UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 26, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-18590
Good Times Restaurants Inc.
(Exact Name of Registrant as Specified in Its Charter)
 | ||||||||||
Nevada | 84-1133368 | |||||||||
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer | |||||||||
651 CORPORATE CIRCLE, GOLDEN, CO 80401
(Address of Principal Executive Offices, Including Zip Code)
(303) 384-1400
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||
Common Stock $.001 par value | GTIM | NASDAQ Capital Market | ||||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ | No ☐ | |||
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ | No ☐ | |||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company”, in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |
Emerging growth company | ☐ | |||
If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ | No ☒ | |||
As of April 23, 2024, there were 11,002,084 shares of the Registrant's common stock, par value $0.001 per share, outstanding.
Form 10-Q
Quarter Ended March 28, 202326, 2024
PART I. -– FINANCIAL INFORMATION
ITEM 1. | FINANCIAL STATEMENTS |
Good Times Restaurants Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share and per share data)
March 26, 2024 | September 26, 2023 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 4,000 | $ | 4,182 | ||||
Receivables | 862 | 769 | ||||||
Prepaid expenses and other | 768 | 163 | ||||||
Inventories | 1,434 | 1,407 | ||||||
Total current assets | 7,064 | 6,521 | ||||||
PROPERTY AND EQUIPMENT: | ||||||||
Land and building | 5,722 | 5,722 | ||||||
Leasehold improvements | 38,481 | 38,191 | ||||||
Fixtures and equipment | 33,811 | 33,040 | ||||||
Total property and equipment | 78,014 | 76,953 | ||||||
Less accumulated depreciation and amortization | (55,787 | ) | (53,917 | ) | ||||
Total net property and equipment | 22,227 | 23,036 | ||||||
OTHER ASSETS: | ||||||||
Operating lease right-of-use assets, net | 38,160 | 40,007 | ||||||
Deferred tax assets | 11,584 | 11,583 | ||||||
Deposits and other assets | 266 | 277 | ||||||
Trademarks | 3,900 | 3,900 | ||||||
Other intangibles, net | 41 | 51 | ||||||
Goodwill | 5,713 | 5,713 | ||||||
Total other assets | 59,664 | 61,531 | ||||||
TOTAL ASSETS: | $ | 88,955 | $ | 91,088 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable | $ | 2,745 | $ | 2,585 | ||||
Deferred income | 46 | 67 | ||||||
Operating lease liabilities, current | 6,078 | 5,787 | ||||||
Other accrued liabilities | 6,710 | 6,451 | ||||||
Total current liabilities | 15,579 | 14,890 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Maturities of long-term debt | 1,250 | 750 | ||||||
Operating lease liabilities, net of current portion | 39,875 | 42,332 | ||||||
Deferred revenues and other liabilities | 116 | 122 | ||||||
Total long-term liabilities | 41,241 | 43,204 | ||||||
SHAREHOLDERS’ EQUITY: | ||||||||
Good Times Restaurants Inc. shareholders’ equity: | ||||||||
Preferred stock, $.01 par value; 5,000,000 shares authorized, no shares issued and outstanding as of March 26, 2024 and September 26, 2023 | - | - | ||||||
Common stock, $.001 par value; 50,000,000 shares authorized; 12,977,433 issued; and 11,033,319 and 11,446,587 outstanding as of March 26, 2024 and September 26, 2023, respectively | 13 | 13 | ||||||
Capital contributed in excess of par value | 56,779 | 56,701 | ||||||
Treasury stock, at cost; 1,944,114 and 1,530,846 shares as of March 26, 2024 and September 26, 2023, respectively | (5,992 | ) | (4,908 | ) | ||||
Accumulated deficit | (19,173 | ) | (19,235 | ) | ||||
Total Good Times Restaurants Inc. shareholders’ equity | 31,627 | 32,571 | ||||||
Non-controlling interests | 508 | 423 | ||||||
Total shareholders’ equity | 32,135 | 32,994 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 88,955 | $ | 91,088 | ||||
| March 28, 2023 | September 27, 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 5,367 | $ | 8,906 | ||||
| Receivables | 603 | 694 | ||||||
| Prepaid expenses and other | 1,745 | 888 | ||||||
| Inventories | 1,321 | 1,387 | ||||||
| Total current assets | 9,036 | 11,875 | ||||||
| PROPERTY AND EQUIPMENT: | ||||||||
| Land and building | 4,670 | 4,670 | ||||||
| Leasehold improvements | 36,492 | 35,906 | ||||||
| Fixtures and equipment | 31,143 | 30,664 | ||||||
| Total property and equipment | 72,305 | 71,240 | ||||||
| Less accumulated depreciation and amortization | (50,461 | ) | (48,989 | ) | ||||
| Total net property and equipment | 21,844 | 22,251 | ||||||
| OTHER ASSETS: | ||||||||
| Operating lease right-of-use assets, net | 40,383 | 42,463 | ||||||
| Deferred tax assets | 10,847 | - | ||||||
| Deposits and other assets | 157 | 166 | ||||||
| Trademarks | 3,900 | 3,900 | ||||||
| Other intangibles, net | 16 | 20 | ||||||
| Goodwill | 5,713 | 5,713 | ||||||
| Total other assets | 61,016 | 52,262 | ||||||
| TOTAL ASSETS: | $ | 91,896 | $ | 86,388 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | 2,382 | 628 | ||||||
| Deferred income | 45 | 48 | ||||||
| Operating lease liabilities, current | 5,506 | 5,430 | ||||||
| Other accrued liabilities | 7,437 | 6,791 | ||||||
| Total current liabilities | 15,370 | 12,897 | ||||||
| LONG-TERM LIABILITIES: | ||||||||
| Operating lease liabilities, net of current portion | 43,063 | 45,544 | ||||||
| Deferred revenues and other liabilities | 134 | 159 | ||||||
| Total long-term liabilities | 43,197 | 45,703 | ||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Good Times Restaurants Inc. shareholders’ equity: | ||||||||
Preferred stock, $.01 par value; 5,000,000 shares authorized, no shares issued and outstanding as of March 28, 2023 and September 27, 2022 | - | - | ||||||
Common stock, $.001 par value; 50,000,000 shares 12,274,351 outstanding as of March 28, 2023 and September 27, 2022, respectively | 13 | 13 | ||||||
| Capital contributed in excess of par value | 56,754 | 59,427 | ||||||
| Treasury stock, at cost; 1,231,083 and 692,798 shares as of March 28, 2023 and September 27, 2022, respectively | (3,974 | ) | (2,634 | ) | ||||
| Accumulated deficit | (19,827 | ) | (30,321 | ) | ||||
| Total Good Times Restaurants Inc. shareholders' equity | 32,966 | 26,485 | ||||||
| Non-controlling interests | 363 | 1,303 | ||||||
| Total shareholders’ equity | 33,329 | 27,788 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 91,896 | $ | 86,388 | ||||
See accompanying notes to condensed consolidated financial statements (unaudited)
Good Times Restaurants Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands except share and per share data)
Quarter Ended | Year-to-Date | |||||||||||||||
March 26, 2024 | March 28, 2023 | March 26, 2024 | March 28, 2023 | |||||||||||||
NET REVENUES: | ||||||||||||||||
Restaurant sales | $ | 35,265 | $ | 34,568 | $ | 68,211 | $ | 67,747 | ||||||||
Franchise revenues | 173 | 217 | 359 | 432 | ||||||||||||
Total net revenues | 35,438 | 34,785 | 68,570 | 68,179 | ||||||||||||
RESTAURANT OPERATING COSTS: | ||||||||||||||||
Food and packaging costs | 10,599 | 10,655 | 20,926 | 21,262 | ||||||||||||
Payroll and other employee benefit costs | 12,266 | 11,989 | 23,890 | 23,537 | ||||||||||||
Restaurant occupancy costs | 2,613 | 2,428 | 5,118 | 4,886 | ||||||||||||
Other restaurant operating costs | 5,105 | 4,826 | 9,833 | 9,318 | ||||||||||||
Preopening costs | - | 30 | - | 30 | ||||||||||||
Depreciation and amortization | 926 | 911 | 1,853 | 1,821 | ||||||||||||
Total restaurant operating costs | 31,509 | 30,839 | 61,620 | 60,854 | ||||||||||||
General and administrative costs | 2,554 | 2,297 | 4,867 | 4,675 | ||||||||||||
Advertising costs | 824 | 778 | 1,916 | 1,672 | ||||||||||||
Impairment of long-lived assets | - | 76 | - | 76 | ||||||||||||
Loss (gain) on restaurant and equipment asset sales | 4 | (22 | ) | (6 | ) | (22 | ) | |||||||||
Litigation contingencies | (97 | ) | - | (97 | ) | - | ||||||||||
INCOME FROM OPERATIONS: | 644 | 817 | 270 | 924 | ||||||||||||
Interest and other expense, net | (42 | ) | (26 | ) | (74 | ) | (38 | ) | ||||||||
NET INCOME BEFORE INCOME TAXES: | 602 | 791 | 196 | 886 | ||||||||||||
Provision for income taxes | 78 | 9,952 | 1 | 9,952 | ||||||||||||
NET INCOME: | $ | 680 | $ | 10,743 | $ | 197 | $ | 10,838 | ||||||||
Income attributable to non-controlling interests | (62 | ) | (122 | ) | (135 | ) | (344 | ) | ||||||||
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 618 | $ | 10,621 | $ | 62 | $ | 10,494 | ||||||||
NET INCOME PER SHARE, ATTRIBUTABLE TO COMMON SHAREHOLDERS: | ||||||||||||||||
Basic | $ | 0.06 | $ | 0.90 | $ | 0.01 | $ | 0.88 | ||||||||
Diluted | $ | 0.06 | $ | 0.89 | $ | 0.01 | $ | 0.88 | ||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
Basic | 11,136,207 | 11,818,651 | 11,256,893 | 11,930,140 | ||||||||||||
Diluted | 11,230,717 | 11,884,123 | 11,352,592 | 11,985,254 | ||||||||||||
| Quarter Ended | Year-to-Date | |||||||||||||||
| March 28, 2023 (13 Weeks) | March 29, 2022 (13 Weeks) | March 28, 2023 (26 Weeks) | March 29, 2022 (26 Weeks) | |||||||||||||
| NET REVENUES: | ||||||||||||||||
| Restaurant sales | $ | 34,568 | $ | 33,364 | $ | 67,747 | $ | 66,040 | ||||||||
| Franchise revenues | 217 | 233 | 432 | 473 | ||||||||||||
| Total net revenues | 34,785 | 33,597 | 68,179 | 66,513 | ||||||||||||
| RESTAURANT OPERATING COSTS: | ||||||||||||||||
| Food and packaging costs | 10,655 | 10,457 | 21,262 | 20,683 | ||||||||||||
| Payroll and other employee benefit costs | 11,989 | 11,555 | 23,537 | 22,732 | ||||||||||||
| Restaurant occupancy costs | 2,428 | 2,377 | 4,886 | 4,705 | ||||||||||||
| Other restaurant operating costs | 4,826 | 4,667 | 9,318 | 8,805 | ||||||||||||
| Preopening costs | 30 | - | 30 | 50 | ||||||||||||
| Depreciation and amortization | 911 | 1,013 | 1,821 | 1,997 | ||||||||||||
| Total restaurant operating costs | 30,839 | 30,069 | 60,854 | 58,972 | ||||||||||||
| General and administrative costs | 2,297 | 2,577 | 4,672 | 5,282 | ||||||||||||
| Advertising costs | 778 | 812 | 1,672 | 1,453 | ||||||||||||
| Franchise costs | - | 6 | 3 | 11 | ||||||||||||
| Impairment of long-lived assets | 76 | 1,753 | 76 | 1,753 | ||||||||||||
| Gain on restaurant asset sale and lease termination | (22 | ) | (43 | ) | (22 | ) | (657 | ) | ||||||||
| Litigation contingencies | - | 332 | - | 332 | ||||||||||||
| INCOME (LOSS) FROM OPERATIONS: | 817 | (1,909 | ) | 924 | (633 | ) | ||||||||||
| Interest and other expense, net | (26 | ) | (11 | ) | (38 | ) | (29 | ) | ||||||||
| NET INCOME (LOSS) BEFORE INCOME TAXES: | 791 | (1,920 | ) | 886 | (662 | ) | ||||||||||
| Provision for income taxes | 9,952 | - | 9,952 | (8 | ) | |||||||||||
| NET INCOME (LOSS): | $ | 10,743 | $ | (1,920 | ) | $ | 10,838 | $ | (670 | ) | ||||||
| Income attributable to non-controlling interests | (122 | ) | (230 | ) | (344 | ) | (1,150 | ) | ||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 10,621 | $ | (2,150 | ) | $ | 10,494 | $ | (1,820 | ) | ||||||
| NET INCOME (LOSS) PER SHARE, ATTRIBUTABLE TO COMMON SHAREHOLDERS: | ||||||||||||||||
| Basic | $ | 0.90 | $ | (0.17 | ) | $ | 0.88 | $ | (0.15 | ) | ||||||
| Diluted | $ | 0.89 | $ | (0.17 | ) | $ | 0.88 | $ | (0.15 | ) | ||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
| Basic | 11,818,651 | 12,527,625 | 11,930,140 | 12,525,048 | ||||||||||||
| Diluted | 11,884,123 | 12,527,625 | 11,985,254 | 12,525,048 | ||||||||||||
See accompanying notes to condensed consolidated financial statements (unaudited)
Good Times Restaurants Inc. and Subsidiaries
Consolidated Statements of Shareholders’Shareholders’ Equity (Unaudited)
Year-to-Date March 28, 202326, 2024
(In thousands, except share and per share data)
Treasury Stock, | Common Stock | |||||||||||||||||||||||||||||
Shares | Amount | Outstanding | Par | Capital | Non- | Accumulated | Total | |||||||||||||||||||||||
BALANCES, September 26, 2023 | 1,530,846 | $ | (4,908 | ) | 11,446,587 | $ | 13 | $ | 56,701 | $ | 423 | $ | (19,235 | ) | $ | 32,994 | ||||||||||||||
Stock-based compensation cost | - | - | - | - | 38 | - | - | 38 | ||||||||||||||||||||||
Treasury Shares Purchased | 160,772 | (438 | ) | (160,772 | ) | - | - | - | - | (438 | ) | |||||||||||||||||||
Non-controlling interests: | ||||||||||||||||||||||||||||||
Income | - | - | - | - | - | 73 | - | 73 | ||||||||||||||||||||||
Distributions | - | - | - | - | - | (29 | ) | - | (29 | ) | ||||||||||||||||||||
Net loss attributable to Good Times Restaurants Inc and comprehensive income | - | - | - | - | - | - | (556 | ) | (556 | ) | ||||||||||||||||||||
BALANCES, December 26, 2023 | 1,691,618 | $ | (5,346 | ) | 11,285,815 | $ | 13 | $ | 56,739 | $ | 467 | $ | (19,791 | ) | $ | 32,082 | ||||||||||||||
Stock-based compensation cost | - | - | - | - | 40 | - | - | 40 | ||||||||||||||||||||||
Treasury Shares Purchased | 252,496 | (646 | ) | (252,496 | ) | - | - | - | - | (646 | ) | |||||||||||||||||||
Non-controlling interests: | ||||||||||||||||||||||||||||||
Income | - | - | - | - | - | 62 | - | 62 | ||||||||||||||||||||||
Distributions | - | - | - | - | - | (21 | ) | - | (21 | ) | ||||||||||||||||||||
Net income attributable to Good Times Restaurants Inc and comprehensive income | - | - | - | - | - | - | 618 | 618 | ||||||||||||||||||||||
BALANCES, March 26, 2024 | 1,944,114 | $ | (5,992 | ) | 11,033,319 | $ | 13 | $ | 56,779 | $ | 508 | $ | (19,173 | ) | $ | 32,135 | ||||||||||||||
| Treasury Stock, at cost | Common Stock | |||||||||||||||||||||||||||||||
| Shares | Amount | Outstanding Shares | Par Value | Capital Contributed in Excess of Par Value | Non- Controlling Interest In Partnerships | Accumulated Deficit | Total | |||||||||||||||||||||||||
| BALANCES, September 27, 2022 | 692,798 | $ | (2,634 | ) | 12,274,351 | $ | 13 | $ | 59,427 | $ | 1,303 | $ | (30,321 | ) | $ | 27,788 | ||||||||||||||||
| Stock-based compensation cost | - | - | - | - | 46 | - | - | 46 | ||||||||||||||||||||||||
| Restricted stock unit vesting | - | - | 8,284 | - | (92 | ) | - | - | (92 | ) | ||||||||||||||||||||||
| Stock Option Exercise | - | - | 2,000 | - | 5 | - | - | 5 | ||||||||||||||||||||||||
| Treasury Shares Purchased | 371,395 | (873 | ) | (371,395 | ) | - | - | - | - | (873 | ) | |||||||||||||||||||||
| Non-controlling interests: | ||||||||||||||||||||||||||||||||
| Income | - | - | - | - | - | 222 | - | 222 | ||||||||||||||||||||||||
| Distributions | - | - | - | - | - | (172 | ) | - | (172 | ) | ||||||||||||||||||||||
| Contributions | - | - | - | - | - | 13 | - | 13 | ||||||||||||||||||||||||
Net Income attributable to common shareholders and comprehensive income | (127 | ) | (127 | ) | ||||||||||||||||||||||||||||
| BALANCES, December 27, 2022 | 1,064,193 | $ | (3,507 | ) | 11,913,240 | $ | 13 | $ | 59,386 | $ | 1,366 | $ | (30,448 | ) | $ | 26,810 | ||||||||||||||||
| Stock-based compensation cost | - | - | - | - | 43 | - | - | 43 | ||||||||||||||||||||||||
| Treasury Shares Purchased | 166,890 | (467 | ) | (166,890 | ) | - | - | - | - | (467 | ) | |||||||||||||||||||||
| Non-controlling interests: | ||||||||||||||||||||||||||||||||
| Income | - | - | - | - | - | 122 | - | 122 | ||||||||||||||||||||||||
| Distributions | - | - | - | - | - | (294 | ) | - | (294 | ) | ||||||||||||||||||||||
| Purchase of non-controlling interests | - | - | - | - | (2,675 | ) | (831 | ) | - | (3,506 | ) | |||||||||||||||||||||
Net Income attributable to common shareholders and comprehensive income | - | - | - | - | - | - | 10,621 | 10,621 | ||||||||||||||||||||||||
| BALANCES, March 28, 2023 | 1,231,083 | $ | (3,974 | ) | 11,746,350 | $ | 13 | $ | 56,754 | $ | 363 | $ | (19,827 | ) | $ | 33,329 | ||||||||||||||||
See accompanying notes to consolidated financial statements (unaudited)
Good Times Restaurants Inc. and Subsidiaries
Consolidated Statements of Shareholders’Shareholders’ Equity (Unaudited)
Year-to-Date March 29, 202228, 2023
(In thousands, except share and per share data)
Treasury Stock, | Common Stock | |||||||||||||||||||||||||||||
Shares | Amount | Outstanding | Par | Capital | Non- | Accumulated | Total | |||||||||||||||||||||||
BALANCES, September 27, 2022 | 692,798 | $ | (2,634 | ) | 12,274,351 | $ | 13 | $ | 59,427 | $ | 1,303 | $ | (30,321 | ) | $ | 27,788 | ||||||||||||||
Stock-based compensation cost | - | - | - | - | 46 | - | - | 46 | ||||||||||||||||||||||
Restricted stock unit vesting | - | - | 8,284 | - | (92 | ) | - | - | (92 | ) | ||||||||||||||||||||
Stock option exercise | - | - | 2,000 | - | 5 | - | - | 5 | ||||||||||||||||||||||
Treasury shares purchased | 371,395 | (873 | ) | (371,395 | ) | - | - | - | - | (873 | ) | |||||||||||||||||||
Non-controlling interests: | ||||||||||||||||||||||||||||||
Income | - | - | - | - | - | 222 | - | 222 | ||||||||||||||||||||||
