Release Date: December 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Good Times Restaurants Inc (NASDAQ:GTIM) reported a 4.3% increase in total revenues for the quarter, reaching a new all-time record of $142.3 million for fiscal 2024.
• Bad Daddy's brand saw a strong increase in same-store sales by 3.2% for the quarter, driven by operational improvements and new menu items.
• The introduction of the Smash Patty burgers at Bad Daddy's was successful, becoming a top menu item and contributing positively to sales and margins.
• The company has been actively remodeling and acquiring franchise locations to ensure operational excellence and brand continuity.
• Good Times Restaurants Inc (NASDAQ:GTIM) expanded its share repurchase program, indicating confidence in the company's value and providing flexibility for capital allocation.

Negative Points

• Good Times brand experienced a slight decline in same-store sales, with a 0.1% decrease, attributed to escalating beef prices and competitive discounting.
• The company faced increased costs in food and packaging, labor, and occupancy, impacting overall profitability.
• Despite revenue growth, Good Times Restaurants Inc (NASDAQ:GTIM) reported a decrease in restaurant-level operating profit for the Good Times brand.
• The company's marketing strategy faced challenges, with audio-based advertising reductions not yielding the expected results.
• There is uncertainty in the commodity market, particularly with ground beef prices, which could continue to impact cost structures.

Q & A Highlights

• Warning! GuruFocus has detected 2 Warning Sign with GTIM.

Q: Can you provide more details on the performance of Bad Daddy's and the impact of the new menu items? A: Ryan Zink, CEO, explained that Bad Daddy's saw a strong increase in same-store sales and improved margins. The introduction of the Smash Patty burgers as a permanent menu item was a significant success, becoming a top-five menu item. The new items have been well-received, contributing to the brand's positive momentum.

Q: What challenges did Good Times face this quarter, and how are you addressing them? A: Ryan Zink, CEO, noted that Good Times experienced challenges due to escalating beef prices and intense discounting by competitors, leading to slightly negative same-store sales. The company is focusing on product improvement and innovation rather than deep discounting, with new menu items like the Bambino Supremo sliders.

Q: How is the company handling the current economic pressures, such as inflation and supply chain issues? A: Carrie August, SVP of Finance and Accounting, stated that the company is managing these pressures by focusing on operational efficiencies and strategic pricing. They have implemented a modest price increase and are monitoring commodity markets closely to adjust as needed.

Q: Could you elaborate on the company's development plans for Bad Daddy's locations? A: Ryan Zink, CEO, mentioned that while they had hoped to open a new Bad Daddy's location in fiscal 2025, they decided against it after further analysis. The company remains committed to only pursuing sites with high expected performance and continues to actively search for new locations.

Q: What are the company's plans regarding share repurchases and capital allocation? A: Carrie August, SVP of Finance and Accounting, explained that the company expanded its share repurchase program by an additional $2 million. This decision reflects their belief in the undervaluation of their shares and the strong return potential for shareholders. Share repurchases will be balanced with other capital needs, including maintenance and special CapEx projects.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.