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GTIM Good Times Restaurants Inc

2.72
0.00 (0.00%)
04 Dec 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type
Good Times Restaurants Inc NASDAQ:GTIM NASDAQ Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 2.72 2.67 2.85 2.75 2.70 2.75 3,589 22:16:11

Form 10-Q - Quarterly report [Sections 13 or 15(d)]

01/08/2024 9:08pm

Edgar (US Regulatory)


  

 

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 June 25, 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
Identification Number)

 

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 July 23, 2024, there were 10,752,803 shares of the Registrant's common stock, par value $0.001 per share, outstanding.

 

 

 

   
 

 

Form 10-Q

Quarter Ended June 25, 2024

 

  INDEX   PAGE
       
  PART I - FINANCIAL INFORMATION    
       
Item 1. Financial Statements   3
       
  Condensed Consolidated Balance Sheets (unaudited) – June 25, 2024 and September 26, 2023   3
       
  Condensed Consolidated Statements of Operations (unaudited) for the fiscal quarters and year-to-date periods ended June 25, 2024 and June 27, 2023   4
       
  Consolidated Statements of Shareholders’ Equity (unaudited) for the fiscal year-to-date periods ended June 25, 2024 and June 27, 2023   5 - 6
       
  Condensed Consolidated Statements of Cash Flows (unaudited) for the fiscal year-to-date periods ended June 25, 2024 and June 27, 2023   7
       
  Notes to Condensed Consolidated Financial Statements (unaudited)   8
       
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   15
       
Item 3. Quantitative and Qualitative Disclosures About Market Risk   24
       
Item 4. Controls and Procedures   24
       
  PART II – OTHER INFORMATION    
       
Item 1. Legal Proceedings   25
       
Item 1A. Risk Factors   25
       
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   25
       
Item 3. Defaults Upon Senior Securities   26
       
Item 4. Mine Safety Disclosures   26
       
Item 5. Other Information   26
       
Item 6. Exhibits   26
       
  SIGNATURES   27
       
  CERTIFICATIONS    

 

 2 

 

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)

 

   June 25, 2024   September 26, 2023 
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents  $4,819   $4,182 
Receivables   782    769 
Prepaid expenses and other   662    163 
Inventories   1,446    1,407 
Total current assets   7,709    6,521 
PROPERTY AND EQUIPMENT:          
Land and building   6,103    5,722 
Leasehold improvements   39,241    38,191 
Fixtures and equipment   34,328    33,040 
Total property and equipment   79,672    76,953 
Less accumulated depreciation and amortization   (56,721)   (53,917)
Total net property and equipment   22,951    23,036 
OTHER ASSETS:          
Operating lease right-of-use assets, net   37,728    40,007 
Deferred tax assets   11,781    11,583 
Deposits and other assets   259    277 
Trademarks   3,900    3,900 
Other intangibles, net   36    51 
Goodwill   5,713    5,713 
Total other assets   59,417    61,531 
           
TOTAL ASSETS:  $90,077   $91,088 
LIABILITIES AND SHAREHOLDERS’ EQUITY          
CURRENT LIABILITIES:          
Current maturities of long-term debt  $30   $- 
Accounts payable   2,884    2,585 
Deferred revenue   187    67 
Operating lease liabilities, current   6,176    5,787 
Other accrued liabilities   7,266    6,451 
Total current liabilities   16,543    14,890 
LONG-TERM LIABILITIES:          
Maturities of long-term debt   1,100    750 
Operating lease liabilities, net of current portion   39,307    42,332 
Deferred revenues and other liabilities   109    122 
Total long-term liabilities   40,516    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 June 25, 2024 and
September 26, 2023
   
-
    
-
 
Common stock, $.001 par value; 50,000,000 shares authorized;
12,977,433 issued; and 10,769,803 and 11,446,587 outstanding
as of June 25, 2024 and September 26, 2023, respectively
   13    13 
Capital contributed in excess of par value   56,807    56,701 
Treasury stock, at cost; 2,207,630 and 1,530,846 shares as of
June 25, 2024 and September 26, 2023, respectively
   (6,697)   (4,908)
Accumulated deficit   (17,852)   (19,235)
Total Good Times Restaurants Inc. shareholders’ equity   32,271    32,571 
           
