Good Times Restaurants Reports Q2 Results

  • Bad Daddy’s Same Store Sales Increase 3.2%
  • Good Times’ Same Store Sales Increase 0.5% Net of Remodel Closures
  • Total Revenues +19% with Restaurant Level Operating Profit +16% in Q1*
  • Conference Call Wednesday, May 10, 2017, at 3:00 p.m. MDT/5:00 p.m. EDT

DENVER - May 10, 2017 - (BUSINESS WIRE) - Good Times Restaurants Inc. (Nasdaq: GTIM), operator of Good Times Burgers & Frozen Custard, a regional quick service restaurant chain focused on fresh, high quality, all natural products, and Bad Daddy’s Burger Bar, a full service, upscale concept, today announced its preliminary unaudited financial results for the second fiscal quarter ended March 28, 2017.

Key highlights of the Company’s financial results include:

  • Same store sales for company-owned Good Times restaurants increased 0.1% for the quarter on top of last year’s increase of 0.5%. Excluding the days that the Good Times’ restaurants were closed for kitchen remodels to add new production line equipment, same store sales increased 0.5% for the quarter. Year to date, same store sales decreased 0.2% versus last year’s increase of 2.6%.
  • Same store sales for company-owned Bad Daddy’s restaurants increased 3.2% for the quarter on top of last year’s increase of 1.9%. Year to date, same store sales increased 2.6% versus last year’s increase of 4.0%.
  • Total revenues increased 19% to $18,239,000 for the quarter
  • The Company opened one new Bad Daddy’s restaurant during the quarter and has opened one additional restaurant after the quarter ended for a total of three new Bad Daddy’s restaurants opened so far in fiscal 2017 and expects five more to open by fiscal year end.
  • The Company opened one new Good Times restaurant during the quarter.
  • Sales for the Bad Daddy’s restaurants for the quarter increased 33% versus last year to $11,187,000 and Restaurant
    Level Operating Profit (a non-GAAP measure) increased 35% to $1,803,000 or 16.1% as a percent of sales*
  • Adjusted EBITDA (a non-GAAP measure) for the quarter was $619,000 versus $639,000 last year*
  • The Company ended the quarter with $4.8 million in cash and $1.4 million of long-term debt

Boyd Hoback, President & CEO, said, “We are very pleased with both our same store sales trends and the sales from our new restaurants. As a result, we remain confident in our expectations for our same store sales and operating margins, as we’ve seen some acceleration in Good Times’ sales subsequent to the quarter’s end from the rollout of our Better Burger and West Coast Burger initiatives. Our most recent store openings’ sales in both brands have exceeded our expectations, including the new Good Times restaurant that has set sales records for any Good Times restaurant and our two newest Bad Daddy’s that look like they will both settle in above our average restaurant sales and above our target of $2.5 million. We are also on track for five new Bad Daddy’s to open in May, June, August and September and are building our pipeline for fiscal 2018.”

Fiscal 2017 Outlook:

The Company reiterated the following guidance for fiscal 2017:

  • Total revenues of approximately $78 million to $80 million with a year-end revenue run rate of approximately $92 million to $94 million
  • Total revenue estimates assume same store sales of approximately +3% to +3.5% for Good Times and +1% to +2% for Bad Daddy’s in Q3 and Q4
  • General and administrative expenses of approximately $7.0 million, including approximately $800,000 of non-cash equity compensation expense
  • The opening of a total of 8 new Bad Daddy’s restaurants (including 2 joint venture units) and 1 new Good Times restaurant
  • Total Adjusted EBITDA* of approximately $4.0 million to $4.5 million
  • Restaurant pre-opening expenses of approximately $3 million
  • Capital expenditures (net of tenant improvement allowances) of approximately $12 million including approximately $2 million related to fiscal 2018 development
  • Fiscal year end long term debt of approximately $6 million
  • *For a reconciliation of restaurant level operating profit and Adjusted EBITDA to the most directly comparable financial measures presented in accordance with GAAP and a discussion of why the Company considers them useful, see the financial information schedules accompanying this release.

Conference Call: Management will host a conference call to discuss its second quarter 2017 financial results on Wednesday, May 10 at 3:00 p.m. MDT/5:00 p.m. EDT. Hosting the call will be Boyd Hoback, President and Chief Executive Officer, and Jim Zielke, Chief Financial Officer.

