GTIM — Good Times Restaurants Inc.

Summary of Good Times Restaurants, Inc. Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Net Income: $1.5 million ($0.14 per share), up from $1.3 million ($0.12 per share) year-over-year.
• Adjusted EBITDA: $2.2 million, down from $2.4 million in Q3 2024.
• Total Restaurant Sales:
  • Bad Daddy's: $26.5 million, down $0.8 million year-over-year.
  • Good Times: $10.4 million, down $0.1 million year-over-year.
• Same-Store Sales:
  • Bad Daddy's: Decreased 1.4%.
  • Good Times: Decreased 9%, with mid-single-digit declines year-over-year.
• Restaurant-Level Operating Profit:
  • Bad Daddy's: $3.8 million (14.4% of sales), slightly improved from 14.3% last year.
  • Good Times: $1.2 million (11.2% of sales), down from 16.5% last year.
• Cash Position: $3.1 million with $2.3 million in long-term debt.
• Share Repurchase: 21,968 shares repurchased during the quarter.

2. Strategic Updates and Business Highlights

• Leadership Change: Appointment of Jason Murphy as the new marketing leader to enhance advertising and promotional strategies.
• Operational Improvements: Significant enhancements in product and service execution at Good Times, including a successful Fried Ice Cream promotion.
• Pricing Strategy: Good Times has not increased prices since January 2024, now at parity with competitors, with a recent 1% price increase tested in select stores.
• Promotional Campaigns: Launching a new campaign for Colorado Native Burgers and continuing successful promotions at Bad Daddy's, such as the $8 Bad Ass Margarita.

3. Forward Guidance and Outlook

• Cash Accumulation Focus: The company plans to prioritize cash reserves over aggressive share repurchases, with potential acceleration in fiscal 2026.
• CapEx Plans: Maintenance CapEx is expected to be around 1% of sales, with special projects including remodels and technology upgrades planned for fiscal 2026.

4. Challenges and Points of Concern

• Declining Sales: Both brands experienced negative same-store sales, particularly Good Times with a 9% decline.
• Cost Pressures: Rising costs for ground beef and eggs, with expectations for continued increases in these commodities.
• Labor Costs: Increased labor costs attributed to higher wage rates and decreased productivity due to lower sales.
• Competitive Pressures: Increased discounting by major competitors affecting traffic and sales, particularly in the burger segment.

5. Notable Q&A Insights

• CapEx Discussion: Analysts inquired about future CapEx, with management indicating a focus on maintaining cash reserves while considering both maintenance and investment CapEx.
• Good Times Underperformance: Management cited demographic factors and heavy discounting by competitors as contributors to Good Times' struggles, emphasizing a strategy focused on quality rather than discounting.
• Future Share Repurchases: Management indicated that any acceleration in share repurchases would likely occur in fiscal 2026, contingent on macroeconomic factors and internal forecasts.

Overall, while Good Times Restaurants showed some positive developments in operational improvements and strategic leadership changes, significant challenges remain, particularly with declining sales and rising costs. The company is taking a cautious approach to cash management and future investments.