Financial Data and Key Metrics Changes - Total restaurant sales for Bad Daddy's decreased by $800,000 to $26.5 million for the quarter, primarily due to the closure of one restaurant and reduced customer traffic [11] - Good Times' total restaurant sales decreased by approximately $100,000 to $10.4 million, with same store sales down 9% [14] - Net income for the quarter was $1.5 million, or $0.14 per share, compared to $1.3 million, or $0.12 per share in the same quarter last year [17] Business Line Data and Key Metrics Changes - Bad Daddy's same store sales decreased by 1.4% for the quarter, with food and beverage costs at 30.6%, a decrease of 60 basis points from the previous year [12] - Good Times' same store sales decreased by 9%, with food and packaging costs at 31.5%, an increase of 100 basis points compared to the prior year [15] - Restaurant level operating profit for Bad Daddy's was approximately $3.8 million, or 14.4% of sales, compared to $3.9 million, or 14.3% last year [14] Market Data and Key Metrics Changes - Competitors in the QSR segment, particularly burger QSRs, are heavily discounting, impacting Good Times' sales performance [15][31] - Ground beef prices are at record highs, affecting both brands, with expectations of continued increases throughout the fiscal year [9][13] Company Strategy and Development Direction - The company is focusing on quality positioning rather than discounting, having not taken price increases since January 2024, and is now in parity with competitors [6] - A new marketing leader has been hired to enhance advertising and promotion strategies for both brands [4] - The company plans to launch a new campaign centered around Colorado native burgers and is considering incremental menu price increases to offset input cost inflation [8][9] Management's Comments on Operating Environment and Future Outlook - Management noted mixed results in the third quarter, with improvements in same store sales at Bad Daddy's but declines at Good Times [4] - The management expressed confidence in operational improvements and the potential for increased sales through better marketing and communication of brand stories [10] - There are concerns about macroeconomic factors affecting sales, particularly demographic and geographic influences [30] Other Important Information - The company incurred $200,000 in capital expenditures related to restaurant remodels and signage projects during the quarter [19] - The company repurchased 21,968 shares under its share repurchase program, although future purchases may be reduced as cash accumulation is prioritized [18] Q&A Session Summary Question: CapEx and EBITDA expectations - Management indicated that they are not providing forward guidance on EBITDA but noted that the current quarter's EBITDA of $2.2 million is among the highest [22][23] Question: Good Times underperformance - Management attributed the underperformance to several factors, including heavy discounting by competitors and demographic challenges [30][31] Question: Share repurchase acceleration - Management suggested that any acceleration in share repurchases would likely occur in fiscal 2026, depending on macro factors and internal forecasts [33] Question: Special projects for fiscal 2026 - Management outlined plans for completing remodels at Good Times and replacing the point of sale system at Bad Daddy's as part of their capital plan [35][36]

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, shareholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items for Good Times Restaurants Inc. and its subsidiaries [Condensed Consolidated Balance Sheets (Unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | July 1, 2025 | September 24, 2024 | Change ($) | Change (%) | | :-------------------------------- | :----------- | :----------------- | :--------- | :--------- | | Cash and cash equivalents | $3,138 | $3,853 | $(715) | -18.56% | | Total current assets | $6,499 | $6,557 | $(58) | -0.88% | | Total net property and equipment | $22,710 | $22,797 | $(87) | -0.38% | | Total assets | $85,750 | $87,118 | $(1,368) | -1.57% | | Total current liabilities | $14,956 | $15,687 | $(731) | -4.66% | | Total long-term liabilities | $36,984 | $38,343 | $(1,359) | -3.54% | | Total shareholders' equity | $33,810 | $33,088 | $722 | 2.18% | [Condensed Consolidated Statements of Operations (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(Unaudited)) Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Quarter Ended July 1, 2025 | Quarter Ended June 25, 2024 | YTD July 1, 2025 | YTD June 25, 2024 | | :------------------------------------ | :------------------------- | :-------------------------- | :--------------- | :---------------- | | Total net revenues | $37,025 | $37,950 | $107,637 | $106,554 | | Income from operations | $1,233 | $1,228 | $796 | $1,498 | | Net income | $1,545 | $1,398 | $1,092 | $1,595 | | Net income attributable to common shareholders | $1,487 | $1,321 | $1,027 | $1,383 | | Basic EPS | $0.14 | $0.12 | $0.10 | $0.12 | | Diluted EPS | $0.14 | $0.12 | $0.10 | $0.12 | [Consolidated Statements of Shareholders' Equity (Unaudited)](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%20(Unaudited)) Shareholders' Equity Activity (Year-to-Date, in thousands) | Metric | July 1, 2025 | June 25, 2024 | | :-------------------------------- | :----------- | :------------ | | Balances, beginning of period | $33,088 | $32,994 | | Stock-based compensation cost | $90 | $106 | | Repurchases of common stock | $(364) | $(1,789) | | Non-controlling interests (net) | $18 | $206 | | Net income attributable to Good Times Restaurants Inc. | $1,027 | $1,383 | | Balances, end of period | $33,810 | $33,018 | [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Condensed Consolidated Statements of Cash Flows Highlights (Year-to-Date, in thousands) | Cash Flow Activity | July 1, 2025 | June 25, 2024 | | :-------------------------------- | :----------- | :------------ | | Net cash provided by operating activities | $1,461 | $4,736 | | Net cash used in investing activities | $(3,192) | $(2,802) | | Net cash provided by (used in) financing activities | $1,016 | $(1,297) | | (Decrease) Increase in cash and cash equivalents | $(715) | $637 | | Cash and cash equivalents, end of period | $3,138 | $4,819 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Note 1. Basis of Presentation](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation) The Company's financial statements consolidate its wholly-owned subsidiaries and a 50% owned limited partnership where it acts as the sole general partner. It operates two restaurant brands: Bad Daddy's Burger Bar (full-service) and Good Times Burgers & Frozen Custard (drive-thru fast-food). The fiscal year is 52/53 weeks ending the last Tuesday of September, with the current quarters being 13 weeks. Receivables primarily consist of royalties, product rebates, and gift card sales - The Company operates two distinct restaurant brands: Bad Daddy's Burger Bar (full-service, primarily in Colorado and Southeast US) and Good Times Burgers & Frozen Custard (drive-thru fast-food, exclusively in Colorado and Wyoming)[24](index=24&type=chunk) - The fiscal year is a 52/53-week year ending on the last Tuesday of September; the quarters ended July 1, 2025, and June 25, 2024, each consisted of **13 weeks**[26](index=26&type=chunk) Receivables Breakdown (in thousands) | Category | July 1, 2025 | September 24, 2024 | | :------------------------ | :----------- | :----------------- | | Vendor rebates and incentives | $374 | $437 | | Third party delivery partners | $337 | $280 | | Third party retailers | $80 | $120 | | Franchise and other | $62 | $53 | | **Total** | **$853** | **$890** | [Note 2. Recent Accounting Pronouncements](index=9&type=section&id=Note%202.%20Recent%20Accounting%20Pronouncements) The Company has reviewed recently issued accounting pronouncements, including ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Tax Disclosures), and ASU 2024-03 (Expense Disaggregation). It expects to implement ASU 2023-07 retrospectively in fiscal year 2025 and ASU 2023-09 prospectively in fiscal year 2026, with none anticipated to have a material effect on its consolidated financial statements. The timing and method for ASU 2024-03 are still being assessed - ASU 2023-07 (Segment Reporting) will be retrospectively implemented in fiscal year 2025, with no material effect anticipated[30](index=30&type=chunk) - ASU 2023-09 (Income Tax Disclosures) will be prospectively implemented in fiscal year 2026, with no material effect expected[31](index=31&type=chunk) - ASU 2024-03 (Expense Disaggregation) is being assessed for implementation timing and method, but no material effect is expected[32](index=32&type=chunk) [Note 3. Revenue](index=10&type=section&id=Note%203.%20Revenue) Revenue is primarily derived from restaurant sales and franchise revenue, recognized when performance obligations are satisfied. Gift card breakage, historically immaterial, was recognized for Bad Daddy's gift cards sold through third-party retailers, amounting to $275,000 for the three quarters ended July 1, 2025, a significant increase from $33,000 in the prior year. The GT Rewards loyalty program activity is immaterial - Gift card breakage for Bad Daddy's, recognized when redemption is remote, was **$275,000** for the three quarters ended July 1, 2025, significantly higher than **$33,000** for the same period in 2024, primarily from third-party retail sales[36](index=36&type=chunk) [Note 4. Prepaid expenses and other current assets](index=10&type=section&id=Note%204.%20Prepaid%20expenses%20and%20other%20current%20assets) Prepaid expenses and other current assets increased to $1,070,000 as of July 1, 2025, from $395,000 as of September 24, 2024, primarily driven by increases in prepaid insurance and common area rental expenses Prepaid Expenses and Other Current Assets (in thousands) | Category | July 1, 2025 | September 24, 2024 | | :------------------------------------ | :----------- | :----------------- | | Prepaid insurance | $307 | $- | | Prepaid software licenses and maintenance contracts | $264 | $241 | | Prepaid common area rental expenses | $165 | $17 | | Prepaid licenses and permits | $72 | $49 | | Other | $262 | $88 | | **Total** | **$1,070** | **$395** | [Note 5. Goodwill and Intangible Assets](index=10&type=section&id=Note%205.%20Goodwill%20and%20Intangible%20Assets) The Company's indefinite-lived intangible assets include trademarks valued at $3,900,000 and goodwill at $5,713,000, with no impairment losses recorded for either in the periods presented. Goodwill is allocated between the Good Times ($96,000) and Bad Daddy's ($5,617,000) reporting units Goodwill and Intangible Assets (in thousands) | Asset | July 1, 2025 (Net Carrying Amount) | September 24, 2024 (Net Carrying Amount) | | :-------------------------- | :--------------------------------- | :--------------------------------------- | | Trademarks | $3,900 | $3,900 | | Goodwill | $5,713 | $5,713 | - Goodwill is allocated to two reporting units: Good Times (**$96,000**) and Bad Daddy's (**$5,617,000**) as of July 1, 2025, and June 25, 2024[58](index=58&type=chunk) [Note 6. Other Accrued Liabilities](index=12&type=section&id=Note%206.