UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended DecemberMarch 30, 20172019

OR

For the transition period from            to

Commission File Number 1-6836

FLANIGAN'S ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

(954) 377-1961

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant has submitted electronically and posted on its Corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yesý  Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yeso Noý

Securities registered pursuant to Section 12(b) of the Act:

On February 13, 2018,May 14, 2019, 1,858,647 shares of Common Stock, $0.10 par value per share, were outstanding.

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

SIGNATURES

LIST XBRL DOCUMENTS

As used in this Quarterly Report on Form 10-Q, 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).

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(Continued)

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

DECEMBERMARCH 30, 20172019 (UNAUDITED) AND SEPTEMBER 30, 201729, 2018

(in thousands)

ASSETS

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC,INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

DECEMBERMARCH 30, 20172019 (UNAUDITED) AND SEPTEMBER 30, 201729, 2018

(in thousands)

(Continued)

LIABILITIES AND STOCKHOLDERS’ EQUITY

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE TWENTY SIX WEEKS ENDED MARCH 30, 2019 AND MARCH 31, 2018

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THIRTEENTWENTY SIX WEEKS ENDED DECEMBERMARCH 30, 20172019 AND DecemberMARCH 31, 20162018

(in thousands)

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THIRTEENTWENTY SIX WEEKS ENDED DECEMBERMARCH 30, 20172019 AND DECEMBERMARCH 31, 20162018

(in thousands)

(Continued)

See accompanying notes to unaudited condensed consolidated financial statements

FLANIGAN’S ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBERMARCH 30, 20172019

(1) BASIS OF PRESENTATION:

The accompanying condensed consolidated financial information for the thirteen weeks ended DecemberMarch 30, 20172019 and DecemberMarch 31, 20162018 are unaudited. Financial information as of September 30, 201729, 2018 has been derived from the audited financial statements of the Company, but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated have been included. For further information regarding the Company's accounting policies, refer to the Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K for the year ended September 30, 2017.29, 2018. Operating results for interim periods are not necessarily indicative of results to be expected for a full year.

The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and the accounts of the eight limited partnerships in which we act as general partner and have controlling interests. All intercompany balances and transactions have been eliminated. Non-controlling interest represents the limited partners’ proportionate share of the net assets and results of operations of the eight limited partnerships.

These condensed consolidated financial statements include estimates relating to performance based officers’ bonuses. The estimates are reviewed periodically and the effects of any revisions are reflected in the financial statements in the period they are determined to be necessary. Although these estimates are based on management’s knowledge of current events and actions it may take in the future, they may ultimately differ from actual results.

(2) EARNINGS PER SHARE:

We follow Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Section 260 - “Earnings per Share”. This section provides for the calculation of basic and diluted earnings per share. The data on Page 32 shows the amounts used in computing earnings per share and the effects on income and the weighted average number of shares of potentially dilutive common stock equivalents.income. As of DecemberMarch 30, 20172019 and DecemberMarch 31, 2016,2018, no stock options were outstanding.

(3) RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

Adopted

In November 2015,May 2014, the FASBFinancial Accounting Standards Board (FASB) issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet ClassificationAccounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers,” (ASU 2014-09), which requires an entity to recognize the amount of Deferred Taxes. ASU 2015-17 requires that all deferred tax liabilities and tax assetsrevenue to which it expects to be classified as non-current in a classified balance sheet, rather than separating such deferred taxes into current and non-current amounts, as is required under current guidance. ASU 2015-17 isentitled for the transfer of promised goods or services to customers. The new standard was effective for fiscal years,interim and for interimannual periods within thosein fiscal years beginning after December 15, 2016 and may be applied2017. The standard permits the use of either prospectivelythe retrospective or retrospectively.cumulative effect transition method.The adoption of this new guidance did not have a material impact on our consolidated financial statements.

(3) RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

(Continued)

Issued

In August 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-15 “Classification of Certain Cash Receipts and Cash Payments”.  This ASU, which addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, “Statement of Cash Flows”, and other Topics. ASU 2016-15 isThe new standard was effective for interim and annual reporting periods and interim periods therein,in fiscal years beginning after December 15, 2017. We do not expect theThe adoption of this new guidance todid not have a material impact on our consolidated financial statements.

