BT Brands, Inc.

Previous wording

Our fiscal year is 52/53 weeks long, ending on the Sunday closest to December 31. The 52-week budgetary 2023 ended on December 31, 2023, and the 52-week fiscal 2022 ended on January 1, 2023.

Current wording

Our fiscal year is 52/53 weeks long, ending on the Sunday closest to December 31. The 52-week fiscal year 2024 ended on December 29, 2024, and the 52-week fiscal year 2023 ended on December 31, 2023.

Previous wording

Burger Time opened its first restaurant in Fargo, North Dakota, in 1987. Burger Time restaurants feature a traditional grilled hamburger and other affordable foods such as chicken sandwiches, pulled pork sandwiches, sides, and soft drinks. Burger Time’s operating principles include (i) offering bigger burgers and more value for the money; (ii) offering a limited menu to permit attention to quality and speed of preparation; (iii) providing fast service by way of single and double drive-thru designs and a point-of-sale system that expedites the ordering and preparation process, and (iv) great tasting and quality food made fresh to order at a fair price. Our primary strategy is to serve the drive-thru and take-out segment of the quick-service restaurant industry.

Current wording

Burger Time opened its first restaurant in Fargo, North Dakota, in 1987. Burger Time restaurants feature traditional grilled hamburgers, other affordable foods, and soft drinks. Burger Time’s operating principles include (i) offering bigger burgers and more value for the money; (ii) offering a limited menu to permit attention to quality and speed of preparation; (iii) providing fast service by way of single and double drive-thru designs and a point-of-sale system that expedites the ordering and preparation process, and (iv) great tasting and quality food made fresh to order at a fair price

Previous wording

Our 2022 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 the 2022 fiscal year, we acquired three operating restaurants and own a 39.6% interest in BDVB, an operator of six casual restaurants. We expect to consider and evaluate additional acquisition opportunities in the future.

Current wording

Our 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. In 2024, we acquired the Schnitzel Haus restaurant, and in 2022, we purchased three operating restaurants and now own a 39.6% interest in BDVB, an operator of six casual restaurants. In May of 2024, we purchased the Schnitzel Hause restaurant. We may consider and evaluate additional acquisition opportunities in the future. Due to the underperformance of our Village Bier Garten restaurant relative to our expectations, we made the decision early in 2025 to close the business. We own 39.6% of the publicly held Dave’s Burger Tavern, Inc., the owner and operator of six Bagger Dave’s restaurants, a casual restaurant and bar concept. Bagger Dave’s provides an inviting, entertaining atmosphere specializing in burgers, hand-cut fries, craft beer, milkshakes, salads, pizza, and other items. Bagger Dave’s opened its first restaurant in Berkley, Michigan, in January 2008 and operates four restaurants in Michigan, one restaurant in Ft. Wayne, Indiana, and one location in Centerville, Ohio. In January 2025, Bagger Dave’s closed a unit in Chesterfield, Michigan. We are currently exploring the sale of all of Bagger Dave’s restaurant locations.

Previous wording

Industry trends have a direct impact on our business. Current trends include difficulties attracting food service workers and rapid inflation in the cost of input items. Recent trends also include the rapidly changing area of technology and food delivery. The major companies in the restaurant industry have rapidly adopted and developed smartphone and mobile delivery applications, have aggressively expanded drive-through operations, and developed loyalty programs and database marketing supported by a robust technology platform. We expect these trends to continue as restaurants aggressively compete for customers. Competitors will continue to discount prices through aggressive promotions.

Current wording

Industry trends have a direct impact on our business. Current trends include difficulties attracting food service workers and rapid inflation in the cost of input items. Recent trends also include the rapidly changing areas of technology and food delivery. The major companies in the restaurant industry have rapidly adopted and developed smartphone and mobile delivery applications, have aggressively expanded drive-through operations, and developed loyalty programs and database marketing supported by a robust technology platform. We expect these trends to continue as restaurants aggressively compete for customers. Competitors will continue to discount prices through aggressive promotions.

Previous wording

Food costs have increased over the last two years, and we expect to see continued inflationary pressure during 2024. Beef and egg costs continued to increase in 2023 and we expect cost to continue to be volatile in 2024. Given the competitive nature of the restaurant industry, it may be challenging to raise menu prices to fully cover cost increases. 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 continued inflationary pressure during 2024. Beef and egg costs continued to increase in 2024, and we expect costs to continue to be volatile in 2024. Given the competitive nature of the restaurant industry, it may be challenging to raise menu prices to fully cover cost increases. 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

Result of operations for the 52 weeks ending December 31, 2023, compared to the 52 weeks ending January 1, 2023.

