no impairment charges were recognized related to long-lived assets and ROU assets during the 13 and 39 weeks ended July 3, 2021. Given the inherent uncertainty in projecting results of restaurants under the current circumstances, particularly taking into account the projected impact of the COVID-19 pandemic, the Company is monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis. For these restaurants, if expected performance is not realized, an impairment charge may be recognized in future periods, and such charge could be material.

REVENUE RECOGNITION — We recognize revenues when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest or other customer. Revenues from restaurant operations are presented net of discounts, coupons, employee meals and complimentary meals and recognized when food, beverage and retail products are sold. Sales tax collected from customers is excluded from sales and the obligation is included in sales tax payable until the taxes are remitted to the appropriate taxing authorities. Catering service revenue is generated through contracts with customers whereby the customer agrees to pay a contract rate for the service. Revenues from catered events are recognized in income upon satisfaction of the performance obligation (the date the event is held) and all customer payments, including nonrefundable upfront deposits, are deferred as a contract liability until such time. We recognized $1,140,000 and $25,000 in catering services revenue for the 13-week periods ended July 3, 2021 and June 27, 2020, respectively, and $1,347,000 and $7,259,000 for the 39-week periods ended July 3, 2021 and June 27, 2020, respectively. Unearned revenue, which is included in accrued expenses and other current liabilities on the consolidated condensed balance sheets as of July 3, 2021, October 3, 2020 and September 29, 2019, was $4,652,000, $3,661,000 and $4,549,000, respectively.

Revenues from gift cards are deferred and recognized upon redemption. Deferrals are not reduced for potential non-use as we generally have a legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions in which they are sold. As of July 3, 2021 and October 3, 2020, the total liability for gift cards in the amounts of approximately $198,000 and $227,000, respectively, are included in accrued expenses and other current liabilities in the consolidated condensed balance sheets.

Other revenues include purchase service fees which represent commissions earned by a subsidiary of the Company for providing services to other restaurant groups, as well as license fees, property management fees and other rentals.

LEASES — We determine if an arrangement contains a lease at inception. An arrangement contains a lease if it implicitly or explicitly identifies an asset to be used and conveys the right to control the use of the identified asset in exchange for consideration. As a lessee, we include operating leases in Operating lease right-of-use assets and Operating lease liabilities in our consolidated condensed balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized upon commencement of the lease based on the present value of the lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. Our lease terms may include options to extend or terminate the lease.  Options are included when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Amendments or modifications to lease terms are accounted for as variable lease payments. Leases with a lease term of 12 months or less are accounted for using the practical expedient which allows for straight-line rent expense over the remaining term of the lease. 

SEGMENT REPORTING — As of July 3, 2021, the Company owned and operated 18 restaurants and bars, 17 fast food concepts and catering operations, exclusively in the United States, that have similar economic characteristics, nature of products and services, class of customers and distribution methods. The Company believes it meets the criteria for aggregating its operating segments into a single reporting segment in accordance with applicable accounting guidance.

RECENTLY ADOPTED ACCOUNTING PRINCIPLES — In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test referenced in Accounting Standards Codification (“ASC”)

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350, Intangibles - Goodwill and Other (“ASC 350”). As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including any interim impairment tests within those annual periods, with early application permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted this guidance in the first quarter of fiscal 2021. Such adoption did not have a material impact on our consolidated condensed financial statements.

NEW ACCOUNTING STANDARDS NOT YET ADOPTED — In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which modifies Topic 740 to simplify the accounting for income taxes. ASU 2019-12 is effective for financial statements issued for annual periods beginning after December 15, 2020, and for the interim periods therein. The Company is currently evaluating the effect of adopting ASU 2019-12 to determine the impact on the Company’s consolidated financial position and results of operations.

2.    VARIABLE INTEREST ENTITIES

The Company consolidates any variable interest entities in which it holds a variable interest and is the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company has determined that it is the primary beneficiary of three VIEs and, accordingly, consolidates the financial results of these entities. Following are the required disclosures associated with the Company’s consolidated VIEs:

	July 3, 2021		October 3, 2020
	(in thousands)
Cash and cash equivalents	$	676	$	567
Accounts receivable	218		162
Inventories	29		27
Prepaid and refundable income taxes	278		274
Prepaid expenses and other current assets	47		13
Due from Ark Restaurants Corp. and affiliates (1)	420		419
Fixed assets - net	219		241
Operating lease right-of-use assets - net	2,406		2,658
Other assets	82		82
Total assets	$	4,375	$	4,443
Accounts payable - trade	$	134	$	119
Accrued expenses and other current liabilities	565		331
Current portion of operating lease liabilities	243		226
Current portion of notes payable	77		—
Operating lease liabilities, less current portion	2,257		2,442
Notes payable, less current portion	290		723
Total liabilities	3,566		3,841
Equity of variable interest entities	809		602
Total liabilities and equity	$	4,375	$	4,443

(1)Amounts Due from and to Ark Restaurants Corp. and affiliates are eliminated upon consolidation.

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The liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the consolidated VIEs. Conversely, assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets.

3.    RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS

On December 1, 2020, the Company, through a newly formed, wholly-owned subsidiary, acquired the assets of Bear Ice, Inc. and File Gumbo Inc., which collectively operated a restaurant and bar named Blue Moon Fish Company located in Lauderdale-by-the- Sea, FL. The total purchase price of $2,820,000, as set out below, was paid with cash in the amount of $1,820,000 and a four-year note held by the sellers in the amount of $1,000,000 payable monthly with 5% interest. The acquisition was accounted for as a business combination. Concurrent with the acquisition, the Company assumed the related lease which expires in 2026 and has four five-year extension options. Rent payments under the lease are approximately $360,000 per year and increase by 15% as each option is exercised.

The fair values of the assets acquired were allocated as follows (amounts in thousands):

Cash	$	3
Inventory	39
Security deposit	30
Trademarks	500
Non-compete agreement	380
Goodwill	1,870
Liabilities assumed	(2)
	$	2,820

Goodwill recognized in connection with this transaction represents the residual amount of the purchase price over separately identifiable intangible assets and is expected to be deductible for tax purposes.

The consolidated condensed statements of operations for the 13 and 39 weeks ended July 3, 2021 include revenues and net income of approximately $2,141,000 and $4,582,000 and $432,000 and $887,000, respectively, related to Blue Moon Fish Company. The unaudited pro forma financial information set forth below is based upon the Company’s historical consolidated condensed statements of operations for the 13 and 39 weeks ended June 27, 2020 and the 39 weeks ended July 3, 2021 and includes the results of operations for Blue Moon Fish Company for the period prior to acquisition. The unaudited pro forma financial information (which is presented in thousands except per share and share data), which has been adjusted for interest expense on the note, is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the acquisition of Blue Moon Fish Company occurred on the dates indicated, nor does it purport to represent the results of operations for future periods.  

	13 Weeks Ended		39 Weeks Ended
	June 27, 2020		July 3, 2021		June 27, 2020
	(unaudited)		(unaudited)
Total revenues	$	7,575	$	89,708	$	88,264
Net income (loss)	$	(2,595)	$	6,102	$	(2,280)
Net income (loss) per share - basic	$	(0.74)	$	1.74	$	(0.65)
Net income (loss) per share - diluted	$	(0.74)	$	1.69	$	(0.65)
Shares - Basic	3,502		3,512		3,500
Shares - Diluted	3,502		3,602		3,500

On January 26, 2021, the Company exercised its right-of-first-refusal to acquire the land, building and parking lot associated with JB’s on the Beach and immediately contributed such rights and interest to an unrelated entity ("Newco") that purchased the properties on March 22, 2021. In exchange, the Company received a 5% interest in Newco, which plans future development of

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the sites. In addition, all rights and privileges under the current lease were assigned to Newco, as landlord and the lease terms remain unchanged.

4.    RECENT RESTAURANT DISPOSITIONS

On November 13, 2020, the Company was advised by the landlord that it would have to vacate Gallagher’s Steakhouse and Gallagher’s Burger Bar at the Resorts Casino Hotel located in Atlantic City, NJ which were on a month-to-month, no rent lease. The closure of these properties occurred on January 2, 2021 and did not result in a material charge to the Company’s operations.

As of January 2, 2021, the Company determined that it will not reopen Thunder Grill in Washington, D.C. which has been closed since March 20, 2020. This closure did not result in a material charge to the Company’s operations.

5.    INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK

On March 12, 2013, the Company made a $4,200,000 investment in the New Meadowlands Racetrack LLC (“NMR”) through its purchase of a membership interest in Meadowlands Newmark, LLC, an existing member of NMR with a then 63.7% ownership interest. On November 19, 2013, the Company invested an additional $464,000 in NMR through the purchase of an additional membership interest in Meadowlands Newmark, LLC resulting in a total ownership of 11.6% of Meadowlands Newmark, LLC, and an effective ownership interest in NMR of 7.4%, subject to dilution. In 2015, the Company invested an additional $222,000 in NMR and in February 2017, the Company invested an additional $222,000 in NMR, both as a result of capital calls with no change in ownership, bringing its total investment to $5,108,000. The Company accounts for this investment at cost, less impairment, adjusted for subsequent observable price changes in accordance with ASU No. 2016-01. There are no observable prices for this investment.

Due to the recent impact of the COVID-19 pandemic to the global economy, including but not limited to, the temporary closure of the NMR facility, the Company evaluated its investment in NMR for impairment and concluded that its fair value exceeds the carrying value. Accordingly, the Company did not record any impairment during the 13 and 39 weeks ended July 3, 2021. The ultimate severity and longevity of the COVID-19 pandemic is unknown, and therefore, it is possible that impairments could be identified in future periods, and such amounts could be material. Any future changes in the carrying value of our investment in NMR will be reflected in earnings.

In addition to the Company’s ownership interest in NMR through Meadowlands Newmark, LLC, if casino gaming is approved at the Meadowlands and NMR is granted the right to conduct said gaming, neither of which can be assured, the Company shall be granted the exclusive right to operate the food and beverage concessions in the gaming facility with the exception of one restaurant.

In conjunction with this investment, the Company, through a 97% owned subsidiary, Ark Meadowlands LLC (“AM VIE”), also entered into a long-term agreement with NMR for the exclusive right to operate food and beverage concessions serving the new raceway facilities (the “Racing F&B Concessions”) located in the new raceway grandstand constructed at the Meadowlands Racetrack in northern New Jersey. Under the agreement, NMR is responsible to pay for the costs and expenses incurred in the operation of the Racing F&B Concessions, and all revenues and profits thereof inure to the benefit of NMR. AM VIE receives an annual fee equal to 5% of the net profits received by NMR from the Racing F&B Concessions during each calendar year. AM VIE is a variable interest entity; however, based on qualitative consideration of the contracts with AM VIE, the operating structure of AM VIE, the Company’s role with AM VIE, and that the Company is not obligated to absorb expected losses of AM VIE, the Company has concluded that it is not the primary beneficiary and not required to consolidate the operations of AM VIE.

The Company’s maximum exposure to loss as a result of its involvement with AM VIE is limited to any receivable from AM VIE’s primary beneficiary (NMR, a related party). As of July 3, 2021 and October 3, 2020, no amounts were due AM VIE by NMR.

On April 25, 2014, the Company loaned $1,500,000 to Meadowlands Newmark, LLC. The note bears interest at 3%, compounded monthly and added to the principal, and is due in its entirety on January 31, 2024. The note may be prepaid, in whole or in part, at any time without penalty or premium. On July 13, 2016, the Company made an additional loan to Meadowlands Newmark, LLC in the amount of $200,000. Such amount is subject to the same terms and conditions as the original loan as discussed above. The principal and accrued interest related to this note in the amounts of $1,807,000 and $1,766,000 are included in Investment In and Receivable from New Meadowlands Racetrack in the consolidated condensed balance sheets at July 3, 2021 and October 3, 2020, respectively.

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6.    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

	July 3, 2021		October 3, 2020
	(In thousands)
Sales tax payable	$	1,138	$	477
Accrued wages and payroll related costs	4,328		3,302
Customer advance deposits	4,652		3,661
Accrued occupancy and other operating expenses	4,993		5,248
	$	15,111	$	12,688

7.    LEASES

Other than locations where we own the underlying property, we lease our restaurant locations as well as our corporate office under various non-cancelable real estate lease agreements that expire on various dates through 2046. We evaluate whether we control the use of the asset, which is determined by assessing whether we obtain substantially all economic benefits from the use of the asset, and whether we have the right to direct the use of the asset. If these criteria are met and we have identified a lease, we account for the contract under the requirements of ASC Topic 842.

Upon taking possession of a leased asset, we determine its classification as an operating or finance lease. All of our real estate leases are classified as operating leases. We do not have any finance leases as of July 3, 2021. Generally, our real estate leases have initial terms ranging from 10 to 25 years and typically include renewal options. Renewal options are recognized as part of the ROU assets and lease liabilities if it is reasonably certain at the date of adoption that we would exercise the options to extend the lease. Our real estate leases typically provide for fixed minimum rent payments and/or contingent rent payments based upon sales in excess of specified thresholds. When the achievement of such sales thresholds are deemed to be probable, variable lease expense is accrued in proportion to the sales recognized during the period. For operating leases that include rent holidays and rent escalation clauses, we recognize lease expense on a straight-line basis over the lease term from the date we take possession of the leased property. We record the straight-line lease expense and any contingent rent, if applicable, in occupancy expenses in the consolidated condensed statements of operations.

Many of our real estate leases also require us to pay real estate taxes, common area maintenance costs and other occupancy costs (“non-lease components”) which are included in occupancy related expenses in the consolidated condensed statements of operations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As there were no explicit rates provided in our leases, we used our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The components of lease expense in the consolidated condensed statements of operations are as follows:

	13 Weeks Ended				39 Weeks Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
	(In thousands)				(In thousands)
Operating lease expense - occupancy expenses (1)	$	2,899	$	2,088	$	6,836	$	7,005
Occupancy lease expense - general and administrative expenses	118		158		270		481
Variable lease expense	158		132		1,553		2,500
Total lease expense	$	3,175	$	2,378	$	8,659	$	9,986

_________________________________

(1)    Includes short-term leases, which are immaterial.

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Supplemental cash flow information related to leases:

	39 Weeks Ended
	July 3, 2021		June 27, 2020
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases	$	6,992	$	8,086
Non-cash investing activities:
ROU assets obtained in exchange for new operating lease liabilities	$	8,712	$	62,330

The weighted average remaining lease terms and discount rates as of July 3, 2021 are as follows:

	Weighted Average Remaining Lease Term	Weighted Average Discount Rate
Operating leases	12.8 years	5.2	%

The annual maturities of our lease liabilities as of July 3, 2021 are as follows:

	Operating Leases
Fiscal Year Ending	(In thousands)
October 2, 2021	$	2,363
October 1, 2022	9,565
September 30, 2023	8,076
September 28, 2024	7,694
September 27, 2025	6,685
Thereafter	50,508
Total future lease commitments	84,891
Less imputed interest	(23,719)
Present value of lease liabilities	$	61,172

8.    NOTES PAYABLE

Long-term debt consists of the following:

	July 3, 2021		October 3, 2020
	(In thousands)
Promissory Note - Rustic Inn purchase	$	3,544	$	3,758
Promissory Note - Shuckers purchase	4,079		4,335
Promissory Note - Oyster House purchase	3,646		4,109
Promissory Note - JB's on the Beach purchase	5,000		5,750
Promissory Note - Sequoia renovation	2,286		2,629
Revolver Borrowings	9,666		9,666
Promissory Note - Blue Moon Fish Company (see Note 3)	886		—
Paycheck Protection Program Loans	7,851		14,995
	36,958		45,242
Less: Current maturities	(7,377)		(9,001)
Less: Unamortized deferred financing costs	(126)		(173)
Long-term debt	$	29,455	$	36,068

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Notes Payable - Bank

On June 1, 2018, the Company refinanced (the "Refinancing") its then existing indebtedness with its current lender, Bank Hapoalim B.M. (“BHBM”), by entering into an amended and restated credit agreement (the “Revolving Facility”), which was to mature on May 19, 2022 (as extended). The Revolving Facility provided for total availability of the lesser of (i) $10,000,000 and (ii) $35,000,000 less the then aggregate amount of all indebtedness and obligations to BHBM. On July 26, 2021, all outstanding Revolver Borrowings, in the amount of $9,666,000, were converted to a promissory note with quarterly principal payments of $500,000 commencing on September 1, 2021, with a balloon payment of $2,166,000 on June 1, 2025. Such note bears interest at LIBOR plus 3.5% per annum. We expect that the LIBOR rate will be discontinued at some point during 2021 and to work with BHBM to identify a suitable replacement rate and amend our debt agreements to reflect this new reference rate accordingly. We do not expect the discontinuation of LIBOR as a reference rate in our debt agreements to have a material adverse effect on our financial position or materially affect our interest expense.

The Revolving Facility, which includes all of the above promissory notes, also requires, among other things, that the Company meet minimum quarterly tangible net worth amounts, maintain a minimum fixed charge coverage ratio and meet minimum annual net income amounts. The Revolving Facility contains customary representations, warranties and affirmative covenants as well as customary negative covenants, subject to negotiated exceptions on liens, relating to other indebtedness, capital expenditures, liens, affiliate transactions, disposal of assets and certain changes in ownership.

Borrowings under the Revolving Facility are secured by all tangible and intangible personal property (including accounts receivable, inventory, equipment, general intangibles, documents, chattel paper, instruments, letter-of-credit rights, investment property, intellectual property and deposit accounts) and fixtures of the Company.

On June 12, 2020 and again on February 15, 2021, as a result of the impact of the COVID-19 pandemic on our business, BHBM agreed to modified financial covenants through fiscal Q2 2022.

