Financial Performance - Net revenues for fiscal 2024 increased by $4,155,000 (3.0%) to $142,315,000 from $138,160,000 in fiscal 2023[16] - Total interest expense on notes payable was $108,000 for fiscal 2024[33] - Same store sales increased by 2.9% in fiscal 2024 and 3.7% in fiscal 2023, with a compound annual growth rate of 4.4% from fiscal 2015 to 2024[47] - Good Times same store sales increased for fiscal 2024, primarily due to price increases, with a compound annual growth rate of approximately 4.4% over the past ten years[59] - Same store sales decreased by 1.2% at the Bad Daddy's brand during fiscal 2024[17] Cash and Debt Management - The company ended fiscal 2024 with $3.9 million in cash and $0.8 million in long-term debt[20] - As of September 24, 2024, the interest rate applicable to borrowings under the Cadence Credit Facility was 8.41%[29] - The Cadence Credit Facility allows for loans up to $8,000,000, maturing on April 20, 2028[27] - The company maintains approximately $7,490,000 of committed funds available under the Cadence Credit Facility, with $500,000 currently borrowed against it[31] - The company has repurchased a total of 1,670,718 shares at an aggregate cost of approximately $4,650,000 as of September 24, 2024[26] Restaurant Operations - Good Times operates 30 restaurants, having acquired one and closed one during fiscal 2024, while Bad Daddy's operates 39 locations, closing one during the same period[72] - The company operates 30 Good Times restaurants, with 28 located in Colorado[13] - The company owns and operates or licenses 40 Bad Daddy's restaurants across seven states[12] - Bad Daddy's Burger Bar offers a customizable menu with over sixty topping options for burgers and salads, enhancing customer experience[75] - Good Times Burgers & Frozen Custard focuses on fresh, all-natural ingredients, including beef from Meyer Natural Foods and chicken from Springer Mountain Farms[79] Growth Strategy - The company plans to pursue disciplined unit growth for Bad Daddy's, focusing on urban and suburban areas with median household incomes over $90,000[65] - The company aims to primarily grow the Bad Daddy's brand, focusing on contiguous expansion from existing restaurants to maximize brand awareness and operational efficiencies[56] - The company has identified potential new restaurant locations in the southeast U.S. market for Bad Daddy's, with a disciplined growth strategy[65] - Good Times does not have explicit plans for new restaurant development but may consider opportunistic growth in Colorado and surrounding states[68] Marketing and Customer Engagement - The marketing strategy for Bad Daddy's focuses on local store marketing and community events rather than traditional advertising, supplemented by social media investments[82] - Good Times focuses on driving same store sales by attracting new customers and increasing visit frequency, utilizing audio advertising and social media for brand awareness[84] - Customer feedback is gathered through various channels, including surveys and social media, to improve service execution[90] Operational Efficiency - The company aims to enhance operational capabilities while managing expenses, particularly in cost of sales and labor[62] - The company utilizes a cloud-based back-office solution for real-time sales, labor, and cash data collection, enhancing operational efficiency[99] - The company has implemented a new cloud-based point of sale system across all company-owned Good Times restaurants, with plans for Bad Daddy's in the next eighteen months[98] - The cloud-based back-office solution provides near real-time data on sales, labor, and inventory, interfacing with financial accounting systems for comprehensive reporting[99] Employee Management - As of September 24, 2024, the company had approximately 2,110 active employees, with 1,879 being hourly team members and 231 salaried managers or professional staff[102] - Managers undergo an eight-week training program and are closely supervised before managing independently, ensuring high standards in service and food preparation[91] - Good Times restaurants employ a general manager and up to four shift managers, with most management positions filled by promoting from within[88] - Bad Daddy's Burger Bar operates with a team of three to four managers per restaurant, each responsible for specific areas and participating in a bonus pool based on sales and operational objectives[86] Compliance and Regulations - The company is subject to various health, sanitation, safety, and fire regulations for its restaurants[108] - The company actively monitors franchise operations to ensure compliance with systems and procedures, advising on menu, management training, and marketing[97]

Financial Performance - Good Times Restaurants Inc. reported same store sales for the fourth fiscal quarter ended September 24, 2024[2]. - The press release regarding the financial results was issued on October 15, 2024[2]. - The report is part of the requirements under the Securities Exchange Act of 1934[5]. Company Information - The company is listed on the Nasdaq Capital Market under the symbol GTIM[2]. - Ryan M. Zink serves as the Chief Executive Officer of Good Times Restaurants Inc.[6].

Financial Data and Key Metrics Changes - Total revenues increased approximately 6.5% for the quarter to $37.9 million [17] - Net income to common shareholders for the quarter was $1.3 million or income of $0.12 per share compared to $0.8 million or $0.07 per share in the third quarter last year [22] Business Line Data and Key Metrics Changes - Bad Daddy's restaurant sales increased $1.2 million to $27.3 million for the quarter, with same-store sales increasing 1.2% [17][19] - Good Times restaurant sales increased approximately $1.1 million to $10.4 million for the quarter, with same-store sales increasing 5.8% [20][22] Market Data and Key Metrics Changes - Sales growth at Good Times was significantly weighted to dinner and late-night sales, supported by strong trends at recently purchased and remodeled restaurants [11] - The Atlanta market has shown sales recovery, although individual store performance has varied [7] Company Strategy and Development Direction - The company is focusing on enhancing guest experience and hospitality, particularly at Bad Daddy's, by investing in front-of-house labor [5] - The company is evaluating underperforming restaurants for potential closure as part of smart real estate management [9][32] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing challenges in the labor market, with increased wage pressures despite a rise in applicant quality [8] - The company expects continued pressure on food prices, particularly beef, and is considering price adjustments in the future [24] Other Important Information - The company repurchased 92,240 shares during the quarter and executed a privately negotiated purchase of approximately 171,000 shares at an average price of $2.60 per share [15] - The company completed the remodel of a Good Times restaurant in Lakewood, Colorado, resulting in a significant turnaround in sales [13] Q&A Session Summary Question: Will menu prices need to be raised due to rising beef prices? - Management indicated that while they evaluate prices based on competitor actions and customer demand for value, a price increase is not immediately planned [23][24] Question: What was the advertising expense for the quarter? - Advertising expense was 2% of revenues for the quarter, amounting to $749,000 [25][26] Question: What is the status of the development pipeline? - Management is in the final stages of negotiating a lease in the Greater Charlotte DMA, with potential openings expected in late fiscal Q2 or early Q3 of 2025 [30][31] Question: Are the lowest performing stores currently unprofitable? - Yes, some stores under consideration for closure are negative contributors to restaurant level cash flow [33]