Non-controlling interests   747    423 
Total shareholders’ equity   33,018    32,994 
           
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  $90,077   $91,088 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 3 

 

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 
   June 25, 2024
(13 Weeks)
   June 27, 2023
(13 Weeks)
   June 25, 2024
(39 Weeks)
   June 27, 2023
(39 Weeks)
 
NET REVENUES:                
Restaurant sales  $37,742   $35,376   $105,953   $103,123 
Franchise revenues   200    256    568    706 
Total net revenues   37,942    35,632    106,521    103,829 
                     
RESTAURANT OPERATING COSTS:                    
Food and packaging costs   11,698    10,923    32,624    32,185 
Payroll and other employee benefit costs   12,635    11,940    36,525    35,477 
Restaurant occupancy costs   2,580    2,432    7,698    7,318 
Other restaurant operating costs   5,195    4,811    15,028    14,129 
Preopening costs   -    80    
-
    110 
Depreciation and amortization   960    919    2,813    2,740 
Total restaurant operating costs   33,068    31,105    94,688    91,959 
                     
General and administrative costs   2,680    2,377    7,791    7,070 
Advertising costs   749    751    2,665    2,423 
Impairment of long-lived assets   199    965    199    1,041 
Loss (gain) on restaurant and equipment asset sales   18    (10)   12    (32)
Litigation contingencies   
-
    
-
    (332)   
-
 
                     
INCOME FROM OPERATIONS:   1,228    444    1,498    1,368 
Interest and other expense, net   (27)   (18)   (101)   (56)
                     
NET INCOME BEFORE INCOME TAXES:   1,201    426    1,397    1,312 
Provision for income taxes   197    551    198    10,503 
                     
NET INCOME:  1,398   977   1,595   11,815 
Income attributable to non-controlling interests   (77)   (135)   (212)   (479)
                     
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS  $1,321   $842   $1,383   $11,336 
                     
NET INCOME PER SHARE, ATTRIBUTABLE TO COMMON SHAREHOLDERS:                    
Basic  $0.12   $0.07   $0.12   $0.96 
Diluted  $0.12   $0.07   $0.12   $0.95 
                     
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:                    
Basic   10,933,758    11,700,044    11,149,181    11,853,441 
Diluted   11,034,487    11,769,286    11,246,353    11,910,491 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 4 

 

Good Times Restaurants Inc. and Subsidiaries
Consolidated Statements of Shareholders’ Equity (Unaudited) Year-to-Date June 25, 2024

(In thousands, except share and per share data)

 

    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 26, 2023   1,530,846   $(4,908)   11,446,587   $13   $56,701   $423   $(19,235)  $32,994 
                                         
Stock-based compensation cost   -    
-
    -    
-
    38    
-
    
-
    38 
Repurchases of common stock   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 
Repurchases of common stock   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 
                                         
Stock-based compensation cost   -    
-
    -    -    28    
-
    
-
    28 
Repurchases of common stock   263,516    (705)   (263,516)   -    -    
-
    
-
    (705)
Non-controlling interests:                                        
Contributions   -    
-
    -    -    -    200    
-
    200 
Income   -    
-
    -    -    -    77    
-
    77 
Distributions   -    
-
    -    -    -    (38)   
-
    (38)
Net income attributable to Good Times Restaurants Inc and comprehensive income   -    
-
    -    -    -    
-
    1,321    1,321 
                                         
BALANCES, June 25, 2024   2,207,630   $(6,697)   10,769,803   $13   $56,807   $747   $(17,852)  $33,018 

 

See accompanying notes to consolidated financial statements (unaudited)

 

 5 

 

Good Times Restaurants Inc. and Subsidiaries
Consolidated Statements of Shareholders’ Equity (Unaudited) Year-to-Date June 27, 2023

(In thousands, except share and per share data)

 

   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 
Repurchases of common stock   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 
Repurchases of common stock   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 
                                         
Stock-based compensation cost   -    
-
    -    -    14    
-
    
-
    14 
Repurchases of common stock   123,623    (380)   (123,623)   -    -    
-
    
