Flanigan's Enterprises, Inc. (BDL) is a Florida-based company that operates a diverse portfolio of restaurants, package liquor stores, and combination restaurant-package liquor stores. With a rich history spanning over five decades, Flanigan's has established itself as a prominent player in the hospitality industry, known for its Flanigan's Seafood Bar and Grill restaurants and Big Daddy's Liquors package stores.

Company History

The company's origins date back to 1959 when the Flanigan family opened their first restaurant in Fort Lauderdale, Florida. Over the next few decades, Flanigan's expanded its footprint throughout South Florida, opening additional company-owned and franchised restaurants and package liquor stores. In the 1980s and 1990s, the company faced challenges related to dram shop liability lawsuits, which required obtaining adequate insurance coverage and increased operating costs. Additionally, Flanigan's had to navigate changes in Florida's minimum wage laws and other regulations that impacted its labor costs.

Despite these obstacles, Flanigan's continued to grow by leveraging its franchise model and limited partnership structure. By the early 2000s, the company operated 32 units, consisting of restaurants, package liquor stores, and combination restaurant-package liquor stores, as well as 5 franchised units. In the 2010s, Flanigan's made investments to upgrade and refurbish its existing locations while also opening new corporate-owned and limited partnership-owned restaurants. A notable addition was the Hollywood, Florida location that opened in March 2024.

Business Model

Flanigan's diversified business model has been a key driver of its success, with revenue generated from three primary sources: restaurant food sales, restaurant bar sales, and package store sales. In the fiscal year ended September 28, 2024, the company reported total revenues of $188.32 million, an 8.1% increase from the previous year's $174.40 million. This growth was primarily fueled by a 9.8% increase in restaurant food sales, a 7.6% rise in restaurant bar sales, and a 9.1% surge in package store sales.

Financials

The company's financial performance has remained relatively stable, with net income of $3.36 million in the fiscal year ended September 28, 2024, compared to $4.00 million in the prior year. For the first quarter of fiscal year 2025 (13 weeks ended December 28, 2024), Flanigan's reported total revenues of $50.26 million, an 11.35% increase from $45.14 million in the same period of the prior year. Net income for the quarter was $632,000, up 6.40% from $594,000 in Q1 2024.

The increase in revenue was primarily due to increased package liquor store and restaurant sales, increased menu prices, and revenue generated from the opening of the company's corporate-owned restaurant in Hollywood, Florida (Store #19R) in March 2024. The increase in net income was due to the recent price increases and the new restaurant opening, offset by higher food costs and increased expenses.

In the package store segment, sales totaled $12.44 million in Q1 2025, up 17.28% from $10.60 million in the same period of the prior year. This increase was primarily due to increased package liquor store traffic. However, the gross profit margin for package store sales decreased to 23.76% in Q1 2025 from 25.67% in Q1 2024, with expectations of further decreases due to higher costs and reduced pricing to remain competitive.

In the restaurant segment, food sales totaled $29.13 million in Q1 2025, up 4.58% on a comparable weekly basis from $26.36 million in Q1 2024. Restaurant bar sales increased to $7.96 million, up 1.74% on a comparable weekly basis. The gross profit margin for restaurant food and bar sales slightly decreased to 64.87% in Q1 2025 from 65.02% in Q1 2024, primarily due to higher food costs, partially offset by recent price increases.

Liquidity

Flanigan's has demonstrated strong liquidity, with $27.32 million in cash and cash equivalents as of December 28, 2024. The company's current ratio stood at 1.46, and its quick ratio was 1.16 as of the same date, indicating its ability to meet short-term obligations. The debt-to-equity ratio was 0.47, suggesting a relatively conservative capital structure.

Strengths

One of the key strengths of Flanigan's business model is its diversification across different revenue streams. In the most recent fiscal year, restaurant food and bar sales accounted for 63.9% of total revenues, while package store sales contributed 24.4%. This diversification helps the company mitigate risks and navigate changing consumer preferences and market conditions.

Moreover, Flanigan's has a well-established franchise model, with five franchised units as of December 28, 2024. The franchise agreements provide the company with a steady stream of royalty and advertising fee income, adding to its overall financial stability.

Resilience and Adaptability

Despite the challenges posed by the COVID-19 pandemic, Flanigan's has demonstrated resilience and adaptability. The company implemented various cost-cutting measures, including rent renegotiations and operational efficiency improvements, to navigate the turbulent period. As a result, Flanigan's was able to maintain positive net income throughout the pandemic, a testament to its strong operational capabilities.

Future Outlook

Looking ahead, Flanigan's is focused on strategic expansion and enhancing its operational efficiencies. The company has outlined plans to open additional corporate-owned and franchised locations, leveraging its strong brand recognition and customer loyalty. Additionally, Flanigan's is investing in technology upgrades and process improvements to drive enhanced productivity and cost savings.

Challenges

However, the company is not without its challenges. The highly competitive nature of the hospitality industry, coupled with rising labor and food costs, continue to put pressure on Flanigan's profit margins. The company's reliance on a limited number of large customers for its package store operations also presents a potential risk. Furthermore, the anticipated decrease in gross profit margins for package liquor store merchandise due to higher costs and reduced pricing to remain competitive could impact overall profitability in the coming quarters.

Business Overview

Flanigan's Enterprises, Inc. operates 32 units, consisting of restaurants, package liquor stores, combination restaurant/package liquor stores, and a sports bar that it either owns or has operational control over and partial ownership in. It also franchises an additional 5 units. The company operates under the service marks "Flanigan's Seafood Bar and Grill" or "Flanigan's" for its restaurants and "Big Daddy's Liquors" or "Big Daddy's Wine & Liquors" for its package liquor stores. All of the company's operations are located in South Florida, highlighting its strong regional focus and brand recognition.

Conclusion

Despite these challenges, Flanigan's Enterprises, Inc. (BDL) remains a well-established player in the hospitality industry, with a diversified business model, strong financial position, and a proven track record of navigating industry cycles. The company's recent performance, marked by revenue growth across both its package store and restaurant segments, demonstrates its ability to adapt to changing market conditions. As Flanigan's continues to focus on cost management, strategic expansion, and operational improvements, it is poised to capitalize on the evolving landscape and drive long-term shareholder value.