Financial Performance - Total Revenues for Q3 2024 increased 6.5% to $37.9 million compared to Q3 2023[1] - Net Income Attributable to Common Shareholders was $1.3 million for the quarter[1] - Restaurant sales for the third quarter of 2024 reached $27,327 million, a 4.8% increase from $26,085 million in the same quarter of 2023[8] - Average weekly sales per restaurant increased to $52.6 thousand in Q3 2024, compared to $51.8 thousand in Q3 2023, reflecting a growth of 1.5%[8] - The company reported an income from operations of $1,228 million for the year-to-date period, a significant increase from $444 million in the same period of 2023[10] - Net income reported for the quarter was $1,321,000, an increase from $842,000 in the previous year[18] Cost Management - Food and packaging costs accounted for 31.2% of restaurant sales in Q3 2024, up from 31.1% in Q3 2023, indicating rising cost pressures[10] - Payroll and benefits costs were 33.8% of restaurant sales in Q3 2024, compared to 34.7% in Q3 2023, showing a slight improvement in labor cost efficiency[10] - Total other operating costs for the year-to-date period were $4,606 million, down from $5,082 million in the same period of 2023, indicating improved cost management[10] - The restaurant occupancy costs were 6.3% of sales in Q3 2024, slightly down from 6.5% in Q3 2023, reflecting better management of fixed costs[10] Shareholder Activity - The Company repurchased approximately 264,000 shares of its common stock during the quarter[2] - Cash generated by the business allowed for share repurchases and reinvestment in restaurants while reducing borrowings[2] - Shareholders' equity stood at $33.0 million as of June 25, 2024, slightly up from $32.99 million in September 2023[7] Operational Developments - The pilot phase of the next-generation point-of-sale system has been completed, with 19 locations installed by the end of July 2024[1] - New limited-time burgers featuring quarter-pound, smashed patties were introduced and exceeded sales expectations, leading to plans for a permanent menu addition[1] - The company opened 1 new restaurant during the period, maintaining a total of 40 restaurants at the end of Q3 2024[8] Franchise Performance - Franchise revenues for the year-to-date period were $200 million, compared to $256 million in the same period of 2023, indicating a decline in franchise performance[10] EBITDA and Expenses - Adjusted EBITDA for the quarter ended June 25, 2024, was $2,144,000, compared to $2,148,000 for the same quarter in 2023, reflecting a slight decrease[18] - Year-to-date Adjusted EBITDA reached $3,551,000, down from $4,353,000 in the same period last year[18] - Depreciation and amortization expenses for the quarter were $959,000, compared to $924,000 in the prior year[18] - Interest expense for the quarter was $27,000, up from $18,000 in the same quarter last year[18] - The company reported a provision for income taxes of $(197,000) for the quarter, compared to $(551,000) in the previous year[18] - Asset impairment charges for the quarter were $199,000, significantly lower than $965,000 in the same quarter last year[18] - Non-cash stock-based compensation for the quarter was $28,000, an increase from $15,000 in the prior year[18] - The company experienced a GAAP rent-cash rent difference of $(211,000) for the quarter, compared to $(135,000) in the same quarter last year[18] Internal Metrics - The adjusted EBITDA measure is used internally as a benchmark for cash incentive plans and to evaluate operating performance against competitors[21]

Revenue Performance - Net revenues for the fiscal quarter ended March 26, 2024, increased by $653,000 or 1.9% to $35,438,000 compared to $34,785,000 for the same quarter in 2023[78]. - Bad Daddy's restaurant sales increased by $106,000 to $26,448,000, while Good Times restaurant sales increased by $591,000 to $8,817,000 for the fiscal quarter ended March 26, 2024[79][80]. - Same store sales for Bad Daddy's decreased by 3.2%, while Good Times increased by 0.9% during the fiscal quarter ended March 26, 2024[83][85]. - Bad Daddy's restaurant sales decreased by $939,000 to $50,568,000 for the two quarters ended March 26, 2024, compared to $51,507,000 for the same period in 2023[116]. - Good Times restaurant sales increased by $1,403,000 to $17,643,000 for the two quarters ended March 26, 2024, compared to $16,240,000 for the same period in 2023[117]. - Same store sales for Bad Daddy's decreased by 4.7% during the two quarters ended March 26, 2024, while Good Times saw an increase of 2.5%[120][121]. Cost Analysis - Food and packaging costs decreased to $10,599,000 (30.1% of restaurant sales) from $10,655,000 (30.8% of restaurant sales) for the fiscal quarter ended March 26, 2024[86]. - Payroll and other employee benefit costs increased by $277,000 to $12,266,000 (34.8% of restaurant sales) for the fiscal quarter ended March 26, 2024[89]. - Occupancy costs increased by $185,000 to $2,613,000 (7.4% of restaurant sales) for the fiscal quarter ended March 26, 2024[92]. - Food and packaging costs for the two quarters ended March 26, 2024, decreased to $20,926,000 (30.7% of restaurant sales) from $21,262,000 (31.4% of restaurant sales) for the same period in 2023[122]. - Payroll and other employee benefit costs increased to $23,890,000 (35.0% of restaurant sales) for the two quarters ended March 26, 2024, up from $23,537,000 (34.7% of restaurant sales) for the same period in 2023[126]. - General and administrative costs increased to $4,867,000 (7.1% of total revenues) for the two quarters ended March 26, 2024, from $4,675,000 (6.9% of total revenues) for the same period in 2023[136]. Advertising and Marketing - Bad Daddy's advertising costs increased to $539,000 (2.0% of total revenues) for the quarter ended March 26, 2024, up from $422,000 (1.6% of total revenues) for the same quarter in 2023[102]. - Good Times advertising costs decreased to $285,000 (3.2% of total revenues) for the quarter ended March 26, 2024, down from $356,000 (4.2% of total revenues) for the same quarter in 2023[103]. - Advertising costs for the two quarters ended March 26, 2024, increased to $1,916,000 (2.8% of total revenues) from $1,672,000 (2.5% of total revenues) for the same period in 2023[137]. - Bad Daddy's advertising costs increased to $1,269,000 (2.5% of total revenues) for the two quarters ended March 26, 2024, up from $1,031,000 (2.0% of total revenues) for the same period in 2023[138]. - Good Times advertising costs were $647,000 (3.6% of total revenues) for the two quarters ended March 26, 2024, compared to $641,000 (3.9% of total revenues) in the prior year[139]. Income and Profitability - Net income for the quarter ended March 26, 2024, was $680,000, a significant decrease from $10,743,000 for the same quarter in 2023[109]. - Income from operations decreased to $270,000 for the two quarters ended March 26, 2024, down from $924,000 for the same period in 2023[143]. - Net income fell to $197,000 for the two quarters ended March 26, 2024, compared to $10,838,000 in the prior year[144]. - Adjusted EBITDA for the two quarters ended March 26, 2024, was $1,295,000, down from $1,531,000 for the same period in 2023[154]. Financial Position - As of March 26, 2024, the company had a working capital deficit of $8,515,000, influenced by short-term lease liabilities[156]. - The Cadence Credit Facility allows for loans up to $8,000,000, with a weighted average interest rate of 8.42% as of March 26, 2024[158][162]. - The company had $1,250,000 of borrowings against the Cadence Credit Facility, classified as a long-term liability[164]. Cash Flow - Net cash provided by operating activities decreased by $2,643,000 to $1,515,000 for the year-to-date period ended March 26, 2024, compared to $4,158,000 for the same period in 2023[166]. - Net cash used in investing activities was $1,063,000 for the two quarters ended March 26, 2024, significantly lower than $5,817,000 for the same period in 2023, primarily due to property and equipment purchases[167]. - Net cash used in financing activities decreased to $634,000 for the two quarters ended March 26, 2024, from $1,880,000 in the prior year, reflecting changes in long-term debt and treasury stock purchases[168][169]. Market Conditions - Commodity prices, especially for key proteins, remain high and volatile, with ground beef costs expected to increase in the second half of fiscal 2024[170]. - The company has faced increased labor costs due to wage pressures from inflation-indexed statutory wage rate increases in Colorado[171]. - Menu price increases have historically been used to manage profitability during inflation, but consumer preferences may limit the ability to raise prices sufficiently to offset labor cost increases[172]. - Seasonal fluctuations in revenues are observed, particularly affecting restaurant sales in Colorado during December to March, with Good Times restaurants being more sensitive to weather conditions[174].

