UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 27, 2025
or
☐TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to
____________
Commission File Number 001-06836
FLANIGAN’S ENTERPRISES, INC.
(Exact name of registrant as specified in its
charter)
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
(Address of Principal Executive Offices) (Zip Code)
(954)377-1961
(Registrant’s Telephone Number, Including
Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common Stock, $0.10 par value BDL NYSE AMERICAN
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒
Smaller reporting company ☒ Emerging growth company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its annual report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act).
Yes ☐ No ☒
As of March 28, 2025, the last business day of
the registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting stock held by non-affiliates
of the registrant was approximately $21,031,000 (based on the closing price of the common stock as reported on the NYSE AMERICAN of $24.99
per share).
As of December 18, 2025 there were 1,858,647 shares of the registrant’s
Common Stock, $0.10 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Information required by Part III (Items 10, 11,
12, 13 and 14) hereof is incorporated by reference to portions of the Registrant’s Proxy Statement for the 2026 Annual Meeting
of Shareholders which will be filed with the Securities and Exchange Commission no later than 120 days after the end of the registrant’s
fiscal year covered by this report.
FLANIGAN’S
ENTERPRISES, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PART I
Item 1 Business 1
Item 1A Risk Factors 11
Item 1B Unresolved Staff Comments 21
Item 1C Cybersecurity 21
Item 2 Properties 22
Item 3 Legal Proceedings 28
Item 4 Mine Safety Disclosures 28
PART II
Item 6 Reserved 29
Item 7A Quantitative and Qualitative Disclosures About Market Risk 37
Item 8 Financial Statements and Supplementary Data 37
Item 9A Controls and Procedures 38
Item 9B Other Information 39
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 39
PART III
Item 10 Directors, Executive Officers and Corporate Governance 40
Item 11 Executive Compensation 40
Item 14 Principal Accountant Fees and Services 40
PART IV
Item 15 Exhibits and Financial Statement Schedules 41
SIGNATURES 45
EXHIBIT INDEX
LIST XBRL DOCUMENTS
i
As used in this Annual Report on Form 10-K,
the terms “we,” “us,” “our,” the “Company” and “Flanigan’s” mean Flanigan’s
Enterprises, Inc. and its subsidiaries (unless the context indicates a different meaning).
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report, including,
without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results
of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended
(“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). These
forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,”
“anticipates,” “expects,” “intends,” “plans,” “may,” “will,”
“potential,” “projects,” “predicts,” “continue,” or “should,” “could”,
“may”, “might”, “will” and “would” or, in each case, their negative or other variations
or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements
include, but are not limited to, the general expansion of our business and other statements which are not statements of current or historical
facts.
The forward-looking statements
contained in this annual report are based on our current expectations and beliefs concerning future developments and their potential
effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a
number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include,
but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these
forward-looking statements. We caution readers not to place undue reliance on any forward-looking statements, which speak only as of
the dates on which they are made. We undertake no obligation to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described
under “Risk Factors” may not be exhaustive.
By their nature, forward-looking
statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the
future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations,
financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested
by the forward-looking statements contained in this annual report. In addition, even if our results of operations, financial condition
and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this
annual report, those results or developments may not be indicative of results or developments in subsequent periods.
ii
PART I
ITEM 1. BUSINESS
General
As of September 27, 2025,
Flanigan’s Enterprises, Inc., a Florida corporation, together with its subsidiaries (“we”, “our”, “ours”
and “us” as the context requires), (i) operates 32 units, consisting of restaurants, package liquor stores, combination restaurant/package
liquor stores and a sports bar that we either own or have operational control over and partial ownership in; and (ii) franchises an additional
5 units, consisting of 2 restaurants (one of which we operate) and 3 combination restaurant/package liquor stores. The table below provides
information concerning the type (i.e. restaurant, sports bar, package liquor store or combination restaurant/package liquor store) and
ownership of the units (i.e. whether (i) we own 100% of the unit; (ii) the unit is owned by a limited partnership of which we are the
sole general partner and/or have invested in; or (iii) the unit is franchised by us), as of September 27, 2025 and as compared to September
28, 2024. With the exception of “The Whale’s Rib,” a restaurant we operate but do not own, and “Brendan’s
Sports Pub” a restaurant/bar we own, all of the restaurants operate under our service marks “Flanigan’s Seafood Bar
and Grill” or “Flanigan’s” and all of the package liquor stores operate under our service marks “Big Daddy’s
Liquors” or “Big Daddy’s Wine & Liquors”.
