NASHVILLE, Tenn.--(BUSINESS WIRE)--J. Alexander’s Holdings, Inc. (NYSE: JAX) (the Company), owner and operator of J. Alexander’s, Redlands Grill, Stoney River Steakhouse and Grill and other restaurants, today provided a business update with regard to the impact of the novel coronavirus outbreak (COVID-19).
Recently, the Company has been impacted by a second wave of required dining room closures and increased capacity restrictions in certain of the markets in which it operates, including in Illinois, Kentucky, Michigan, Missouri, Pennsylvania, Maryland and Colorado. As of December 14, 2020, a total of 10 of the Company’s 46 locations are closed for indoor dining. In certain of those locations where economically feasible and allowed by the various governing authorities, the Company has taken steps to expand its outdoor dining areas in order to accommodate additional guests, retain a portion of its workforce, and provide additional revenue to supplement its ongoing carryout business. The Company also continues to offer a robust carryout menu at all 46 of its locations. In November 2020, sales averaged just under 80% of sales experienced in the same period of 2019, reflecting a reduction from September and October’s sales recovery of nearly 90% of prior year sales. In the last four weeks since the added restrictions on indoor dining have increased, the Company’s sales on a weekly basis have begun to trend downward, ranging between approximately 60% and 70% of prior year’s weekly sales, and could continue to decrease if governmental restrictions tighten further.
In its business update and earnings press release dated November 5, 2020, the Company estimated that, excluding the impact of the $10,000,000 voluntary repayment of outstanding borrowings in October 2020, it would be cash flow positive in the range of $400,000 to $450,000 per week for the fourth quarter of 2020 (which contains 14 weeks due to fiscal 2020 being a 53-week fiscal year). When factoring in the $10,000,000 voluntary repayment of outstanding borrowings, the Company previously estimated that the weekly cash burn rate for the fourth quarter of 2020 would be approximately $265,000 to $315,000. Due to the new restrictions that the Company is now operating under, the Company no longer believes that these estimates are accurate. However, the Company continues to believe that, at current business levels, it will have adequate liquidity for the balance of fiscal 2020 and fiscal 2021 from cash on hand and available borrowings.
Mark A. Parkey, President and Chief Executive Officer of J. Alexander’s Holdings, Inc. stated, “As we enter the most crucial season of the year for our business, we are estimating that approximately 50% of our seats are available for dining room guests on a consolidated basis. We continue to navigate the ever-changing landscape in which we operate, and we are working hard to ensure that we have explored every alternative and opportunity available to us to continue to provide our loyal guests with the outstanding dining experience they have come to expect from us over the years in a healthy and safe environment. We’re also encouraged by the strong levels of support our carryout program has received from our guest base, especially in recent weeks where off-premise sales have ranged from approximately $700,000 to $800,000 on a weekly basis. Our talented culinary team has also been hard at work coming up with “Holiday Family Packs” and other seasonal offerings that should help generate solid off-premise sales in the coming weeks. Our entire team has remained steadfast in one common goal throughout an incredibly turbulent year – to provide the highest quality food and service to our guests that have continued to support us throughout the year in order to emerge on the other side of this pandemic as a stronger company.”
As of December 13, 2020, the Company’s cash on hand totaled approximately $8.9 million.
About J. Alexander’s Holdings, Inc.
J. Alexander’s Holdings, Inc. is a collection of restaurants that focus on providing high quality food, outstanding professional service and an attractive ambiance. The Company presently operates 46 restaurants in 16 states. The Company has its headquarters in Nashville, TN.
For additional information, visit www.jalexandersholdings.com
This press release issued by J. Alexander’s Holdings, Inc. contains forward-looking statements, which include all statements that do not relate solely to historical or current facts, such as statements regarding our expectations, intentions or strategies regarding the future, including the impact of the COVID-19 pandemic on our operations, our sales, off-premise sales, cash needs, liquidity, financial results and our ability to manage through the COVID-19 pandemic and emerge in a strong position. These forward-looking statements are based on management's beliefs, as well as assumptions made by, and information currently available to, management. Because such statements are based on expectations as to future financial and operating results and other events and are not statements of fact, actual results may differ materially from those projected and are subject to a number of known and unknown risks and uncertainties, including the health and financial effects of the COVID-19 pandemic; government restrictions on indoor and outdoor dining and the Company’s ability to reopen its restaurants for in-person dining at normal capacities, and thereafter to reestablish and maintain satisfactory guest count levels and maintain or increase sales and operating margin in its restaurants under varying economic conditions; the effect of higher commodity prices, unemployment and other economic factors on consumer demand; increases in food input costs or product shortages and the Company’s response to them; the Company’s ability to obtain access to additional capital as needed; the Company’s ability to comply with financial covenants under its loan agreement with its lender and to access available borrowing capacity; the impact of any impairment of our long-lived assets, including tradename; the Company’s ability to defer lease or contract payments or otherwise obtain concessions from landlords, vendors and other parties in light of the impact of the COVID-19 pandemic; the number and timing of new restaurant openings and the Company’s ability to operate them profitably; competition within the casual dining industry and within the markets in which our restaurants are located; adverse weather conditions in regions in which the Company’s restaurants are located; factors that are under the control of third parties, including government agencies; the Company’s evaluation of strategic alternatives; as well as other risks and uncertainties described under the headings “Forward-Looking Statements,” “Risk Factors” and other sections of the Company’s Annual Report on Form 10-K filed with the SEC on March 13, 2020, as amended on April 17, 2020, and subsequent filings, including under the heading “Risk Factors” in its Quarterly Report on Form 10-Q filed with the SEC on November 5, 2020. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.