Financial Performance - Total Revenues for the quarter increased 1.9% to $35.4 million compared to the second quarter of fiscal 2023[4] - Net Income Attributable to Common Shareholders was $0.6 million for the quarter[4] - The company reported a net income of $618,000 for Q1 2024, a significant decrease from $10,621,000 in Q1 2023[20] - Adjusted EBITDA for Q1 2024 was $1,295,000, a decrease from $1,531,000 in Q1 2023; year-to-date adjusted EBITDA was $1,642,000 compared to $2,206,000 in the previous year[20] - Total other operating costs for Q1 2024 were $4,211,000, compared to $4,070,000 in Q1 2023, indicating an increase in operational expenses[20] - The company incurred $1,853,000 in depreciation and amortization for the year-to-date period in 2024, compared to $1,767,000 in 2023[20] Sales Performance - Same Store Sales for company-owned Bad Daddy's restaurants decreased 3.2% for the quarter compared to the second quarter of fiscal 2023[4] - Same Store Sales for company-owned Good Times restaurants increased 0.9% for the quarter compared to the second quarter of fiscal 2023[4] - The Bad Daddy's brand showed sequential quarterly improvement in same store sales, trending similarly to the Black Box casual dining benchmark[4] - The Company featured a fish sandwich that exceeded prior year sales by 14% during the quarter[4] - Restaurant sales for Bad Daddy's Burger Bar reached $26,448,000 in Q1 2024, a slight increase from $26,342,000 in Q1 2023, while Good Times Burgers & Frozen Custard reported $8,817,000, up from $8,226,000[16] - Year-to-date restaurant sales for Bad Daddy's Burger Bar were $50,568,000 in 2024, down from $51,507,000 in 2023; Good Times Burgers & Frozen Custard saw an increase to $17,643,000 from $16,240,000[17] Operating Profit - The restaurant-level operating profit for Bad Daddy's Burger Bar was $3,607,000 (13.6% margin) in Q1 2024, compared to $3,643,000 (13.8% margin) in Q1 2023; Good Times Burgers & Frozen Custard reported $1,075,000 (12.2% margin) versus $1,027,000 (12.5% margin)[16] - Year-to-date restaurant-level operating profit for Bad Daddy's Burger Bar was $6,178,000 (12.2% margin) in 2024, compared to $6,826,000 (13.3% margin) in 2023; Good Times Burgers & Frozen Custard reported $2,266,000 (12.8% margin) versus $1,918,000 (11.8% margin)[17] Franchise Performance - Franchise revenues decreased to $173,000 in Q1 2024 from $217,000 in Q1 2023, reflecting a decline in franchise performance[16] Cash and Debt Management - The Company ended the quarter with $4.0 million in cash and $1.3 million of long-term debt[4] - The Company repurchased 252,496 shares of its common stock during the quarter[4] Strategic Initiatives - The Company is in negotiations to purchase a franchised Good Times location in Parker, Colorado, expected to close before the end of the third fiscal quarter[6] - The pilot phase of a next-generation point-of-sale system began in April at two locations, with plans for rapid rollout upon successful testing[4] Adjusted EBITDA Insights - The company emphasizes that restaurant-level operating profit is a key metric for evaluating operational efficiency, excluding non-cash charges like depreciation and impairment costs[19] - Adjusted EBITDA is used as a performance measure to assess operating performance without the impact of non-cash charges, facilitating comparisons within the industry[22] - The company believes Adjusted EBITDA provides a useful benchmark for cash incentive plans and evaluating operating performance against competitors[22] - Significant variations in capital structures and cost of capital among companies in the industry affect interest expenses and income tax rates, which Adjusted EBITDA helps to isolate[22] - The management asserts that Adjusted EBITDA allows for better company-to-company comparisons by eliminating variations in depreciation expenses and asset lives[22] - The presentation of Adjusted EBITDA may not be comparable to similar measures from other companies, and future results may still be affected by excluded or unusual items[22]

PART I - FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents unaudited condensed consolidated financial statements and notes, covering balance sheets, operations, equity, and cash flows [Condensed Consolidated Balance Sheets (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) Table: Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | December 26, 2023 | September 26, 2023 | | :-------------------- | :------------------ | :------------------- | | Total current assets | $6,978 | $6,521 | | Total net property and equipment | $22,553 | $23,036 | | Total assets | $90,121 | $91,088 | | Total current liabilities | $15,478 | $14,890 | | Total long-term liabilities | $42,561 | $43,204 | | Total shareholders' equity | $32,082 | $32,994 | - The company's total assets decreased from **$91,088,000 to $90,121,000**, while total current liabilities increased from **$14,890,000 to $15,478,000**, contributing to a working capital deficit[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%28Unaudited%29) Table: Condensed Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Quarter Ended Dec 26, 2023 | Quarter Ended Dec 27, 2022 | | :-------------------- | :------------------------- | :------------------------- | | Total net revenues | $33,132 | $33,394 | | Total restaurant operating costs | $30,111 | $30,015 | | (Loss) Income from Operations | $(374) | $107 | | NET (LOSS) INCOME | $(483) | $95 | | NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $(556) | $(127) | | Basic and Diluted EPS | $(0.05) | $(0.01) | - Total net revenues slightly decreased by **0.8% YoY**. The company shifted from an income from operations of **$107,000 to a loss of $374,000**, resulting in a net loss of **$483,000** for the quarter, compared to a net income of **$95,000** in the prior year[13](index=13&type=chunk) [Consolidated Statements of Shareholders' Equity (Unaudited)](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity%20%28Unaudited%29) Table: Consolidated Statements of Shareholders' Equity (in thousands) | Metric (in thousands) | September 26, 2023 | December 26, 2023 | | :-------------------- | :----------------- | :---------------- | | Treasury Stock, at cost | $(4,908) | $(5,346) | | Capital Contributed in Excess of Par Value | $56,701 | $56,739 | | Accumulated Deficit | $(19,235) | $(19,791) | | Total Good Times Restaurants Inc. shareholders' equity | $32,571 | $31,615 | - Shareholders' equity decreased from **$32,994,000 to $32,082,000**, primarily due to a net loss attributable to common shareholders of **$556,000** and treasury shares purchased for **$438,000**[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%28Unaudited%29) Table: Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Quarter Ended Dec 26, 2023 | Quarter Ended Dec 27, 2022 | | :-------------------------------- | :------------------------- | :------------------------- | | Net cash used in operating activities | $(252) | $(154) | | Net cash used in investing activities | $(448) | $(719) | | Net cash provided by (used in) financing activities | $33 | $(1,119) | | (DECREASE) IN CASH AND CASH EQUIVALENTS | $(667) | $(1,992) | | CASH AND CASH EQUIVALENTS, end of period | $3,515 | $6,914 | - Net cash used in operating activities increased to **$252,000** from **$154,000 YoY**. Net cash provided by financing activities