Greetings, and welcome to Ark Restaurants' Second Quarter 2016 Results. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host for today's call, Mr. Bob Stewart, President and Chief Financial Officer. You may begin.

Thank you, operator. Good morning, and thank you for joining us on our conference call for the second fiscal quarter ended April 2, 2016. With me on the call today is Michael Weinstein, our Chairman and CEO. For those of you who have not yet obtained a copy of our press release, it was issued over the news wire yesterday 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 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 will now turn the call over to Michael.

Hi, everybody. Briefly, I would like to review some statements we made in the last quarter, just to remind you. The issues that we have faced in the company, and which I think we're handling very well, are twofold. Number one, we are churning leases. By that I mean we have lost some leases that were valuable to us. New leases or new acquisitions of properties have more than made up for that. I think we replaced a lot of lost EBITDA over the last couple of years. And at the present time, we have nothing that really is in danger of imminently terming out in terms of our leases. So we are in a much more stable position than we have been in the last 3 years. Secondly, our approach to minimum wage increases, which were most dramatic in the New York City region, where we have significant revenues. We are finding that we have price elasticity. Our managers are working really hard to try to limit overtime hours. Another part of the labor law are something called spread of hours, where somebody works 9 hours and are paid the 10th hour even if they don't work it. New York City has implemented 6 mandatory sick days for all employees. So the impact on our tipped employee payrolls has probably been a 50% increase in wages that we pay to them because we don't get credit for the tips that they're earning toward minimum wage. So this has been a dramatic amount of money for us. So again, we've been rescheduling people, taking some chances with some service coordination, how we get the food in, store it, prep it, cook it and serve it. We've been trying to invent some new approaches. But what we have found for the…

[Operator Instructions] The first question comes from Bruce Geller with DGHM funds.

The comps for the quarter were listed in the press release at plus 1%. But some of the numbers that you gave are -- confused the matter for me because you noted New York was up 14%, which is -- that's a big driver of your business. That's such an important part. It was up 14%. How could the overall comps have only been up 1%?

Yes. Florida was down 9.3%. I'm sorry, I didn't mention that. I mentioned the construction and the marketing things and the change in marketing of the 2 Hard Rock casinos. But it was down 9.3%, I think, yes. So if New York was up $800,000 in sales, Florida was down $669,000.

Okay. Do you think that Florida will remain down at levels that substantial for the rest of the year? Or is there something in place that you've seen ...

Florida is going to track this from now on in -- at pretty much the same range as it is now. We -- so we see no reason for sales -- other than if we could pass on price increases at the fast-food courts, for sales to go up in the coming year. They will not go down anymore because they've taken all the marketing incentives away from the fast food area, so those are gone. They're not coming back. What will happen probably in 18 months, which is -- hard to predict what the impact will be, but Hard Rock is building a new hotel and expanding their entertainment center in Hollywood. There's a similar plan which is a little further behind the Hollywood plan in terms of getting it built, but there is similar plan for Tampa. There are making these things bigger. We have the exclusive fast-food areas in both, so we would think we would benefit eventually from that expansion. But right now, our sales is going to be remaining pretty much on track to the way they've been the last couple of quarters.

And it sounds like you're a little bit less enthusiastic about the Jupiter restaurant at this point in time.

Well, it hasn't produced the sales we thought it would. We're enthusiastic, honestly, about the way we're operating it. I think the product is really, really good. We pay attention to OpenTable reviews. We don't really pay attention to Yelp reviews. There's no way to know if somebody writing the Yelp review really ate there. But with OpenTable, we know the customer was there. And our managers and waiters are talking to customers all the time, and we're getting very good response, really great responses -- I shouldn't say very good, great responses. The business seems to be building a little bit, but it's slower than we anticipated. We're very happy with the product. We're not happy with the sales level.

So you've had a lot of moving pieces through the first half of the year. Can you give kind of a directional outlook for the second half of the year, taking into account the ...