In connection with the Refinancing, the Company also amended the principal amounts and payment terms of its outstanding term notes with BHBM as follows:

•Promissory Note – Rustic Inn purchase – The principal amount of $4,400,000, which is secured by a mortgage on the Rustic Inn real estate, is payable in 27 equal quarterly installments of $71,333, commencing on September 1, 2018, with a balloon payment of $2,474,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

•Promissory Note – Shuckers purchase – The principal amount of $5,100,000, which is secured by a mortgage on the Shuckers real estate, is payable in 27 equal quarterly installments of $85,000, commencing on September 1, 2018, with a balloon payment of $2,805,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

•Promissory Note – Oyster House purchase – In connection with the Refinancing, this note was amended and restated and separated into two notes. The first note, in the principal amount of $3,300,000, is secured by a mortgage on the Oyster House Gulf Shores real estate, is payable in 19 equal quarterly installments of $117,857, commencing on September 1, 2018, with a balloon payment of $1,060,716 on June 1, 2023 and bears interest at LIBOR plus 3.5% per annum. The second note, in the principal amount of $2,200,000, is secured by a mortgage on the Oyster House Spanish Fort real estate, is payable in 27 equal quarterly installments of $36,667, commencing on September 1, 2018, with a balloon payment of $1,210,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

•Promissory Note – JB's on the Beach purchase – On May 15, 2019, the Company issued a promissory note under the Revolving Facility to BHBM for $7,000,000, which is payable in 23 equal quarterly installments of $250,000, commencing on September 1, 2019, with a balloon payment of $1,250,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

•Promissory Note – Sequoia renovation – Also on May 15, 2019, the Company converted $3,200,000 of Revolving Facility borrowings incurred in connection with the Sequoia renovation to a promissory note which is payable in 23 equal quarterly installments of $114,286, commencing on September 1, 2019, with a balloon payment of $571,429 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

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Paycheck Protection Program Loans

During the year ended October 3, 2020, subsidiaries (the “Borrowers”) of the Company received loan proceeds from several banks (the “Lenders”) in the aggregate amount of $14,995,000 (the “PPP Loans”) under the Paycheck Protection Program (the “PPP”) of the CARES Act, which was enacted March 27, 2020. In addition, during the 13 weeks ended April 3, 2021, one of our consolidated VIEs received a second draw PPP Loan in the amount of $111,000. The PPP Loans are evidenced by individual promissory notes of each of the Borrowers (together, the “Notes”) in favor of the Lender, which Notes bear interest at the rate of 1.00% per annum. Funds from the PPP Loans may be used only for payroll and related costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations that were incurred by a Borrower prior to February 15, 2020 (the “Qualifying Expenses”). Under the terms of the PPP Loans, some or all of the amounts thereunder, including accrued interest, may be forgiven if they are used for Qualifying Expenses as described in and in compliance with the CARES Act. Each Note may be prepaid by the respective Borrower at any time prior to maturity with no prepayment penalties. No payments of principal or interest are due under the Notes until the date on which the amount of loan forgiveness (if any) under the CARES Act for each respective Note is remitted to the Lender and a forgiveness decision is received by the Borrower. Forgiveness applications can be submitted up to 10 months after the end of the related notes covered period (which is defined as 24 weeks after the date of the loan) (the “Deferral Period”) and the ultimate forgiveness decisions can be made by the Lenders up to 60 days after submitting the applications and possibly longer if forgiveness is fully or partially denied and the Borrower appeals the decision. While the Company and each Borrower used the PPP Loan proceeds exclusively for Qualifying Expenses, it is unclear and uncertain whether the conditions for forgiveness of the PPP Loans outstanding at July 3, 2021 will be met under the current guidelines of the CARES Act. Therefore, we cannot make any assurances that the Company, or any of the Borrowers, will be eligible for forgiveness of the remaining PPP Loans, in whole or in part. Accordingly, based on the above, we have classified $2,439,000 of the PPP Loans as short-term in the consolidated condensed balance sheet as of July 3, 2021.

During the 13 and 39 weeks ended July 3, 2021, $3,195,000 (including $36,000 of accrued interest) and $7,318,000 of PPP Loans (including $63,000 of accrued interest), respectively, were forgiven. To the extent, if any, that any of the remaining PPP Loans are not forgiven, beginning one month following expiration of the Deferral Period, and continuing monthly until 24 months from the date of each applicable Note (the “Maturity Date”), each respective Borrower is obligated to make monthly payments of principal and interest to the Lender with respect to any unforgiven portion of the Notes, in such equal amounts required to fully amortize the principal amount outstanding on such Notes as of the last day of the applicable Deferral Period by the applicable Maturity Date.

Deferred Financing Costs

Deferred financing costs incurred in the amount of $271,000 are being amortized over the life of the agreements using the effective interest rate method and included in interest expense. Amortization expense of approximately $15,000 and $13,000 is included in interest expense for the 13 weeks ended July 3, 2021 and June 27, 2020, respectively. Amortization expense was $47,000 and $33,000 for the 39 weeks ended July 3, 2021 and June 27, 2020, respectively.

9.    COMMITMENTS AND CONTINGENCIES

Leases — The Company leases several restaurants, bar facilities, and administrative headquarters through its subsidiaries under terms expiring at various dates through 2046. Most of the leases provide for the payment of base rents plus real estate taxes, insurance and other expenses and, in certain instances, for the payment of a percentage of the restaurant’s sales in excess of stipulated amounts at such facility and in one instance based on profits. In connection with one of our leases, the Company obtained and delivered an irrevocable letter of credit in the amount of approximately $238,000 as a security deposit under such lease.

Legal Proceedings — In the ordinary course of its business, the Company is a party to various lawsuits arising from accidents at its restaurants and workers’ compensation claims, which are generally handled by the Company’s insurance carriers. The employment by the Company of management personnel, waiters, waitresses and kitchen staff at a number of different restaurants has resulted in the institution, from time to time, of litigation alleging violation by the Company of employment discrimination laws. Management believes, based in part on the advice of counsel, that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

On May 1, 2018, two former tipped service workers (the “Plaintiffs”), individually and on behalf of all other similarly situated personnel, filed a putative class action lawsuit (the “Complaint”) against the Company and certain subsidiaries as well as certain officers of the Company (the “Defendants”).  Plaintiffs alleged, on behalf of themselves and the putative class, that the Company violated certain of the New York State Labor Laws and related regulations.  The Complaint sought unspecified money damages, together with interest, liquidated damages and attorney fees.  In December 2020, the parties reached a settlement agreement

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resolving all issues alleged in the Complaint, which received preliminary approval by the New York State Supreme Court, for approximately the amount which was previously accrued.

10.    STOCK OPTIONS

The Company has options outstanding under two stock option plans, the 2010 Stock Option Plan (the “2010 Plan”) and the 2016 Stock Option Plan (the “2016 Plan”). Options granted under both plans are exercisable at prices at least equal to the fair market value of such stock on the dates the options were granted and expire 10 years after the date of grant.

During the 13-week periods ended July 3, 2021 and June 27, 2020, no options to purchase shares of common stock were issued by the Company

During the 39-week period ended July 3, 2021, options to purchase 110,500 shares of common stock at an exercise price of $10.65 per share were granted to employees and directors of the Company (the "2021 Grant").  Such options are exercisable as to 50% of the shares commencing on the second anniversary of the date of grant and as to 50% on the fourth anniversary of the date of grant. Such options had an aggregate grant date fair value of $2.22 per share and totaled approximately $246,000.    

During the 39-week period ended June 27, 2020, options to purchase 266,500 shares of common stock at an exercise price of $21.90 per share were granted to employees, directors of the Company and other service providers.  Such options are exercisable as to 50% of the shares commencing on the second anniversary of the date of grant and as to the remaining 50% commencing on the fourth anniversary of the date of grant. The grant date fair value of these stock options was $3.35 per share.

The fair value of each of the Company’s stock options is estimated on the date of grant using a Black-Scholes option-pricing model that uses assumptions that relate to the expected volatility of the Company’s common stock, the expected dividend yield of our stock, the expected life of the options and the risk-free interest rate. The assumptions used for the 2021 Grant include a risk-free interest rate of 0.86%, volatility of 37.1%, a dividend yield of 3.0% and an expected life of 10 years.

The Company also maintains a Section 162(m) Cash Bonus Plan. Under the Company's Section 162(m) Cash Bonus Plan, compensation paid in excess of $1,000,000 to any employee who is the chief executive officer or one of the three highest paid executive officers on the last day of that tax year (other than the chief executive officer or the chief financial officer) is not tax deductible.

A summary of stock option activity is presented below:

	2021
	Shares	Weighted Average Exercise Price	Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of period	626,500	$20.41	6.1 years
Options:
Granted	110,750	$10.65
Exercised	(49,149)	$14.40
Canceled or expired	(17,000)	$21.05
Outstanding and expected to vest,    end of period	671,101	$19.22	6.3 years	$	1,383,000
Exercisable, end of period	302,351	$20.10	3.2 years	$	399,000
Shares available for future grant	63,750

Compensation cost charged to operations for the 13 weeks ended July 3, 2021 and June 27, 2020 for share-based compensation programs was approximately $74,000 and $58,000, respectively, and for the 39 weeks ended July 3, 2021 and June 27, 2020 was approximately $207,000 and $113,000, respectively. The compensation cost recognized is classified as a general and administrative expense in the consolidated condensed statements of operations.

As of July 3, 2021, there was approximately $810,000 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a period of 3.2 years.

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11.    INCOME TAXES

We calculate our interim income tax provision in accordance with ASC Topic 270, Interim Reporting and ASC Topic 740, Accounting for Income Taxes. At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary year to date earnings. In addition, the tax effects of unusual or infrequently occurring items including changes in judgment about valuation allowances and effects of changes in enacted tax laws are recognized discretely in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating (loss) income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current fiscal year. The accounting estimates used to compute income tax expense may change as new events occur, additional information is obtained, or the tax environment changes.

On March 27, 2020, the CARES Act was enacted to provide economic relief to those impacted by the COVID-19 pandemic. In addition to the PPP loans, the CARES Act made various tax law changes including among other things (i) modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 tax years to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes, (ii) enhanced recoverability of AMT tax credit carryforwards, (iii) increased the limitation under Internal Revenue Code ("IRC") Section 163(j) for 2019 and 2020 to permit additional expensing of interest, and (iv) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k).

On December 27, 2020, the Consolidated Appropriations Act of 2021 (“CAA”) was enacted and provided clarification on the tax deductibility of expenses funded with PPP loans as fully deductible for tax purposes. During the 13 and 39 weeks ended July 3, 2021, the Company recorded income for financial reporting purposes related to the forgiveness of some of its PPP loans. The forgiveness of these PPP loans is not taxable. The income recorded for financial reporting purposes was considered an unusual or infrequent event and the tax effect was recorded discretely in the quarter in which the loans were forgiven.

As a result of the CARES Act and the CAA, the Company carried back taxable losses from fiscal year 2020 and is expected to carryback taxable losses from fiscal 2021 to generate a refund of previously paid income taxes. As a result of these carrybacks, the Company recorded income tax benefits as the taxable losses from fiscal 2020 and fiscal 2021 are being carried back to tax years in which the Company was subject to a higher federal corporate income tax rate. The carryback of taxable losses from fiscal 2021 was recorded as a component of the estimated annual effective tax rate. The adjustment to the fiscal 2020 carryback was recorded as a discrete item.

The provision for income taxes for the 13-week period ended July 3, 2021 was $4,684,000. The effective tax rate for the 13-week period ended July 3, 2021 of 58.5% differed from the statutory rate of 21% primarily related to changes in the annual effective tax rate as a result of updated forecasts of pre-tax earnings coupled with a discrete tax benefit attributable to the income related to the PPP loan forgiveness which is not taxable for income tax reporting purposes.

The income tax benefit for the 39-week period ended July 3, 2021 was $(155,000). The effective tax rate for the 39-week period ended July 3, 2021 of -2.31% differed from the statutory rate of 21% primarily related to the discrete tax benefit attributable to the income related to the PPP loan forgiveness which is not taxable for income tax reporting purposes.

The income tax benefit for the 13- and 39-week periods ended June 27, 2020 was ($3,118,000) and $(3,213,000), respectively. The effective tax rate for the 13- and 39-week periods ended June 27, 2020 of 52.3% and 53.1%, respectively, differed from the statutory rate of 21% primarily as a result of the tax benefits related to the generation of FICA tax credits and the incremental benefit arising from the ability to carryback fiscal 2020 net operating losses to prior years when the tax rate was 34%.

The Company’s overall effective tax rate in the future will be affected by factors such as changes in tax law, the utilization of state and local net operating loss carryforwards, the generation of FICA tax credits, additional forgiveness of PPP loans and the mix of earnings by state taxing jurisdictions as Nevada does not impose a state income tax, as compared to the other major state and local jurisdictions in which the Company has operations. The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from current estimates.

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12.    INCOME PER SHARE OF COMMON STOCK

Basic earnings per share is computed by dividing net income attributable to Ark Restaurants Corp. by the weighted average number of common shares outstanding for the period. Our diluted earnings per share is computed similarly to basic earnings per share, except that it reflects the effect of common shares issuable upon exercise of stock options, using the treasury stock method in periods in which they have a dilutive effect.

A reconciliation of shares used in calculating earnings per basic and diluted share follows:

	13 Weeks Ended		39 Weeks Ended
	July 3, 2021	June 27, 2020	July 3, 2021	June 27, 2020
Basic	3,522	3,502	3,512	3,500
Effect of dilutive securities:
Stock options	126	—	90	—
Diluted	3,648	3,502	3,602	3,500

For the 13- and 39-week periods ended July 3, 2021, the dilutive effect of 443,500 options was not included in diluted earnings per share as their impact would be anti-dilutive.

For the 13- and 39-week periods ended June 27, 2020, the dilutive effect of all outstanding options to purchase shares of our common stock were not included in diluted earnings per share as their impact would have been anti-dilutive.

13.    SUBSEQUENT EVENTS

On August 3, 2021, New York City became the first U.S. city to require proof of at least one dose of a COVID-19 vaccine for a variety of activities for workers and customers, including indoor dining. The requirements are effective starting on August 16, 2021 with enforcement to begin on September 13, 2021.

As a result of these new requirements, the Company temporarily closed Clyde Frazier's Wine & Dine on August 8, 2021.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section and other parts of this Quarterly Report on Form 10-Q ("Form 10-Q") contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA"), which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different from the statements made herein. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial position, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to any historical or current facts. These statements may include words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "future," "intend," "outlook," "potential," "project," "projection," "plan," "seek," "may," "could," "would," "will," "should," "can," "can have," "likely," the negatives thereof and other similar expressions. All forward-looking statements are expressly qualified in their entirety by these cautionary statements.

The following discussion and analysis should be read in conjunction with our Annual Report on Form 10-K for the year ended October 3, 2020 and the consolidated condensed financial statements and notes thereto included in Part I, Item 1 of this Form 10-Q. All information presented herein is based on our fiscal calendar. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years and the associated quarters, months and periods of those fiscal years.

COVID-19 Pandemic

The COVID-19 pandemic has adversely affected, and is expected to continue to adversely affect, our operations and financial results for the foreseeable future. As of July 3, 2021, all of our restaurants have re-opened and currently, national, state and local jurisdictions have removed their capacity restrictions on businesses and therefore our restaurants are serving customers in our dining rooms without social distancing requirements. However, we cannot predict whether we will be required to limit capacity or close again in the future, as these decisions will depend primarily on the actions of a number of governmental bodies over which we have no control. It is possible additional outbreaks could require us to reduce our capacity, implement social distancing or further suspend our in-restaurant dining operations, and there is no guarantee that state and local jurisdictions, that have currently eased restrictions, will not reverse or roll-back the restrictions, as many have done in the past. Additionally, our restaurant operations have been and could continue to be disrupted by employee staffing issues because of illness, fear of contracting COVID-19 or caring for family members due to COVID-19, or for other reasons. Furthermore, we remain in regular contact with our major suppliers and while to date we have not experienced significant disruptions in our supply chain due to COVID-19, we could see significant future disruptions should the impacts of COVID-19 extend for a considerable amount of time.

As a result of the COVID-19 pandemic, the Company experienced a significant negative impact on its revenues, results of operations and cash flows, and has a working capital deficiency of $(2,134,000) as of July 3, 2021. However, we believe that our existing cash balances, current banking facilities and cash provided by operations will be sufficient to meet our liquidity and capital spending requirements through August 18, 2022.

Overview

As of July 3, 2021, the Company owned and operated 18 restaurants and bars, 17 fast food concepts and catering operations, exclusively in the United States, that have similar economic characteristics, nature of products and service, class of customer and distribution methods. The Company believes it meets the criteria for aggregating its operating segments into a single reporting segment in accordance with applicable accounting guidance.

The consolidated condensed statements of operations for the 13 and 39 weeks ended July 3, 2021 include revenues and income of approximately $2,141,000 and $4,582,000 and $432,000 and $887,000, respectively, related to Blue Moon Fish Company, which was acquired on December 1, 2020.

Accounting Period

Our fiscal year ends on the Saturday nearest September 30. We report fiscal years under a 52/53-week format. This reporting method is used by many companies in the hospitality industry and is meant to improve year-to-year comparisons of operating results. Under this method certain years will contain 53 weeks. The periods ended July 3, 2021 and June 27, 2020 each included 13 and 39 weeks.

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Seasonality

The Company has substantial fixed costs that do not decline proportionately with sales. At our properties located in the northeast, the first and second fiscal quarters, which include the winter months, usually reflect lower customer traffic than in the third and fourth fiscal quarters. However, sales in the third and fourth fiscal quarters can be adversely affected by inclement weather due to the significant amount of outdoor seating at the Company’s restaurants.

Results of Operations

The Company’s operating income for the 13 weeks ended July 3, 2021 was $5,113,000, as compared to an operating loss of $(5,623,000) for the 13 weeks ended June 27, 2020. This increase resulted primarily from the strong performance of our Florida, Alabama and Las Vegas operations in the current period combined with the fact that all of our properties were closed for the majority of the prior period and operated at limited capacity when they reopened as a result of government mandates in connection with the COVID-19 pandemic.

The Company’s operating income for the 39 weeks ended July 3, 2021 was $309,000, as compared to an operating loss of $(5,123,000) for the 39 weeks ended June 27, 2020. This increase also resulted primarily from the strong performance of our Florida, Alabama and Las Vegas operations in the current quarter combined with the fact that all of our properties were closed for the majority of the third quarter of the prior fiscal year and operated at limited capacity when they reopened as a result of government mandates in connection with the COVID-19 pandemic.

The following table summarizes the significant components of the Company’s operating results for the 13- and 39-week periods ended July 3, 2021 and June 27, 2020:

	13 Weeks Ended				Variance				39 Weeks Ended				Variance
	July 3, 2021		June 27, 2020		$		%		July 3, 2021		June 27, 2020		$		%
	(in thousands)								(in thousands)
REVENUES:
Food and beverage sales	$	42,137	$	6,907	$	35,230	510.1	%	$	87,207	$	82,850	$	4,357	5.3	%
Other revenue	828		292		536		183.6	%	1,824		1,866		(42)		-2.3	%
Total revenues	42,965		7,199		35,766		496.8	%	89,031		84,716		4,315		5.1	%
COSTS AND EXPENSES:
Food and beverage cost of sales	12,676		1,847		10,829		586.3	%	26,382		22,366		4,016		18.0	%
Payroll expenses	12,304		3,701		8,603		232.5	%	29,345		31,925		(2,580)		-8.1	%
Occupancy expenses	4,251		3,004		1,247		41.5	%	11,248		12,274		(1,026)		-8.4	%
Other operating costs and expenses	4,737		852		3,885		456.0	%	11,077		11,834		(757)		-6.4	%
General and administrative expenses	2,802		2,437		365		15.0	%	7,625		7,888		(263)		-3.3	%
Loss on termination of lease	—		—		—		—	%	—		364		(364)		-100.0	%
Depreciation and amortization	1,082		981		101		10.3	%	3,045		3,188		(143)		-4.5	%
Total costs and expenses	37,852		12,822		25,030		195.2	%	88,722		89,839		(1,117)		-1.2	%
OPERATING INCOME (LOSS)	$	5,113	$	(5,623)	$	10,736	190.9	%	$	309	$	(5,123)	$	5,432	106.0	%

Revenues

During the 13-week period ended July 3, 2021, revenues increased 496.8% as compared to revenues in the 13-week period ended June 27, 2020. This increase resulted primarily from all of our properties operating with no capacity restrictions in the current period combined with the fact that all of our properties were closed for the majority of the prior period and operated at limited capacity when they reopened as a result of government mandates in connection with the COVID-19 pandemic.

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Food and Beverage Same-Store Sales

On a Company-wide basis, same-store sales increased 455.0% during the third fiscal quarter of 2021 as compared to the same period last year as follows:

	13 Weeks Ended				Variance
	July 3, 2021		June 27, 2020		$		%
	(in thousands)
Las Vegas	$	12,144	$	1,462	$	10,682	730.6	%
New York	5,501		125		5,376		4,300.8	%
Washington, D.C.	3,192		166		3,026		1,822.9	%
Atlantic City, NJ	554		—		554		N/A
Connecticut	103		—		103		N/A
Alabama	5,073		2,436		2,637		108.3	%
Florida	13,873		3,098		10,775		347.8	%
Same-store sales	40,440		7,287		$	33,153	455.0	%
Other	1,697		(380)
Food and beverage sales	$	42,137	$	6,907

The increases in same-store sales for the 13-week period ended July 3, 2021 as compared to the same period of the prior year are the result of all of our properties operating with no capacity restrictions in the current period combined with the fact that all of our properties were closed for the majority of the prior period and operated at limited capacity when they reopened as a result of government mandates in connection with the COVID-19 pandemic.

