Commitments and Contingencies

9 Months Ended

Jan. 01, 2012

Commitments and Contingencies

11.   Commitments and Contingencies

During May 2010, the California Department of Alcoholic Beverage Control (the “Department”) notified us of proceedings against the Company based upon allegations that alcohol was served to underage guests in a RA Sushi location. The Department issued a decision imposing a 30 day suspension of the alcoholic beverage license. We will vigorously contest the suspension of the alcoholic beverage license for this location and the claim against us. While under appeal by us, the suspension is stayed, and we are permitted to continue operating under our alcoholic beverage license. In one incident, on which a claim had been filed against us, a guest was subsequently involved in a fatal automobile accident. In July 2011, a jury returned a verdict for which we were found to be 30% responsible, resulting in a liability of approximately $0.2 million. We have general liability insurance coverage for such claims, subject to certain retention levels. 

The Company has been named in certain litigation involving wage and hour laws in both California and New York. The Company intends to vigorously defend these claims. The cases are currently under review to determine if they will be certified as class actions, and it is not possible to determine a probable outcome at this time.

We are not subject to any other significant pending legal proceedings, other than ordinary routine claims incidental to our business or those otherwise covered by our insurance policies.

We do not believe that the ultimate resolution of these matters will have a material adverse effect on our results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our financial condition, results of operations or cash flows.

Supply Agreements – We have entered into non-cancellable national supply agreements for the purchase of certain beef and seafood items, as well as produce, oils and other items used in the normal course of business, at fixed prices for up to fifteen-month terms. The purpose of the supply agreements is to reduce the potential impact of the volatility in the cost of the commodities over the terms of the agreements. These supply agreements are not considered derivative contracts.

Lease Agreements – The majority of our Company-owned restaurants are located in leased properties, generally subject to a base lease term and one or more renewal options. We monitor lease expiration dates and routinely execute renewal options or enter into negotiations for lease extensions. We are currently in discussions with the landlord for one location, whose lease expires in June 2012. The landlord has indicated that a major renovation is planned for the complex in which this restaurant is located and that a short-term lease extension will likely be granted while plans for the major renovation are being finalized. We are currently in discussion with the landlord to come to a long-term agreement, which would include a major remodel of the restaurant. If the landlord ultimately determines that we will not be incorporated in the long-term plans for the space, we believe we will be able to identify alternate sites within the trade area for this restaurant.