Company Owned:
Combination package liquor store and restaurant 2 2
Restaurant only, including sports bar 9 9
Package liquor store only 9 9
Company Managed Restaurants Only:
Limited partnerships 10 10
Franchise 1 1
Unrelated Third Party 1 1
Total Company Owned/Operated Units 32 32
Franchised Units 5 5 (1)
Notes:
1
History and Development of Our Business
We were incorporated in Florida
in 1959 and commenced operating as a chain of small cocktail lounges and package liquor stores throughout South Florida. By 1970, we
had established a chain of “Big Daddy’s” lounges and package liquor stores between Vero Beach and Homestead, Florida.
From 1970 to 1979, we expanded our package liquor store and lounge operations throughout Florida and opened clubs in five other “Sun
Belt” states. In 1975, we discontinued most of our package store operations in Florida except in the South Florida areas of Miami-Dade,
Broward, Palm Beach and Monroe Counties. In 1982, we expanded our club operations into the Philadelphia, Pennsylvania area as general
partner of several limited partnerships we organized. In March 1985, we began franchising package liquor stores and lounges in the South
Florida area. (See Note 12 to the consolidated financial statements and the discussion of franchised units on pages 3 and 4).
During our fiscal year 1987,
we began renovating our lounges to provide full restaurant food service, and subsequently renovated and added food service to most of
our lounges. Food sales currently represent approximately 79.67% and bar sales approximately 20.33% of our total restaurant sales.
Our package liquor stores
emphasize high volume business by providing customers with a wide variety of brand name and private label merchandise at discount prices.
Our restaurants and our sports bar establishment offer alcoholic beverages and food service with abundant portions and reasonable prices,
served in a relaxed, friendly and casual atmosphere.
We conduct our operations
directly and through a number of limited partnerships and wholly owned subsidiaries, all of which are listed below. Our subsidiaries
and the limited partnerships, (except for the limited partnership, where we are not the general partner, which owns and operates our
franchised restaurant in Fort Lauderdale, Florida) are reported on a consolidated basis.
Entity State Of Organization Percentage Owned
Flanigan’s Management Services, Inc. Florida 100
CIC Investors #13, Limited Partnership Florida 50
CIC Investors #25, Limited Partnership Florida —
CIC Investors #50, Limited Partnership Florida 29
CIC Investors #55, Limited Partnership Florida 54
CIC Investors #60, Limited Partnership Florida 46
CIC Investors #65, Limited Partnership Florida 33
CIC Investors #70, Limited Partnership Florida 41
CIC Investors #80, Limited Partnership Florida 32
CIC Investors #85, Limited Partnership Florida 7
CIC Investors #90, Limited Partnership Florida 11
Josar Investments, LLC Florida 100
Flanigan’s Calusa Center, LLC Florida 100
Flanigan’s Fish Company, LLC Florida 51
2
Package Liquor Store Operations
Our package liquor stores
emphasize high volume business by providing customers with a wide selection of brand name and private label liquors, beers and wines
while offering competitive pricing by meeting the published sales prices of our competitors. We provide sales training to our package
liquor store personnel. The stores are open for business seven days a week from 9:00-10:00 a.m. to 10:00-11:00 p.m., depending upon demand
and local law. Most of our units have “night windows” with extended evening hours.
Company-Owned Package
Liquor Stores. As of our fiscal year ended September 27, 2025, we own and operate eleven package liquor stores in the South Florida
area under the name “Big Daddy’s Liquors” or “Big Daddy’s Wine & Liquors”, two of which are jointly
operated with restaurants we own.
Franchised Package Liquor
Stores. We currently franchise three package liquor stores, all in the South Florida area, all of which are operated under the name
“Big Daddy’s Liquors”. Of the three franchised package liquor stores, two are jointly operated with our franchisee’s
restaurant operations and one is operated in a freestanding building adjacent to the franchisee’s restaurant operation. Two of
the three franchised package liquor stores are franchised to members of the family of our Chairman of the Board, officers and/or directors.
We have not entered into a franchise arrangement for either a package liquor store, restaurant or combination package liquor store/restaurant
since 1986 and do not anticipate that we will do so in the foreseeable future.
Generally, a franchise agreement
with our franchisees for the operation of a package liquor store runs for the balance of the term of the franchisee’s lease for
the business premises, extended by the franchisee’s continued occupancy of the business premises thereafter, whether by lease or
ownership. In exchange for our providing management and related services to the franchisee and our granting the right to the franchisee
to use our service mark, “Big Daddy’s Liquors”, franchisees of package liquor stores pay us weekly in arrears, (i)
a royalty equal to approximately 1% of gross sales; plus (ii) an amount for advertising equal to between 1.5% to 3% of gross sales generated
at the stores depending upon our actual advertising costs.
For accounting purposes,
we do not consolidate the revenue and expenses of our franchisees’ operations with our revenue and expenses. Franchise royalties
we receive are recognized as revenue when sales are made by franchisees.