Costs and Expenses

Costs and expenses for the 13- and 39-weeks ended July 3, 2021 and June 27, 2020 were as follows (in thousands):

	13 Weeks Ended July 3, 2021		% to Total Revenues		13 Weeks Ended June 27, 2020		% to Total Revenues		Increase (Decrease)				39 Weeks Ended July 3, 2021		% to Total Revenues		39 Weeks Ended June 27, 2020		% to Total Revenues		Increase (Decrease)
									$		%										$		%
Food and beverage cost of sales	$	12,676	29.5	%	$	1,847	25.7	%	10,829		586.3	%	$	26,382	29.6	%	$	22,366	26.4	%	4,016		18.0	%
Payroll expenses	12,304		28.6	%	3,701		51.4	%	8,603		232.5	%	29,345		33.0	%	31,925		37.7	%	(2,580)		-8.1	%
Occupancy expenses	4,251		9.9	%	3,004		41.7	%	1,247		41.5	%	11,248		12.6	%	12,274		14.5	%	(1,026)		-8.4	%
Other operating costs and expenses	4,737		11.0	%	852		11.8	%	3,885		456.0	%	11,077		12.4	%	11,834		14.0	%	(757)		-6.4	%
General and administrative expenses	2,802		6.5	%	2,437		33.9	%	365		15.0	%	7,625		8.6	%	7,888		9.3	%	(263)		-3.3	%
Loss on termination of lease	—		—	%	—		—	%	—		—	%	—		—	%	364		0.4	%	(364)		-100.0	%
Depreciation and amortization	1,082		2.5	%	981		13.6	%	101		10.3	%	3,045		3.4	%	3,188		3.8	%	(143)		-4.5	%
Total costs and expenses	$	37,852			$	12,822			$	25,030			$	88,722			$	89,839			$	(1,117)

Food and beverage costs as a percentage of total revenues for the 13- and 39-weeks ended July 3, 2021 increased as compared with the same period of last year primarily as a result of increases in costs of seafood and other high-volume items.

Payroll expenses as a percentage of total revenues for the 13- and 39-weeks ended July 3, 2021 decreased as compared with the same period of last year primarily as a result of retaining key restaurant management personnel with lower corresponding revenues in the prior period as a result of the government mandated closures and/or capacity restrictions at all of our restaurants in connection with the COVID-19 pandemic.

Occupancy expenses as a percentage of total revenues for the 13- and 39-weeks ended July 3, 2021 decreased as compared with the same period of last year primarily as a result of the fixed nature of many of these expenses and lower sales in the prior period as a result of the COVID-19 pandemic.

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Other operating costs and expenses as a percentage of total revenues for the 13- and 39-weeks ended July 3, 2021 as compared to the same period of last year decreased primarily as a result of the fixed nature of some of these expenses and lower sales in the prior period as a result of the COVID-19 pandemic, decreased maintenance at properties where we are experiencing lower traffic and increased professional fees at the restaurant-level in the prior periods.

General and administrative expenses (which relate solely to the corporate office in New York City) for the 13-weeks ended July 3, 2021 increased as compared with the same period of last year primarily as a result of headcount and salary reductions of corporate personnel in the prior period as a result of the impacts on our business from the COVID-19 pandemic. General and administrative expenses for the 39-weeks ended July 3, 2021 decreased as compared with the same period of last year primarily as a result of lower legal fees in the current period partially offset by headcount and salary reductions of corporate personnel in the prior period as a result of the impacts on our business from the COVID-19 pandemic.

Depreciation and amortization expense for the 13-weeks ended July 3, 2021 increased as compared to the same period of last year primarily as a result of assets placed in service in the current period. Depreciation and amortization expense for the 39-weeks ended July 3, 2021 decreased as compared to the same period of last year primarily as a result of lower charges in the current period as a result of asset impairments in the first quarter of 2020.

Income Taxes

We calculate our interim income tax provision in accordance with ASC Topic 270, Interim Reporting and ASC Topic 740, Accounting for Income Taxes. At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary year to date earnings. In addition, the tax effects of unusual or infrequently occurring items including changes in judgment about valuation allowances and effects of changes in enacted tax laws are recognized discretely in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating (loss) income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current fiscal year. The accounting estimates used to compute income tax expense may change as new events occur, additional information is obtained, or the tax environment changes.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was enacted to provide economic relief to those impacted by the COVID-19 pandemic. In addition to the PPP loans, the CARES Act made various tax law changes including among other things (i) modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 tax years to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes, (ii) enhanced recoverability of AMT tax credit carryforwards, (iii) increased the limitation under IRC Section 163(j) for 2019 and 2020 to permit additional expensing of interest, and (iv) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k).

On December 27, 2020, the Consolidated Appropriations Act of 2021 (“CAA”) was enacted and provided clarification on the tax deductibility of expenses funded with PPP loans as fully deductible for tax purposes. During the 13 and 39-weeks ended July 3, 2021, the Company recorded income for financial reporting purposes related to the forgiveness of some of its PPP loans. The forgiveness of these PPP loans is not taxable. The income recorded for financial reporting purposes was considered an unusual or infrequent event and the tax effect was recorded discretely in the quarter in which the loans were forgiven.

As a result of the CARES Act and the CAA, the Company carried back taxable losses from fiscal year 2020 and is expected to carryback taxable losses from fiscal 2021 to generate a refund of previously paid income taxes. As a result of these carrybacks, the Company recorded income tax benefits as the taxable losses from fiscal 2020 and fiscal 2021 are being carried back to tax years in which the Company was subject to a higher federal corporate income tax rate. The carryback of taxable losses from fiscal 2021 was recorded as a component of the estimated annual effective tax rate. The adjustment to the fiscal 2020 carryback was recorded as a discrete item.

The provision for income taxes for the 13-week period ended July 3, 2021 was $4,684,000. The effective tax rate for the 13-week period ended July 3, 2021 of 58.5% differed from the statutory rate of 21% primarily related to changes in the annual effective tax rate as a result of updated forecasts of pre-tax earnings coupled with a discrete tax benefit attributable to the income related to the PPP loan forgiveness which is not taxable for income tax reporting purposes.

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The income tax benefit for the 39-week period ended July 3, 2021 was $(155,000). The effective tax rate for the 39-week period ended July 3, 2021 of -2.31% differed from the statutory rate of 21% primarily related to the discrete tax benefit attributable to the income related to the PPP loan forgiveness which is not taxable for income tax reporting purposes.

The income tax benefit for the 13- and 39-week periods ended June 27, 2020 was ($3,118,000) and $(3,213,000), respectively. The effective tax rate for the 13 and 39-week periods ended June 27, 2020 of 52.3% and 53.1%, respectively, differed from the statutory rate of 21% primarily as a result of the tax benefits related to the generation of FICA tax credits and the incremental benefit arising from the ability to carryback fiscal 2020 net operating losses to prior years when the tax rate was 34%.

The Company’s overall effective tax rate in the future will be affected by factors such as changes in tax law, the utilization of state and local net operating loss carryforwards, the generation of FICA tax credits. additional forgiveness of PPP loans and the mix of earnings by state taxing jurisdictions as Nevada does not impose a state income tax, as compared to the other major state and local jurisdictions in which the Company has operations. The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from current estimates.

Liquidity and Capital Resources

Our primary source of capital has been cash provided by operations and, in recent years, bank and other borrowings to finance specific transactions, acquisitions and large remodeling projects. We utilize cash generated from operations to fund the cost of developing and opening new restaurants and smaller remodeling projects of existing restaurants we own. Consistent with many other restaurant operators, we typically use operating lease arrangements for our restaurants. In recent years we have been able to acquire the underlying real estate at several locations along with the restaurant operation. We believe that our operating lease arrangements provide appropriate leverage of our capital structure in a financially efficient manner. As of July 3, 2021, we had a cash and cash equivalents balance of $18,280,000.

The Company had a working capital deficiency of $(2,134,000) at July 3, 2021 as compared with a deficiency of $(3,234,000) at October 3, 2020. This increase resulted primarily from cash provided by operations offset by a change in our debt maturities in connection with conversion of our revolving credit borrowings to term loans. We believe that our existing cash balances and current banking facilities will be sufficient to meet our liquidity and capital spending requirements and finance our operating activities for at least the next 12 months.

Our liquidity has been adversely affected primarily by decreased customer traffic as a result the government mandated closures and capacity restrictions at all our of restaurants in connection with the COVID-19 pandemic.

The COVID-19 pandemic has adversely affected, and may continue to adversely affect, our operations and financial results for the foreseeable future. As of July 3, 2021, all of our restaurants have re-opened and currently, national, state and local jurisdictions have removed their capacity restrictions on businesses and therefore our restaurants are serving customers in our dining rooms without social distancing requirements. However, we cannot predict whether we will be required to limit capacity or close again in the future, as these decisions will depend primarily on the actions of a number of governmental bodies over which we have no control. It is possible additional outbreaks could require us to reduce our capacity, implement social distancing or further suspend our in-restaurant dining operations, and there is no guarantee that state and local jurisdictions, that have currently eased restrictions, will not reverse or roll-back the restrictions, as many have done in the past. Additionally, our restaurant operations have been and could continue to be disrupted by employee staffing issues because of illness, fear of contracting COVID-19 or caring for family members due to COVID-19, or for other reasons. Furthermore, we remain in regular contact with our major suppliers and while to date we have not experienced significant disruptions in our supply chain due to COVID-19, we could see significant future disruptions should the impacts of COVID-19 extend for a considerable amount of time.

Due to the fluidity of the COVID-19 pandemic, management cannot determine the ultimate impact that it will have on the Company’s consolidated financial condition, liquidity, future results of operations, suppliers, industry, and workforce and therefore any prediction as to the ultimate material adverse impact on the Company’s consolidated financial condition, liquidity, and future results of operations is uncertain. The disruption in operations has led the Company to consider the impact of the COVID-19 pandemic on its liquidity, debt covenant compliance, and recoverability of long-lived and ROU assets, goodwill and intangible assets, among others. If these disruptions were to re-occur, they could have a material negative impact on our consolidated financial condition, future results of operations and liquidity. The extent of such negative impact will be determined, in part, by the longevity and severity of the pandemic.

- 26 -

Cash Flows for 39 Weeks Ended July 3, 2021 and June 27, 2020

Net cash provided by operating activities for the 39-weeks ended July 3, 2021 increased to $6,648,000 as compared to $(2,510,000) used in operations in the same period of last year. This increase was attributable to an increase in operating income as a result of the continued recovery from the COVID-19 pandemic and changes in net working capital primarily related to accounts receivable, inventory and accounts payable and accrued expenses.

Net cash used in investing activities for the 39-weeks ended July 3, 2021 and June 27, 2020 was $(3,455,000) and $(1,986,000), respectively, and resulted primarily from purchases of fixed assets at existing restaurants and, in the current period, the cash portion of the purchase price of the Blue Moon Fish Company acquisition.

Net cash used in financing activities for the 39-weeks ended July 3, 2021 of $(1,799,000) resulted primarily from principal payments on notes payable and the payment of distributions to non-controlling interests partially offset by proceeds from stock option exercises.

Net cash provided by financing activities for the 39-weeks ended June 27, 2020 of $18,044,000 resulted primarily from borrowings under our credit facility and proceeds from PPP loans partially offset by principal payments on notes payable and the payment of dividends.

Recent Restaurant Expansions and Other Developments

On December 1, 2020, the Company, through a newly formed, wholly-owned subsidiary, acquired the assets of Bear Ice, Inc. and File Gumbo Inc., which collectively operated a restaurant and bar named Blue Moon Fish Company located in Lauderdale-by-the-Sea, FL. The total purchase price of $2,820,000 was paid with cash in the amount of $1,820,000 and a four-year note held by the sellers in the amount of $1,000,000 payable monthly with 5% interest. Concurrent with the acquisition, the Company assumed the related lease which expires in 2026 and has four five-year extension options. Rent payments under the lease are approximately $360,000 per year and increase by approximately 15% as each option is exercised.

On January 26, 2021, the Company exercised its right-of-first-refusal to acquire the land, building and parking lot associated with JB’s on the Beach and immediately contributed such rights and interest to an unrelated entity ("Newco") that purchased the properties on March 22, 2021. In exchange, the Company received a 5% interest in Newco, as defined, which plans future development of the sites. In addition, all rights and privileges under the current lease were assigned to Newco, as landlord and the lease terms remain unchanged.

Our restaurants generally do not achieve substantial increases in revenue from year to year, which we consider to be typical of the restaurant industry. To achieve significant increases in revenue or to replace revenue of restaurants that lose customer favor or which close because of lease expirations or other reasons, we would have to open additional restaurant facilities or expand existing restaurants. There can be no assurance that a restaurant will be successful after it is opened, particularly since in many instances we do not operate our new restaurants under a trade name currently used by us, thereby requiring new restaurants to establish their own identity.

We may take advantage of other opportunities we consider to be favorable, when they occur, depending upon the availability of financing and other factors.

Recent Restaurant Dispositions

On November 13, 2020, the Company was advised by the landlord that it would have to vacate Gallagher’s Steakhouse and Gallagher’s Burger Bar at the Resorts Casino Hotel located in Atlantic City, NJ which were on a month-to-month, no rent lease. The closure of these properties occurred on January 2, 2021 and did not result in a material charge to the Company’s operations.

As of January 2, 2021, the Company determined that, given the current situation, it will not reopen Thunder Grill in Washington, D.C. which has been closed since March 20, 2020. This closure did not result in a material charge to the Company’s operations.

Investment in and Receivable from New Meadowlands Racetrack

On March 12, 2013, the Company made a $4,200,000 investment in the New Meadowlands Racetrack LLC (“NMR”) through its purchase of a membership interest in Meadowlands Newmark, LLC, an existing member of NMR with a then 63.7% ownership interest. On November 19, 2013, the Company invested an additional $464,000 in NMR through the purchase of an additional membership interest in Meadowlands Newmark, LLC resulting in a total ownership of 11.6% of Meadowlands Newmark, LLC,

- 27 -

and an effective ownership interest in NMR of 7.4%, subject to dilution. In 2015, the Company invested an additional $222,000 in NMR and in February 2017, the Company invested an additional $222,000 in NMR, both as a result of capital calls with no change in ownership, bringing its total investment to $5,108,000.

In addition to the Company’s ownership interest in NMR, if casino gaming is approved at the Meadowlands and NMR is granted the right to conduct said gaming, the Company shall be granted the exclusive right to operate the food and beverage concessions in the gaming facility with the exception of one restaurant.

In conjunction with this investment, the Company, through a 97% owned subsidiary, Ark Meadowlands LLC (“AM VIE”), also entered into a long-term agreement with NMR for the exclusive right to operate food and beverage concessions serving the new raceway facilities (the “Racing F&B Concessions”) located in the new raceway grandstand constructed at the Meadowlands Racetrack in northern New Jersey. Under the agreement, NMR is responsible to pay for the costs and expenses incurred in the operation of the Racing F&B Concessions, and all revenues and profits thereof inure to the benefit of NMR. AM VIE receives an annual fee equal to 5% of the net profits received by NMR from the Racing F&B Concessions during each calendar year.

On April 25, 2014, the Company loaned $1,500,000 to Meadowlands Newmark, LLC. The note bears interest at 3%, compounded monthly and added to the principal, and is due in its entirety on January 31, 2024. The note may be prepaid, in whole or in part, at any time without penalty or premium. On July 13, 2016, the Company made an additional loan to Meadowlands Newmark, LLC in the amount of $200,000. Such amount is subject to the same terms and conditions as the original loan as discussed above. The principal and accrued interest related to this note in the amounts of $1,807,000 and $1,766,000 are included in Investment In and Receivable from New Meadowlands Racetrack in the consolidated condensed balance sheets at July 3, 2021 and October 3, 2020, respectively.

On June 7, 2018, the New Jersey State Legislature voted to legalize sports betting at casinos and racetracks in the state. Pursuant to this legislation NMR opened a sports book in partnership with FanDuel, a leading provider of daily fantasy sports.

Notes Payable – Bank

On June 1, 2018, the Company refinanced (the "Refinancing") its then existing indebtedness with its current lender, Bank Hapoalim B.M. (“BHBM”), by entering into an amended and restated credit agreement (the “Revolving Facility”), which was to mature on May 19, 2022 (as extended). The Revolving Facility provides for total availability of the lesser of (i) $10,000,000 and (ii) $35,000,000 less the then aggregate amount of all indebtedness and obligations to BHBM. On July 26, 2021, all outstanding Revolver Borrowings, in the amount of $9,666,000, were converted to a promissory note with quarterly principal payments of $500,000 commencing on September 1, 2021, with a balloon payment of $2,166,000 on June 1, 2025. Such note bears interest at LIBOR plus 3.5% per annum. We expect that the LIBOR rate will be discontinued at some point during 2021 and to work with BHBM to identify a suitable replacement rate and amend our debt agreements to reflect this new reference rate accordingly. We do not expect the discontinuation of LIBOR as a reference rate in our debt agreements to have a material adverse effect on our financial position or materially affect our interest expense.

Borrowings under the Revolving Facility, which include the promissory notes as discussed in Note 8 of the consolidated condensed financial statements, are secured by all tangible and intangible personal property (including accounts receivable, inventory, equipment, general intangibles, documents, chattel paper, instruments, letter-of-credit rights, investment property, intellectual property and deposit accounts) and fixtures of the Company. The Revolving Facility also requires, among other things, that the Company meet minimum quarterly tangible net worth amounts, maintain a minimum fixed charge coverage ratio and meet minimum annual net income amounts. The Revolving Facility contains customary representations, warranties and affirmative covenants as well as customary negative covenants, subject to negotiated exceptions on liens, relating to other indebtedness, capital expenditures, liens, affiliate transactions, disposal of assets and certain changes in ownership.

On June 12, 2020 and again on February 15, 2021, as a result of the impact of the COVID-19 pandemic on our business, BHBM agreed to modified financial covenants through fiscal Q2 2022. The Company was in compliance with all of its financial covenants under the Revolving Facility as of July 3, 2021.

Paycheck Protection Program Loans

During the year ended October 3, 2020, subsidiaries (the “Borrowers”) of the Company received loan proceeds from several banks (the “Lenders”) in the aggregate amount of $14,995,000 (the “PPP Loans”) under the Paycheck Protection Program (the “PPP”) of the CARES Act, which was enacted March 27, 2020. In addition, during the 13-weeks ended April 3, 2021, one of our consolidated VIEs received a second draw PPP Loan in the amount of $111,000. The PPP Loans are evidenced by individual promissory notes of each of the Borrowers (together, the “Notes”) in favor of the Lender, which Notes bear interest at the rate of 1.00% per annum. Funds from the PPP Loans may be used only for payroll and related costs, costs used to continue group health

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care benefits, mortgage payments, rent, utilities, and interest on other debt obligations that were incurred by a Borrower prior to February 15, 2020 (the “Qualifying Expenses”). Under the terms of the PPP Loans, some or all of the amounts thereunder, including accrued interest, may be forgiven if they are used for Qualifying Expenses as described in and in compliance with the CARES Act. Each Note may be prepaid by the respective Borrower at any time prior to maturity with no prepayment penalties. No payments of principal or interest are due under the Notes until the date on which the amount of loan forgiveness (if any) under the CARES Act for each respective Note is remitted to the Lender and a forgiveness decision is received by the Borrower. Forgiveness applications can be submitted up to 10 months after the end of the related notes covered period (which is defined as 24 weeks after the date of the loan) (the “Deferral Period”) and the ultimate forgiveness decisions can be made by the Lenders up to 60 days after submitting the applications and possibly longer if forgiveness is fully or partially denied and the Borrower appeals the decision. While the Company and each Borrower used the PPP Loan proceeds exclusively for Qualifying Expenses, it is unclear and uncertain whether the conditions for forgiveness of the PPP Loans outstanding at July 3, 2021 will be met under the current guidelines of the CARES Act. Therefore, we cannot make any assurances that the Company, or any of the Borrowers, will be eligible for forgiveness of the remaining PPP Loans, in whole or in part.

