Greetings, and welcome to the Ark Restaurants' Second Quarter 2020 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sonal Shah, General Counsel. Thank you. You may begin.

Thank you, Operator. Good afternoon, and thank you for joining us on our conference call for the second fiscal quarter ended March 28, 2020. My name is Sonal Shah, and I'm General Counsel of Ark Restaurants. With me on the call today is Michael Weinstein, our Chairman and CEO; Vinny Pascal, our Chief Operating Officer; and Anthony Sirica, our Chief Financial Officer. For those of you who have yet to obtain a copy of our press release, it was issued over the newswires yesterday and is available on our website. To review the full text of that press release, along with its associated financial tables, please go to our homepage at www.arkrestaurants.com. Before we begin, however, I'd like to read the Safe Harbor statement. I need to remind everyone that part of our discussion this afternoon will include forward-looking statements, and that these statements are not guarantees of future performance, and therefore, undue reliance should not be placed on them. We refer everyone to our filings with the Securities and Exchange Commission for a more detailed discussion of the risks that may have a direct bearing on our operating results, performance, and financial condition. I'll now turn the call over to Michael.

Hi, everybody. I assume you've all seen the earnings release. So, let me try to explain our business right now. Whatever we reported in the past is essentially not useful other than to say that the properties we had were performing very well prior to the pandemic. We thought we would have a $16 million EBITDA for the year, the way we were going. These properties were strong properties. They'll be strong again at some point, but given that the pandemic closed us everywhere, we've been slowly opening where we were allowed to open, and fortunately the first places we opened were in the South, Florida and Alabama. We initially opened six restaurants in a short period of time about five weeks ago, I guess, and those restaurants are doing quite well. They're obviously down because of social distancing and 50% capacities; their volumes are down from the same time last year. However, because of limiting menus, and certainly in every case reconfiguring payroll and schedules, they're operating more efficiently. And in some cases, the cash flow coming from the restaurants is the same as in the prior period last year. So, those six restaurants were very solid right from the beginning. If there were early losses in any restaurants, they were minor. But as of the last flash cash reports on those six restaurants, which was last week, they were all profitable. About 10 days ago, we opened Las Vegas. The first week, we essentially broke even with cash flow. We haven't seen last week's P&L yet, but I anticipate that there would be some positive cash flow from that. So those southern restaurants in Las Vegas have been better than we anticipated when we opened them up. I mean, there was fear in opening them up. We had no idea how they would do. We opened Washington a few days ago, in Sequoia. We haven't opened Union Station yet. Well, it's too early to tell how that's doing. We have the advantage of having a lot of outdoor seats. I think we have 307 outdoor seats after social distancing. I think as of the next couple of days, we'll also be allowed by the city to sit people inside, though I don't know how that's going to go. We opened Bryant Park yesterday in New York. We opened El Rio Grande today in New York. Both of those have outdoor seating; we're only allowed to sit outside in New York. Clyde's and Robert and the Museum of Art and Design will not open until well, Clyde's will open once we are allowed to open inside. Robert won't open until probably mid-September because the museum that we're in is closed, and museums in New York are going to be the last phase, and probably none of the museums are going to open until sometime in September. So we have this staged opening that so far is going well. Before we count New York again, we have no idea what's going to happen there. We just have no way to validate anything. To say that this is fraught with potential peril is an understatement. Obviously, we're open. The case loads in Florida, Alabama, and Las Vegas are climbing. I know there’s every intent by the government to keep these places open, but if we have cases in our restaurants and it becomes obvious that we're endangering our employees or our customers by remaining open, we're probably going to be faced with a decision that I see every business in the United States is faced with. Do you close? Do you close until you can get everybody tested so that you have only people who tested negative in the restaurants? We can control the atmosphere in the restaurants; we can control for the most part our employees, and we're certainly following CDC guidelines plus we're doing more than that. What we cannot control is where our customers have been and where our employees have been when they're not working. We sent out notices to all our employees that it is their responsibility to be considerate of their fellow employees and to their customers and wear masks and practice social distancing, avoid crowds when they're not in the restaurants to improve the odds. But obviously, I'm sure all of you are very cognizant that this is not the case. There is no assurance that we can keep the virus out of our restaurants, but right now it's all going well. We did take PPP money for our restaurants. It was cheap money to take. Honestly, I thought when we went into this that we would have enough money to see us through without PPP money. The PPP money was very helpful. One of the things we face in terms of the negative is places like Sequoia, Bryant Park, and Robert do a lot of events. Well, we're not doing events right now. And we had $4 million on deposit for Christmas events and we're trying to reschedule people and encourage them to keep the deposits for another day. We’re somewhat successful, but there are deposits flowing out of here as well. So, our cash flow or our cash on hand in part was bolstered by the flow of deposits and by the float of being in business where customers pay us the day they get served, and we pay bills 15 to 30 days later. Those two advantages disappeared the minute we closed down. So, the PPP money was of great assistance. That's about all I have to say right now. I'm happy to take questions.

First questions come from the line of Anthony Chiarenza. Please proceed with your questions.

