8-K: Good Times Restaurants Reports Q3 Sales Decline

Good Times Restaurants Inc. reported a 2.4% decrease in total revenues for fiscal Q3 2025, driven by significant same-store sales declines at both its Bad Daddys and Good Times brands.

Summary

• Total revenues for the fiscal 2025 third quarter decreased 2.4% to $37.0 million compared to the fiscal 2024 third quarter.
• Same store sales for company-owned Bad Daddys restaurants decreased 1.4% and Good Times restaurants decreased 9.0% for the quarter compared to the fiscal 2024 third quarter.
• Year-to-date same store sales decreased 1.2% for Bad Daddys and 4.4% for Good Times.
• Net Income Attributable to Common Shareholders was $1.5 million for the quarter, an increase from $1.321 million in the prior year quarter.
• Adjusted EBITDA was $2.2 million for the quarter, down from $2.355 million in the prior year quarter.
• The company ended the quarter with $3.1 million in cash and $2.3 million of long-term debt.
• General and administrative costs were reduced to $2.174 million from $2.688 million in the prior year quarter.

Sentiment

Score: 4

Explanation: The sentiment is moderately negative due to significant sales declines at both brands, particularly Good Times, and a decrease in Adjusted EBITDA. While net income improved due to cost controls, the core revenue and traffic trends are concerning. Management acknowledges the disappointment and is taking proactive steps, which mitigates a lower score, but the underlying financial performance is weak.

Positives

• Net Income Attributable to Common Shareholders increased to $1.5 million in Q3 2025 from $1.321 million in Q3 2024.
• General and administrative costs were significantly reduced to $2.174 million in Q3 2025 from $2.688 million in Q3 2024, strengthening bottom-line results.
• Bad Daddys sales showed improvement in May and June after a soft April.
• The company maintains a healthy cash balance of $3.1 million and manageable long-term debt of $2.3 million.

Negatives

• Total revenues decreased 2.4% to $37.0 million in Q3 2025.
• Same store sales for Good Times restaurants significantly decreased 9.0% for the quarter.
• Same store sales for Bad Daddys restaurants decreased 1.4% for the quarter.
• Adjusted EBITDA decreased to $2.2 million in Q3 2025 from $2.355 million in Q3 2024.
• Total restaurant-level operating profit decreased to $4.970 million (13.5% of sales) from $5.634 million (14.9% of sales) in the prior year quarter.
• Good Times Burgers & Frozen Custard's restaurant-level operating profit significantly declined to $1.157 million (11.2% of sales) from $1.723 million (16.5% of sales).

Risks

• The market price of the company's stock may fluctuate.
• Disruptions to business from pandemics and other public health emergencies.
• Impact and duration of staffing constraints at restaurants.
• Impact of supply chain constraints and the current inflationary environment.
• Impact of tariffs on costs.
• Uncertain nature of current restaurant development plans and the ability to implement and integrate new restaurants.
• Delays in developing and opening new restaurants due to weather, local permitting, or other reasons.
• Increased competition in the restaurant industry.
• Cost increases or shortages in raw food products.
• Other general economic and operating conditions.
• Risks associated with the company's share repurchase program.
• Risks associated with the acquisition of additional restaurants.
• 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 restaurant operations, including minimum wage and tip credit regulations.

Future Outlook

Management is revisiting its strategy to address sales declines, including the hiring of Jason Murphy as the new Senior Director of Marketing. A new brand campaign for Good Times, 'Colorado Native Burgers,' will launch in late August with outdoor advertising, followed by social, streaming video, website, and mobile app redesigns in September. The company's priority is addressing traffic trends at both brands, improving unit-level economics, and ensuring reasonable overhead costs while maintaining guest experience.

Management Comments

• "Our sales results this quarter were disappointing at both brands, with our Good Times brand missing last years comparable quarter sales by a wide margin."
• "After a soft April, Bad Daddys sales improved in May and June, and bottom line results were strengthened by good controls at the Bad Daddys brand and reductions in general and administrative costs."
• "We are revisiting our strategy to address sales declines and as a part of that endeavor we have hired Jason Murphy, previously with Buffalo Wild Wings, as our new Senior Director of Marketing."
• "Addressing traffic trends at both brands is our priority; additionally, we are focused on improving unit level economics and ensuring reasonable overhead costs as evidenced by this quarters profitability in spite of the reduced sales."
• "We remain committed to delivering a great guest experience while taking swift action to reduce restaurant-level costs, however we will continue to make those choices with balance, evaluating any impacts felt by our guests."

Industry Context

The restaurant industry continues to face challenges including staffing constraints, supply chain issues, and inflationary pressures. Good Times Restaurants' sales declines, particularly at its quick-service Good Times brand, reflect broader consumer spending shifts and competitive pressures within the casual dining and quick-service segments. The strategic focus on marketing and cost control aligns with industry efforts to drive traffic and maintain profitability amidst a challenging economic environment.

Comparison to Industry Standards

• The filing does not provide specific comparable companies or projects for direct benchmarking against industry standards. However, the reported same-store sales declines of 1.4% for Bad Daddys and 9.0% for Good Times indicate underperformance relative to many publicly traded restaurant chains that have reported flat to positive same-store sales in recent quarters, particularly in the quick-service segment.
• The decrease in Adjusted EBITDA suggests a decline in operational efficiency compared to the prior year, which contrasts with some industry leaders who have managed to maintain or grow EBITDA through pricing power and cost management despite inflationary pressures.

Stakeholder Impact

• Shareholders: Negative impact due to declining revenues and same-store sales, potentially affecting stock performance, though net income improved.
• Employees: Potential impact from efforts to reduce restaurant-level costs, though management states choices will be made with balance.
• Customers: Potential positive impact from new marketing campaigns and efforts to improve the online ordering experience and overall guest experience.
• Suppliers: Potential negative impact from reduced sales volumes if the trend continues, leading to lower demand for food and packaging.
• Creditors: No immediate significant impact indicated, as the company maintains a healthy cash balance and manageable long-term debt.

Next Steps

• Launch of new 'Colorado Native Burgers' brand campaign for Good Times, with outdoor advertising in late August.
• Rollout of other campaign elements (social, streaming video, website, mobile app redesign) in September.
• Review of in-restaurant merchandising, promotions, menu, point of purchase materials, and online ordering experience by the new Senior Director of Marketing.
• Continued focus on addressing traffic trends at both brands.
• Ongoing efforts to improve unit level economics and ensure reasonable overhead costs.
• Management conference call to discuss results on August 7, 2025, at 5:00 p.m. ET.

Key Dates

Recommendation

While the company reported disappointing sales declines across both brands and a decrease in Adjusted EBITDA, the increase in net income due to effective cost controls and management's proactive steps to address sales trends (new marketing hire, upcoming campaigns) suggest a potential for stabilization. The company remains profitable and has a manageable debt load. An investor should hold to observe the effectiveness of the new strategies before considering further investment or divestment, as the current trends are negative but the response is positive.

Keywords

Restaurant, Fast Casual, Burger Bar, Frozen Custard, SEC Filing, Earnings Report, GTIM, Bad Daddys, Good Times Burgers, Financial Results, Same Store Sales, Adjusted EBITDA