During the 13 and 39 weeks ended July 3, 2021, $3,195,000 (including $36,000 of accrued interest) and $7,318,000 of PPP Loans (including $63,000 of accrued interest), respectively, were forgiven. To the extent, if any, that any of the remaining PPP Loans are not forgiven, beginning one month following expiration of the Deferral Period, and continuing monthly until 24 months from the date of each applicable Note (the “Maturity Date”), each respective Borrower is obligated to make monthly payments of principal and interest to the Lender with respect to any unforgiven portion of the Notes, in such equal amounts required to fully amortize the principal amount outstanding on such Notes as of the last day of the applicable Deferral Period by the applicable Maturity Date.

Recent Events

On August 3, 2021, New York City became the first U.S. city to require proof of at least one dose of a COVID-19 vaccine for a variety of activities for workers and customers, including indoor dining. The requirements are effective starting on August 16, 2021 with enforcement to begin on September 13, 2021.

As a result of these new requirements, the Company temporarily closed Clyde Frazier's Wine & Dine on August 8, 2021.

Critical Accounting Policies

The preparation of financial statements requires the application of certain accounting policies, which may require the Company to make estimates and assumptions of future events. In the process of preparing its consolidated condensed financial statements, the Company estimates the appropriate carrying value of certain assets and liabilities, which are not readily apparent from other sources. The primary estimates underlying the Company’s consolidated condensed financial statements include projected cash flows, allowances for potential bad debts on accounts and notes receivable, assumptions regarding discount rates related to lease accounting, the useful lives and recoverability of its assets, such as property and intangibles, fair values of financial instruments, the realizable value of its tax assets and other matters. Management bases its estimates on certain assumptions, which it believes are reasonable in the circumstances, and actual results could differ from those estimates. Although management does not believe that any change in those assumptions in the near term would have a material effect on the Company’s consolidated condensed financial position or the results of operations, differences in actual results could be material to the consolidated condensed financial statements.

The Company’s critical accounting policies are described in the Company’s Form 10-K for the year ended October 3, 2020. There have been no significant changes to such policies during fiscal 2021 other than those disclosed in Note 1 to the consolidated condensed financial statements.

Recently Adopted and Issued Accounting Standards

See Note 1 to the consolidated condensed financial statements for a description of recent accounting pronouncements, including those adopted in fiscal 2021 and the expected dates of adoption of new accounting standards and the anticipated impact on the consolidated condensed financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not Applicable

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on this evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of July 3, 2021 to ensure that all material information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to them as appropriate to allow timely decisions regarding required disclosure and that all such information is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the third quarter of fiscal 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations of the Effectiveness of Internal Control

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of the inherent limitations of any internal control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings

Except as otherwise provided below, the Company is not subject to pending legal proceedings, other than ordinary claims incidental to its business, which the Company does not believe will materially impact results of operations.

On May 1, 2018, two former tipped service workers (the “Plaintiffs”), individually and on behalf of all other similarly situated personnel, filed a putative class action lawsuit (the “Complaint”) against the Company and certain subsidiaries as well as certain officers of the Company (the “Defendants”).  Plaintiffs alleged, on behalf of themselves and the putative class, that the Company violated certain of the New York State Labor Laws and related regulations.  The Complaint sought unspecified money damages, together with interest, liquidated damages and attorney fees.  In December 2020, the parties reached a settlement agreement resolving all issues alleged in the Complaint, which received preliminary approval by the New York State Supreme Court, for approximately the amount which was previously accrued.

Item 1A. Risk Factors

Not Applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

Item 6.    Exhibits

31.1 Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32    Certificate of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*  XBRL Instance Document

101.SCH* XBRL Taxonomy Extension Schema Document

101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* XBRL Taxonomy Extension Label Linkbase Document

101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document

__________________________

* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:	August 17, 2021
	ARK RESTAURANTS CORP.
By:	/s/ Michael Weinstein
	Michael Weinstein
	Chairman & Chief Executive Officer
	(Principal Executive Officer)
By:	/s/ Anthony J. Sirica
	Anthony J. Sirica
	Chief Financial Officer
	(Authorized Signatory and Principal
	Financial and Accounting Officer)

- 32 -

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Weinstein, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Ark Restaurants Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 17, 2021

/s/ Michael Weinstein

Michael Weinstein

Chairman and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Anthony J. Sirica, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Ark Restaurants Corp.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 17, 2021

/s/ Anthony J. Sirica

Anthony J. Sirica

Chief Financial Officer

(Authorized Signatory and Principal Financial and Accounting Officer)

EX-32

Exhibit 32

Certificate of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q for the quarter ended July 3, 2021 of Ark Restaurants Corp. (the “Registrant”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Michael Weinstein, Chief Executive Officer and Anthony J. Sirica, Chief Financial Officer, of the Registrant, certify, pursuant to 18 U.S.C. § 1350, that to our knowledge:

(i)this Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o(d)); and

(ii)the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated as of this 17th day of August 2021

/s/ Michael Weinstein	/s/ Anthony J. Sirica
Michael Weinstein	Anthony J. Sirica
Chairman and Chief Executive Officer	Chief Financial Officer
(Principal Executive Officer)	(Authorized Signatory and Principal Financial and Accounting Officer)

XML

Cover - shares	9 Months Ended
	Jul. 03, 2021	Aug. 12, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Current Fiscal Year End Date	--07-03
Document Transition Report	false
Entity File Number	1-09453
Entity Registrant Name	ARK RESTAURANTS CORP.
Entity Incorporation, State or Country Code	NY
Entity Tax Identification Number	13-3156768
Entity Address, Address Line One	85 Fifth Avenue,
Entity Address, City or Town	New York,
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10003
City Area Code	212
Local Phone Number	206-8800
Title of 12(b) Security	Common Stock, par value $.01 per share
Trading Symbol	ARKR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		3,551,556
Amendment Flag	false
Entity Central Index Key	0000779544
Document Period End Date	Jul. 03, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3

XML

CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Jul. 03, 2021	Oct. 03, 2020
CURRENT ASSETS:
Cash and cash equivalents (includes $676 at July 3, 2021 and $567 at October 3, 2020 related to VIEs)	$ 18,280	$ 16,886
Accounts receivable (includes $218 at July 3, 2021 and $162 at October 3, 2020 related to VIEs)	3,997	1,738
Employee receivables	373	385
Inventories (includes $29 at July 3, 2021 and $27 at October 3, 2020 related to VIEs)	2,172	2,553
Prepaid and refundable income taxes (includes $278 at July 3, 2021 and $274 at October 3, 2020 related to VIEs)	3,716	2,870
Prepaid expenses and other current assets (includes $47 at July 3, 2021 and $13 at October 3, 2020 related to VIEs)	2,895	2,469
Total current assets	31,433	26,901
FIXED ASSETS - Net (includes $219 at July 3, 2021 and $241 at October 3, 2020 related to VIEs)	36,338	37,682
OPERATING LEASE RIGHT-OF-USE ASSETS - Net (includes $2,406 at July 3, 2021 and $2,658 at October 3, 2020 related to VIEs)	57,633	54,191
INTANGIBLE ASSETS - Net	378	49
GOODWILL	17,440	15,570
TRADEMARKS	4,220	3,720
DEFERRED INCOME TAXES	5,215	5,897
INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK	6,915	6,874
OTHER ASSETS (includes $82 at July 3, 2021 and October 3, 2020 related to VIEs)	2,549	2,432
TOTAL ASSETS	162,121	153,316
CURRENT LIABILITIES:
Accounts payable - trade (includes $134 at July 3, 2021 and $119 at October 3, 2020 related to VIEs)	4,533	2,329
Accrued expenses and other current liabilities (includes $565 at July 3, 2021 and $331 at October 3, 2020 related to VIEs)	15,111	12,688
Current portion of operating lease liabilities (includes $243 at July 3, 2021 and $226 at October 3, 2020 related to VIEs)	6,546	6,117
Current portion of notes payable (includes $77 at July 3, 2021 related to VIEs)	7,377	9,001
Total current liabilities	33,567	30,135
OPERATING LEASE LIABILITIES, LESS CURRENT PORTION (includes $2,257 at July 3, 2021 and $2,442 at October 3, 2020 related to VIEs)	54,626	49,960
NOTES PAYABLE, LESS CURRENT PORTION, net of deferred financing costs (includes $290 at July 3, 2021 and $723 at October 3, 2020 related to VIEs)	29,455	36,068
TOTAL LIABILITIES	117,648	116,163
COMMITMENTS AND CONTINGENCIES
EQUITY:
Common stock, par value $0.01 per share - authorized, 10,000 shares; issued and outstanding, 3,552 shares at July 3, 2021 and 3,502 shares at October 3, 2020	36	35
Additional paid-in capital	14,419	13,503
Retained earnings	29,056	22,989
Total Ark Restaurants Corp. shareholders’ equity	43,511	36,527
NON-CONTROLLING INTERESTS	962	626
TOTAL EQUITY	44,473	37,153
TOTAL LIABILITIES AND EQUITY	$ 162,121	$ 153,316

XML

CONSOLIDATED CONDENSED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ in Thousands	Jul. 03, 2021	Oct. 03, 2020
Cash and cash equivalents	$ 18,280	$ 16,886
Accounts receivable	3,997	1,738
Inventories	2,172	2,553
Prepaid and refundable income taxes	3,716	2,870
Prepaid expenses and other current assets	2,895	2,469
Fixed assets - net	36,338	37,682
Operating lease right-of-use asset	57,633	54,191
Other assets	2,549	2,432
Accounts payable - trade	4,533	2,329
Accrued expenses and other current liabilities	15,111	12,688
Current portion of operating lease liabilities	6,546	6,117
Current portion of notes payable	7,377	9,001
Operating lease liabilities, less current portion	54,626	49,960
Notes payable, less current portion	$ 29,455	$ 36,068
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	10,000	10,000
Common stock, issued (in shares)		3,502
Common stock, outstanding (in shares)		3,502
Variable Interest Entity, Primary Beneficiary
Cash and cash equivalents	$ 676	$ 567
Accounts receivable	218	162
Inventories	29	27
Prepaid and refundable income taxes	278	274
Prepaid expenses and other current assets	47	13
Fixed assets - net	219	241
Operating lease right-of-use asset	2,406	2,658
Other assets	82	82
Accounts payable - trade	134	119
Accrued expenses and other current liabilities	565	331
Current portion of operating lease liabilities	243	226
Current portion of notes payable	77	0
Operating lease liabilities, less current portion	2,257	2,442
Notes payable, less current portion	$ 290	$ 723

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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands	3 Months Ended		9 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
REVENUES:
Total revenues	$ 42,965,000	$ 7,199,000	$ 89,031,000	$ 84,716,000
COSTS AND EXPENSES:
Payroll expenses	12,304,000	3,701,000	29,345,000	31,925,000
Other operating costs and expenses	4,737,000	852,000	11,077,000	11,834,000
General and administrative expenses	2,802,000	2,437,000	7,625,000	7,888,000
Loss on termination of lease	0	0	0	364,000
Depreciation and amortization	1,082,000	981,000	3,045,000	3,188,000
Total costs and expenses	37,852,000	12,822,000	88,722,000	89,839,000
OPERATING INCOME (LOSS)	5,113,000	(5,623,000)	309,000	(5,123,000)
OTHER (INCOME) EXPENSE:
Interest expense	309,000	283,000	940,000	1,045,000
Interest income	(14,000)	(29,000)	(41,000)	(103,000)
Gain on forgiveness of PPP Loans	(3,195,000)	0	(7,318,000)	0
Total other (income) expense, net	(2,900,000)	254,000	(6,419,000)	942,000
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES	8,013,000	(5,877,000)	6,728,000	(6,065,000)
Provision (benefit) for income taxes	4,684,000	(3,118,000)	(155,000)	(3,213,000)
CONSOLIDATED NET INCOME (LOSS)	3,329,000	(2,759,000)	6,883,000	(2,852,000)
Net (income) loss attributable to non-controlling interests	(659,000)	233,000	(816,000)	61,000
NET INCOME (LOSS) ATTRIBUTABLE TO ARK RESTAURANTS CORP.	$ 2,670,000	$ (2,526,000)	$ 6,067,000	$ (2,791,000)
NET INCOME (LOSS) PER ARK RESTAURANTS CORP. COMMON SHARE:
Basic (in dollars per share)	$ 0.76	$ (0.72)	$ 1.73	$ (0.80)
Diluted (in dollars per share)	$ 0.73	$ (0.72)	$ 1.68	$ (0.80)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic (in shares)	3,522	3,502	3,512	3,500
Diluted (in shares)	3,648	3,502	3,602	3,500
Food and Beverage
REVENUES:
Total revenues	$ 42,137,000	$ 6,907,000	$ 87,207,000	$ 82,850,000
COSTS AND EXPENSES:
Cost of goods and services sold	12,676,000	1,847,000	26,382,000	22,366,000
Other Revenue
REVENUES:
Total revenues	828,000	292,000	1,824,000	1,866,000
Occupancy
COSTS AND EXPENSES:
Cost of goods and services sold	$ 4,251,000	$ 3,004,000	$ 11,248,000	$ 12,274,000

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CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Total Ark Restaurants Corp. Shareholders’ Equity	Non- controlling Interests
Beginning balance (in shares) at Sep. 28, 2019		3,499,000
Beginning balance at Sep. 28, 2019	$ 42,707	$ 35	$ 13,277	$ 28,552	$ 41,864	$ 843
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(2,852)			(2,791)	(2,791)	(61)
Exercise of stock options (in shares)		3,000
Exercise of stock options	50		50		50
Stock-based compensation	113		113		113
Distributions to non-controlling interests	(138)					(138)
Dividends accrued	(1,751)			(1,751)	(1,751)
Ending balance (in shares) at Jun. 27, 2020		3,502,000
Ending balance at Jun. 27, 2020	38,129	$ 35	13,440	24,010	37,485	644
Beginning balance (in shares) at Mar. 28, 2020		3,502,000
Beginning balance at Mar. 28, 2020	40,830	$ 35	13,382	26,536	39,953	877
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(2,759)			(2,526)	(2,526)	(233)
Stock-based compensation	58		58		58
Ending balance (in shares) at Jun. 27, 2020		3,502,000
Ending balance at Jun. 27, 2020	38,129	$ 35	13,440	24,010	37,485	644
Beginning balance (in shares) at Oct. 03, 2020		3,502,000
Beginning balance at Oct. 03, 2020	37,153	$ 35	13,503	22,989	36,527	626
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ 6,883			6,067	6,067	816
Exercise of stock options (in shares)	49,149	50,000
Exercise of stock options	$ 710	$ 1	709		710
Stock-based compensation	207		207		207
Distributions to non-controlling interests	(480)					(480)
Ending balance (in shares) at Jul. 03, 2021		3,552,000
Ending balance at Jul. 03, 2021	44,473	$ 36	14,419	29,056	43,511	962
Beginning balance (in shares) at Apr. 03, 2021		3,532,000
Beginning balance at Apr. 03, 2021	41,219	$ 35	14,062	26,386	40,483	736
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	3,329			2,670	2,670	659
Exercise of stock options (in shares)		20,000
Exercise of stock options	284	$ 1	283		284
Stock-based compensation	74		74		74
Distributions to non-controlling interests	(433)					(433)
Ending balance (in shares) at Jul. 03, 2021		3,552,000
Ending balance at Jul. 03, 2021	$ 44,473	$ 36	$ 14,419	$ 29,056	$ 43,511	$ 962

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CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN EQUITY (Unaudited) (Parentheticals)	9 Months Ended
	Jun. 27, 2020 $ / shares
Statement of Stockholders' Equity [Abstract]
Dividends accrued (in dollars per share)	$ 0.50

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Jul. 03, 2021	Jun. 27, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)	$ 6,883,000	$ (2,852,000)
Adjustments to reconcile consolidated net income (loss) to net cash provided by (used in) operating activities:
Stock-based compensation	207,000	113,000
Gain on forgiveness of PPP Loans	(7,318,000)	0
Loss on termination of lease	0	364,000
Deferred income taxes	682,000	(1,360,000)
Accrued interest on note receivable from NMR	(41,000)	(39,000)
Depreciation and amortization	3,045,000	3,188,000
Amortization of operating lease assets	1,653,000	261,000
Amortization of deferred financing costs	47,000	33,000
Operating lease deferred credit	0	(197,000)
Changes in operating assets and liabilities:
Accounts receivable	(2,259,000)	1,328,000
Inventories	420,000	(438,000)
Prepaid, refundable and accrued income taxes	(846,000)	(2,044,000)
Prepaid expenses and other current assets	(426,000)	(745,000)
Other assets	(87,000)	115,000
Accounts payable - trade	2,204,000	(665,000)
Accrued expenses and other current liabilities	2,484,000	428,000
Net cash provided by (used in) operating activities	6,648,000	(2,510,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed assets	(1,650,000)	(2,004,000)
Loans and advances made to employees	(37,000)	(75,000)
Payments received on employee receivables	49,000	93,000
Purchase of Blue Moon Fish Company, net of cash acquired	(1,817,000)	0
Net cash used in investing activities	(3,455,000)	(1,986,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable	(2,140,000)	(1,350,000)
Borrowings under credit facility	0	6,300,000
Proceeds from PPP Loans	111,000	14,995,000
Payments of debt financing costs	0	(63,000)
Dividends paid	0	(1,750,000)
Proceeds from issuance of stock upon exercise of stock options	710,000	50,000
Distributions to non-controlling interests	(480,000)	(138,000)
Net cash provided by (used in) financing activities	(1,799,000)	18,044,000
NET INCREASE IN CASH AND CASH EQUIVALENTS	1,394,000	13,548,000
CASH AND CASH EQUIVALENTS, Beginning of period	16,886,000	7,177,000
CASH AND CASH EQUIVALENTS, End of period	18,280,000	20,725,000
Cash paid during the period for:
Interest	802,000	1,001,000
Income taxes	7,000	192,000
Non-cash financing activities:
Accrued dividend	0	876,000
Note payable in connection with the purchase of Blue Moon Fish Company	$ 1,000,000	$ 0

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BASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIES

9 Months Ended

Jul. 03, 2021

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIES

BASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIES

The consolidated condensed balance sheet as of October 3, 2020, which has been derived from the audited consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended October 3, 2020 (“Form 10-K”), and the unaudited interim consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. All adjustments that, in the opinion of management are necessary for a fair presentation for the periods presented, have been reflected as required by Article 10 of Regulation S-X. Such adjustments are of a normal, recurring nature. These consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K.