Can you comment a little bit about how well customers are following the protocols and wearing masks? Because I had heard stories here in New York that customers come in, they wear their masks, and then they take them off and start walking around all over the place in the restaurant. I know it's difficult for you to enforce, but how have you seen the customer in terms of complying with what they should be doing once they are in the restaurant?

All right, personally we're not traveling to Florida or Alabama or Las Vegas right now. So, we're relying on our general managers, obviously in the Hard Rock casinos and the New York, New York Hotel & Casino. We're not in control of that; the casinos are in control of it. When you get into our restaurants, we're in control and we're enforcing it. Obviously, people can't drink or eat with their masks on, but for the most part, we are being told by our managers that most people are wearing masks. In Florida, you have a big problem in general with what's going on in Miami. We're not in Miami; we're in Broward County. Palm Beach County is reckless, we’re told. One of the problems we have is our restaurant JB's in Deerfield Beach has a restaurant next to it. We're not allowing people to sit at the bar. We're following all the guidelines and social spacing. The restaurant next door has a bar that's four people deep, you know, and nobody's wearing a mask. There's no social distancing, and that puts us in jeopardy because their property abuts our property. So, we're trying to enforce everything. It's awkward to go to a customer and tell them what proper behavior is, but we're doing it. We're also doing something that most restaurants I'm told are not doing. When you come to our restaurants, you have to give us your contact number so that in case we have an incident on a particular, we can go back to the date you ate there and contact all of those people and say we've had an incident here, you should be tested. So, we're being very careful. Unfortunately, other people are not, and I know in Miami now they've been closing places where guidelines are not being followed, but the problem is those restaurants open two days later. So, it's difficult, but I think in our places, we are having a lot of success.

Taking down the number is a great idea; that's an excellent idea. And I think everybody should do that because that's one of the best ways we could battle this thing, as once we identify it, we can identify who has been in contact with people who had the virus and then trace it through. I know in New York City, we've had very good success doing that, and the mayor was talking about it the other day but…

Yes, right. One of the other things, which is a nuance because you learn every day, we're now querying our staff to see if anyone has an immunology problem. We don't want them working. We don't want them in danger. And so, what happened here is the staff was on unemployment; we bring them back, and we find out that somebody has an immunology problem. We don't want them to risk themselves. Nobody should have the economics of their life to make the decision that they have to go to work with an immunology problem just because they need to make a living. So, we're going to subsidize those people until they can get back on unemployment. You just got to be so aware of, again, the nuances of the situation; it's hard.

Yes, I can totally understand it, and you are in the minority in terms of enforcing everything in New York. The stories that I've heard from different people are just revolting; I mean that just people don't care and they just walk around, take off their masks, and it puts tremendous stress on the restaurant owners. You have to fight with your customers or what are you going to do? It’s a difficult situation. Now on the cash flow side, I know you don't know what's going to happen in New York and everything else. Do you think you have enough cash to maintain yourself for another six months, another year assuming things stay - let's say to some degree a slight negative cash flow?

So, I'm going to make a statement that you have to take at a period in time as of this date, and it could change dramatically. We have enough cash flow coming out of the restaurants that have been operating for five or six weeks to cover our corporate overhead.

Fantastic, right?

And that does not include PPP money. That can change rapidly depending upon what happens with the pandemic. We are at risk, but I don't want to sound like we're good guys. The top four people, Anthony, you may chime in, but I think the top four people at our corporate office were salaried and bonused at $3 million last year, right? That number went down to $220,000 the minute we closed. Nobody in our business was allowed to make more than $50,000 a year. I mean, we cut everybody and every manager. I mean, we have managers like Paul Gordon in Las Vegas, who made a lot of money. He went down to $50,000. Every manager - we don't have a manager in our network that doesn't make less than $100,000. Everybody went down to $50,000. Everybody else went down by 50%. So, we were able to crush corporate overhead until we could get these restaurants open. Now, we brought everybody back up to what, Anthony, 65% to 70%?

65%.

Except me, alright? I'm less than 65%, but the restaurants are - the minute they turn cash flow positive, which was immediately in the South, we brought everybody back from 70% gradually to where they're at 100% of their salary. So, these cash flows are real in the sense that they're not being subsidized by people subsidizing us. So, we're operating as if there was not a pandemic in terms of the economics of the salaries of the people in the restaurants. So these cash flows are real, and we have room to move them back down again, because we're, quite honestly, very fortunate in the culture of the company and the managers who have been with us. Every one of these managers for the most part, except for their recent acquisitions in the last three or four years, were with us through 9/11; they were with us in 2008. This is the third time they're subsidizing the life of the business by taking salary cuts. They know that their life is tied to the success of this company. The way their lives are going to get better is to bet on the company. And by betting on the company, they have to subsidize it. They're all prepared to do it. We did not hear one peep, not one. And as a matter of fact, if we didn't do it, they would volunteer to do it.

That's great. You're in the minority, and it's great to hear. It's great to be a shareholder, and you're approaching it from the shareholder perspective, which is wonderful. I commend you.

There are no further questions at this time. I would like to turn the floor back over to management for any closing comments.

Well thank you for all attending this. We’ll keep you advised. So far, things are going well. Again, there are risks out there. I don't know how to assess them, obviously, but so far we're doing well. And I wish you all well and stay healthy, and we'll speak to you in three months. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.