COMMITMENTS AND CONTINGENCIES

9 Months Ended

Jun. 27, 2020

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

(6) COMMITMENTS AND CONTINGENCIES:

Construction Contracts

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

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 $62,000 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 at this location 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 through June 27, 2020.

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

During the third quarter of our fiscal year 2019, we also entered into an agreement with a third party unaffiliated design group for design and development services of our new location at 14301 W. Sunrise Boulevard, Sunrise, Florida 33323 (Store #85) for a total contract price of $122,000. 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 by $18,000 to $140,000, of which $97,000 has been paid through June 27, 2020.

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 10 years and, some of which include options to renew and extend the lease terms for up to an additional 30 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, common area maintenance and property taxes are not considered to be lease components.

The components of lease expense are as follows:

	13 Weeks		39 Weeks
	Ended June 27, 2020		Ended June 27, 2020
Operating Lease Expense,	$	1,131,000	$	3,391,000
which is included in occupancy costs

Total loan costs recorded as rent and other occupancy costs include fixed operating lease costs and variable lease costs. Variable lease costs include certain expenses, such as CAM costs and real estate taxes. In addition to the above costs, variable lease costs also include amounts based on a percentage of gross sales in excess of specified levels and are recognized when probable and are not included in determining the present value of our lease liability.

The components of lease costs:

	13 Weeks		39 Weeks
	Ended June 27, 2020		Ended June 27, 2020
Operating lease costs	$	1,131,000	$	3,391,000
Variable lease costs	$	415,000	$	1,433,000

Supplemental balance sheet information related to leases as follows:

	Classification on the
	Condensed Consolidated
	Balance Sheet	June 27, 2020
Assets
Operating lease assets	Other non-current assets	$	25,543,000
Liabilities
Other current liabilities	Current liabilities	$	3,154,000
Operating lease liabilities	Other non-current liabilities	$	23,408,000
Weighted Average Remaining Lease Term:
Operating leases			8.59 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      (Three months)	$	828,000
2021		4,506,000
2022		3,172,000
2023		3,193,000
2024		3,234,000

Thereafter		19,942,000
Total lease payments (Undiscounted cash flows)		34,875,000
Less imputed interest		(8,313,000	)
Total	$	26,562,000

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.