COVID-19 PANDEMIC — The COVID-19 pandemic has adversely affected, and is expected to continue to adversely affect, our operations and financial results for the foreseeable future. As of July 3, 2021, all of our restaurants have re-opened and currently, national, state and local jurisdictions have removed their capacity restrictions on businesses and therefore our restaurants are serving customers in our dining rooms without social distancing requirements. However, we cannot predict whether we will be required to limit capacity or close again in the future, as these decisions will depend primarily on the actions of a number of governmental bodies over which we have no control. It is possible additional outbreaks could require us to reduce our capacity, implement social distancing or further suspend our in-restaurant dining operations, and there is no guarantee that state and local jurisdictions, that have currently eased restrictions, will not reverse or roll-back the restrictions, as many have done in the past. Additionally, our restaurant operations have been and could continue to be disrupted by employee staffing issues because of illness, fear of contracting COVID-19 or caring for family members due to COVID-19, or for other reasons. Furthermore, we remain in regular contact with our major suppliers and while to date we have not experienced significant disruptions in our supply chain due to COVID-19, we could see significant future disruptions should the impacts of COVID-19 extend for a considerable amount of time.

As a result of the COVID-19 pandemic, the Company experienced a significant negative impact on its revenues, results of operations and cash flows, and has a working capital deficiency of $(2,134,000) as of July 3, 2021. However, we believe that our existing cash balances, current banking facilities and cash provided by operations will be sufficient to meet our liquidity and capital spending requirements through August 18, 2022.

PRINCIPLES OF CONSOLIDATION — The consolidated condensed financial statements include the accounts of Ark Restaurants Corp. and all of its wholly-owned subsidiaries, partnerships and other entities in which it has a controlling interest, collectively herein referred to as the “Company”. Also included in the consolidated condensed financial statements are certain variable interest entities (“VIEs”). All significant intercompany balances and transactions have been eliminated in consolidation.

USE OF ESTIMATES — The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The accounting estimates that require management’s most difficult and subjective judgments include: projected cash flows, allowances for potential bad debts on receivables, assumptions regarding discount rates related to lease accounting, the useful lives and recoverability of its assets, such as property and intangibles, fair values of financial instruments and share-based compensation, estimates made in connection with acquisitions and impairment analyses, the realizable value of its tax assets and determining when investment impairments are other-than-temporary. Because of the uncertainty in such estimates, actual results may differ from these estimates. The results of operations for the 13 and 39 weeks ended July 3, 2021 are not necessarily indicative of the results to be expected for any other interim period or for the year ending October 2, 2021.

NON-CONTROLLING INTERESTS — Non-controlling interests represent capital contributions, income and loss attributable to the shareholders of less than wholly-owned and consolidated entities.

SEASONALITY — The Company has substantial fixed costs that do not decline proportionally with sales. The first and second fiscal quarters, which include the winter months, usually reflect lower customer traffic than in the third and fourth fiscal quarters. However, sales in the third and fourth fiscal quarters can be adversely affected by inclement weather due to the significant amount of outdoor seating at the Company’s restaurants.

FAIR VALUE OF FINANCIAL INSTRUMENTS — The carrying amount of cash and cash equivalents, receivables, accounts payable and accrued expenses approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair values of notes receivable and payable are determined using current applicable rates for similar instruments as of the balance sheet dates and approximate the carrying value of such debt instruments.

CASH AND CASH EQUIVALENTS — Cash and cash equivalents include cash on hand, deposits with banks and highly liquid investments generally with original maturities of three months or less. Outstanding checks in excess of account balances, typically vendor payments, payroll and other contractual obligations disbursed after the last day of a reporting period are reported as a current liability in the accompanying consolidated condensed balance sheets.

CONCENTRATIONS OF CREDIT RISK — Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company reduces credit risk by placing its cash and cash equivalents with major financial institutions with high credit ratings. At times, such amounts may exceed federally insured limits. Accounts receivable are primarily comprised of normal business receivables, such as credit card receivables, that are collected in a short period of time and amounts due from the hotel operators where the Company has a location, and are recorded upon satisfaction of the performance obligation. The Company reviews the collectability of its receivables on an ongoing basis, and provides for an allowance when it considers the entity unable to meet its obligation. The concentration of credit risk with respect to accounts receivable is generally limited due to the short payment terms extended by the Company and the number of customers comprising the Company’s customer base.

As of July 3, 2021, the Company had accounts receivable balances due from one hotel operator totaling 31% of total accounts receivable. As of October 3, 2020, the Company had accounts receivable balances due from two hotel operators totaling 46% of total accounts receivable.

For the 13-week period ended July 3, 2021, the Company made purchases from two vendors that accounted for 22% of total purchases. For the 13-week period ended June 27, 2020, the Company made purchases from three vendors that accounted for 46% of total purchases.

For the 39-week period ended July 3, 2021, the Company made purchases from two vendors that accounted for 23% of total purchases. For the 39-week period ended June 27, 2020, the Company made purchases from one vendor that accounted for 10% or greater of total purchases.

As of July 3, 2021 and October 3, 2020, all debt outstanding, other than Paycheck Protection Program loans and the note payable to the sellers of the Blue Moon Fish Company, is with one lender (see Note 8 – Notes Payable).

GOODWILL AND TRADEMARKS — Goodwill and trademarks are not amortized, but are subject to impairment analysis. We assess the potential impairment of goodwill and trademarks annually (at the end of our fourth quarter) and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If we determine through the impairment review process that goodwill or trademarks are impaired, we record an impairment charge in our consolidated condensed statements of operations.

Due to the recent impact of the COVID-19 pandemic to the global economy, including but not limited to, the volatility of the Company's stock price, temporary closures of the Company's restaurants and the challenging environment for the restaurant industry in general, the Company determined that there were indicators of potential impairment of its goodwill and trademarks during the 13 weeks ended July 3, 2021. As such, the Company performed a qualitative assessment for both goodwill and its trademarks and concluded that the fair value of these assets exceeded their carrying values. Accordingly, the Company did not record any impairment to its goodwill or trademarks during the 13 and 39 weeks ended July 3, 2021. The ultimate severity and longevity of the COVID-19 pandemic is unknown, and therefore, it is possible that impairments could be identified in future periods, and such amounts could be material.

LONG-LIVED AND RIGHT-OF-USE ASSETS — Long-lived assets, such as property, plant and equipment, purchased intangibles subject to amortization, and right-of-use assets ("ROU assets") are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the evaluation of the fair value and future benefits of long-lived assets, the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value. Various factors including estimated future sales growth and estimated profit margins are included in this analysis.

The Company considers a triggering event related to long-lived assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s cash flows for the last 12 months are less than a minimum threshold or if

consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. Additionally, the Company considers a triggering event related to ROU assets to have occurred related to a specific lease if the location has been subleased and future estimated sublease income is less than current lease payments. If the Company concludes that the carrying value of certain long-lived and ROU assets will not be recovered based on expected undiscounted future cash flows, an impairment loss is recorded to reduce the long-lived or ROU assets to their estimated fair value. The fair value is measured on a nonrecurring basis using unobservable (Level 3) inputs. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis, which requires the use of estimates and assumptions. If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods, and such charges could be material.

Based on the results of this analysis, no impairment charges were recognized related to long-lived assets and ROU assets during the 13 and 39 weeks ended July 3, 2021. Given the inherent uncertainty in projecting results of restaurants under the current circumstances, particularly taking into account the projected impact of the COVID-19 pandemic, the Company is monitoring the recoverability of the carrying value of the assets of several restaurants on an ongoing basis. For these restaurants, if expected performance is not realized, an impairment charge may be recognized in future periods, and such charge could be material.

REVENUE RECOGNITION — We recognize revenues when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest or other customer. Revenues from restaurant operations are presented net of discounts, coupons, employee meals and complimentary meals and recognized when food, beverage and retail products are sold. Sales tax collected from customers is excluded from sales and the obligation is included in sales tax payable until the taxes are remitted to the appropriate taxing authorities. Catering service revenue is generated through contracts with customers whereby the customer agrees to pay a contract rate for the service. Revenues from catered events are recognized in income upon satisfaction of the performance obligation (the date the event is held) and all customer payments, including nonrefundable upfront deposits, are deferred as a contract liability until such time. We recognized $1,140,000 and $25,000 in catering services revenue for the 13-week periods ended July 3, 2021 and June 27, 2020, respectively, and $1,347,000 and $7,259,000 for the 39-week periods ended July 3, 2021 and June 27, 2020, respectively. Unearned revenue, which is included in accrued expenses and other current liabilities on the consolidated condensed balance sheets as of July 3, 2021, October 3, 2020 and September 29, 2019, was $4,652,000, $3,661,000 and $4,549,000, respectively.

Revenues from gift cards are deferred and recognized upon redemption. Deferrals are not reduced for potential non-use as we generally have a legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions in which they are sold. As of July 3, 2021 and October 3, 2020, the total liability for gift cards in the amounts of approximately $198,000 and $227,000, respectively, are included in accrued expenses and other current liabilities in the consolidated condensed balance sheets.

Other revenues include purchase service fees which represent commissions earned by a subsidiary of the Company for providing services to other restaurant groups, as well as license fees, property management fees and other rentals.

LEASES — We determine if an arrangement contains a lease at inception. An arrangement contains a lease if it implicitly or explicitly identifies an asset to be used and conveys the right to control the use of the identified asset in exchange for consideration. As a lessee, we include operating leases in Operating lease right-of-use assets and Operating lease liabilities in our consolidated condensed balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized upon commencement of the lease based on the present value of the lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. Our lease terms may include options to extend or terminate the lease.  Options are included when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Amendments or modifications to lease terms are accounted for as variable lease payments. Leases with a lease term of 12 months or less are accounted for using the practical expedient which allows for straight-line rent expense over the remaining term of the lease. 

SEGMENT REPORTING — As of July 3, 2021, the Company owned and operated 18 restaurants and bars, 17 fast food concepts and catering operations, exclusively in the United States, that have similar economic characteristics, nature of products and services, class of customers and distribution methods. The Company believes it meets the criteria for aggregating its operating segments into a single reporting segment in accordance with applicable accounting guidance.

RECENTLY ADOPTED ACCOUNTING PRINCIPLES — In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test referenced in Accounting Standards Codification (“ASC”)

350, Intangibles - Goodwill and Other (“ASC 350”). As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including any interim impairment tests within those annual periods, with early application permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted this guidance in the first quarter of fiscal 2021. Such adoption did not have a material impact on our consolidated condensed financial statements. NEW ACCOUNTING STANDARDS NOT YET ADOPTED — In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which modifies Topic 740 to simplify the accounting for income taxes. ASU 2019-12 is effective for financial statements issued for annual periods beginning after December 15, 2020, and for the interim periods therein. The Company is currently evaluating the effect of adopting ASU 2019-12 to determine the impact on the Company’s consolidated financial position and results of operations.

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VARIABLE INTEREST ENTITIES

9 Months Ended

Jul. 03, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES

The Company consolidates any variable interest entities in which it holds a variable interest and is the primary beneficiary. Generally, a variable interest entity, or VIE, is an entity with one or more of the following characteristics: (a) the total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support; (b) as a group the holders of the equity investment at risk lack (i) the ability to make decisions about an entity’s activities through voting or similar rights, (ii) the obligation to absorb the expected losses of the entity, or (iii) the right to receive the expected residual returns of the entity; or (c) the equity investors have voting rights that are not proportional to their economic interests and substantially all of the entity’s activities either involve, or are conducted on behalf of, an investor that has disproportionately few voting rights. The primary beneficiary of a VIE is generally the entity that has (a) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (b) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company has determined that it is the primary beneficiary of three VIEs and, accordingly, consolidates the financial results of these entities. Following are the required disclosures associated with the Company’s consolidated VIEs:

	July 3, 2021		October 3, 2020
	(in thousands)
Cash and cash equivalents	$	676	$	567
Accounts receivable	218		162
Inventories	29		27
Prepaid and refundable income taxes	278		274
Prepaid expenses and other current assets	47		13
Due from Ark Restaurants Corp. and affiliates (1)	420		419
Fixed assets - net	219		241
Operating lease right-of-use assets - net	2,406		2,658
Other assets	82		82
Total assets	$	4,375	$	4,443
Accounts payable - trade	$	134	$	119
Accrued expenses and other current liabilities	565		331
Current portion of operating lease liabilities	243		226
Current portion of notes payable	77		—
Operating lease liabilities, less current portion	2,257		2,442
Notes payable, less current portion	290		723
Total liabilities	3,566		3,841
Equity of variable interest entities	809		602
Total liabilities and equity	$	4,375	$	4,443

(1)Amounts Due from and to Ark Restaurants Corp. and affiliates are eliminated upon consolidation.

The liabilities recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of the consolidated VIEs. Conversely, assets recognized as a result of consolidating these VIEs do not represent additional assets that could be used to satisfy claims against the Company’s general assets.

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RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS

9 Months Ended

Jul. 03, 2021

Business Combination and Asset Acquisition [Abstract]

RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS

RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS

On December 1, 2020, the Company, through a newly formed, wholly-owned subsidiary, acquired the assets of Bear Ice, Inc. and File Gumbo Inc., which collectively operated a restaurant and bar named Blue Moon Fish Company located in Lauderdale-by-the- Sea, FL. The total purchase price of $2,820,000, as set out below, was paid with cash in the amount of $1,820,000 and a four-year note held by the sellers in the amount of $1,000,000 payable monthly with 5% interest. The acquisition was accounted for as a business combination. Concurrent with the acquisition, the Company assumed the related lease which expires in 2026 and has four five-year extension options. Rent payments under the lease are approximately $360,000 per year and increase by 15% as each option is exercised.

The fair values of the assets acquired were allocated as follows (amounts in thousands):

Cash	$	3
Inventory	39
Security deposit	30
Trademarks	500
Non-compete agreement	380
Goodwill	1,870
Liabilities assumed	(2)
	$	2,820

Goodwill recognized in connection with this transaction represents the residual amount of the purchase price over separately identifiable intangible assets and is expected to be deductible for tax purposes.

The consolidated condensed statements of operations for the 13 and 39 weeks ended July 3, 2021 include revenues and net income of approximately $2,141,000 and $4,582,000 and $432,000 and $887,000, respectively, related to Blue Moon Fish Company. The unaudited pro forma financial information set forth below is based upon the Company’s historical consolidated condensed statements of operations for the 13 and 39 weeks ended June 27, 2020 and the 39 weeks ended July 3, 2021 and includes the results of operations for Blue Moon Fish Company for the period prior to acquisition. The unaudited pro forma financial information (which is presented in thousands except per share and share data), which has been adjusted for interest expense on the note, is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the acquisition of Blue Moon Fish Company occurred on the dates indicated, nor does it purport to represent the results of operations for future periods.  

	13 Weeks Ended		39 Weeks Ended
	June 27, 2020		July 3, 2021		June 27, 2020
	(unaudited)		(unaudited)
Total revenues	$	7,575	$	89,708	$	88,264
Net income (loss)	$	(2,595)	$	6,102	$	(2,280)
Net income (loss) per share - basic	$	(0.74)	$	1.74	$	(0.65)
Net income (loss) per share - diluted	$	(0.74)	$	1.69	$	(0.65)
Shares - Basic	3,502		3,512		3,500
Shares - Diluted	3,502		3,602		3,500

On January 26, 2021, the Company exercised its right-of-first-refusal to acquire the land, building and parking lot associated with JB’s on the Beach and immediately contributed such rights and interest to an unrelated entity ("Newco") that purchased the properties on March 22, 2021. In exchange, the Company received a 5% interest in Newco, which plans future development of

the sites. In addition, all rights and privileges under the current lease were assigned to Newco, as landlord and the lease terms remain unchanged.

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RECENT RESTAURANT DISPOSITIONS

9 Months Ended

Jul. 03, 2021

Recent Restaurant Dispositions [Abstract]

RECENT RESTAURANT DISPOSITIONS

RECENT RESTAURANT DISPOSITIONS

On November 13, 2020, the Company was advised by the landlord that it would have to vacate Gallagher’s Steakhouse and Gallagher’s Burger Bar at the Resorts Casino Hotel located in Atlantic City, NJ which were on a month-to-month, no rent lease. The closure of these properties occurred on January 2, 2021 and did not result in a material charge to the Company’s operations.

As of January 2, 2021, the Company determined that it will not reopen Thunder Grill in Washington, D.C. which has been closed since March 20, 2020. This closure did not result in a material charge to the Company’s operations.

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INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK

9 Months Ended

Jul. 03, 2021

ASU 2016-01 Transition [Abstract]

INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK

INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK

On March 12, 2013, the Company made a $4,200,000 investment in the New Meadowlands Racetrack LLC (“NMR”) through its purchase of a membership interest in Meadowlands Newmark, LLC, an existing member of NMR with a then 63.7% ownership interest. On November 19, 2013, the Company invested an additional $464,000 in NMR through the purchase of an additional membership interest in Meadowlands Newmark, LLC resulting in a total ownership of 11.6% of Meadowlands Newmark, LLC, and an effective ownership interest in NMR of 7.4%, subject to dilution. In 2015, the Company invested an additional $222,000 in NMR and in February 2017, the Company invested an additional $222,000 in NMR, both as a result of capital calls with no change in ownership, bringing its total investment to $5,108,000. The Company accounts for this investment at cost, less impairment, adjusted for subsequent observable price changes in accordance with ASU No. 2016-01. There are no observable prices for this investment.

Due to the recent impact of the COVID-19 pandemic to the global economy, including but not limited to, the temporary closure of the NMR facility, the Company evaluated its investment in NMR for impairment and concluded that its fair value exceeds the carrying value. Accordingly, the Company did not record any impairment during the 13 and 39 weeks ended July 3, 2021. The ultimate severity and longevity of the COVID-19 pandemic is unknown, and therefore, it is possible that impairments could be identified in future periods, and such amounts could be material. Any future changes in the carrying value of our investment in NMR will be reflected in earnings.

In addition to the Company’s ownership interest in NMR through Meadowlands Newmark, LLC, if casino gaming is approved at the Meadowlands and NMR is granted the right to conduct said gaming, neither of which can be assured, the Company shall be granted the exclusive right to operate the food and beverage concessions in the gaming facility with the exception of one restaurant.

In conjunction with this investment, the Company, through a 97% owned subsidiary, Ark Meadowlands LLC (“AM VIE”), also entered into a long-term agreement with NMR for the exclusive right to operate food and beverage concessions serving the new raceway facilities (the “Racing F&B Concessions”) located in the new raceway grandstand constructed at the Meadowlands Racetrack in northern New Jersey. Under the agreement, NMR is responsible to pay for the costs and expenses incurred in the operation of the Racing F&B Concessions, and all revenues and profits thereof inure to the benefit of NMR. AM VIE receives an annual fee equal to 5% of the net profits received by NMR from the Racing F&B Concessions during each calendar year. AM VIE is a variable interest entity; however, based on qualitative consideration of the contracts with AM VIE, the operating structure of AM VIE, the Company’s role with AM VIE, and that the Company is not obligated to absorb expected losses of AM VIE, the Company has concluded that it is not the primary beneficiary and not required to consolidate the operations of AM VIE.

The Company’s maximum exposure to loss as a result of its involvement with AM VIE is limited to any receivable from AM VIE’s primary beneficiary (NMR, a related party). As of July 3, 2021 and October 3, 2020, no amounts were due AM VIE by NMR.

On April 25, 2014, the Company loaned $1,500,000 to Meadowlands Newmark, LLC. The note bears interest at 3%, compounded monthly and added to the principal, and is due in its entirety on January 31, 2024. The note may be prepaid, in whole or in part, at any time without penalty or premium. On July 13, 2016, the Company made an additional loan to Meadowlands Newmark, LLC in the amount of $200,000. Such amount is subject to the same terms and conditions as the original loan as discussed above. The principal and accrued interest related to this note in the amounts of $1,807,000 and $1,766,000 are included in Investment In and Receivable from New Meadowlands Racetrack in the consolidated condensed balance sheets at July 3, 2021 and October 3, 2020, respectively.