Current wording

Results of operations for the 52 weeks ending December 29, 2024, compared to the 52 weeks ending December 31, 2024.

Previous wording

For BTND locations open at year-end, 2023 restaurant sales ranged from a low of $472,000 to a high of $1,208,000. The average sales for each Burger Time unit open at year-end were approximately $821,600 in 2023, an increase of approximately 6.1% from $809,000 in 2022.

Current wording

For BTND locations open at year-end, 2024 restaurant sales ranged from a low of $567,000 to a high of $1,176,000. The average sales for each Burger Time unit open at year-end were approximately $926,000 in 2024, an increase of approximately 12.8% from $821,000 in 2023.

Previous wording

In 2023, restaurant operating costs (which refer to all the costs associated with operating our restaurants but do not include general and administrative expenses and depreciation and amortization) increased to 93.9% of restaurant sales from 86.5% in 2022. This increase was due primarily to continued price inflation on input costs, including food and labor, and the matters discussed in the “Cost of Sales,” “Labor Costs,” and “Occupancy and Other Operating Cost” sections below.

Current wording

In 2024, restaurant operating costs (which refer to all the costs associated with operating our restaurants but do not include general and administrative expenses and depreciation, amortization, and restaurant impairment charges) increased to 95.1% of restaurant sales from 93.9% in 2023. This increase was due primarily to continued price inflation on input costs, including food and labor, and the matters discussed in the “Cost of Sales,” “Labor Costs,” and “Occupancy and Other Operating Cost” sections below.

Previous wording

The impact of cost increases and the addition of three non-BTND restaurants during the year may be detailed as follows:

Current wording

The impact of cost increases and the addition, including non-BTND restaurants during the year, may be detailed as follows:

Previous wording

Cost of sales - food and paper - for 2023 increased to 39.4% of restaurant sales from 38.5% of restaurant sales in 2022. The increase results from the inclusion of a full year of VBG and Keegan’s results, which operate at a lower gross profit. The increase also reflects the net result of price increases during the year offset by a moderating inflationary cost environment where we saw a slight rise in beef, paper and lower flour, bacon and egg costs. Because of its coffee-focused menu, PIE has significantly lower food and paper costs than BTND and Keegan’s.

Current wording

The cost of food and paper sales for 2024 decreased to 37.8% of restaurant sales from 39.8% in 2023. The decrease is the net result of menu price increases at all locations during the year, offset by a moderate inflationary cost environment, where we saw a slight rise in beef and paper and lower costs for some other items. Because of its coffee-focused menu, PIE has significantly lower food and paper costs than our other restaurants.

Previous wording

In 2023, labor and benefits costs increased to 38.8% of restaurant sales from 32.7% 2022. The increase results from higher wages for hourly employees and managers in all of our markets, and an unfavorable utilization of the fixed portion of labor costs. Also, PIE and Keegan’s businesses run at higher labor costs than BTND. We benefit from minimal turnover in unit restaurant management. Payroll costs are semi-variable, meaning that they do not decrease proportionally to decreases in revenue; thus, they increase as a percentage of restaurant sales when there is a decrease.

Current wording

In 2024, labor and benefits costs increased to 41.3% of restaurant sales from 38.8% in 2023. The increase results from higher wages for hourly employees and managers in all of our markets and an unfavorable utilization of the fixed portion of labor costs. Also, PIE and Keegan’s businesses run higher labor costs than BTND. In addition, we added a senior culinary person at PIE to focus on new menu development. Payroll costs are semi-variable, meaning that they do not decrease proportionally to decreases in revenue; thus, they increase as a percentage of restaurant sales when there is a decrease.

Previous wording

For 2023, occupancy and other costs increased to 15.3% of sales or $2,154,611 compared to $1,928,308 or 15.3% of restaurant sales in 2022.

Current wording

For 2024, occupancy and other costs increased to 16.0% of sales, or $2,355,806, compared to $2,154,611, or 15.3% of restaurant sales in 2023, principally as a result of the addition of Schnitzel Haus as a leased location during the year.

Previous wording

General and administrative costs in 2023 increased 1%, or $16,926, to $1,650,755 (11.7% of sales) from $1,633,829 (13.0% of sales) in 2022.