Issued

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes all existing guidance on accounting for leases in ASC Topic 840.  ASU 2016-02 is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet.  ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income.  ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.years, which will require us to adopt these provisions in the first quarter of our fiscal year 2020.  Early adoption is permitted.  ASU 2016-02 requires a modified retrospective approach for all leases existing at, or entered into after the date of initial adoption, with an option to elect to use certain transition relief.  We are currently assessingexpect the adoption dateof the new guidance will have a material impact on our consolidated balance sheets due to recognition of the right-of-use asset and the potentiallease liability related to our current operating leases. The process of evaluating the full impact of adopting ASU 2016-02 onthe new guidance of our financial statements and related disclosures.

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from Contracts with Customers,” (ASU 2014-09), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. generally accepted accounting principles when it becomes effective. The new standard was originally effective for interim and annual periods in fiscal years beginning after December 15, 2016. In July 2015, the FASB affirmed its proposal for a one year deferral of the effective date. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effectdisclosures is ongoing and we expect to have an estimate of the standard on its ongoing financial reporting.impact by the end of the third quarter of our fiscal year 2019.

(4) INVESTMENT IN REAL PROPERTY; OPTION TO LEASE AGREEMENT:

Pompano Beach, Florida

During the second quarter of our fiscal year 2019, we purchased from an unrelated third party the vacant real property (the “Property”), located at 2119 S.E. 9^th Street, Pompano Beach, Florida for $1,300,000 cash at closing. The Property is adjacent to property owned by a third party unaffiliated with us and leased to another third party unaffiliated with us for use as a restaurant (the “Adjacent Property”). As a condition to closing on the Property, we executed an Option to Lease Agreement for the Adjacent Property, to lease the Adjacent Property for a 50 year term commencing either in November, 2019 or if the current tenant exercises a one time three year renewal option, November, 2022. We plan to renovate the building on the Adjacent Property for operation as a “Flanigan’s Seafood Bar and Grill” restaurant and use the Property as parking. To fund the cash at closing, we used cash on hand. We plan to raise funds to renovate this new restaurant location using our limited partnership ownership model.

(5) EXECUTION OF LEASES FOR NEW LOCATIONS:

Sunrise, Florida (“Flanigan’s Seafood Bar and Grill”)

On February 28, 2019, we entered into a Lease Agreement (the “Sunrise Lease Agreement”) with a non-affiliated third party to rent approximately 6,900 square feet of commercial space in Sunrise, Florida where, subject to certain conditions, we anticipate opening a new restaurant location. Subsequent to the end of the second quarter of our fiscal year 2019, we assigned the Sunrise Lease Agreement to a newly formed limited partnership in which we currently are (i) the sole general partner; and (ii) our wholly owned subsidiary is the sole limited partner. While there can be no assurances that we will be successful in doing so, we intend to sell limited partnership interests to third parties as well as affiliates of the Company in order to raise net proceeds, in an amount to be determined, which proceeds will be used to renovate this potential restaurant location. We anticipate that the new restaurant location’s ownership and operating structure will be substantially similar to that of our other restaurants owned by limited partnerships. Any amounts we advance to the limited partnership will be applied as a credit to limited partnership equity in the limited partnership we may acquire (which equity shall be purchased at the same price and upon the same terms as other equity investors). If we do not acquire equity in the limited partnership for at least $250,000, any excess amounts advanced by us will be reimbursed to us by the limited partnership without interest. Through May 14, 2019, we have advanced $63,000 to the limited partnership.

(6) INCOME TAXES:

We account for our income taxes using FASB ASC Topic 740, “Income Taxes”, which requires among other things, recognition of future tax benefits measured at enacted rates attributable to deductible temporary differences between financial statement and income tax basis of assets and liabilities and to tax net operating loss carryforwards and tax credits to the extent that realization of said tax benefits is more likely than not.

On December 22, 2017 the Tax Cuts and Jobs Act (“The Act”(the “Act”) was signed into law, reducing the corporate income tax rate to 21%.  Our accounting for the impact of Thethe Act is complete.  Consequently, we have recorded a decrease of approximately $268,000 to our net deferred tax asset, with a corresponding adjustment to deferred income tax expense for the thirteen weeks ended December 30, 2017.