Distributions | - | - | - | - | - | (172 | ) | - | (172 | ) | ||||||||||||||||||||
Contributions | - | - | - | - | - | 13 | - | 13 | ||||||||||||||||||||||
Net loss attributable to Good Times Restaurants Inc and comprehensive income | - | - | - | - | - | - | (127 | ) | (127 | ) | ||||||||||||||||||||
BALANCES, December 27, 2022 | 1,064,193 | $ | (3,507 | ) | 11,913,240 | $ | 13 | $ | 59,386 | $ | 1,366 | $ | (30,448 | ) | $ | 26,810 | ||||||||||||||
Stock-based compensation cost | - | - | - | - | 43 | - | - | 43 | ||||||||||||||||||||||
Treasury Shares Purchased | 166,890 | (467 | ) | (166,890 | ) | - | - | - | - | (467 | ) | |||||||||||||||||||
Non-controlling interests: | ||||||||||||||||||||||||||||||
Income | - | - | - | - | - | 122 | - | 122 | ||||||||||||||||||||||
Distributions | - | - | - | - | - | (294 | ) | - | (294 | ) | ||||||||||||||||||||
Purchase of non-controlling interests | - | - | - | - | (2,675 | ) | (831 | ) | - | (3,506 | ) | |||||||||||||||||||
Net income attributable to Good Times Restaurants Inc and comprehensive income | - | - | - | - | - | - | 10,621 | 10,621 | ||||||||||||||||||||||
BALANCES, March 28, 2023 | 1,231,083 | $ | (3,974 | ) | 11,746,350 | $ | 13 | $ | 56,754 | $ | 363 | $ | (19,827 | ) | $ | 33,329 | ||||||||||||||
| Treasury Stock, at cost | Common Stock | |||||||||||||||||||||||||||||||
| Shares | Amount | Outstanding Shares | Par Value | Capital Contributed in Excess of Par Value | Non- Controlling Interest In Partnerships | Accumulated Deficit | Total | |||||||||||||||||||||||||
| BALANCES, September 28, 2021 | 376,351 | $ | (1,608 | ) | 12,512,072 | $ | 13 | $ | 59,021 | $ | 1,124 | $ | (27,680 | ) | $ | 30,870 | ||||||||||||||||
| Stock-based compensation cost | - | - | - | - | 95 | - | - | 95 | ||||||||||||||||||||||||
| Restricted stock unit vesting | - | - | 13,366 | - | - | - | - | - | ||||||||||||||||||||||||
| Common stock grants | - | - | 9,256 | - | - | - | - | - | ||||||||||||||||||||||||
| Stock option exercise | - | - | 5,000 | - | 6 | - | - | 6 | ||||||||||||||||||||||||
| Non-controlling interests: | ||||||||||||||||||||||||||||||||
| Income | - | - | - | - | - | 920 | - | 920 | ||||||||||||||||||||||||
| Distributions | - | - | - | - | - | (632 | ) | - | (632 | ) | ||||||||||||||||||||||
Net Income attributable to common shareholders and comprehensive income | - | - | - | - | - | - | 330 | 330 | ||||||||||||||||||||||||
| BALANCES, December 28, 2021 | 376,351 | $ | (1,608 | ) | 12,539,694 | $ | 13 | $ | 59,122 | $ | 1,412 | $ | (27,350 | ) | $ | 31,589 | ||||||||||||||||
| Stock-based compensation cost | - | - | - | - | 52 | - | - | 52 | ||||||||||||||||||||||||
| Stock option exercise | - | - | 23,797 | - | 84 | - | - | 84 | ||||||||||||||||||||||||
| Repurchases of common stock | 75,900 | (331 | ) | (75,900 | ) | - | - | - | - | (331 | ) | |||||||||||||||||||||
| Non-controlling interests: | ||||||||||||||||||||||||||||||||
| Income | - | - | - | - | - | 230 | - | 230 | ||||||||||||||||||||||||
| Distributions | - | - | - | - | - | (112 | ) | - | (112 | ) | ||||||||||||||||||||||
Net Income attributable to common shareholders and comprehensive loss | - | - | - | - | - | - | (2,150 | ) | (2,150 | ) | ||||||||||||||||||||||
| BALANCES, March 29, 2022 | 452,251 | $ | (1,939 | ) | 12,487,591 | $ | 13 | $ | 59,258 | $ | 1,530 | $ | (29,500 | ) | $ | 29,362 | ||||||||||||||||
See accompanying notes to consolidated financial statements (unaudited)
Good Times Restaurants Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Fiscal Year-to-Date (26 Weeks) | ||||||||
March 26, 2024 | March 28, 2023 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 197 | $ | 10,838 | ||||
Adjustments to reconcile net income (loss) to net cash provided by | ||||||||
Depreciation and amortization | 1,899 | 1,859 | ||||||
Net change in operating lease right-of-use assets and liabilities | (319 | ) | (329 | ) | ||||
Recognition of deferred gain on sale of restaurant building | (19 | ) | (31 | ) | ||||
Impairment of long-lived assets | - | 76 | ||||||
Loss on disposal of assets | 13 | 9 | ||||||
Stock-based compensation expense | 78 | 89 | ||||||
Provision for income taxes | (1 | ) | (9,959 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
(Increase) decrease in: | ||||||||
Receivables and other | (93 | ) | 135 | |||||
Prepaid expense | (605 | ) | (853 | ) | ||||
Inventories | (27 | ) | 66 | |||||
Deposits and other | 11 | 10 | ||||||
Accounts payable | 129 | 1,596 | ||||||
Accrued and other liabilities | 252 | 652 | ||||||
Net cash provided by operating activities | 1,515 | 4,158 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Payments for the purchase of property and equipment | (1,063 | ) | (1,423 | ) | ||||
Purchase of non-controlling interests | - | (4,394 | ) | |||||
Net cash used in investing activities | (1,063 | ) | (5,817 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Borrowings against credit facility | 1,000 | - | ||||||
Payments on credit facility | (500 | ) | - | |||||
Payment for the purchase of treasury stock | (1,084 | ) | (1,340 | ) | ||||
Payment for restricted stock vesting settled in cash | - | (92 | ) | |||||
Proceeds from stock option exercise | - | 5 | ||||||
Contributions from non-controlling interests | - | 13 | ||||||
Distributions to non-controlling interests | (50 | ) | (466 | ) | ||||
Net cash used in financing activities | (634 | ) | (1,880 | ) | ||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (182 | ) | (3,539 | ) | ||||
CASH AND CASH EQUIVALENTS, beginning of period | 4,182 | 8,906 | ||||||
CASH AND CASH EQUIVALENTS, end of period | $ | 4,000 | $ | 5,367 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | $ | 36 | $ | 5 | ||||
Change in accounts payable attributable to the purchase of property and equipment | $ | (31 | ) | $ | 158 | |||
| Fiscal Year to Date | ||||||||
| March 28, 2023 (13 Weeks) | March 29, 2022 (13 Weeks) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | 10,838 | $ | (670 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 1,859 | 2,114 | ||||||
| Impairment of long-lived assets | 76 | 1,753 | ||||||
| Stock-based compensation expense | 89 | 147 | ||||||
| Gain on lease termination and disposal of assets | 9 | (642 | ) | |||||
| Recognition of deferred gain on sale of restaurant building | (31 | ) | (15 | ) | ||||
| Provision for income taxes | (9,959 | ) | 8 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables and other | 135 | (26 | ) | |||||
| Pre-paid expense | (857 | ) | (1,172 | ) | ||||
| Inventories | 66 | (57 | ) | |||||
| Deposits and other | 10 | 33 | ||||||
| Accounts payable | 1,596 | (370 | ) | |||||
| Net change in ROU assets and operating lease liabilities | (325 | ) | (186 | ) | ||||
| Accrued and other liabilities | 652 | 395 | ||||||
| Net cash provided by operating activities | 4,158 | 1,312 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Payments for the purchase of property and equipment | (1,423 | ) | (1,177 | ) | ||||
| Acquisition of restaurant from franchisee, net of cash acquired | - | (728 | ) | |||||
| Purchase of non-controlling interests | (4,394 | ) | - | |||||
| Net cash used in investing activities | (5,817 | ) | (1,905 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payment for the purchase of treasury stock | (1,340 | ) | (331 | ) | ||||
| Restricted stock vesting settled in cash | (92 | ) | - | |||||
| Proceeds from stock option exercise | 5 | 90 | ||||||
| Distributions to non-controlling interests | (466 | ) | (956 | ) | ||||
| Contributions from non-controlling interests | 13 | - | ||||||
| Net cash used in financing activities | (1,880 | ) | (1,197 | ) | ||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (3,539 | ) | (1,790 | ) | ||||
| CASH AND CASH EQUIVALENTS, beginning of period | 8,906 | 8,856 | ||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | 5,367 | $ | 7,066 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | 5 | $ | 9 | ||||
| Change in accounts payable attributable to the purchase of property and equipment | $ | 158 | $ | (421 | ) | |||
See accompanying notes to condensed consolidated financial statements (Unaudited)(unaudited)
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)(UNAUDITED)
(Tabular dollar amounts in thousands, except share and per share data)
Note 1. | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements include the accounts of Good Times Restaurants Inc. (the “Company”) and its wholly-ownedwholly owned subsidiaries as well as one partnership in which the Company is the general partner, and five limited liability companies in which the Company wasis the controlling member duringsole owner following the periodJanuary 2023 purchase of time in which unrelated parties ownedthe membership interests in those limited liability companies.of the previously joint-venture restaurants. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company owns a 50% interest in a limited partnership which owns six Good Times restaurants, is the sole general partner, and receives a management fee prior to any distributions to the limited partner. Because the Company owns an approximate 50% interest in the partnership and exercises complete management control over all decisions for the partnership, except for certain veto rights, the financial statements of the partnership are consolidated into the Company’s consolidated financial statements.
The Company operates and licenses full-service restaurants under the brand Bad Daddy’sDaddy’s Burger Bar (“Bad Daddy’s”) that are primarily located in Colorado and in the Southeast region of the United States.
The Company operates and franchises drive-thru fast-food hamburger restaurants under the brand Good Times Burgers & Frozen Custard(“Good Times”), all of which are located in Colorado and Wyoming.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles and practices of the United States of America (“GAAP”) for interim financial information. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all of the normal recurring adjustments necessary to present fairly the financial position of the Company as of March 28, 2023 26, 2024 and the results of its operations and its cash flows for the fiscal quarters ended March 26, 2024 and March 28, 2023 and March 29, 2022. 2023. Operating results for the fiscal quarter ended March 28, 2023 26, 2024 are not necessarily indicative of the results that may be expected for the year ending September 26, 2023. 24, 2024. The condensed consolidated balance sheet as of September 27, 2022 26, 2023 is derived from the audited financial statements but does not include all disclosures required by generally accepted accounting principles. As a result, these condensed consolidated financial statements should be read in conjunction with the Company'sCompany’s Form 10-K10-K for the fiscal year ended September 27, 2022.26, 2023.
Fiscal Year – The Company’s fiscal year is a 52/53-week53-week year ending on the last Tuesday of September. In a 52-week52-week fiscal year, each of the Company’s quarterly periods consist of 13 weeks. The additional week in a 53-week53-week fiscal year is added to the first quarter, making such quarter consist of 14 weeks. The quarters ended March 26, 2024 and March 28, 2023 and March 29, 2022 each consisted of 13 weeks.
Reclassification – Certain prior year balances have been reclassified to conform to the current year’s presentation. Such reclassifications had no effect on the net income (loss).income.
Advertising Costs – The company utilizes Advertising Funds to administer certain advertising programs for both the Bad Daddy’s and Good Times brands that benefit both us and our franchisees. We and our franchisees are required to contribute a percentage of gross sales to the fund. The contributions to these funds are designated and segregated for advertising. We consolidate the Advertising Funds into our financial statements whereby contributions from franchisees, when received, are recorded and included as a component of franchise revenues. Additionally, the Company intends to utilize all of the advertising contributions towards advertising expenditures, we recognize costs equal to franchisee contributions to the advertising funds on a quarterly basis. Contributions to the Advertising Funds from our franchisees were $129,000$93,000 and $136,000$129,000 for the two quarters ended March 26, 2024 and March 28, 2023, and March 29, 2022, respectively.
Receivables – Our receivables typically consist of royalties and other fees due to us from independent franchisees of our brands as well as product rebates and other incentives due to us under agreements with our food and beverage vendors, payments due from third party delivery and online ordering partners, and payments due to us for sales of gift cards to third party retailers. As of March 28, 2023, total receivables were $603,000, which consists of $78,000 in receivables from large box retail partners, retailed receivables, $122,000 in rebate receivables, $312,000 in third party delivery receivables, and $91,000 of franchise and other receivables, compared to $1,239,000 as
Receivables consist of the fiscal quarter ended March 29, 2022, consisting primarily of $745,000 for a lease termination agreement entered in the quarter for one of our Good Times locations, and $494,000 of franchise and other receivables.following as of:
March 26, 2024 | September 26, 2023 | |||||||
Third party delivery partners | $ | 316 | $ | 269 | ||||
Third party retailers | 268 | 291 | ||||||
Vendor rebates and incentives | 243 | 185 | ||||||
Franchise and other | 35 | 24 | ||||||
Total | $ | 862 | $ | 769 | ||||
Note 2. | Recent Accounting Pronouncements |
ASU 2023-07–Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures was issued November 2023 and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. It is to be applied retrospectively. The Company expects to retrospectively implement ASU 2023-07 in fiscal year 2025 and does not anticipate that it will have a material effect on the Company’s consolidated financial statements.
The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on the Company’s consolidated financial statements.
Note 3. | Revenue |
Revenue RecognitionRecognition.
Revenues consist primarily of sales from restaurant operations;operations and franchise revenue, which also includes franchisee contributions to advertising funds.Advertising Funds. Revenues associated with gift card breakage are immaterial to our financials. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer, typically a restaurant customer or a franchisee/licensee.
The Company recognizes revenues in the form of restaurant sales at the time of the sale when payment is made by the customer, as the Company has completed its performance obligation, namely the provision of food and beverage, and the accompanying customer service, during the customer’s visit to the restaurant. The Company sells gift cards to customers and recognizes revenue from gift cards primarily in the form of restaurant revenue. Gift card breakage, which is recognized when the likelihood of a gift card being redeemed is remote, is determined based upon the Company’s historic redemption patterns, and is immaterial to our overall financial statements. Late in fiscal 2023, the Company began operating a loyalty program known as GT Rewards. With each purchase, GT Rewards members earn loyalty points that can be redeemed in the future for free products. Activity related to the new reward program is immaterial to the Company’s financial statements for the quarter and year-to-date periods ended March 26, 2024.
Revenues we receive from our franchise and license agreements include sales-based royalties and, from our franchise agreements, may also may include advertising fundAdvertising Fund contributions, area development fees, and franchisee fees. We recognize sales-based royalties from franchisees and licensees as the underlying sales occur. We similarly recognize advertising fundAdvertising Fund contributions from franchisees as the underlying sales occur. The Company also provides its franchisees with services associated with opening new restaurants and operating them under franchise and development agreements in exchange for area development and franchise fees. The Company would capitalize these fees upon receipt from the franchisee and then would amortize those over the contracted franchise term as the services comprising the performance obligations are satisfied. We have not received material development or franchise fees in the years presented, and the primary performance obligations under existing franchise and development agreements have been satisfied prior to the earliest period presented in our financial statements.