significantly improved to **$33,000** from a usage of **$1,119,000**, primarily due to borrowings against the credit facility[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) [Note 1. Basis of Presentation](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation) - The company operates and licenses full-service Bad Daddy's Burger Bar restaurants and operates and franchises drive-thru Good Times Burgers & Frozen Custard restaurants[19](index=19&type=chunk) - The fiscal year is a 52/53-week year ending on the last Tuesday of September, with quarters ended December 26, 2023, and December 27, 2022, each consisting of 13 weeks[21](index=21&type=chunk) Table: Receivables (in thousands) | Receivables (in thousands) | December 26, 2023 | September 26, 2023 | | :------------------------- | :------------------ | :------------------- | | Large box retail partners | $638 | $291 | | Vendor rebates and incentives | $341 | $185 | | Third party delivery partners | $308 | $269 | | Franchise and other | $47 | $24 | | Total | $1,334 | $769 | [Note 2. Recent Accounting Pronouncements](index=10&type=section&id=Note%202.%20Recent%20Accounting%20Pronouncements) - The company expects to retrospectively implement ASU 2023-07 (Segment Reporting) in fiscal year 2025, with no anticipated material effect on its consolidated financial statements[26](index=26&type=chunk) [Note 3. Revenue](index=11&type=section&id=Note%203.%20Revenue) - Revenues primarily consist of restaurant sales and franchise revenue, recognized when performance obligations are satisfied, typically at the time of sale for food and beverage[28](index=28&type=chunk) - Sales-based royalties and advertising fund contributions from franchisees are recognized as underlying sales occur, with new GT Rewards loyalty program activity being immaterial for the quarter[30](index=30&type=chunk)[29](index=29&type=chunk) [Note 4. Goodwill and Intangible Assets](index=11&type=section&id=Note%204.%20Goodwill%20and%20Intangible%20Assets) Table: Goodwill and Intangible Assets (in thousands) | Asset Type (in thousands) | December 26, 2023 Net Carrying Amount | September 26, 2023 Net Carrying Amount | | :------------------------ | :------------------------------------ | :------------------------------------- | | Intangible assets subject to amortization | $48 | $51 | | Trademarks (indefinite-lived) | $3,900 | $3,900 | | Goodwill | $5,713 | $5,713 | - The company reported no goodwill impairment losses in the periods presented, with aggregate amortization expense for intangible assets at **$3,000** for the quarter, up from **$2,000** in the prior year[32](index=32&type=chunk) [Note 5. Stock-Based Compensation](index=11&type=section&id=Note%205.%20Stock-Based%20Compensation) - Stock-based compensation expense for the quarter ended December 26, 2023, was **$38,000**, a decrease from **$46,000** in the prior year[34](index=34&type=chunk) - **38,000** incentive stock options were awarded with an exercise price of **$2.51** per share and a fair value of **$1.58**, with **$123,000** in unrecognized compensation cost expected over **3.2 years**[36](index=36&type=chunk)[39](index=39&type=chunk) - **34,000** restricted stock units were granted, with **$149,000** in unrecognized compensation cost expected over **2.2 years**[40](index=40&type=chunk)[44](index=44&type=chunk) [Note 6. Gain on Sale of Assets](index=15&type=section&id=Note%206.%20Gain%20on%20Sale%20of%20Assets) - The company recognized **$10,000** in deferred gains on prior sale-leaseback transactions for the quarter, compared to a net **$0** in the prior year[46](index=46&type=chunk) [Note 7. Prepaid expense and other current assets](index=15&type=section&id=Note%207.%20Prepaid%20expense%20and%20other%20current%20assets) Table: Prepaid Expenses and Other Current Assets (in thousands) | Prepaid Expenses and Other Current Assets (in thousands) | December 26, 2023 | September 26, 2023 | | :--------------------------------------- | :------------------ | :------------------- | | Prepaid Insurance | $474 | $0 | | Other | $231 | $163 | | Total | $705 | $163 | [Note 8. Other Accrued Liabilities](index=15&type=section&id=Note%208.%20Other%20Accrued%20Liabilities) Table: Other Accrued Liabilities (in thousands) | Other Accrued Liabilities (in thousands) | December 26, 2023 | September 26, 2023 | | :------------------------------------- | :------------------ | :------------------- | | Wages and other employee benefits | $2,442 | $2,892 | | Taxes, other than income taxes | $1,396 | $1,275 | | Gift card liability, net of breakage | $1,907 | $1,108 | | General expense accrual and other | $1,129 | $1,176 | | Total | $6,874 | $6,451 | [Note 9. Notes Payable and Long-Term Debt](index=15&type=section&id=Note%209.%20Notes%20Payable%20and%20Long-Term%20Debt) - The company maintains an **$8 million** Cadence Credit Facility maturing April 20, 2028, with **$1,250,000** borrowed and **$6,740,000** of committed funds available as of December 26, 2023[49](index=49&type=chunk)[54](index=54&type=chunk) - The weighted average interest rate on borrowings under the Cadence Credit Facility was **8.45%** for the quarter, and the company was in compliance with all covenants[52](index=52&type=chunk)[51](index=51&type=chunk) - Interest expense on notes payable increased to **$26,000** for the quarter ended December 26, 2023, from **$0** in the prior year[55](index=55&type=chunk) [Note 10. Earnings (Loss) per Common Share](index=17&type=section&id=Note%2010.%20Earnings%20%28Loss%29%20per%20Common%20Share) Table: Earnings (Loss) per Common Share | Metric | Quarter Ended Dec 26, 2023 | Quarter Ended Dec 27, 2022 | | :-------------------------------- | :------------------------- | :------------------------- | | Weighted-average shares outstanding basic | 11,377,579 | 12,041,628 | | Weighted-average shares outstanding diluted | 11,377,579 | 12,041,628 | | Antidilutive shares excluded | 435,900 | 527,658 | - Basic and diluted weighted-average shares outstanding were identical for both periods, indicating no dilutive impact from stock options or restricted stock units due to the net loss[57](index=57&type=chunk) [Note 11. Contingent Liabilities and Liquidity](index=17&type=section&id=Note%2011.%20Contingent%20Liabilities%20and%20Liquidity) - The company is a defendant in a lawsuit regarding failed negotiations for the sale of the Good Times Drive Thru subsidiary, with an ongoing appeal by plaintiffs despite a successful trial for the company[59](index=59&type=chunk) - The company maintains a **$332,000** accrual for contingent litigation expense, acknowledging potential losses exceeding this amount[61](index=61&type=chunk) [Note 12. Leases](index=18&type=section&id=Note%2012.%20Leases) - The company's material long-term operating leases are for restaurant land and buildings, with initial terms of **10-20 years**, often including renewal options[62](index=62&type=chunk) Table: Lease Metrics | Lease Metric | December 26, 2023 | December 27, 2022 | | :------------------------------------------ | :------------------ | :------------------ | | Operating lease cost (in thousands) | $1,901 | $1,825 | | Weighted average remaining lease term (years) | 7.75 | 8.49 | | Weighted average discount rate | 5.0% | 5.0% | | Total lease liabilities (in thousands) | $47,104 | $49,240 | Table: Future Minimum Rent Payments (in thousands) | Future Minimum Rent Payments (in thousands) | Total | | :---------------------------------------- | :---- | | Remainder of 2024 | $6,130 | | 2025 | $8,219 | | 2026 | $7,791 | | 2027 | $7,494 | | 2028 | $6,733 | | Thereafter | $20,858 | | Total minimum lease payments | $57,225 | | Less: imputed interest | $(10,121) | | Present value of lease liabilities | $47,104 | [Note 13. Impairment of Long-Lived Assets and Goodwill](index=19&type=section&id=Note%2013.