Shares of Ark Restaurants Corp. (ARKR Quick QuoteARKR - Free Report) have gained 10.6% since the company reported earnings for the quarter ended June 28, 2025, notably outpacing the S&P 500 Index’s 0.9% gain during the same period. However, the stock has been under pressure on a monthly view, losing 12.9% against the S&P 500’s 2.5% rise.

ARKR’s Revenue and Earnings Performance

Ark Restaurants posted third-quarter fiscal 2025 revenues of $43.7 million, down 13.3% from $50.4 million in the year-ago quarter. Food and beverage sales drove most of the decline, falling 12.7% year over year to $42.9 million from $49.2 million. Net loss attributable to shareholders was $3.5 million, or a loss of $0.96 per share, against a net income of $0.6 million, or $0.18 per share, a year earlier. On a non-GAAP basis, adjusted EBITDA dipped 46.9% to $1.8 million from $3.4 million.

For the 39-week period, revenues fell 8.4% to $128.4 million from $140.1 million, while net loss widened to $9.5 million against a net income of $0.6 million last year.

Segmentally, same-store sales fell 7.4% in the quarter, with steep declines in New York (-20.9%) and Washington, D.C. (-20.9%) offset partially by a modest gain in Florida (+1.8%). Management attributed the New York weakness primarily to lost catering and event revenues at Bryant Park Grill amid ongoing landlord litigation, while the D.C. downturn was tied to reduced traffic caused by hybrid work schedules, government layoffs, and safety concerns.

Ark Restaurants’ Other Key Business Metrics

Cost pressures continued to play a role in Ark Restaurants’ quarterly performance. Food and beverage costs rose as a share of revenues, reaching 27.6% compared with 26.4% a year ago, reflecting the impact of higher commodity prices. Payroll expenses declined 12.6% year over year to $15.3 million from $17.5 million, aided by better management of overtime and staffing, yet they still accounted for approximately 34.9% of revenues. Occupancy expenses fell 13% to $5.4 million from $6.3 million, while other operating costs declined 4.2%, though they were affected by legal fees tied to the Bryant Park dispute.

At the same time, Ark Restaurants recorded a series of non-cash charges that weighed heavily on results. The company booked $4.7 million in impairment charges at its Sequoia restaurant in Washington, D.C., and earlier in the fiscal year, it recognized a $3.4 million goodwill impairment. Despite these charges, ARKR ended the quarter with a comparatively solid balance sheet, holding $12.3 million in cash against $3.9 million in debt. Management also extended its credit agreement with Bank Hapoalim B.M., pushing maturities out to June 2028 while reducing overall capacity to $20 million.

ARKR’s Management Commentary

CEO Michael Weinstein emphasized that, aside from Bryant Park and Sequoia, ARKR’s individual restaurants are performing well overall. Las Vegas properties managed to grow cash flow despite a slowdown in Strip visitorship, while Florida’s Rustic Inn and New York’s Robert restaurant exceeded expectations. However, management acknowledged that litigation-related costs and negative publicity continue to weigh heavily on Bryant Park Grill, which remains a significant source of revenue volatility.

Factors Influencing Ark Restaurants’ Results

A major influence on the quarter’s performance was the ongoing legal dispute over the Bryant Park Grill & Cafe and The Porch at Bryant Park. The litigation has not only generated more than $800,000 in legal expenses during the quarter but has also cast a shadow over the restaurants’ reputation, resulting in lost event bookings and weaker a la carte traffic. Management made clear that the uncertainty surrounding the case has weighed heavily on revenue and cash flow from these flagship locations.

Another significant factor was the recognition of impairment charges at the company’s Sequoia restaurant in Washington, D.C. Ark Restaurants wrote down $4.7 million in right-of-use and long-lived assets as management concluded that future cash flow projections no longer supported their carrying values. The decision highlights the broader challenges in the D.C. dining market, where hybrid work patterns, government layoffs, and consumer safety concerns have combined to suppress demand and make it difficult for large venues like Sequoia to sustain profitability.

The absence of contributions from previously operated locations also affected year-over-year comparisons. Ark Restaurants had permanently closed El Rio Grande in January 2025 and exited the Tampa Food Court in December 2024. The loss of these revenue streams, which together accounted for several million dollars in sales during the prior-year periods, reduced the company’s top line. Although management recorded modest gains related to the termination and closure, the absence of recurring revenues from these venues amplified the reported revenue decline for the quarter.

ARKR’s Guidance

Management did not issue formal quantitative guidance, but comments during the earnings call underscored a cautious tone. Weinstein described the litigation over Bryant Park as a multi-year process and highlighted that the outcome remains highly uncertain. Weinstein also noted potential upside from a possible Meadowlands casino license, where Ark Restaurants would operate food and beverage concessions if gaming is approved in northern New Jersey.

Ark Restaurants’ Other Developments

ARKR continues to operate the Bryant Park Grill & Cafe and The Porch at Bryant Park as a holdover tenant while pursuing its legal challenge against the landlord. Together, these locations generated $19.7 million, or 15.4% of Ark Restaurants’ total revenues for the first nine months of fiscal 2025. Separately, ARKR sold two condominium units adjacent to its Shuckers restaurant in Florida, generating $0.8 million in proceeds and a $0.4 million gain.

Ark Restaurants completed extensions of key Las Vegas leases, including America and Village Eateries at the New York-New York Hotel & Casino, committing several million dollars in property refreshes slated for completion by late 2025 and early 2026.