Note 4. | Goodwill and Intangible Assets |
The following table presents goodwill and intangible assets as of March 28,26, 2024 and September 26, 2023 and September 27, 2022 (in(in thousands):
| March 28, 2023 | September 27, 2022 | March 26, 2024 | September 26, 2023 | |||||||||||||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross | Accumulated | Net | Gross | Accumulated | Net | |||||||||||||||||||||||||||||||||||||
Intangible assets subject to amortization: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Non-compete agreements | $ | 25 | $ | (9 | ) | $ | 16 | $ | 25 | $ | (5 | ) | $ | 20 | $ | 50 | $ | (22 | ) | $ | 28 | $ | 50 | $ | (14 | ) | $ | 36 | ||||||||||||||||||||
Reacquired franchise rights | $ | 15 | $ | (2 | ) | $ | 13 | $ | 15 | $ | - | $ | 15 | |||||||||||||||||||||||||||||||||||
| $ | 65 | $ | (24 | ) | $ | 41 | $ | 65 | $ | (14 | ) | $ | 51 | |||||||||||||||||||||||||||||||||||
| Indefinite-lived intangible assets: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Trademarks | 3,900 | - | 3,900 | 3,900 | - | 3,900 | $ | 3,900 | $ | - | $ | 3,900 | $ | 3,900 | $ | - | $ | 3,900 | ||||||||||||||||||||||||||||||
| Intangible assets, net | $ | 3,925 | $ | (9 | ) | $ | 3,916 | $ | 3,925 | $ | (5 | ) | $ | 3,920 | $ | 3,965 | $ | (24 | ) | $ | 3,941 | $ | 3,965 | $ | (14 | ) | $ | 3,951 | ||||||||||||||||||||
| Goodwill | $ | 5,713 | $ | - | $ | 5,713 | $ | 5,713 | $ | - | $ | 5,713 | $ | 5,713 | $ | - | $ | 5,713 | $ | 5,713 | $ | - | $ | 5,713 | ||||||||||||||||||||||||
Goodwill represents the excessIntangible assets subject to amortization primarily consist of cost over fair value of the assets of businesses the Company acquired. Goodwill is not amortized, but rather, the Company is required to test goodwill for impairment on an annual basis or whenever indications of impairment arise. The Company considers its operations to be comprised of two reporting units: (1) Good Times restaurants and (2) Bad Daddy’s restaurants. The Company had no goodwill impairment losses in the periods presented in the above table.non-compete agreements associated with prior restaurant purchases. The aggregate amortization expense related to these intangible assets subject to amortization was $10,000 for the two quarters ended March 26, 2024 and $9,000 for the two quarters ended March 28, 2023. As of both March 26, 2024 and March 28, 2023, and $5,000 for the two quarters ended March 29, 2022.As of both March 28, 2023 and March 29, 2022, the Company had $96,000 of goodwill attributable to the Good Times reporting unit and $5,617,000 of goodwill attributable to its Bad Daddy’s reporting unit. The Company had no goodwill impairment losses in the periods presented in the above table.
Note 5. | Stock-Based Compensation |
The Company has traditionally maintained incentive compensation plans that include provisionprovisions for the issuance of equity-based awards. The Company established the 2008 Omnibus Equity Incentive Compensation Plan in 2008 (the “2008“2008 Plan”) and has outstanding awards that were issued under the 2008 Plan. Subsequently, the 2008 Plan expired in 2018 and the Company established a new plan, the 2018 Omnibus Equity Incentive Plan (the “2018“2018 Plan”) during the 2018 fiscal year, which was approved by shareholders on May 24, 2018. Future awards will be issued under the 2018 Plan. On February 8, 2022 the Company’s shareholders approved a proposal to increase the number of shares available for issuance under the 2018 Plan from 900,000 to 1,050,000, which currently represents the maximum number of shares available for issuance under the 2018 Plan.
Stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the grant). The Company recognizes the impact of forfeitures as forfeitures occur.
For the quarters ended March 26, 2024 and March 28, 2023, we recognized $40,000 and $43,000, respectively, related to stock-based compensation arrangements. Our net income (loss) for the two quarters ended March 26, 2024 and March 28, 2023 includes $78,000 and March 29, 2022 includes $89,000, and $147,000, respectively, of compensation costs related to our stock-based compensation arrangements.
Stock Option awards
The Company measures the compensation cost associated with stock option awards by estimating the fair value of the award as of the grant date using the Black-Scholes pricing model. The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the Company’s stock options and stock awards granted during the two quarters ended March 28, 2023. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by the employees who receive equity awards.
There were 20,000 incentive stock options awarded during the two quarters ended March 28, 2023 to the Company’s Chief Executive Officer from available shares under the 2018 Plan, with an exercise price of $3.00 per share and a per share weighted average fair value of $2.29. During the two quarters ended March 29, 2022, the Company granted 90,000 incentive stock options to its Chief Executive Officer, from available shares under the 2018 Plan, with an exercise price of $2.33 per share and a per share weighted average fair value of $1.24 pursuant to the Chief Executive Officer’s Second Amended and Restated Employment Agreement dated December 24, 2020.
In addition to the exercise and grant date prices of the stock option awards, certain weighted average assumptions that were used to estimate the fair value of stock option grants are listed in the following table:
| Two Quarters Ended March 28, 2023 Incentive and Non-Qualified Stock Options | Two Quarters Ended March 29, 2022 Incentive and Non-Qualified Stock Options | |||||||
| Expected term (years) | 7.5 | 6.5 | ||||||
| Expected volatility | 60.2% | 61.3% | ||||||
| Risk-free interest rate | 4.21% | 1.8% | ||||||
| Expected dividends | - | - | ||||||
We estimate expected volatility based on historical weekly price changes of our common stock for a period equal to the current expected term of the options. The risk-free interest rate is based on the United States treasury yields in effect at the time of grant corresponding with the expected term of the options. The expected option term is the number of years we estimate that options will be outstanding prior to exercise considering vesting schedules and our historical exercise patterns.
The following table summarizes stock option activity for the two quarters ended March 28, 2023 under all plans:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Yrs) | ||||||||||
| Outstanding at beginning of year | 470,161 | $ | 3.97 | |||||||||
| Options granted | 20,000 | $ | 3.00 | |||||||||
| Options exercised | (2,000 | ) | $ | 2.31 | ||||||||
| Options Forfeited | (12,253 | ) | $ | 3.95 | ||||||||
| Outstanding March 28, 2023 | 475,908 | $ | 3.94 | 5.5 | ||||||||
| Exercisable March 28, 2023 | 334,965 | $ | 3.67 | 4.7 | ||||||||
As of March 28, 2023, the aggregate intrinsic value of the outstanding and exercisable options was $177,000. Only options whose exercise price is below the current market price of the underlying stock are included in the intrinsic value calculation.
As of March 28, 2023, the total remaining unrecognized compensation cost related to non-vested stock options was $164,000 and is expected to be recognized over a weighted average period of approximately 2.0 years.
There were 2,000 stock options exercised that resulted in an issuance of 2,000 shares during the two quarters ended March 28, 2023 with proceeds of approximately $5,000. There were 23,797 stock options exercised that resulted in an issuance of 23,797 shares during the two quarters ended March 29, 2022 with proceeds of approximately $90,000.
Restricted Stock Units
There were 25,750 restricted stock units granted during the two quarters ended March 28, 2023 and there were 28,000 restricted stock units granted during the two quarters ended March 29, 2022.
A summary of the status of non-vested restricted stock units as of March 28, 2023 is presented below.
| Shares | Grant Date Fair Value Per Share | ||||||
| Non-vested units at beginning of year | 73,336 | $1.54 to $4.50 | |||||
| Units granted | 25,750 | $2.29 | |||||
| Units vested | (46,336 | ) | $1.54 | ||||
| Units forfeited | (1,000 | ) | $4.50 | ||||
| Non-vested units at March 28, 2023 | 51,750 | $2.29 to $4.50 | |||||
As of March 28, 2023, there was $123,000 of total unrecognized compensation cost related to non-vested restricted stock units. This cost is expected to be recognized over a weighted average period of approximately 2.2 years.
Restricted and Unrestricted Common Stock Awards
No grants of restricted or unrestricted common stock were made during the two quarters ended March 28, 2023. During the two quarters ended March 29, 2022 there were 9,256 unrestricted shares of common stock granted to directors of the Company. These shares had a grant date fair value of $4.35 per share and resulted in the recognition of $40,000 of stock-based compensation expense.
| Note 6. |
For the two fiscal quarters ended March 28, 2023, the Company had $19,000 of deferred gains on prior sale-leaseback transactions related to certain Good Times restaurants and $3,000 of net gains in the loss and disposal of miscellaneous assets. During the two fiscal quarters ended March 29, 2022 we recognized a $607,000 gain in connection with a landlord’s exercising a lease termination option for one Good Times restaurant and we also recognized $7,000 in deferred gain on prior sale-leaseback transactions related to certain Good Times restaurants.
| Prepaid |
Prepaid expenses and other current assets consist of the following as of:
| March 28, 2023 | September 27, 2022 | |||||||
| Prepaid Rent | $ | 769 | $ | 765 | ||||
| Prepaid Insurance | 736 | 3 | ||||||
| Other | 240 | 120 | ||||||
| Total | $ | 1,745 | $ | 888 | ||||
March 26, 2024 | September 26, 2023 | |||||||
Prepaid Insurance | $ | 446 | $ | - | ||||
Other | 322 | 163 | ||||||
Total | $ | 768 | $ | 163 | ||||
Note | Other Accrued Liabilities |
Other accrued liabilities consist of the following as of:
| March 28, 2023 | September 27, 2022 | |||||||
| Wages and other employee benefits | $ | 2,987 | $ | 2,773 | ||||
| Taxes, other than income taxes | 1,025 | 1,166 | ||||||
| Gift card liability, net of breakage | 1,182 | 985 | ||||||
| General expense accrual and other | 2,243 | 1,867 | ||||||
| Total | $ | 7,437 | $ | 6,791 | ||||
March 26, 2024 | September 26, 2023 | |||||||
Wages and other employee benefits | $ | 2,882 | $ | 2,893 | ||||
Gift card liability, net of breakage | 1,576 | 1,108 | ||||||
Taxes, other than income taxes | 1,149 | 1,275 | ||||||
General expense accrual and other | 1,103 | 1,175 | ||||||
Total | $ | 6,710 | $ | 6,451 | ||||
Note | Notes Payable and Long-Term Debt |
Cadence Credit Facility
Facility. The Company maintained aand its wholly owned subsidiaries (the “Subsidiaries”) maintain an amended and restated credit agreement with Cadence Bank (“Cadence”) pursuant. Pursuant to which, as amended,the credit agreement, Cadence agreed to loan the Company up to $8,000,000, which as of March 28, 2023 hadwith a maturity date of April 30, 2023 (the “Prior Cadence20, 2028 (the “Cadence Credit Facility”). The PriorCadence Credit Facility amended and restated the Company’s prior credit facility with Cadence in its entirety. The Cadence Credit Facility accrues commitment fees on the daily unused balance of the facility at a rate of 0.25%. As of March 28, 2023, any borrowings under the Prior Cadence Credit Facility, as amended, bear interest at a variable rate based upon the Company’s election of (i) 2.5% plus the base rate, which is the highest of the (a) Federal Funds Rate plus 0.5%, (b) the Cadence bank publicly announced prime rate, and (c) LIBOR plus 1.0%, or (ii) LIBOR, with a 0.250% floor, plus 3.5%. Interest is due at the end of each calendar quarter if the Company selects to pay interest based on the base rate and at the end of each LIBOR period if it selects to pay interest based on LIBOR. The Cadence Credit Facility includes provisions for the Administrative Agent of the facility to amend the facility to replace LIBOR with an alternate benchmark rate, which may be (but is not required to be) SOFR, at such point in time when appliable LIBOR rates are no longer available or no longer reliable.
On January 24, 2023, the Company and Cadence amended the Prior Cadence Credit Facility to extend its expiration date to April 30, 2023, to provide consent for the Company’s acquisition of certain non-controlling interests in Bad Daddy’s limited liability company partnerships, and to provide pro-forma credit for a portion of the full-year EBITDA, as that term is defined in the Prior Cadence Credit Facility previously attributed to the non-controlling partners in those limited liability company partnerships.
During the fiscal quarter ended March 28, 2023, the weighted average interest rate applicable to borrowings under the Prior Cadence Credit Facility was 7.6%.
The Prior Cadence Credit Facility contained certain affirmative and negative covenants and events of default that the Company considers customary for an agreement of this type, including covenants setting a maximum leverage ratio of 5.15:1, a minimum pre-distribution fixed charge coverage ratio of 1.25:1, a minimum post-distribution fixed charge coverage ratio of 1.10:1 and minimum liquidity of $2.0 million. As of March 28, 2023, the Company was in compliance with all financial covenants under the Prior Cadence Credit Facility.
As a result of entering into the Prior Cadence Credit Facility and the various amendments, the Company paid loan origination costs including professional fees of approximately $308,500 and is amortizing these costs over the term of the credit agreement. The remaining amount to be amortized as of March 28, 2023 is $9,000. The obligations under the Prior Cadence Credit Facility were collateralized by a first-priority lien on substantially all of the Company’s assets.
Prior to entered into the Company’s new credit facility as described below, there were no outstanding borrowings against the Prior Cadence Credit Facility. Availability of the Prior Cadence Credit Facility for borrowings was reduced by the outstanding face value of any letters of credit issued under the facility. Prior to entering into the Company’s new credit facility as described below, there were no outstanding letters of credit issued under the facility.
On April 20, 2023, subsequent to the end of the fiscal quarter ended March 28, 2023, the Company and each of its wholly-owned subsidiaries, as guarantors (the “Subsidiary Guarantors”), entered into an Amended and Restated Credit Agreement (the “Senior Credit Facility”) with Cadence Bank, as administrative agent and sole lender (“Cadence”). The Senior Credit Facility provides for an $8.0 million senior revolving loan (the “Revolver”) and amends and restates the Prior Cadence Credit Facility in its entirety.
Proceeds from the Senior Credit Facility, if and when drawn, will be used (i) to fund new restaurant development, (ii) to finance the buyout of non-controlling joint venture partners in certain restaurants, (iii) to finance the redemption, purchase or other acquisition of equity interests in the Company and (iv) for working capital and other general corporate purposes.
The Revolver will be available until April 20, 2028. The loans may from time to time consist of a mixture of SOFR Rate Loans and Base Rate Loans with differing interest rates based upon varying additions to the Federal Funds Rate, the Cadence prime rate or Term SOFR. The SeniorEach of the Subsidiaries are guarantors of the Cadence Credit Facility.
Proceeds from the Cadence Credit Facility, also carries an upfront feeif and when drawn, may be used (i) to fund new restaurant development, (ii) to finance the buyout of 0.25%non-controlling partners in certain restaurants, (iii) to finance the redemption, purchase or other acquisition of equity interests in the aggregate principal amount of the Revolver commitmentCompany and a commitment fee of 0.25% per annum on the unused portion of the Revolver commitment.(iv) for working capital and other general corporate purposes.
The SeniorCadence Credit Facility includes customary affirmative and negative covenants and events of default. The SeniorCadence Credit Facility also requires the Company to maintain various financial condition ratios, including minimum liquidity, an amended maximum leverage ratio and an amended minimum fixed charge coverage ratio. In addition, to the extent the aggregate outstandingsoutstanding balance under the Revolver exceedrevolver under the Cadence Credit Facility exceeds $4.0 million, the Company is required to meet a new specified leverage ratio, on a pro forma basis, before making further borrowings as well as certain restricted payments, investments and growth capital expenditures. As of the date of filing of this report, the Company was in compliance with each of these covenants under the Cadence Credit Facility.
As of March 26, 2024 the weighted average interest rate applicable to borrowings under the Cadence Credit Facility was 8.42%.
As a result of entering into the Cadence Credit Facility and the various amendments, the Company paid loan origination costs including professional fees of approximately $299,000 and is amortizing these costs over the term of the credit agreement. As of March 26, 2024, the unamortized balance of these fees was $109,000.
In connection with the Cadence Credit Facility, the Company and the Subsidiaries entered into an Amended and Restated Security and Pledge Agreement (the “Security Agreement”) with Cadence. Under the Security Agreement, the Cadence Credit Facility is secured by a first priority security interest in substantially all the assets of the Company and the Subsidiaries.
As of March 26, 2024, there were $1,250,000 of borrowings against the facility, all of which is due during the fiscal year ending September 26, 2028 and is classified as a long-term liability in the accompanying balance sheet. Availability of the Cadence Credit Facility for borrowings is reduced by the outstanding face value of any letters of credit issued under the facility. As of March 26, 2024, there were approximately $10,000 in outstanding letters of credit issued under the facility, and approximately $6,740,000 of committed funds available.
Total interest expense on notes payable was $37,000 and $0 for the quarters ended March 26, 2024 and March 28, 2023, respectively.
Note | Earnings per Common Share |
Our basic earnings per share calculation is computed based on the weighted-average number of common shares outstanding. Our diluted earnings per share calculation is computed based on the weighted-average number of common shares outstanding adjusted by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued. Potentially dilutive securities for this calculation consist of in-the-money outstanding stock options, restricted stock units and warrants (which were assumed to have been exercised at the average market price of the common shares during the reporting period). The treasury stock method is used to measure the dilutive impact of in-the-money stock options.
