8-K: Good Times Restaurants Reports Positive Q1 2025 Results Driven by Revenue Growth and Improved Margins at Bad Daddy's

Good Times Restaurants Inc. reports a 9.6% increase in total revenues and net income for the first fiscal quarter ended December 31, 2024, driven by same-store sales growth at Bad Daddy's Burger Bar.

Summary

• Good Times Restaurants Inc. reported its financial results for the first fiscal quarter of 2025, which ended on December 31, 2024.
• Total revenues increased by 9.6% to $36.3 million compared to the same quarter in fiscal year 2024.
• Same-store sales for company-owned Bad Daddy's restaurants increased by 1.5%, while Good Times restaurants remained unchanged.
• Net income attributable to common shareholders was $0.2 million for the quarter.
• Adjusted EBITDA, a non-GAAP measure, was $1.2 million for the quarter.
• Margins at Bad Daddy's improved due to increased labor productivity and lower food and beverage costs, particularly beef.
• Margins at Good Times declined due to higher staffing levels.
• The second fiscal quarter has been affected by unfavorable weather conditions.
• The company is developing new menu items for both brands.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to revenue growth, improved profitability, and management's optimistic outlook, although weather-related challenges and margin declines at Good Times temper the overall outlook.

Positives

• The company achieved net income compared to a net loss in the same prior year quarter.
• Total revenues increased by 9.6% to $36.3 million.
• Same-store sales at Bad Daddy's Burger Bar increased 1.5%.
• Margins at Bad Daddy's improved due to increased labor productivity and lower beef costs.
• The company is actively developing new menu items for both brands.

Negatives

• Same-store sales for Good Times restaurants were unchanged.
• Margins at Good Times declined due to higher staffing levels.
• The second fiscal quarter has been negatively impacted by unfavorable weather conditions.

Risks

• The company faces challenges in the QSR environment.
• The holiday season shift had a negative impact due to one fewer shopping week between Thanksgiving and Christmas.
• Unfavorable weather conditions have affected both brands in the second fiscal quarter.
• The press release contains forward looking statements that 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 and uncertainties include, among other things, the market price of the Company's stock prevailing from time to time, the nature of other investment opportunities presented to the Company, the disruption to our business from pandemics and other public health emergencies, the impact and duration of staffing constraints at our restaurants, the impact of supply chain constraints and the current inflationary environment, 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, other general economic and operating conditions, risks associated with our share repurchase program, risks associated with the acquisition of additional restaurants, the adequacy of cash flows and the cost and availability of capital or credit facility borrowings to provide liquidity, changes in federal, state, or local laws and regulations affecting the operation of our restaurants, including minimum wage and tip credit regulations, and other matters discussed under the Risk Factors section of Good Times Annual Report on Form 10-K for the fiscal year ended September 24, 2024 filed with the SEC, and other filings with the SEC.

Future Outlook

Management indicates that underlying trends at both concepts remain encouraging and the product pipeline is strong, despite weather-related challenges in the second fiscal quarter. They are focused on brand evolution and modernization.

Management Comments

• I am pleased that our performance this quarter delivered net income compared to a net loss in the same prior year quarter.
• This improvement in income is in spite of challenges in the QSR environment and the negative impact of the holiday season shift, specifically one fewer shopping week between Thanksgiving and Christmas.
• We have strong momentum at Bad Daddys and are executing our long-term plan of brand evolution and modernization at Good Times.

Industry Context

The report acknowledges challenges in the QSR (Quick Service Restaurant) environment, suggesting the company is operating in a competitive and potentially difficult market. The focus on menu innovation and brand evolution aligns with industry trends of adapting to changing consumer preferences.

Comparison to Industry Standards

• It's difficult to provide a precise comparison without knowing the specific peer group Good Times Restaurants benchmarks against.
• However, companies like Wendy's, McDonald's, and Restaurant Brands International (which owns Burger King and Tim Hortons) are major players in the QSR space.
• Comparing Good Times' 9.6% revenue growth to these larger companies' quarterly results would provide context.
• Similarly, comparing same-store sales growth to industry averages and competitors like Habit Burger Grill (owned by Yum! Brands) would be insightful.
• EBITDA margins are also a key metric to compare against peers to assess operational efficiency.

Stakeholder Impact

• Shareholders will likely react positively to the improved financial performance.
• Employees at Bad Daddy's may benefit from increased labor productivity.
• Customers can expect new menu items and potential improvements to existing offerings.

Next Steps

• Management will host a conference call to discuss the results.
• The company will continue to develop and introduce new menu items.
• The company will continue executing its long-term plan of brand evolution and modernization at Good Times.

Key Dates