%20Impairment%20of%20Long-Lived%20Assets%20and%20Goodwill) - No impairments of long-lived assets or trademarks were recorded for the fiscal quarters ended December 26, 2023, and December 27, 2022[70](index=70&type=chunk)[72](index=72&type=chunk) - Goodwill is tested annually for impairment, with **$96,000** attributable to Good Times and **$5,617,000** to Bad Daddy's reporting units as of December 26, 2023[73](index=73&type=chunk) [Note 14. Income Taxes](index=21&type=section&id=Note%2014.%20Income%20Taxes) - The effective income tax rate for the three months ended December 26, 2023, was **(14.04%)**, a decrease from **0.0%** in the prior year, due to the release of the company's valuation allowance during fiscal year 2023[75](index=75&type=chunk) - The company believes its income tax filing positions will be sustained upon audit and has not recorded reserves for uncertain income tax positions[76](index=76&type=chunk) [Note 15. Non-controlling Interests](index=21&type=section&id=Note%2015.%20Non-controlling%20Interests) Table: Non-controlling Interests Activity (in thousands) | Non-controlling Interests Activity (in thousands) | Total | | :---------------------------------------------- | :---- | | Balance at September 26, 2023 | $423 | | Income | $73 | | Distributions | $(29) | | Balance at December 26, 2023 | $467 | - Non-controlling interests increased to **$467,000** as of December 26, 2023, primarily due to **$73,000** in income attributable to non-controlling interests, mainly from Good Times joint-venture restaurants[79](index=79&type=chunk)[126](index=126&type=chunk) [Note 16. Segment Reporting](index=21&type=section&id=Note%2016.%20Segment%20Reporting) - The company operates two reportable segments: Bad Daddy's Burger Bar (full-service) and Good Times Burgers and Frozen Custard (quick-service)[80](index=80&type=chunk) Table: Segment Performance (in thousands) | Segment Performance (in thousands) | Quarter Ended Dec 26, 2023 | Quarter Ended Dec 27, 2022 | | :--------------------------------- | :------------------------- | :------------------------- | | **Revenues:** | | | | Bad Daddy's | $24,193 | $25,226 | | Good Times | $8,939 | $8,168 | | **(Loss) Income from Operations:** | | | | Bad Daddy's | $(763) | $(7) | | Good Times | $389 | $114 | | **Capital Expenditures:** | | | | Bad Daddy's | $132 | $726 | | Good Times | $330 | $884 | Table: Segment Assets (in thousands) | Segment Assets (in thousands) | December 26, 2023 | September 26, 2023 | | :---------------------------- | :---------------- | :----------------- | | **Property and equipment, net:** | | | | Bad Daddy's | $18,468 | $18,053 | | Good Times | $4,085 | $4,983 | | **Total assets:** | | | | Bad Daddy's | $66,614 | $67,720 | | Good Times | $23,507 | $23,368 | [Note 17. Subsequent Events](index=23&type=section&id=Note%2017.%20Subsequent%20Events) - There were no subsequent events to report[82](index=82&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=24&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Analyzes operations, growth strategies, and financial performance, highlighting revenue changes, operating loss, inflation, and liquidity [Overview](index=24&type=section&id=Overview) - Good Times Restaurants Inc. operates and franchises Bad Daddy's Burger Bar (full-service) and Good Times Burgers & Frozen Custard (drive-through)[86](index=86&type=chunk) - The company focuses on targeted unit growth for Bad Daddy's and improving same-store sales and profitability for both concepts[87](index=87&type=chunk) [Growth Strategies and Outlook](index=24&type=section&id=Growth%20Strategies%20and%20Outlook) - The company evaluates unit growth in light of inflationary impacts on the restaurant industry, despite opportunities for customer traffic and brand awareness growth[88](index=88&type=chunk) [Restaurant locations](index=24&type=section&id=Restaurant%20locations) - As of December 26, 2023, the company operated, franchised, or licensed **41** Bad Daddy's restaurants and **31** Good Times restaurants[89](index=89&type=chunk) Table: Restaurant Locations | Restaurant Type | 2023 | 2022 | | :---------------- | :--- | :--- | | Company-Owned/Co-Developed/Joint-Venture: | | | | Bad Daddy's Burger Bar | 40 | 40 | | Good Times Burgers & Frozen Custard | 25 | 23 | | Total Company-Owned | 65 | 63 | | Franchise/License: | | | | Bad Daddy's Burger Bar | 1 | 1 | | Good Times Burgers & Frozen Custard | 6 | 8 | | Total Franchise/License | 7 | 9 | [Results of Operations](index=26&type=section&id=Results%20of%20Operations) [Net Revenues](index=26&type=section&id=Net%20Revenues) Table: Net Revenues (in thousands) | Revenue Type (in thousands) | Quarter Ended Dec 26, 2023 | Quarter Ended Dec 27, 2022 | Change ($) | Change (%) | | :-------------------------- | :------------------------- | :------------------------- | :--------- | :--------- | | Restaurant sales | $32,946 | $33,179 | $(233) | -0.7% | | Franchise revenues | $186 | $215 | $(29) | -13.5% | | Total net revenues | $33,132 | $33,394 | $(262) | -0.8% | - Bad Daddy's restaurant sales decreased by **$1,045,000** due to a prior-year closure and reduced customer traffic, partially offset by a **4.2%** menu price increase and sales from a new Madison, Alabama restaurant[95](index=95&type=chunk) - Good Times restaurant sales increased by **$812,000**, primarily due to the acquisition of two franchised restaurants, increased customer traffic, and a **4.6%** menu price increase[96](index=96&type=chunk) [Same Store Sales](index=26&type=section&id=Same%20Store%20Sales) - Bad Daddy's same-store sales decreased by **6.2%** due to general weakness in casual dining and weaker traffic in key markets, partially offset by menu price increases[99](index=99&type=chunk) - Good Times same-store sales increased by **4.1%**, driven by increased customer traffic and menu price increases[100](index=100&type=chunk) [Restaurant Operating Costs](index=28&type=section&id=Restaurant%20Operating%20Costs) Table: Restaurant Operating Costs (in thousands) | Cost Category (in thousands) | Dec 26, 2023 | % of Sales | Dec 27, 2022 | % of Sales | Change ($) | Change (%) | | :--------------------------- | :----------- | :--------- | :----------- | :--------- | :--------- | :--------- | | Food and Packaging Costs | $10,327 | 31.3% | $10,607 | 32.0% | $(280) | -2.6% | | Payroll and Other Employee Benefit Costs | $11,624 | 35.3% | $11,548 | 34.8% | $76 | 0.7% | | Restaurant Occupancy Costs | $2,505 | 7.6% | $2,458 | 7.4% | $47 | 1.9% | | Other Restaurant Operating Costs | $4,728 | 14.4% | $4,492 | 13.5% | $236 | 5.3% | | Depreciation and Amortization | $927 | 2.8% | $910 | 2.7% | $17 | 1.9% | | Total Restaurant Operating Costs | $30,111 | 91.4% | $30,015 | 90.4% | $96 | 0.3% | - Food and packaging costs decreased due to lower sales and purchase prices, while payroll costs increased due to higher average pay rates despite lower Bad Daddy's sales[104](index=104&type=chunk)[107](index=107&type=chunk) - Other