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

9 Months Ended

Jul. 03, 2021

Payables and Accruals [Abstract]

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

	July 3, 2021		October 3, 2020
	(In thousands)
Sales tax payable	$	1,138	$	477
Accrued wages and payroll related costs	4,328		3,302
Customer advance deposits	4,652		3,661
Accrued occupancy and other operating expenses	4,993		5,248
	$	15,111	$	12,688

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LEASES

9 Months Ended

Jul. 03, 2021

Leases [Abstract]

LEASES

LEASES

Other than locations where we own the underlying property, we lease our restaurant locations as well as our corporate office under various non-cancelable real estate lease agreements that expire on various dates through 2046. We evaluate whether we control the use of the asset, which is determined by assessing whether we obtain substantially all economic benefits from the use of the asset, and whether we have the right to direct the use of the asset. If these criteria are met and we have identified a lease, we account for the contract under the requirements of ASC Topic 842.

Upon taking possession of a leased asset, we determine its classification as an operating or finance lease. All of our real estate leases are classified as operating leases. We do not have any finance leases as of July 3, 2021. Generally, our real estate leases have initial terms ranging from 10 to 25 years and typically include renewal options. Renewal options are recognized as part of the ROU assets and lease liabilities if it is reasonably certain at the date of adoption that we would exercise the options to extend the lease. Our real estate leases typically provide for fixed minimum rent payments and/or contingent rent payments based upon sales in excess of specified thresholds. When the achievement of such sales thresholds are deemed to be probable, variable lease expense is accrued in proportion to the sales recognized during the period. For operating leases that include rent holidays and rent escalation clauses, we recognize lease expense on a straight-line basis over the lease term from the date we take possession of the leased property. We record the straight-line lease expense and any contingent rent, if applicable, in occupancy expenses in the consolidated condensed statements of operations.

Many of our real estate leases also require us to pay real estate taxes, common area maintenance costs and other occupancy costs (“non-lease components”) which are included in occupancy related expenses in the consolidated condensed statements of operations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As there were no explicit rates provided in our leases, we used our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

The components of lease expense in the consolidated condensed statements of operations are as follows:

	13 Weeks Ended				39 Weeks Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
	(In thousands)				(In thousands)
Operating lease expense - occupancy expenses (1)	$	2,899	$	2,088	$	6,836	$	7,005
Occupancy lease expense - general and administrative expenses	118		158		270		481
Variable lease expense	158		132		1,553		2,500
Total lease expense	$	3,175	$	2,378	$	8,659	$	9,986

_________________________________

(1)    Includes short-term leases, which are immaterial.

Supplemental cash flow information related to leases:

	39 Weeks Ended
	July 3, 2021		June 27, 2020
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases	$	6,992	$	8,086
Non-cash investing activities:
ROU assets obtained in exchange for new operating lease liabilities	$	8,712	$	62,330

The weighted average remaining lease terms and discount rates as of July 3, 2021 are as follows:

	Weighted Average Remaining Lease Term	Weighted Average Discount Rate
Operating leases	12.8 years	5.2	%

The annual maturities of our lease liabilities as of July 3, 2021 are as follows:

	Operating Leases
Fiscal Year Ending	(In thousands)
October 2, 2021	$	2,363
October 1, 2022	9,565
September 30, 2023	8,076
September 28, 2024	7,694
September 27, 2025	6,685
Thereafter	50,508
Total future lease commitments	84,891
Less imputed interest	(23,719)
Present value of lease liabilities	$	61,172

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NOTES PAYABLE

9 Months Ended

Jul. 03, 2021

Notes Payable [Abstract]

NOTES PAYABLE

NOTES PAYABLE

Long-term debt consists of the following:

	July 3, 2021		October 3, 2020
	(In thousands)
Promissory Note - Rustic Inn purchase	$	3,544	$	3,758
Promissory Note - Shuckers purchase	4,079		4,335
Promissory Note - Oyster House purchase	3,646		4,109
Promissory Note - JB's on the Beach purchase	5,000		5,750
Promissory Note - Sequoia renovation	2,286		2,629
Revolver Borrowings	9,666		9,666
Promissory Note - Blue Moon Fish Company (see Note 3)	886		—
Paycheck Protection Program Loans	7,851		14,995
	36,958		45,242
Less: Current maturities	(7,377)		(9,001)
Less: Unamortized deferred financing costs	(126)		(173)
Long-term debt	$	29,455	$	36,068

Notes Payable - Bank

On June 1, 2018, the Company refinanced (the "Refinancing") its then existing indebtedness with its current lender, Bank Hapoalim B.M. (“BHBM”), by entering into an amended and restated credit agreement (the “Revolving Facility”), which was to mature on May 19, 2022 (as extended). The Revolving Facility provided for total availability of the lesser of (i) $10,000,000 and (ii) $35,000,000 less the then aggregate amount of all indebtedness and obligations to BHBM. On July 26, 2021, all outstanding Revolver Borrowings, in the amount of $9,666,000, were converted to a promissory note with quarterly principal payments of $500,000 commencing on September 1, 2021, with a balloon payment of $2,166,000 on June 1, 2025. Such note bears interest at LIBOR plus 3.5% per annum. We expect that the LIBOR rate will be discontinued at some point during 2021 and to work with BHBM to identify a suitable replacement rate and amend our debt agreements to reflect this new reference rate accordingly. We do not expect the discontinuation of LIBOR as a reference rate in our debt agreements to have a material adverse effect on our financial position or materially affect our interest expense.

The Revolving Facility, which includes all of the above promissory notes, also requires, among other things, that the Company meet minimum quarterly tangible net worth amounts, maintain a minimum fixed charge coverage ratio and meet minimum annual net income amounts. The Revolving Facility contains customary representations, warranties and affirmative covenants as well as customary negative covenants, subject to negotiated exceptions on liens, relating to other indebtedness, capital expenditures, liens, affiliate transactions, disposal of assets and certain changes in ownership.

Borrowings under the Revolving Facility are secured by all tangible and intangible personal property (including accounts receivable, inventory, equipment, general intangibles, documents, chattel paper, instruments, letter-of-credit rights, investment property, intellectual property and deposit accounts) and fixtures of the Company.

On June 12, 2020 and again on February 15, 2021, as a result of the impact of the COVID-19 pandemic on our business, BHBM agreed to modified financial covenants through fiscal Q2 2022.

In connection with the Refinancing, the Company also amended the principal amounts and payment terms of its outstanding term notes with BHBM as follows:

•Promissory Note – Rustic Inn purchase – The principal amount of $4,400,000, which is secured by a mortgage on the Rustic Inn real estate, is payable in 27 equal quarterly installments of $71,333, commencing on September 1, 2018, with a balloon payment of $2,474,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

•Promissory Note – Shuckers purchase – The principal amount of $5,100,000, which is secured by a mortgage on the Shuckers real estate, is payable in 27 equal quarterly installments of $85,000, commencing on September 1, 2018, with a balloon payment of $2,805,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

•Promissory Note – Oyster House purchase – In connection with the Refinancing, this note was amended and restated and separated into two notes. The first note, in the principal amount of $3,300,000, is secured by a mortgage on the Oyster House Gulf Shores real estate, is payable in 19 equal quarterly installments of $117,857, commencing on September 1, 2018, with a balloon payment of $1,060,716 on June 1, 2023 and bears interest at LIBOR plus 3.5% per annum. The second note, in the principal amount of $2,200,000, is secured by a mortgage on the Oyster House Spanish Fort real estate, is payable in 27 equal quarterly installments of $36,667, commencing on September 1, 2018, with a balloon payment of $1,210,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

•Promissory Note – JB's on the Beach purchase – On May 15, 2019, the Company issued a promissory note under the Revolving Facility to BHBM for $7,000,000, which is payable in 23 equal quarterly installments of $250,000, commencing on September 1, 2019, with a balloon payment of $1,250,000 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

•Promissory Note – Sequoia renovation – Also on May 15, 2019, the Company converted $3,200,000 of Revolving Facility borrowings incurred in connection with the Sequoia renovation to a promissory note which is payable in 23 equal quarterly installments of $114,286, commencing on September 1, 2019, with a balloon payment of $571,429 on June 1, 2025 and bears interest at LIBOR plus 3.5% per annum.

Paycheck Protection Program Loans

During the year ended October 3, 2020, subsidiaries (the “Borrowers”) of the Company received loan proceeds from several banks (the “Lenders”) in the aggregate amount of $14,995,000 (the “PPP Loans”) under the Paycheck Protection Program (the “PPP”) of the CARES Act, which was enacted March 27, 2020. In addition, during the 13 weeks ended April 3, 2021, one of our consolidated VIEs received a second draw PPP Loan in the amount of $111,000. The PPP Loans are evidenced by individual promissory notes of each of the Borrowers (together, the “Notes”) in favor of the Lender, which Notes bear interest at the rate of 1.00% per annum. Funds from the PPP Loans may be used only for payroll and related costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations that were incurred by a Borrower prior to February 15, 2020 (the “Qualifying Expenses”). Under the terms of the PPP Loans, some or all of the amounts thereunder, including accrued interest, may be forgiven if they are used for Qualifying Expenses as described in and in compliance with the CARES Act. Each Note may be prepaid by the respective Borrower at any time prior to maturity with no prepayment penalties. No payments of principal or interest are due under the Notes until the date on which the amount of loan forgiveness (if any) under the CARES Act for each respective Note is remitted to the Lender and a forgiveness decision is received by the Borrower. Forgiveness applications can be submitted up to 10 months after the end of the related notes covered period (which is defined as 24 weeks after the date of the loan) (the “Deferral Period”) and the ultimate forgiveness decisions can be made by the Lenders up to 60 days after submitting the applications and possibly longer if forgiveness is fully or partially denied and the Borrower appeals the decision. While the Company and each Borrower used the PPP Loan proceeds exclusively for Qualifying Expenses, it is unclear and uncertain whether the conditions for forgiveness of the PPP Loans outstanding at July 3, 2021 will be met under the current guidelines of the CARES Act. Therefore, we cannot make any assurances that the Company, or any of the Borrowers, will be eligible for forgiveness of the remaining PPP Loans, in whole or in part. Accordingly, based on the above, we have classified $2,439,000 of the PPP Loans as short-term in the consolidated condensed balance sheet as of July 3, 2021.

During the 13 and 39 weeks ended July 3, 2021, $3,195,000 (including $36,000 of accrued interest) and $7,318,000 of PPP Loans (including $63,000 of accrued interest), respectively, were forgiven. To the extent, if any, that any of the remaining PPP Loans are not forgiven, beginning one month following expiration of the Deferral Period, and continuing monthly until 24 months from the date of each applicable Note (the “Maturity Date”), each respective Borrower is obligated to make monthly payments of principal and interest to the Lender with respect to any unforgiven portion of the Notes, in such equal amounts required to fully amortize the principal amount outstanding on such Notes as of the last day of the applicable Deferral Period by the applicable Maturity Date.

Deferred Financing Costs

Deferred financing costs incurred in the amount of $271,000 are being amortized over the life of the agreements using the effective interest rate method and included in interest expense. Amortization expense of approximately $15,000 and $13,000 is included in interest expense for the 13 weeks ended July 3, 2021 and June 27, 2020, respectively. Amortization expense was $47,000 and $33,000 for the 39 weeks ended July 3, 2021 and June 27, 2020, respectively.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Jul. 03, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Leases — The Company leases several restaurants, bar facilities, and administrative headquarters through its subsidiaries under terms expiring at various dates through 2046. Most of the leases provide for the payment of base rents plus real estate taxes, insurance and other expenses and, in certain instances, for the payment of a percentage of the restaurant’s sales in excess of stipulated amounts at such facility and in one instance based on profits. In connection with one of our leases, the Company obtained and delivered an irrevocable letter of credit in the amount of approximately $238,000 as a security deposit under such lease.

Legal Proceedings — In the ordinary course of its business, the Company is a party to various lawsuits arising from accidents at its restaurants and workers’ compensation claims, which are generally handled by the Company’s insurance carriers. The employment by the Company of management personnel, waiters, waitresses and kitchen staff at a number of different restaurants has resulted in the institution, from time to time, of litigation alleging violation by the Company of employment discrimination laws. Management believes, based in part on the advice of counsel, that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

On May 1, 2018, two former tipped service workers (the “Plaintiffs”), individually and on behalf of all other similarly situated personnel, filed a putative class action lawsuit (the “Complaint”) against the Company and certain subsidiaries as well as certain officers of the Company (the “Defendants”).  Plaintiffs alleged, on behalf of themselves and the putative class, that the Company violated certain of the New York State Labor Laws and related regulations.  The Complaint sought unspecified money damages, together with interest, liquidated damages and attorney fees.  In December 2020, the parties reached a settlement agreement

resolving all issues alleged in the Complaint, which received preliminary approval by the New York State Supreme Court, for approximately the amount which was previously accrued.

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STOCK OPTIONS

9 Months Ended

Jul. 03, 2021

Share-based Payment Arrangement [Abstract]

STOCK OPTIONS

STOCK OPTIONS

The Company has options outstanding under two stock option plans, the 2010 Stock Option Plan (the “2010 Plan”) and the 2016 Stock Option Plan (the “2016 Plan”). Options granted under both plans are exercisable at prices at least equal to the fair market value of such stock on the dates the options were granted and expire 10 years after the date of grant.

During the 13-week periods ended July 3, 2021 and June 27, 2020, no options to purchase shares of common stock were issued by the Company

During the 39-week period ended July 3, 2021, options to purchase 110,500 shares of common stock at an exercise price of $10.65 per share were granted to employees and directors of the Company (the "2021 Grant").  Such options are exercisable as to 50% of the shares commencing on the second anniversary of the date of grant and as to 50% on the fourth anniversary of the date of grant. Such options had an aggregate grant date fair value of $2.22 per share and totaled approximately $246,000.    

During the 39-week period ended June 27, 2020, options to purchase 266,500 shares of common stock at an exercise price of $21.90 per share were granted to employees, directors of the Company and other service providers.  Such options are exercisable as to 50% of the shares commencing on the second anniversary of the date of grant and as to the remaining 50% commencing on the fourth anniversary of the date of grant. The grant date fair value of these stock options was $3.35 per share.

The fair value of each of the Company’s stock options is estimated on the date of grant using a Black-Scholes option-pricing model that uses assumptions that relate to the expected volatility of the Company’s common stock, the expected dividend yield of our stock, the expected life of the options and the risk-free interest rate. The assumptions used for the 2021 Grant include a risk-free interest rate of 0.86%, volatility of 37.1%, a dividend yield of 3.0% and an expected life of 10 years.

The Company also maintains a Section 162(m) Cash Bonus Plan. Under the Company's Section 162(m) Cash Bonus Plan, compensation paid in excess of $1,000,000 to any employee who is the chief executive officer or one of the three highest paid executive officers on the last day of that tax year (other than the chief executive officer or the chief financial officer) is not tax deductible.

A summary of stock option activity is presented below:

	2021
	Shares	Weighted Average Exercise Price	Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of period	626,500	$20.41	6.1 years
Options:
Granted	110,750	$10.65
Exercised	(49,149)	$14.40
Canceled or expired	(17,000)	$21.05
Outstanding and expected to vest,    end of period	671,101	$19.22	6.3 years	$	1,383,000
Exercisable, end of period	302,351	$20.10	3.2 years	$	399,000
Shares available for future grant	63,750

Compensation cost charged to operations for the 13 weeks ended July 3, 2021 and June 27, 2020 for share-based compensation programs was approximately $74,000 and $58,000, respectively, and for the 39 weeks ended July 3, 2021 and June 27, 2020 was approximately $207,000 and $113,000, respectively. The compensation cost recognized is classified as a general and administrative expense in the consolidated condensed statements of operations.

As of July 3, 2021, there was approximately $810,000 of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a period of 3.2 years.

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INCOME TAXES

9 Months Ended

Jul. 03, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

We calculate our interim income tax provision in accordance with ASC Topic 270, Interim Reporting and ASC Topic 740, Accounting for Income Taxes. At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary year to date earnings. In addition, the tax effects of unusual or infrequently occurring items including changes in judgment about valuation allowances and effects of changes in enacted tax laws are recognized discretely in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating (loss) income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current fiscal year. The accounting estimates used to compute income tax expense may change as new events occur, additional information is obtained, or the tax environment changes.

On March 27, 2020, the CARES Act was enacted to provide economic relief to those impacted by the COVID-19 pandemic. In addition to the PPP loans, the CARES Act made various tax law changes including among other things (i) modifications to the federal net operating loss rules including permitting federal net operating losses incurred in 2018, 2019, and 2020 tax years to be carried back to the five preceding taxable years in order to generate a refund of previously paid income taxes, (ii) enhanced recoverability of AMT tax credit carryforwards, (iii) increased the limitation under Internal Revenue Code ("IRC") Section 163(j) for 2019 and 2020 to permit additional expensing of interest, and (iv) enacted a technical correction so that qualified improvement property can be immediately expensed under IRC Section 168(k).

On December 27, 2020, the Consolidated Appropriations Act of 2021 (“CAA”) was enacted and provided clarification on the tax deductibility of expenses funded with PPP loans as fully deductible for tax purposes. During the 13 and 39 weeks ended July 3, 2021, the Company recorded income for financial reporting purposes related to the forgiveness of some of its PPP loans. The forgiveness of these PPP loans is not taxable. The income recorded for financial reporting purposes was considered an unusual or infrequent event and the tax effect was recorded discretely in the quarter in which the loans were forgiven.

As a result of the CARES Act and the CAA, the Company carried back taxable losses from fiscal year 2020 and is expected to carryback taxable losses from fiscal 2021 to generate a refund of previously paid income taxes. As a result of these carrybacks, the Company recorded income tax benefits as the taxable losses from fiscal 2020 and fiscal 2021 are being carried back to tax years in which the Company was subject to a higher federal corporate income tax rate. The carryback of taxable losses from fiscal 2021 was recorded as a component of the estimated annual effective tax rate. The adjustment to the fiscal 2020 carryback was recorded as a discrete item.

The provision for income taxes for the 13-week period ended July 3, 2021 was $4,684,000. The effective tax rate for the 13-week period ended July 3, 2021 of 58.5% differed from the statutory rate of 21% primarily related to changes in the annual effective tax rate as a result of updated forecasts of pre-tax earnings coupled with a discrete tax benefit attributable to the income related to the PPP loan forgiveness which is not taxable for income tax reporting purposes.

The income tax benefit for the 39-week period ended July 3, 2021 was $(155,000). The effective tax rate for the 39-week period ended July 3, 2021 of -2.31% differed from the statutory rate of 21% primarily related to the discrete tax benefit attributable to the income related to the PPP loan forgiveness which is not taxable for income tax reporting purposes.

The income tax benefit for the 13- and 39-week periods ended June 27, 2020 was ($3,118,000) and $(3,213,000), respectively. The effective tax rate for the 13- and 39-week periods ended June 27, 2020 of 52.3% and 53.1%, respectively, differed from the statutory rate of 21% primarily as a result of the tax benefits related to the generation of FICA tax credits and the incremental benefit arising from the ability to carryback fiscal 2020 net operating losses to prior years when the tax rate was 34%.

