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COMMITMENTS AND CONTINGENCIES | 9 Months Ended
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Jun. 29, 2024
Commitments and Contingencies [Abstract] |
COMMITMENTS AND CONTINGENCIES | (8) COMMITMENTS AND CONTINGENCIES: Construction Contract 2505 N. University Drive, Hollywood, Florida (Store #19 – “Flanigan’s”) During the first quarter of our fiscal year 2022, we entered into an agreement with a third party unaffiliated general contractor to re-build our restaurant located at 2505 N. University Drive, Building B, Hollywood, Florida (Store #19R), which had been closed since October 2, 2018 due to damage caused by a fire and re-opened March 26, 2024. The contract totaled $2,515,000 and through the end of the third quarter of our fiscal year 2024 we agreed to change orders increasing the total contract price by $1,507,000 to $4,022,000, of which $3,596,000 has been paid through June 29, 2024 and $308,000 has been paid subsequent to the end of the third quarter of our fiscal year 2024. ERP Contract In the third quarter of our fiscal year 2024, we entered into an agreement with Oracle, an unrelated third party vendor for the licensing and support of NetSuite, a cloud-based Oracle ERP solution to replace our general ledger. The agreement is for a period of five years at a fixed rate of approximately $40,000 annually, with a cap on the percentage increase to our fees for our options to extend the term of the agreement for years six and seven. The fee for the five year agreement will be paid to the unrelated third party vendor over a period of five years, with a deferral of any payments for the first six months of the agreement. We do not expect the implementation of NetSuite to be complete and functional until the second quarter of our fiscal year 2025. In the third quarter of our fiscal year 2024, we also entered into an agreement with an unrelated third party implementation partner for the implementation of NetSuite. The fee for its implementation services will be approximately $237,000, payable as hourly services are performed and billed. Leases To conduct certain of our operations, we lease restaurant and package liquor store space in South Florida from unrelated third parties. Our leases have remaining lease terms of up to 48 years, some of which include options to renew and extend the lease terms for up to an additional 26 years. We presently intend to renew some of the extension options available to us and for purposes of computing the right-of-use assets and lease liabilities required by ASC 842, we have incorporated into all lease terms which may be extended, an additional term of the lesser of (i) the amount of years the lease may be extended; or (ii) 15 years. Following adoption of ASC 842 during our fiscal year ended October 3, 2020, common area maintenance and property taxes are not considered to be lease components. The components of lease expense are as follows:
|  | (in thousands) |
|  | 13 Weeks |  |  | 13 Weeks |
|  | Ended June 29, 2024 |  |  | Ended July 1, 2023 |
Operating Lease Expense, which is included in occupancy costs |  | $ | 950 |  |  | $ | 955 |
Variable Lease Expense, which is included in occupancy costs |  | $ | 235 |  |  | $ | 263 |
|  | (in thousands) |
|  | 39 Weeks |  |  | 39 Weeks |
|  | Ended June 29, 2024 |  |  | Ended July 1, 2023 |
Operating Lease Expense, which is included in occupancy costs |  | $ | 2,898 |  |  | $ | 2,868 |
Variable Lease Expense, which is included in occupancy costs |  | $ | 715 |  |  | $ | 807 |
|  | (in thousands) |
Classification on the Condensed Consolidated Balance Sheets |  | June 29, 2024 |  |  | September 30, 2023 |
Assets |  |  |  |  |  |  |  |
Operating lease assets |  | $ | 25,260 |  |  | $ | 26,987 |
Liabilities |  |  |  |  |  |  |  |
Operating lease current liabilities |  | $ | 2,478 |  |  | $ | 2,385 |
Operating lease non-current liabilities |  | $ | 24,218 |  |  | $ | 25,850 |
Weighted Average Remaining Lease Term: |  |  |  |  |  |  |  |
Operating Leases |  |  | 10.18 Years |  |  |  | 9.86 Years |
Weighted Average Discount: |  |  |  |  |  |  |  |
Operating leases |  |  | 4.82% |  |  |  | 4.75% |
The following table outlines the minimum future lease payments for the next five years and thereafter:
|  | (in thousands) |
For fiscal year |  | Operating |
2024 (13 weeks remaining) |  | $ | 904 |
2025 |  |  | 3,598 |
2026 |  |  | 3,432 |
2027 |  |  | 3,335 |
2028 |  |  | 3,346 |
Thereafter |  |  | 22,406 |
Total lease payments (undiscounted cash flows) |  |  | 37,021 |
Less imputed interest |  |  | (10,325 | )
Total operating lease liabilities |  | $ | 26,696 |
Litigation Our sale of alcoholic beverages subjects us to “dram shop” statutes, which allow an injured person to recover damages from an establishment that served alcoholic beverages to an intoxicated person. If we receive a judgment substantially in excess of our insurance coverage or if we fail to maintain our insurance coverage, our business, financial condition, operating results or cash flows could be materially and adversely affected. We currently have no “dram shop” claims. From time to time, we are a party to various other claims, legal actions and complaints arising in the ordinary course of our business, including claims resulting from “slip and fall” accidents, claims under federal and state laws governing access to public accommodations, employment-related claims and claims from guests alleging illness, injury or other food quality, health or operational concerns. It is our opinion, after consulting with legal counsel, that all such matters are without merit or involve such amounts that an unfavorable disposition, some of which is covered by insurance, would not have a material adverse effect on our financial position or results of operations.

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