(5)(7) DEBT:

(a) Revolving Credit Line/Term LoanMortgage on Real Property

During the first quarter of our fiscal year 2017,2019, we closed onborrowed the sum of $250,000 from a secured revolving line of credit from an unaffiliatedrelated third party lender which, subject to certain conditions, entitled us to borrow, from time to time through December 28, 2017, up to $5,500,000 (the “Credit Line”“$250,000 Loan”). From December 28, 2016 through December 28, 2017, we were obligated to pay interest only onThe proceeds of the outstanding balance$250,000 Loan are being used as working capital. Our repayment obligations under the Credit Line,$250,000 Loan are secured by a first mortgage on our quadraplex located at a1420 N.E. 50th Court, Fort Lauderdale, Florida 33334. The $250,000 Loan bears interest at the fixed rate of LIBOR, Daily Floating Rate, plus 2.25%,4.00% per annum. During the second quarter of our fiscal year 2017, we entered into an interest rate swap agreement to hedge the interest rate risk when the unpaid principal balance under the

Credit Line converted to a term loan on December 28, 2017annum and our repayment obligations thereunder becomeis amortizable over a fivean eight (8) year period, payable in equalwith our current monthly installmentspayment of principal and interest at the rate of 4.65% per annum, with any outstandingtotaling $3,047. The entire principal balance and all accrued but unpaid interest are due on December 28, 2022, (the “Term Loan”). We granted our lender a first priority security interest in substantially all of our personal property assets to secure our repayment obligations under this loan. During the second quarter of our fiscal year 2017, we borrowed $2.0 million on the Credit Line and during the first quarter of our fiscal year 2018, we borrowed the balance of the Line of Credit, ($3.5 million). As of December 21, 2017, we had no credit available under the Credit Line and on December 28, 2017 the entire principal balance under the Credit Line ($5,500,000) converted to the Term Loan.

November 1, 2026.

(b) Financed Insurance Premiums

During the thirteentwenty six weeks ended DecemberMarch 30, 2017,2019, we financed the premiums on the following three (3) property and general liability insurance policies, totaling approximately $1.33$1.65 million, which property and general liability insurance includes coverage for our franchises which are not included in our consolidated financial statements:

(i)       For the policy year beginning December 30, 2017,2018, our general liability insurance, excluding limited partnerships, is a one (1) year policy with our insurance carriers, including automobile and excess liability coverage. The one (1) year general liability insurance premiums, including automobile and excess liability coverage, total, in the aggregate $581,000,$620,000, of which $466,000$494,000 is financed through an unaffiliated third party lender (the “Third Party Lender”). The finance agreement obligates us to repay the amounts financed together with interest at the rate of 3.15%3.85% per annum, over 10 months, with monthly payments of principal and interest, each in the amount of $47,000.$50,000. The finance agreement is secured by a first priority security interest in all insurance policies, all unearned premium, return premiums, dividend payments and loss payments thereof.

(ii)        For the policy year beginning December 30, 2017,2018, our general liability insurance for our limited partnerships is a one (1) year policy with our insurance carriers, including excess liability coverage. The one (1) year general liability insurance premiums, including excess liability coverage, total, in the aggregate $511,000,$521,000, of which $409,000$416,000 is financed through the Third Party Lender. The finance agreement obligates us to repay the amounts financed, together with interest at the rate of 3.15%3.85% per annum, over 10 months, with monthly payments of principal and interest, each in the amount of $41,000.$42,000. The finance agreement is secured by a first priority security interest in all insurance policies, all unearned premium, return premiums, dividend payments and loss payments thereof.

(iii)       For the policy year beginning December 30, 2017,2018, our property insurance is a one (1) year policy. The one (1) year property insurance premium is in the amount of $564,000,$506,000, of which $453,000$385,000 is financed through the Third Party Lender. The finance agreement provides that we are obligated to repay the amounts financed, together with interest at the rate of 3.15%3.85% per annum, over 10 months, with monthly payments of principal and interest, each in the amount of approximately $46,000.$39,000. The finance agreement is secured by a first priority security interest in all insurance policies, all unearned premium, return premiums, dividend payments and loss payments thereof.

As of DecemberMarch 30, 2017,2019, the aggregate principal balance owed from the financing of our property and general liability insurance policies is $1,057,000.$833,000.

(6)(8) COMMITMENTS AND CONTINGENCIES:

Construction Contracts

a. 13205 Biscayne Boulevard, North Miami, Florida (Store #20)

On June 14, 2017, we entered into an agreement with a third party unaffiliated general contractor to renovate our restaurant located at 13205 Biscayne Boulevard, North Miami, Florida, (Store #20) for a total contract price of $880,000. The renovations include, but are not limited to the construction of a new kitchen and the expansion of the restaurant into our former package liquor store location. During the firstsecond quarter of our fiscal year 2018,2019, we agreed to change orders which had the effect of increasing the total contract price for the renovationrenovations to $1,080,000,$1,177,000, of which as of$933,000 has been paid. Subsequent to the end of the second quarter of our firstfiscal year 2019, we paid an additional $229,000 toward the total contract price, leaving a balance of $15,000.