The conference call can be accessed live over the phone by dialing (888) 339-0806 and requesting the Good Times Restaurants (GTIM) call. The conference call will also be webcast live from the Company's corporate website www.goodtimesburgers.com under the Investor section. An archive of the webcast will be available at the same location on the corporate website shortly after the call has concluded.

About Good Times Restaurants Inc

Good Times Restaurants Inc. (GTIM) operates Good Times Burgers & Frozen Custard, a regional chain of quick service restaurants located primarily in Colorado, in its wholly owned subsidiary, Good Times Drive Thru Inc. Good Times provides a menu of high-quality all natural hamburgers, 100% all natural chicken tenderloins, fresh frozen custard, natural cut fries, fresh lemonades and other unique offerings. Good Times currently operates and franchises a total of 38 restaurants.

GTIM owns, operates, franchises and licenses 21 Bad Daddy’s Burger Bar restaurants through its wholly-owned subsidiaries. Bad Daddy’s Burger Bar is a full service, upscale, “small box” restaurant concept featuring a chef driven menu of gourmet signature burgers, chopped salads, appetizers and sandwiches with a full bar and a focus on a selection of craft microbrew beers in a high-energy atmosphere that appeals to a broad consumer base.

Good Times Forward-Looking Statement

This press release contains forward-looking statements within the meaning of federal securities laws. The words “intend,” “may,” “believe,” “will,” “should,” “anticipate,” “expect,” “seek” and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, which may cause the Company’s actual results to differ materially from results expressed or implied by the forward-looking statements. These risks include such factors as the uncertain nature of current restaurant development plans and the ability to implement those plans and integrate new restaurants, delays in developing and opening new restaurants because of weather, local permitting or other reasons, increased competition, cost increases or shortages in raw food products, and other matters discussed under the “Risk Factors” section of Good Times’ Annual Report on Form 10-K for the fiscal year ended September 27, 2016 filed with the SEC. Although Good Times may from time to time voluntarily update its forward-looking statements, it disclaims any commitment to do so except as required by securities laws.

 
Good Times Restaurants Inc.
Unaudited Supplemental Information

(In thousands, except per share amounts)

 
      Second Quarter     Year To Date
Statement of Operations     2017     2016     2017     2016
Net revenues:                        
      $ 18,077       $ 15,141       $ 34,463       $ 28,797  
        162         177         331         359  
        18,239         15,310         34,797         29,156  
Restaurant Operating Costs:                        
Food and packaging costs       5,614         4,785         10,769         9,290  
Payroll and other employee benefit costs       6,675         5,394         12,670         10,166  
Restaurant occupancy costs       1,429         1,231         2,723         2,294  
Other restaurant operating costs       1,579         1,332         3,107         2,583  
Royalty expense       0         0         0         0  
New store preopening costs       567         576         918         1,301  
Depreciation and amortization       703         549         1,333        

1,008

 
Total restaurant operating costs       16,567         13,867         31,520         26,642  
General and administrative costs       1,746         1,510         3,391         3,116  
Advertising costs       431         352         843         718  
Franchise costs       28         27         52         54  
Gain on restaurant asset sale       (5 )       (7 )       (11 )       (12 )
Loss from operations       (528 )       (431 )       (1,001 )       (731 )
Other income (expense):                        
Interest income (expense), net       (36 )       (36 )       (56 )       (66 )
Total other income (expense), net       (36 )       (36 )       (56 )       (66 )
Net loss       ($564 )       ($467 )       ($1,057 )       ($1,428 )
Income attributable to non-controlling interest       (147 )       (206 )       (287 )       (369 )
Net loss attributable to Good Times Restaurants Inc.       ($711 )       ($673 )       ($1,344 )       ($1,797 )
Basic and diluted loss per share       ($0.06 )       ($0.05 )       ($0.11 )       ($0.15 )

Basic and diluted weighted average common shares outstanding

      12,298         12,263         12,293         12,262  
                                         
                                         

 

Good Times Restaurants Inc.
Unaudited Supplemental Information

(In thousands)

 
         

Mar. 28,
2017

   

Sep. 27,
2016

Balance Sheet Data                
Cash & cash equivalents         $ 4,828     $ 6,330
Current assets           6,843       7,793
Property and Equipment, net           24,122       19,692
Other assets           19,347       19,392
Total assets         $ 50,312     $ 46,877
                 

Current liabilities, including capital lease obligations and long-term debt due within one year

          7,115       5,122
Long-term debt due after one year           1,448       19
Other liabilities           4,709       3,938
Total liabilities         $ 13,272     $ 9,079
Stockholders’ equity         $ 37,040     $ 37,798
                     