Well, we think certain things are very, very strong. Our New York business is extremely strong. There seems to be great demand for what we're doing. And -- we didn't put big price increases in at the beginning of the year because we just -- as I said, we're concerned about elasticity. We don't want to price at the end of the line. But nobody is talking about price. I mean, you think of restaurants -- I'm old, so when I started in this business, if you made the list of the top 50 restaurants in the country 25 years ago, you were probably doing $5 million. Bryant Park did $175,000 yesterday. Yesterday, okay? So I mean that's an enormous number. I don't have the number for Southwest Porch, but it's an all-outdoor, little bar, hamburger place that sits at the southwest corner of Bryant Park. They did $26,000 yesterday. It's an extraordinary number. So I think we have some elasticity there, but the most important thing in New York, our business is extremely strong. In Las Vegas, we think we'll start to get a bump -- we hope we get a bump from the fact that this construction has been lifted that blocked one of the main entrances to the hotel for a couple of years and was unsightly. That's all been lifted. And hopefully, we get new demand from these entertainment centers they're building. In Washington, D.C., Sequoia is very strong. Now in Washington, we have 600 outdoor seats. In New York, we have maybe 1,500 outdoor seats. So obviously, weather affects that also. But if you ask me about demand in Las Vegas, New York and Washington, D.C., it's definitely there. If we get just a normal weather pattern here, we should certainly outperform last year, maybe…

So when you put it all together for the second half of the year, do you feel like ...

We should be ahead of last year.

Okay. Well, that's good. Is there going to be an incremental spend for marketing on that vote that you noted in November? You mentioned you're going to have to spend something on that.

The other potential site, which is a Jersey City site, which is being advocated by Paul Fearston (sic) [ Paul Fireman ] who used to own Reebok, there is a conversation going on with him, with Hard Rock right now, with the hedge fund in Canada on what the marketing budget should be. Whether or not Fearston (sic) [ Fireman ] wants to be a part of it, he has indicated he does. So there may be an incremental spend, but we have -- we don't think our share will be anything substantial. And when will say -- I would take a guess, our share would be in the hundreds of thousands, certainly not $1 million. So that's where I think we are.

And does the fact that you would now have to partner with a casino company from Atlantic City, does that take away some of the potential upside if the vote does pass?

Everything takes away from the potential upside. Clairvest, the hedge fund in Canada, would be -- if they make the investment they're allowed to make it, it would be dilutive. And obviously, the legislation, which calls for an Atlantic City operator to be a partner, that's dilutive. But the fact of the matter is, in order to keep our percentage before the legislation call for an Atlantic City operator, we would have had to dilute ourselves one way or the other ourselves by either selling additional equity to finance this thing, hopefully, at a price that was higher. Because I think once the legislation -- what surprised me is March 16 was a date we didn't think would come for another 2 years. We were surprised at how fast circumstances created an environment where the legislation could be passed. I mean we made this investment, and in 1 year, 4 casinos closed in Atlantic City. We didn't expect that. We're not that smart. And revenue from Atlantic City continues to go down. So the -- and then we did not expect that Caesars would upset legislators by making a bid for 1 of the New York licenses, 1 of those 7 licenses. I mean that was like the legislators saying, "Caesars, here we are trying to protect Atlantic City from competition. We can't protect you from Maryland, Delaware and Pennsylvania. But we will certainly try and protect you from having casinos in the northern part of the state, which is perfectly logical to do in order to recapture revenue that's leaving the state. And you guys go ahead and bid on a license outside of the state. What are you doing?" So I think that turns a couple of heads. We contradict that. So the legislation took place in an environment that we didn't think would be there as quickly as it came. The -- under any circumstances, no matter what we own of this thing, it is a big, big upside. I -- if it occurs -- I thought March 16, when that legislation passes, somebody would -- I'm not a stock guy, I'm a restaurant guy, but given a fairly stable balance sheet and decent earnings, it's certainly not a runaway growth company, but paying a 5% -- I thought the stock would take a little bump. No one seems to care.

Right. I guess it's so hard to handicap this vote pass thing with all the variables and then trying to figure out what your -- basically, what your option might be worth.

Yes. So nobody's pricing in an option. It's not really an option because either it goes or it doesn't go. But you would think that somebody would say, "Hey, this potential should be priced into the stock." The stock went down 4 points on March 16 -- since March 16, or 3 points or something like that. One of the ways we are in a better position than everybody else is exclusive on the restaurants and bar service and all food service. I think this casino, if it happens, makes a great amount of money. And whatever percentage we have, it will be -- it will turn out to be a very strong investment in terms of returns. But the restaurants, regardless of whether the casino makes a lot of money or a modest amount of money, those restaurants are going to hum, and there's a big play for us there as well. So if it happens, I think we're looking at a completely different business model in terms of the cash flow that we will have available to grow our business in the future.

[Operator Instructions] There are no questions at this time. At this point, I'd like to turn the call back over to Michael Weinstein for closing comments.

Well, thank you very much. We'll speak to you next quarter, and enjoy your summer.

This concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.