-
    (380)
Non-controlling interests:                                        
Income   -    
-
    -    -    -    135    
-
    135 
Distributions   -    
-
    -    -    -    (97)   
-
    (97)
Net Income attributable to common shareholders and comprehensive income   -    
-
    -    
-
    
-
    
-
    842    842 
                                         
BALANCES, June 27, 2023   1,354,706   $(4,354)   11,622,727   $13   $56,768   $401   $(18,985)  $33,843 

 

See accompanying notes to condensed consolidated financial statements (unaudited)

 

 6 

 

Good Times Restaurants Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

   Fiscal Year-to-Date (39 Weeks) 
   June 25, 2024   June 27, 2023 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income  $1,595   $11,815 
           
Adjustments to reconcile net income to net cash provided by
operating activities:
          
Depreciation and amortization   2,883    2,809 
Net change in operating lease right-of-use assets and liabilities   (544)   (451)
Recognition of deferred gain on sale of restaurant building   (29)   (76)
Impairment of long-lived assets   199    1,041 
Loss on disposal of assets   30    44 
Stock-based compensation expense   106    103 
Provision for income taxes   (198)   (10,510)
           
Changes in operating assets and liabilities:          
(Increase) decrease in:          
Receivables and other   (15)   (35)
Prepaid expense   (499)   (513)
Inventories   (27)   34 
Deposits and other   18    (119)
Accounts payable   276    444 
Deferred income   138    24 
Accrued and other liabilities   803    97 
Net cash provided by operating activities   4,736    4,707 
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Payments for the purchase of property and equipment   (2,282)   (3,178)
Acquisition of restaurant from franchisee, net of cash acquired   (534)   
-
 
Proceeds from sale of fixed assets   14    
-
 
Net cash used in investing activities   (2,802)   (3,178)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Borrowings from long-term debt   1,380    
-
 
Payments on long-term debt   (1,000)   
-
 
Repurchases of common stock   (1,789)   (1,720)
Payments for restricted stock vesting settled in cash   
-
    (92)
Proceeds from stock option exercise   
-
    5 
Purchase of non-controlling interests   
-
    (4,394)
Contributions from non-controlling interests   200    13 
Distributions to non-controlling interests   (88)   (563)
Net cash used in financing activities   (1,297)   (6,751)
           
NET CHANGE IN CASH AND CASH EQUIVALENTS   637    (5,222)
CASH AND CASH EQUIVALENTS, beginning of period   4,182    8,906 
CASH AND CASH EQUIVALENTS, end of period  $4,819   $3,684 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid for interest  $69   $15 
Change in accounts payable attributable to the purchase of
property and equipment
  $(23)  $(50)

 

 

 7 

 

GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (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 owned subsidiaries as well as one partnership in which the Company is the general partner, and five limited liability companies in which the Company is the sole owner following the January 2023 purchase of the membership interests 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’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 (United States) (“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 June 25, 2024 and the results of its operations and its cash flows for the fiscal quarters ended June 25, 2024 and June 27, 2023. Operating results for the fiscal quarter ended June 25, 2024 are not necessarily indicative of the results that may be expected for the year ending September 24, 2024. The condensed consolidated balance sheet as of September 26, 2023 is derived from the audited financial statements but does not include all disclosures required by GAAP. As a result, these condensed consolidated financial statements should be read in conjunction with the Company’s Form 10-K for the fiscal year ended September 26, 2023.

 

Fiscal Year – The Company’s fiscal year is a 52/53-week year ending on the last Tuesday of September. In a 52-week fiscal year, each of the Company’s quarterly periods consist of 13 weeks. The additional week in a 53-week fiscal year is added to the first quarter, making such quarter consist of 14 weeks. The quarters ended June 25, 2024 and June 27, 2023 each consisted of 13 weeks and the year-to-date periods each consisted of 39 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.

 

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.  Contributions to the Advertising Funds from our franchisees were $144,000 and $212,000 for the two quarters ended June 25, 2024 and June 27, 2023, 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.

 

Receivables consist of the following as of:

   June 25, 2024   September 26, 2023 
Third party delivery partners  $        304   $        269 
Vendor rebates and incentives   298    185 
Third party retailers   141    291 
Franchise and other   39    24 
Total  $782   $769 

 

 8 

 

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 Recognition. Revenues consist primarily of sales from restaurant operations and franchise revenue, which also includes franchisee contributions to 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 June 25, 2024 and June 27, 2023.