During our fiscal year 2018, we entered into an agreement with a third party unaffiliated general contractor to renovate and add an outdoor patio area to the front of our restaurant located at 13205 Biscayne Boulevard, North Miami, Florida (Store #20) for a total contract price of $912,000. During the second quarter of our fiscal 2018,year 2019, we agreed to change orders which had the effect of decreasing the total contract price for the renovation to $880,000, of which we have paid $345,000.$777,000. Subsequent to the end of the second quarter of our fiscal year 2019, we paid an additional $98,000 toward the total contract price, leaving a balance of $5,000.

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

During the first quarter of our fiscal year 2018, we entered into two agreements with a third party unaffiliated general contractor for design and development services for a total contract price of $127,000 (the “$127,000 Contract”) and $174,000 (the “$174,000 Contract”). The $127,000 Contract provides for design and development services for the construction of a new building (the “New Building”) on a parcel of real property which we own 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) operates.operated until it was closed in October 2018 due to damages caused by a fire. The $174,000 Contract provides for design and development services for the renovation of the existing building which currently houseshoused the combination package liquor store and restaurant.restaurant until it was closed in October 2018 due to damages caused by a fire. If we complete the construction of the New Building and as a result of the renovationfire, the rebuild of the existing building, (the “Rebuilt Building”), we currently plan to re-locate our package liquor store located at the property to the New Building and to operate the restaurant located at the property in the renovatedRebuilt Building. During our fiscal year 2019, we agreed to change orders which had the effect of increasing the total contract price for the $127,000 Contract to $138,000, and expanded existing building.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 our fiscal year 2019, we also agreed to change orders which had the effect of increasing the total contract price for the $174,000 Contract to $187,000, and during the second quarter of our fiscal year 2019, we paid $46,000 as the final payment of the contract price of the $174,000 Contract, (of which a total of $157,000 was paid), which we cancelled during the first quarter of our fiscal year 2019 due to the building being damaged by fire.

Subsequent to the end of the firstsecond quarter of our fiscal year 2018,2019, we entered into an agreement with a third party unaffiliated general contractor for site work to renovateconnect the real property where our combination package liquor store and add an outdoor patio arearestaurant 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 to city sewer and for the construction of the new building on the adjacent parcel of real property for the operation of our package liquor store for $1,618,000.

Subsequent to the frontend of the second quarter of our fiscal year 2019, we also entered into an agreement with a third party unaffiliated architect for design and development services for the re-build of our restaurant located at 13205 Biscayne Boulevard, North Miami,2505 N. University Drive, Hollywood, Florida (Store #20)#19) for a total contract price of $912,000.$77,000, of which we paid $15,000.

c. 4 N. Federal Highway, Hallandale Beach, Florida (Store #31)

During the first quarter of our fiscal year 2019, we entered into an agreement with a third party unaffiliated design group for design and development services for a contract price of $356,000 (the “$356,000 Contract”). The $356,000 Contract provided for design and development services for the construction of two (2) new buildings on the real property which we own where our combination package liquor store and restaurant located at 4 N. Federal Highway, Hallandale Beach, Florida, (Store #31) operates. Our plan for the real property was to (i) demolish the building which currently houses our combination package liquor store and restaurant, (ii) build two new buildings, one of which will house our package liquor store and the other of which will house our restaurant; and (iii) enter into a ground lease with an existing retail tenant for a parcel of land which will not be improved by the two buildings. During the second quarter of our fiscal year 2019, we learned that our planned development of Store #31 would cause the loss of too many parking spaces, so we abandoned our development plans and terminated the $356,000 Contract. We paid $130,000 on account of the $356,000 Contract and owe no further amounts under the same.

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

Subsequent to the end of the second 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, of which we paid $20,000.

Litigation

From time to time, we are a defendant in litigation arising in the ordinary course of our business, including claims resulting from “slip and fall” accidents, dram shop claims, claims under federal and state laws governing access to public accommodations, employment-related claims and claims from guests alleging illness, injury or other food quality, health or operational concerns. To date, none of this litigation, some of which is covered by insurance, has had a material effect on us.

(7)   SUBSEQUENT EVENTS:(9) CASUALTY LOSS

Subsequent events have been evaluated through the date these condensed consolidated financial statements were issued .

