VARIABLE INTEREST ENTITIES

6 Months Ended

Apr. 01, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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 assets and liabilities of the Company’s consolidated VIEs:


	April 1, 2023		October 1, 2022
	(in thousands)
Cash and cash equivalents	$	560	$	834
Accounts receivable	154		140
Inventories	44		38
Prepaid and refundable income taxes	279		278
Prepaid expenses and other current assets	24		17
Due from Ark Restaurants Corp. and affiliates (1)	471		400
Fixed assets - net	231		212
Operating lease right-of-use assets - net	1,938		2,076
Other assets	11		11
Total assets	$	3,712	$	4,006

Accounts payable - trade	$	211	$	135
Accrued expenses and other current liabilities	353		417
Current portion of operating lease liabilities	285		272
Operating lease liabilities, less current portion	1,776		1,921
Total liabilities	2,625		2,745
Equity of variable interest entities	1,087		1,261
Total liabilities and equity	$	3,712	$	4,006

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

The liabilities of $2,625,000 and $2,745,000 at April 1, 2023 and October 1, 2022, respectively, recognized as a result of consolidating these VIEs do not represent additional claims on the Company’s general assets and creditors of the VIEs do not have recourse to the general credit of the Company; rather, they represent claims against the specific assets of the consolidated VIEs. Conversely, the assets of $3,712,000 and $4,006,000 at April 1, 2023 and October 1, 2022, respectively, 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, these assets can be used only to settle obligations of the three VIEs.