 

Revenues we receive from our franchise and license agreements include sales-based royalties and, from our franchise agreements, may also include Advertising Fund contributions, area development fees, and franchisee fees. We recognize sales-based royalties and advertising fund contributions from franchisees and licensees 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 June 25, 2024 and September 26, 2023 (in thousands):

 

   June 25, 2024   September 26, 2023 
   Gross
Carrying
Amount
   Accumulated
Amortization
   Net
Carrying
Amount
   Gross
Carrying
Amount
   Accumulated
Amortization
   Net
Carrying
Amount
 
Intangible assets subject to amortization:                        
Non-compete agreements  $50   $(26)  $24   $50   $(14)  $36 
Reacquired franchise rights  $15   $(3)  $12   $15   $
-
   $15 
   $65   $(29)  $36   $65   $(14)  $51 
Indefinite-lived intangible assets:                              
Trademarks  $3,900   $
-
   $3,900   $3,900   $
-
   $3,900 
Intangible assets, net  $3,965   $(29)  $3,936   $3,965   $(14)  $3,951 
                               
Goodwill  $5,713   $
-
   $5,713   $5,713   $
-
   $5,713 

 

Intangible assets subject to amortization primarily consist of non-compete agreements associated with prior restaurant purchases. The aggregate amortization expense related to these intangible assets subject to amortization was $15,000 for the three quarters ended June 25, 2024 and $6,000 for the three quarters ended June 27, 2023. As of both June 25, 2024 and June 27, 2023, 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.

 

 9 

 

Note 5.     Stock-Based Compensation

 

The Company has traditionally maintained incentive compensation plans that include provisions for the issuance of equity-based awards. The Company established the 2008 Omnibus Equity Incentive Compensation Plan in 2008 (the “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 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 they occur.

 

For the quarters ended June 25, 2024 and June 27, 2023, we recognized $28,000 and $14,000, respectively, related to stock-based compensation arrangements. Our net income for the three quarters ended June 25, 2024 and June 27, 2023 includes $106,000 and $104,000, respectively, of compensation costs related to our stock-based compensation arrangements.

 

Note 6.     Prepaid expenses and other current assets

 

Prepaid expenses and other current assets consist of the following as of:

 

   June 25, 2024   September 26, 2023 
Prepaid insurance  $     290   $
-
 
Prepaid software licenses and maintenance contracts   180         88 
Prepaid licenses and permits   82    42 
Other   110    33 
Total  $662   $163 

 

Note 7.     Other Accrued Liabilities

 

Other accrued liabilities consist of the following as of:

 

   June 25, 2024   September 26, 2023 
Wages and other employee benefits  $3,207   $2,893 
Gift card liability, net of breakage   1,511    1,108 
Taxes, other than income taxes   1,388    1,275 
General expense accrual and other   1,160    1,175 
Total  $7,266   $6,451 

 

Note 8.     Notes Payable and Long-Term Debt

 

Cadence Credit Facility. The Company and its wholly owned subsidiaries (the “Subsidiaries”) maintain an amended and restated credit agreement with Cadence Bank (“Cadence”). Pursuant to the credit agreement, as amended to date, Cadence agreed to loan the Company up to $8,000,000, with a maturity date of April 20, 2028 (the “Cadence Credit Facility”). The Cadence 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%. 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. Each of the Subsidiaries are guarantors of the Cadence Credit Facility.

 

Proceeds from the Cadence Credit Facility, if and when drawn, may be used (i) to fund new restaurant development, (ii) to finance the buyout of non-controlling 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 Cadence Credit Facility includes customary affirmative and negative covenants and events of default. The Cadence 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 outstanding balance under the revolver 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 June 25, 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 June 25, 2024, the unamortized balance of these fees was $102,000.

 

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.

 

 10 

 

As of June 25, 2024, there were $750,000 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 June 25, 2024, there were approximately $10,000 in outstanding letters of credit issued under the facility, and approximately $7,240,000 of committed funds available.

 

Total interest expense on notes payable was $24,000 and $0 for the quarters ended June 25, 2024 and June 27, 2023, respectively.

 

Parker Promissory Note. Good Times Drive Thru, Inc., a wholly owned subsidiary of the Company is the maker of an unsecured promissory note in connection with the purchase of the previously franchised Good Times Burgers and Frozen Custard restaurant located in the Denver suburb of Parker, Colorado. JGN Management, Inc., the former franchisee, is the holder of the note. The Parker Promissory Note fully amortizes over its original ten-year life and carries an interest rate of 5.00% and is, in all respects, subordinate to the Cadence Credit Facility. As of June 25, 2024 the outstanding principal balance on the Parker Promissory Note was $380,000.

 

Note 9.     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 (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 
   June 25, 2024   June 27, 2023   June 25, 2024   June 27, 2023 
Weighted-average shares outstanding basic   10,933,758    11,700,044    11,149,181    11,853,441 
Effect of potentially dilutive securities:                    
Stock options   11,479    19,242    7,922    7,050 
Restricted stock units   89,250    50,000    89,250    50,000 
Weighted-average shares outstanding diluted   11,034,487    11,769,286    11,246,353    11,910,491 
Excluded from diluted weighted average shares outstanding:                    
Antidilutive   345,623    345,691    345,623    354,024 

 

Note 10.     Contingent Liabilities and Liquidity

 

There may be various claims in process, matters in litigation, and other contingencies brought against the Company 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, 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.

 

 11 

 

Note 11.     Leases

 

The Company determines if a contract contains a lease at inception. The Company’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 to 20 years, most of which include renewal options of 10 to 15 years.

 

Components of operating lease costs are as follows for the fiscal quarters ended June 25, 2024 and June 27, 2023:

 

Lease cost  Classification  June 25, 2024   June 27, 2023 
Operating lease cost  Occupancy, Other restaurant operating costs and General and administrative expenses, net  $1,876   $1,824 
Variable lease cost  Occupancy   19    60 
Sublease income  Occupancy   (132)   (137)
      $1,763   $1,747 

 

Weighted average lease term and discount rate are as follows:

   June 25, 2024   June 27, 2023 
Weighted average remaining lease term (in years)   7.52    8.16 
           
Weighted average discount rate   5.2%   5.0%

 

Supplemental cash flow disclosures:

   June 25, 2024   June 27, 2023 
Cash paid for operating lease liabilities  $5,817   $5,771 
           
Non-cash operating lease assets obtained in exchange for
operating lease liabilities
  $933   $1,201 

 

Future minimum rent payments for our operating leases as of June 25, 2024 are as follows:

 

   Total 
One Year  $8,402 
Two Years   8,066 
Three Years   7,754 
Four Years   7,202 
Five Years   5,867 
Thereafter   17,952 
Total minimum lease payments   55,243 
Less: imputed interest   (9,760)
Present value of lease liabilities  $45,483 

 

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 12.     Impairment of Long-Lived Assets and Trademarks

 

Long-Lived Assets. We review our long-lived assets including land, property, equipment and lease right-of-use assets 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 impairments of $199,000 in the three quarters ended June 25, 2024, related primarily to lease right-of-use assets and 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 three quarters ended June 27, 2023, there were impairments of $1,041,000.

 

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 for the acquired trademarks as of June 25, 2024 or June 27, 2023.

 

 12 

 

Note 13.     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 periods ended June 25, 2024 was (15.21%), an increase from the effective income tax rate of (189.98%) for the three periods ended June 27, 2023. The increase is due to the additional release of the Company’s valuation allowance in the prior year quarter, and an increase in book income. The Company’s effective tax rate for the nine periods ended June 25, 2024 was (15.09%), an increase from an effective income tax rate of (1,261.02%) for the nine periods ended June 27, 2023. The increase is due to the Company’s valuation allowance release that occurred during the prior year.

 

The Company is subject to taxation in various jurisdictions within the United States. The Company continues to remain subject to examination by United States federal authorities for the years 2021 through 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 June 25, 2024.

 

Note 14.     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 three quarters ended June 25, 2024 (in thousands):

   Total 
Balance at September 26, 2023  $423 
Income   212 
Contributions   200 
Distributions   (88)
Balance at June 25, 2024  $747 

 

Non-controlling interests at the quarter ended June 25, 2024 consisted of one joint-venture partnership involving six Good Times restaurants, in which the Company is the general partner and owns a 50.0% interest.

 

Note 15.     Segment Reporting

 

All of our Bad Daddy’s compete in the full-service segment of the restaurant industry while our Good Times compete in the quick-service segment of the restaurant 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.

 

 13 

 

The following tables present information about our reportable segments for the respective periods (in thousands):

 

   Quarter Ended (13 Weeks)   Year-to-Date (39 Weeks) 
   June 25, 2024   June 27, 2023   June 25, 2024   June 27, 2023 
Revenues:                
Bad Daddy’s  $27,410   $26,161   $78,107   $77,795 
Good Times   10,532    9,471    28,414    26,034 
   $37,942   $35,632   $106,521   $103,829 
Income (loss) from operations:                    
Bad Daddy’s  $388   $(946)  $7   $(277)
Good Times   840   $1,390    1,491   $1,645 
   $1,228   $444   $1,498   $1,368 
Capital expenditures:                    
Bad Daddy’s  $481   $1,295   $968   $1,901 
Good Times   1,264    302    1,871    1,277 
   $1,745   $1,597   $2,839   $3,178 

 

 

   June 25, 2024   September 26, 2023 
Property and equipment, net:          
Bad Daddy’s  $17,747   $18,053 
Good Times   5,204    4,983 
   $22,951   $23,036 
Total assets:          
Bad Daddy’s  $65,319   $67,720 
Good Times   24,758    23,368 
   $90,077   $91,088 

 

Note 16.     Subsequent Events

 

On July 29, 2024, the Company settled an investigation conducted by the United States Department of Justice related to alleged violations of the Americans with Disabilities Act with respect to an incident at one of the Company’s restaurants.  All expected payments in association with this settlement have been adequately accrued as of the quarter ended June 25, 2024.

 

 14 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Overview. Good Times Restaurants 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 26, 2023. Also, documents subsequently filed by the 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 disruption to our business from pandemics or other public health emergencies and the impact it could have on results of operations, financial condition and prospects. The disruption and effect on our business may vary depending on the duration and extent of the pandemics and other public health emergencies and the impact of federal, state and local governmental actions and customer behavior in response.

 

(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 United States 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.

 

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 26, 2023.

 

Growth Strategies and Outlook. We believe there are significant opportunities to grow customer traffic and increase awareness of our brands, leading to organic sales growth. We also believe there are unit growth opportunities for both of our concepts though we continue to execute unit growth with increased scrutiny surrounding real estate selection and a more conservative approach to leverage than we previously took, in light of the higher costs and volatile inflation present in the current operating environment.

 

Restaurant Locations. As of June 25, 2024, we operated, franchised, or licensed a total of forty-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 June 25, 2024 and June 27, 2023.

 

 15 

 

Company-Owned/Co-Developed:

 

    Bad Daddy’s
Burger Bar
    Good Times Burgers
& Frozen Custard
    Total  
    2024     2023     2024     2023     2024     2023  
Alabama     3       2       -       -       3       2  
Colorado     11       11       26       23       37       34  
Georgia     5       5       -       -       5       5  
North Carolina     14       14       -       -       14       14  
Oklahoma     1       1       -       -       1       1  
South Carolina     4       4       -       -       4       4  
Tennessee     2       2       -       -       2       2  
Total     40       39       26       23       66       62  

 

Franchise/License:

 

    Bad Daddy’s
Burger Bar
    Good Times Burgers
& Frozen Custard
    Total  
    2024     2023     2024     2023     2024     2023  
Colorado     -       -       3       6       3       6  
North Carolina     1       1       -       -       1       1  
Wyoming     -       -       2       2       2       2  
Total     1       1       5       8       6       9  

 

We acquired one Good Times restaurant in Parker, Colorado from a franchisee during the quarter ended June 25, 2024. We acquired one Good Times restaurant in Lafayette, Colorado and one Good Times restaurant in Greenwood Village, Colorado from franchisees during the 2023 fourth quarter. Additionally, we opened one Bad Daddy’s restaurant in Madison, Alabama during the 2023 fourth quarter.