Extension of Lease for Existing Location

Pinecrest, Florida

Subsequent to the end ofDuring the first quarter of our fiscal year 2018, the lease with an unrelated third party for the2019, our combination package liquor store and restaurant owned by our limited partnership located at 11415 S. Dixie Highway, Pinecrest,2505 N. University Drive, Hollywood, Florida (Store #13)#19) was extended through July 31, 2026, an additional period of approximately five (5) years beyond its current expiration date of May 31, 2021. The extended leasedamaged by a fire and was forced to close. Due to the damage caused by the fire, we determined that Store #19 should be demolished and rebuilt and as a result, the package liquor store and restaurant will be closed for our fiscal year 2019. We have insurance coverage of $1,975,000, in the aggregate, which our insurance carrier has agreed to pay. We sustained a loss of $1,373,000 on our building and business personal property, against which we received insurance proceeds of $1,200,000 resulting in a loss of $173,000. We had a gain of $775,000 on our business interruption coverage, which when netted against our loss of $173,000 on our building and business personal property produced a gain of $602,000. During the same termsfirst quarter of our fiscal year 2019, we received an advance of $600,000 against our insurance recovery and conditions, exceptduring the annual rent (base and estimated percentage rent) effective February 1, 2018 will increase by approximately 20%, with annual 3% increases onsecond quarter of our fiscal year 2019, we received the base rent thereafter commencing February 1, 2021.balance of our insurance recovery, less only $132,000 as depreciation against our business personal property until such time as it is replaced.

(8)(10) BUSINESS SEGMENTS:

We operate principally in two reportable segments – package stores and restaurants. The operation of package stores consists of retail liquor sales and related items. Information concerning the revenues and operating income for the thirteen weeks and twenty six weeks ended DecemberMarch 30, 20172019 and DecemberMarch 31, 2016,2018, and identifiable assets for the two reportable segments in which we operate, are shown in the following table. Operating income is total revenue less cost of merchandise sold and operating expenses relative to each segment. In computing operating income, none of the following items have been included: interest expense, other non-operating income and expenses and income taxes. Identifiable assets by segment are those assets that are used in our operations in each segment. Corporate assets are principally cash and real property, improvements, furniture, equipment and vehicles used at our corporate headquarters. We do not have any operations outside of the United States and transactions between restaurants and package liquor stores are not material.

(11)       SUBSEQUENT EVENTS:

Subsequent events have been evaluated through the date these condensed consolidated financial statements were issued and except as disclosed herein, no events required disclosure.

Reported financial results may not be indicative of the financial results of future periods. All non-historical information contained in the following discussion constitutes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Words such as “anticipates, appears, expects, trends, intends, hopes, plans, believes, seeks, estimates, may, will,” and variations of these words or similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve a number of risks and uncertainties, including but not limited to customer demand and competitive conditions. Factors that could cause actual results to differ materially are included in, but not limited to, those identified in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Annual Report on our Form 10-K for the fiscal year ended September 30, 201729, 2018 and in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may reflect events or circumstances after the date of this report.

OVERVIEW

At DecemberAs of March 30, 2017, we2019, Flanigan’s Enterprises, Inc., a Florida corporation, together with its subsidiaries, (i) operatedoperates 26 units, (excluding the adult entertainment club referenced in (ii) below), consisting of restaurants, package liquor stores and combination restaurants/package liquor stores that we either own or have operational control over and partial ownership in; and (ii) own but do not operate one adult entertainment club; and (iii) franchisefranchises an additional five units, consisting of two restaurants (one restaurant of which we operate), and three combination restaurants/package liquor stores. The foregoing excludes an adult entertainment club which we owned but did not operate and which was permanently closed on September 20, 2018 when a Federal Court upheld recently enacted local legislation which prohibited the operation of the club as then operated. The table below provides information concerning the type (i.e. restaurant, 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 DecemberMarch 30, 20172019 and as compared to DecemberMarch 31, 20162018 and September 30, 2017.29, 2018. With the exception of “The Whale’s Rib”, a restaurant we operate but do not own, all of the restaurants operate under our service mark “Flanigan’s Seafood Bar and Grill” and all of the package liquor stores operate under our service mark “Big Daddy’s Liquors”.

Notes:

(1) During the thirdfirst quarter of our fiscal year 2017, we re-located the package liquor store from2019, our combination package liquor store and restaurant located at 13205 Biscayne Boulevard, North Miami,2505 N. University Drive, Hollywood, Florida (Store #19) was damaged by a fire which caused it to be closed during the first and second quarters of our newly constructed, free-standing building located at 13185 Biscayne Boulevard, North Miami, Florida.fiscal year 2019. Revenues and expenses from Store #19 for the first two (2) days of the first quarter of our fiscal year 2019, except payroll, are immaterial.

(2) During the fourth quarter of our fiscal year 2018, the adult entertainment club which we owned but did not operate was closed permanently when a Federal Court upheld recently enacted local legislation which prohibited the operation of the club as then operated.

