Good Times Restaurants (NASDAQ:GTIM) reported fiscal third-quarter net income of $1.9 million, or $0.18 per share, compared with $1.5 million, or $0.14 per share, a year earlier, as its Good Times brand returned to positive same-store sales and restaurant-level profitability improved.
Adjusted EBITDA rose to $2.5 million from $2.1 million in the prior-year third quarter. The company ended the quarter with $3.6 million in cash and $0.3 million in long-term debt, which Chief Executive Officer Ryan Zink said consisted of seller-financed debt related to the June 2024 acquisition of one Good Times restaurant.
Good Times Same-Store Sales Turn Positive
Zink said the brand’s positive same-store sales trend continued into the fourth fiscal quarter. The company expanded a systemwide test of $2 Bambinos, described as cheeseburger sliders with sauce and pickles, beginning in June. Good Times generated mid-single-digit same-store sales growth during the June fiscal month, he said, and experienced same-store growth in sales, average check and transactions during both June and July.
“Although the promotion was originally planned to be a summer promotion, its success has resulted in us considering expanding the length of the $2 pricing beyond its originally intended end,” Zink said.
He said Bambinos have become the chain’s largest single burger item purchased. While the promotion has created some cannibalization, Zink said the sliders differ from the company’s larger burger offerings and that average-check trends suggest customers are supplementing Bambino purchases with other items.
Good Times’ average menu price was approximately 1.7% higher than a year earlier. Chief Accounting Officer Keri August said the company is not currently planning additional price increases for the remainder of the fiscal year because of market competitiveness.
- Food and packaging costs declined 30 basis points to 31.2%, helped by reduced waste and menu pricing, partly offset by higher fuel surcharges.
- Labor costs fell 120 basis points to 33%, driven by improved labor efficiency, though average wage rates increased.
- Restaurant-level operating profit increased by $0.1 million to $1.3 million, reaching 13% of sales, up 150 basis points from a year earlier.
Bad Daddy’s Sales Decline, Menu Pipeline Expands
At Bad Daddy’s, restaurant sales declined $1.6 million to $24.9 million. August attributed the decrease primarily to fewer restaurant operating weeks resulting from a reduced restaurant count and lower customer traffic, partially offset by menu price increases.
Bad Daddy’s same-store sales declined 2.3% in the third quarter and were down 1.5% year to date. The comparable base included 36 restaurants at quarter-end. Average menu prices rose 2.5% from the year-earlier quarter.
Zink said Bad Daddy’s sales “were not as strong,” but the company is continuing to develop limited-time and permanent menu offerings. He said the Smashadilla Burger, offered during May, was the company’s best-selling individual limited-time burger launch. The chain is featuring The Big Dill in August and has planned monthly menu releases through the end of the calendar year, including new products and returning fan favorites.
During the first quarter of fiscal 2027, Bad Daddy’s expects to add its first sampler platter to the core menu. The brand also expects to introduce a new power bowl as it brings Ahi Tuna back to the core menu, where it was last offered in 2019.
Bad Daddy’s restaurant-level operating profit declined $0.2 million to $3.6 million, though its margin remained unchanged at 14.4% of sales.
- Food and packaging costs decreased 30 basis points to 30.3%, reflecting lower non-beef protein costs and pricing actions, partially offset by higher produce costs and fuel surcharges.
- Labor costs declined 70 basis points to 33.6%, primarily due to reduced salary costs.
- Other operating costs rose 70 basis points to 15.3%, largely due to higher delivery and travel expenses.
Expenses, Liquidity and Capital Allocation
Combined general and administrative expenses were $2 million, or 5.6% of total revenue, down 30 basis points from the prior-year quarter. August said the decline reflected lower multi-unit supervision costs as well as lower legal and professional fees. The company expects full-year fiscal 2026 G&A expenses to represent 6% to 7% of revenue.
During the call’s question-and-answer session, Steven Stern of Stern Investment Advisory asked whether the company had considered initiating a cash dividend given its earnings, cash position, limited long-term debt and existing stock-repurchase program.
Zink said the board continually evaluates ways to create shareholder value and ensure shareholders receive value for their stock. He said a dividend, along with other alternatives, is among the options under consideration by the board.
Zink also said the company is expanding team-member training and retraining through a new learning management system, which management believes can improve salesmanship, sales and traffic. He said Good Times remains focused on consistent execution and improving the friendliness and hospitality customers experience across its drive-thru, walk-up-window and limited indoor-dining formats.
About Good Times Restaurants (NASDAQ:GTIM)
Good Times Restaurants International, Inc (NASDAQ: GTIM) owns, develops, operates and franchises quick-service restaurants under the Good Times Burger & Frozen Custard brand. The company’s restaurants feature a signature menu built around hand-pressed, fresh-never-frozen beef burgers, homemade buns, fresh-cut fries, handcrafted milkshakes and frozen custard desserts. Good Times supplements its core offerings with seasonal items and limited-time promotions designed to appeal to a variety of customer tastes.
Founded in 1987 and headquartered in Lakewood, Colorado, Good Times has expanded through a mix of company-owned locations and franchising agreements.