The Company’s overall effective tax rate in the future will be affected by factors such as changes in tax law, the utilization of state and local net operating loss carryforwards, the generation of FICA tax credits, additional forgiveness of PPP loans and the mix of earnings by state taxing jurisdictions as Nevada does not impose a state income tax, as compared to the other major state and local jurisdictions in which the Company has operations. The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from current estimates.

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INCOME PER SHARE OF COMMON STOCK

9 Months Ended

Jul. 03, 2021

Earnings Per Share [Abstract]

INCOME PER SHARE OF COMMON STOCK

INCOME PER SHARE OF COMMON STOCK

Basic earnings per share is computed by dividing net income attributable to Ark Restaurants Corp. by the weighted average number of common shares outstanding for the period. Our diluted earnings per share is computed similarly to basic earnings per share, except that it reflects the effect of common shares issuable upon exercise of stock options, using the treasury stock method in periods in which they have a dilutive effect.

A reconciliation of shares used in calculating earnings per basic and diluted share follows:

	13 Weeks Ended		39 Weeks Ended
	July 3, 2021	June 27, 2020	July 3, 2021	June 27, 2020
Basic	3,522	3,502	3,512	3,500
Effect of dilutive securities:
Stock options	126	—	90	—
Diluted	3,648	3,502	3,602	3,500

For the 13- and 39-week periods ended July 3, 2021, the dilutive effect of 443,500 options was not included in diluted earnings per share as their impact would be anti-dilutive.

For the 13- and 39-week periods ended June 27, 2020, the dilutive effect of all outstanding options to purchase shares of our common stock were not included in diluted earnings per share as their impact would have been anti-dilutive.

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SUBSEQUENT EVENTS

9 Months Ended

Jul. 03, 2021

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On August 3, 2021, New York City became the first U.S. city to require proof of at least one dose of a COVID-19 vaccine for a variety of activities for workers and customers, including indoor dining. The requirements are effective starting on August 16, 2021 with enforcement to begin on September 13, 2021.

As a result of these new requirements, the Company temporarily closed Clyde Frazier's Wine & Dine on August 8, 2021.

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BASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIES (Policies)

9 Months Ended

Jul. 03, 2021

Accounting Policies [Abstract]

Principles of Consolidation

PRINCIPLES OF CONSOLIDATION — The consolidated condensed financial statements include the accounts of Ark Restaurants Corp. and all of its wholly-owned subsidiaries, partnerships and other entities in which it has a controlling interest, collectively herein referred to as the “Company”. Also included in the consolidated condensed financial statements are certain variable interest entities (“VIEs”). All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

USE OF ESTIMATES — The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The accounting estimates that require management’s most difficult and subjective judgments include: projected cash flows, allowances for potential bad debts on receivables, assumptions regarding discount rates related to lease accounting, the useful lives and recoverability of its assets, such as property and intangibles, fair values of financial instruments and share-based compensation, estimates made in connection with acquisitions and impairment analyses, the realizable value of its tax assets and determining when investment impairments are other-than-temporary. Because of the uncertainty in such estimates, actual results may differ from these estimates. The results of operations for the 13 and 39 weeks ended July 3, 2021 are not necessarily indicative of the results to be expected for any other interim period or for the year ending October 2, 2021.

Non-Controlling Interests

NON-CONTROLLING INTERESTS — Non-controlling interests represent capital contributions, income and loss attributable to the shareholders of less than wholly-owned and consolidated entities.

Seasonality

SEASONALITY — The Company has substantial fixed costs that do not decline proportionally with sales. The first and second fiscal quarters, which include the winter months, usually reflect lower customer traffic than in the third and fourth fiscal quarters. However, sales in the third and fourth fiscal quarters can be adversely affected by inclement weather due to the significant amount of outdoor seating at the Company’s restaurants

Fair Value of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS — The carrying amount of cash and cash equivalents, receivables, accounts payable and accrued expenses approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair values of notes receivable and payable are determined using current applicable rates for similar instruments as of the balance sheet dates and approximate the carrying value of such debt instruments.

Cash and Cash Equivalents

CASH AND CASH EQUIVALENTS — Cash and cash equivalents include cash on hand, deposits with banks and highly liquid investments generally with original maturities of three months or less. Outstanding checks in excess of account balances, typically vendor payments, payroll and other contractual obligations disbursed after the last day of a reporting period are reported as a current liability in the accompanying consolidated condensed balance sheets.

Concentrations of Credit Risk

CONCENTRATIONS OF CREDIT RISK — Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company reduces credit risk by placing its cash and cash equivalents with major financial institutions with high credit ratings. At times, such amounts may exceed federally insured limits. Accounts receivable are primarily comprised of normal business receivables, such as credit card receivables, that are collected in a short period of time and amounts due from the hotel operators where the Company has a location, and are recorded upon satisfaction of the performance obligation. The Company reviews the collectability of its receivables on an ongoing basis, and provides for an allowance when it considers the entity unable to meet its obligation. The concentration of credit risk with respect to accounts receivable is generally limited due to the short payment terms extended by the Company and the number of customers comprising the Company’s customer base.

As of July 3, 2021, the Company had accounts receivable balances due from one hotel operator totaling 31% of total accounts receivable. As of October 3, 2020, the Company had accounts receivable balances due from two hotel operators totaling 46% of total accounts receivable.

For the 13-week period ended July 3, 2021, the Company made purchases from two vendors that accounted for 22% of total purchases. For the 13-week period ended June 27, 2020, the Company made purchases from three vendors that accounted for 46% of total purchases.

For the 39-week period ended July 3, 2021, the Company made purchases from two vendors that accounted for 23% of total purchases. For the 39-week period ended June 27, 2020, the Company made purchases from one vendor that accounted for 10% or greater of total purchases.

As of July 3, 2021 and October 3, 2020, all debt outstanding, other than Paycheck Protection Program loans and the note payable to the sellers of the Blue Moon Fish Company, is with one lender (see Note 8 – Notes Payable).

Goodwill and Trademarks

GOODWILL AND TRADEMARKS — Goodwill and trademarks are not amortized, but are subject to impairment analysis. We assess the potential impairment of goodwill and trademarks annually (at the end of our fourth quarter) and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If we determine through the impairment review process that goodwill or trademarks are impaired, we record an impairment charge in our consolidated condensed statements of operations.

Due to the recent impact of the COVID-19 pandemic to the global economy, including but not limited to, the volatility of the Company's stock price, temporary closures of the Company's restaurants and the challenging environment for the restaurant industry in general, the Company determined that there were indicators of potential impairment of its goodwill and trademarks during the 13 weeks ended July 3, 2021. As such, the Company performed a qualitative assessment for both goodwill and its trademarks and concluded that the fair value of these assets exceeded their carrying values. Accordingly, the Company did not record any impairment to its goodwill or trademarks during the 13 and 39 weeks ended July 3, 2021. The ultimate severity and longevity of the COVID-19 pandemic is unknown, and therefore, it is possible that impairments could be identified in future periods, and such amounts could be material.

Long-lived And Right-Of-Use-Assets

LONG-LIVED AND RIGHT-OF-USE ASSETS — Long-lived assets, such as property, plant and equipment, purchased intangibles subject to amortization, and right-of-use assets ("ROU assets") are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the evaluation of the fair value and future benefits of long-lived assets, the Company performs an analysis of the anticipated undiscounted future net cash flows of the related long-lived assets. If the carrying value of the related asset exceeds the undiscounted cash flows, the carrying value is reduced to its fair value. Various factors including estimated future sales growth and estimated profit margins are included in this analysis.

The Company considers a triggering event related to long-lived assets or ROU assets in a net asset position to have occurred related to a specific restaurant if the restaurant’s cash flows for the last 12 months are less than a minimum threshold or if

consistent levels of undiscounted cash flows for the remaining lease period are less than the carrying value of the restaurant’s assets. Additionally, the Company considers a triggering event related to ROU assets to have occurred related to a specific lease if the location has been subleased and future estimated sublease income is less than current lease payments. If the Company concludes that the carrying value of certain long-lived and ROU assets will not be recovered based on expected undiscounted future cash flows, an impairment loss is recorded to reduce the long-lived or ROU assets to their estimated fair value. The fair value is measured on a nonrecurring basis using unobservable (Level 3) inputs. There is uncertainty in the projected undiscounted future cash flows used in the Company's impairment review analysis, which requires the use of estimates and assumptions. If actual performance does not achieve the projections, or if the assumptions used change in the future, the Company may be required to recognize impairment charges in future periods, and such charges could be material.

Revenue Recognition

REVENUE RECOGNITION — We recognize revenues when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest or other customer. Revenues from restaurant operations are presented net of discounts, coupons, employee meals and complimentary meals and recognized when food, beverage and retail products are sold. Sales tax collected from customers is excluded from sales and the obligation is included in sales tax payable until the taxes are remitted to the appropriate taxing authorities. Catering service revenue is generated through contracts with customers whereby the customer agrees to pay a contract rate for the service. Revenues from catered events are recognized in income upon satisfaction of the performance obligation (the date the event is held) and all customer payments, including nonrefundable upfront deposits, are deferred as a contract liability until such time. We recognized $1,140,000 and $25,000 in catering services revenue for the 13-week periods ended July 3, 2021 and June 27, 2020, respectively, and $1,347,000 and $7,259,000 for the 39-week periods ended July 3, 2021 and June 27, 2020, respectively. Unearned revenue, which is included in accrued expenses and other current liabilities on the consolidated condensed balance sheets as of July 3, 2021, October 3, 2020 and September 29, 2019, was $4,652,000, $3,661,000 and $4,549,000, respectively.

Revenues from gift cards are deferred and recognized upon redemption. Deferrals are not reduced for potential non-use as we generally have a legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions in which they are sold. As of July 3, 2021 and October 3, 2020, the total liability for gift cards in the amounts of approximately $198,000 and $227,000, respectively, are included in accrued expenses and other current liabilities in the consolidated condensed balance sheets.

Other revenues include purchase service fees which represent commissions earned by a subsidiary of the Company for providing services to other restaurant groups, as well as license fees, property management fees and other rentals.

Leases

LEASES — We determine if an arrangement contains a lease at inception. An arrangement contains a lease if it implicitly or explicitly identifies an asset to be used and conveys the right to control the use of the identified asset in exchange for consideration. As a lessee, we include operating leases in Operating lease right-of-use assets and Operating lease liabilities in our consolidated condensed balance sheet. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized upon commencement of the lease based on the present value of the lease payments over the lease term. As most of our leases do not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. Our lease terms may include options to extend or terminate the lease.  Options are included when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Amendments or modifications to lease terms are accounted for as variable lease payments. Leases with a lease term of 12 months or less are accounted for using the practical expedient which allows for straight-line rent expense over the remaining term of the lease.

Segment Reporting

SEGMENT REPORTING — As of July 3, 2021, the Company owned and operated 18 restaurants and bars, 17 fast food concepts and catering operations, exclusively in the United States, that have similar economic characteristics, nature of products and services, class of customers and distribution methods. The Company believes it meets the criteria for aggregating its operating segments into a single reporting segment in accordance with applicable accounting guidance.

Recently Adopted Accounting Principles and New Accounting Standards Not Yet Adopted

RECENTLY ADOPTED ACCOUNTING PRINCIPLES — In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). ASU 2017-04 simplifies the accounting for goodwill impairments by eliminating the requirement to compare the implied fair value of goodwill with its carrying amount as part of step two of the goodwill impairment test referenced in Accounting Standards Codification (“ASC”) 350, Intangibles - Goodwill and Other (“ASC 350”). As a result, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the impairment loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual reporting periods beginning after December 15, 2019, including any interim impairment tests within those annual periods, with early application permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted this guidance in the first quarter of fiscal 2021. Such adoption did not have a material impact on our consolidated condensed financial statements. NEW ACCOUNTING STANDARDS NOT YET ADOPTED — In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which modifies Topic 740 to simplify the accounting for income taxes. ASU 2019-12 is effective for financial statements issued for annual periods beginning after December 15, 2020, and for the interim periods therein. The Company is currently evaluating the effect of adopting ASU 2019-12 to determine the impact on the Company’s consolidated financial position and results of operations.

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VARIABLE INTEREST ENTITIES (Tables)

9 Months Ended

Jul. 03, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Variable Interest Entities

Following are the required disclosures associated with the Company’s consolidated VIEs:

	July 3, 2021		October 3, 2020
	(in thousands)
Cash and cash equivalents	$	676	$	567
Accounts receivable	218		162
Inventories	29		27
Prepaid and refundable income taxes	278		274
Prepaid expenses and other current assets	47		13
Due from Ark Restaurants Corp. and affiliates (1)	420		419
Fixed assets - net	219		241
Operating lease right-of-use assets - net	2,406		2,658
Other assets	82		82
Total assets	$	4,375	$	4,443
Accounts payable - trade	$	134	$	119
Accrued expenses and other current liabilities	565		331
Current portion of operating lease liabilities	243		226
Current portion of notes payable	77		—
Operating lease liabilities, less current portion	2,257		2,442
Notes payable, less current portion	290		723
Total liabilities	3,566		3,841
Equity of variable interest entities	809		602
Total liabilities and equity	$	4,375	$	4,443

(1)Amounts Due from and to Ark Restaurants Corp. and affiliates are eliminated upon consolidation.

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RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS (Tables)

9 Months Ended

Jul. 03, 2021

Business Combination and Asset Acquisition [Abstract]

Allocation of Fair Values of Assets Acquired

The fair values of the assets acquired were allocated as follows (amounts in thousands):

Cash	$	3
Inventory	39
Security deposit	30
Trademarks	500
Non-compete agreement	380
Goodwill	1,870
Liabilities assumed	(2)
	$	2,820

Pro Forma Information

The unaudited pro forma financial information (which is presented in thousands except per share and share data), which has been adjusted for interest expense on the note, is presented for informational purposes only and may not be indicative of what actual results of operations would have been had the acquisition of Blue Moon Fish Company occurred on the dates indicated, nor does it purport to represent the results of operations for future periods.  

	13 Weeks Ended		39 Weeks Ended
	June 27, 2020		July 3, 2021		June 27, 2020
	(unaudited)		(unaudited)
Total revenues	$	7,575	$	89,708	$	88,264
Net income (loss)	$	(2,595)	$	6,102	$	(2,280)
Net income (loss) per share - basic	$	(0.74)	$	1.74	$	(0.65)
Net income (loss) per share - diluted	$	(0.74)	$	1.69	$	(0.65)
Shares - Basic	3,502		3,512		3,500
Shares - Diluted	3,502		3,602		3,500

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

9 Months Ended

Jul. 03, 2021

Payables and Accruals [Abstract]

Schedule of Accrued Expenses And Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

	July 3, 2021		October 3, 2020
	(In thousands)
Sales tax payable	$	1,138	$	477
Accrued wages and payroll related costs	4,328		3,302
Customer advance deposits	4,652		3,661
Accrued occupancy and other operating expenses	4,993		5,248
	$	15,111	$	12,688

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LEASES (Tables)

9 Months Ended

Jul. 03, 2021

Leases [Abstract]

Lease Cost

The components of lease expense in the consolidated condensed statements of operations are as follows:

	13 Weeks Ended				39 Weeks Ended
	July 3, 2021		June 27, 2020		July 3, 2021		June 27, 2020
	(In thousands)				(In thousands)
Operating lease expense - occupancy expenses (1)	$	2,899	$	2,088	$	6,836	$	7,005
Occupancy lease expense - general and administrative expenses	118		158		270		481
Variable lease expense	158		132		1,553		2,500
Total lease expense	$	3,175	$	2,378	$	8,659	$	9,986

_________________________________

(1)    Includes short-term leases, which are immaterial.

Supplemental cash flow information related to leases:

	39 Weeks Ended
	July 3, 2021		June 27, 2020
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows related to operating leases	$	6,992	$	8,086
Non-cash investing activities:
ROU assets obtained in exchange for new operating lease liabilities	$	8,712	$	62,330

The weighted average remaining lease terms and discount rates as of July 3, 2021 are as follows:

	Weighted Average Remaining Lease Term	Weighted Average Discount Rate
Operating leases	12.8 years	5.2	%

Annual Maturities of Lease Liabilities

The annual maturities of our lease liabilities as of July 3, 2021 are as follows:

	Operating Leases
Fiscal Year Ending	(In thousands)
October 2, 2021	$	2,363
October 1, 2022	9,565
September 30, 2023	8,076
September 28, 2024	7,694
September 27, 2025	6,685
Thereafter	50,508
Total future lease commitments	84,891
Less imputed interest	(23,719)
Present value of lease liabilities	$	61,172

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NOTES PAYABLE (Tables)

9 Months Ended

Jul. 03, 2021

Notes Payable [Abstract]

Schedule of Debt

Long-term debt consists of the following:

	July 3, 2021		October 3, 2020
	(In thousands)
Promissory Note - Rustic Inn purchase	$	3,544	$	3,758
Promissory Note - Shuckers purchase	4,079		4,335
Promissory Note - Oyster House purchase	3,646		4,109
Promissory Note - JB's on the Beach purchase	5,000		5,750
Promissory Note - Sequoia renovation	2,286		2,629
Revolver Borrowings	9,666		9,666
Promissory Note - Blue Moon Fish Company (see Note 3)	886		—
Paycheck Protection Program Loans	7,851		14,995
	36,958		45,242
Less: Current maturities	(7,377)		(9,001)
Less: Unamortized deferred financing costs	(126)		(173)
Long-term debt	$	29,455	$	36,068

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STOCK OPTIONS (Tables)

9 Months Ended

Jul. 03, 2021

Share-based Payment Arrangement [Abstract]

Summary of Option Activity

A summary of stock option activity is presented below:

	2021
	Shares	Weighted Average Exercise Price	Weighted Average Contractual Term	Aggregate Intrinsic Value
Outstanding, beginning of period	626,500	$20.41	6.1 years
Options:
Granted	110,750	$10.65
Exercised	(49,149)	$14.40
Canceled or expired	(17,000)	$21.05
Outstanding and expected to vest,    end of period	671,101	$19.22	6.3 years	$	1,383,000
Exercisable, end of period	302,351	$20.10	3.2 years	$	399,000
Shares available for future grant	63,750

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INCOME PER SHARE OF COMMON STOCK (Tables)

9 Months Ended

Jul. 03, 2021

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

A reconciliation of shares used in calculating earnings per basic and diluted share follows:

	13 Weeks Ended		39 Weeks Ended
	July 3, 2021	June 27, 2020	July 3, 2021	June 27, 2020
Basic	3,522	3,502	3,512	3,500
Effect of dilutive securities:
Stock options	126	—	90	—
Diluted	3,648	3,502	3,602	3,500

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BASIS OF PRESENTATION AND CRITICAL ACCOUNTING POLICIES (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Jul. 03, 2021 USD ($)	Jun. 27, 2020 USD ($)	Jul. 03, 2021 USD ($) segment	Jun. 27, 2020 USD ($)	Oct. 03, 2020 USD ($)	Sep. 29, 2019 USD ($)
Business And Summary Of Significant Accounting Policies [Line Items]
Working capital deficiency	$ (2,134,000)		$ (2,134,000)
Revenues	42,965,000	$ 7,199,000	89,031,000	$ 84,716,000
Gift cards liability	198,000		$ 198,000		$ 227,000
Restaurants and Bars
Business And Summary Of Significant Accounting Policies [Line Items]
Number of operating segments | segment			18
Fast Food Concepts and Catering Operations
Business And Summary Of Significant Accounting Policies [Line Items]
Number of operating segments | segment			17
Catering Services
Business And Summary Of Significant Accounting Policies [Line Items]
Revenues	1,140,000	$ 25,000	$ 1,347,000	$ 7,259,000
Unearned revenue	$ 4,652,000		$ 4,652,000		$ 3,661,000	$ 4,549,000
One Vendor | Purchases | Supplier Concentration Risk
Business And Summary Of Significant Accounting Policies [Line Items]
Concentration risk				10.00%
Two Vendors | Purchases | Supplier Concentration Risk
Business And Summary Of Significant Accounting Policies [Line Items]
Concentration risk	22.00%		23.00%
Three Vendors | Purchases | Supplier Concentration Risk
Business And Summary Of Significant Accounting Policies [Line Items]
Concentration risk		46.00%
One Hotel Operator | Accounts Receivable | Customer Concentration Risk
Business And Summary Of Significant Accounting Policies [Line Items]
Concentration risk			31.00%
Two Hotel Operators | Accounts Receivable | Customer Concentration Risk
Business And Summary Of Significant Accounting Policies [Line Items]
Concentration risk					46.00%