(3)We operate a restaurant for one (1) franchisee. This unit is included in the table both as a franchised restaurant, as well as a restaurant operated by us.

Franchise Financial Arrangement: In exchange for our providing management and related services to our franchisees and granting them the right to use our service marks “Flanigan’s Seafood Bar and Grill” and “Big Daddy’s Liquors”, our franchisees (four of which are franchised to members of the family of our Chairman of the Board, officers and/or directors), are required to (i) pay to us a royalty equal to 1% of gross package store sales and 3% of gross restaurant sales; and (ii) make advertising expenditures equal to between 1.5% to 3% of all gross sales based upon our actual advertising costs allocated between stores, pro-rata, based upon gross sales.

Limited Partnership Financial Arrangement: We manage and control the operations of all restaurants owned by limited partnerships, except the Fort Lauderdale, Florida restaurant which is ownedmanaged and controlled by a related franchisee. Accordingly, the results of operations of all limited partnership owned restaurants, except the Fort Lauderdale, Florida restaurant are consolidated into our operations for accounting purposes. The results of operations of the Fort Lauderdale, Florida restaurant are accounted for by us utilizing the equity method.method of accounting. In general, until the investors’ cash investment in a limited partnership (including any cash invested by us and our affiliates) is returned in full, the limited partnership distributes to the investors annually out of available cash from the operation of the restaurant 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 (½) to us as a management fee, with the balance distributed to the investors. Once the investors in the limited partnership have received, in full, amounts equal to their cash invested, an annual management fee is payable to us equal to one-half (½) of cash available to the limited partnership, with the other one half (½) of available cash distributed to the investors (including us and our affiliates). As of DecemberMarch 30, 2017,2019, limited partnerships owning six (6)eight (8) restaurants, (Surfside, Florida, Kendall, Florida, West Miami, Florida, Pinecrest, Florida, Wellington, Florida, Miami, Florida, Pembroke Pines, Florida and Miami,Davie, Florida locations), have returned all cash invested and we receive an annual management fee equal to one-half (½) of the cash available for distribution by the limited partnership. In addition to receipt of distributable amounts from the limited partnerships, we receive from the limited partnerships a fee equal to 3% of gross sales for use of theour service mark “Flanigan’s Seafood Bar and Grill”.

RESULTS OF OPERATIONS

Comparison of Thirteen Weeks Ended DecemberMarch 30, 20172019 and DecemberMarch 31, 2016.2018.

Revenues.Total revenue for the thirteen weeks ended DecemberMarch 30, 20172019 increased $1,799,000$280,000 or 6.76%0.95% to $28,393,000$29,736,000 from $26,594,000$29,456,000 for the thirteen weeks ended DecemberMarch 31, 20162018 due primarily to increased menu pricesrestaurant traffic and notwithstanding the loss of revenue from our combination restaurant/package liquor store located at 2505 N. University Drive, Hollywood, Florida (Store #19), which was closed for the thirteen weeks ended March 30, 2019 due to a lesser extentfire on October 2, 2018, (the “Store #19 Closure”). Revenue generated from operations at our Store #19 was $1,346,000 for the thirteen weeks ended March 31, 2018. We expect revenue to remain stable throughout the balance of our fiscal year 2019 due to increased restaurant traffic. Effective September 3, 2017 we increased certain menu pricestraffic, offset by the loss of revenue resulting from the Store #19 Closure. We currently anticipate that our Store #19 will be closed for at least the remainder of our bar offerings to target an increase to our total bar revenues of approximately 4.9% annually and effective September 16, 2017 we increased certain menu prices for our food offerings to target an increase to our total food revenues of approximately 4.0% annually, (the “Price Increases”). Previously, in February 2016, we had increased prices targeting to increase revenue from (i) our bar offerings by 3.0%; and (ii) our food offerings by 3.7% annually.fiscal year 2019.