Current wording

General and administrative costs in 2024 declined as a percentage of sales with an overall increase of 2.5%, or $40,649, to $1,691,404 (11.4% of sales) from $1,650,755 (11.7% of sales) in 2023.

Previous wording

The loss from operations was $1,072,589 in 2023 compared to operating loss of $391,164 in 2022. The change in income from operations in 2023 compared to 2022 was primarily due to the matters discussed in the “Net Revenues,” “General and Administrative Costs,” and “Restaurant Operating Costs” sections above.

Current wording

The loss from operations was $1,832,108 in 2024 compared to a loss from operations of $1,072,589 in 2023. A significant portion of the increase in the loss was the result of the impairment charge related to the continuing poor results at VBG, leading to the decision to close the location in 2025 as a result of recording an impairment charge of $371,872, which is included in costs and expenses. PIE profitability declined because costs increased faster than menu prices. PIE also invested in additional staffing and culinary leadership, focusing on broadening the menu to increase business in the afternoons and evenings. The change in income from operations in 2024 compared to 2023 reflects a $250,000 gain on the sale of a trademark asset and was also due to the matters discussed in the “Net Revenues,” “General and Administrative Costs,” and “Restaurant Operating Costs” sections above.

Previous wording

The net loss was $887,368 in 2023, compared to a loss of $562,285 in 2022. The change in 2023 from 2022 was primarily attributable to the matters discussed in the “Net Revenues,” “Restaurant Operating Costs,” “General and Administrative Costs,” and “Other Income” sections.

Current wording

The net loss was $2,311,208 in 2024 compared to a loss of $887,368 in 2023. The increase in the net loss in 2024 from 2023 reflects the impact of an increase in the share of loss from Bagger Dave’s to $415,085 from $347,081 in 2023. The impact of fully reserving for deferred tax benefits resulted in a $206,000 income tax provision in the year. The increase in the loss from 2023 also reflects the $371,872 impairment charge related to VBG. The net loss was also attributable to the matters discussed in the “Net Revenues,” “Restaurant Operating Costs,” “General and Administrative Costs,” and “Other Income” sections.

Previous wording

For the 52 weeks ending December 31, 2023, we recorded an after-tax loss of $887,368. At that time, we had $6,692,506 in cash and marketable securities and a net working capital of $5,724,483.

Current wording

For the 52 weeks ending December 29, 2024, we recorded an after-tax loss of $2,311,208. At December 29, 2024, we had $4,270,970 in cash and marketable securities and a net working capital of $3,556,469.

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 that are synergistic with our business. Our operations do not require significant working capital as, generally, restaurants operate with negative working capital. Working capital deficits may be incurred in the future. Our liquidity and cash flows sources are operating cash flows and cash and cash equivalents and marketable securities on hand. We have used available cash to make acquisitions, service debt, and maintain our stores. Our working capital position benefits from the fact that we collect cash from sales from our customers at the point of sale or within a few days from our credit card processor, and in general, 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 that are synergistic with our business. Our operations do not require significant working capital as, generally, restaurants operate with negative working capital. Working capital deficits may be incurred in the future. Our liquidity and cash flow sources are cash and cash equivalents and marketable securities on hand. We have used available cash to make acquisitions, service debt, and maintain our stores. Our working capital position benefits from the fact that we collect cash from sales from our customers at the point of sale or within a few days from our credit card processor, and in general, payments to our vendors are not due for thirty days.

Previous wording

Operating cash flow in 2023 was negative $258,787 compared to a positive $211,798 in 2022, representing a decline in cash flow from operations from $594,316 in 2022.

Current wording

The operating cash flow in 2024 was negative $723,505 compared to negative $258,787 in 2023, representing a decline in cash flow from operations of $464,719 in 2024.

Previous wording

Cash flow from financing activities reflects a reduction of $675,471 in broker margin borrowing, $250,525 used to purchase shares of the Company’s common stock held in treasury and principal payments on long-term debt.

Current wording

Cash flow from financing activities reflects a reduction of $440,849. In 2024, broker margin borrowing of $115,899 was repaid. Additionally, we spent $142,794 purchasing treasury shares, and $182,156 was used for long-term debt principal payments.

Previous wording

As of December 31, 2023, we had $4,269,505 in contractual obligations, including $1,815,948** **in contractual commitments relating to leases on restaurants acquired in 2022. Our monthly required payments total approximately $59,300.

Current wording

As of December 29, 2024, we had $4,048,155 in contractual obligations, including long-term debt and future lease liabilities. Our monthly required payments total approximately $50,000.