Restaurant Operations
Our restaurants provide a
neighborhood casual, standardized dining experience, typical of casual restaurant chains. The interior decor of the restaurants is nautical
with numerous fishing and boating pictures and decorations. The restaurants are designed to permit minor modifications without significant
capital expenditures. However, from time to time we are required to redesign and refurbish the restaurants at significant cost. Drink
prices may vary between locations to meet local conditions. Food prices are substantially standardized for all restaurants. The restaurants’
hours of operation are from 11:00 a.m. to 1:00-5:00 a.m. depending upon demand and local law.
Company-Owned Restaurants.
As of our fiscal year ended September 27, 2025, we own and operate eleven restaurants all under our service mark “Flanigan’s
Seafood Bar and Grill” two of which are jointly operated with package liquor stores we own.
Franchised Restaurants.
We franchise five restaurants, all of which operate under our service mark “Flanigan’s Seafood Bar and Grill”, two
of which operate as a restaurant only, two of which operate jointly with a franchisee operated “Big Daddy’s Liquors”
package liquor store and one of which operates adjacent to a “Big Daddy’s Liquors” package liquor store. Four of the
five franchised restaurants are franchised to members of the family of our Chairman of the Board, officers and/or directors. We have
not entered into a franchise arrangement for either a package liquor store, restaurant or combination package liquor store/restaurant
since 1986 and do not anticipate that we will do so in the foreseeable future.
Generally, a franchise agreement
with our franchisees for the operation of a restaurant runs for the balance of the term of the franchisee’s lease for the business
premises, extended by the franchisee’s continued occupancy of the business premises thereafter, whether by lease or ownership.
In exchange for our providing management and related services to the franchisee and our granting the right to the franchisee to use our
service mark, “Flanigan’s Seafood Bar and Grill”, our franchisees pay us weekly in arrears, (i) a royalty equal to
approximately 3% of gross sales; plus (ii) an amount for advertising equal to between 1.5% to 3% of gross sales from the restaurants
depending upon our actual advertising costs.
For accounting purposes,
we do not consolidate the revenue and expenses of our franchisees’ operations with our revenue and expenses. Franchise royalties
we receive are recognized as revenue when sales are made by franchisees.
3
Restaurants Owned by Affiliated Limited Partnerships
We have invested along with
others (some of whom are affiliated with our officers and directors) in eleven limited partnerships which currently own and operate eleven
South Florida based restaurants under our service marks “Flanigan’s Seafood Bar and Grill” or “Flanigan’s”.
In addition to being a limited partner in these limited partnerships, we are the sole general partner of ten of these limited partnerships
and manage and control the operations of these restaurants except for the restaurant located in Fort Lauderdale, Florida where we only
hold a limited partnership interest.
Generally, the terms of the
limited partnership agreements provide that until the investors’ cash investment in a limited partnership (including any cash invested
by us) is returned in full, (available cash is distributed to the investors pro-rata based on ownership interest), the limited partnership
distributes to the investors annually out of available cash from the operation of the restaurant, as a return of capital, up to 25% of
the cash invested in the limited partnership, with no management fee paid to us. Any available cash in excess of the 25% of the cash
invested in the limited partnership distributed to the investors annually, is paid one-half (1⁄2) to us as a management fee and
one-half (1⁄2) to the investors (including us), pro-rata based on the investors’ investment, as a return of capital. Once
all of the investors (including us), have received, in full, amounts equal to their cash invested, an annual management fee becomes payable
to us equal to one-half (1⁄2) of cash available to be distributed, with the other one-half (1⁄2) of available cash distributed
to the investors (including us), as a profit distribution, pro-rata based on the investors’ investment. As of September 27, 2025,
all limited partnerships, with the exception of the limited partnership which owns the restaurant in Sunrise, Florida (Store #85), which
opened for business in March 2022 and the limited partnership which owns the restaurant in Miramar, Florida (Store #25), which opened
for business in April 2023, have returned all cash invested and we receive an annual management fee equal to one-half (1⁄2) of the
cash available for distribution by the limited partnership.
In addition to receipt of
distributable amounts from the limited partnerships, we receive a fee equal to 3% of gross sales for use of our service marks “Flanigan’s
Seafood Bar and Grill” or “Flanigan’s”, which use is authorized while we act as general partner only. This 3%
fee is “earned” when sales are made by the limited partnerships and is paid weekly, in arrears. Whether we will have any
additional restaurants in the future will be dependent, among other things, on market conditions and our ability to raise capital. We
anticipate that we will continue to form limited partnerships to raise funds to own and operate restaurants under our service marks “Flanigan’s
Seafood Bar and Grill” or “Flanigan’s” using the same or substantially similar financial arrangements.