Restaurant Food Sales.Restaurant revenue generated from the sale of food, including non-alcoholic beverages, at restaurants (food sales) totaled $17,272,000$18,219,000 for the thirteen weeks ended DecemberMarch 30, 20172019 as compared to $16,224,000$18,244,000 for the thirteen weeks ended DecemberMarch 31, 2016.2018. The increasedecrease in restaurant revenue from the sale of food at restaurants during the thirteen weeks ended DecemberMarch 30, 20172019 is primarily due tothe Price Increases and to a lesser extent loss of revenue resulting from the Store #19 Closure, offset byincreased restaurant traffic. traffic. Restaurant revenue from the sale of food at our Store #19 was $892,000 for the thirteen weeks ended March 31, 2018.Comparable weekly restaurant food sales (for restaurants open for all of the firstsecond quarter of our fiscal year 2019 and the second quarter of our fiscal year 2018, and the first quarter of our fiscal year 2017, which consists of tennine restaurants owned by us, (excluding Store #19which was closed for the thirteen weeks ended March 30, 2019)and eight restaurants owned by affiliated limited partnerships) was $1,329,000$1,401,000 and $1,248,000$1,335,000 for the thirteen weeks ended DecemberMarch 30, 20172019 and DecemberMarch 31, 2016,2018, respectively, an increase of 6.49%4.94%. Comparable weekly restaurant food sales for Company owned restaurants only was $700,000$720,000 and $651,000$685,000 for the firstsecond quarter of our fiscal year 2019 and the second quarter of our fiscal year 2018, and the first quarter of our fiscal year 2017, respectively, an increase of 7.53%5.11%. Comparable weekly restaurant food sales for affiliated limited partnership owned restaurants only was $629,000$681,000 and $597,000$650,000 for the firstsecond quarter of our fiscal year 2019 and the second quarter of our fiscal year 2018, andrespectively, an increase of 4.84%.We expect restaurant revenue generated from food sales, including non-alcoholic beverages, at restaurants to remain stable throughout the first quarterbalance of our fiscal year 2017, respectively, an increase2019 due to the loss of 5.36%.food sales resulting from the Store #19 Closure.

Restaurant Bar Sales. Restaurant revenue generated from the sale of alcoholic beverages at restaurants (bar sales) totaled $5,484,000$5,745,000 for the thirteen weeks ended DecemberMarch 30, 20172019 as compared to $5,061,000$5,641,000 for the thirteen weeks ended DecemberMarch 31, 2016.2018. The increase in restaurant revenue from the sale of alcoholic beverages at restaurants during the thirteen weeks ended DecemberMarch 30, 20172019 is primarily due to the Price Increases and to a lesser extent increased restaurant traffic. traffic, offset by theloss of revenue resulting from the Store #19 Closure. Restaurant revenue from the bar sales at our Store #19 was $190,000 for the thirteen weeks ended March 31, 2018.Comparable weekly restaurant bar sales (for restaurants open for all of the firstsecond quarter of our fiscal year 2019 and the second quarter of our fiscal year 2018, and the first quarter of our fiscal year 2017, which consists of tennine restaurants owned by us, (excluding Store #19which was closed for the thirteen weeks ended March 30, 2019),and eight restaurants owned by affiliated limited partnerships) was $422,000$442,000 for the thirteen weeks ended DecemberMarch 30, 20172019 and $389,000$423,000 for the thirteen weeks ended December 30, 2017,March 31, 2018, an increase of 8.48%4.49%. Comparable weekly restaurant bar sales for Company owned restaurants only was $200,000$205,000 and $184,000$195,000 for the firstsecond quarter of our fiscal year 2019 and the second quarter of our fiscal year 2018, and the first quarter of our fiscal year 2017, respectively, an increase of 8.79%5.13%. Comparable weekly restaurant bar sales for affiliated limited partnership owned restaurants only was $222,000$237,000 and $205,000$228,000 for the firstsecond quarter of our fiscal year 2019 and the second quarter of our fiscal year 2018, andrespectively, an increase of 3.95%.We expect restaurant revenue generated from bar sales to remain stable throughout the first quarterbalance of our fiscal year 2017, respectively, an increase2019 due to increased restaurant traffic, offset by the loss of 8.29%.bar sales resulting from the Store #19 Closure.

Package Store Sales. Revenue generated from sales of liquor and related items at package liquor stores totaled $5,013,000$5,092,000 for the thirteen weeks ended DecemberMarch 30, 20172019 as compared to $4,678,000$4,866,000 for the thirteen weeks ended DecemberMarch 31, 2016,2018, an increase of $335,000.$226,000. This increase was primarily due to increased package liquor store traffic.traffic, offset by the loss of revenue generated from sales of liquor and related items at Store #19, due to the Store #19 Closure. Revenue generated from sales of liquor and related items at our Store #19 was $264,000 for the thirteen weeks ended March 31, 2018. The weekly average of same store package liquor store sales, which includes all nine (9)eight (8) Company owned package liquor stores, (excluding Store #19, which was $386,000closed for the thirteen weeks ended DecemberMarch 30, 2017 as compared to $360,0002019), was $392,000 for the thirteen weeks ended DecemberMarch 30, 2019 as compared to $354,000 for the thirteen weeks ended March 31, 2016,2018, an increase of 7.22%10.73%. We expect package liquor store sales to remain stableincrease throughout the balance of our fiscal year 2018.2019 due to increased package liquor store traffic, offset by the loss of revenue generated from sales of liquor and related items resulting from the Store #19 Closure.