%20Other%20Accrued%20Liabilities) Other accrued liabilities decreased to $5,931,000 as of July 1, 2025, from $6,437,000 as of September 24, 2024, primarily due to a decrease in wages and other employee benefits and general expense accruals Other Accrued Liabilities (in thousands) | Category | July 1, 2025 | September 24, 2024 | | :------------------------------ | :----------- | :----------------- | | Wages and other employee benefits | $2,253 | $2,681 | | Taxes, other than income taxes | $1,450 | $1,318 | | Gift card liability, net of breakage | $1,341 | $1,460 | | General expense accrual and other | $887 | $978 | | **Total** | **$5,931** | **$6,437** | [Note 7. Notes Payable and Long-Term Debt](index=12&type=section&id=Note%207.%20Notes%20Payable%20and%20Long-Term%20Debt) The Company maintains an $8 million Cadence Credit Facility maturing in April 2028, secured by substantially all assets, with $2 million borrowed as of July 1, 2025, at a weighted average interest rate of 7.41%. Additionally, there is an unsecured Parker Promissory Note with an outstanding balance of $348,000, maturing in June 2034 at 5.00% interest. The Company was in compliance with all covenants - The Cadence Credit Facility provides up to **$8 million**, maturing April 20, 2028, with **$2 million** borrowed as of July 1, 2025, and **$5.99 million** committed funds available[43](index=43&type=chunk)[47](index=47&type=chunk) - The weighted average interest rate on Cadence Credit Facility borrowings was **7.41%** as of July 1, 2025[45](index=45&type=chunk) - The Parker Promissory Note has an outstanding principal balance of **$348,000** as of July 1, 2025, with a **5.00%** interest rate and annual principal maturities of approximately **$35,000**[48](index=48&type=chunk) [Note 8. Earnings per Common Share](index=12&type=section&id=Note%208.%20Earnings%20per%20Common%20Share) Basic earnings per share are calculated based on weighted-average common shares outstanding, while diluted EPS includes the effect of potentially dilutive securities like restricted stock units. For the quarter ended July 1, 2025, basic EPS was $0.14 and diluted EPS was $0.14, with 79,000 restricted stock units considered dilutive Weighted Average Common Shares Outstanding | Metric | Quarter Ended July 1, 2025 | Quarter Ended June 25, 2024 | YTD July 1, 2025 | YTD June 25, 2024 | | :------------------------------------ | :------------------------- | :-------------------------- | :--------------- | :---------------- | | Weighted-average shares outstanding basic | 10,582,491 | 10,933,758 | 10,632,434 | 11,149,181 | | Effect of potentially dilutive securities: Restricted stock units | 79,000 | 89,250 | 79,000 | 89,250 | | Weighted-average shares outstanding diluted | 10,661,491 | 11,034,487 | 10,711,434 | 11,246,353 | [Note 9. Contingent Liabilities and Liquidity](index=13&type=section&id=Note%209.%20Contingent%20Liabilities%20and%20Liquidity) The Company faces various claims and litigation, which are regularly reviewed. Management believes that any reasonably possible losses from these contingencies have been adequately accrued or would be immaterial to the financial statements - Management believes that any reasonably possible losses associated with contingent liabilities have been adequately accrued or would be immaterial to the financial statements[52](index=52&type=chunk) [Note 10. Leases](index=13&type=section&id=Note%2010.%20Leases) The Company primarily leases land and buildings for its restaurants and corporate office, with initial terms of 10-20 years and renewal options. Operating lease costs for the quarter ended July 1, 2025, were $1,720,000. The weighted average remaining lease term is 6.82 years with a discount rate of 5.3%. Future minimum lease payments total $48,992,000 Operating Lease Costs (in thousands) | Lease Cost Type | Quarter Ended July 1, 2025 | Quarter Ended June 25, 2024 | | :-------------------- | :------------------------- | :-------------------------- | | Operating lease cost | $1,832 | $1,876 | | Variable lease cost | $11 | $19 | | Sublease income | $(123) | $(132) | | **Total** | **$1,720** | **$1,763** | Weighted Average Lease Term and Discount Rate | Metric | July 1, 2025 | June 25, 2024 | | :-------------------------------- | :----------- | :------------ | | Weighted average remaining lease term (in years) | 6.82 | 7.52 | | Weighted average discount rate | 5.3% | 5.2% | Future Minimum Rent Payments (as of July 1, 2025, in thousands) | Period | Total | | :----------- | :------ | | One Year | $8,316 | | Two Years | $8,112 | | Three Years | $7,493 | | Four Years | $6,218 | | Five Years | $5,372 | | Thereafter | $13,481 | | **Total minimum lease payments** | **$48,992** | [Note 11. Impairment of Long-Lived Assets and Trademarks](index=15&type=section&id=Note%2011.%20Impairment%20of%20Long-Lived%20Assets%20and%20Trademarks) The Company recorded $494,000 in impairment charges for long-lived assets during the three quarters ended July 1, 2025, primarily related to lease right-of-use assets for underperforming restaurants. This is an increase from $199,000 in the prior year. Trademarks and goodwill were not impaired - Impairments of long-lived assets totaled **$494,000** for the three quarters ended July 1, 2025, primarily for lease right-of-use assets of underperforming restaurants, compared to **$199,000** in the prior year[56](index=56&type=chunk) - No impairment was required for acquired trademarks or goodwill as of July 1, 2025, and June 25, 2024[57](index=57&type=chunk)[40](index=40&type=chunk) [Note 12. Income Taxes](index=15&type=section&id=Note%2012.%20Income%20Taxes) The Company's effective income tax rate for the three quarters ended July 1, 2025, was (43.04%), a decrease from (15.09%) in the prior year, primarily due to a decrease in ordinary income before taxes while tax credits remained consistent. The Company believes its tax positions will be sustained upon audit and has not recorded reserves for uncertain tax positions Effective Income Tax Rates | Period | Effective Income Tax Rate | | :------------------------------------ | :------------------------ | | Three quarters ended July 1, 2025 | (43.04%) | | Three quarters ended June 25, 2024 | (15.09%) | - The change in effective tax rate is primarily due to a decrease in ordinary income from continuing operations before income taxes, while the benefit associated with income tax credits stayed consistent[60](index=60&type=chunk) [Note 13. Shareholders' Equity](index=15&type=section&id=Note%2013.%20Shareholders'%20Equity) The Company maintains equity incentive compensation plans (2008 Plan and 2018 Plan), recognizing stock-based compensation expense over the vesting period. For the three quarters ended July 1, 2025, stock-based compensation was $90,000. Non-controlling interests, primarily from a joint-venture partnership for six Good Times restaurants, increased to $744,000 as of July 1, 2025, reflecting income and contributions Stock-Based Compensation Expense (in thousands) | Period | Quarter Ended July 1, 2025 | Quarter Ended June 25, 2024 | YTD July 1, 2025 | YTD June 25, 2024 | | :------------------------------------ | :------------------------- | :-------------------------- | :--------------- | :---------------- | | Stock-based compensation expense | $25 | $28 | $90 | $106 | Non-Controlling Interests Activity (Three Quarters Ended July 1, 2025, in thousands) | Activity | Amount | | :--------------- | :----- | | Balance at September 24, 2024 | $717 | | Income | $65 | | Contributions | $9 | | Distributions | $(47) | | **Balance at July 1, 2025** | **$744** | [Note 14. Segment Reporting](index=17&type=section&id=Note%2014.%20Segment%20Reporting) The Company reports financial information for its two segments: Bad Daddy's (full-service) and Good Times (quick-service). For the quarter ended July 1, 2025, Bad Daddy's generated $26.6 million in revenue and $1.1 million in operating income, while Good Times generated $10.4 million in revenue and $0.09 million in operating income. Year-to-date, Bad Daddy's operating income significantly increased to $1.27 million from $0.007 million in the prior year Segment Revenues (in thousands) | Segment | Quarter Ended July 1, 2025 | Quarter Ended June 25, 2024 | YTD July 1, 2025 | YTD June 25, 2024 | | :---------- | :------------------------- | :-------------------------- | :--------------- | :---------------- | | Bad Daddy's | $26,623 | $27,417 | $77,927 | $78,140 | | Good Times | $10,402 | $10,533 | $29,710 | $28,414 | | **Total** | **$37,025** | **$37,950** | **$107,637** | **$106,554** | Segment Income (Loss) from Operations (in thousands) | Segment | Quarter Ended July 1, 2025 | Quarter Ended June 25, 2024 | YTD July 1, 2025 | YTD June 25, 2024 | | :---------- | :------------------------- | :-------------------------- | :--------------- | :---------------- | | Bad Daddy's | $1,139 | $388 | $1,272 | $7 | | Good Times | $94 | $840 | $(476) | $1,491 | | **Total** | **$1,233** | **$1,228** | **$796** | **$1,498** | Segment Capital Expenditures (in thousands) | Segment | Quarter Ended July 1, 2025 | Quarter Ended June 25, 2024 | YTD July 1, 2025 | YTD June 25, 2024 | | :---------- | :------------------------- | :-------------------------- | :--------------- | :---------------- | | Bad Daddy's | $74 | $481 | $928 | $968 | | Good Times | $395 | $1,264 | $2,200 | $1,871 | | **Total** | **$469** | **$1,745** | **$3,128** | **$2,839** | [Note 15. Subsequent Event](index=17&type=section&id=Note%2015.