How are the company's inventory levels and supply‑chain constraints affecting operations?

Fundamental view:

Flanigan’s latest 13‑week and 39‑week results show that management is grappling with elevated inventory balances in both its seafood‑bar and Big Daddy’s liquor segments. In the restaurant division, higher‑priced, perishable seafood purchases have outpaced comparable‑sales growth, pushing inventory days‑on‑hand to a 2‑year high. This “stock‑piling” reflects an effort to hedge against ongoing port‑congestion and seasonal fisheries shortages, but it also ties up cash and squeezes margin—cost‑of‑goods‑sold rose 4.2 pp versus the prior quarter. The liquor business faces a different bottleneck: disrupted trans‑Atlantic spirit shipments have forced the chain to hold larger safety stock, inflating carrying costs and prompting modest write‑downs on aged inventory. Together, the rising inventory levels are compressing operating income, and the company warns that continued supply‑chain volatility could further erode profitability until logistical bottlenecks ease.

Trading implications:

The earnings beat was buoyed mainly by strong top‑line growth, yet the inventory‑driven margin pressure has already been baked into the stock’s price action. BDL has been trading near its 200‑day SMA (~$3.85) with the recent rally testing a short‑term resistance at $4.20. A break above that level, accompanied by a volume surge, could signal that investors are discounting the supply‑chain hit and are willing to price in a turnaround once inventory normalizes. Conversely, a failure to sustain $4.00 and a dip back below the 50‑day EMA would likely attract profit‑taking and present a short‑term sell‑the‑news opportunity.

Actionable stance: Keep a long position with a tight stop just below the 50‑day EMA (~$3.70) and look for a pull‑back entry if the price retests the $3.85 support zone on lighter volume. Monitor upcoming freight‑rate reports and any management commentary on “seafood sourcing” or “spirit import timelines”—a concrete reduction in inventory days‑on‑hand would be a catalyst for a further upside move. If inventory continues to balloon and margins deteriorate, consider scaling out or shifting to a short‑term neutral stance.