The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding:
| Quarter Ended | Year-to-Date | |||||||||||||||
| March 28, 2023 | March 29, 2022 | March 28, 2023 | March 29, 2022 | |||||||||||||
| Weighted-average shares outstanding basic | 11,818,651 | 12,527,625 | 11,930,140 | 12,525,048 | ||||||||||||
| Effect of potentially dilutive securities: | ||||||||||||||||
| Stock options | 13,722 | - | 3,364 | - | ||||||||||||
| Restricted stock units | 51,750 | - | 51,750 | - | ||||||||||||
| Weighted-average shares outstanding diluted | 11,884,123 | 12,527,625 | 11,985,254 | 12,525,048 | ||||||||||||
| Excluded from diluted weighted average shares outstanding: | ||||||||||||||||
| Antidilutive | 372,575 | 406,515 | 385,908 | 386,101 | ||||||||||||
Quarter Ended | Year-to-Date | |||||||||||||||
March 26, 2024 | March 28, 2023 | March 26, 2024 | March 28, 2023 | |||||||||||||
Weighted-average shares outstanding basic | 11,136,207 | 11,818,651 | 11,256,893 | 11,930,140 | ||||||||||||
Effect of potentially dilutive securities: | ||||||||||||||||
Stock options | 5,260 | 13,722 | 6,449 | 3,364 | ||||||||||||
Restricted stock units | 89,250 | 51,750 | 89,250 | 51,750 | ||||||||||||
Weighted-average shares outstanding diluted | 11,230,717 | 11,884,123 | 11,352,592 | 11,985,254 | ||||||||||||
Excluded from diluted weighted average shares outstanding: | ||||||||||||||||
Antidilutive | 383,623 | 372,575 | 383,623 | 385,908 | ||||||||||||
Note | Contingent Liabilities and Liquidity |
The failure of banks where we maintain deposits in excess of the limits insured by FDIC or other government or quasi-government agencies could materially affect our financial position and operating results.
The Company maintains deposits with certain banks in excess of the maximum insured limits by the FDIC. The significant interest rate increases by the Federal Reserve have caused recent bank failures. Although in certain of those cases, depositors have been protected from loss by government intervention, no assurances can be made in the case of any failure of a bank in which the Company has uninsured deposits, that the Company would be similarly protected against loss of such uninsured deposits.
There may be various claims in process, matters in litigation, and other contingencies brought against the companyCompany by employees, vendors, customers, franchisees, or other parties. Evaluating these contingencies is a complex process that may involve substantial judgment on the potential outcome of such matters, and the ultimate outcome of such contingencies may differ from our current analysis. We regularly review the adequacy of accruals and disclosures related to such contingent liabilities in consultation with legal counsel. While it is not possible to predict the outcome of these claims with certainty, subject to our disclosure immediately below, it is management’s opinion that any reasonably possible losses associated with such contingencies have been adequately accrued or would be immaterial to our financial statements. During the quarter ended March 26, 2024, we have recognized $235,000 in contingent liabilities related to routine course of business claims.
The Company is the defendant in a lawsuit styled as White Winston Select Asset Funds, LLC and GT Acquisition Group, Inc. v. Good Times Restaurants, Inc., arising from the failed negotiations between plaintiffs and the Company for the sale of the Good Times Drive Thru subsidiary to plaintiffs. The lawsuit was initially filed on September 24, 2019 in Delaware Chancery Court, and the Company removed the case to federal court in the US District Court for the District of Delaware on November 5, 2019. On July 30, 2021, the plaintiffs moved the Court for leave to amend their complaint and add new causes of action and a claim for $18 million in damages. On April 11, 2022, the Court heard the parties’ respective motions for summary judgment on the plaintiffs’ claims. The Court verbally ruled that it was dismissing all of the plaintiffs’ claims except for their claim for breach of an express and implied obligation to negotiate in good faith under the parties’ letter of intent. The Court also indicated its intent to dismiss Good Times’sTimes’ counterclaim against the plaintiffs for breach of a covenant not to sue over the failed negotiations. On May 5, 2022, the Court issued a written order confirming this ruling. On May 25, 2022, the Court issued an order that the plaintiffs are only entitled to reliance damages should they prevail on their claim for breaches of the express and implied obligations to negotiate in good faith. The parties conducted a bench trial on the plaintiffs’ claims. The parties concluded post-trial briefing on October 24, 2022. On January 25, 2023, the Court rendered judgment dismissing the plaintiffs’ claims in their entirety and denying all of the requested relief.
The plaintiffs filed a notice of appeal of the Court’s January 25, 2023 decisions. Good Times, in turn, filed a notice of appeal of the Court’s previous dismissal of its counterclaim against the plaintiffs. The deadlineOn March 1, 2024, the court of appeals issued a ruling affirming the trial court’s dismissal of the plaintiffs’ claims and reversed the trial court’s previous dismissal of Good Times’ own claim for the plaintiffs’ opening appellate brief is May 10, 2023.breach of their covenant not to sue Good Times’s deadline to file a responseTimes. The court of appeals ordered that Good Times’ counterclaim be remanded to the plaintiffs’ opening brief and Good Times’s own opening brieftrial court for further consideration. Due to this favorable decision, we have reversed our previous contingency reserve of $332,000. The plaintiffs petitioned the court of appeals for rehearing on its appealreversal of the trial court’s dismissal of Good Times’ counterclaim. The court of appeals’ ruling on the petition for rehearing is June 9, 2023.
pending. The Company previously recorded an accrual for contingent litigation expense in the fiscal quarter ended March 28, 2022 in the amount of $332,000. This amount represented the Company’s best estimateGood Times’ claimed damages (which consists substantially of the likely amount of plaintiffs’ damage recovery.its prior legal fees) exceeds $3 million. While the Company was successful at trial, in light of plaintiff’s appeal, the Company has determined to maintain the accrual and will continue to evaluate this matter based on new information as it becomes available. The ultimate resolution of the case could result in losses less than or in excess of amounts accrued. Any additional liability in excess of the accrual could have a material impact on the Company’s results of operations, liquidity or financial condition for the annual or interim period during which any such additional liability is accrued. The Company will continueGood Times plans to vigorously pursue a full defensethis remaining claim to conclusion, there is no assurance that it will be successful and, even if it is successful, its recovery may be less than such claimed damages amount.
| Note | Leases |
The Company determines if a contract contains a lease at inception. The Company'sCompany’s material long-term operating lease agreements are for the land and buildings for our restaurants as well as our corporate office. The initial lease terms range from 10 years to 20 years, most of which include renewal options of 10 to 15 years. The lease term is generally the minimum of the non-cancelable period or the lease term including the renewal options which are reasonably certain of being exercised up to a term of approximately 20 years. The Company reassesses the number of remaining renewal options to include in a lease term for a specific lease when it exercises an option to extend such lease.
Operating lease assets and liabilities are recognized at the lease commencement date for material leases with a term of greater than 12 months. Operating lease liabilities represent the present value of future minimum lease payments. Since our leases do not provide an implicit rate, our operating lease liabilities are calculated using our estimated incremental borrowing rate based on a collateralized borrowing over the term of each individual lease. Minimum lease payments include only fixed lease components of the agreement, as well as variable rate payments that depend on an index, initially measured using the index at the lease commencement date.
Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepaid or accrued lease payments, initial direct costs and lease incentives. Lease incentives are recognized when earned and reduce our operating lease asset related to the lease. They are amortized through the operating lease assets as reductions of rent expense over the lease term.
Operating lease expense is recognized on a straight-line basis over the lease term. Certain of the Company’s operating leases contain clauses that provide for contingent rent based on a percentage of sales greater than certain specified target amounts. Variable lease payments that do not depend on a rate or index, escalation in the index subsequent to the initial measurement, payments associated with non-lease components such as common area maintenance, real estate taxes and insurance, and short-term lease payments (leases with a term with 12 months or less) are expensed as incurred or when the achievement of the specified target that triggers the contingent rent is considered probable.
Some of the leases provide for base rent, plus additional rent based on gross sales, as defined in each lease agreement. The Company is also generally obligated to pay certain real estate taxes, insurance and common area maintenance charges, and various other expenses related to properties, which are expensed as incurred.
Components of operating lease costs are as follows for the fiscal quarters ended March 26, 2024 and March 28, 2023 and March 29, 2022:2023:
| Lease cost | Classification | March 28, 2023 | March 29, 2022 | Classification | March 26, 2024 | March 28, 2023 | ||||||||||||||
| Operating lease cost | Occupancy, Other restaurant operating costs and General and administrative expenses, net | $ | 1,853 | $ | 1,830 | Occupancy, Other restaurant operating costs and General and administrative expenses, net | $ | 1,908 | $ | 1,853 | ||||||||||
| Variable lease cost | Occupancy | - | 59 | Occupancy | 10 | - | ||||||||||||||
| Sublease income | Occupancy | (143 | ) | (136 | ) | Occupancy | (125 | ) | (143 | ) | ||||||||||
| $ | 1,710 | $ | 1,753 | $ | 1,793 | $ | 1,710 | |||||||||||||
Weighted average lease term and discount rate are as follows:
| March 28, 2023 | March 29, 2022 | March 26, 2024 | March 28, 2023 | |||||||||||||
| Weighted average remaining lease term (in years) | 8.24 | 9.06 | 7.54 | 8.24 | ||||||||||||
| Weighted average discount rate | 5.0 | % | 5.0 | % | 5.0 | % | 5.0 | % | ||||||||
Supplemental cash flow disclosures for the two fiscal quarters ended March 28, 2023:
| March 28, 2023 | March 29, 2022 | |||||||
| Cash paid for operating lease liabilities | $ | 3,734 | $ | 3,621 | ||||
| Non-cash operating lease assets obtained in exchange for operating lease liabilities | $ | 184 | $ | 872 | ||||
Supplemental balance sheet disclosures:
| March 28, 2023 | September 27, 2022 | |||||||||
| Right-of-use assets | Operating lease assets | $ | 40,383 | $ | 42,463 | |||||
| Current lease liabilities | Operating lease liability | $ | 5,506 | $ | 5,430 | |||||
| Non-current lease liabilities | Operating lease liability, less current portion | 43,063 | 45,544 | |||||||
| Total lease liabilities | $ | 48,569 | $ | 50,974 | ||||||
March 26, 2024 | March 28, 2023 | |||||||
Cash paid for operating lease liabilities | $ | 3,865 | $ | 3,734 | ||||
Non-cash operating lease assets obtained in exchange for operating lease liabilities | $ | 452 | $ | 184 | ||||
Future minimum rent payments for our operating leases for each of the next five years as of March 28, 2023 26, 2024 are as follows:
| Fiscal year ending: | Total | |||
| Remainder of 2023 | $ | 3,901 | ||
| 2024 | 7,762 | |||
| 2025 | 7,829 | |||
| 2026 | 7,378 | |||
| 2027 | 7,079 | |||
| Thereafter | 25,718 | |||
| Total minimum lease payments | 59,667 | |||
| Less: imputed interest | (11,098 | ) | ||
| Present value of lease liabilities | $ | 48,569 | ||
Total | ||||
One Year | $ | 8,299 | ||
Two Years | 8,094 | |||
Three Years | 7,706 | |||
Four Years | 7,291 | |||
Five Years | 6,067 | |||
Thereafter | 18,077 | |||
Total minimum lease payments | 55,534 | |||
Less: imputed interest | (9,581 | ) | ||
Present value of lease liabilities | $ | 45,953 | ||
The above future minimum rental amounts exclude the amortization of deferred lease incentives, renewal options that are not reasonably assured of renewal, and contingent rent. The Company generally has escalating rents over the term of the leases and records rent expense on a straight-line basis.
Note | Impairment of Long-Lived Assets and Trademarks |
Long-Lived Assets. We review our long-lived assets including land, property, and equipment for impairment when there are factors that indicate that the carrying amount of an asset may not be recoverable. We assess recovery of assets at the individual restaurant level and typically include an analysis of historical cash flows, future operating plans, and cash flow projections in assessing whether there are indicators of impairment. The recoverability of assets to be held and used is measured by comparing the net book value of the assets of an individual restaurant to the fair value of those assets. This impairment process involves significant judgment in the use of estimates and assumptions pertaining to future projections and operating results.
There were no asset impairments in the two quarters ended March 26, 2024. During the two quarters ended March 28, 2023, there were $76,000 of asset impairments in the two quarters ended March 28, 2023, related primarily to new assets deployed in restaurants where impairment was previously assessed, and the Company’s current analysis indicated impairment of assets associated with those restaurants. During the two quarters ended March 29, 2022, we recognized $1,753,000 in total asset impairments for three restaurants. Of this amount, $487,000 was related to two Good Times restaurants and $1,266,000 was related to one Bad Daddy’s restaurant.
Trademarks. Trademarks have been determined to have an indefinite life. We evaluate our trademarks for impairment annually and on an interim basis as events and circumstances warrant by comparing the fair value of the trademarks with their carrying amount. There was no impairment required to the acquired trademarks as of March 26, 2024 or March 28, 2023 and March 29, 2022.2023.
Note | Income Taxes |
We account for income taxes using the liability method, whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The deferred tax assets are reviewed periodically for recoverability and valuation allowances are adjusted as necessary.
The Company’s effective income tax rate for the three months periods ended March 26, 2024 was (12.82%), an increase from the effective income tax rate of (1,487%) for the three periods ended March 28, 2023 2023. The Company’s effective tax rate for the six periods ended March 26, 2024 was (1,487%(1.83%), a decreasean increase from an effective income tax rate of 2.0%(1,836%) for the three monthssix periods ended March 29, 2022. 28, 2023. The decreaseincrease is due to the release of the Company’s valuation allowance previously recorded to reduce the deferred tax assets to zero. The Company’s effective income tax rate for the six months ended March 28, 2023 was (1,836%), a decrease from an effective income tax rate of 2.0% for the six months ended March 29, 2022. The decrease is also attributed to the release of the Company’s valuation allowance that occurred during the second quarter.prior year quarter and the prior year.
During the current quarter, the Company entered into a transaction in which it purchased the non-controlling interests in several joint ventures that have historically collectively generated significant income. Due to this transaction and a recent history of cumulative earnings, management believes the Company is now in a position to realize its tax benefits beginning in the current year, as well as in future years, and as such, has released the full valuation allowance recorded to reduce its deferred tax assets.
The Company is subject to taxation in various jurisdictions within the U.S.United States. The Company continues to remain subject to examination by U.S.United States federal authorities for the years 20192020 through 2022.2023. The Company believes that its income tax filing positions and deductions will be sustained upon audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. No accrual for interest and penalties was considered necessary as of March 28, 2023.26, 2024.
| Note | Non-Controlling Interests |
Non-controlling interests are presented as a separate item in the shareholders’ equity section of the condensed consolidated balance sheet. The amount of consolidated net income or loss attributable to non-controlling interests is presented on the face of the condensed consolidated statement of operations. Changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions, while changes in ownership interest that do result in deconsolidation of a subsidiary require gain or loss recognition based on the fair value on the deconsolidation date.
The equity interests of the unrelated limited partners and non-controlling members are shown on the accompanying consolidated balance sheet in the shareholders’ equity section as a non-controlling interest and is adjusted each period to reflect the limited partners’ and non-controlling members’ share of the net income or loss as well as any cash contributions or distributions to or from the limited partners and non-controlling members for the period. The limited partners’ and members’ share of the net income or loss in the subsidiary is shown as income or expense attributable to non-controlling interests in the accompanying consolidated statement of operations. All inter-company accounts and transactions are eliminated.
The following table summarizes the activity in non-controlling interests during the two quarters ended March 28, 2023 (in26, 2024 (in thousands):
| Bad Daddy’s | Good Times | Total | ||||||||||
| Balance at September 27, 2022 | $ | 1,041 | $ | 262 | $ | 1,303 | ||||||
| Income | 219 | 125 | 344 | |||||||||
| Purchase of Non-controlling Interests | (831 | ) | - | (831 | ) | |||||||
| Distributions | (442 | ) | (24 | ) | (466 | ) | ||||||
| Contribution | 13 | - | 13 | |||||||||
| Balance at March 28, 2023 | 0 | 363 | 363 | |||||||||
Total | ||||
Balance at September 26, 2023 | $ | 423 | ||
Income | 135 | |||
Distributions | (50 | ) | ||
Balance at March 26, 2024 | $ | 508 | ||
Non-controllingAs previously described in Note 1, our non-controlling interests at the endas of the quarter ended March 26, 2024 consisted of one limited liability joint-venture partnership currently involving six Good Times restaurants, ofin which the Company is the general partner. During the fiscal quarter ended March 28, 2023, the Company acquired all of the non-controlling membership interests in all outstanding limited liability companies, which included five total Bad Daddy’s restaurants. The aggregate purchase price paid to the sellers was $4,394,000.partner and owns a 50.0% interest.
Note | Segment Reporting |
All of our Bad Daddy’s Burger Bar restaurants (Bad Daddy’s) compete in the full-service segment of the restaurant industry while our Good Times Burgers and Frozen Custard restaurants (Good Times) compete in the quick-service segment of the diningrestaurant industry. We believe that providing this additional financial information for each of our brands will provide a better understanding of our overall operating results. Income (loss) from operations represents revenues less restaurant operating costs and expenses, directly allocable general and administrative expenses, and other restaurant-level expenses directly associated with each brand including depreciation and amortization, pre-opening costs and losses or gains on disposal of property and equipment. Unallocated corporate capital expenditures are presented below as reconciling items to the amounts presented in the consolidated financial statements.