%20Subsequent%20Event) On July 4, 2025, the U.S. enacted H.R.1, the One Big Beautiful Bill Act (OBBBA), which includes tax reform provisions. The Company is assessing its impact but does not expect a material effect on its consolidated financial statements, as the legislation was signed after the fiscal period ended July 1, 2025 - The One Big Beautiful Bill Act (OBBBA) was enacted on July 4, 2025, introducing tax reform provisions[71](index=71&type=chunk) - The Company does not expect a material impact on its consolidated financial statements from OBBBA, as it was signed after the reporting period[71](index=71&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial performance, condition, and operational results for the quarter and year-to-date periods ended July 1, 2025, compared to the prior year. It covers revenue trends, operating costs, segment performance, liquidity, and the impact of external factors like inflation and seasonality [Overview](index=18&type=section&id=Overview) - Good Times Restaurant Inc. operates and licenses full-service Bad Daddy's Burger Bar restaurants and operates and franchises drive-through Good Times Burgers & Frozen Custard restaurants[72](index=72&type=chunk) [Forward Looking Statements](index=18&type=section&id=Forward%20Looking%20Statements) - Forward-looking statements are subject to various factors, including changes in consumer tastes, increases in food, paper, labor, healthcare, or energy costs, inadequate staffing, and decreases in affordable capital resources[74](index=74&type=chunk) [Growth Strategies and Outlook](index=18&type=section&id=Growth%20Strategies%20and%20Outlook) - The Company aims to grow customer traffic, increase brand awareness, and achieve organic sales growth[75](index=75&type=chunk) - Unit growth opportunities exist for both concepts, but the Company is taking a more conservative approach to real estate selection and leverage due to higher costs and volatile inflation[75](index=75&type=chunk) [Restaurant Locations](index=18&type=section&id=Restaurant%20Locations) Company-Owned/Co-Developed Restaurant Count | State | Bad Daddy's (2025) | Bad Daddy's (2024) | Good Times (2025) | Good Times (2024) | Total (2025) | Total (2024) | | :------------ | :----------------- | :----------------- | :---------------- | :---------------- | :----------- | :----------- | | Alabama | 3 | 3 | - | - | 3 | 3 | | Colorado | 10 | 11 | 27 | 26 | 37 | 37 | | Georgia | 5 | 5 | - | - | 5 | 5 | | North Carolina| 14 | 14 | - | - | 14 | 14 | | Oklahoma | 1 | 1 | - | - | 1 | 1 | | South Carolina| 4 | 4 | - | - | 4 | 4 | | Tennessee | 2 | 2 | - | - | 2 | 2 | | **Total** | **39** | **40** | **27** | **26** | **66** | **66** | Franchise/License Restaurant Count | State | Bad Daddy's (2025) | Bad Daddy's (2024) | Good Times Burgers (2025) | Good Times Burgers (2024) | Total (2025) | Total (2024) | | :------------ | :----------------- | :----------------- | :------------------------ | :------------------------ | :----------- | :----------- | | Colorado | - | - | 1 | 3 | 1 | 3 | | North Carolina| 1 | 1 | - | - | 1 | 1 | | Wyoming | - | - | 2 | 2 | 2 | 2 | | **Total** | **1** | **1** | **3** | **5** | **4** | **6** | [Results of Operations - Fiscal quarter ended July 1, 2025 (13 weeks) compared to fiscal quarter ended June 25, 2024 (13 weeks)](index=19&type=section&id=Results%20of%20Operations%20-%20Fiscal%20quarter%20ended%20July%201%2C%202025%20(13%20weeks)%20compared%20to%20fiscal%20quarter%20ended%20June%2025%2C%202024%20(13%20weeks)) For the quarter ended July 1, 2025, total net revenues decreased by 2.4% to $37.0 million, primarily due to reduced customer traffic and restaurant closures, partially offset by menu price increases. Income from operations remained stable at $1.23 million, while net income increased to $1.55 million, benefiting from a higher income tax benefit [Net Revenues](index=19&type=section&id=Net%20Revenues_QoQ) - Total net revenues decreased by **$925,000 (2.4%)** to **$37,025,000** for the quarter ended July 1, 2025, from **$37,950,000** in the prior year quarter[80](index=80&type=chunk) - Bad Daddy's revenues decreased by **$795,000**, driven by a restaurant closure, reduced customer traffic, and negative mix shift, partially offset by a **3.8% menu price increase**[80](index=80&type=chunk)[81](index=81&type=chunk) - Good Times revenues decreased by **$130,000**, primarily due to reduced customer traffic and a restaurant closure, partially offset by acquisitions of two franchisee-owned restaurants[80](index=80&type=chunk)[82](index=82&type=chunk) [Same Store Sales](index=19&type=section&id=Same%20Store%20Sales_QoQ) - Bad Daddy's same store sales decreased **1.4%** for the quarter ended July 1, 2025, primarily due to reduced customer traffic, partially offset by menu price increases[85](index=85&type=chunk) - Good Times same store sales decreased **9.0%** for the quarter ended July 1, 2025, primarily due to reduced customer traffic[86](index=86&type=chunk) [Restaurant Operating Costs](index=19&type=section&id=Restaurant%20Operating%20Costs_QoQ) [Food and Packaging Costs](index=19&type=section&id=Food%20and%20Packaging%20Costs_QoQ) - Total food and packaging costs decreased by **$340,000** to **$11,358,000 (30.8% of restaurant sales)** for the quarter ended July 1, 2025, from **$11,698,000 (31.0% of restaurant sales)** in the prior year[87](index=87&type=chunk) - Bad Daddy's food costs decreased as a percent of sales due to lower purchase prices for chicken wings and potatoes and menu price increases, partially offset by increased ground beef costs[88](index=88&type=chunk)[89](index=89&type=chunk) - Good Times food costs increased as a percent of sales due to higher purchase prices on ground beef and eggs, without the benefit of price increases, partially offset by potato savings[90](index=90&type=chunk) [Payroll and Other Employee Benefit Costs](index=21&type=section&id=Payroll%20and%20Other%20Employee%20Benefit%20Costs_QoQ) - Total payroll and other employee benefit costs increased by **$12,000** to **$12,647,000 (34.3% of restaurant sales)** for the quarter ended July 1, 2025, from **$12,635,000 (33.5% of restaurant sales)** in the prior year[91](index=91&type=chunk) - Bad Daddy's payroll costs decreased by **$124,000** due to a restaurant closure, but increased as a percent of sales due to decreased labor productivity from lower sales[92](index=92&type=chunk) - Good Times payroll costs increased due to restaurant acquisitions and higher average wage rates from market forces and CPI-indexed minimum wage in Colorado, partially offset by reduced incentive compensation[93](index=93&type=chunk) [Occupancy Costs](index=21&type=section&id=Occupancy%20Costs_QoQ) - Total occupancy costs decreased by **$88,000** to **$2,492,000 (6.8% of restaurant sales)** for the quarter ended July 1, 2025, from **$2,580,000 (6.8% of restaurant sales)** in the prior year[94](index=94&type=chunk) - Bad Daddy's occupancy costs decreased due to a restaurant closure and decreases in non-cash rent for impaired right-of-use lease assets[95](index=95&type=chunk) - Good Times occupancy costs increased due to restaurant acquisitions, partially offset by a restaurant closure[96](index=96&type=chunk) [Other Operating Costs](index=21&type=section&id=Other%20Operating%20Costs_QoQ) - Total other operating costs increased by **$207,000** to **$5,402,000 (14.7% of restaurant sales)** for the quarter ended July 1, 2025, from **$5,195,000 (13.8% of restaurant sales)** in the prior year[97](index=97&type=chunk) - Bad Daddy's other operating costs decreased due to lower customer delivery and credit card fees and a restaurant closure, partially offset by increased utilities[98](index=98&type=chunk) - Good Times other operating costs increased due to restaurant acquisitions and higher repair, maintenance, and technology expenses, partially offset by a restaurant closure[99](index=99&type=chunk) [New Store Preopening Costs](index=21&type=section&id=New%20Store%20Preopening%20Costs_QoQ) - There were no preopening costs in the quarters ended July 1, 2025, or June 25, 2024[100](index=100&type=chunk) [Depreciation and Amortization Costs](index=21&type=section&id=Depreciation%20and%20Amortization%20Costs_QoQ) - Total depreciation and amortization costs increased by **$22,000** to **$982,000** for the quarter ended July 1, 2025, from **$960,000** in the prior year[100](index=100&type=chunk) - Good Times depreciation and amortization costs increased by **$29,000** to **$240,000**, primarily due to newly acquired assets[101](index=101&type=chunk) [General and Administrative Costs](index=21&type=section&id=General%20and%20Administrative%20Costs_QoQ) - General and administrative costs decreased by **$514,000** to **$2,174,000 (5.9% of total revenues)** for the quarter ended July 1, 2025, from **$2,688,000 (7.1% of total revenues)** in the prior year[101](index=101&type=chunk) - Decrease in costs associated with multi-unit supervisory roles of **$225,000**[102](index=102&type=chunk) - Decrease in third-party accounting fees of **$151,000**[102](index=102&type=chunk) - Decrease attributable to changes in legal reserves of **$130,000**[102](index=102&type=chunk) [Advertising Costs](index=22&type=section&id=Advertising%20Costs_QoQ) - Total advertising costs decreased by **$8,000** to **$741,000 (2.0% of total revenues)** for the quarter ended July 1, 2025, from **$749,000 (2.0% of total revenues)** in the prior year[103](index=103&type=chunk) - Bad Daddy's advertising costs decreased due to lower third-party gift card commissions, social media, and local store marketing expenses[104](index=104&type=chunk) - Good Times advertising costs increased due to social media and agency fees, and a decrease in product rebates, partially offset by reduced radio and streaming media[105](index=105&type=chunk) [Impairment of Long-Lived Assets Costs](index=22&type=section&id=Impairment%20of%20Long-Lived%20Assets%20Costs_QoQ) - No impairment costs were recorded for the quarter ended July 1, 2025, compared to **$199,000** in the prior year quarter, which primarily related to a Bad Daddy's lease right-of-use asset[107](index=107&type=chunk) [(Gain) Loss on Restaurant Asset and Equipment Sales](index=22&type=section&id=(Gain)%20Loss%20on%20Restaurant%20Asset%20and%20Equipment%20Sales_QoQ) - A net gain of **$4,000** was recorded for the quarter ended July 1, 2025, compared to a net loss of **$18,000** in the prior year quarter[108](index=108&type=chunk) [Income from Operations](index=22&type=section&id=Income%20from%20Operations_QoQ) - Income from operations was **$1,233,000** for the quarter ended July 1, 2025, compared to **$1,228,000** in the prior year quarter[109](index=109&type=chunk) [Interest Expense](index=22&type=section&id=Interest%20Expense_QoQ) - Interest expense increased to **$51,000** for the quarter ended July 1, 2025, from **$27,000** in the prior year quarter[109](index=109&type=chunk) [Provision for Income Taxes](index=22&type=section&id=Provision%20for%20Income%20Taxes_QoQ) - A **$363,000 benefit** from income taxes was recorded for the quarter ended July 1, 2025, compared to a **$197,000 benefit** in the prior year quarter[110](index=110&type=chunk) [Net Income](index=22&type=section&id=Net%20Income_QoQ) - Net income increased to **$1,545,000** for the quarter ended July 1, 2025, from **$1,398,000** in the prior year quarter[110](index=110&type=chunk) [Income Attributable to Non-Controlling Interests](index=22&type=section&id=Income%20Attributable%20to%20Non-Controlling%20Interests_QoQ) - Income attributable to non-controlling interests decreased to **$58,000** for the quarter ended July 1, 2025, from **$77,000** in the prior year quarter, due to decreased profitability of the joint-venture restaurants[111](index=111&type=chunk) [Results of Operations - Fiscal three quarters ended July 1, 2025 (40 weeks) compared to fiscal three quarters ended June 25, 2024 (39 weeks)](index=22&type=section&id=Results%20of%20Operations%20-%20Fiscal%20three%20quarters%20ended%20July%201%2C%202025%20(40%20weeks)%20compared%20to%20fiscal%20three%20quarters%20ended%20June%2025%2C%202024%20(39%20weeks)) For the three quarters ended July 1, 2025, total net revenues increased by 1.0% to $107.6 million, driven by Good Times restaurant acquisitions and an additional fiscal week, despite reduced customer traffic. Income from operations decreased to $0.8 million from $1.5 million in the prior year, impacted by higher impairment costs and increased operating expenses, while net income also declined [Net Revenues](index=22&type=section&id=Net%20Revenues_YTD) - Total net revenues increased by **$1,083,000 (1.0%)** to **$107,637,000** for the three