What were the key takeaways from Good Times Restaurants's earnings call?

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What were the key takeaways from Good Times Restaurants’s earnings call?

What does Good Times Restaurants do and what are its main business segments?

What factors drove the changes in Good Times Restaurants's revenue and profit?

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What is the revenue and EPS growth rate for Good Times Restaurants year over year?

- **Revenue Challenges**: Good Times same-store sales down 9% Y/Y, while Bad Daddy's saw modest improvement.
- **Cost Pressures**: Ground beef costs driving 300+ bps margin headwinds; labor costs up 50-150 bps Y/Y.
- **Strategic Moves**: 
  - 1% price increase testing in Good Times; no discounting strategy.
  - $2.2M Q3 EBITDA; share buybacks to resume in 2026.
  - 2026 CapEx focus on remodels, POS upgrades, and new unit development.
- **Key Risks**: Competitor discounting, commodity volatility, labor inflation.


**【CEO Summary Section】**
- **Mixed Q3 Results**: Bad Daddy's saw sequential improvement in same-store sales (+10 bps in restaurant-level profit), while Good Times experienced declines in both sales (-9% Y/Y) and profitability. 
- **New Marketing Leadership**: Hired Jason Murphy to lead cross-brand marketing strategy, including digital, media, and menu execution.
- **Pricing Strategy**: 
  - Good Times implemented 1% price increase in select locations, with plans to expand system-wide.
  - Maintained quality positioning without discounting, now pricing in parity with competitors after 10% historical premium.
- **Product Innovation**: 
  - Good Times' Fried Ice Cream LTO was most successful in years; Bad Daddy's $8 Bad Ass Margarita drove beverage sales.
  - Upcoming Colorado Native Burgers campaign and Bratwurst Burger/Large Pretzel LTOs.
- **Cost Challenges**: Both brands facing record-high ground beef costs, with potential menu price adjustments to offset inflation.

**【CFO Financial Commentary】**
- **Topline Performance**: 
  - Bad Daddy's: $26.5M in restaurant sales (-$0.8M Y/Y), 1.4% same-store sales decline.
  - Good Times: $10.4M in restaurant sales (-$0.1M Y/Y), 9% same-store sales decline.
- **Cost Pressures**: 
  - Food/beverage costs: 30.6% (Bad Daddy's) vs. 31.5% (Good Times), driven by ground beef and egg prices.
  - Labor costs: 34.3% (Bad Daddy's) vs. 34.2% (Good Times), up 50-150 bps Y/Y due to wage inflation and lower sales leverage.
- **Profitability**: 
  - Bad Daddy's: $3.8M restaurant-level profit (14.4% of sales).
  - Good Times: $1.2M restaurant-level profit (11.2% of sales, -530 bps Y/Y).
- **Financial Highlights**: 
  - Net income: $1.5M ($0.14/share) vs. $1.3M ($0.12/share) Y/Y.
  - Adjusted EBITDA: $2.2M vs. $2.4M Y/Y.
  - Cash: $3.1M; Long-term debt: $2.3M.
  - Share repurchases: 21,968 shares ($0.2M).

**【Q&A Key Highlights】**
- **CapEx Outlook**: 
  - Q3: $0.2M for remodels/signage.
  - 2026: 1% of sales for maintenance (e.g., POS system replacement at Bad Daddy's), plus special projects (Good Times remodels, new unit development).
- **EBITDA Expectations**: Q3 $2.2M is among highest quarters; no forward guidance, but 2026 share buybacks contingent on cash accumulation.
- **Good Times Underperformance**: Driven by competitor discounting, macro factors, and brand messaging challenges. Focus on value through quality and service rather than price.
- **2026 Plans**: 
  - Finalize Good Times remodels/signage.
  - Explore new unit opportunities, particularly for Bad Daddy's in loosening real estate market.
  - Target 20%+ IRR on new unit CapEx.


Good Times Restaurants (GTIM)-7 Aug 25-2025 Q3 Earnings call transcript

- **Q2 Results Disappointing**: Both brands saw 3.5% same-store sales decline amid value-focused competition.
- **Good Times Innovation**: New burger builds, menu simplification, and frozen custard overhaul to improve quality perception.
- **Bad Daddy's Strengths**: Smash n’ Stack burger success (4th in sales mix) and $8 margarita program drive margin resilience.
- **Financial Challenges**: 420bps operating profit margin decline at Good Times due to labor and food cost inflation.
- **Strategic Shifts**: Moving marketing budget to digital channels, pausing share buybacks to invest in remodels.

**【CEO Opening Remarks】**
- Q2 2025 results were disappointing with same-store sales down 3.5% at both Good Times and Bad Daddy's brands.
- Challenging operating environment driven by value-oriented customers and higher labor costs.
- Strategy focuses on improving operational execution, menu simplification, and digital marketing.