The following tables present information about our reportable segments for the respective periods (in thousands):
| Quarter Ended | Year-to-Date | Quarter Ended | Year-to-Date | |||||||||||||||||||||||||||||
| March 28, 2023 (13 Weeks) | March 29, 2022 (13 Weeks) | March 28, 2023 (26 Weeks) | March 29, 2022 (26 Weeks) | March 26, 2024 | March 28, 2023 | March 26, 2024 | March 28, 2023 | |||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
| Bad Daddy’s | $ | 26,408 | $ | 25,524 | $ | 51,634 | $ | 50,196 | $ | 26,504 | $ | 26,408 | $ | 50,697 | $ | 51,634 | ||||||||||||||||
| Good Times | 8,377 | 8,073 | 16,545 | 16,317 | 8,934 | 8,377 | 17,873 | 16,545 | ||||||||||||||||||||||||
| $ | 34,785 | $ | 33,597 | $ | 68,179 | $ | 66,513 | $ | 35,438 | $ | 34,785 | $ | 68,570 | $ | 68,179 | |||||||||||||||||
| Income (Loss) from operations | ||||||||||||||||||||||||||||||||
Income (loss) from operations: | ||||||||||||||||||||||||||||||||
| Bad Daddy’s | $ | 678 | $ | (807 | ) | $ | 668 | $ | (499 | ) | $ | 382 | $ | 678 | $ | (381 | ) | $ | 668 | |||||||||||||
| Good Times | $ | 139 | $ | (1,102 | ) | $ | 256 | $ | (134 | ) | 262 | 139 | 651 | 256 | ||||||||||||||||||
| $ | 817 | $ | (1,909 | ) | $ | 924 | $ | (633 | ) | $ | 644 | $ | 817 | $ | 270 | $ | 924 | |||||||||||||||
| Capital expenditures | ||||||||||||||||||||||||||||||||
Capital expenditures: | ||||||||||||||||||||||||||||||||
| Bad Daddy’s | $ | 448 | $ | 636 | $ | 606 | $ | 828 | $ | 355 | $ | 448 | $ | 487 | $ | 606 | ||||||||||||||||
| Good Times | 249 | 62 | 975 | 107 | 277 | 249 | 607 | 975 | ||||||||||||||||||||||||
| $ | 697 | $ | 698 | $ | 1,581 | $ | 935 | $ | 632 | $ | 697 | $ | 1,094 | $ | 1,581 | |||||||||||||||||
March 26, 2024 | September 26, 2023 | |||||||
Property and equipment, net: | ||||||||
Bad Daddy’s | $ | 18,062 | $ | 18,053 | ||||
Good Times | 4,165 | 4,983 | ||||||
| $ | 22,227 | $ | 23,036 | |||||
Total assets: | ||||||||
Bad Daddy’s | $ | 65,652 | $ | 67,720 | ||||
Good Times | 23,303 | 23,368 | ||||||
| $ | 88,955 | $ | 91,088 | |||||
Note 16. | Subsequent Events |
None.
| March 28, 2023 | September 27, 2022 | |||||||
| Property and equipment, net | ||||||||
| Bad Daddy’s | $ | 18,551 | $ | 19,575 | ||||
| Good Times | 3,293 | 2,676 | ||||||
| $ | 21,844 | $ | 22,251 | |||||
As discussed more specifically in Note 9 above, on April 20, 2023, subsequent to the end of the fiscal quarter ended March 28, 2023, the Company and each of its wholly-owned subsidiaries, as guarantors, entered into an Amended and Restated Credit Agreement with Cadence Bank, as administrative agent and sole lender (“Cadence”). The Senior Credit Facility provides for an $8.0 million senior revolving loan and amends and restates the Company’s prior Cadence Credit Facility with Cadence in its entirety.
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Overview. Good Times Restaurant Inc., through its subsidiaries (collectively, the “Company” or “we”, “us” or “our”) operates and licenses full-service hamburger-oriented restaurants under the name Bad Daddy’s Burger Bar (“Bad Daddy’s”) and operates and franchises hamburger-oriented drive-through restaurants under the name Good Times Burgers & Frozen Custard (“Good Times”).
Forward Looking Statements: This Form 10-Q contains or incorporates by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the disclosure of risk factors in the Company’s Form 10-K for the fiscal year ended September 27, 2022.26, 2023. Also, documents subsequently filed by usthe Company with the SEC and incorporated herein by reference may contain forward-looking statements. We caution investors that any forward-looking statements made by us are not guarantees of future performance and actual results could differ materially from those in the forward-looking statements as a result of various factors, including but not limited to the following:
(I) | The |
(II) | We compete with numerous well-established competitors who have substantially greater financial resources and longer operating histories than we do. Competitors have increasingly offered selected food items and combination meals, including hamburgers, at discounted prices, and continued discounting by competitors may adversely affect revenues and profitability of Company restaurants. |
(III) | We may be negatively impacted if we experience same store sales declines. Same store sales comparisons will be dependent, among other things, on the success of our advertising and promotion of new and existing menu items. No assurances can be given that such advertising and promotions will in fact be successful. |
(IV) | We may be negatively impacted if we are unable to pass on to customers through menu price increases the increased costs that we incur through inflation experienced in our input costs including both the cost of food and the cost of labor. Recent metrics have indicated that increased levels of price inflation are prevalent throughout the economy which have resulted in increases in commodity, labor and energy costs for both concepts as well as increased product substitutions, elevated freight costs, and increased variability in product quality. Further significant increases in inflation could affect the global and |
We may also be negatively impacted by other factors common to the restaurant industry such as: changes in consumer tastes away from red meat and fried foods; increases in the cost of food, paper, labor, health care, workers’ compensation or energy; inadequate number of hourly paid employees; increased wages and salaries for hourly and salaried employees; and/or decreases in the availability of affordable capital resources. We caution the reader that such risk factors are not exhaustive, particularly with respect to future filings. For further discussion of our exposure to market risk, refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 27, 2022.26, 2023.
Overview.
Good Times Restaurant Inc., through its subsidiaries (collectively, the “Company” or “we”, “us” or “our”) operates and franchises/licenses full-service hamburger-oriented restaurants under the name Bad Daddy’s Burger Bar (Bad Daddy’s) and operates and franchises hamburger-oriented drive-through restaurants under the name Good Times Burgers & Frozen Custard (Good Times).
We are focused on targeted unit growth of the Bad Daddy’s concept while at the same time growing same store sales and improving the profitability of both the Bad Daddy’s and the Good Times concepts.
Macro-Economic Factors and Operating Environment.
During the two quarters ended March 28, 2023, high rates of inflation have been seen globally which have also resulted in increases in commodity, labor and energy costs for both concepts. Further significant continued increases in inflation could affect the global and U.S. economies, which could have an adverse impact on our business and results of operations if we and our franchisees are not able to adjust prices sufficiently to offset the effect of cost increases without negatively impacting consumer demand.
The Company maintains deposits with certain banks in excess of the maximum insured limits by the FDIC. The significant interest rate increases by the Federal Reserve have caused recent bank failures. Although in certain of those cases, depositors have been protected from loss by government intervention, no assurances can be made in the case of any failure of a bank in which the Company has uninsured deposits, that the Company would be similarly protected against loss of such uninsured deposits.
Although we conduct all of our restaurant operations within the USA, worldwide product supply chains have been impacted by the war in Ukraine. Specifically sunflower oil and wheat, which are fungible commodities, are used as ingredients in our raw materials and purchased by our suppliers, have significant supplies that typically originate in Ukraine. The lack of availability of supplies of such products may impact the availability and supplier pricing for products purchased by us for use in our business, which could result in higher food and packaging costs or reduced revenues.
Growth Strategies and Outlook.
We believe there are significant opportunities to grow customer traffic and increase awareness of our brands. In 2019 we reduced our development profile as we soughtbrands, leading to improve our financial position, and while weorganic sales growth. We also believe there are unit growth opportunities for both of our concepts though we continue to evaluate that in-lineexecute unit growth with increased scrutiny surrounding real estate selection and a more conservative approach to leverage than we previously took, in light of the inflationary impact currently seenhigher costs and volatile inflation present in the restaurant industry. We anticipate the opening of one new restaurant in late Fiscal 2023 in the greater Huntsville, Alabama market.current operating environment.
Restaurant locations.Locations.
As of March 28, 2023,26, 2024, we operated, franchised, or licensed a total of fortyforty-one Bad Daddy’s restaurants and thirty-one Good Times restaurants. The following table presents the number of restaurants operating at the end of the fiscal quarters ended March 28, 202326, 2024 and March 29, 2022. During the fiscal quarter ended March 28, 2023, the Company acquired all of the membership interests in five Bad Daddy’s, four located in North Carolina and one located in South Carolina.2023.
Company-Owned/Co-Developed:
| Bad Daddy’s Burger Bar | Good Times Burgers & Frozen Custard | Total | Bad Daddy’s | Good Times Burgers | Total | |||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||
| Alabama | 2 | 2 | - | - | 2 | 2 | 3 | 2 | - | - | 3 | 2 | ||||||||||||||||||||||||||||||||||||
| Colorado | 11 | 12 | 23 | 23 | 34 | 35 | 11 | 11 | 25 | 23 | 36 | 34 | ||||||||||||||||||||||||||||||||||||
| Georgia | 5 | 5 | - | - | 5 | 5 | 5 | 5 | - | - | 5 | 5 | ||||||||||||||||||||||||||||||||||||
| North Carolina | 14 | 14 | - | - | 14 | 14 | 14 | 14 | - | - | 14 | 14 | ||||||||||||||||||||||||||||||||||||
| Oklahoma | 1 | 1 | - | - | 1 | 1 | 1 | 1 | - | - | 1 | 1 | ||||||||||||||||||||||||||||||||||||
| South Carolina | 4 | 4 | - | - | 4 | 4 | 4 | 4 | - | - | 4 | 4 | ||||||||||||||||||||||||||||||||||||
| Tennessee | 2 | 2 | - | - | 2 | 2 | 2 | 2 | - | - | 2 | 2 | ||||||||||||||||||||||||||||||||||||
| Total | 39 | 40 | 23 | 23 | 62 | 63 | 40 | 39 | 25 | 23 | 65 | 62 | ||||||||||||||||||||||||||||||||||||
Franchise/License:
Bad Daddy’s | Good Times Burgers | Total | ||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
Colorado | - | - | 4 | 6 | 4 | 6 | ||||||||||||||||||
North Carolina | 1 | 1 | - | - | 1 | 1 | ||||||||||||||||||
Wyoming | - | - | 2 | 2 | 2 | 2 | ||||||||||||||||||
Total | 1 | 1 | 6 | 8 | 7 | 9 | ||||||||||||||||||
One company-owned Bad Daddy’s restaurant closed, due to a termination byopened in Madison, Alabama in the landlord, for redevelopmentfourth quarter of 2023. We acquired two Good Times restaurants in Greenwood Village and Lafayette, Colorado from franchisees during the fiscalfourth quarter ended March 28,of 2023.
Franchise/License:
| Bad Daddy’s Burger Bar | Good Times Burgers & Frozen Custard | Total | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Colorado | - | - | 6 | 6 | 6 | 6 | ||||||||||||||||||
| North Carolina | 1 | 1 | - | - | 1 | 1 | ||||||||||||||||||
| South Carolina | - | - | - | - | - | - | ||||||||||||||||||
| Wyoming | - | - | 2 | 2 | 2 | 2 | ||||||||||||||||||
| Total | 1 | 1 | 8 | 8 | 9 | 9 | ||||||||||||||||||
Non-Traditional*
| Bad Daddy’s Burger Bar | Good Times Burgers & Frozen Custard | Total | |||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| Colorado | - | 1 | - | - | - | 1 | |||||||||||||||||||
| Total | - | 1 | - | - | - | 1 | |||||||||||||||||||
*The non-traditional Bad Daddy’s Burger Bar location, where we operated the kitchen under our Bad Daddy’s brand for a local brewery’s taproom, closed in 2022.
Results of Operations
Fiscal quarter ended March 28, 202326, 2024 (13 weeks) compared to fiscal quarter ended March 29, 202228, 2023 (13 weeks):
Net Revenues. Net revenues for the fiscal quarter ended March 28, 202326, 2024 increased $1,188,000$653,000 or 3.5%1.9% to $34,785,000$35,438,000 from $33,597,000$34,785,000 for the fiscal quarter ended March 29, 2022.28, 2023. Bad Daddy’s concept revenues increased $884,000$97,000 while our Good Times concept revenues increased $304,000.$556,000.
Bad Daddy’s restaurant sales increased $895,000$106,000 to $26,448,000 for the fiscal quarter ended March 26, 2024 from $26,342,000 for the fiscal quarter ended March 28, 2023. This increase is a result of the fourth quarter 2023 from $25,447,000 forMadison, Alabama restaurant opening, the fiscal quarter ended March 29, 2022. Sales were positively impacted due to strongerprior year remodel temporary closure of the Greenville, South Carolina restaurant and menu price increases, offset by reduced customer traffic, as well as increased menu prices.concentrated in several key markets. The average menu price increase for the fiscal quarter ended March 28, 202326, 2024 over the same prior-yearprior year quarter was approximately 3.4%4.7%.
Good Times restaurant sales increased $309,000$591,000 to $8,817,000 for the fiscal quarter ended March 26, 2024 from $8,226,000 for the fiscal quarter ended March 28, 2023. This increase is primarily due to the acquisition, by the Company during fiscal 2023, from $7,917,000 for the fiscal quarter ended March 29, 2022.of two Good Times restaurants previously owned by franchisees and menu price increases. The average menu price increase for the fiscal quarter ended March 28, 202326, 2024 over the same prior-yearprior year quarter was approximately 10.5%3.9%.
Franchise revenues decreased $16,000$44,000 to $173,000 in the fiscal quarter ended March 26, 2024 compared to $217,000 in the fiscal quarter ended March 28, 2023 compared to $233,000 in the fiscal quarter ended March 29, 2022.2023. This decrease is primarily due to the acquisition, during the secondfourth fiscal quarter of 2022,2023, by the Company of one Bad Daddy’s restauranttwo Good Times restaurants previously owned by franchisees, as well as significantly lower sales compared to the prior year at two restaurants operated by a franchisee.common franchisee, resulting in reduced royalties collected.
Same Store Sales
SalesSame store sales is a metric used in evaluating the performance of established restaurants and is a commonly used metric in the restaurant industry. Same store sales for our brands are calculated using all company-ownedCompany-owned units open for at least eighteen full fiscal months and use the comparable operating weeks from the prior year to the current year quarter’s operating weeks. The calculation of same store sales for Bad Daddy’s excludes the results of one restaurant for the March fiscal month due to that restaurant’s extended remodel closure.
Bad Daddy’s same store restaurant sales increased 4.6%decreased 3.2% during the fiscal quarter ended March 28, 202326, 2024 compared to the same thirteen-week period ended March 29, 2022,28, 2023, primarily driven by strong off premisegeneral weakness in the casual dining restaurant segment as indicated by sequentially lower same store sales as measured by Black Box Intelligence, and to a lesser extent, weaker traffic specific to Bad Daddy’s in certain restaurants, partially offset by menu price increases. There were thirty-nine restaurants included in the same store sales base at the end of the current quarter.quarter, although one of those restaurants has been removed from the same store sales calculation during the March fiscal month as it compares against a remodel closure in the prior year.
Good Times same store restaurant sales increased 7.6%0.9% during the fiscal quarter ended March 28, 202326, 2024 compared to the same thirteen-week period ended March 29, 2022,28, 2023, primarily due to menu price increases, slightlypartially offset by lower traffic.reduced customer traffic driven by significantly unfavorable weather during the quarter compared to the same prior year quarter. There were twenty-threetwenty-five restaurants included in the same store sales base at the end of the current quarter.
Restaurant Operating Costs
Food and Packaging Costs. Food and packaging costs for the fiscal quarter ended March 28, 2023 increased $198,00026, 2024 decreased $56,000 to $10,599,000 (30.1% of restaurant sales) from $10,655,000 (30.8% of restaurant sales) from $10,457,000 (31.3% of restaurant sales) for the fiscal quarter ended March 28, 2022.2023.
Bad Daddy’s food and packaging costs were 8,052,000$8,031,000 (30.4% of restaurant sales) for the fiscal quarter ended March 26, 2024, down from $8,052,000 (30.6% of restaurant sales) for the fiscal quarter ended March 28, 2023, up from $7,972,000 (31.3%2023. The decrease, as a percentage of sales, is primarily attributable to the impact of a 4.7% increase in menu pricing, partially offset by slightly higher purchase prices in our commodity basket compared to the prior year period.
Good Times food and packaging costs were $2,568,000 (29.1% of restaurant sales) for the fiscal quarter ended March 29, 2022. This increase is primarily attributable to higher restaurant sales during the current fiscal quarter versus prior fiscal quarter, and the decrease as a percent of sales is attributed to lower purchase prices for beef, chicken, and other food commodities.
Good Times food and packaging costs were26, 2024, down from $2,603,000 (31.6% of restaurant sales) for the fiscal quarter ended March 28, 2023, up from $2,485,000 (31.4% of restaurant sales) for the fiscal quarter ended March 29, 2022. 2023. This increasedecrease is primarily attributable to the impact of higher sales. This slighta 3.9% increase asin menu pricing and, to a percent of sales is due to the pricing of our all-natural beeflesser extent, lower purchase prices on food and custard, which continued to be elevated compared to the prior year during the quarter, offsetting purchase price reductions for other commodities.paper goods.
Payroll and Other Employee Benefit Costs. Payroll and other employee benefit costs for the fiscal quarter ended March 28, 202326, 2024 increased $434,000$277,000 to $12,266,000 (34.8% of restaurant sales) from $11,989,000 (34.7% of restaurant sales) from $11,555,000 (34.6% of restaurant sales) for the fiscal quarter ended March 29, 2022.28, 2023.