operating costs increased for both brands, driven by higher repair and maintenance, technology, utility expenses, and increased delivery sales commissions for Good Times[112](index=112&type=chunk)[113](index=113&type=chunk) [General and Administrative Costs](index=29&type=section&id=General%20and%20Administrative%20Costs) - General and administrative costs decreased by **$65,000** to **$2,313,000 (7.0% of total revenues)** from **$2,378,000 (7.1% of total revenues)** in the prior year[116](index=116&type=chunk) - The decrease was primarily due to reductions in professional services, office lease/equipment, general travel, recruiting/training, and health insurance costs, partially offset by increases in home office payroll and multi-unit supervisory roles[126](index=126&type=chunk) [Advertising Costs](index=30&type=section&id=Advertising%20Costs) - Advertising costs increased to **$1,092,000 (3.3% of total revenues)** from **$894,000 (2.7% of total revenues)** in the prior year[117](index=117&type=chunk) - Bad Daddy's advertising costs increased due to commissions on gift cards sold through large-box retailers, while Good Times advertising costs increased due to radio advertising and loyalty program expenses[118](index=118&type=chunk)[119](index=119&type=chunk) [Gain on Restaurant Asset and Equipment Sales](index=30&type=section&id=Gain%20on%20Restaurant%20Asset%20and%20Equipment%20Sales) - A gain of **$10,000** was recognized from restaurant asset and equipment sales for the quarter ended December 26, 2023, compared to **$0** in the prior year[121](index=121&type=chunk) [(Loss) Income from Operations](index=30&type=section&id=%28Loss%29%20Income%20from%20Operations) - The company reported a loss from operations of **$374,000** for the quarter, a significant decline from an income of **$107,000** in the prior year[121](index=121&type=chunk) [Interest Expense](index=30&type=section&id=Interest%20Expense) - Interest expense increased to **$32,000** for the quarter ended December 26, 2023, from **$12,000** in the prior year[122](index=122&type=chunk) [Provision for Income Taxes](index=30&type=section&id=Provision%20for%20Income%20Taxes) - A provision for income taxes of **$77,000** was recorded for the quarter, compared to **$0** in the prior year, due to the release of the valuation allowance[123](index=123&type=chunk)[75](index=75&type=chunk) [Net (Loss) Income](index=30&type=section&id=Net%20%28Loss%29%20Income) - The company incurred a net loss of **$483,000** for the quarter, a reversal from a net income of **$95,000** in the prior year[123](index=123&type=chunk) [Income Attributable to Non-Controlling Interests](index=30&type=section&id=Income%20Attributable%20to%20Non-Controlling%20Interests) - Income attributable to non-controlling interests decreased to **$73,000** from **$222,000** in the prior year, primarily due to the acquisition of interests in Bad Daddy's joint-venture restaurants by the company[124](index=124&type=chunk)[125](index=125&type=chunk) [Adjusted EBITDA](index=31&type=section&id=Adjusted%20EBITDA) - Adjusted EBITDA is a non-GAAP measure used by management and investors to evaluate performance, excluding non-cash items like stock-based compensation, preopening expenses, and GAAP rent differences[129](index=129&type=chunk)[130](index=130&type=chunk) Table: Adjusted EBITDA (in thousands) | Metric (in thousands) | Quarter Ended Dec 26, 2023 | Quarter Ended Dec 27, 2022 | | :-------------------- | :------------------------- | :------------------------- | | Net loss, as reported | $(556) | $(127) | | EBITDA | $482 | $752 | | Adjusted EBITDA | $347 | $674 | - Adjusted EBITDA decreased to **$347,000** from **$674,000** in the prior year, reflecting the decline in net income and other adjustments[132](index=132&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash and Working Capital](index=33&type=section&id=Cash%20and%20Working%20Capital) - As of December 26, 2023, the company had a working capital deficit of **$8.5 million**, primarily influenced by short-term lease liabilities[135](index=135&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 2024[135](index=135&type=chunk) [Financing](index=33&type=section&id=Financing) - The company has a **$5.0 million** share repurchase program authorized in February 2022, with **$1,343,000** remaining available for repurchases as of December 26, 2023[136](index=136&type=chunk)[160](index=160&type=chunk) - The Cadence Credit Facility provides up to **$8 million**, maturing April 20, 2028, with **$1,250,000** borrowed and **$6,740,000** available as of December 26, 2023, at a weighted average interest rate of **8.45%**[137](index=137&type=chunk)[142](index=142&type=chunk)[140](index=140&type=chunk) [Cash Flows](index=35&type=section&id=Cash%20Flows) Table: Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | Quarter Ended Dec 26, 2023 | Quarter Ended Dec 27, 2022 | | :-------------------------------- | :------------------------- | :------------------------- | | Net cash used in operating activities | $(252) | $(154) | | Net cash used in investing activities | $(448) | $(719) | | Net cash provided by (used in) financing activities | $33 | $(1,119) | | Net change in cash and cash equivalents | $(667) | $(1,992) | - Operating cash flow usage increased by **$98,000**. Investing cash flow usage decreased by **$271,000** due to lower property and equipment purchases. Financing cash flow shifted from a usage of **$1,119,000** to a provision of **$33,000**, driven by credit facility borrowings[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) [Impact of Inflation and Wage Increases at Both Concepts](index=35&type=section&id=Impact%20of%20Inflation%20and%20Wage%20Increases%20at%20Both%20Concepts) - Commodity prices, especially for key proteins, remain high and volatile, with ground beef costs projected to increase in the second half of fiscal 2024, alongside elevated costs for paper, packaging, and energy[150](index=150&type=chunk) - The company faces significant wage increases, particularly in Colorado, and while menu price increases are used, consumer preferences and competitor pricing may limit their effectiveness[151](index=151&type=chunk)[152](index=152&type=chunk) [Seasonality](index=35&type=section&id=Seasonality) - Revenues are subject to seasonal fluctuations, with adverse weather in December-March affecting Colorado restaurant sales, especially Good Times, and Bad Daddy's experiencing reductions from November-January[153](index=153&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=35&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) States that quantitative and qualitative disclosures about market risk are not required for this filing - Quantitative and qualitative disclosures about market risk are not required for this report[154](index=154&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=35&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were effective, with no significant changes in internal control over financial reporting - The company's Chief Executive Officer and Senior Vice President of Finance and Accounting concluded that disclosure controls and procedures were effective as of December 26, 2023[156](index=156&type=chunk) - There were no significant changes in internal control over financial reporting during the fiscal quarter ended December 26, 2023[157](index=157&type=chunk) PART II - OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=37&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Refers to Note 11 for material legal proceedings, including an ongoing appeal in a lawsuit regarding a failed subsidiary sale - For a discussion of material legal proceedings, refer to Note 11 to the unaudited, consolidated financial statements[158](index=158&type=chunk) [ITEM 1A. RISK FACTORS](index=37&type=section&id=ITEM%201A.