Greetings, and welcome to Ark Restaurants Third Quarter 2016 Results. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Bob Stewart, President and Chief Financial Officer for Ark Restaurants. Thank you, Mr. Stewart. You may begin.

Good morning, and thank you for joining us on our conference call for the third fiscal quarter ended July 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 who have not yet obtained a copy of our press release, it was issued over the newswire 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 be -- have a direct bearing on our operating results, performance and financial condition. I will now turn the call over to Michael.

Hi. I'm going to do my best to try to explain the quarter, but there are some overriding themes, which I think are important. First of all, we're -- on the businesses that are operating, we feel pretty comfortable that we're doing a good job, the product is good. The sensitivity to prices is obvious from the review of the quarter. Last quarter, in response to minimum wage increases throughout all our menus, we started to raise prices not significantly, 1%, 2%, 3%, depending upon the restaurant's location and what we thought demand was for our product. I think we're fully priced. I think there is a little bit of pushback in some areas with the pricing. The big issue going forward to this company, and I think most restaurant companies, will be the acceleration of further minimum wage increases, especially for tipped employees. I don't know if there's any price elasticity left out there right now to sort of compensate to those increased expenses. Our EBITDA was improved this last quarter by 2 adjustments. I'm going to interrupt my part of the discussion right now and give you back to Bob Stewart, who will explain those 2 adjustments. He had a large part in us being very successful in Florida to recapture rent taxes that we did not think we should pay. And it was an ongoing litigation for some 5 to 6 years, which we have now been successful with. So Bob, why don't you explain the 2 adjustments that positively impacted our EBITDA in the quarter and the year?

Well, as Michael said, the rent tax case in Florida was the larger adjustment of about $945,000. We had been in court with the state of Florida for, I think, 5 years. The Tribe -- the Seminole Tribe had taken the state of Florida to Federal Court. The state of Florida lost in Federal Court of Appeal, lost again. And that sort of was the reason why they were willing to sign consent judgments with us indicating that they are constitutionally prohibited from taxing the rentals on tribal land. So that impact was $945,000.

Gross.

Gross. There was a part of that, that related to noncontrolling interests. The net income effect of that was positive $449,000. The other adjustment we made related to an over-accrual of percentage rent on one of our properties. It wasn't material in any of the quarters that the accruals were occurring. So it was adjusted in this quarter and the net effect of that was $191,000 on the bottom line. So those were 2 fairly large adjustments that occurred this quarter.

So without those adjustments, the change in EBITDA would have been -- on a quarter-to-quarter basis would have been negative $417,000. There is some ongoing positive effect of the case in Florida at the Hard Rock, which is on tribal lands. In that, we -- this accrual, which we took back, obviously, was over 5 years we were accruing in case we lost at the state level. But now we will not be accruing, so EBITDA on a quarterly basis will improve somewhat on the Hard Rock properties, both in Tampa and Hollywood. The other things that really affected the EBITDA in this quarter are primarily, on the positive side, our opening of Southwest Porch, which is just doing gangbusters. But on the negative side, we lost the Center Café in the quarter, which is in Union Station in Washington, and that had been a very profitable endeavor for us. So we lost that EBITDA. In -- at the Rustic Inn in Fort Lauderdale, we lost considerable sales. There is a detour to get to the property now. The bridge that took you over the canal, that was a direct way of getting there, has been torn down and they're replacing it. We probably have another 12 months until the new bridge is up. And right now, there's about a 3, 3.5-mile detour, and we think that is hurting us dramatically. We acquired Shuckers in Jensen Beach, we did not have it last year. That has had a positive impact on EBITDA. And then the last thing that has been difficult for us is Las Vegas, where we lost the V Bar. We had that last year. We did not have it this year, and that's significant operating income that we lost. So all in all, if you remove the…

[Operator Instructions] Our first question comes from the line of Bruce Geller from DGHM Funds.

Can you go through the comps by market, by geography?

Yes. Las Vegas, we were down 0.3%. So on $11 million business, that was $37,000. New York, we're up 1.5%; Washington DC, we're absolutely flat; Atlantic City, we're up 6.9%; Connecticut, we're up 4.3%; Boston, we're down 11%; and Florida, we're down 11%.