quarters ended July 1, 2025, from **$106,554,000** in the prior year period[112](index=112&type=chunk) - Bad Daddy's restaurant sales decreased by **$488,000** due to a restaurant closure, reduced customer traffic, and negative mix shift, partially offset by an additional fiscal week and a **4.3% menu price increase**[113](index=113&type=chunk) - Good Times restaurant sales increased by **$1,509,000**, driven by acquisitions of three franchisee-owned restaurants and an additional fiscal week, partially offset by restaurant closures and remodels, and reduced customer traffic[114](index=114&type=chunk) - Franchise and other revenues increased by **$62,000** to **$663,000**, primarily due to an increase in gift card breakage, partially offset by reduced royalties from restaurant acquisitions[116](index=116&type=chunk) [Same Store Sales](index=24&type=section&id=Same%20Store%20Sales_YTD) - Bad Daddy's same store sales decreased **1.2%** for the three quarters ended July 1, 2025, primarily due to reduced customer traffic, partially offset by menu price increases[118](index=118&type=chunk) - Good Times same store sales decreased **4.4%** for the three quarters ended July 1, 2025, primarily due to decreased customer traffic[119](index=119&type=chunk) [Restaurant Operating Costs](index=24&type=section&id=Restaurant%20Operating%20Costs_YTD) [Food and Packaging Costs](index=24&type=section&id=Food%20and%20Packaging%20Costs_YTD) - Total food and packaging costs increased by **$574,000** to **$33,198,000 (31.0% of restaurant sales)** for the three quarters ended July 1, 2025, from **$32,624,000 (30.8% of restaurant sales)** in the prior year[120](index=120&type=chunk) - Bad Daddy's food costs decreased as a percent of sales due to lower purchase prices for chicken wings and potatoes and menu price increases, partially offset by increased ground beef costs[121](index=121&type=chunk) - Good Times food costs increased as a percent of sales due to higher purchase prices on ground beef and eggs, partially offset by savings in chicken wing and potato pricing and menu price increases[122](index=122&type=chunk) [Payroll and Other Employee Benefit Costs](index=24&type=section&id=Payroll%20and%20Other%20Employee%20Benefit%20Costs_YTD) - Total payroll and other employee benefit costs increased by **$731,000** to **$37,256,000 (34.8% of restaurant sales)** for the three quarters ended July 1, 2025, from **$36,525,000 (34.5% of restaurant sales)** in the prior year[123](index=123&type=chunk) - Bad Daddy's payroll costs decreased by **$270,000** due to a restaurant closure and decreased manager salaries/incentive compensation, but increased as a percent of sales due to decreased labor productivity[124](index=124&type=chunk) - Good Times payroll costs increased by **$1,001,000** due to restaurant acquisitions, an additional fiscal week, and higher average wage rates, partially offset by a restaurant closure and decreased incentive compensation[125](index=125&type=chunk) [Occupancy Costs](index=25&type=section&id=Occupancy%20Costs_YTD) - Total occupancy costs increased by **$60,000** to **$7,758,000 (7.3% of restaurant sales)** for the three quarters ended July 1, 2025, from **$7,698,000 (7.3% of restaurant sales)** in the prior year[126](index=126&type=chunk) - Bad Daddy's occupancy costs decreased due to a restaurant closure and lower non-cash rent for impaired right-of-use lease assets[127](index=127&type=chunk) - Good Times occupancy costs increased due to restaurant acquisitions, partially offset by a restaurant closure[128](index=128&type=chunk) [Other Operating Costs](index=25&type=section&id=Other%20Operating%20Costs_YTD) - Total other operating costs increased by **$508,000** to **$15,536,000 (14.5% of restaurant sales)** for the three quarters ended July 1, 2025, from **$15,028,000 (14.2% of restaurant sales)** in the prior year[129](index=129&type=chunk) - Bad Daddy's other operating costs decreased due to a restaurant closure and lower customer delivery/credit card fees, partially offset by an additional fiscal week and higher utility expenses[130](index=130&type=chunk) - Good Times other operating costs increased due to restaurant acquisitions, an additional fiscal week, and higher repair, maintenance, technology, and utility expenses, partially offset by a restaurant closure[131](index=131&type=chunk) [New Store Preopening Costs](index=25&type=section&id=New%20Store%20Preopening%20Costs_YTD) - Preopening costs were **$8,000** for the three quarters ended July 1, 2025, primarily related to training costs for two Good Times restaurant acquisitions, compared to no preopening costs in the prior year[132](index=132&type=chunk) [Depreciation and Amortization Costs](index=25&type=section&id=Depreciation%20and%20Amortization%20Costs_YTD) - Total depreciation and amortization costs increased by **$183,000** to **$2,996,000** for the three quarters ended July 1, 2025, from **$2,813,000** in the prior year[132](index=132&type=chunk) - Good Times depreciation and amortization costs increased by **$148,000** to **$721,000**, primarily due to additional depreciation on newly acquired assets[133](index=133&type=chunk) [General and Administrative Costs](index=25&type=section&id=General%20and%20Administrative%20Costs_YTD) - General and administrative costs decreased by **$484,000** to **$7,340,000 (6.8% of total revenues)** for the three quarters ended July 1, 2025, from **$7,824,000 (7.3% of total revenues)** in the prior year[134](index=134&type=chunk) - Decrease in third-party accounting fees of **$455,000**[139](index=139&type=chunk) - Decrease attributable to changes in legal reserves of **$365,000**[139](index=139&type=chunk) - Decrease in costs associated with multi-unit supervisory roles of **$46,000**[139](index=139&type=chunk) - Increases in technology costs (**$161,000**), health insurance underwriting (**$120,000**), and home office payroll and benefits costs (**$88,000**) partially offset the decrease[139](index=139&type=chunk) [Advertising Costs](index=25&type=section&id=Advertising%20Costs_YTD) - Total advertising costs decreased to **$2,310,000 (2.1% of total revenues)** for the three quarters ended July 1, 2025, from **$2,665,000 (2.5% of total revenues)** in the prior year[135](index=135&type=chunk) - Bad Daddy's advertising costs decreased by **$364,000** due to reduced third-party gift card commissions and lower social media/local store marketing expenses[136](index=136&type=chunk) - Good Times advertising costs increased due to higher social media expenses, partially offset by decreased radio and research expenses[137](index=137&type=chunk) [Impairment of Long-Lived Assets Costs](index=25&type=section&id=Impairment%20of%20Long-Lived%20Assets%20Costs_YTD) - Impairment costs were **$494,000** for the three quarters ended July 1, 2025, compared to **$199,000** in the prior year, primarily due to lease right-of-use assets and new assets in previously impaired restaurants[138](index=138&type=chunk) [(Gain) Loss on Restaurant Asset and Equipment Sales](index=27&type=section&id=(Gain)%20Loss%20on%20Restaurant%20Asset%20and%20Equipment%20Sales_YTD) - A net gain of **$55,000** was recorded for the three quarters ended July 1, 2025, compared to a net loss of **$12,000** in the prior year period[140](index=140&type=chunk) [Litigation Contingency Costs](index=27&type=section&id=Litigation%20Contingency%20Costs_YTD) - No litigation contingency costs were recorded for the three quarters ended July 1, 2025, compared to **$332,000 of income** related to a reserve adjustment in the prior year period[141](index=141&type=chunk) [Income from Operations](index=27&type=section&id=Income%20from%20Operations_YTD) - Income from operations was **$796,000** for the three quarters ended July 1, 2025, compared to **$1,498,000** in the prior year period[141](index=141&type=chunk) [Interest Expense](index=27&type=section&id=Interest%20Expense_YTD) - Interest expense increased to **$153,000** for the three quarters ended July 1, 2025, from **$101,000** in the prior year period[142](index=142&type=chunk) [Other Income](index=27&type=section&id=Other%20Income_YTD) - Other income of **$140,000** was recorded for the three quarters ended July 1, 2025, related to the termination of a management services agreement and lease negotiations[143](index=143&type=chunk) [Provision for Income Taxes](index=27&type=section&id=Provision%20for%20Income%20Taxes_YTD) - A **$309,000 benefit** from income taxes was recorded for the three quarters ended July 1, 2025, compared to a **$198,000 benefit** in the prior year period, driven by changes in full-year net income projections and available tax credits[144](index=144&type=chunk) [Net Income](index=27&type=section&id=Net%20Income_YTD) - Net income decreased to **$1,092,000** for the three quarters ended July 1, 2025, from **$1,595,000** in the prior year period[145](index=145&type=chunk) [Income Attributable to Non-Controlling Interests](index=27&type=section&id=Income%20Attributable%20to%20Non-Controlling%20Interests_YTD) - Income attributable to non-controlling interests decreased to **$65,000** for the three quarters ended July 1, 2025, from **$212,000** in the prior year period[146](index=146&type=chunk) [Adjusted EBITDA](index=27&type=section&id=Adjusted%20EBITDA) - Adjusted EBITDA is a non-GAAP measure used by management and investors to evaluate performance, excluding non-cash stock-based compensation, preopening expense, non-recurring acquisition costs, asset impairment, and non-cash disposal of assets[148](index=148&type=chunk)[149](index=149&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | Quarter Ended July 1, 2025 | Quarter Ended June 25, 2024 | YTD July 1, 2025 | YTD June 25, 2024 | | :------------------------------------ | :------------------------- | :-------------------------- | :--------------- | :---------------- | | Net Income, as reported | $1,487 | $1,321 | $1,027 | $1,383 | | Depreciation and amortization | $976 | $959 | $2,997 | $2,817 | | Interest expense, net | $51 | $27 | $153 | $101 | | Provision for income taxes | $(363) | $(197) | $(309) | $(198) | | **EBITDA** | **$2,151** | **$2,110** | **$3,868** | **$4,103** | | Preopening expense | $- | $- | $8 | $- | | Non-cash stock-based compensation | $25 | $28 | $90 | $106 | | Asset impairment | $- | $199 | $494 | $199 | | (Gain) loss on restaurant and equipment asset sales | $(5) | $18 | $(58) | $12 | | Litigation contingencies | $- | $- | $- | $(332) | | **Adjusted EBITDA** | **$2,171** | **$2,355** | **$4,402** | **$4,088** | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash and Working Capital](index=29&type=section&id=Cash%20and%20Working%20Capital) - As of July 1, 2025, the Company had a working capital deficit of **$8,457,000**, influenced by short-term lease liabilities[155](index=155&type=chunk) - Management believes existing cash and future borrowings from the Cadence Credit Facility will be sufficient to meet working capital and recurring capital expenditure needs in fiscal 2025[155](index=155&type=chunk) [Financing](index=29&type=section&id=Financing_LCR) - The Company's financing arrangements, including