 

Supplemental Information:

      Good Times Burgers & Frozen Custard     Bad Daddy’s Burger Bar
      Second Quarter     Year To Date     Second Quarter     Year To Date
      2017     2016     2017     2016     2017     2016     2017     2016
Restaurant Sales (in thousands)     $ 6,890     $ 6,700     $ 13,765     $ 13,647     $ 11,187     $ 8,441     $ 20,698     $ 15,150
Restaurants open during period       1       0       1       0       1       2       2       4
Restaurants open at period end       28       27       28       27       18       14       18       14
Restaurant operating weeks       353.3       351.0       704.3       705.9       231.3       175.0       441.3       320.3
Average weekly sales per restaurant (in thousands)     $ 19.5     $ 19.1     $ 19.5     $ 19.3     $ 48.4     $ 48.2     $ 46.9     $ 47.3
                                                                 
                                                                 

Reconciliation of Non-GAAP Measurements to US GAAP Results

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Loss from Operations

(In thousands, except percentage data)

 
    Good Times Burgers &
Frozen Custard
  Bad Daddy’s
Burger Bar
  Good Times
Restaurants Inc.
   

----------------------------------------------Fiscal Second Quarter----------------------------------------------

    2017   2016   2017   2016   2017   2016
Restaurant Sales   $ 6,890   100.0 %   $ 6,700   100.0 %   $ 11,187   100.0 %   $ 8,441   100.0 %   $ 18,077     $ 15,141  

Restaurant Operating Costs (exclusive of depreciation and amortization shown separately below):

                                       
Food and packaging costs     2,187   31.7 %     2,124   31.7 %     3,427   30.6 %     2,661   31.5 %     5,614       4,785  
Payroll and other employee benefit costs     2,462   35.7 %     2,283   34.1 %     4,213   37.7 %     3,111   36.9 %     6,675       5,394  
Restaurant occupancy costs     716   10.4 %     692   10.3 %     713   6.4 %     539   6.4 %     1,429       1,231  
Other restaurant operating costs     548   8.0 %     538   8.0 %     1,031   9.2 %     794   9.4 %     1,579       1,332  
Restaurant-level operating profit   $ 977   14.2 %   $ 1,063   15.9 %   $ 1,803   16.1 %   $ 1,336   15.8 %     2,780       2,399  
Franchise royalty income, net                                     162       177  
Deduct - Other operating:                                        
Depreciation and amortization                                     703       549  
General and administrative                                     1,746       1,510  
Advertising costs                                     431       352  
Franchise costs                                     28       27  
Gain on restaurant asset sale                                     (5 )     (7 )
Preopening costs                                     567       576  
Total other operating                                     3,470       3,007  
Loss from Operations                                   $ (528 )   $ (431 )

Certain percentage amounts in the table above do not total due to rounding as well as the fact that restaurant operating costs are expressed as a percentage of restaurant revenues, as opposed to total revenues.

Reconciliation of Non-GAAP Measurements to US GAAP Results

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Loss from Operations

(In thousands, except percentage data)

 
    Good Times Burgers &
Frozen Custard
  Bad Daddy’s
Burger Bar
  Good Times
Restaurants Inc.
   

----------------------------------------------Year To Date----------------------------------------------

    2017   2016   2017   2016   2017   2016
Restaurant Sales   $ 13,765   100.0 %   $ 13,647   100.0 %   $ 20,698   100.0 %   $ 15,150   100.0 %   $ 34,463     $ 28,797  

Restaurant Operating Costs (exclusive of depreciation and amortization shown separately below):

                                       
Food and packaging costs     4,399   32.0 %     4,437   32.5 %     6,370   30.8 %     4,853   32.0 %     10,769       9,290  
Payroll and other employee benefit costs     4,860   35.3 %     4,582   33.6 %     7,810   37.7 %     5,584   36.9 %     12,670       10,166  
Restaurant occupancy costs     1,382   10.0 %     1,349   9.9 %     1,341   6.5 %     945   6.2 %     2,723       2,294  
Other restaurant operating costs     1,153   8.4 %     1,126   8.3 %     1,954   9.4 %     1,457   9.6 %     3,107       2,583  
Restaurant-level operating profit   $ 1,971   14.3 %   $ 2,153   15.8 %   $ 3,223   15.6 %   $ 2,331   15.3 %     5,194       4,464  
Franchise royalty income, net                                     331       359  
Deduct - Other operating:                                        
Depreciation and amortization                                     1,333       1,008  
General and administrative                                     3,391       3,116  
Advertising costs                                     843       718  
Franchise costs                                     52       54  
Gain on restaurant asset sale                                     (11 )     (12 )
Preopening costs                                     918       1,301  
Total other operating                                     6,526       6,185  
Loss from Operations                                   $ (1,001 )   $ (1,362 )

Certain percentage amounts in the table above do not total due to rounding as well as the fact that restaurant operating costs are expressed as a percentage of restaurant revenues, as opposed to total revenues.