Below is information on the
eleven limited partnerships which own and operate “Flanigan’s Seafood Bar and Grill” or “Flanigan’s”
restaurants:
Surfside, Florida
We are the sole general partner
and a 46% limited partner in this limited partnership which has owned and operated a restaurant in Surfside, Florida under our “Flanigan’s
Seafood Bar and Grill” service mark since March 6, 1998. 33.3% of the limited partnership interest is owned by persons who are
either our officers, directors or their family members. This limited partnership has returned to its investors all of their initial cash
invested and we receive an annual management fee equal to one-half (1⁄2) of the cash available for distribution by this limited
partnership. This entity is consolidated in the accompanying consolidated financial statements.
Kendall, Florida
We are the sole general partner
and a 41% limited partner in this limited partnership which has owned and operated a restaurant in Kendall, Florida under our “Flanigan’s
Seafood Bar and Grill” service mark since April 4, 2000. 28.3% of the limited partnership interest is owned by persons who are
either our officers, directors or their family members. This limited partnership has returned to its investors all of their initial cash
invested and we receive an annual management fee equal to one-half (1⁄2) of the cash available for distribution by this limited
partnership. This entity is consolidated in the accompanying consolidated financial statements.
West Miami, Florida
We are the sole general partner
and a 32% limited partner in this limited partnership which has owned and operated a restaurant in West Miami, Florida under our “Flanigan’s
Seafood Bar and Grill” service mark since October 11, 2001. 32.7% of the limited partnership interest is owned by persons who are
either our officers, directors or their family members. This limited partnership has returned to its investors all of their initial cash
invested and we receive an annual management fee equal to one-half (1⁄2) of the cash available for distribution by this limited
partnership. This entity is consolidated in the accompanying consolidated financial statements.
Wellington, Florida
We are the sole general partner
and a 33% limited partner in this limited partnership which has owned and operated a restaurant in Wellington, Florida under our “Flanigan’s
Seafood Bar and Grill” service mark since May 27, 2005. 21.9% of the limited partnership interest is owned by persons who are either
our officers, directors or their family members. This limited partnership has returned to its investors all of their initial cash invested
and we receive an annual management fee equal to one-half (1⁄2) of the cash available for distribution by this limited partnership.
This entity is consolidated in the accompanying consolidated financial statements.
4
Pinecrest, Florida
We are the sole general partner
and 50% limited partner in this limited partnership which has owned and operated a restaurant in Pinecrest, Florida under our “Flanigan’s
Seafood Bar and Grill” service mark since August 14, 2006. 19.4% of the limited partnership interest is owned by persons who are
either our officers, directors or their family members. This limited partnership has returned to its investors all of their initial cash
invested and we receive an annual management fee equal to one-half (1⁄2) of the cash available for distribution by this limited
partnership. This entity is consolidated in the accompanying consolidated financial statements.
Pembroke Pines, Florida
We are the sole general partner
and a 29% limited partner in this limited partnership which has owned and operated a restaurant in Pembroke Pines, Florida under our
“Flanigan’s Seafood Bar and Grill” service mark since October 29, 2007. 23.0% of the limited partnership interest is
owned by persons who are either our officers, directors or their family members. This limited partnership has returned to its investors
all of their initial cash invested and we receive an annual management fee equal to one-half (1⁄2) of the cash available for distribution
by this limited partnership. This entity is consolidated in the accompanying consolidated financial statements.
Davie, Florida
We are the sole general partner
and a 54% limited partner in this limited partnership which has owned and operated a restaurant in Davie, Florida under our “Flanigan’s
Seafood Bar and Grill” service mark since July 28, 2008. 12.0% of the limited partnership interest is owned by persons who are
either our officers, directors or their family members. This limited partnership has returned to its investors all of their initial cash
invested and we receive an annual management fee equal to one-half (1⁄2) of the cash available for distribution by this limited
partnership. This entity is consolidated in the accompanying consolidated financial statements.
Miami, Florida
We are the sole general partner
and a 11% limited partner in this limited partnership which has owned and operated a restaurant in Miami, Florida under our “Flanigan’s
Seafood Bar and Grill” service mark since December 27, 2012. 26.3% of the limited partnership interest is owned by persons who
are either our officers, directors or their family members. This limited partnership has returned to its investors all of their initial
cash invested and we receive an annual management fee equal to one-half (1⁄2) of the cash available for distribution by this limited
partnership. This entity is consolidated in the accompanying consolidated financial statements.
