BT Brands Inc

Previous wording

As of March 31, 2024, including our partially owned Bagger Dave’s business, we own and operate the following seventeen restaurants:

Current wording

As of June 30, 2024, including our partially owned Bagger Dave’s business, we owned and operated eighteen restaurants comprising the following:

Previous wording

We operate through a central management organization that provides continuity across our restaurant base by utilizing the efficiencies of a central management team.

Current wording

Our business environment is challenging, as competition is intense. We operate through a central management organization that provides continuity across our restaurant base by utilizing the efficiencies of a central management team.

Previous wording

Our recent acquisitions have allowed us to diversify our operations into new restaurant segments and new geographic regions, reducing our dependency on the financial performance of our Burger Time restaurants. During 2022, we acquired three operating restaurants and an approximately 40% ownership interest in Bagger Dave’s, an operator of six casual restaurants. We continue to consider new acquisition opportunities.

Current wording

Our recent acquisitions have allowed us to diversify our operations into new restaurant segments and new geographic regions, reducing our dependency on the financial performance of our Burger Time restaurants. During 2022, we acquired three operating restaurants and approximately a 40% ownership interest in Bagger Dave’s, an operator of six casual restaurants. During the second quarter of 2024, we acquired assets and assumed the remaining lease obligation related to the Schnitzel Haus restaurant in Hobe Sound, Florida. We continue to consider new acquisition opportunities.

Previous wording

Food costs have increased over the last two years, and we expect to see some moderating inflationary pressure during the remainder of 2024. Beef and egg costs trended down slightly in 2023. Given the competitive nature of the restaurant industry, raising menu prices to fully cover cost increases may be challenging. As a result, future margin improvements may be difficult to achieve. Margin improvement will be achieved through operational enhancements, equipment advances, and increased volumes offsetting food cost increases.

Current wording

Food costs have increased over the last two years, and we expect to see moderation of inflationary pressure during the remainder of 2024. Beef and egg costs trended down slightly in 2023. Given the competitive nature of the restaurant industry, raising menu prices to fully cover cost increases may be challenging. As a result, future margin improvements may be difficult to achieve. Margin improvement will be achieved through operational enhancements, equipment advances, and increased volumes offsetting food cost increases.

Previous wording

Labor is a critical factor in operating our stores. Securing staff to run our locations at capacity has become more challenging in most areas where we operate our restaurants. The current labor market has resulted in higher wages as the competition for employees intensifies, not only in the restaurant industry but in practically all retail and service industries. To succeed, we must identify and retain quality employees.

Current wording

Labor is a critical factor in operating our stores. Securing staff to run our locations at full capacity has become more challenging in most areas where we operate our restaurants. The current labor market has resulted in higher wages as the competition for employees intensifies, not only in the restaurant industry but in practically all retail and service industries. To succeed, we must identify, develop, and retain quality employees.

Previous wording

The following table sets forth our Condensed Consolidated Statements of Operations and percentages of total sales for the thirteen-week fiscal periods. The percentages below may not reconcile because of rounding.

Current wording

The following table sets forth our Condensed Statements of Operations and percentages of total revenues for the thirteen-week fiscal periods. The percentages below may not reconcile because of rounding.

Previous wording

Restaurant unit sales for Burger Time for the first 13 weeks ranged from a low of approximately $125,000 to a high of approximately $290,000. The average sales for each Burger Time unit were approximately $209,000 in 2024, approximately $29,000 above the same period in 2023.

Current wording

Restaurant unit sales for Burger Time for the 13 weeks ranged from a low of approximately $161,000 to a high of approximately $348,000. The average sales for each Burger Time unit were approximately $276,000 in 2024, approximately $34,000 above the same period in 2023. The average customer transaction at our Burger Time restaurants increased by approximately 10% in 2024. The results reflect a significant menu price increase, particularly in our “Deal of the Day” offering. The average check is currently about $18.00.

Previous wording

Our various restaurants all experience unique seasonal sales patterns. The first quarter was seasonally slower for BTND and PIE, which had sales of $446,000, an increase of 4% from the same quarter a year ago.

Current wording

Our various restaurants all experience unique seasonal sales patterns.

Previous wording

The cost of sales—food and paper—for the fiscal 2024 period decreased as a percentage of restaurant sales to 40.1% from 42.0% in the first quarter of fiscal 2023. This decrease was the net result of moderating inflationary pressures, including a decline in the cost of several key inputs from a year ago.

Current wording

The cost of sales—food and paper—for the fiscal 2024 period declined to 38.1% from 40.2% of restaurant sales in the second quarter of fiscal 2023. This percentage was the net result of moderating inflationary pressures, including the cost of key inputs from a year ago and the impact of menu price increases at all locations, particularly at Burger Time, where the menu price of the popular “Deal of the Day” was increased approximately 10%.

Previous wording

Restaurant operating costs (which refer to all the costs associated with the operation of our restaurants but do not include general and administrative expenses, gain on sales of assets, and depreciation and amortization) as a percentage of restaurant sales increased slightly to 100.5% of sales in the first fiscal quarter of 2024 from 99.2% in the similar period of fiscal 2023. This increase was the result of higher labor costs and declining and stabilizing commodity costs, as well as the matters discussed in the “Cost of Sales, - food and paper,” “Labor Costs,” and “Occupancy and Other Operating Costs” sections below.

Current wording

Restaurant operating costs (which refer to all the costs associated with the operation of our restaurants but do not include general and administrative expenses and depreciation and amortization) as a percentage of restaurant sales increased to 89.4% of sales in the fiscal quarter of 2024 from 84.2% in the similar period of fiscal 2023. This increase was the result of increases in labor costs, additional occupancy costs, and stabilizing commodity costs and the matters discussed in the "Cost of Sales, - food and paper," "Labor Costs," and "Occupancy and Other Operating Costs" sections below.