Bad Daddy’s payroll and other employee benefit costs were $9,172,000 (34.7% of restaurant sales) for the fiscal quarter ended March 26, 2024 up from $9,143,000 (34.7% of restaurant sales) for the fiscal quarter ended March 28, 2023 up from $8,736,000 (34.3% of restaurant sales) for the fiscal quarter ended March 29, 2022.2023. The $407,000$29,000 increase is primarily attributable to higherone additional operating restaurant sales during the current quarter versuscompared to the same quarter in the prior year, as well as slightlyquarter, higher average pay rates. As a percent of sales, payroll and employee benefits costs increased by 0.4% primarily attributable to higher average wage rates, paid to attract qualified employees.and increased deployment of service and bar staff, partially offset by greater back of house productivity.
Good Timespayroll and other employee benefit costs were $2,846,000 (34.6%$3,094,000 (35.1% of restaurant sales) in the fiscal quarter ended March 28, 2023,26, 2024, up from $2,819,000 (35.6%$2,846,000 (34.6% of restaurant sales) in the same prior-yearprior year period. The decrease as a percentincrease is attributable to labor associated with two additional company-owned restaurants and higher average wage rates resulting from market forces and the CPI-indexed minimum wage in Denver and the state of sales is due primarily to increased labor productivity.Colorado.
Occupancy Costs. Occupancy costs for the fiscal quarter ended March 28, 202326, 2024 increased $51,000$185,000 to $2,613,000 (7.4% of restaurant sales) from $2,428,000 (7.0% of restaurant sales) from $2,377,000 (7.1% of restaurant sales) for the fiscal quarter ended March 29, 2022.28, 2023.
Bad Daddy’s occupancy costs were $1,743,000 (6.6% of restaurant sales) for the fiscal quarter ended March 26, 2024, up from $1,693,000 (6.4% of restaurant sales) for the fiscal quarter ended March 28, 2023, up from $1,679,000 (6.6%2023.
Good Times occupancy costs were $870,000 (9.9% of restaurant sales) forin the fiscal quarter ended March 29, 2022.
Good Times occupancy costs were26, 2024, up from $735,000 (8.9% of restaurant sales) in the fiscal quarter ended March 28, 2023, up from $698,000 (8.8% of restaurant sales) in the fiscal quarter ended March 29, 2022.2023. The increase was primarily attributabledue to increasedthe acquisition, by the Company during fiscal 2023, of two Good Times restaurants previously owned by franchisees, as well as real property and liability insurance costs.tax increases resulting from higher property values.
Other Operating Costs. Other operating costs for the fiscal quarter ended March 28, 2023,26, 2024, increased $160,000$279,000 to $4,827,000$5,105,000 (14.5% of restaurant sales) from $4,826,000 (14.0% of restaurant sales) from $4,667,000 (14.0% of restaurant sales) for the fiscal quarter ended March 29, 2022.28, 2023.
Bad Daddy’s other operating costs were $3,812,000$3,895,000 (14.7% of restaurant sales) for the fiscal quarter ended March 26, 2024 up from $3,811,000 (14.5% of restaurant sales) for the fiscal quarter ended March 28, 2023 up from $3,670,000 (14.4% of restaurant sales) for the fiscal quarter ended March 29, 2022.2023. The $142,000$84,000 increase was primarily attributable to higher overall sales, increased delivery charges,repair and increasedmaintenance, credit card fees and other employee-related expenses, partially offset by reduced restaurant supply costs.
Good Times other operating costs were $1,210,000 (13.7% of restaurant sales) in the fiscal quarter ended March 26, 2024, up from $1,015,000 (12.3% of restaurant sales) in the fiscal quarter ended March 28, 2023, up from $997,000 (12.6% of restaurant sales) in the fiscal quarter ended March 29, 2022.2023. The increase was primarily attributabledue to the acquisition, by the Company during fiscal 2023, of two Good Times restaurants previously owned by franchisees, as well as increased overall sales.repair and maintenance, credit card fees and customer delivery fees.
New Store Preopening Costs.In the fiscal quarter ended March 28, 2023,26, 2024, there were no preopening costs were $30,000 compared to no$30,000 of preopening costs for the fiscal quarter ended March 29, 2022. These costs28, 2023, which primarily relaterelated to re-training costs incurred as part of our closure and remodel of our Greenville, SCSouth Carolina Bad Daddy’s location.
Depreciation and Amortization Costs. Depreciation and amortization costs for the fiscal quarter ended March 28, 2023, decreased $102,00026, 2024, increased $15,000 to $911,000$926,000 from $1,013,000$911,000 in the fiscal quarter ended March 29, 2022. These decreases at both concepts are due to assets performing past their estimated usable lives and the prior-year impairment of assets.28, 2023.
Bad Daddy’s depreciation and amortization costs for the fiscal quarter ended March 28, 202326, 2024 decreased $73,000$21,000 to $761,000$740,000 from $834,000$761,000 in the fiscal quarter ended March 29, 2022.28, 2023.
Good Timesdepreciation and amortization costs for the fiscal quarter ended March 28, 2023 decreased $29,00026, 2024 increased $36,000 to $150,000$186,000 from $179,000$150,000 in the fiscal quarter ended March 29, 2022.28, 2023.
General and Administrative Costs. General and administrative costs for the fiscal quarter ended March 28, 2023, decreased $280,00026, 2024, increased $257,000 to $2,297,000 (7.1%$2,554,000 (7.2% of total revenues) from $2,577,000$2,297,000 (6.6% of total revenue)revenues) for the fiscal quarter ended March 29, 2022.28, 2023.
This decreaseincrease in general and administrative expenses in the fiscal quarter ended March 28, 202326, 2024 is primarily attributable to:
● |
Increase in costs associated with multi-unit supervisory roles of |
● | Increase in home office payroll and benefits costs of |
● | Increase in |
● | Increase in office lease and equipment expense of $17,000 |
● | Increase in other costs of $116,000 |
● | Decrease in health insurance related costs of $70,000 |
● | Decrease in recruiting and training related costs of $13,000 |
● | Decrease in general travel-related expenses of $24,000 |
For the balance of the fiscal year, we expect general and administrative costs to be approximately 7.0% - 8.0% of total revenues.
Advertising Costs.Advertising costs for the fiscal quarter ended March 28, 2023, decrease26, 2024, increased $46,000 to $824,000 (2.3% of total revenues) from $778,000 (2.2% of total revenue) from $812,000 (2.4% of total revenue)revenues) for the fiscal quarter ended March 29, 2023.
Bad Daddy’s advertising costs were $539,000 (2.0% of total revenues) in the fiscal quarter ended March 26, 2024 compared to $422,000 (1.6% of restaurant sales)total revenues) for the fiscal quarter ended March 28, 2023. The increase is primarily due to social media and printing cost increases, partially offset by a decrease in local store marketing. Bad Daddy’s advertising costs consist primarily of third party gift card commissions, menu development, printing costs, local store marketing and social media.
Good Times advertising costs were $285,000 (3.2% of total revenues) in the fiscal quarter ended March 26, 2024 compared to $356,000 (4.2% of total revenues) in the fiscal quarter ended March 28, 2023 compared to $467,000 (1.8% of total revenue) for the fiscal quarter ended March 29, 2022.2023. The decrease is primarily duerelated to lesser recognition of commissions earned by third parties on gift cards sold through large-box retailers. Bad Daddy’s advertising costs consist primarily of a combination of menus and other point of purchase materials, digitalreduced radio advertising and commissions incurred for placement ofprofessional fees, partially offset by increased gift parties at third party retailers, as well as local store marketing efforts.card and loyalty program expense.
Good Times advertising costs were $356,000 (4.2% of restaurant sales) in the fiscal quarter ended March 28, 2023 compared to $345,000 (4.3% of total revenue) in the fiscal quarter ended March 29, 2022. The current and prior year quarters include advertising costs of $65,000 and $62,000, respectively, of costs associated with franchise advertising contributions.
Good Times advertising costs consist primarily of contributions made to the advertising materials fund and a regional advertising cooperative based on a percentage of restaurant sales which are used to provide television and radio advertising, social media, and on-site and point-of-purchase.point-of-purchase printing costs. Advertising costs are presented gross, with franchisee contributions to the fund being recognized as a component of franchise revenues.
FranchiseImpairment of Long-Lived Assets Costs. ThereThe were no franchise costs associated with impairments for the fiscal quarter ended March 26, 2024, compared to $76,000 for the fiscal quarter ended March 28, 2023, compared to $6,000which primarily consists of new assets associated with previously impaired locations.
Loss (Gain) on Restaurant Asset and Equipment Sales. The net loss on restaurant asset sales and equipment disposals for the fiscal quarter ended March 29, 2022, respectively. The costs are related26, 2024 was $4,000, which is composed of a loss of $13,000 on disposal of miscellaneous assets, and $9,000 of deferred gain recognition, compared to the Good Times franchised restaurants. We currently have minimal direct costs associated with maintaining our franchise systems as those employees overseeing franchisee relations primarily perform responsibilities associated with company operations.
Gain on Restaurant Asset Sales and Lease Termination. Thea net gain on restaurant asset sales and lease terminationof $22,000 for the fiscal quarter ended March 28, 2023, was $22,000, which is composed of a net loss of $9,000 on disposal of miscellaneous assets, and $31,000 of deferred gains, comparedgain recognition.
Litigation Contingency Costs. There was $97,000 of income related to $43,000 foradjustment of the Company’s litigation contingency reserve in the fiscal quarter ended March 29, 2022, of which $35,000 is attributable26, 2024, compared to gains in connection with a lease termination at a Good Times restaurant and the remainder primarily attributable to deferred gains on prior sale-leaseback transactions of certain Good Times restaurants.
Impairment of Long-Lived Assets Costs. The costs associated with impairments$0 for the fiscal quarter ended March 28, 2023 was $76,000, which primarily consists2023. This adjustment is due to the recognition of new assets associated with previously impaired locations, compared$235,000 in contingent liabilities related to $1,753,000 forroutine course of business claims as well as the fiscal quarter ended March 29, 2022.reversal of our previous contingency reserve of $332,000.
Litigation Contingency Costs.Income from Operations There were no litigation contingency costs. Income from operations was $644,000 in the fiscal quarter ended March 28, 2023,26, 2024 compared to $332,000 for the fiscal quarter ended March 29, 2022.
Income (Loss) from Operations. Incomeincome from operations wasof $817,000 in the fiscal quarter ended March 28, 2023 compared to loss from operations of $1,909,000 in the fiscal quarter ended March 29, 2022.2023.
The change in the income (loss) from operations for the fiscal quarter ended March 28, 202326, 2024 is due primarily due to matters discussed in the “Net Revenues,” “Restaurant Operating Costs,” “General and Administrative Costs”, “Advertising Costs”, “Gain on Restaurant Sales and Lease Termination”, “Impairment of Long-Lived Assets Costs”, and “Litigation Contingency Costs” relevant sections above.
Interest Expense. Interest expense was $42,000 during the fiscal quarter ended March 26, 2024, compared with $26,000 during the fiscal quarter ended March 28, 2023, primarily related to the amortization of loan initiation fees, compared with $11,000 during the fiscal quarter ended March 29, 2022.2023.
Provision for Income Taxes. Provision for income taxesThere was $(9,952,000) for the fiscal quarter ended March 28, 2023, compared to no provision fora$78,000 benefit from income taxes for the fiscal quarter ended March 29, 2022. This26, 2024, compared to a $9,952,000 benefit for the fiscal quarter ended March 28, 2023. The most significant driver of this provisionthe prior year benefit was the release during this quarter, of the valuation allowance during previously assessed on the deferred tax assets.
Net Income (Loss). Net income was $10,743,000$680,000 for the fiscal quarter ended March 28, 202326, 2024, compared to net lossincome of $1,920,000$10,743,000 in the fiscal quarter ended March 29, 2022.28, 2023.
The change from the fiscal quarter ended March 28, 202326, 2024 to the fiscal quarter ended March 29, 202228, 2023 was primarily attributable to the matters discussed in the relevant sections above.
Income Attributable to Non-Controlling Interests. The non-controlling interest represents the limited partners’ or members’ share of income in the Good Times and Bad Daddy’s joint-venture restaurants.
For the fiscal quarter ended March 28, 2023,26, 2024, the income attributable to non-controlling interests was $122,000$62,000 compared to $230,000$122,000 for the fiscal quarter ended March 29, 2022.28, 2023.
Of the quarter’s income attributable to non-controlling interests, $40,000zero is attributable to Bad Daddy’s joint-venture restaurants, compared to $157,000 $40,000 in the same prior year period. This $117,000 decreasereduction is primarily due to the company’s purchaseacquisition by the Company of all the Bad Daddy’s membership interests in the limited liability companies held by non-controlling parties during the second fiscal quarter ended March 28, 2023, as described in Note 15 to the unaudited, consolidated financial statements included in this report.of 2023.
OfThe full $62,000 of the current fiscal quarter’s income $82,000 is attributable to the Good Times joint-venture restaurants, compared to $73,000 $82,000 in the same prior year period. This $9,000 increase$20,000 decrease is primarily due to increased restaurant leveldecreased profitability induring the current fiscal quarter.quarter of the six restaurants involved in the partnership.
Fiscal two quarters ended March 28, 202326, 2024 (26 weeks) compared to fiscal two quarters ended March 29, 202228, 2023 (26 weeks):
Net Revenues. Net revenues for the two quarters ended March 28, 202326, 2024 increased $1,666,000,$391,000, or 2.5%0.6%, to $68,179,000$68,570,000 from $66,513,000$68,179,000 for the two quarters ended March 29,28, 2023. Bad Daddy’s concept revenues increased $1,438,000decreased $937,000 while our Good Times concept revenues increased $228,000.$1,328,000.
Bad Daddy’s restaurant sales increased $1,470,000decreased $939,000 to $50,568,000 for the two quarters ended March 26, 2024 from $51,507,000 for the two quarters ended March 28, 2023 from $50,037,000 for the two quarters ended March 29, 2022. Sales were positively impacted by increases in sales primarily2023. This decrease is due to higher averagethe prior year closure of the Cherry Creek location, reduced customer traffic, concentrated in certain restaurants, partially offset by menu prices as well asprice increases and sales from the purchaseMadison, Alabama restaurant which opened during the fourth quarter of a previously franchised Bad Daddy’s location that occurred in March 2022.fiscal 2023. The average menu price increase for the two quarters ended March 28, 202326, 2024 over the same prior-year quarterprior year quarters was approximately 4.4%4.5%.
Good Times restaurant sales decreased $237,000increased $1,403,000 to $17,643,000 for the two quarters ended March 26, 2024 from $16,240,000 for the two quarters ended March 28, 2023 from $16,003,000 for the two quarters ended March 29, 2022,2023. This increase is primarily due to increasedthe acquisition, by the Company during fiscal 2023, of two Good Times restaurants previously owned by franchisees and menu prices.price increases. The average menu price increase for the two quarters ended March 28, 202326, 2024 over the same prior-year quarterprior year quarters was approximately 9.2%4.2%.
Franchise revenues decreased $41,000$73,000 to $359,000 in the two quarters ended March 26, 2024 compared to $432,000 in the two quarters ended March 28, 2023 compared to $473,000 in the two quarters ended March 29, 2022.2023. This decrease is primarily due to the acquisition, during the secondfourth fiscal quarter of 2022,2023, by the Company of one Bad Daddy’s restauranttwo Good Times restaurants previously owned by franchisees, as well as significantly lower sales compared to the prior year at two restaurants operated by a franchisee.common franchisee, resulting in reduced royalties collected.
Same Store Sales
SalesSame store sales is a metric used in evaluating the performance of established restaurants and is a commonly used metric in the restaurant industry. Same store sales for our brands are calculated using all company-owned units open for at least eighteen full fiscal months and use the comparable operating weeks from the prior year-to-date period to the current year-to-date period’s operating weeks. The calculation of same store sales for Bad Daddy’s excludes the results of one restaurant for the March fiscal month due to that restaurant’s extended remodel closure.
Bad Daddy’s same store restaurant sales increased 3.5%decreased 4.7% during the two quarters ended March 28, 202326, 2024 compared to the same two quarters ended March 29, 2022,28, 2023, primarily driven by strong off premisegeneral weakness in the casual dining restaurant segment as indicated by sequentially lower same store sales andas measured by Black Box Intelligence, weaker traffic specific to Bad Daddy’s in certain restaurants, partially offset by menu price increases. There were thirty-nine restaurants included in the same store sales base at the end of the current quarter.quarter, although one of those restaurants has been removed from the same store sales calculation during the March fiscal month as it compares against a remodel closure in the prior year.
Good Times same store restaurant sales increased 5.3%2.5% during the two quarters ended March 28, 202326, 2024 compared to the same two quarters period ended March 29, 2022,28, 2023, primarily due to menu price increases, slightlypartially offset by lower traffic.traffic decreases, primarily associated with unfavorable weather during the second fiscal quarter, as compared to the same-prior year quarter. There were twenty-threetwenty-five restaurants included in the same store sales base at the end of the current quarter.
Restaurant Operating Costs
Food and Packaging Costs. Food and packaging costs for the two quarters ended March 28, 2023 increased $579,00026, 2024 decreased $336,000 to $20,926,000 (30.7% of restaurant sales) from $21,262,000 (31.4% of restaurant sales) from $20,683,000 (31.3% of restaurant sales) for the two quarters ended March 28, 2022.2023.
Bad Daddy’s food and packaging costs were $15,640,000 (30.9% of restaurant sales) for the two quarters ended March 26, 2024, down from $16,025,000 (31.1% of restaurant sales) for the two quarters ended March 28, 2023. This decrease is primarily attributable to a combination of lower restaurant sales during the two quarters ended March 26, 2024 versus the two quarters ended March 28, 2023 up from $15,784,000 (31.5%and lower purchase prices for food and paper goods. The decrease, as a percent of sales, is primarily attributable to the impact of a 4.5% average annual increase in menu pricing.
