Nonconsolidated Variable Interest Entities
|12 Months Ended|
Dec. 31, 2018
|Equity Method Investments and Joint Ventures [Abstract]|
|Nonconsolidated Variable Interest Entities||
Note 9 - Nonconsolidated Variable Interest Entities
As of December 31, 2018 and 2017, the Company owned interests in the following companies, which directly or indirectly operate restaurants:
Bagatelle Investors is a holding company that has an interest in Bagatelle NY. Both entities were formed in 2011. The Company accounts for its investments in these entities under the equity method of accounting based on management’s assessment that although it is not the primary beneficiary of these entities because it does not have the power to direct their day to day activities, the Company is able to exercise influence over these entities. The Company has provided no additional types of support to these entities than what is contractually required.
One 29 Park, formed in 2009, operates a restaurant and manages the rooftop of a hotel located in New York, NY. Until the fourth quarter of 2017, the Company accounted for its investment in One 29 Park under the equity method of accounting based on management’s assessment that the Company had significant influence over One 29 Park’s operations. In the fourth quarter of 2017, the majority ownership of One 29 Park changed. As a result of this ownership change, the Company believed that it no longer had significant influence over the operations of On
e 29 Park, and subsequently began accounting for its investment in One 29 Park under the cost method of accounting. In March 2018, the Company sold its 10% interest in One 29 Park to the new ownership group for $0.6 million and recorded a gain of $0.2 million on the sale as a component of “other expenses, net” on the consolidated statement of operations and comprehensive income (loss).
As of December 31, 2018 and 2017, the carrying values of these investments were (in thousands):
For the each of the years ended
December 31, 2018 and 2017, the equity in income of investee companies for the equity method investments discussed above was $0.2 million.
Additionally, the Company has entered into a management agreement with Bagatelle NY. Under this agreement, the Company recorded management fee revenue of $0.3 million and
$0.2 million for the years ended December 31, 2018 and 2017, respectively.
The Company also receives rental income from Bagatelle NY for restaurant space that it subl
eases to Bagatelle NY. Rental income of $0.6 million and $0.5 million was recorded from this entity for the year ended December 31, 2018 and 2017, respectively.
The Company had also entered into a management agreement with One 29 Park. Under this agreement, the Company recorded management fee revenue of $0.3 million and $0.5 million for the year ended December 31, 2018 and 2017, respectively. The management agreement with One 29 Park terminated on September 30, 2018.
Net receivables from the Bagatelle Entities included in due from related parties, net were approximately
$0.1 million for each of the years ended December 31, 2018 and 2017. These receivables, combined with the Company’s equity in each of these investments, represent the Company’s maximum exposure to loss.
Summarized financial data for these investments is presented below (in thousands):
(1) For the nine months ended September 30, 2017.
The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef