GTIM - Earnings call transcript Q2 2024 | Good Times Restaurants Inc.

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Operator

Good afternoon, ladies and gentlemen. Welcome to the Good Times Restaurants Incorporated Fiscal 2024 Second Quarter Earnings Call. By now everyone should have access to the company's earnings release, which is available in the Investor section of the company's website.As a reminder, a part of today's discussion will include forward-looking statements within the meaning of federal security laws. These forward-looking statements are not guarantees of future performance and therefore you should not put undue reliance on them.These statements involve known and unknown risks, which may cause the company's actual results to differ materially from results expressed or implied by forward-looking statements. Such risks and uncertainties include, among other things, the market price of the company's stock prevailing from time to time, the nature of other investment opportunities presented to the company, the disruption to our business from pandemics and other public health emergencies, the impact and duration of staffing constraints at our restaurants, the impact of supply chain constraints and inflation, the uncertain nature of current restaurant development plans and the ability to implement those plans and integrate new restaurants, delays in developing and opening new restaurants because of weather, local permitting or other reasons, increased competition, cost increases or shortages in raw food products, other general economic and operating conditions, risk associated with our share repurchase program, risk associated with the acquisition of additional restaurants, the adequacy of cash flow and the cost and availability of capital and credit facility borrowings to provide liquidity, changes in federal, state or local laws and regulation affected the operation of the restaurants, including minimum wage and tip credit regulations and other matters discussed under the Risk Factors section of Good Times Annual Report on Form 10-K for the fiscal year ending September 26, 2023, filed with the SEC and other non-GAAP filings with the SEC.During today's call, the company will discuss non-GAAP measures, which they believe can be useful in evaluating our performance. comparable additional a not in I substitute GAAP reconciliation the isolation considered accordance would of in and as available the or for to to like presentation to information release.And call be should in with our turn The earnings measures over now Ryan. GAAP results prepared go sir. ahead, Please

Ryan Zink

joining call today. the you, and Thank on Christa, thank us you all for

XX-Q our As mentioned, second to filing. everyone and release access should quarter our now earnings have

the tough Vice quarter. reported Fridays for the quarter's President Good the delivering a recurring sales Meanwhile, In the margins first level results and from Saturdays of both year.Restaurant bit Senior Bad quarter improvement sales Finance during a its decline quarter with X.X%, sequential me Daddy's and a minutes, August. posting our the on of a Joining brands, same-store quarter of Times brands eighth weather same-store compressed today tolerant currently profit deliver continue levels generated. snow sales leverage guest of of Keri restaurant to ultimately to sales, in events X.X% for level of to just growth, she of from experience of spite conditions Accounting, operating quarter needed is with the quarter both which restaurant sales the from reduced X.X% the grow will for we're will with margins very consecutive results.I'm and few benefit a review the of the stack and X-year pleased

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the this trade optimistic and growth to and We are improvements demographics location similar make to this extremely expect area. of about population

restaurant the us. of on purchase loyalty third close focus quarter.GT the a be to fiscal We for expect continues our Rewards, this to program during

primarily However, in the we customer concept. have in a seen challenges adoption involved drive-through

growth at of And cloud-based satisfaction.We conclusion in test highly several the strategies really to still have expect that point-of-sale next-generation with convinced like.Nevertheless, This we improve implemented leading, test to with been the expect engagement successful. will have our reducing balance as continuing POS vein, has restaurants period, in to fiscal Times or prior currently out Toast we customers is the selected to digital Good the pace we not at roll of system, the Toast, ultimately, speed, Good critical at of implement friction the is to can seeing our transaction to company-owned which franchisees feature-rich X would but our are end We year encourage system. the restaurants Times in the point-of-sale at we're most In follow are improve membership, our so member at and pilot customer accuracy we sales suit. that the same we points is and critical all the system to momentum. acquisition

Bad Daddy's during awnings that efficient. including quarter conducting and forthcoming third X evaluation our approximately a The drive-through mural a remodel Daddy's weeks over signage. week.We under the new This X the are from prior of the that from Lakewood, layout program with system has next repurchased store fourth is and restaurant of we had a Bad remodel will older an new Times purchase by a remodel non-executive several is to less Toast within test are Good a never Colorado XXX,XXX the the shares the expect next construction likely end is quarters.We restaurant one of this similar X double and Good of employee. and artist, company-owned fiscal be just quarter a of in a We kitchen associated local reopen share it repurchase will has that at remove Times, typical this near and

stock would performance to program, At return repurchases current investments. sometime expect are call reducing have interest months other be for currently will for at share to quarter. in conducting we authorization against our assuming that the on financial left rate, now our to capital to believe the authorization.I shareholders.We to similar, repurchase And the the a with We and over good a repurchase anticipating of expanded review trading current remain an particularly we at reduced the prices the the continue current turn prior market our facility X Keri credit pace, generates for completion authorization. factors existing the about borrowings

Keri August

basis reduced the the increase by X.X% and last commodity at Daddy's XX to prior quarter.The compared the other the repair end. results. points the X.X% year now were non-GAAP Bad million for menu a have in for for year Good early partially the card the increased supply prices at Occupancy basis Total of quarter. of prior sales measure were at an Good costs profit, $X.X quarter year, quarter Greenville, million. in points for increase impact remodeled average XX.X% approximately for restaurants quarter.Same-store from as sales was quarter recently price of the offset X.X% X.X%. costs over and Ryan. and a for offset primarily same XX.X% XX.X% prior for base $XX.X Times as base X.X% review $X.X attributable quarter. increase you, purchase the the point to compared to partially quarter prices the restaurants year.Total to quarter $X.X $XX.X compared costs the and quarter, approximately by for operating with to The the operating decrease primarily Madison, Daddy's million many Times in to quarter, XX.X% Food in increased the experienced in a the a traffic Bad of Total end. We'll Good last on X.X% costs.Overall, quarter, during and paper fiscal commodities.Bad The increase basket.Though XX.X% for to decrease with pricing lesser sales was a million Carolina other costs the for Daddy's beef temporary the decrease restaurant increased other to quarter price XXX increased by Daddy's Alabama prices fourth reduced XX approximately for at restaurant Bad for impact quarter restaurant for we Daddy's of decrease increased XXXX expenses, half certain or increased expect this comp $X.X year XX.X% in a The restaurants quarter's Daddy's quarter. basis X.X% a restaurant $X.X the purchase for higher by XX second labor along fees pricing, to sales XX food revenues fiscal partially our year's we the goods. second quarter. Thank continue at sales increase, to extent, year approximately quarter primarily Bad last sales to proteins Bad in XXXX, of basis increased credit to maintenance, million the compared is comp the food-based or XX year's South the X.X% menu commodities, Times restaurants.Same-store million was quarter prior flat increase restaurant-level slightly Bad were and the employee-related compared lower of to result company-owned offset Daddy's cost closure of attributable to begun customer to prior ground the purchase points declined and result million year quarter them restaurant for lower the of sales to menu with well is packaging approximate for quarter Cost menu opening, increase

by were associated quarter. increase labor of and costs Colorado.Occupancy with As year's wage additional from year the in state beef wage Daddy's, Denver fiscal resumed during to Times company-owned increase pressure last we point Good basis expect quarter forces from X restaurants the higher is as and increase Times and an basis costs ran The XX.X%, Good of restaurants half case Times the to market operating well owned the were due for other primarily of due basis XXX in labor resulting the other for X fiscal CPI from increases rates values.Good property tax previously property quarter, average fiscal index X.X%, by increased repair costs Times increase on prices higher primarily real late XX.X% points, due XXXX restaurants quarter acquisition franchisees million $X.X credit increased previously Bad food with from $X.X the XX to the increased the acquisition owned for Good as prior of XX.X% XXX well year.Total franchisees the is minimum to late resulting and by mentioned points delivery in maintenance, X a restaurant-level at to fees.Good last of an of we previously Good as the million. card to Times and profit customer XXXX fees as Times' operating

million the back $X.X percent As income during income the for $X.X million of last benefit shareholders year.Our was X.X% to common second versus with or basis share We finished the to XX in million, now increase quarter. quarter from per the quarter of net There and the Combined point share $X.X $XX for net a during million versus $X.X tax year. a last expenses basis the was Adjusted and of were I prior for quarter $X.X or the million debt.And income operating the income in turn $X.X recorded per XX was decreased of $X.XX Ryan. call profit million quarter in year quarter EBITDA of $X.XX points XXXX. $XX.X versus to general total year sales, XX.X%. current million last will million second quarter of of compared to cash administrative million long-term by revenues, the $X approximately restaurant-level quarter

Ryan Zink

time. Thank the questions you, call Christa, can open this for Keri. we at

Operator

Kingdom of Instructions] David from Bastian the Advisors. question from line your Capital first [Operator And comes

David Bastian

any if any I -- from missed comments in little the of the part late, a got first the key so of call. sorry I

to So to feel the send free here. me back transcript

First question...