Good Times food and packaging costs were $5,286,000 (30.0% of restaurant sales) for the two quarters ended March 29, 2022. This increase is primarily attributable to higher restaurant sales during the current fiscal quarter versus the prior fiscal quarter. The decrease as a percent of sales reflects lower input prices experienced during the second fiscal quarter.
Good Times food and packaging costs were26, 2024, up from $5,237,000 (32.2% of restaurant sales) for the two quarters ended March 28, 2023, up from $4,899,000 (30.6%2023. This increase is primarily attributable to a combination of higher restaurant sales) forsales during the two quarters ended March 29, 2022. This increasecurrent two-quarter period versus the prior two-quarter period, offset by lower purchase prices on food and paper goods. The decrease, as a percent of sales, is primarily attributable to the impact of highera 4.2% average annual increase in menu pricing, and to a lesser extent, lower purchase prices on food and paper goods, partially offset by the impact of an 8.8% increase in menu pricing.goods.
Payroll and Other Employee Benefit Costs. Payroll and other employee benefit costs for the two quarters ended March 28, 202326, 2024 increased $805,000$353,000 to $23,890,000 (35.0% of restaurant sales) from $23,537,000 (34.7% of restaurant sales) from $22,732,000 (34.4% of restaurant sales) for the two quarters ended March 29, 2022.28, 2023.
Bad Daddy’s payroll and other employee benefit costs were $17,813,000 (35.2% of restaurant sales) for the two quarters ended March 26, 2024 down from $17,898,000 (34.7% of restaurant sales) for the two quarters ended March 28, 2023 up from $17,154,000 (34.3% of2023. The $85,000 decrease is primarily attributable to lower restaurant sales) forsales during the two quarters ended March 29, 2022. The $744,000 increase is primarily attributable to higher restaurant sales during the current quarter26, 2024 versus the same quarter in the prior year, as well as slightlytwo quarters ended March 28, 2023, partially offset by higher average pay rates. As a percent of sales, payroll and employee benefits costs increased by 0.4%0.5% primarily attributable to higher average wage rates paid to attract qualified employees.employees and the deleveraging impact of lower sales on fixed labor costs, primarily manager salaries.
Good Timespayroll and other employee benefit costs were $5,639,000 (34.7%$6,077,000 (34.4% of restaurant sales) in the two quarters ended March 28, 2023,26, 2024, up from $5,578,000 (34.9%$5,639,000 (34.7% of restaurant sales) in the same prior-yearprior year period. The $61,000$438,000 increase was attributable to labor associated with two additional company-owned restaurants and higher sales.average wage rates, partially offset by increased labor productivity. As a percent of sales, payroll and employee benefits costs decreased by 0.3% primarily attributable to menu price increases and increased labor productivity, partially offset by increased wage rates.
Occupancy Costs. Occupancy costs for the two quarters ended March 28, 202326, 2024 increased $181,000$232,000 to $5,118,000 (7.5% of restaurant sales) from $4,886,000 (7.2% of restaurant sales) from $4,705,000 (7.1% of restaurant sales) for the two quarters ended March 29, 2022.28, 2023.
Bad Daddy’s occupancy costs were $3,461,000 (6.8% of restaurant sales) for the two quarters ended March 26, 2024, up from $3,425,000 (6.6% of restaurant sales) for the two quarters ended March 28, 2023, up from $3,327,000 (6.6%2023.
Good Times occupancy costs were $1,657,000 (9.4% of restaurant sales) forin the two quarters ended March 29, 2022. The increase was primarily attributable to additional lease costs associated with the purchase of our Bad Daddy’s Franchisee in the second quarter of fiscal 2022.
Good Times occupancy costs were26, 2024, up from $1,461,000 (9.0% of restaurant sales) in the two quarters ended March 28, 2023, up from $1,378,000 (8.6% of restaurant sales) in the two quarters ended March 29, 2022.2023. The increase was primarily attributabledue to the acquisition, by the Company during fiscal 2023, of two Good Times restaurants previously owned by franchisees, as well as real property tax increases resulting from increased property and liability insurance costs.valuations.
Other Operating Costs. Other operating costs for the two quarters ended March 28, 2023,26, 2024, increased $514,000$515,000 to $9,319,000$9,833,000 (14.4% of restaurant sales) from $9,318,000 (13.8% of restaurant sales) from $8,805,000 (13.3% of restaurant sales) for the two quarters ended March 29, 2022.28, 2023.
Bad Daddy’s other operating costs were $7,334,000$7,476,000 (14.8% of restaurant sales) for the two quarters ended March 26, 2024 up from $7,333,000 (14.2% of restaurant sales) for the two quarters ended March 28, 2023 up from $6,955,000 (13.9% of restaurant sales) for the two quarters ended March 29, 2022.2023. The $379,000$143,000 increase and the increase as a percentage of sales was attributable to higher overall sales, increased third party delivery fees, increased utility costs,repair and maintenance and other employee-related expenses, partially offset by a general increase inreduced restaurant supplies.supply cost.
Good Times other operating costs were $2,357,000 (13.4% of restaurant sales) in the two quarters ended March 26, 2024, up from $1,985,000 (12.2% of restaurant sales) in the two quarters ended March 28, 2023, up from $1,850,000 (11.6% of restaurant sales) in the two quarters ended March 29, 2022.2023. The increase was primarily attributabledue to the acquisition, by the Company during fiscal 2023, of two Good Times restaurants previously owned by franchisees, as well as increased salesrepair and general price inflation in supplies costs.maintenance, credit card fees and customer delivery fees.
New Store Preopening Costs. NewThere were nonew store preopening costs werefor the two quarters ended March 26, 2024, compared to $30,000 for the two quarters ended March 28, 2023 which were primarily associated withrelated to re-training costs in connection withincurred as part of our closure and remodel of our Greenville, SCSouth Carolina Bad Daddy’s compared to $50,000 for the two quarters ended March 29, 2022.location.
Depreciation and Amortization Costs. Depreciation and amortization costs for the two quarters ended March 28, 2023, decreased $176,00026, 2024, increased $32,000 to 1,821,000$1,853,000 from $1,997,000$1,821,000 in the two quarters ended March 29, 2022.28, 2023.
Bad Daddy’s depreciation and amortization costs for the two quarters ended March 28, 202326, 2024 decreased $83,000$44,000 to $1,535,000$1,491,000 from $1,618,000$1,535,000 in the two quarters ended March 29, 2022.28, 2023.
Good Timesdepreciation and amortization costs for the two quarters ended March 28, 2023 decreased $93,00026, 2024 increased $76,000 to $286,000$362,000 from $379,000$286,000 in the two quarters ended March 29, 2022.28, 2023.
General and Administrative Costs. General and administrative costs for the two quarters ended March 28, 2023, decreased $610,00026, 2024, increased $192,000 to $4,672,000$4,867,000 (7.1% of total revenues) from $4,675,000 (6.9% of total revenues) from $5,282,000 (7.9% of total revenue) for the two quarters ended March 29, 2022.28, 2023.
This decreaseincrease in general and administrative expenses in the two quarters ended March 28, 202326, 2024 is primarily attributable to:
● |
Increase in costs associated with multi-unit supervisory roles of |
● | Increase in home office payroll and benefits costs of |
● | Increase in |
● | Increase in other costs of $139,000 |
● | Decrease in professional services of $79,000 |
● | Decrease in health insurance related costs $88,000 |
● | Decrease in stock compensation costs of $11,000 |
● | Decrease in recruiting and training related costs of $121,000 |
● | Decrease in general travel-related costs of $72,000 |
Advertising Costs.Advertising costs for the two quarters ended March 28, 2023,26, 2024, increased to $1,916,000 (2.8% of total revenues) from $1,672,000 (2.5% of sales from $1,453,000 (2.2% of total revenue)revenues) for the two quarters ended March 29,28, 2023.
Bad Daddy’s advertising costs were $1,269,000 (2.5% of total revenues) for the two quarters ended March 26, 2024 compared to $1,031,000 (1.6%(2.0% of restaurant sales) intotal revenues) for the two quarters ended March 28, 2023compared to $781,000 (1.6% of total revenue) for the two quarters ended March 29, 2022.2023. The increase is primarily due to recognition of commission earned by third parties on gift cards sold through large-box retailers.retailers as well as increased social media and printing costs. Bad Daddy’s advertising costs consist primarily of third-party gift card commissions, menu development, printing costs, local store marketing and social media. The two fiscal quarters ended March 28, 2023 had no advertising costs associated with franchise contributions.media.
Good Times advertising costs were $647,000 (3.6% of total revenues) in the two quarters ended March 26, 2024 compared to $641,000 (3.9% of restaurant sales)total revenues) in the two quarters ended March 28, 2023 compared to $672,000 (4.1% of total revenue) in the two quarters ended March 29, 2022. The current and prior year quarters include advertising costs of $129,000 and $127,000, respectively, of costs associated with franchise advertising contributions.2023.
Good Times advertising costs consist primarily of contributions made to the advertising materials fund and a regional advertising cooperative based on a percentage of restaurant sales which are used to provide television and radio advertising, social media, and on-site and point-of-purchase.point-of-purchase printing costs. Advertising costs are presented gross, with franchisee contributions to the fund being recognized as a component of franchise revenues.
Franchise Costs. Franchise costs were $3,000 and $11,000 for the two quarters ended March 28, 2023 and March 29, 2022, respectively. The costs are related to the Good Times franchised restaurants. We currently have minimal direct costs associated with maintaining our franchise systems as those employees overseeing franchisee relations primarily perform responsibilities associated with company operations.
Gain on Restaurant Asset Sales and Lease Termination. The gain on restaurant asset sales and lease termination for the two quarters ended March 28, 2023 was $22,000, which is composed of a net $3,000 gain on the sale miscellaneous assets, and $19,000 of deferred gains, compared to $657,000 for the two quarters ended March 29, 2022.
Impairment of Long-Lived Assets Costs. TheThere were no costs associated with impairments for the two quarters ended March 26, 2024, compared to $76,000 for the two quarters ended March 28, 2023, was $76,000, which primarily consistsconsisted of new assets associated with previously impaired locations, compared to $1,753,000locations.
Loss (Gain) on Restaurant Asset and Equipment Sales. The net gain on restaurant asset sales and equipment disposals for the two quarters ended March 29, 2022.
Litigation Contingency Costs. There were no litigation contingency costs in26, 2024 was $6,000, which is composed of a loss of $13,000 on disposal of miscellaneous assets and $19,000 of deferred gain recognition, compared to a net gain of $22,000 for the two quarters ended March 28, 2023, which is composed of a net loss of $9,000 on disposal of miscellaneous assets, and $31,000 of deferred gains.
Litigation Contingency Costs. There was $97,000 of income related to the adjustment of the Company’s litigation contingency reserve during the two quarters ended March 26, 2024, compared to $332,000$0 for the two quarters ended March 29, 2022.28, 2023. This adjustment is due to the recognition of $235,000 in contingent liabilities related to routine course of business claims as well as the reversal of our previous contingency reserve of $332,000.
Income (Loss) from Operations. Income from operations was $270,000 in the two quarters ended March 26, 2024 compared to income from operations of $924,000 in the two quarters ended March 28, 2023 compared to loss from operations of $633,000 in the two quarters ended March 29, 2022.2023.
The change in the income (loss) from operations for the two quarters ended March 28, 202326, 2024 is due primarily due to matters discussed in the “Net Revenues,” “Restaurant Operating Costs,” “General and Administrative Costs”, “Advertising Costs”, “Gain on Restaurant Sales and Lease Termination”, “Impairment of Long-Lived Assets Costs”, and “Litigation Contingency Costs” relevant sections above.
Interest Expense. Interest expense was $74,000 during the two quarters ended March 26, 2024, compared with $38,000 during the two quarters ended March 28, 2023, primarily related to the amortization of loan initiation fees, compared with $29,000 during the two quarters ended March 29, 2022.2023.
Provision for Income Taxes. Provision for income taxesThere was $9,952,000 for the two quarters ended March 28, 2023, compared to no provision fora$1,000 benefit from income taxes for the two quarters ended March 29, 2022. This26, 2024, compared to a $9,952,000 benefit for the two quarters ended March 28, 2023. The most significant driver of this provisionthe prior year benefit was the release during the quarter ended March 28, 2023, of the valuation allowance during previously assessed on the deferred tax assets.
Net Income (Loss). Net income was $10,838,000$197,000 for the two quarters ended March 28, 202326, 2024 compared to net lossincome of $670,000$10,838,000 in the two quarters ended March 29, 2022.28, 2023.
The change from the two quarters ended March 28, 202326, 2024 to the two quarters ended March 29, 202228, 2023 was primarily attributable to the matters discussed in the relevant sections above.
Income Attributable to Non-Controlling Interests. The non-controlling interest represents the limited partners’ or members’ share of income in the Good Times and Bad Daddy’s joint-venture restaurants.
For the two quarters ended March 28, 2023,26, 2024, the income attributable to non-controlling interests was $344,000$135,000 compared to $1,150,000$344,000 for the two quarters ended March 29, 2022.28, 2023.
Of the two quarters’ income attributable to non-controlling interests, $219,000$0 is attributable to Bad Daddy’s joint-venture restaurants, compared to $840,000 $219,000 in the same prior year period. This $621,000 decreasereduction is primarily due to a one-time special allocation to the non-controlling partners in these partnershipsacquisition by the Company of approximately $516,000the interests in the limited liability companies held by non-controlling parties during the second fiscal quarter ended December 28, 2021 related to a rebate of payroll costs. Of2023.
The full $135,000 of the current quarter’stwo quarters’ income $125,000 is attributable to the Good Times joint-venture restaurants, compared to $310,000 $125,000 in the same prior year period. This $185,000 decrease$10,000 increase is primarily due to decreased restaurant levelincreased profitability in the current fiscal quarter. The Company acquired all of the membership interests in Bad Daddy’s during the two fiscal quarters ended March 28, 2023, as describedof the six restaurants involved in Note 15 to the unaudited, consolidated financial statements included in this report.partnership.
Adjusted EBITDA
EBITDA is defined as net income (loss) before interest, income taxes and depreciation and amortization.
Adjusted EBITDA is defined as EBITDA plus non-cash stock-based compensation expense, preopening expense, non-recurring acquisition costs, GAAP rent in excess of cash rent, and non-cash disposal of assets. Adjusted EBITDA is intended as a supplemental measure of our performance that is not required by or presented in accordance with GAAP. We believe that EBITDA and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results. Our management uses EBITDA and Adjusted EBITDA (i) as a factor in evaluating management's performance when determining incentive compensation and (ii) to evaluate the effectiveness of our business strategies.
We believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial measures with other fast casual restaurants, which may present similar non-GAAP financial measures to investors. In addition, you should be aware when evaluating EBITDA and Adjusted EBITDA that in the future we may incur expenses similar to those excluded when calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies do not calculate Adjusted EBITDA in the same fashion.
Our management does not consider EBITDA or Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of EBITDA and Adjusted EBITDA is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. Some of these limitations are:
● | Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; |
● | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
● | Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; |
● | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; |
● | Stock based compensation expense is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing performance for a particular period; |
● | Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and |
● | Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as a supplemental measure. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.
The following table reconciles net loss/income to EBITDA and Adjusted EBITDA (in thousands) for the fiscal quarter ended March 28, 2023:26, 2024:
| Quarter Ended | Year-to-Date | |||||||||||||||
| March 28, 2023 (13 Weeks) | March 29, 2022 (13 Weeks) | March 28, 2023 (26 Weeks) | March 29, 2022 (26 Weeks) | |||||||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Net Income (Loss), as reported | $ | 10,621 | $ | (2,150 | ) | $ | 10,494 | $ | (1,820 | ) | ||||||
| Depreciation and amortization1 | 900 | 977 | 1,767 | 1,982 | ||||||||||||
| Interest expense, net | 25 | 11 | 38 | 29 | ||||||||||||
| Provision for income taxes | (9,952 | ) | - | (9,952 | ) | 8 | ||||||||||
| EBITDA | 1,594 | (1,162 | ) | 2,347 | 199 | |||||||||||
| Preopening expense | 30 | - | 30 | 50 | ||||||||||||
| Non-cash stock-based compensation | 43 | 52 | 89 | 147 | ||||||||||||
| Asset Impairment | 76 | 1,753 | 76 | 1,753 | ||||||||||||
| GAAP rent-cash rent difference | (190 | ) | (110 | ) | (314 | ) | (182 | ) | ||||||||
| Loss (Gain) on restaurant asset sales and lease termination2 | (22 | ) | (35 | ) | (22 | ) | (519 | ) | ||||||||
| One-time special allocation to Bad Daddy’s partnerships | - | - | - | 516 | ||||||||||||
| Litigation contingencies | - | 332 | - | 332 | ||||||||||||
| Adjusted EBITDA | $ | 1,531 | $ | 830 | $ | 2,206 | $ | 2,296 | ||||||||
Quarter Ended | Year-to-Date | |||||||||||||||
March 26, 2024 | March 28, 2023 | March 26, 2024 | March 28, 2023 | |||||||||||||
Adjusted EBITDA: | ||||||||||||||||
Net Income, as reported | $ | 618 | $ | 10,621 | $ | 62 | $ | 10,494 | ||||||||
Depreciation and amortization | 929 | 900 | 1,858 | 1,767 | ||||||||||||
Interest expense, net | 42 | 25 | 74 | 38 | ||||||||||||
Provision for income taxes | (78 | ) | (9,952 | ) | (1 | ) | (9,952 | ) | ||||||||
EBITDA | 1,511 | 1,594 | 1,993 | 2,347 | ||||||||||||
Preopening expense | - | 30 | - | 30 | ||||||||||||
Non-cash stock-based compensation1 | 40 | 43 | 78 | 89 | ||||||||||||
Asset impairment | - | 76 | - | 76 | ||||||||||||
GAAP rent-cash rent difference2 | (163 | ) | (190 | ) | (326 | ) | (314 | ) | ||||||||
Loss (gain) on restaurant and equipment asset sales3 | 4 | (22 | ) | (6 | ) | (22 | ) | |||||||||
Litigation contingencies | (97 | ) | - | (97 | ) | - | ||||||||||
Adjusted EBITDA | $ | 1,295 | $ | 1,531 | $ | 1,642 | $ | 2,206 | ||||||||
1 | Represents non-cash stock-based compensation as described in Note 5 to the Consolidated Financial Statements. |
2 | Represents the excess of cash rent incurred over the amount of GAAP rent recorded in the |
3 | Represents deferred gains on |
Amount representsDepreciation and amortization, the portion of a payroll cost rebatedifference between GAAP rent and cash rent and loss (gain) on restaurant and equipment asset sales have been reduced by any amounts attributable to the non-controlling partners in these partnerships.interests.