Operating Costs and Expenses. Operating costs and expenses, (consisting of cost of merchandise sold, payroll and related costs, occupancy costs and selling, general and administrative expenses), for the thirteen weeks ended DecemberMarch 30, 20172019 increased $1,685,000$902,000 or 6.71%3.35% to $26,806,000$27,846,000 from $25,121,000$26,944,000 for the thirteen weeks ended DecemberMarch 31, 2016.2018. The increase was primarily due to an expected general increase in food costs, offset by a reduction of operating costs and expenses at Store #19 due to the Store #19 Closure and actions taken by management to reduce and/or control costs. Operating costs and expenses.expenses at our Store #19 were $529,000 for the thirteen weeks ended March 31, 2018. We anticipate that our operating costs and expenses will continue to increase through our fiscal year 20182019 for the same reasons. Operating costs and expenses decreasedincreased as a percentage of total salesrevenue to approximately 94.41%93.64% in the firstsecond quarter of our fiscal year 20182019 from 94.46%92.36% in the firstsecond quarter of our fiscal year 2017.2018.

Gross Profit. Gross profit is calculated by subtracting the cost of merchandise sold from sales.

Restaurant Food Sales and Bar Sales. Gross profit for food sales and bar sales for the thirteen weeks ended DecemberMarch 30, 2017 increased2019 decreased to $14,773,000$15,646,000 from $13,823,000$15,673,000 for the thirteen weeks ended DecemberMarch 31, 2016.2018. Our gross profit margin for restaurant food sales and bar sales (calculated as gross profit reflected as a percentage of restaurant food sales and bar sales), was 64.92%65.29% for the thirteen weeks ended DecemberMarch 30, 20172019 and 64.94%65.62% for the thirteen weeks ended DecemberMarch 31, 2016. Our gross profit margin for restaurant food and bar sales for the thirteen weeks ended December 30, 2017 was virtually equal to that for the thirteen weeks ended December 31, 2016 due to the Price Increases.2018. We anticipate that our gross profit for restaurant food and bar sales will increasedecrease during our fiscal year 20182019 due to Price Increases, offset partially by higher food costs.

Package Store Sales. Gross profit for package store sales for the thirteen weeks ended DecemberMarch 30, 20172019 increased to $1,392,000$1,373,000 from $1,324,000$1,358,000 for the thirteen weeks ended DecemberMarch 31, 2016.2018. Our gross profit margin, (calculated as gross profit reflected as a percentage of package liquor store sales), for package liquor store sales was 27.77%26.96% for the thirteen weeks ended DecemberMarch 30, 20172019 and 28.30%27.91% for the thirteen weeks ended DecemberMarch 31, 2016.2018. We anticipate that the gross profit margin for package store merchandise will decrease during our fiscal year 20182019 due to a reduction inanticipated lower pricing of certain package store merchandise in order for us to be morestay competitive.

Payroll and Related Costs. Payroll and related costs for the thirteen weeks ended DecemberMarch 30, 20172019 increased $401,000$73,000 or 4.92%0.81% to $8,546,000$9,067,000 from $8,145,000$8,994,000 for the thirteen weeks ended DecemberMarch 31, 2016.2018. Higher payroll and related costs for the thirteen weeks ended DecemberMarch 30, 20172019 were primarily due to higher restaurant sales, which require additional payroll and related costs for employees such as cooks, bartenders and servers. servers, offset by a decrease in payroll and related costs of $657,000at Store #19 due to the Store #19 Closure.Payroll and related costs as a percentage of total salesrevenue was 30.10%30.49% in the firstsecond quarter of our fiscal year 20182019 and 30.63%30.82% of total sales in the firstsecond quarter of our fiscal year 2017.2018.

Occupancy Costs. Occupancy costs (consisting of rent, common area maintenance, repairs, real property taxes and amortization of leasehold purchases) for the thirteen weeks ended DecemberMarch 30, 20172019 increased $136,000$100,000 or 10.07%7.12% to $1,486,000$1,504,000 from $1,350,000$1,404,000 for the thirteen weeks ended DecemberMarch 31, 2016.2018. We anticipate that our occupancy costs will remain stable throughout the balance of our fiscal year 2018.2019.