Ryan Zink

I won't do that, David.

David Bastian

Okay.

you First cost given what the rule? you would of rough judge costs. other lawsuit. guys and one, two, with past awarded want I I appeal, award on estimate the saw And court to on be question won appeal further court confirm, windows. you that got just we're any

Ryan Zink

Yes.

plaintiffs that case. have that are So to might kind with in the liability past any we respect we we of believe that

that awarded, filing, to legal subject respect you comments do does the might we And from relatively fees that -- there. I'd us we to so I make a million. I'd would about be matter where say, closed.With the be talk of the couple to total is, standpoint, for costs $X exceed think the refer those that XX-Q of

However, ultimately X. awarded less and the much be collectibility that amount even or those be that may of of the may

And to at so hesitate anything be recoverable would this really that forecast I point. would there

David Bastian

Understood.

quarter-to-date sales give you same-store could brands? Secondly, update for pacing both on an

Ryan Zink

Yes.

both did Times. say comp mention would brands And the under those adjusted comments, sales. that when I And period low-single-digits mid-single-digits are it that Daddy's, they remodel, the -- So for that say closure I think base same-store adjusted at at earlier of of note we've -- Bad that that, in I I store that's that the removing positive been is time. -- the from for Good

David Bastian

Understandable. And then...

Operator

again, could star please? I'm you sorry, X David, press

Ryan Zink

David, are chance? there you by

Operator

there. he's Yes,

David Bastian

Okay. Great. regarding or And footprint repurchase the Daddy's going as a your further, guys looking Bad increasing program, forward? of share then you lastly, any authorization use at capital potential on maybe allocation there expansion better thoughts that are is being of

Ryan Zink

velocity that market I the completion months we've conditions -- and and left I that same. got assuming we X No, expect had that, that the prepared would remain of would expand I in would about of at my prior remarks, said we purchases the think that current to pricing

David Bastian

Bad on then And Daddy's now? thoughts new any pacing of Got it. locations right

Ryan Zink

working we leases several are have on. we So that

got real and fairly couple ultimately to able lease. reviewed are need a still we've a execute by have Those if couple that they're are pretty be estate that approved. close committee. being Board to a We close But our to

Operator

with comes question David from next Swartz of the Your Morningstar. line

David Swartz

stores. of the the tell kind bit that from remodeled us you about been of what you the Can now? in that more some performance talked expect remodels of stores remodels past? about of ROICs the the doing a And little you're have You

Ryan Zink

Yes.

lot the the -- We into increases more includes say cosmetic remodels maintenance. we've of which remodels, X new ROI.The signage XX%, which most sales than bit kind paint, be a than signage new done of maybe are remodels, as and double-digit I'd a translate maybe have better a been, more that So that result higher typically does seeing could a expensive. would -- deferred say, I previously is current and remodel awnings, those extensive of better it of

that think that of the maintaining a think that's so business existing I current And expected -- would also is level in there's preservation the a ROI on our about less of some growing -- but sales is I of sales, it and include remodel.

David Swartz

about both staff and made in also management can of terms you Also in have manager Okay. stores, where being to that what challenges you in and going people new it's tell have how talked the changes left. us replacements seen hiring. changes in the so for but you've Maybe far you able stores at hire

Ryan Zink

on business hiring our takeaway the And need I my is requires higher that's past. that of to quality market big run commentary the pay we that talent think the the Yes, has than there. it of in really levels required kind of

we team, great have least general team off. in at really And we with I and management this among I decisions in managers think to tough some at have markets certain earlier, staffing. existing certain decisions, a as look made we've been or I've our assistant paying point, mentioned be those tough challenged where managers.There we been cases -- stores, have have great of restaurant think and management a there

Operator

you back That concludes closing turn Ryan, comments. session. I'll it our question-and-answer to for

Ryan Zink

brands. optimistic about Thanks of very again, the I both of am future our Christa.

their engagement both operating directly feels both our exciting initiatives have at result of you that in will it company strong and of team is the call into hospitality, every of have efforts work customer employee translate concepts like members, is momentum. This today. all the manifest guest shift and throughout we and certainly whose We of service our every and managers our on to concepts our into our leaders focus for their day.I'd thank like joining pride

Operator

you Thank for participation disconnect. now This your concludes today's conference and may you call.

Good Times Restaurants (GTIM) 2 May 242024 Q2 Earnings call transcript