Liquidity and Capital Resources
Cash and Working Capital
Capital. As of March 28, 2023,26, 2024, we had a working capital deficit of $6,334,000.$8,515,000. Our working capital position benefits from the fact that we generally collect cash from sales to customers the same day, or in the case of credit or debit card transactions, within a few days of the related sale. Although wesale and have negotiated payment terms of up to four weeks with many of our vendors we pay some of our primary foodservice vendors on 1-3 day payment terms to take advantage of early pay discountsthat are typically between 14 and generally pay most outstanding accounts payable upon review for accuracy and validity. In addition, our21 days. Our current working capital position includesdeficit is additionally affected by the recognition of the current portion ofshort-term lease liabilities, as we lease substantially all of our real estate and have both short-termcurrent and long-term obligations to our landlords. We believe that we will have sufficient capital to meet our working capital, recurring operating costs and recurring capital expenditure needs throughoutin fiscal 2023. As2024. We anticipate any commitments in fiscal 2024 will be funded out of March 28, 2023, we entered into a construction contract for one new Bad Daddy’s restaurant development located in Alabama, scheduled to open in Q4 2023. The construction is expected to begin in Q3 2023 and is not anticipated to materially impactexisting cash or future borrowings against the Company’s liquidity or operations.Cadence Credit Facility.
On January 31, 2022, the Company‘s Board of Directors authorized a $5.0 Million share repurchase program which became effective February 7, 2022. The authorization to repurchase will continue until the maximum value of shares is achieved or the Company terminates the program. The timing and amount of repurchases will depend upon the Company’s stock price, economic and market conditions, regulatory requirements, and other corporate considerations.considerations.
Financing
Cadence Credit Facility
Through the end of the period covered by this report on Form 10-Q, theFacility. The Company maintained aand its wholly owned subsidiaries (the “Subsidiaries”) maintain an amended and restated credit agreement with Cadence Bank (“Cadence”) pursuant. Pursuant to which, as amended,the credit agreement, Cadence agreed to loan the Company up to $8,000,000 which as of March 28, 2023 hadwith a maturity date of April 30, 202320, 2028 (the “Prior Cadence“Cadence Credit Facility”). . The Prior Cadence Credit Facility is discussed in more detail in Note 9 of the Company’s unaudited, consolidated financial statements contained in this Form 10-Q.
On April 20, 2023, subsequent to the end of the fiscal quarter ended March 28, 2023, the Companyamended and each of its wholly-owned subsidiaries, as guarantors (the “Subsidiary Guarantors”), entered into an Amended and Restated Credit Agreement (the “Senior Credit Facility”) with Cadence Bank, as administrative agent and sole lender (“Cadence”). The Senior Credit Facility provides for an $8.0 million senior revolving loan (the “Revolver”) and amends and restatesrestated the Company’s prior Cadence Credit Facilitycredit facility with Cadence in its entirety.
Proceeds from the Senior The Cadence Credit Facility [if and when drawn] will be used (i) to fund new restaurant development, (ii) to financeaccrues commitment fees on the buyoutdaily unused balance of non-controlling joint venture partners in certain restaurants, (iii) to finance the redemption, purchase or other acquisitionfacility at a rate of equity interests in the Company and (iv) for working capital and other general corporate purposes.
The Revolver will be available until April 20, 2028.0.25%. The loans may from time to time consist of a mixture of SOFR Rate Loans and Base Rate Loans with differing interest rates based upon varying additions to the Federal Funds Rate, the Cadence prime rate or Term SOFR. The SeniorEach of the Subsidiaries are guarantors of the Cadence Credit Facility.
Proceeds from the Cadence Credit Facility, also carries an upfront feeif and when drawn, may be used (i) to fund new restaurant development, (ii) to finance the buyout of 0.25%non-controlling partners in certain restaurants, (iii) to finance the redemption, purchase or other acquisition of equity interests in the aggregate principal amount of the Revolver commitmentCompany and a commitment fee of 0.25% per annum on the unused portion of the Revolver commitment.(iv) for working capital and other general corporate purposes.
The SeniorCadence Credit Facility includes customary affirmative and negative covenants and events of default. The SeniorCadence Credit Facility also requires the Company to maintain various financial condition ratios, including minimum liquidity, an amended maximum leverage ratio and an amended minimum fixed charge coverage ratio. In addition, to the extent the aggregate outstandingsoutstanding balance under the Revolver exceedrevolver exceeds $4.0 million, the Company is required to meet a new specified leverage ratio, on a pro forma basis, before making further borrowings as well as certain restricted payments, investments and growth capital expenditures. As of the date of filing of this report, the Company was in compliance with each of these covenants under the Cadence Credit Facility.
As of March 26, 2024, the weighted average interest rate applicable to borrowings under the Cadence Credit Facility was 8.42%.
Cash FlowsAs a result of entering into the Cadence Credit Facility and the various amendments, the Company paid loan origination costs including professional fees of approximately $299,000 and is amortizing these costs over the term of the credit agreement. As of March 26, 2024, the unamortized balance of these fees was $109,000.
Net cash providedIn connection with the Cadence Credit Facility, the Company and the Subsidiaries entered into an Amended and Restated Security and Pledge Agreement (the “Security Agreement”) with Cadence. Under the Security Agreement, the Cadence Credit Facility is secured by operating activitiesa first priority security interest in substantially all the assets of the Company and the Subsidiaries.
As of March 26, 2024, there were $1,250,000 of borrowings against the facility, all of which is due during the fiscal year ending September 26, 2028 and is classified as a long-term liability in the accompanying balance sheet. Availability of the Cadence Credit Facility for borrowings is reduced by the outstanding face value of any letters of credit issued under the facility. As of March 26, 2024, there were approximately $10,000 in outstanding letters of credit issued under the facility, and approximately $6,740,000 of committed funds available.
Total interest expense on notes payable was $4,158,000$37,000 and $0 for the two quarters ended March 28, 2023. The net cash used in operating activities for the two quarters ended26, 2024 and March 28, 2023, was the result ofrespectively.
Cash Flows
Year-to-Date Period Ended | ||||||||
March 26, 2024 | March 28, 2023 | |||||||
Net cash provided by operating activities | $ | 1,515 | $ | 4,158 | ||||
Net cash used in investing activities | (1,063 | ) | (5,817 | ) | ||||
Net cash used in financing activities | (634 | ) | (1,880 | ) | ||||
Net change in cash and cash equivalents | $ | (182 | ) | $ | (3,539 | ) | ||
Operating Cash Flows. Net cash from operating activities decreased by $2,643,000, primarily due to decreased net income of $10,838,000and income tax provision as well as cash and non-cash reconciling items totaling $6,680,000. These reconciling items are primarily comprised of 1) depreciation and amortization of general assets of $1,859,000, 2) amortization of operating lease assets of $1,836,000, 3) decrease of ROU assets of $2,161,000 4) stock-based compensation expense of $89,000, 5) a net gain on sales and disposals of assets of $22,000, 5) an increase in receivables and other assets of $643,000, 5) a decrease in deferred liabilitiesaccounts payable and accrued expensesliabilities, as presented on the Condensed Consolidated Statements of $649,000, 7) an increase in accounts payable of $1,596,000 and 8) a net decrease in amounts related to our operating leases of $2,161,000, 8) impairment of long lived assets of $76,000, and 9) income tax provision of $9,959,000.Cash Flows.
Net cash provided by operating activities was $1,312,000 for the two quarters ended March 29, 2022. The net cash provided by operating activities for the two quarters ended March 29, 2022 was the result of net loss of $670,000 as well as cash and non-cash reconciling items totaling $1,982,000. These reconciling items are primarily comprised of 1) depreciation and amortization of general assets of $2,114,000, 2) amortization of operating lease assets of $1,751,000, 3) impairment of long-lived assets of $1,753,000 4) stock-based compensation expense of $147,000 5) a gain on lease termination and deferred gain on sale/leaseback of restaurants of $657,000, 6) A decrease in ROU assets of $39,000, 7) Income tax provision of $8,000, 8) an increase in prepaids of $1,176, primarily attributable to an in prepaid rent, 9) an increase in accrued expenses of $395,000, 10) a decrease in accounts payable of $370,000, 11) a net decrease in amounts related to our operating lease liabilities of $1,976,000 and 12) An increase of $46,000 in inventory and other receivables.
Investing Cash Flows. Net cash used in investing activities for the two quarters ended March 26, 2024 and March 28, 2023 waswere $1,063,000 and $5,817,000, respectively, which primarily reflectsreflect the purchases of property and equipment of $1,423,000, andin each period as well as the net purchase of all non-controlling interests in our Bad Daddy’s locations of $4,394,000. Purchases of property and equipment is comprised ofin the following:prior year period.
Net cash used in investing activities for the two quarters ended March 29, 2022 was $1,905,000 which primarily reflects the general purchases of property and equipment of $1,177,000 and an acquisition of a restaurant from franchisee, net of cash acquired, for $728,000. Purchases of property and equipment is comprised of the following:
Financing Cash Flows. Net cash used in financing activities for the two fiscal quarters ended March 28, 202326, 2024 was $1,880,000,$634,000, which includes proceeds from stock option exerciseslong-term debt of $5,000 and net$1,000,000, payments of long-term debt of $500,000, distributions to non-controlling interests of $453,000, $92,000 in restricted stock vesting paid in cash,$50,000, and $1,340,000$1,084,000 in payments for the purchase of treasury stock.
Net cash used in financing activities for the two fiscal quarters ended March 29, 202228, 2023 was $1,197,000,$1,880,000, which includesincluded distributions to (net of contributions from) non-controlling interests of $956,000, payment$453,000, payments for the repurchasepurchase of the Company’s commontreasury stock of $331,000$1,340,000, $92,000 in restricted stock vesting paid in cash, and proceeds from stock option exercise of $90,000.$5,000.
Impact of Inflation
Commodity prices, particularly for key proteins, remain high and volatile. During the first fiscal quarter of 2024, we experienced lower costs across many commodities in our basket, however as we had expected, ground beef costs have recently been at near-record highsbegun to increase and have exhibited extreme volatility. Though we have seen some moderation in certain commodities, weexpect them to continue to increase during the second half of fiscal 2024, as will likely be the case for other proteins and food-based commodities. We continue to experience higher year-over-year prices on many goods, including food and beverage items,elevated costs for paper and packaging, other restaurant supplies, and energy (utilities) costs. Due to the volatility in commodity pricing, we are unable to reasonably predict the impact of future inflationary pressures.
In addition to food and supplies cost inflation, we have also experienced the need to meaningfully increase wages to attract workersrestaurant employees, and in our restaurants. While we are hopeful that wage rate inflation moderates, the persistent shortage of qualified workers, rather thanColorado inflation-indexed statutory wage rate increases which have traditionally created rate pressure, is the primary factorare creating upward pressure on wages,wages. Further, as demand for labor is currently significantly exceeding the supply of qualified workers.property valuations have increased in Colorado and to a lesser extent elsewhere, we have seen significant increases in real property taxes.
We have historically used menu price increases to manage profitability in times of inflation, however consumer preferences and the current unusually high raterelative pricing of inflation,competitors may prevent us from raising prices sufficient to offset the significant increases in labor costs, particularly in Colorado where wage pressures are caused by both of goodsstatutory and labor, exceeds what we believe we can reasonably pass through to our customers without negatively affecting frequency and trial by our customers.market forces.
Seasonality
Revenues of the Company are subject to seasonal fluctuations based on weather conditions adversely affecting Colorado restaurant sales primarily during the months of December, January, February, and March,. which affects both of the Company’s brands, but the Company’s Good Times restaurants are more sensitive to these weather-based seasonal fluctuations. The Company’s Bad Daddy’s restaurants typically experience seasonal reductions in revenues between the months of November and January resulting from general consumer spending patterns.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not required.
ITEM 4. | CONTROLS AND PROCEDURES |
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Based on an evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this report on Form 10-Q, the Company’s Chief Executive Officer (its principal executive officer) and Senior Vice President of Finance and Accounting (its principal financial officer) have concluded that the Company’s disclosure controls and procedures were effective as of March 28, 2023.26, 2024.
Changes in Internal Control over Financial Reporting
There have been no significant changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended March 28, 202326, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS |
For a discussion of material legal proceedings affecting the Company, see Note 11 to the unaudited, consolidated financial statements included in this report.
ITEM 1A. | RISK FACTORS |
The risk factor below updates the risk factors contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 27, 2022.26, 2023.
The failure of banks where we maintain deposits in excessA future ownership change as defined by Section 382 of the limits insured by FDIC or other government or quasi-government agenciesInternal Revenue Code (“IRC”) could materially affectlimit our financial positionability to utilize tax loss and operating results.credit carryforwards to offset our taxable income.
The Company maintains deposits withOur deferred tax assets include certain banks in excessgeneral business credit tax credits and loss carryforwards. Our ability to realize these deferred tax assets through their use to offset future taxable income may be significantly limited if we experience an ownership change, as defined by Section 382 of the maximum insured limitsIRC. In general, an ownership change under Section 382 occurs if the percentage of stock owned by the FDIC. The significant interest ratean entity’s 5% stockholders (as defined for tax purposes) increases by the Federal Reserve have caused recent bank failures. Although in certain of those cases, depositors have been protected from loss by government intervention, no assurances can be mademore than 50 percentage points over a rolling three-year period. Such an ownership change has occurred several times in the caseCompany’s history, although during the periods in which such prior ownership changes occurred, the Company had placed a 100% valuation allowance on its deferred tax assets. The limitation on our ability to utilize these credits and tax loss carryforwards that could arise from an ownership change under Section 382 would depend on the value of our equity at the time of any failureownership change. If we were to experience an ownership change, it is possible that a significant portion of a bank in which the Company has uninsured deposits, that the Companyour tax loss and credit carryforwards could expire before we would be similarly protected againstable to use them to offset future taxable income and could result in the recognition of loss associated with the reduced value of such uninsured deposits.the Company’s deferred tax assets.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
The Company‘s Board of Directors authorized a $5.0 Million share repurchase program which became effective February 7, 2022. The authorization to repurchase will continue until the maximum value of shares is achieved or the Company terminates the program. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. As of March 28, 202326, 2024 the Company has purchased 827,4351,521,042 shares of its common stock pursuant to the share repurchase plan leaving approximately $2,697,000$752,000 available for repurchases under the plan.
Repurchases of common stock under the share repurchase plan during the fiscal quarter ended March 28, 202326, 2024 were as follows:
| Period | Total number of shares (or units) purchased | Average price paid per share (or unit) | Total number of shares (or units) purchased as part of publicly announced plans or programs | Maximum dollar value of shares that may yet be purchased under the plans or programs | |||||||||||||
| 12/28/2023 – 1/24/2023 | 58,531 | $ | 2.59 | 58,531 | |||||||||||||
| 1/25/2023 – 2/21/2023 | 66,188 | $ | 2.94 | 66,188 | |||||||||||||
| 2/22/2023 – 3/28/2023 | 42,171 | $ | 2.87 | 42,171 | |||||||||||||
| Total | 166,890 | 166,890 | $ | 2,697,000 | |||||||||||||
Period | Total number of | Average price | Total number of | Maximum dollar | ||||||||||||
12/27/2023 – 1/23/2024 | 95,362 | $ | 2.56 | 95,362 | ||||||||||||
1/24/2024 – 2/20/2024 | 92,830 | $ | 2.51 | 92,830 | ||||||||||||
2/21/2024 – 3/26/2024 | 44,890 | $ | 2.55 | 44,890 | ||||||||||||
Total | 233,082 | 233,082 | $ | 752,000 | ||||||||||||
In addition, on February 14, 2024, outside of the publicly announced share repurchase program referred to above, the Board authorized the Company to purchase an aggregate of 19,414 shares from one non-executive employee for a purchase price of $2.60 per share.
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
ITEM 5. | OTHER INFORMATION |
None.During the quarter ended March 26, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, modified or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).
ITEM 6. | EXHIBITS |
(a) Exhibits. The following exhibits are furnished as part of this report:
Exhibit No. | Description |
*31.1 | |
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | |
*31.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 |
*32.1 | |
101.INS | XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
*104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
*Filed herewith
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GOOD TIMES RESTAURANTS INC. | |||
DATE: May 2, 2024 | |||
 | |||
 | |||
Ryan M. Zink Chief Executive Officer (Principal Executive Officer) | |||
 |  | ||
Senior Vice President of Finance and Accounting (Principal Financial Officer) |
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