**【Good Times Brand Updates】**
- Leadership transition: Craig Soto promoted to Director of Operations to drive kitchen consistency and quality.
- Product innovations: 
  - New burger builds with shredded lettuce for better taste
  - Smashed patties to enhance value perception
  - Condensed menu removing underperforming items
  - New frozen custard base and fried ice cream dessert
- Labor costs up 50bps YoY due to training and wage inflation.

**【Bad Daddy's Performance】**
- Strong menu engineering: Smash n’ Stack burger ranked #4 in sales mix
- Beverage innovation: $8 all-day margarita and zero-proof cocktails
- Colorado-specific sales underperformance linked to regional factors
- Sequential sales improvement but April remained soft

**【CFO Financial Review】**
- **Bad Daddy's**: 
  - Total sales $24.8M (-6.3% YoY)
  - Food costs 30.7% (up 30bps)
  - Labor costs 34.3% (down 40bps)
  - Operating profit $3.4M (13.6% of sales)
- **Good Times**: 
  - Sales $9.3M (+5.6% YoY)
  - Food costs 30.7% (up 160bps)
  - Labor costs 35.6% (up 50bps)
  - Operating profit $0.7M (8% of sales)
- Net loss $0.6M vs. $0.6M profit YoY
- Adjusted EBITDA $1M (-33% YoY)
- Cash balance $2.7M with $2.6M long-term debt

**【Strategic Initiatives】**
- Shifting marketing spend to digital and connected TV
- Testing outdoor advertising in Denver
- Pausing share buybacks to prioritize remodels and debt repayment
- 1% of sales allocated to maintenance CapEx

Good Times Restaurants (GTIM)-8 May 25-2025 Q2 Earnings call transcript

- **Bad Daddy's Growth**: 1.5% Q1 same-store sales growth driven by smashed patty burgers, offsetting 4.5% menu price increase. Spring menu expansion planned.
- **Good Times Struggles**: Flat sales amid 3.9% price hike, 36.7% labor costs, and 9.6% occupancy expenses. Q1 remodels and Thornton closure highlight operational focus.
- **Financial Health**: Bad Daddy's EBITDA margin up to 12.6%, Good Times down to 8.6%. Company net income $0.2M, cash $3M. 
- **Share Buybacks**: 59,125 shares repurchased Q1; buybacks balanced with remodels. 
- **Key Risks**: Colorado minimum wage hike (+2.7%), unpredictable weather, and QSR competition.

**【CEO Summary Section】**
- **Bad Daddy's Performance**: Q1 same-store sales +1.5% driven by smashed patty burgers (e.g., Smokehouse Smash) with 4.5% menu price increase partially offset by mix shift. Spring plans include Birria Burger reintroduction and new audio/visual ads.
- **Good Times Challenges**: Flat same-store sales amid 3.9% menu price increase, but facing intense QSR competition and higher labor/occupancy costs. Q1 remodels in Denver suburbs and Thornton (6-week closure) aim to modernize brand.
- **Cost Management**: Labor costs down 70bps at Bad Daddy's (35.1% of sales) due to sales leverage and wage control, but Q2 labor may rise due to Colorado minimum wage hike (+2.7%) and January weather-related sales decline.

**【CFO Financial Commentary】**
- **Bad Daddy's**: Total sales $26.1M (+$2M vs. Q1 2024), food/beverage cost stable at 31.5% of sales. Restaurant-level EBITDA $3.3M (12.6% margin vs. 10.7% prior year). 
- **Good Times**: Sales $9.9M (+$1.1M), same-store sales flat. Food cost up 100bps to 31.8%, labor up 290bps to 36.7%, occupancy up 70bps to 9.6%. Restaurant-level EBITDA $0.9M (8.6% margin vs. 13.5% prior year). 
- **Company-wide**: Net income $0.2M ($0.02 EPS), Adjusted EBITDA $1.2M. Cash $3M, debt $2.6M. Q1 share buybacks 59,125 shares.

**【Q&A Highlights】**
1. **New Locations**: Bad Daddy's seeking high-visibility co-tenant sites (e.g., Madison, AL). Good Times remodels prioritized over new builds. 
2. **Capital Allocation**: Share buybacks (~1% of sales) balanced with Good Times remodels and franchisee acquisitions. No immediate plans for new franchise purchases. 
3. **Legal Update**: Appeals court remanded damages ruling to District Court; no timeline for resolution. 
4. **Seasonality**: Bad Daddy's peak Q3-Q4, Good Times most impacted by Q1 weather. 
5. **Customer Demographics**: Bad Daddy's 25-45 mixed gender; Good Times 30-40 female-leaning. Testing YouTube ads to attract younger audiences.


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