Sunrise, Florida
We are the sole general partner
and a 7% limited partner in this limited partnership which has owned and operated a restaurant in Sunrise, Florida under our “Flanigan’s”
service mark since March 22, 2022. 32.1% of the limited partnership interest is owned by persons who are either our officers, directors
or their family members. As of the end of our fiscal year 2025, this limited partnership has returned to its investors approximately
26.5% of their initial cash invested and as a result, we are currently not entitled to receive any management fees from this limited
partnership. This entity is consolidated in the accompanying consolidated financial statements.
Miramar, Florida
We are the sole general partner
in this limited partnership which has owned and operated a restaurant in Miramar, Florida under our “Flanigan’s” service
mark since April 18, 2023. No units of limited partnership interest were purchased by the Company. 25.5% of the limited partnership interest
is owned by persons who are either our officers, directors or their family members. As of the end of our fiscal year 2025, this limited
partnership has returned to its investors approximately 45% of their initial cash invested and as a result, we are currently not entitled
to receive any management fee from this limited partnership. This entity is consolidated in the accompanying consolidated financial statements.
Fort Lauderdale, Florida
A corporation, owned by a
member of our Board of Directors, acts as sole general partner of a limited partnership which has owned and operated a restaurant in
Fort Lauderdale, Florida under our “Flanigan’s Seafood Bar and Grill” service mark since April 1, 1997. We have a 25%
limited partnership interest in this limited partnership. 56.9% of the limited partnership interest is owned by persons who are either
our officers, directors or their family members. This limited partnership has returned to its investors all cash invested, but since
we are not the general partner of this limited partnership, we do not receive an annual management fee. We have a franchise arrangement
with this limited partnership and for accounting purposes, we do not consolidate the operations of this limited partnership into our
operations.
5
Management Agreement for “The Whale’s Rib”
Restaurant
Since January 2006, we have
managed “The Whale’s Rib”, a casual dining restaurant located in Deerfield Beach, Florida, pursuant to a management
agreement. We paid $500,000 in exchange for our rights to manage this restaurant. The restaurant is owned by a third party unaffiliated
with us. In exchange for providing management, bookkeeping and related services, we receive one-half (1⁄2) of the net profit, if
any, from the operation of the restaurant. For the fiscal years ended September 27, 2025 and September 28, 2024, we generated $200,000
of revenue in each respective fiscal year from providing these management services.
Operations and Management
We emphasize systematic operations
and control of all package liquor stores and restaurants regardless of whether we own, franchise or manage the unit. Each unit has its
own manager who is responsible for monitoring inventory levels, supervising sales personnel, food preparation and service in restaurants
and generally assuring that the unit is managed in accordance with our guidelines and procedures. We have in effect an incentive cash
bonus program for our managers and salespersons based upon various performance criteria. Our operations are supervised by supervisors,
who visit all Company, limited partnership and franchise owned units and the managed unit to provide on-site management and support.
There are three supervisors responsible for package liquor store operations and six supervisors responsible for restaurant operations.
All of our managers and salespersons
receive extensive training in sales techniques. We arrange for independent third parties, or “shoppers”, to inspect each
unit in order to evaluate the unit’s operations, including the handling of cash transactions.
Purchasing and Inventory
The package liquor business
requires a constant substantial capital investment in inventory at the stores. Our inventory consists primarily of liquor and wine products
and as such, does not become excessive or obsolete that would require identifying and recording of the same. Liquor inventory purchased
can normally be returned only if defective or broken.
All of our purchases of liquor
inventory are made through our purchasing department from our corporate headquarters. The major portion of inventory is purchased under
individual purchase orders with licensed wholesalers and distributors who deliver the merchandise within one or two days of the placing
of an order. Frequently there is only one wholesaler in the immediate marketing area with an exclusive distributorship of certain liquor
product lines. Substantially all of our liquor inventory is shipped by the wholesalers or distributors directly to our stores. We significantly
increase our inventory prior to Christmas, New Year’s Eve and other holidays. Under Florida law, we are required to pay for our
liquor purchases within ten days of delivery.
Negotiations with food suppliers
are conducted by our purchasing department at our corporate headquarters. We believe this ensures that the best quality and prices will
be available to each restaurant. Orders for food products are regularly prepared by each restaurant’s kitchen manager and reviewed
by the restaurant’s general manager before orders are placed. Food is delivered by the supplier directly to each restaurant. Orders
are placed several times a week to ensure product freshness. Food inventory is primarily paid for weekly. We purchase food and other
commodities for use in our operations based on market prices established with our suppliers. Many of the food products purchased by us
can be subject to price volatility due to market supply and demand factors outside of our control. We mitigate the risk of supply shortages
and obtain competitive prices by utilizing multiple qualified suppliers for substantially all our food products.
We negotiate short-term and
long-term agreements for certain of our principal food product requirements, depending on market conditions and expected demand. We evaluate
the possibility of entering into arrangements to assist us in managing risk and variability associated with the supply and demand of
food products.