The Company believes that restaurant-level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. The Company defines restaurant-level operating profit to be restaurant revenues minus restaurant-level operating costs, excluding restaurant closures and impairment costs. The measure includes restaurant level occupancy costs, which include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance and other property costs, but excludes depreciation. The measure excludes depreciation and amortization expense, substantially all of which is related to restaurant level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. The measure also excludes selling, general and administrative costs, and therefore excludes occupancy costs associated with selling, general and administrative functions, and pre-opening costs. The Company excludes restaurant closure costs as they do not represent a component of the efficiency of continuing operations. Restaurant impairment costs are excluded, because, similar to depreciation and amortization, they represent a non-cash charge for the Company’s investment in its restaurants and not a component of the efficiency of restaurant operations. Restaurant-level operating profit is not a measurement determined in accordance with generally accepted accounting principles (“GAAP”) and should not be considered in isolation, or as an alternative, to income from operations or net income as indicators of financial performance. Restaurant-level operating profit as presented may not be comparable to other similarly titled measures of other companies. The tables above set forth certain unaudited information for the fiscal second quarters and year to date for fiscal 2017 and fiscal 2016, expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenues.

Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA

(In thousands)

 
Good Times Restaurants Inc.
 
      Second Quarter     Year To Date
      2017     2016     2017     2016
Net loss as reported       ($711 )       ($673 )       ($1,344 )       ($1,797 )
Adjustments to net loss:                        
Depreciation and amortization       672         520         1,274         947  
Interest expense, net       37         36         57         66  
EBITDA     $ (2 )     $ (117 )     $ (13 )     $ (784 )
Preopening costs       431         576         713         1,301  
Non-cash stock based compensation       205         177         404         355  
GAAP rent in excess of cash rent       (11 )       10         (16 )       24  
Non-cash disposal of assets       (4 )       (7 )       (11 )       (12 )
Adjusted EBITDA     $ 619       $ 639       $ 1,077       $ 884  

Adjusted EBITDA is a supplemental measure of operating performance that does not represent and should not be considered as an alternative to net income or cash flow from operations, as determined by GAAP, and our calculation thereof may not be comparable to that reported by other companies. This measure is presented because we believe that investors' understanding of our performance is enhanced by including this non-GAAP financial measure as a reasonable basis for evaluating our ongoing results of operations.

Adjusted EBITDA is calculated as net income before interest expense, provision for income taxes and depreciation and amortization and further adjustments to reflect the additions and eliminations presented in the table above.

Adjusted EBITDA is presented because: (i) we believe it is a useful measure for investors to assess the operating performance of our business without the effect of non-cash charges such as depreciation and amortization expenses and asset disposals, closure costs and restaurant impairments and (ii) we use adjusted EBITDA internally as a benchmark for certain of our cash incentive plans and to evaluate our operating performance or compare our performance to that of our competitors. The use of adjusted EBITDA as a performance measure permits a comparative assessment of our operating performance relative to our performance based on our GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance or that vary widely among similar companies. Companies within our industry exhibit significant variations with respect to capital structures and cost of capital (which affect interest expense and income tax rates) and differences in book depreciation of property, plant and equipment (which affect relative depreciation expense), including significant differences in the depreciable lives of similar assets among various companies. Our management believes that adjusted EBITDA facilitates company-to-company comparisons within our industry by eliminating some of these foregoing variations. Adjusted EBITDA as presented may not be comparable to other similarly-titled measures of other companies, and our presentation of adjusted EBITDA should not be construed as an inference that our future results will be unaffected by excluded or unusual items.

Contacts:

Boyd E. Hoback
Investor Relations
Good Times Restaurants Inc.
President and CEO
303-384-1411

Jim Zielke
Good Times Restaurants Inc.
Chief Financial Officer
303-384-1432

Christi Pennington
Good Times Restaurants Inc.
303-384-1440

SOURCE Good Times Restaurants Inc.

###

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