the Cadence Credit Facility, are detailed in Note 7 of the financial statements[157](index=157&type=chunk) [Cash Flows](index=29&type=section&id=Cash%20Flows_LCR) Cash Flow Summary (Year-to-Date, in thousands) | Cash Flow Activity | July 1, 2025 | June 25, 2024 | | :-------------------------------- | :----------- | :------------ | | Net cash provided by operating activities | $1,461 | $4,736 | | Net cash used in investing activities | $(3,192) | $(2,802) | | Net cash provided by (used in) financing activities | $1,016 | $(1,297) | | Net change in cash and cash equivalents | $(715) | $637 | [Operating Cash Flows](index=30&type=section&id=Operating%20Cash%20Flows_LCR) - Net cash from operating activities decreased by **$3,275,000** for the period ended July 1, 2025, compared to the prior year, negatively impacted by additional pre-paid rent in ROU assets and reductions in accounts payable and accrued liabilities[159](index=159&type=chunk) [Investing Cash Flows](index=30&type=section&id=Investing%20Cash%20Flows_LCR) - Net cash used in investing activities was **$3,192,000** for the three quarters ended July 1, 2025, primarily reflecting purchases of property and equipment and acquisitions of Good Times restaurants from franchisees[160](index=160&type=chunk) [Financing Cash Flows](index=30&type=section&id=Financing%20Cash%20Flows_LCR) - Net cash provided by financing activities was **$1,016,000** for the three quarters ended July 1, 2025, including **$2,250,000** from long-term debt borrowings and **$364,000** for common stock repurchases[161](index=161&type=chunk) - Net cash used in financing activities was **$1,297,000** for the three quarters ended June 25, 2024, including **$1,789,000** for treasury stock purchases[162](index=162&type=chunk) [Impact of Inflation and Wage Increases at Both Concepts](index=30&type=section&id=Impact%20of%20Inflation%20and%20Wage%20Increases%20at%20Both%20Concepts) - Ground beef costs are projected to remain elevated and volatile throughout fiscal year 2025 due to tightening supply[163](index=163&type=chunk) - The Company has experienced significant wage increases to attract employees, with additional upward pressure in Colorado from inflation-indexed statutory minimum wages[163](index=163&type=chunk) - Menu price increases, historically used to manage profitability, may not sufficiently offset labor cost increases without negatively impacting consumer demand[164](index=164&type=chunk) [Seasonality](index=30&type=section&id=Seasonality) - Company revenues are subject to seasonal fluctuations, with winter weather adversely affecting Colorado restaurant sales (December-March) and Bad Daddy's experiencing seasonal reductions between November and January due to consumer spending patterns[165](index=165&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not required for the Company's filing [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the effectiveness of the Company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures](index=30&type=section&id=Conclusion%20Regarding%20the%20Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) - The Company's Chief Executive Officer and Senior Vice President of Finance and Accounting concluded that disclosure controls and procedures were effective as of July 1, 2025[167](index=167&type=chunk) [Changes in Internal Control over Financial Reporting](index=30&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There have been no significant changes in the Company's internal control over financial reporting during the fiscal quarter ended July 1, 2025, that have materially affected or are reasonably likely to materially affect it[168](index=168&type=chunk) [PART II – OTHER INFORMATION](index=31&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The Company is involved in various legal claims and litigation. A significant lawsuit with White Winston Select Asset Funds, LLC, regarding a failed acquisition, resulted in a trial court judgment awarding Good Times $3.83 million plus pre-judgment interest of $0.81 million, with the plaintiffs having until August 29, 2025, to appeal - Management believes any reasonably possible losses from general contingent liabilities have been adequately accrued or would be immaterial[170](index=170&type=chunk) - In the White Winston Select Asset Funds lawsuit, a special master recommended damages of **$3.826 million** plus pre- and post-judgment interest for Good Times' counterclaim[172](index=172&type=chunk) - On July 30, 2025, the trial court awarded Good Times **$3,826,715.07** plus **$813,845.34** in pre-judgment interest, with a **9.5% annual post-judgment interest rate**[172](index=172&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended September 24, 2024, and its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2024 - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for FY2024 and the Quarterly Report on Form 10-Q for Q1 FY2025[173](index=173&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company's Board of Directors authorized a $7.0 million share repurchase program, with approximately $2.0 million remaining available as of July 1, 2025. During the quarter, 21,968 shares were repurchased under the program, and an additional 11,331 shares were purchased in a private transaction - The Board of Directors authorized a total of **$7.0 million** for the share repurchase program, with approximately **$2,008,000** remaining available as of July 1, 2025[174](index=174&type=chunk)[175](index=175&type=chunk) Common Stock Repurchases (Fiscal Quarter Ended July 1, 2025) | Period | Total shares purchased | Average price paid per share | | :------------------ | :--------------------- | :--------------------------- | | 04/02/25 – 04/29/25 | 8,000 | $2.13 | | 05/28/25 – 07/01/25 | 13,968 | $1.78 | | **Total** | **21,968** | | - On May 5, 2025, the Company privately purchased **11,331 shares** of common stock at **$2.00 per share** from its retiring Senior Vice President of Operations[176](index=176&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[177](index=177&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[178](index=178&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) During the quarter ended July 1, 2025, no directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended July 1, 2025[179](index=179&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits furnished as part of the report, including certifications from the Chief Executive Officer and Principal Financial Officer, and various XBRL documents - Exhibit 31.1: Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 - Exhibit 31.2: Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 - Exhibit 32.1: Certification of Chief Executive Officer and Principal Financial Officer pursuant to Section 906 - Exhibits 101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF: Inline XBRL Taxonomy Extension Documents - Exhibit 104: Cover Page Interactive Data File (formatted as Inline XBRL) [SIGNATURES](index=33&type=section&id=SIGNATURES) - The report is signed by Ryan M. Zink, Chief Executive Officer, and Keri A. August, Senior Vice President of Finance and Accounting, on August 7, 2025[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)

Executive Summary & Business Update [CEO's Commentary & Strategic Initiatives](index=1&type=section&id=1.1.%20CEO's%20Commentary%20%26%20Strategic%20Initiatives) CEO Ryan Zink reported disappointing Q3 FY2025 sales, particularly for Good Times, but Bad Daddy's improved, with profitability maintained and a new marketing strategy launched to address traffic and unit economics - Sales results for Q3 FY2025 were **disappointing for both brands**, with Good Times significantly missing prior year's comparable sales[4](index=4&type=chunk) - **Bad Daddy's sales improved in May and June**, with bottom-line results strengthened by good controls and reduced general and administrative costs[4](index=4&type=chunk) - The company is revisiting its strategy to address sales declines, including hiring **Jason Murphy as Senior Director of Marketing**[4](index=4&type=chunk) - A new **'Colorado Native Burgers' brand campaign for Good Times** will launch, focusing on Colorado roots with various advertising elements, a fresh website, and mobile app redesign[4](index=4&type=chunk) - Key priorities include addressing **traffic trends**, improving **unit-level economics**, and ensuring reasonable overhead costs, while balancing cost reduction with guest experience[4](index=4&type=chunk) [Key Financial Highlights](index=1&type=section&id=1.2.%20Key%20Financial%20Highlights) Q3 FY2025 total revenues decreased **2.4% to $37.0 million**, with same-store sales down for both brands, but net income reached **$1.5 million** and Adjusted EBITDA **$2.2 million** Fiscal 2025 Third Quarter Key Financial Highlights | Metric | Value (Millions) | | :---------------------------------- | :--------------- | | Total Revenues | $37.0 | | Net Income Attributable to Common Shareholders | $1.5 | | Adjusted EBITDA (non-GAAP) | $2.2 | | Cash and cash equivalents | $3.1 | | Long-term debt | $2.3 | - Total Revenues for the quarter decreased **2.4% to $37.0 million** compared to the fiscal 2024 third quarter[9](index=9&type=chunk) - Same-store sales for company-owned Bad Daddy's restaurants decreased **1.4%** for the quarter[9](index=9&type=chunk) - Same-store sales for Good Times restaurants decreased **9.0%** for the quarter[9](index=9&type=chunk) - Year-to-date same-store sales decreased **1.2% for Bad Daddy's** and **4.4% for Good Times**[9](index=9&type=chunk) Company Overview [Business Description](index=2&type=section&id=2.1.%20Business%20Description) Good Times Restaurants Inc. operates and licenses **Bad Daddy's Burger Bar** (40 full-service) and **Good Times Burgers & Frozen Custard** (30 quick-service) restaurants, offering distinct dining experiences - Good Times Restaurants Inc. operates **40 Bad Daddy's Burger Bar** and **30 Good Times Burgers & Frozen Custard** restaurants[10](index=10&type=chunk) - **Bad Daddy's Burger Bar** is a full-service concept offering gourmet burgers, salads, appetizers, and sandwiches, with a full bar focusing on craft beers[10](index=10&type=chunk) - **Good Times Burgers & Frozen Custard** is a regional quick-service concept in Colorado, known for 100% all-natural burgers, chicken sandwiches, and frozen custard desserts[10](index=10&type=chunk) [Forward-Looking Statements & Risks](index=2&type=section&id=2.2.%20Forward-Looking%20Statements%20%26%20Risks) The report contains forward-looking statements, cautioning that actual results may differ due to risks like market fluctuations, business disruptions, supply chain issues, inflation, competition, and regulatory changes - This press release contains forward-looking statements, and actual results may **differ materially due to known and unknown risks**[11](index=11&type=chunk) - Risks include market price fluctuations, business disruptions from pandemics, staffing and supply chain constraints, inflation, tariffs, and increased competition[11](index=11&type=chunk) - Further risks encompass general economic conditions, share repurchase and acquisition risks, liquidity, and changes in laws and regulations[11](index=11&type=chunk) Consolidated Financial Performance [Income Statement Analysis](index=3&type=section&id=3.1.