In order to fix the cost
and ensure adequate supply of baby back ribs for our restaurants for calendar year 2026, we entered into a purchase agreement with our
existing rib supplier, whereby we agreed to purchase approximately $9.2 million of “2.5 & Down Baby Back Ribs” (weight
range in which baby back ribs are sold) during calendar year 2026, at a prescribed cost, which we believe is competitive. For calendar
year 2025, we entered into a purchase agreement with a new rib supplier, whereby we agreed to purchase approximately $7.8 million of
“2.5 & Down Baby Back Ribs” during calendar year 2025, at a prescribed cost, which we also believe is competitive. The
increase in our cost of baby back ribs for calendar year 2026 compared to calendar year 2025 is due to an increase in market price and
quantity ordered.
While we anticipate purchasing
all of our rib supply from this vendor, we believe there are several other alternative vendors available, if needed.
6
Information Technology
Our
restaurant and package liquor store point-of-sale and back-office systems provide information regarding daily sales, cash receipts, inventory,
food and beverage costs, labor costs and other controllable operating expenses. Our restaurants and package liquor stores offer
online ordering for to-go sales and our package liquor stores also offer delivery services by third-party vendors.
Restaurant
and package liquor store hardware and software support is provided by both our internal support services team as well as third-party
vendors. Each restaurant and package liquor store has a private high-speed wide area connection to send and receive critical business
data as well as to access web-based applications securely as well as a failover capability. All of our core and critical applications
are backed up to external data centers. To mitigate business interruptions, we utilize a data backup and replication infrastructure
between our onsite and external data centers, so all data is replicated nightly between the sites.
We require cybersecurity
awareness training for all staff members with access to our cyber systems. We also maintain cyber risk insurance coverage to further
reduce our risk profile. Security of our financial data and other sensitive information remains a high priority for us, led by our
information technology department. In an effort to further secure our customers’ credit card information, we employ an encryption
and tokenization platform for all credit card transactions in our restaurants, ensuring no credit card data is stored in our internal
systems. We also transact business through online ordering for both our restaurants and package liquor stores through third party vendors.
(See Item 1A. Risk Factors and the discussion of cybersecurity risks and Item 1C information on cybersecurity risk management.)
Government Regulation
Our operations are subject
to various federal, state and local laws affecting our business. In particular, our operations are subject to regulation by federal agencies
and to licensing and regulation by state and local health, food preparation and safety, sanitation, alcoholic beverage control, safety
and fire department agencies in the state or municipality where our units are located.
Alcoholic beverage control
regulations require each of our restaurants and package liquor stores to obtain a license to sell alcoholic beverages from a state authority
and in certain locations, county and municipal authorities.
In Florida, where all of
our restaurants and package liquor stores are located, most of our liquor licenses are issued on a “quota license” basis.
Quota licenses are issued on the basis of a population count established from time to time under the latest applicable census. Because
the total number of liquor licenses available under a quota license system is limited and restrictions are placed upon their transfer,
the licenses have purchase and resale value based upon supply and demand in the particular areas in which they are issued. The quota
licenses held by us allow the sale of liquor for on and off premises consumption (the “4 COP Quota Liquor License”). The
other liquor licenses held by us or limited partnerships of which we are the general partner, are restaurant liquor licenses, which do
not have quota restrictions or purchase or resale value. A restaurant liquor license is issued to every applicant who meets all of the
state and local licensing requirements, including, but not limited to zoning and minimum restaurant size, seating and menu. The restaurant
liquor licenses held by us allow the sale of liquor for on premises consumption only.
All licenses must be renewed
annually and may be revoked or suspended for cause at any time. Suspension or revocation may result from violation by the licensee or
its employees of any federal, state or local law regulation pertaining to alcoholic beverage control. Alcoholic beverage control regulations
relate to numerous aspects of the daily operations of our units, including, minimum age of patrons and employees, hours of operations,
advertising, wholesale purchasing, inventory control, handling, storage and dispensing of alcoholic beverages, internal control and accounting.
As the sale of alcoholic
beverages constitutes a large share of our revenue, the failure to receive or retain, or a delay in obtaining a liquor license in a particular
location could adversely affect our operations in that location and could impair our ability to obtain licenses elsewhere.
During our fiscal years 2025
and 2024, no significant pending matters have been initiated concerning any of our licenses which might be expected to result in a revocation
of a liquor license or other significant actions against us.
