Greetings, and welcome to the Ark Restaurants First Quarter 2016 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Bob Stewart, President and Chief Financial Officer. Thank you. You may begin. .

Thank you, operator. Good morning, and thank you for joining us on our conference call for the first fiscal quarter ended January 2, 2016. With me on the call today is Michael Weinstein, our Chairman and CEO; and Vinny Pascal, our Chief Operating Officer.

For those of you have not yet obtained a copy of our press release, it was issued over the newswire Friday and is available on our website. To review the full text of that press release along with the associated financial tables, please go to our home page 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 will now turn the call over to Michael. .

Hi, everybody. This quarter had a lot of moving parts. Let me start off by telling you the good news, which we think is substantial. And we certainly are well aware of the shortfall in EBITDA, which I will get into as well.

First of all, our same-store sales were more than satisfactory, helped a little bit by the fact that New Year's Eve fell in our current quarter and last year it fell in the second fiscal quarter, so New Year's Eve was helpful. But in general, same-store sales, with the exception of Washington, D.C., were all up in every venue..

The business in general feels good. We think demand is holding. We are under construction in several venues, most notably, Washington, D.C. Where Union Station has been blocking our entrance to one of our restaurants because of restoration of the ceiling.

We are under construction in Fort Lauderdale at the Rustic Inn with a -- basically have detoured people going to the restaurant some 1.5 to 2 miles because one of the bridges is being restored. It has some floors in it that goes over the canal to directly access our restaurant.

We were under construction in Las Vegas with New York, New York, blocking one of the main entrances to -- they're building a new park with a new entertainment center with 2,000 seats -- 20,000 seats, excuse me. That lifts in April.

So we expect that in Las Vegas, we'll start doing better in April when this entrance is opened up and we should see more demand from the expansion of New York, New York. So given the fact that we are facing outside construction problems at those 3 venues, again, we think sales are more than satisfactory. .

In this quarter, we finished the purchase of Shuckers, a restaurant in Jensen Beach, Florida. We purchased that restaurant for some $5.6 million. It includes a gift shop and a real estate brokerage arm. It's in a timeshare facility. Shuckers controls most of the rentals of the timeshare. The restaurant does about $5 million.

And when we purchased it, we thought it would earn about $1 million operating profit on a trailing 12-month basis. It earned $990,000, so we're right on the ball there, and we think that will be a wonderful acquisition. It sits right on the beach. We are now processing an application to expand the beach seating.

We think that will go well, although there's no insurance of that. But if that should happen, we think there's more demand than seats at this time..

We also had a very good 6 months at our Southwest Porch in Bryant Park. We operate, as you know, the Bryant Park Grill and the Bryant Park Café in that park, and there was an opportunity to take over a 45-seat outdoor facility. We did bang-up business from the time we took it over in mid-summer and through December. It's seasonal.

There is no enclosed seats. The March quarter will generally be a disaster, I would think. And -- but it will swing back very favorably in April and May through December.

What makes it such a good fit in the December quarter is that park has an outdoor shopping, Christmas shopping retail complex that comes into the park around October and lasts right until New Year's Day. And that brings literally thousands and thousands of people to our doorstep. We also are expanding that.

It was 45 seats in April, we'll get another 40 seats. So that seems to be going extremely well..

We have continued problems in Jupiter with the expansion of the Rustic Inn in Jupiter. We just feel that we got off to a bad start with service in that facility. We changed managers. Part of our problem this quarter was increased losses. Last year, we were not operating, but we did have some preopening expenses.

But the losses in the December quarter exceeded the preopening expenses last year..

We had 2 factors which we spoke about in the press conference, which are related to the decline in EBITDA. One was $120,000 in closing costs with the Shuckers deals, which we wrote off. And another was we lost 3 operations at the Venetian that were fully operating last December quarter and we're not operating this December quarter.

All that being said, that's the good news. The bad news and really bad news here was that we lost control of our labor costs, and it was insidious. It's -- just across-the-board, we were higher everywhere. And it's not a big number in any one restaurant, but when you take a look at all our operations, labor costs were just inefficient.

Some of that has to do with the new labor laws in certain venues, but we just did not do our usual good job. And we're apologetic and we're well aware of it, and we put in those corrections already. .

This -- starting January 1 in New York, which has nothing to do with the last quarter, we will face substantial increased minimum wage rates for tipped employees. We have taken a different approach than a lot of restaurants who are going with a no-tipping policy and raising menu prices. We don't want to be that revolutionary.