%20RISK%20FACTORS) States no material changes to risk factors previously disclosed in the company's Form 10-K - There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the company's Form 10-K for the fiscal year ended September 26, 2023[159](index=159&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=37&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Details the company's **$5.0 million** share repurchase program, with **$1,343,000** remaining available as of December 26, 2023 - The company has a **$5.0 million** share repurchase program, effective February 7, 2022, with **$1,343,000** remaining available for repurchases as of December 26, 2023[160](index=160&type=chunk) Table: Share Repurchase Activity | Period | Total shares purchased | Average price paid per share | | :--------------------- | :--------------------- | :--------------------------- | | 09/27/2023–10/24/2023 | 41,950 | $2.93 | | 10/25/2023–11/21/2023 | 40,199 | $2.68 | | 11/22/2023–12/26/2023 | 78,623 | $2.59 | | Total | 160,772 | | [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=37&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) Indicates no defaults upon senior securities - There were no defaults upon senior securities[162](index=162&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=37&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) States that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[163](index=163&type=chunk) [ITEM 5. OTHER INFORMATION](index=37&type=section&id=ITEM%205.%20OTHER%20INFORMATION) Reports no adoption, modification, or termination of Rule 10b5-1 trading arrangements by directors or officers during the quarter - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended December 26, 2023[164](index=164&type=chunk) [ITEM 6. EXHIBITS](index=38&type=section&id=ITEM%206.%20EXHIBITS) Lists exhibits furnished with the report, including certifications and XBRL instance and taxonomy documents Table: Exhibits | Exhibit No. | Description | | :---------- | :----------------------------------------------------------------------- | | *31.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | | *31.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 | | *32.1 | Certification of Chief Executive Officer and Principal Financial Officer pursuant to Section 906 | | 101.INS | XBRL Instance Document | | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | | *104 | Cover Page Interactive Data File (formatted as Inline XBRL) | [SIGNATURES](index=39&type=section&id=SIGNATURES) Contains signatures of authorized officers, including the CEO and SVP of Finance and Accounting, certifying the report - The report is signed by Ryan M. Zink, Chief Executive Officer, and Keri A. August, Senior Vice President of Finance and Accounting, on January 31, 2024[169](index=169&type=chunk)

Financial Performance - Fiscal 2023 net revenues decreased by $78,000 (0.1%) to $138,122,000 from $138,200,000 in fiscal 2022, primarily due to the closure of one Good Times restaurant and one Bad Daddy's restaurant[19] - The company ended fiscal 2023 with $4.2 million in cash and $0.8 million in long-term debt[19] - Total interest expense on notes payable was $31,000 for fiscal 2023, up from $20,000 in fiscal 2022[29] - As of September 26, 2023, the company had an accumulated deficit of $19,235,000, despite recognizing net income in fiscal 2023[117] - High rates of inflation have resulted in increased commodity, labor, and energy costs, which could adversely impact business operations[18] Sales Performance - Same store sales increased by 0.1% at Bad Daddy's and 3.7% at Good Times during fiscal 2023[19] - Same store sales increased by 3.7% in fiscal 2023, with a compound annual growth rate of 5.0% from fiscal 2014 to 2023[42] - Off-premises sales accounted for approximately 27% of all system-wide sales in fiscal 2023[35] - The average sales per transaction at Bad Daddy's is approximately $36, with lunch representing 35% and dinner 65% of sales[35] - Sales of Bad Daddy's restaurants open for at least 18 months averaged $2.6 million for fiscal 2023[53] - The average per person check at Good Times is approximately $13.04, which is higher than national quick-service restaurants but lower than fast casual hamburger concepts[40] Expansion and Growth Strategy - The company plans to pursue disciplined unit growth of Bad Daddy's, focusing on urban and suburban areas with median household incomes over $70,000[56] - The company acquired non-controlling interests in subsidiaries owning five Bad Daddy's restaurants and two previously franchised Good Times restaurants during fiscal 2023[19] - The company acquired two Good Times restaurants in Colorado during fiscal 2023, enhancing its market presence[62] - The expansion strategy for Bad Daddy's includes utilizing specialized software for sales forecasting at new locations[57] - Good Times is assessing potential future growth strategies, including the development of franchised restaurants, although it is not actively soliciting new franchisees at this time[84] Operational Efficiency - The company utilizes a cloud-based back-office solution for real-time sales, labor, and cash data collection, enhancing operational efficiency[88] - The average transaction time at Good Times drive-thru is less than three minutes, emphasizing speed of service as a critical success factor[41] - The company has implemented extensive training programs for restaurant managers to ensure high standards in service and food preparation[81] Market Position and Competition - Good Times maintains a competitive advantage in product quality compared to traditional quick-service hamburger chains[94] - Bad Daddy's Burger Bar competes with both local and national gourmet burger concepts, emphasizing premium quality ingredients and customization[92] - The hamburger restaurant market is highly competitive, with significant competition from established chains like McDonald's and Burger King, which may adversely affect revenues and profitability[123] Financial Management - The Cadence Credit Facility allows for loans up to $8,000,000, with an interest rate of 8.42% as of September 26, 2023[23][26] - The company maintains compliance with various financial condition ratios under the Cadence Credit Facility[25] - The company maintains deposits with banks in excess of FDIC insured limits, which could pose a risk to financial stability in case of bank failures[115] - The company may implement price increases on selected menu items to offset recurring operating expenses, which could impact customer visits[122] Employee and Labor Considerations - The company employs approximately 2,245 active employees, with 2,016 being hourly team members and 229 salaried managers or professional staff[91] - Labor shortages have been reported, with an extreme shortage of qualified workers in fiscal 2023, impacting growth and operational efficiency[111] - Rising employee healthcare costs may not be fully passed on to employees, potentially increasing operating expenses[142] Regulatory and Economic Environment - The company is subject to various federal and state regulations, including the Fair Labor Standards Act and the Americans with Disabilities Act, which could affect operations[101] - The company is subject to extensive government regulations that could impact its ability to expand and develop restaurants, including food safety and licensing requirements[130] - Macroeconomic conditions and inflation have negatively impacted labor and product input costs, potentially affecting future sales[121] Brand and Marketing Strategy - The marketing strategy emphasizes local store marketing and social media engagement, with a focus on building word-of-mouth reputation[73] - Good Times Burgers & Frozen Custard focuses on fresh, all-natural beef and chicken, differentiating itself in the crowded quick-service restaurant segment[70]