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VARIABLE INTEREST ENTITIES - Narrative (Details)	Jul. 03, 2021 variableInterestEntity
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of VIEs with primary benefits	3

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VARIABLE INTEREST ENTITIES - Schedule of variable interest entities (Details) - USD ($) $ in Thousands	Jul. 03, 2021	Apr. 03, 2021	Oct. 03, 2020	Jun. 27, 2020	Mar. 28, 2020	Sep. 28, 2019
Variable Interest Entity [Line Items]
Cash and cash equivalents	$ 18,280		$ 16,886
Accounts receivable	3,997		1,738
Inventories	2,172		2,553
Prepaid and refundable income taxes	3,716		2,870
Prepaid expenses and other current assets	2,895		2,469
Fixed assets - net	36,338		37,682
Operating lease right-of-use assets - net	57,633		54,191
Other assets	2,549		2,432
TOTAL ASSETS	162,121		153,316
Accounts payable - trade	4,533		2,329
Accrued expenses and other current liabilities	15,111		12,688
Current portion of operating lease liabilities	6,546		6,117
Current portion of notes payable	7,377		9,001
Operating lease liabilities, less current portion	54,626		49,960
Notes payable, less current portion	29,455		36,068
TOTAL LIABILITIES	117,648		116,163
Equity of variable interest entities	44,473	$ 41,219	37,153	$ 38,129	$ 40,830	$ 42,707
TOTAL LIABILITIES AND EQUITY	162,121		153,316
Variable Interest Entity, Primary Beneficiary
Variable Interest Entity [Line Items]
Cash and cash equivalents	676		567
Accounts receivable	218		162
Inventories	29		27
Prepaid and refundable income taxes	278		274
Prepaid expenses and other current assets	47		13
Due from Ark Restaurants Corp. and affiliates	420		419
Fixed assets - net	219		241
Operating lease right-of-use assets - net	2,406		2,658
Other assets	82		82
TOTAL ASSETS	4,375		4,443
Accounts payable - trade	134		119
Accrued expenses and other current liabilities	565		331
Current portion of operating lease liabilities	243		226
Current portion of notes payable	77		0
Operating lease liabilities, less current portion	2,257		2,442
Notes payable, less current portion	290		723
TOTAL LIABILITIES	3,566		3,841
Equity of variable interest entities	809		602
TOTAL LIABILITIES AND EQUITY	$ 4,375		$ 4,443

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RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS - Narrative (Details)		3 Months Ended	9 Months Ended
	Dec. 01, 2020 USD ($) extensionOption	Jul. 03, 2021 USD ($)	Jul. 03, 2021 USD ($)	Jan. 26, 2021	Oct. 03, 2020 USD ($)
Business Acquisition [Line Items]
Notes payable		$ 36,958,000	$ 36,958,000		$ 45,242,000
Revenues of acquiree since acquisition		2,141,000	4,582,000
Cost method investment, ownership percent				5.00%
Blue Moon Fish Company
Business Acquisition [Line Items]
Consideration	$ 2,820,000
Payments to acquire businesses	$ 1,820,000
Debt instrument, term	4 years
Notes payable	$ 1,000,000
Interest rate, stated percentage	5.00%
Operating lease, number of renewal terms | extensionOption	4
Lease renewal term	5 years
Operating lease, annual lease payments	$ 360,000
Operating lease, extension option, increase in rent, percentage	15.00%
Income of acquiree since acquisition		$ 432,000	$ 887,000

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RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS - Schedule of Assets Acquired (Details) - USD ($) $ in Thousands	Jul. 03, 2021	Dec. 01, 2020	Oct. 03, 2020
Business Acquisition [Line Items]
Goodwill	$ 17,440		$ 15,570
Blue Moon Fish Company
Business Acquisition [Line Items]
Cash		$ 3
Inventory		39
Security deposit		30
Trademarks		500
Non-compete agreement		380
Goodwill		1,870
Liabilities assumed		(2)
Assets acquired, net		$ 2,820

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RECENT RESTAURANT EXPANSION AND OTHER DEVELOPMENTS - Pro Forma Financial Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Business Acquisition [Line Items]
Shares - Basic (in shares)	3,522	3,502	3,512	3,500
Shares - Diluted (in shares)	3,648	3,502	3,602	3,500
Blue Moon Fish Company
Business Acquisition [Line Items]
Total revenues		$ 7,575	$ 89,708	$ 88,264
Net income (loss)		$ (2,595)	$ 6,102	$ (2,280)
Net income per share - basic (in dollars per share)		$ (0.74)	$ 1.74	$ (0.65)
Net income per share - diluted (in dollars per share)		$ (0.74)	$ 1.69	$ (0.65)
Shares - Basic (in shares)		3,502	3,512	3,500
Shares - Diluted (in shares)		3,502	3,602	3,500

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INVESTMENT IN AND RECEIVABLE FROM NEW MEADOWLANDS RACETRACK (Details) - USD ($)					9 Months Ended	12 Months Ended
	Feb. 07, 2017	Apr. 25, 2014	Nov. 19, 2013	Mar. 12, 2013	Jul. 03, 2021	Dec. 31, 2015	Oct. 03, 2020	Jul. 13, 2016
New Meadowlands Racetrack LLC
INVESTMENT IN NEW MEADOWLANDS RACETRACK (Details) [Line Items]
Payments to acquire businesses				$ 4,200,000
Ownership percentage			7.40%
Payments to acquire additional interest in subsidiaries	$ 222,000		$ 464,000			$ 222,000
Long-term investments	$ 5,108,000
Meadowlands Newmark LLC
INVESTMENT IN NEW MEADOWLANDS RACETRACK (Details) [Line Items]
Ownership percentage			11.60%	63.70%
Loans to related party		$ 1,500,000
Interest rate		3.00%
Loan maturity date		Jan. 31, 2024
Additional loan								$ 200,000
Principal and accrued interest					$ 1,807,000		$ 1,766,000
Ark Meadowlands LLC
INVESTMENT IN NEW MEADOWLANDS RACETRACK (Details) [Line Items]
Ownership percentage by parent					97.00%
Profit participation percentage					5.00%

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Schedule of Accrued Expenses And Other Current Liabilities (Details) - USD ($) $ in Thousands	Jul. 03, 2021	Oct. 03, 2020
Payables and Accruals [Abstract]
Sales tax payable	$ 1,138	$ 477
Accrued wages and payroll related costs	4,328	3,302
Customer advance deposits	4,652	3,661
Accrued occupancy and other operating expenses	4,993	5,248
Accrued expenses and other current liabilities	$ 15,111	$ 12,688

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LEASES - Narrative (Details)	Jul. 03, 2021
Minimum
Lessor, Lease, Description [Line Items]
Lease term	10 years
Maximum
Lessor, Lease, Description [Line Items]
Lease term	25 years

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LEASES - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Leases [Abstract]
Operating lease expense - occupancy expenses	$ 2,899	$ 2,088	$ 6,836	$ 7,005
Occupancy lease expense - general and administrative expenses	118	158	270	481
Variable lease expense	158	132	1,553	2,500
Total lease expense	$ 3,175	$ 2,378	$ 8,659	$ 9,986

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LEASES - Supplemental Cash Flow (Details) - USD ($) $ in Thousands	9 Months Ended
	Jul. 03, 2021	Jun. 27, 2020
Leases [Abstract]
Operating cash flows related to operating leases	$ 6,992	$ 8,086
ROU assets obtained in exchange for new operating lease liabilities	$ 8,712	$ 62,330

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LEASES - Weighted Average Lease Terms (Details)	Jul. 03, 2021
Leases [Abstract]
Operating lease, weighted average remaining lease term	12 years 9 months 18 days
Operating lease, weighted average discount rate, percent	5.20%

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LEASES - Annual Maturities of Lease Liabilities (Details) $ in Thousands	Jul. 03, 2021 USD ($)
Leases [Abstract]
October 2, 2021	$ 2,363
October 1, 2022	9,565
September 30, 2023	8,076
September 28, 2024	7,694
September 27, 2025	6,685
Thereafter	50,508
Total future lease commitments	84,891
Less imputed interest	(23,719)
Present value of lease liabilities	$ 61,172

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NOTES PAYABLE - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands	Jul. 03, 2021	Oct. 03, 2020
NOTES PAYABLE - Schedule of Long-term debt [Line Items]
Notes payable	$ 36,958	$ 45,242
Less: Current maturities	(7,377)	(9,001)
Less: Unamortized deferred financing costs	(126)	(173)
Long-term debt	29,455	36,068
Revolving Credit Facility
NOTES PAYABLE - Schedule of Long-term debt [Line Items]
Notes payable	9,666	9,666
The Rustic Inn
NOTES PAYABLE - Schedule of Long-term debt [Line Items]
Notes payable	3,544	3,758
Shuckers Inc
NOTES PAYABLE - Schedule of Long-term debt [Line Items]
Notes payable	4,079	4,335
Oyster House
NOTES PAYABLE - Schedule of Long-term debt [Line Items]
Notes payable	3,646	4,109
JB's on the Beach
NOTES PAYABLE - Schedule of Long-term debt [Line Items]
Notes payable	5,000	5,750
Sequoia Renovation
NOTES PAYABLE - Schedule of Long-term debt [Line Items]
Notes payable	2,286	2,629
Blue Moon
NOTES PAYABLE - Schedule of Long-term debt [Line Items]
Notes payable	886	0
Paycheck Protection Program Loan
NOTES PAYABLE - Schedule of Long-term debt [Line Items]
Notes payable	$ 7,851	$ 14,995

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NOTES PAYABLE - Narrative (Details)				3 Months Ended			9 Months Ended
	Jul. 26, 2021 USD ($)	May 15, 2019 USD ($) installment	Jun. 01, 2018 USD ($) installment	Jul. 03, 2021 USD ($)	Jan. 02, 2021	Jun. 27, 2020 USD ($)	Jul. 03, 2021 USD ($)	Jun. 27, 2020 USD ($)	Oct. 03, 2020 USD ($)
NOTES PAYABLE - BANK (Details) [Line Items]
Notes payable				$ 36,958,000			$ 36,958,000		$ 45,242,000
Forgiveness of PPP loans				3,195,000		$ 0	7,318,000	$ 0
PPP loans, interest forgiven				36,000			63,000
Deferred financing costs incurred				271,000			271,000
Amortization				15,000		$ 13,000	47,000	$ 33,000
The Rustic Inn
NOTES PAYABLE - BANK (Details) [Line Items]
Notes payable				3,544,000			3,544,000		3,758,000
Shuckers Inc
NOTES PAYABLE - BANK (Details) [Line Items]
Notes payable				4,079,000			4,079,000		4,335,000
Oyster House
NOTES PAYABLE - BANK (Details) [Line Items]
Notes payable				3,646,000			3,646,000		4,109,000
JB's on the Beach
NOTES PAYABLE - BANK (Details) [Line Items]
Notes payable				5,000,000			5,000,000		5,750,000
Sequoia Renovation
NOTES PAYABLE - BANK (Details) [Line Items]
Notes payable				2,286,000			2,286,000		2,629,000
Paycheck Protection Program Loan
NOTES PAYABLE - BANK (Details) [Line Items]
Basis spread on variable rate					1.00%
Notes payable				7,851,000			7,851,000		14,995,000
Paycheck protection program loan									14,995,000
Long-term debt, current				2,439,000			2,439,000
Paycheck Protection Program Loan | Variable Interest Entity, Primary Beneficiary
NOTES PAYABLE - BANK (Details) [Line Items]
Paycheck protection program loan				111,000			111,000
Revolving Credit Facility
NOTES PAYABLE - BANK (Details) [Line Items]
Notes payable				$ 9,666,000			$ 9,666,000		$ 9,666,000
Revolving Credit Facility | Bank Hapoalim B.M.
NOTES PAYABLE - BANK (Details) [Line Items]
Current borrowing capacity			$ 10,000,000
Maximum borrowing capacity			35,000,000
Revolving Credit Facility | Bank Hapoalim B.M. | Subsequent Event
NOTES PAYABLE - BANK (Details) [Line Items]
Credit facility	$ 9,666,000
Periodic payment	500,000
Balloon payment to be paid	$ 2,166,000
Basis spread on variable rate	3.50%
Revolving Credit Facility | Bank Hapoalim B.M. | JB's on the Beach
NOTES PAYABLE - BANK (Details) [Line Items]
Periodic payment		$ 250,000
Balloon payment to be paid		$ 1,250,000
Basis spread on variable rate		3.50%
Number of installments | installment		23
Date of first required payment		Sep. 01, 2019
Notes payable		$ 7,000,000
Revolving Credit Facility | Bank Hapoalim B.M. | Sequoia Renovation
NOTES PAYABLE - BANK (Details) [Line Items]
Periodic payment		114,286
Balloon payment to be paid		$ 571,429
Basis spread on variable rate		3.50%
Number of installments | installment		23
Date of first required payment		Sep. 01, 2019
Notes payable		$ 3,200,000
Revolving Credit Facility | Amendment | Bank Hapoalim B.M. | The Rustic Inn
NOTES PAYABLE - BANK (Details) [Line Items]
Periodic payment			71,333
Balloon payment to be paid			$ 2,474,000
Basis spread on variable rate			3.50%
Face amount			$ 4,400,000
Number of installments | installment			27
Frequency of periodic payment			quarterly
Date of first required payment			Sep. 01, 2018
Revolving Credit Facility | Amendment | Bank Hapoalim B.M. | Shuckers Inc
NOTES PAYABLE - BANK (Details) [Line Items]
Periodic payment			$ 85,000
Balloon payment to be paid			$ 2,805,000
Basis spread on variable rate			3.50%
Face amount			$ 5,100,000
Number of installments | installment			27
Frequency of periodic payment			quarterly
Date of first required payment			Sep. 01, 2018
Revolving Credit Facility | Amendment | Bank Hapoalim B.M. | Oyster House Gulf Shores
NOTES PAYABLE - BANK (Details) [Line Items]
Periodic payment			$ 117,857
Balloon payment to be paid			$ 1,060,716
Basis spread on variable rate			3.50%
Face amount			$ 3,300,000
Number of installments | installment			19
Frequency of periodic payment			quarterly
Date of first required payment			Sep. 01, 2018
Revolving Credit Facility | Amendment | Bank Hapoalim B.M. | Oyster House Spanish Fort
NOTES PAYABLE - BANK (Details) [Line Items]
Periodic payment			$ 36,667
Balloon payment to be paid			$ 1,210,000
Basis spread on variable rate			3.50%
Face amount			$ 2,200,000
Number of installments | installment			27
Frequency of periodic payment			quarterly
Date of first required payment			Sep. 01, 2018

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COMMITMENTS AND CONTINGENCIES (Details)	9 Months Ended
	Jul. 03, 2021 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Lease expiration year	2046
Letters of credit outstanding, amount	$ 238,000

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STOCK OPTIONS (Details)	3 Months Ended		9 Months Ended
	Jul. 03, 2021 USD ($) shares	Jun. 27, 2020 USD ($) shares	Jul. 03, 2021 USD ($) plan $ / shares shares	Jun. 27, 2020 USD ($) $ / shares shares
STOCK OPTIONS (Details) [Line Items]
Number of stock option plans | plan			2
Granted (in shares) | shares			110,750
Exercise price (in dollars per share) | $ / shares			$ 10.65
Risk free interest rate			0.86%
Volatility rate			37.10%
Dividend yield			3.00%
Expected term			10 years
Compensation paid			$ 1,000,000
Stock-based compensation	$ 74,000	$ 58,000	207,000	$ 113,000
Unrecognized compensation	$ 810,000		$ 810,000
Unrecognized compensation, period for recognition			3 years 2 months 12 days
Employee Stock Option
STOCK OPTIONS (Details) [Line Items]
Granted (in shares) | shares	0	0	110,500	266,500
Exercise price (in dollars per share) | $ / shares			$ 10.65	$ 21.90
Employee Stock Option | Exercise Price One
STOCK OPTIONS (Details) [Line Items]
Grant date fair value (in US dollars per share) | $ / shares			$ 2.22	$ 3.35
Share-based payment award granted fair value			$ 246,000
Tranche One | Employee Stock Option | Exercise Price One
STOCK OPTIONS (Details) [Line Items]
Vesting percentage			50.00%	50.00%
Tranche Two | Employee Stock Option | Exercise Price One
STOCK OPTIONS (Details) [Line Items]
Vesting percentage			50.00%	50.00%
Stock Option 2016 Plan
STOCK OPTIONS (Details) [Line Items]
Expiration period			10 years

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STOCK OPTIONS (Details) - Schedule of stock options, activity	9 Months Ended	12 Months Ended
	Jul. 03, 2021 USD ($) $ / shares shares	Oct. 03, 2020 $ / shares shares
Shares
Outstanding, beginning of period (in shares)	626,500
Granted (in shares)	110,750
Exercised (in shares)	(49,149)
Canceled or expired (in shares)	(17,000)
Outstanding and expected to vest, end of period (in shares)	671,101	626,500
Exercisable, end of period (in shares)	302,351
Shares available for future grant (in shares)	63,750
Weighted Average Exercise Price
Outstanding, beginning of period (in dollars per share) | $ / shares	$ 20.41
Granted (in dollars per share) | $ / shares	10.65
Exercise price (in dollars per share) | $ / shares	14.40
Canceled or expired (in dollars per share) | $ / shares	21.05
Outstanding and expected to vest, end of period (in dollars per share) | $ / shares	19.22	$ 20.41
Exercisable, end of period (in dollars per share) | $ / shares	$ 20.10
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted average contractual term, outstanding	6 years 3 months 18 days	6 years 1 month 6 days
Weighted average contractual term, exercisable	3 years 2 months 12 days
Aggregate intrinsic value, outstanding and expected to vest | $	$ 1,383,000
Aggregate intrinsic value, exercisable | $	$ 399,000

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INCOME TAXES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Income Tax Disclosure [Abstract]
Provision (benefit) for income taxes	$ 4,684,000	$ (3,118,000)	$ (155,000)	$ (3,213,000)
Effective income tax rate	58.50%	52.30%	(2.31%)	53.10%

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INCOME PER SHARE OF COMMON STOCK (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Earnings Per Share [Abstract]
Basic (in shares)	3,522	3,502	3,512	3,500
Effect of dilutive securities:
Stock options (in shares)	126	0	90	0
Diluted (in shares)	3,648	3,502	3,602	3,500

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INCOME PER SHARE OF COMMON STOCK - NARRATIVE (Details) - shares	3 Months Ended		9 Months Ended
	Jul. 03, 2021	Jun. 27, 2020	Jul. 03, 2021	Jun. 27, 2020
Earnings Per Share [Abstract]
Shares excluded from computation of earning per share (in shares)	443,500	0	443,500	0