COMMITMENTS AND CONTINGENCIES

3 Months Ended

Dec. 28, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

(6) COMMITMENTS AND CONTINGENCIES:

Construction Contracts

a. 2505 N. University Drive, Hollywood, Florida (Store #19)

During our fiscal year 2018 and prior to it being closed in the first quarter of our fiscal year 2019 due to damages caused by a fire, we entered into an agreement with a third party unaffiliated general contractor for design and development services for the construction of a new building (the “New Building”) on a parcel of real property which we own and which is adjacent to the real property where our combination package liquor store and restaurant located at 2505 N. University Drive, Hollywood, Florida, (Store #19) operated until it was closed in October, 2018 due to damages caused by a fire for a total contract price of for a total contract price of $127,000 (the “$127,000 Contract”). We plan to re-locate our package liquor store at the property to the New Building. During the term of the $127,000 Contract, we agreed to change orders which had the effect of increasing the total contract price of the same to $138,000, and during the second quarter of our fiscal year 2019, we paid the balance of the total contract price of the $127,000 Contract, in the amount of $25,000. During the first quarter of our fiscal year 2020, we agreed upon changes to the $127,000 Contract for additional design and development services for the construction of the New Building which had the effect of increasing the total contract price of the same by $10,000 to $148,000, of which $6,000 has been paid.

During the third quarter of our fiscal year 2019, we entered into an agreement with a third party unaffiliated architect for design and development services totaling $77,000 for the re-build of our restaurant located at 2505 N. University Drive, Hollywood, Florida (Store #19) which has been closed since October 2018 due to damages caused by a fire, of which $27,000 has been paid. Additionally, during the third quarter of our fiscal year 2019, we entered into an agreement with a third party unaffiliated general contractor for site work totaling $1,618,000, (i) to connect the real property where this restaurant operated (Store #19) to city sewer and (ii) to construct a new building on the adjacent parcel of real property for the operation of a package liquor store, of which $-0- has been paid.

b. 14301 W. Sunrise Boulevard, Sunrise, Florida (Store #85)

During the third quarter of our fiscal year 2019, we entered into an agreement with a third party unaffiliated design group for design and development services of our new restaurant in development to be located at 14301 W. Sunrise Boulevard, Sunrise, Florida 33323 (Store #85) for a total contract price of $122,000, (the $122,000 Contract”). During the first quarter of our fiscal year 2020, we agreed upon amendments to the $122,000 Contract for additional design and development services which had the effect of increasing the total contract price of the same by $18,000 to $140,000, of which $97,000 has been paid.

Leases

We lease restaurant and package liquor store space in South Florida for our business operations. Our leases have remaining lease terms of up to 10 years, some of which include options to extend the leases for up to 30 years. We intend to renew some of the extension options available to us and they are included in the computations of the right-of-use assets and lease liabilities. Following adoption of ASC 842, common area maintenance and property taxes are not considered to be lease components.

The components of lease expense were as follows:

	13 Weeks
	Ended Dec. 28, 2019
Operating Lease Expense, which is included in occupancy costs	$	1,130,000

Supplemental balance sheet information related to leases as follows:

	Classification on the
	Condensed Consolidated
	Balance Sheet	Dec. 28, 2019
Assets
Operating lease assets	Other non-current assets	$	27,068,000
Liabilities
Other current liabilities	Current liabilities	$	1,810,000
Operating lease liabilities	Other non-current liabilities	$	25,585,000
Weighted Average Remaining Lease Term:
Operating leases			9.08 Years
Weighted Average Discount:
Operating leases			5.5%

The following table outlines the minimum future lease payments for the next five years and thereafter:

For fiscal year
2020      (Nine months)	$	2,437,000
2021		4,466,000
2022		3,172,000
2023		3,193,000
2024		3,234,000
Thereafter		19,942,000
Total lease payments (Undiscounted cash flows)		36,444,000
Less imputed interest		(9,049,000	)
Total	$	27,395,000

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.

We are a party to various other claims, legal actions and complaints arising in the ordinary course of our business. It is our opinion, after consulting with legal counsel, that all such matters are without merit or involve such amounts that an unfavorable disposition would not have a material adverse effect on our financial position or results of operations.