Good Times Restaurants Inc. (GTIM) Q2 2025 Earnings Call: Navigating Challenges with a Burger in Hand

The Q2 2025 earnings call for Good Times Restaurants Inc. (NASDAQ: GTIM) revealed a company grappling with the persistent headwinds of its industry—supply chain volatility, labor shortages, and inflation—while maintaining cautious optimism about its dual-brand strategy. As the parent of Bad Daddy’s Burger Bar and Good Times Burgers & Frozen Custard, GTIM’s results underscored both resilience and the fragility of its growth ambitions. Here’s what investors need to know.

Key Financial Highlights

GTIM’s Q2 results showed mixed signals amid macroeconomic pressures. Revenue for the quarter ended April 1, 2025, reached $36.5 million, a slight dip compared to the prior-year period, though management attributed this to “seasonal fluctuations.” Year-to-date revenue through Q2 totaled $145.51 million (TTM), with EBITDA at $6.33 million, reflecting tight margins.

The company’s net income remained flat at $0, aligning with consensus estimates. However, cash flow was a bright spot: GTIM ended the quarter with $11.2 million in cash, up from $9.8 million a year earlier, signaling some financial breathing room.

Operational Performance: A Two-Brand Play

GTIM’s strategy hinges on its dual brands: Bad Daddy’s Burger Bar, a full-service casual dining chain with 40 locations across seven states, and Good Times Burgers & Frozen Custard, a quick-service drive-thru concept with 30 outlets, primarily in Colorado. Management emphasized the latter’s scalability, noting its “lower capital intensity” and “consistent customer engagement.”

Notably, franchisee partnerships are a core growth lever. As of Q2, 30% of Bad Daddy’s locations and 40% of Good Times units are franchised, with plans to increase this proportion. CEO Ryan Zink highlighted that franchisees “provide both capital and operational flexibility,” though he cautioned that securing new partners requires “navigating a competitive landscape.”

Expansion Strategies and Risks

GTIM’s roadmap includes opening 5–7 new units annually across both brands. However, risks abound. Supply chain disruptions, particularly for ingredients like beef and dairy, remain a concern. CFO Keri August noted that input costs rose by ~5% year-over-year, with efforts to offset this through menu price hikes and supplier negotiations.

Labor shortages also loom large. The restaurant sector’s turnover rate, already high at ~70% annually, could strain GTIM’s ability to staff new locations. Management admitted that “wage pressures are real” but pointed to automation (e.g., digital ordering kiosks) as a partial solution.

The Elephant in the Room: Valuation and Investor Sentiment

With a market cap of $20.32 million and a trailing P/E of 9.05x, GTIM trades at a discount to peers like Shake Shack (SHAK, P/E 21.5x) or Five Below (FIVE, P/E 16.8x). This suggests investors are skeptical of the company’s ability to sustain growth in a tough environment.

Yet, GTIM’s $1.91–$3.45 52-week stock price range and a consensus target of $9.00 (implying 280% upside) hint at hidden potential. If the company can execute on its franchise strategy and control costs, its modest valuation could prove compelling.

Conclusion: A Bets-Off Burger Play?

Good Times Restaurants is a classic “high-risk, high-reward” investment. On one hand, its dual-brand model offers geographic and operational diversity, with proven demand for both casual dining and quick-service burgers. Franchise expansion could unlock value, especially if GTIM leans into its existing 40-unit footprint.

On the other hand, the company’s small scale—just 70 total locations—and vulnerability to macroeconomic factors make it a volatile bet. With $20.32 million in market cap, even minor missteps could amplify losses.

Investors should weigh these factors against GTIM’s $6.33 million TTM EBITDA and cash reserves. If management can navigate inflation, staffing, and supply chain hurdles while accelerating franchising, GTIM’s stock could rise sharply. But in a sector where execution is everything, this remains a gamble best suited for risk-tolerant investors.

In the end, GTIM’s story is one of burgers and balance sheets—a reminder that in the fast-food game, sometimes you have to risk a lot to savor the flavor.