We are subject to “dram-shop”
statutes due to our restaurant operations. These statutes generally provide a person injured by an intoxicated person the right to recover
damages from an establishment that wrongfully served alcoholic beverages to the intoxicated individual. We carry liquor liability coverage
as part of our existing comprehensive general liability insurance, which we believe is consistent with coverage carried by other entities
in the restaurant industry. Although we are covered by insurance, a judgment against us under a dram-shop statute in excess of our liability
coverage could have a material adverse effect on us. We currently have no “dram shop” claims.
7
Our operations are also subject
to federal and state laws governing such matters as wages, working conditions, citizenship requirements and overtime. Significant numbers
of hourly personnel at our restaurants are paid at rates related to the federal or Florida minimum wage, whichever is higher, and accordingly,
increases in the minimum wage will increase labor costs. We are also subject to the Americans with Disability Act of 1990 (“ADA”),
which, among other things, may require certain renovations to our restaurants to meet federally mandated requirements. The cost of any
such renovations is not expected to materially affect us.
A significant number of our
hourly restaurant staff members receive income from gratuities. Many of our locations participate voluntarily in a Tip Reporting Alternative
Commitment (“TRAC”) agreement with the Internal Revenue Service (“IRS”). By complying with the educational and
other requirements of the TRAC agreement, we reduce the likelihood of potential employer-only Federal Insurance Contributions Act (“FICA”)
tax assessments for unreported or underreported tips. We are not under investigation or audit, nor have we been assessed for potential
employer-only FICA tax assessments for unreported or underreported tips.
We are also subject to laws
relating to information security, privacy, cashless payments and consumer credit protection and fraud.
We are not aware of any statute,
ordinance, rule or regulation under present consideration which would significantly limit or restrict our business as now conducted.
However, in view of the number of local jurisdictions within the State of Florida in which we conduct business, and the highly regulated
nature of the liquor business, there can be no assurance that additional limitations may not be imposed in the future, even though none
are presently anticipated.
Human Capital
We
depend on our staff members to successfully execute all aspects of our day-to-day operations. Our ability to attract highly motivated
staff members and retain an engaged, experienced team is key to successful execution of our strategy. We are currently operating in a
competitive labor environment. If we are unable to hire or retain qualified restaurant management and operating personnel in an increasingly
competitive market, we may be unable to effectively operate and grow our business and revenues, which could materially adversely affect
our financial performance.
Development and Training
We
invest resources to ensure our staff receive training in order to maximize their potential. In addition, we strive to provide our staff
with career advancement opportunities. Our training programs allow us to fill certain of our management positions with internal candidates.
Benefits and Wellness
We
believe access to healthcare is a compelling benefit for many staff members and we offer healthcare benefits to our hourly staff members
who work a minimum of 30 hours per week, on average. We attempt to provide a robust suite of benefits and wellness offerings.
Employee Engagement
Listening
to our staff members is an essential part of building an engaged workforce, and we provide avenues for staff to share their ideas and
concerns.
As
of our fiscal year end 2025, we employed 2,033 persons, of which 773 were full-time and 1,260 were part-time. Of these, 58 were employed
at our corporate offices in administrative capacities and 13 were employed in maintenance. Of the remaining employees, 76 were employed
in our package liquor stores and 1,886 in our restaurants. None of our employees are represented by collective bargaining organizations.
We consider our labor relations to be favorable.
8
Giving Back
Another
key aspect of our culture is giving back to the communities where our staff live and work and uniting our staff members around charitable
causes personal to them. We periodically donate to philanthropic organizations through campaigns designed to engage our staff, as follows:
● Reclaimed Wood – All of our locations use reclaimed wood on interior walls.
We
also believe our sustainability programs and initiatives like restaurant-based recycling and replacing our off-premise packaging with
materials that reduce the use of plastics and improve recyclability serve to foster pride in our staff.
Executive Officers
Name Positions and Offices Currently Held Age Office or Position Held Since
August Bucci Chief Operating Officer and Executive Vice President 81 2002
Jeffrey D. Kastner Chief Financial Officer, General Counsel and Secretary 72 (2)
Christopher O’Neil Vice President of Package Operations 60 2016
Flanigan’s 401(k) Plan
Effective July 1, 2004, we
began sponsoring a 401(k) retirement plan covering substantially all employees who meet certain eligibility requirements. Employees may
contribute elective deferrals to the plan up to amounts allowed under the Internal Revenue Code. We are not required to contribute to
the plan but may make discretionary profit sharing and/or matching contributions. During our fiscal years ended September 27, 2025 and
September 28, 2024, the Board of Directors approved discretionary matching contributions totaling $87,000 and $74,000, respectively.