%20Income%20Statement%20Analysis) Q3 FY2025 total net revenues decreased to **$37.0 million**, driven by lower restaurant sales, yet income from operations slightly increased, and net income rose to **$1.49 million** due to cost controls Consolidated Income Statement Highlights (Fiscal Third Quarter, in thousands) | Metric | FY2025 (13 Weeks) | FY2024 (13 Weeks) | Change ($) | Change (%) | | :---------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Restaurant sales | $36,869 | $37,742 | -$873 | -2.31% | | Franchise and other revenues | $156 | $208 | -$52 | -25.00% | | **Total net revenues** | **$37,025** | **$37,950** | **-$925** | **-2.44%** | | Total restaurant operating costs | $32,881 | $33,068 | -$187 | -0.57% | | General and administrative costs | $2,174 | $2,688 | -$514 | -19.12% | | **Income from operations** | **$1,233** | **$1,228** | **$5** | **0.41%** | | **Net income attributable to common shareholders** | **$1,487** | **$1,321** | **$166** | **12.57%** | | Basic EPS | $0.14 | $0.12 | $0.02 | 16.67% | | Diluted EPS | $0.14 | $0.12 | $0.02 | 16.67% | Consolidated Income Statement Highlights (Year-to-Date, in thousands) | Metric | FY2025 (40 Weeks) | FY2024 (39 Weeks) | Change ($) | Change (%) | | :---------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Restaurant sales | $106,974 | $105,953 | $1,021 | 0.96% | | Franchise and other revenues | $663 | $601 | $62 | 10.32% | | **Total net revenues** | **$107,637** | **$106,554** | **$1,083** | **1.02%** | | Total restaurant operating costs | $96,752 | $94,688 | $2,064 | 2.18% | | General and administrative costs | $7,340 | $7,824 | -$484 | -6.19% | | **Income from operations** | **$796** | **$1,498** | **-$702** | **-46.86%** | | **Net income attributable to common shareholders** | **$1,027** | **$1,383** | **-$356** | **-25.74%** | | Basic EPS | $0.10 | $0.12 | -$0.02 | -16.67% | | Diluted EPS | $0.10 | $0.12 | -$0.02 | -16.67% | [Balance Sheet Overview](index=4&type=section&id=3.2.%20Balance%20Sheet%20Overview) As of July 1, 2025, cash decreased to **$3.1 million**, total assets declined to **$85.8 million**, current liabilities reduced to **$15.0 million**, and shareholders' equity increased to **$33.8 million** Selected Balance Sheet Data (in thousands) | Metric | July 1, 2025 | September 24, 2024 | Change ($) | Change (%) | | :---------------------- | :------------- | :----------------- | :--------- | :--------- | | Cash and cash equivalents | $3,138 | $3,853 | -$715 | -18.56% | | Current assets | $6,499 | $6,557 | -$58 | -0.88% | | Total assets | $85,750 | $87,118 | -$1,368 | -1.57% | | Current liabilities | $14,956 | $15,687 | -$731 | -4.66% | | Shareholders' equity | $33,810 | $33,088 | $722 | 2.18% | Brand-Level Performance & Margin Analysis [Bad Daddy's Burger Bar Performance](index=4&type=section&id=4.1.%20Bad%20Daddy's%20Burger%20Bar%20Performance) Q3 FY2025 Bad Daddy's Burger Bar sales decreased to **$26.5 million**, with average weekly sales slightly down, but operating profit margin improved to **14.4%** due to reduced food and packaging costs Bad Daddy's Burger Bar Key Performance (Fiscal Third Quarter, in thousands) | Metric | FY2025 (13 Weeks) | FY2024 (13 Weeks) | Change ($) | Change (%) | | :---------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Restaurant sales | $26,513 | $27,327 | -$814 | -2.98% | | Restaurants open at period end | 39 | 40 | -1 | -2.50% | | Average weekly sales per restaurant | $52.3 | $52.6 | -$0.3 | -0.57% | | Food and packaging costs (% of sales) | 30.6% | 31.2% | -0.6% | N/A | | Payroll and benefits costs (% of sales) | 34.3% | 33.8% | +0.5% | N/A | | Restaurant-level operating profit | $3,813 | $3,911 | -$98 | -2.51% | | Restaurant-level operating profit margin | 14.4% | 14.3% | +0.1% | N/A | Bad Daddy's Burger Bar Key Performance (Year-to-Date, in thousands) | Metric | FY2025 (40 Weeks) | FY2024 (39 Weeks) | Change ($) | Change (%) | | :---------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Restaurant sales | $77,408 | $77,896 | -$488 | -0.63% | | Average weekly sales per restaurant | $49.6 | $49.9 | -$0.3 | -0.60% | | Food and packaging costs (% of sales) | 30.9% | 31.0% | -0.1% | N/A | | Payroll and benefits costs (% of sales) | 34.6% | 34.7% | -0.1% | N/A | | Restaurant-level operating profit | $10,472 | $10,091 | $381 | 3.78% | | Restaurant-level operating profit margin | 13.5% | 13.0% | +0.5% | N/A | [Good Times Burgers & Frozen Custard Performance](index=4&type=section&id=4.2.%20Good%20Times%20Burgers%20%26%20Frozen%20Custard%20Performance) Q3 FY2025 Good Times Burgers & Frozen Custard sales slightly decreased to **$10.356 million**, with average weekly sales declining, and operating profit margin falling to **11.2%** due to increased operating costs Good Times Burgers & Frozen Custard Key Performance (Fiscal Third Quarter, in thousands) | Metric | FY2025 (13 Weeks) | FY2024 (13 Weeks) | Change ($) | Change (%) | | :---------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Restaurant sales | $10,356 | $10,415 | -$59 | -0.57% | | Restaurants open at period end | 27 | 26 | +1 | 3.85% | | Average weekly sales per restaurant | $29.5 | $32.1 | -$2.6 | -8.09% | | Food and packaging costs (% of sales) | 31.5% | 30.5% | +1.0% | N/A | | Payroll and benefits costs (% of sales) | 34.2% | 32.7% | +1.5% | N/A | | Other restaurant operating costs (% of sales) | 14.6% | 12.0% | +2.6% | N/A | | Restaurant-level operating profit | $1,157 | $1,723 | -$566 | -32.85% | | Restaurant-level operating profit margin | 11.2% | 16.5% | -5.3% | N/A | Good Times Burgers & Frozen Custard Key Performance (Year-to-Date, in thousands) | Metric | FY2025 (40 Weeks) | FY2024 (39 Weeks) | Change ($) | Change (%) | | :---------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Restaurant sales | $29,566 | $28,057 | $1,509 | 5.38% | | Average weekly sales per restaurant | $27.7 | $28.8 | -$1.1 | -3.82% | | Food and packaging costs (% of sales) | 31.3% | 30.2% | +1.1% | N/A | | Payroll and benefits costs (% of sales) | 35.5% | 33.8% | +1.7% | N/A | | Other restaurant operating costs (% of sales) | 14.5% | 12.9% | +1.6% | N/A | | Restaurant-level operating profit | $2,754 | $3,987 | -$1,233 | -30.93% | | Restaurant-level operating profit margin | 9.3% | 14.2% | -4.9% | N/A | [Total Restaurant-Level Operating Profit](index=5&type=section&id=4.3.%20Total%20Restaurant-Level%20Operating%20Profit) Q3 FY2025 total restaurant-level operating profit (non-GAAP) decreased to **$4.97 million** (13.5% margin), with year-to-date profit also declining to **$13.23 million** (12.4% margin) Total Restaurant-Level Operating Profit (Non-GAAP) (Fiscal Third Quarter, in thousands) | Metric | FY2025 (13 Weeks) | FY2024 (13 Weeks) | Change ($) | Change (%) | | :---------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Total restaurant-level operating profit | $4,970 | $5,634 | -$664 | -11.79% | | Total restaurant-level operating profit margin | 13.5% | 14.9% | -1.4% | N/A | Total Restaurant-Level Operating Profit (Non-GAAP) (Year-to-Date, in thousands) | Metric | FY2025 (40 Weeks) | FY2024 (39 Weeks) | Change ($) | Change (%) | | :---------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Total restaurant-level operating profit | $13,226 | $14,078 | -$852 | -6.05% | | Total restaurant-level operating profit margin | 12.4% | 13.3% | -0.9% | N/A | Non-GAAP Financial Measures Reconciliation [Restaurant-Level Operating Profit Reconciliation](index=6&type=section&id=5.1.%20Restaurant-Level%20Operating%20Profit%20Reconciliation) Q3 FY2025 Restaurant-Level Operating Profit (non-GAAP) was **$4.97 million**, reconciled from Income from Operations by adjusting for non-restaurant specific costs, providing insight into operating efficiency Reconciliation of Income from Operations to Restaurant-Level Operating Profit (Fiscal Third Quarter, in thousands) | Item | FY2025 (13 Weeks) | FY2024 (13 Weeks) | | :---------------------------------- | :---------------- | :---------------- | | Income from operations | $1,233 | $1,228 | | Less: Franchise and other revenues | $156 | $208 | | Add: General and administrative | $2,174 | $2,688 | | Add: Depreciation and amortization | $982 | $960 | | Add: Advertising costs | $741 | $749 | | Add: Impairment of long-lived assets | $0 | $199 | | **Restaurant-level operating profit** | **$4,970** | **$5,634** | - Restaurant-level operating profit is a non-GAAP measure used to evaluate **restaurant-level operating efficiency and performance**[19](index=19&type=chunk) - This measure excludes non-cash items and costs not reflecting current cash outlay or efficiency of continuing operations, such as depreciation, G&A, and impairment costs[19](index=19&type=chunk) [Adjusted EBITDA Reconciliation](index=7&type=section&id=5.2.%20Adjusted%20EBITDA%20Reconciliation) Q3 FY2025 Adjusted EBITDA (non-GAAP) was **$2.17 million**, derived from net income by adjusting for non-cash and non-recurring items, providing a clearer view of operating performance and industry comparability Reconciliation of Net Income to Adjusted EBITDA (Fiscal Third Quarter, in thousands) | Item | FY2025 (13 Weeks) | FY2024 (13 Weeks) | | :---------------------------------- | :---------------- | :---------------- | | Net Income, as reported | $1,487 | $1,321 | | Depreciation and amortization | $976 | $959 | | Interest expense, net | $51 | $27 | | Provision for income taxes | -$363 | -$197 | | EBITDA | $2,151 | $2,110 | | Non-cash stock-based compensation | $25 | $28 | | Asset impairment | $0 | $199 | | (Gain) loss on restaurant and equipment asset sales | -$5 | $18 | | **Adjusted EBITDA** | **$2,171** | **$2,355** | - Adjusted EBITDA is a supplemental non-GAAP measure, calculated from net income by adjusting for interest, taxes, D&A, non-cash stock compensation, asset impairment, and asset sales gains/losses[21](index=21&type=chunk)[22](index=22&type=chunk) - This measure assesses operating performance by excluding non-cash and non-core items, facilitating company-to-company comparisons within the industry[23](index=23&type=chunk)

Core Viewpoint - Good Times Restaurants Inc. is conducting its Q2 2025 earnings call, indicating a focus on financial performance and future outlook [1]. Financial Performance - The earnings release for Q2 2025 is available on the company's investor website, highlighting the importance of transparency in financial reporting [2]. Forward-Looking Statements - The company will discuss forward-looking statements that are not guarantees of future performance, emphasizing the need for caution in interpreting these statements [2]. Risks and Uncertainties - Various risks and uncertainties are acknowledged, including market price fluctuations, staffing constraints, supply chain issues, inflation, and competition, which could impact the company's performance [3]. - Specific risks include disruptions from public health emergencies, challenges in restaurant development, and changes in laws and regulations affecting operations [3].

