J. Alexander’s Holdings, Inc. Reports Recent Trends and Steps Taken to Address the Coronavirus Outbreak - Seite 2

Steps Taken to Address COVID-19

In response to the situation outlined above, the Company has taken certain actions including, but not limited to, the following:

• The Company has drawn down the remaining $17,000,000 available under its lines of credit and, when combined with existing cash on hand, the Company currently has approximately $26,000,000 of cash in its cash reserves.
• The Company has implemented an Hourly Team Member Emergency Sick Leave Policy (“ESLP”), which provides for up to two weeks of paid leave for hourly team members who are either infected by COVID-19 or employed at a restaurant that closed in response to the COVID-19 outbreak. Company management estimates that the cash expense associated with the ESLP, including applicable payroll taxes, would be approximately $1,225,000 per week assuming all 47 restaurants were closed. Under the terms of the ESLP, hourly employees will be paid the higher of their normal hourly rate or the federal minimum wage for the average hours worked over the previous eight-week period. In addition, hourly employees will be able to use any available vacation or state mandated sick leave accrued.
• The Company intends to utilize each restaurant’s management team, with several key hourly personnel, to staff the carry-out function over the duration of the mandatory closure of dining room operations. Personnel at the restaurant will hand-cut steaks and prepare and package the carry-out meals being offered on a limited menu customized for each location. All locations utilizing the carry-out program will provide a complimentary dessert for every two entrees ordered. Restaurant management labor averages approximately $425,000 per week including applicable payroll taxes.
• Approximately 3,400 hourly employees that will not be assisting with the Company’s carry-out program have been furloughed until the Company resumes dine-in operations.
• Capital expenditures have been curtailed unless absolutely necessary relative to a restaurant’s safe operation. The two new restaurants scheduled to open in the latter part of fiscal 2020 are at the front end of the construction cycle and management intends to negotiate with the parties involved to defer any cash outlays possible relative to these new restaurants.
• Company management currently believes that the distribution channels necessary to fulfill the limited menu being offered for carry-out business will be able to meet the demands associated with such a program. Company management anticipates that the beef inventory currently in place should be adequate to meet the demand related to the carry-out business for the next 4-5 weeks and management will be closely monitoring events nationally over the next several weeks in order to ramp up applicable inventory levels once it is apparent that the mandated closures are going to be lifted.
• Resy, the Company’s reservation system partner, has implemented a new feature on the Resy application whereby guests are able to select from four set dinner packages online, select the time they desire to pick up the carry-out order at the restaurant and pay for the order online. This feature will be available at all of the Company’s restaurants currently utilizing the carry-out model and will allow for curbside service at any of these locations.

Under the structure outlined above, the Company estimates that cash on hand would be sufficient to fund required cash obligations through the late summer to early fall back-to-school timeframe. Depending on any future legislative developments and any governmental relief programs, the Company’s expenses could be diminished and/or the Company’s costs could be reimbursed, which could potentially expand the Company’s liquidity. In addition, the Company owns 18 of its restaurant sites, of which 6 are currently unencumbered and could be used to secure incremental borrowings. However, there can be no assurances that any of the foregoing will come to fruition.