Previous wording

For the first quarter of fiscal 2024, labor and benefits costs increased as a percentage of restaurant sales to 43.5% from 39.2% in fiscal 2023. The increase in the percentage cost resulted from tighter labor markets, which resulted in higher hourly wage costs offset by leveraging existing staffing and higher labor costs associated with the PIE acquisition. Payroll costs are semi-variable, meaning they do not change proportionally to changes in revenue.

Current wording

For the second quarter of fiscal 2024, labor and benefits costs increased as a percentage of restaurant sales to 37.7% from 35.3% in fiscal 2023. The increase in the percentage cost resulted from the continued tightness of labor markets, higher-than-historical costs to train new employees and continued upward competitive pressure on hourly wage costs. These costs were offset by leveraging existing staffing and labor costs associated with the Schnitzel Haus acquisition. Payroll costs are semi-variable, meaning they do not increase proportionally to increases in revenue.

Previous wording

For the first fiscal quarter of 2024, depreciation and amortization expenses were $160,542 (5.0% of sales), approximately the same as in the prior year of $163,507 (5.3% of sales).

Current wording

For the second fiscal quarter of 2024, depreciation and amortization expenses were $171,351 (4.2% of sales), a decrease from $192,520 (4.8% of sales) in the prior year as more of the Company’s assets reached the fully depreciated amount.

Previous wording

The loss from operations for the first quarter of fiscal 2024 was $630,829 compared to a loss of $564,446 in the prior fiscal year calculated before the asset sale gain and reflects slightly improved sales and higher hourly wage rates in virtually all of the company’s businesses and the items discussed in the “Net Sales” and “Restaurant Operating Costs” sections above.

Current wording

The loss from operations for the second quarter of fiscal 2024 was $188,543, compared to a loss of $79,548 in the prior year fiscal quarter. This reflects higher hourly and increases in manager wages in virtually all of the company’s businesses, as well as the items discussed in the "Net Sales" and "Restaurant Operating Costs" sections above.

Previous wording

We define restaurant-level EBITDA as operating income before pre-opening costs, if any, general and administrative costs, depreciation and amortization, and impairment charges. General and administrative expenses are excluded as they are generally not specifically identifiable as restaurant-specific costs. Depreciation, amortization, and impairment charges are excluded because they are not ongoing controllable cash expenses and are not related to the health of ongoing operations.

Current wording

We define restaurant-level EBITDA as operating income before pre-opening costs, including general and administrative costs, depreciation and amortization, and impairment charges. General and administrative expenses are excluded as they are generally not specifically identifiable as restaurant-specific costs. Depreciation, amortization, and impairment charges are excluded because they are not ongoing controllable cash expenses and are not related to the health of ongoing operations.

Previous wording

The public response to COVID-19 positively impacted sales and liquidity. Customer activities have returned to normal patterns, resulting in a decline in sales activity to historic levels. More recently, our Burger Time business sales have shown a slight upward trend. On March 31, 2024, we had $6.1 million in cash and marketable securities and net working capital of $5.3 million, a net working capital decrease of $.4 million from December 31, 2023.

Current wording

On June 30, 2024, we had $5.2 million in cash, cash equivalents and marketable securities and net working capital of $4.4 million, a decrease of $1.3 million from December 31, 2023.

Previous wording

Our primary requirements for liquidity are to fund our working capital needs, capital expenditures, and general corporate needs, as well as to invest in or acquire businesses. Our operations do not require significant working capital, and, like many restaurant companies, we generally operate with negative working capital. We anticipate that working capital deficits may be incurred and possibly increase. Our primary liquidity and cash flow sources are operating cash flows and cash on hand. We use this to service debt, maintain our stores to operate efficiently and increase our working capital. Our working capital position benefits from the fact that we collect cash from sales from our customers at the point of purchase or within a few days from our credit card processor; generally, payments to our vendors are not due for thirty days.

Current wording

Our primary requirements for liquidity are to fund our working capital needs, capital expenditures, and general corporate needs, as well as to invest in or acquire businesses. Our operations do not require significant working capital, and, like many restaurant companies, we generally operate with negative working capital. We anticipate that working capital deficits may be incurred in the future and possibly increase. Our primary liquidity and cash flow sources are operating cash flows and cash on hand. We use this to service debt, maintain our stores to operate efficiently and increase our working capital. Our working capital position benefits from the fact that we collect cash from sales from our customers at the point of purchase or within a few days from our credit card processor; generally, payments to our vendors are not due for thirty days.

Previous wording

Operating cash flow for the thirteen weeks ending March 31, 2024, was a negative $408,875. Cash flow in the first quarter was impacted by seasonal patterns in our business.

Current wording

Operating cash flow for the 26 weeks ending June 30, 2024, was negative $326,369. This was impacted by ongoing seasonal trading patterns in our business, which experienced increased labor costs and repair and maintenance expenses.

Previous wording

As of March 31, 2024, we had $4.2 million in contractual obligations relating to amounts due under mortgages on the real property where our stores are situated, including $1.8 million in capitalized lease obligations related to our recent acquisitions. Our monthly required payments on lease and mortgage obligations are approximately $49,000.

Current wording

As of June 30, 2024, we had $4.3 million in contractual obligations relating to amounts due under mortgages on the real property where our stores are situated, including $1.9 million in lease obligations related to our recent acquisitions. Our monthly required payments on lease and mortgage obligations are approximately $47,000.