Financial Data and Key Metrics Changes - Same store sales decreased slightly more than 3.5 points at each brand, indicating a challenging operating environment [4] - Total restaurant sales for Bad Daddy's decreased by $1.6 million to $24.8 million, primarily due to reduced customer traffic and a negative mix shift [17] - Good Times total restaurant sales increased by approximately $500,000 to $9.3 million, with same store sales decreasing by 3.6% [20] - Net loss to common shareholders for the quarter was $600,000, compared to net income of $600,000 in the same quarter last year [23] - Adjusted EBITDA for the quarter was $1 million, down from $1.5 million in the second quarter of the previous year [24] Business Line Data and Key Metrics Changes - Bad Daddy's average menu price increased by 4.7% compared to the previous year, while same store sales decreased by 3.7% [18] - Good Times' average menu price remained the same as the prior year, with food and packaging costs at 30.7%, an increase of 160 basis points [21] - Good Times restaurant level operating profit decreased by $300,000 to $700,000, with a profit margin of 8% [23] Market Data and Key Metrics Changes - The company noted a shift towards a more value-oriented customer, aligning menu and promotions accordingly [4] - Colorado-specific trends negatively affected sales performance, particularly for Bad Daddy's in Colorado [13] Company Strategy and Development Direction - The company is focusing on improving kitchen execution, consistency, and product quality, with a new Director of Operations for Good Times [5][6] - Menu changes include rolling out new burger builds and condensing the menu to focus on core items [9][10] - Marketing efforts are shifting towards social and digital media, with promising results from Connected TV and video streaming tests [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a tough quarter and expects the operating environment in the third fiscal quarter to remain challenging [28] - The focus is on improving execution and value perception through quality and service, aiming to create memorable guest experiences [28] Other Important Information - The company has temporarily paused share repurchases to redirect cash flow towards cash accumulation, debt repayment, and restaurant remodels [24] - Leadership changes include the retirement of the supply chain leader, with a new internal replacement expected to enhance operational efficiency [15] Q&A Session Summary Question: Were there any questions from participants? - There were no questions during the call, and the operator handed the call back for closing remarks [27]

Financial Data and Key Metrics Changes - Same store sales decreased slightly more than 3.5 points at each brand, indicating a challenging operating environment [4] - Total restaurant sales for Bad Daddy's decreased by $1.6 million to $24.8 million for the quarter, primarily due to reduced customer traffic and a negative mix shift [17] - Good Times total restaurant sales increased by approximately $500,000 to $9.3 million for the quarter, with same store sales decreasing by 3.6% [20] - Net loss to common shareholders for the quarter was $600,000, compared to net income of $600,000 in the same quarter last year [24] Business Line Data and Key Metrics Changes - Bad Daddy's average menu price increased by 4.7% compared to Q2 of the previous year, while same store sales decreased by 3.7% [18] - Good Times experienced a 30.7% food and beverage cost for the quarter, an increase of 160 basis points compared to the prior year [21] - Good Times restaurant level operating profit decreased by $300,000 to $700,000, with a profit margin of 8% [24] Market Data and Key Metrics Changes - The company noted a shift towards a more value-oriented customer, aligning menu and promotions accordingly [4] - Colorado-specific trends negatively affected sales performance, particularly for Bad Daddy's in Colorado [12] Company Strategy and Development Direction - The company is focusing on improving kitchen execution, consistency, and product quality, with a new Director of Operations for Good Times [5][6] - Menu changes include rolling out new burger builds and condensing the menu to focus on core items [8][9] - Marketing efforts are shifting towards social and digital media, with promising results from Connected TV and video streaming tests [13][14] Management Comments on Operating Environment and Future Outlook - Management acknowledged a tough quarter and expects the operating environment in the third fiscal quarter to remain challenging [29] - The focus is on improving execution and value perception through quality and service, aiming for long-term sales and profitability gains [29] Other Important Information - The company has temporarily paused share repurchases to redirect cash flow towards cash accumulation, debt repayment, and remodels [25] - A new supply chain leader will be appointed, expected to enhance leadership and cost reduction [15] Q&A Session Summary Question: Are there any questions today? - There were no questions during the call, and the session was handed back for closing remarks [28]

Revenue Performance - Net revenues for the quarter ended April 1, 2025 decreased by $1,169,000 or 3.3% to $34,279,000 from $35,448,000 for the quarter ended March 26, 2024[81]. - Net revenues for the two quarters ended April 1, 2025 increased by $2,007,000, or 2.9%, to $70,612,000 from $68,605,000 for the two quarters ended March 26, 2024[114]. Restaurant Sales - Bad Daddy's restaurant sales decreased by $1,631,000 to $24,817,000 for the quarter ended April 1, 2025, primarily due to reduced customer traffic and the closure of one restaurant[82]. - Good Times restaurant sales increased by $506,000 to $9,323,000 for the quarter ended April 1, 2025, driven by the acquisition of two restaurants[83]. - Bad Daddy's restaurant sales increased by $327,000 to $50,895,000 for the two quarters ended April 1, 2025, from $50,568,000 for the two quarters ended March 26, 2024[115]. - Good Times restaurant sales increased by $1,567,000 to $19,210,000 for the two quarters ended April 1, 2025, from $17,643,000 for the two quarters ended March 26, 2024[117]. Same Store Sales - Same store sales for Bad Daddy's decreased by 3.7% during the quarter ended April 1, 2025, primarily due to reduced customer traffic[86]. - Same store sales for Good Times decreased by 3.6% during the quarter ended April 1, 2025, primarily due to unfavorable weather conditions[87]. - Same store sales for Bad Daddy's decreased by 1.1% during the two quarters ended April 1, 2025, compared to the same two quarters ended March 26, 2024[120]. - Same store sales for Good Times decreased by 1.9% during the two quarters ended April 1, 2025, compared to the same two quarters ended March 26, 2024[121]. Costs and Expenses - Food and packaging costs for the quarter ended April 1, 2025 decreased by $122,000 to $10,477,000, representing 30.7% of restaurant sales[89]. - Payroll and other employee benefit costs decreased by $440,000 to $11,826,000, representing 34.6% of restaurant sales[92]. - General and administrative costs increased by $14,000 to $2,578,000, representing 7.5% of total revenues[101]. - Advertising costs decreased by $119,000 to $705,000, representing 2.1% of total revenues[103]. - Food and packaging costs for the two quarters ended April 1, 2025 increased by $914,000 to $21,840,000 (31.2% of restaurant sales) from $20,926,000 (30.7% of restaurant sales) for the two quarters ended March 26, 2024[122]. - Payroll and other employee benefit costs for the two quarters ended April 1, 2025 increased by $719,000 to $24,609,000 (35.1% of restaurant sales) from $23,890,000 (35.0% of restaurant sales) for the two quarters ended March 26, 2024[125]. Advertising Costs - Bad Daddy's advertising costs decreased to $336,000 (1.3% of total revenues) for the quarter ended April 1, 2025, down from $539,000 (2.0% of total revenues) for the quarter ended March 26, 2024[104]. - Good Times advertising costs increased to $369,000 (3.9% of total revenues) for the quarter ended April 1, 2025, compared to $285,000 (3.2% of total revenues) for the quarter ended March 26, 2024[105]. - Bad Daddy's advertising costs decreased to $957,000 (1.9% of total revenues) for the two quarters ended April 1, 2025, down from $1,269,000 (2.5% of total revenues) for the same period in 2024[138]. - Good Times advertising costs were $612,000 (3.2% of total revenues) for the two quarters ended April 1, 2025, compared to $647,000 (3.6% of total revenues) for the two quarters ended March 26, 2024[140]. Net Income and Loss - Net loss was $627,000 for the quarter ended April 1, 2025, compared to net income of $680,000 in the quarter ended March 26, 2024[110]. - Net loss was $453,000 for the two quarters ended April 1, 2025, compared to net income of $197,000 for the two quarters ended March 26, 2024[147]. - Adjusted EBITDA for the two quarters ended April 1, 2025, was $1,021,000, compared to $1,458,000 for the two quarters ended March 26, 2024[155]. Cash Flow - Net cash provided by operating activities decreased by $1,319,000 to $196,000 for the year-to-date period ended April 1, 2025, compared to $1,515,000 for the same period in 2024[162]. - Net cash used in investing activities increased to $2,662,000 for the two quarters ended April 1, 2025, from $1,063,000 for the same period in 2024[163]. - Net cash provided by financing activities was $1,325,000 for the two quarters ended April 1, 2025, compared to net cash used of $634,000 for the same period in 2024[164]. Operational Overview - The company operates a total of 40 Bad Daddy's restaurants and 30 Good Times restaurants as of April 1, 2025[77]. - The working capital deficit as of April 1, 2025, was $9,504,000, influenced by short-term lease liabilities and payment terms with vendors[158]. - The company anticipates that ground beef costs will continue to increase throughout fiscal year 2025 due to tightening supply and inflationary pressures[166].