We have raised menu prices. We raised them because we think the demand is there at the moment to take the 3% or 4% increase. And we've also done some work in limiting the number of hours and the number of overtime hours in our restaurants, which is difficult given the legacy that we have with our employees.

But we are trying to make everybody flexible and understand the problem, and we think we have basically gotten to the point where this increase will not affect us on a go-forward basis.

But it did take us most of January and a good part of February to implement these price increases and to tone down the number of hours tipped employees were working at our restaurants..

So all in all, we think we've -- we think demand is there for our restaurants. We think sales will continue to be good. We think Shuckers and the Southwest operations will contribute. We are hopeful that once New York, New York opens up its park and its entertainment complex, we will see increased business flowing to New York, New York.

And we also are hopeful that we will see some good results from our effort with operating expenses and curtailing the labor percentage of our operations. .

So that's basically it. Any questions? I'll take questions on this first, and then I'll be happy to discuss the Meadowlands with everybody. .

[Operator Instructions] Ladies and gentlemen, we have no questions in queue at this time. I would now like to turn the floor back over to management. .

All right. So let's talk about Meadowlands and what's going on there. As you know, we own an 11.6% interest in an LLC called New Meadowlands Racing, LLC. And that LLC, 3 years ago, made a deal with the state of New Jersey and part of the deal with the state to run the Meadowlands Racetrack.

We built $100 million grandstand and moved the facility from the old grandstand to a better position in terms of traffic flow in the Meadowlands area. The Meadowlands is this complex that includes Giants Stadium and other stadiums and the racetrack is part of that.

And perhaps it will include one of the largest malls in the world which they've tried to complete for the last 5 or 6 years, but has not been completed yet..

The Meadowlands sits in an area where there's vast parking and no residential component to it. We thought when we purchased our interest that Meadowlands Racetrack would be a prime site if casino gaming was ever permitted in the Northern part of New Jersey.

Little did we know when we purchased our interest that events in Atlantic City would change dramatically with 4 casinos closing, with revenues collapsing under the weight of competition from New York, Pennsylvania, Delaware and Maryland.

And the state of New Jersey started to have serious conversations in the legislature to permit a referendum to allow casino gaming in Newark. .

Where this stands now is that we believe that sometime before August, the legislature will move and pass legislation to permit a referendum to go on the ballot in November to allow casino gaming in the Northern part of the state.

That legislation will not name any sites but will, essentially, if the referendum passes, allow for some committee, not yet formed, to look at bids from Atlantic City casinos for locations North of by a minimum 75 miles of Atlantic City. .

Again, we think the Meadowlands Racetrack is the primary site in the North. Literarily, all roads lead to it. It's 10 minutes from Manhattan by car. It's a railroad stop on Metro -- on New Jersey Transit that lets out right in front of the Meadowlands. It -- again, it's a built facility, at least for the first phase of the casino.

The race track was built in such a way the grandstands, that it could accept the gaming machines. We could be in business in 6 months. .

The legislation requires that the license be with a current license holder in Atlantic City, so I would expect we would have a partner. There is some provision in the legislation that's being proposed that if no Atlantic City casino comes forward with a proposal that makes sense, then it's open to outside bidding.

But my guess is we will have an Atlantic City partner if the referendum passes. .

We are highly, highly, highly optimistic that the legislation will pass in this session. It is a bill that has bilateral support. It has support from the Atlantic City unions. We don't see any reason why it should not pass, although we're dealing with politicians.

Whether or not a referendum can pass in November, it depends upon which poll you look at right now. Again, it has bilateral support. We would be somewhat confident, but this is not a slam dunk that it passes in November. If it doesn't pass in November, there is a 2-year waiting period before legislation can, again, be introduced.

This is a change to the constitution in the state of New Jersey and that's why it has to be a referendum passed by the people of New Jersey on the November ballot. So again, we remain very optimistic about the next step, which is legislation being passed in the current legislative session. .

So any questions on that, please?.

[Operator Instructions] Ladies and gentlemen, we have no questions in queue at this time. I would now like to turn the floor back over to management. .

All right. Well, thank you very much for calling in. We'll look forward to speaking to you on the next conference call. .

Thank you, ladies and gentlemen. This does conclude our teleconference for today. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day..