Commitments and contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and contingencies |
Commitments and contingencies:
Operating leases:
The Company is obligated under several operating leases for the restaurants, equipment and office space, expiring in various years through 2031, which provide for minimum annual rentals, escalations, percentage rent, common area expenses or increases in real estate taxes.
Future minimum rental payments under the leases and minimum future rental receipts per the sublease in five years subsequent to 2016 and thereafter are as follows:
Rent expense (including percentage rent of $788,250 and $369,126), included in continuing operations, was $4,504,897 and $4,909,851 in 2016 and 2015, respectively. Rent expense included in continuing operations has been reported in the consolidated statements of operations and comprehensive loss net of rental income of $782,629 and $795,895 in 2016 and 2015, respectively, related to subleases with related and unrelated parties which expires through 2021.
The CEO of the Company is a limited personal guarantor of the leases for the STK Miami premises with respect to certain covenants under the lease relating to construction of the new premises and helping the landlord obtain a new liquor license for the premises in the event of termination of the lease. The CEO is a limited personal guarantor of the leases for the Bagatelle New York premises with respect to JEC II, LLC’s payment and performance under the lease.
License and management fees:
Pursuant to its amended and restated operating agreement executed in June 2007, Bridge Hospitality, LLC is obligated to pay management fees equal to 2% of revenues to a member for the life of the lease. Management fees amounted to $39,675 in 2015. Included in accounts payable at December 31, 2015 are amounts due for management fees of $542. Operations for this STK ceased in June 2015 and the lease was terminated in October 2016.
In January 2010, STK Vegas entered into a management agreement with a third party for a term of 10 years, with two five-year option periods. Under this agreement, STK Vegas shall receive a management fee equal to 5% of gross sales, as defined (“gross sales fee”) plus 20% of net profits prior to the investment breakeven point date and 43% of net profits thereafter (“incentive fee”). Management fees amounted to $4,478,632 and $4,628,231 in 2016 and 2015, respectively.
In July 2009, One 29 Park Management entered into an agreement with a third party. Under this agreement, One 29 Park Management shall receive a management fee equal to 5% of gross revenues, as defined, from the restaurant, banquets, room service and rooftop sales and 50% of the base beverage fee, as defined, for the life of the management agreement which expires in 2025. Management fees amounted to $512,454 and $576,401 in 2016 and 2015, respectively. Included in due from related parties, net at December 31, 2016 and 2015 are amounts due for management fees and reimbursable expenses of $387,862 and $398,607, respectively.
In July 2010, Hip Hospitality UK entered into a management agreement with a third party to manage and operate the food and beverage operations in the Hippodrome Casino in London. Under this agreement, Hip Hospitality UK shall receive a management fee equal to 5.5% of total revenue, as defined, as well as an incentive fee if certain conditions are met, for the life of the management agreement which expires in 2022. Management fees amounted to $551,423 and $602,049 in 2016 and 2015, respectively. Included in accounts receivable at December 31, 2016 and 2015 are amounts due for management fees and reimbursable expenses of $117,576 and $443,989, respectively.
In December 2011, TOG Aldwych entered into a management agreement with a third party to operate a restaurant, bar and lounges in the ME Hotel in London. Under this agreement, TOG Aldwych shall receive a management fee equal to 5% of receipts received from food and beverages operations. In addition, TOG Aldwych is entitled to receive a monthly marketing fee equal to 1.5% of receipts received from food and beverages operations and an additional incentive fee equal to 65% of net operating profits, as defined, for the life of the management agreement which expires in 2032. Management and incentive fees amounted to $1,869,372 and $1,532,026 in 2016 and 2015, respectively. Included in accounts receivable at December 31, 2016 and 2015 are amounts due for management and incentive fees of $520,649 and $449,874, respectively.
In May 2013, CA Aldwych entered into a management agreement with a third party to operate a restaurant in the ME Hotel in London. Under this agreement, CA Aldwych shall receive a management fee equal to 5% of receipts received from food and beverages operations. In addition, CA Aldwych is entitled to receive a monthly marketing fee equal to 1.5% of receipts received from food and beverages operations. The restaurant ceased operations in 2016, costs relating to the closing were netted against management fees. Management fees amounted to $20,485 and $117,105 in 2016 and 2015, respectively. Included in accounts receivable at December 31, 2015 are amounts due for management fees of $74,546. Included in accrued expenses at December 31, 2016 are amounts due to the ME Hotel for the shortfall in the operators preferred return which represented the minimum annual guaranteed amount owed to the ME Hotel in 2016 of $276,394.
In June 2014, TOG (Milan) S.R.L. entered into a management agreement with Sol Melia Italia S.R.L. to operate a restaurant, rooftop bar and F&B services at the ME Milan Il Duca hotel in Milan, Italy. TOG (Milan) S.R.L. shall receive a management fee equal to 5% of operating revenue, as defined, and an additional fee equal to 65% of net operating revenue, as defined, for the life of the management agreement which expires in 2025. TOG Milan commenced operations in May 2015. In addition, TOG Milan is entitled to receive a monthly marketing fee equal to 1.5% of receipts received from food and beverages operations. Management fees amounted to $304,970 and $250,211 in 2016 and 2015, respectively. Included in accounts receivable at December 31, 2016 and 2015 are amounts due for management fees of $43,401 and $116,342, respectively. Operators preferred return of $127,765 and $408,511, respectively, is due to the ME Hotel at December 31, 2016 and 2015.
In October 2015, STK Ibiza entered into a license agreement with Foxhold Holdings Limited to develop and operate a restaurant under the STK brand in the Ibiza Hotel and Spa at Marina Botafoch in Ibiza Town, Spain. STK Ibiza received an Entry Fee in the amount of 1,025,000 euros. $1,014,414 and $1,044,592 of the Entry Fee is included in deferred license revenue in the accompanying consolidated balance sheets as of December 31, 2016 and 2015, respectively. In addition, STK Ibiza receives royalty fees equal to 8% of the net turnover from the restaurant. The restaurant commenced operations in July 2016. The license agreement expires in 2026, with the option of one 10-year extension if certain renewal conditions are satisfied.
In May 2016, The ONE Group-STKPR, LLC entered into a license agreement with Condado Duo Vanderbi SPV, LLC to develop and operate a restaurant and a beach venue under the STK brand at the Vanderbilt hotel in San Juan, Puerto Rico. The One Group-STKPR, LLC shall receive a$250,000 Entry Fee. The One Group-STKPR, LLC will also receive royalty fees equal to 5% of the gross revenues generated by the restaurant, 2% of the first $1.8 million of annual gross revenues, from the beach venue and 5% of annual gross revenue, from the beach venue in excess of $1.8 million. The license agreement expires in 2026 with one five-year extension if certain financial goals are met. The restaurant and beach venue are expected to open in 2017.
In November 2016, The ONE Group-MENA, LLC entered into a license agreement with Horizon Hospitality Holdings Limited to develop and operate up to three restaurants under the STK brand in Dubai and Abu Dhabi. The ONE Group-MENA, LLC shall receive a $600,000 Entry Fee. The ONE Group-MENA, LLC will also receive $250,000 for each STK location opened and royalty fees equal to 5% of the gross revenues generated by each restaurant. The license agreement expires on the tenth anniversary of the opening of the first restaurant with one ten-year renewal option.
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