Revenue Performance - Net revenues for the fiscal quarter ended June 27, 2023 decreased by $877,000 or 2.4% to $35,620,000 from $36,497,000 for the same quarter in 2022[103]. - Net revenues for the three quarters ended June 27, 2023 increased by $789,000, or 0.8%, to $103,799,000 from $103,010,000 for the same period in 2022[139]. Restaurant Sales - Bad Daddy's restaurant sales decreased by $1,087,000 to $26,085,000, negatively affected by the closure of the Cherry Creek location and reduced customer traffic[104]. - Good Times restaurant sales increased by $198,000 to $9,291,000, driven by an average menu price increase of approximately 10.5%[105]. - Bad Daddy's restaurant sales increased by $382,000 to $77,592,000 for the three quarters ended June 27, 2023, primarily due to a 4.4% increase in average menu prices[140]. - Good Times restaurant sales increased by $436,000 to $25,531,000 for the three quarters ended June 27, 2023, driven by a 9.6% increase in average menu prices[141]. Same Store Sales - Same store sales for Bad Daddy's decreased by 1.4%, primarily due to weaker traffic, while Good Times saw an increase of 2.1%[108][109]. - Same store sales for Bad Daddy's increased by 1.8% during the three quarters ended June 27, 2023, while Good Times saw a 4.1% increase[145][146]. Costs and Expenses - Food and packaging costs decreased to $10,923,000, representing 30.9% of restaurant sales, down from 32.4% in the prior year[110]. - Payroll and other employee benefit costs decreased to $11,940,000, accounting for 33.8% of restaurant sales, slightly down from 33.9%[113]. - Occupancy costs increased to $2,432,000, representing 6.9% of restaurant sales, up from 6.6% in the prior year[116]. - Payroll and other employee benefit costs increased by $450,000 to $35,477,000, representing 34.4% of restaurant sales for the three quarters ended June 27, 2023[150]. - Other operating costs increased by $571,000 to $14,129,000, representing 13.7% of restaurant sales for the three quarters ended June 27, 2023[155]. - General and administrative costs decreased by $19,000 to $2,365,000, representing 6.6% of total revenues for the fiscal quarter ended June 27, 2023[124]. - General and administrative costs decreased by $621,000 to $7,040,000 (6.8% of total revenues) for the three quarters ended June 27, 2023, compared to $7,661,000 (7.4% of total revenue) for the same period in 2022[161]. Net Income and Profitability - Net income for the fiscal quarter ended June 27, 2023, was $977,000, compared to $138,000 for the same quarter in 2022[134]. - Net income for the three quarters ended June 27, 2023, was $11,815,000, a significant increase from $147,000 in the same period of 2022[172]. - Income from operations rose to $1,368,000 for the three quarters ended June 27, 2023, compared to $188,000 for the same period in 2022[167]. - Adjusted EBITDA for the three quarters ended June 27, 2023, was $4,353,000, up from $3,980,000 in the same period of 2022[179]. Cash Flow and Financing - Net cash provided by operating activities increased by $289,000 to $4,707,000 for the year-to-date period ended June 27, 2023, compared to $4,418,000 for the same period in 2022[186][187]. - Net cash used in investing activities was $7,572,000 for the three quarters ended June 27, 2023, primarily due to property and equipment purchases of $3,178,000 and net purchases of non-controlling interests of $4,394,000[188]. - Net cash used in financing activities was $2,357,000 for the three quarters ended June 27, 2023, including $1,720,000 for treasury stock purchases and $563,000 in distributions to non-controlling interests[191]. Future Outlook and Growth - The company anticipates opening one new restaurant in August 2023 and is developing a pipeline for growth in 2024 and beyond[97]. - As of June 27, 2023, the company operated a total of 40 Bad Daddy's restaurants and 31 Good Times restaurants[98]. Financial Condition and Ratios - The company had a working capital deficit of $6,421,000 as of June 27, 2023, but expects sufficient capital to meet operational needs throughout fiscal 2023[180]. - The company is required to maintain various financial condition ratios under the Cadence Credit Facility, including a minimum liquidity and an amended maximum leverage ratio[184]. Inflation and Economic Factors - The company experienced significant inflationary pressures, particularly in commodity prices and labor costs, impacting profitability management strategies[193][194][195]. - The company has historically used menu price increases to manage profitability during inflationary periods, but current inflation rates exceed what can be reasonably passed to customers[195]. - Seasonal fluctuations in revenues are expected, particularly affecting restaurant sales in Colorado during December to March[196]. Other Costs - Preopening costs for the fiscal quarter ended June 27, 2023, were $80,000, compared to no preopening costs for the same quarter in 2022[121]. - Depreciation and amortization costs decreased by $74,000 to $919,000 for the fiscal quarter ended June 27, 2023, from $993,000 in the same quarter of 2022[122]. - Advertising costs increased to $2,423,000 (2.3% of sales) for the three quarters ended June 27, 2023, compared to $2,260,000 (2.2% of total revenue) for the same period in 2022[162]. - The gain on restaurant asset sales and lease termination was $32,000 for the three quarters ended June 27, 2023, down from $666,000 in the same period of 2022[165]. - Impairment costs for long-lived assets were $1,041,000 for the three quarters ended June 27, 2023, compared to $2,056,000 for the same period in 2022[166]. - Interest expense increased to $56,000 during the three quarters ended June 27, 2023, from $41,000 in the same period of 2022[169]. - The interest rate applicable to borrowings under the Cadence Credit Facility was 8.07% as of June 27, 2023[185].

Good Times Restaurants Inc. (NASDAQ:GTIM) Q2 2023 Results Conference Call May 9, 2023 5:00 PM ET Company Participants Ryan Zink - President, CEO Matthew Karnes - SVP, Finance Operator Good afternoon, ladies and gentlemen. Welcome to the Good Times Restaurants Inc. Fiscal 2023 Second Quarter Earnings Call. By now, everyone should have access to the company's earnings release, which is available in the Investors section of the company's Web site. As a reminder, a part of today's discussion will include forwa ...