And you said that you think the impact on Florida has got about another 12 months from that construction?

Yes. The Department of Transportation down there, I met with 13 people at the last meeting. They had their act together, and I'm pretty sure when they say the time period, which would be about this time next year the bridge will be open, I'm pretty much convinced that they're going to deliver on time.

[Operator Instructions] Gentlemen, there are no other -- we do have another question coming from the line of Bruce Geller.

Could you remind us when you lost Center Café and V Bar? When those started to exit the numbers? And when that will annualize out?

We lost V Bar at the end of last calendar year, December, and we lost Center Café around March.

Okay. So as you start to look into next fiscal year, can you kind of give a framework for how you see things playing out next year?

Again, I think we will have additive EBITDA from Shuckers and Southwest Porch. We will not have anything that falls off. Am I right, Bob?

Correct.

We have no leases coming up for a few years. We will have an interruption in sales, but not so much in EBITDA from our construction in Sequoia in Washington, D.C., which we're going to close on January 1, and hopefully open by April -- mid-April of next year. So that will be an interruption. Our new lease, which is a favorable lease, by the way, in Washington, which becomes due in November of next year, we made a deal with a new landlord, a Korean REIT. And part of the deal, to retain a favorable rental, a new 15-year rental period, was to redo the restaurant. So that'll take us 3.5, 4 months, and that's going to be a significant CapEx expense. But given the direction of sales we're going in and the popularity of Washington Harbor, which is the venue the restaurant is located in, we think that a redo -- and it's a 25-year-old restaurant -- was appropriate and will be a good investment for us. But other than that, nothing is closing. We like our business. We really like what we have. The only thing that's losing money is Jupiter, Rustic, which made a big improvement this year in bottom line. The efficiencies are much better than they were in the first year. We think the profit is much better. We finally have good management down there. And we're happy with our business.

Do you expect Jupiter to return positive next year?

If it doesn't, it will be close. It's moving in the right direction.

You have the ability with your lease to just close the restaurant?

In where? In Jupiter?

Yes.

Yes, we can walk away with it. We have no corporate guarantees on any lease we have here. We have had 2 offers. And we maybe -- you never know if an offer is real. I think one was probably real -- to buy the restaurant, and we're feeling confident enough and our lease is a strong enough lease that we're not giving up on this thing. So -- but I think if we can't make significant improvements in the next year, 1.5 years, we would consider selling it.

And then can you just give an update on what you're seeing with respect to the Meadowlands? And what kind of marketing or advertising-related costs you may have upcoming related to that?

I'm happy to. I was going to give you an update in my closing remarks. So it's very hard -- just for background for everybody, a referendum is on the ballot in November to allow for casino gaming as long as the -- and the issuance of 2 licenses for casinos 72 miles away from Atlantic City. The site that everybody seems to be most interested in, although it is not named in the referendum, that's part of an RFP proposal that will be put in front of some government-appointed board for approval. The site that everybody seems to think is the best site is the racetrack in Meadowlands, which is in Secaucus New Jersey, and we are an 11.6% owner of the company that owns -- the limited partnership that owns the Meadowlands Racetrack. We are not a general partner, we are a limited partner. In addition to being a limited partner in the ownership, we have an exclusive on all food and beverage in the casino is built there. Right now, under a management agreement, which has no effect on the P&Ls in Ark -- we run it, I guess, pro bono. We run the food and beverage at the racetrack right now. The legislation requires that whoever gets a license must have, as a partner, a casino license holder in Atlantic City. That limits the field dramatically and the strongest candidate would be MGM. MGM has had discussions with us. They are not going anywhere now. They don't have to go anywhere from MGM's point of view because they can sit back and wait until the referendum passes, or it doesn't pass, to make a decision whether or not they want a partnership. And it's mandated that they have at least 50% ownership, not MGM, but any…

[Operator Instructions] Gentlemen, there are no further questions in the queue. I'd like to hand the call back over to you for closing comments.

Well, thank you, all. Again, we're very happy with our business. It's a strong business where we are aggressively looking to expand it, find deals which are appropriate for us. And I thank you for being on the call. We'll see you in 3 months.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.