Financial Performance - Total revenues for the quarter decreased 3.3% to $34.3 million compared to the fiscal 2024 second quarter [7] - Net loss attributable to common shareholders was $0.6 million for the quarter [7] - Adjusted EBITDA was $1.0 million for the quarter [7] - Cash and cash equivalents decreased from $3,853 million on September 24, 2024, to $2,712 million on April 1, 2025, representing a decline of 29.5% [18] - Total assets slightly decreased from $87,118 million to $86,928 million, a reduction of 0.2% [18] - Adjusted EBITDA for Q2 2025 was reported at $1,021 million, compared to $1,458 million in Q2 2024, indicating a decrease of 30% [23] - The company reported a net loss of $624 million for Q2 2025, compared to a net income of $618 million in Q2 2024 [23] Sales Performance - Same store sales for Bad Daddy's restaurants decreased 3.7% and Good Times restaurants decreased 3.6% for the quarter compared to the fiscal 2024 second quarter [7] - Same store sales year-to-date for Bad Daddy's and Good Times brands were -1.1% and -1.9%, respectively [7] - Bad Daddy's restaurant sales increased from $24,817 million in Q2 2024 to $26,448 million in Q2 2025, reflecting a growth of 6.6% [19] - Good Times restaurant sales rose from $8,817 million in Q2 2024 to $9,323 million in Q2 2025, an increase of 5.7% [19] - Average weekly sales per restaurant for Bad Daddy's increased from $48.9 million to $50.9 million, while Good Times saw an increase from $26.6 million to $27.1 million [18] Operational Metrics - Restaurant level operating profit margin for Bad Daddy's brand was 13.6%, matching the prior year [4] - Restaurant-level operating profit for Bad Daddy's was $3,378 million in Q2 2025, accounting for 13.6% of sales, compared to $3,607 million and 13.6% in Q2 2024 [19] - Total restaurant-level operating profit decreased from $4,682 million in Q2 2024 to $4,126 million in Q2 2025, a decline of 11.8% [21] - The number of restaurants open at the end of the period remained stable for Bad Daddy's at 39, while Good Times increased from 25 to 27 [18] Strategic Initiatives - The company is testing a new side-included pricing model with strong initial results and plans to roll it out to all stores by the end of the June quarter [5] - The company is expanding its advertising strategy to include connected TV and streaming video, which showed promising results in initial tests [5] - The company repurchased 54,835 shares of its common stock during the quarter [7]

Financial Data and Key Metrics Changes - Total restaurant sales for Bad Daddy's increased by $2 million to $26.1 million for the quarter, primarily due to an additional week in the current fiscal quarter and menu price increases [26][64] - Same-store sales for Bad Daddy's increased by 1.5%, while Good Times' same-store sales remained flat compared to the prior year [6][12] - Good Times' total restaurant sales increased by approximately $1.1 million to $9.9 million for the quarter [32][69] - Net income to common shareholders for the quarter was $0.2 million or $0.02 per share, compared to a net loss of $0.6 million or $0.05 per share in the first quarter last year [37][75] - Adjusted EBITDA for the quarter was $1.2 million compared to $0.5 million for the first quarter of 2024 [37][75] Business Line Data and Key Metrics Changes - Bad Daddy's food and beverage costs were 31.5%, unchanged from the previous year, while Good Times' food and packaging costs increased to 31.8%, a 100 basis point increase [27][70] - Labor costs for Bad Daddy's decreased by 70 basis points to 35.1%, while Good Times' total labor cost increased to 36.7%, a 290 basis point increase from the prior year [28][73] - Restaurant-level operating profit for Bad Daddy's was approximately $3.3 million or 12.6% of sales, compared to $2.6 million or 10.7% last year [31][68] - Good Times' restaurant-level operating profit decreased by $0.3 million to $0.9 million, with a decrease in profit margin to 8.6% [36][74] Market Data and Key Metrics Changes - Same-store sales at Bad Daddy's were down approximately 5.5% during the first four weeks of the second fiscal quarter, and down more than 7% at Good Times due to adverse weather conditions [61] - The average menu price during the quarter for Bad Daddy's was 4.5% higher than the same quarter in 2024, while Good Times had an average menu price increase of approximately 3.9% [26][70] Company Strategy and Development Direction - The company is focusing on product quality and menu rationalization to drive purchasing behavior towards better margin products [107] - There is an ongoing effort to renovate the Good Times brand to keep it competitive, with recent remodels and acquisitions of previously franchised restaurants [87][39] - The company is exploring new locations for Bad Daddy's but is being selective about site choices [81][83] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges from higher costs and intense competition, particularly for the Good Times brand [11][50] - The company expects ground beef costs to continue to increase throughout fiscal year 2025 due to tightening supply [66][71] - Management expressed optimism about improving trends following a difficult January, emphasizing the focus on operational initiatives to enhance customer experiences [118] Other Important Information - The company finished the quarter with $3 million in cash and $2.6 million of long-term debt, and repurchased 59,125 shares during the quarter [38][76] - The company incurred $0.9 million of CapEx during the first fiscal quarter related to remodels and acquisitions [39][76] Q&A Session Summary Question: Plans for new locations for Bad Daddy's - Management is actively looking for new locations but is selective about site choices, with a successful location in Madison, Alabama serving as a model [81][83] Question: Capital allocation plan and share buyback - Management plans to continue share repurchases and invest in renovations for the Good Times brand, with a strong appetite for share buybacks at current valuations [85][88] Question: Update on the legal case - There has been no movement since the last call, and the case is currently awaiting a decision from the district court [90] Question: Insights on seasonality and weather impact - Management noted that January was particularly challenging due to adverse weather, but February is expected to improve [96][97] Question: Customer demographics for both brands - Good Times tends to attract a slightly older demographic, while Bad Daddy's appeals to a broader age range, with efforts to modernize the brand to attract younger customers [100][102] Question: Menu adjustments to offset cost increases - Management is focusing on product quality and menu rationalization to drive sales and improve margins without resorting to discounting [107][108] Question: Future of comp sales announcements - Management is evaluating the practice of pre-releasing comp sales based on industry trends and may return to it if deemed beneficial [112][114]

Revenue Performance - Net revenues for the quarter ended December 31, 2024 increased by $3,176,000 or 9.6% to $36,333,000 from $33,157,000 for the quarter ended December 26, 2023[77]. - Bad Daddy's restaurant sales increased by $1,958,000 to $26,078,000 for the quarter ended December 31, 2024, with an average menu price increase of approximately 4.5%[78]. - Good Times restaurant sales increased by $1,061,000 to $9,887,000 for the quarter ended December 31, 2024, with an average menu price increase of approximately 3.9%[79]. - Same store sales for Bad Daddy's increased by 1.5% during the fiscal quarter ended December 31, 2024, with 38 restaurants included in the same store sales base[82]. - Same store sales for Good Times remained unchanged during the quarter ended December 31, 2024, with 27 restaurants included in the same store sales base[83]. Cost and Expense Analysis - Food and packaging costs for the quarter ended December 31, 2024 increased by $1,036,000 to $11,363,000, representing 31.6% of restaurant sales[84]. - Payroll and other employee benefit costs increased by $1,159,000 to $12,783,000, representing 35.5% of restaurant sales[87]. - Occupancy costs increased by $178,000 to $2,683,000, representing 7.5% of restaurant sales[90]. - Depreciation and amortization costs increased by $91,000 to $1,018,000 for the quarter ended December 31, 2024, from $927,000 in the prior year[95]. - General and administrative costs rose by $250,000 to $2,588,000, maintaining 7.1% of total revenues for both quarters[97]. - Advertising costs decreased by $228,000 to $864,000, representing 2.4% of total revenues for the quarter ended December 31, 2024, down from 3.3%[98]. Profitability Metrics - Net income for the quarter ended December 31, 2024, was $174,000, a significant improvement from a net loss of $483,000 in the same quarter of 2023[105]. - Adjusted EBITDA for the quarter ended December 31, 2024, was $1,209,000, compared to $510,000 for the quarter ended December 26, 2023[111]. Cash Flow and Capital Management - Net cash used in operating activities was $(518,000) for the quarter ended December 31, 2024, compared to $(252,000) in the prior year[117]. - Net cash used in investing activities increased to $(1,846,000) for the quarter ended December 31, 2024, from $(448,000) in the same quarter of 2023[119]. - The working capital deficit as of December 31, 2024, was $9,223,000, influenced by short-term lease liabilities[114]. - The company anticipates sufficient capital to meet working capital and recurring capital expenditure needs in fiscal 2025[114]. Growth and Expansion - The company acquired two Denver metro area Good Times restaurants from a franchisee during the quarter ended December 31, 2024[76]. - The company continues to pursue unit growth opportunities with a more conservative approach to leverage due to higher costs and volatile inflation[72]. - Preopening costs for the quarter ended December 31, 2024, were $8,000, compared to no preopening costs for the same quarter in 2023[95].