9
General Liability Insurance
For the policy year beginning
December 30, 2024, we have general liability insurance which incorporates a $50,000 self-insured retention per occurrence for us and
a $10,000 self-insured retention per occurrence for the limited partnerships. Our insurance carrier is responsible for $1,000,000 coverage
per occurrence above our self-insured retentions, up to a maximum aggregate of $2,000,000 per year. We were also able to purchase excess
liability insurance whereby our excess insurance carrier is responsible for $10,000,000 coverage above our primary general liability
insurance coverage. We are uninsured against liability claims in excess of $11,000,000 per occurrence and in the aggregate.
Our general policy is to
settle only those legitimate and reasonable claims asserted and to aggressively defend and go to trial, if necessary, on frivolous and
unreasonable claims. Under our current liability insurance policy, certain expenses incurred by us in defending a claim, including attorney’s
fees, are a part of our $50,000 self-insured retention, and a part of our limited partnerships’ $10,000 self-insured retention.
In accordance with accounting
guidance, we accrue for any liability by recognizing costs when it is probable that a covered liability has been incurred and the cost
can be reasonably estimated. Accordingly, our annual insurance costs may be subject to adjustment from previous estimates as facts and
circumstances change. Our accruals are included in the accompanying consolidated balance sheets in the caption “Accounts payable
and accrued expenses”. A significant unfavorable judgment or settlement against us in excess of our liability insurance coverage
could have a materially adverse effect on the Company.
Property Insurance; Windstorm Insurance
For the policy year beginning
December 30, 2024, our property insurance is a one (1) year policy with an unaffiliated third party insurance carrier, including coverage
for properties leased by us and our consolidated limited partnerships, and provides for full insurance coverage for property losses,
including those caused by windstorms, such as a hurricane. For property losses caused by windstorm, the property insurance has a fixed
deductible of $100,000, plus 5% of all insured losses, per occurrence. For all other property losses, the property insurance has deductibles
of $10,000 per location, per occurrence.
Insurance Premiums
Due to continuing higher
interest rates, for the policy year commencing December 30, 2024 we paid the premiums for general liability, auto, property, excess liability
and terrorism policies totaling approximately $4.01 million, which includes coverage for our franchises (of approximately $911,000),
which are not included in our consolidated financial statements. For the policy year commencing December 30, 2025, we will pay the premiums
for general liability, auto, property, excess liability and terrorism policies in full again due to continuing higher interest rates.
Competition and the Company’s Market
The liquor and hospitality
industries are highly competitive and are often affected by changes in taste and entertainment trends among the public, by local, national
and economic conditions affecting spending habits, and by population and traffic patterns. We believe that the principal means of competition
among package liquor stores is price and that, in general, the principal means of competition among restaurants include the location,
type and quality of facilities and the type, quality and price of beverage and food served.
Our package liquor stores
compete directly or indirectly with local retailers and discount “superstores”. Due to the competitive nature of the liquor
industry in South Florida, we have had to adjust our pricing to stay competitive. Such practices will continue in the package liquor
business. We believe that we have a competitive position in our market because of widespread consumer recognition of the “Big Daddy’s
Liquors” and “Big Daddy’s Wine & Liquors” names.
Our restaurants compete directly
or indirectly with many well-established competitors, both nationally and locally owned. During the second quarter of our fiscal year
2025, we increased our menu prices for our bar offerings (effective February 23, 2025) to target an increase to our bar revenues of approximately
0.84% annually to offset higher food and liquor costs and higher overall expenses. During the first quarter of our fiscal year 2025,
we increased our menu prices for our bar offerings (effective December 4, 2024) to target an increase to our bar revenues of approximately
4.90% annually and we increased our menu prices for our food offerings (effective November 17, 2024) to target an increase to our food
revenues of approximately 4.14% annually to offset higher food and liquor costs and higher overall expenses. During our fiscal year 2024,
we increased menu prices for our bar offerings (effective August 25, 2024) to target an increase to our bar revenues of approximately
5.63% annually to offset higher food and liquor costs and higher overall expenses. Prior to these increases we previously raised menu
prices in the second quarter of our fiscal year 2023. We believe that we have a competitive position in our market because of widespread
consumer recognition of the “Flanigan’s Seafood Bar and Grill” and “Flanigan’s” names.
We have many well-established
competitors, both nationally and locally owned, with substantially greater financial resources than we do. Their resources and market
presence may provide advantages in marketing, purchasing and negotiating leases. We compete with other restaurant and retail establishments
for sites and finding management personnel.
10
Our business is subject to
seasonal effects, including that liquor purchases tend to increase during the holiday seasons.
Trade Names
We operate our package liquor
stores and restaurants under the service marks: “Big Daddy’s Liquors”, “Big Daddy’s Wine & Liquors”,
“Flanigan’s Seafood Bar and Grill”, and “Flanigan’s”. We operate our sports bar under the service
mark: “Brendan’s Sports Pub”. Our right to the use of the “Big Daddy’s” service mark is set forth