 

Results of Operations

 

Fiscal quarter ended June 25, 2024 (13 weeks) compared to fiscal quarter ended June 27, 2023 (13 weeks):

 

Net Revenues. Net revenues for the fiscal quarter ended June 25, 2024 increased $2,310,000 or 6.5% to $37,942,000 from $35,632,000 for the fiscal quarter ended June 27, 2023. Bad Daddy’s concept revenues increased $1,249,000 while our Good Times concept revenues increased $1,061,000.

 

Bad Daddy’s restaurant sales increased $1,242,000 to $27,327,000 for the fiscal quarter ended June 25, 2024 from $26,085,000 for the fiscal quarter ended June 27, 2023. This increase is a result of the fourth quarter 2023 Madison, Alabama restaurant opening, the prior year remodel temporary closure of the Greenville, South Carolina restaurant, and menu price increases, partially offset by reduced customer traffic. The average menu price increase for the fiscal quarter ended June 25, 2024 over the same prior year quarter was approximately 4.4%.

 

Good Times restaurant sales increased $1,124,000 to $10,415,000 for the fiscal quarter ended June 25, 2024 from $9,291,000 for the fiscal quarter ended June 27, 2023. This increase is primarily due to the acquisition, by the Company during fourth quarter 2023, of two Good Times restaurants previously owned by franchisees, the current fiscal quarter acquisition of a Good Times restaurant previously owned by a franchisee, increased customer traffic, and menu price increases. The average menu price increase for the fiscal quarter ended June 25, 2024 over the same prior year quarter was approximately 3.9%.

 

Franchise revenues decreased $56,000 to $200,000 in the fiscal quarter ended June 25, 2024 compared to $256,000 in the fiscal quarter ended June 27, 2023. This decrease is primarily due to the acquisition, by the Company during fourth quarter 2023, of two Good Times restaurants previously owned by franchisees, and the current fiscal quarter acquisition of a Good Times restaurant previously owned by a franchisee, resulting in reduced royalties earned and collected.

 

Same Store Sales

 

Same 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 the current year quarter’s operating weeks.

 

Bad Daddy’s same store restaurant sales increased 1.2% during the fiscal quarter ended June 25, 2024 compared to the same thirteen-week period ended June 27, 2023, primarily driven by increased customer traffic and menu price increases. There were thirty-nine restaurants included in the same store sales base at the end of the current quarter.

 

 16 

 

Good Times same store restaurant sales increased 5.8% during the fiscal quarter ended June 25, 2024 compared to the same thirteen-week period ended June 27, 2023, primarily due to increased customer traffic and menu price increases. There were twenty-six 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 June 25, 2024 increased $775,000 to $11,698,000 (31.0% of restaurant sales) from $10,923,000 (30.9% of restaurant sales) for the fiscal quarter ended June 27, 2023.

 

Bad Daddy’s food and packaging costs were $8,517,000 (31.2% of restaurant sales) for the fiscal quarter ended June 25, 2024, up from $8,106,000 (31.1% of restaurant sales) for the fiscal quarter ended June 27, 2023. The increase, as a percentage of sales, is primarily attributable to higher purchase prices in our commodity basket compared to the prior year quarter, partially offset by the impact of a 4.4% average increase in menu pricing.

 

Good Times food and packaging costs were $3,181,000 (30.5% of restaurant sales) for the fiscal quarter ended June 25, 2024, up from $2,817,000 (30.3% of restaurant sales) for the fiscal quarter ended June 27, 2023. This increase, as a percentage of sales, is primarily attributable to higher purchase prices on food and paper goods, partially offset by the impact of a 3.9% average increase in menu pricing.

 

Payroll and Other Employee Benefit Costs. Payroll and other employee benefit costs for the fiscal quarter ended June 25, 2024 increased $695,000 to $12,635,000 (33.5% of restaurant sales) from $11,940,000 (33.8% of restaurant sales) for the fiscal quarter ended June 27, 2023.

 

Bad Daddy’s payroll and other employee benefit costs were $9,227,000 (33.8% of restaurant sales) for the fiscal quarter ended June 25, 2024 up from $9,054,000 (34.7% of restaurant sales) for the fiscal quarter ended June 27, 2023. The $173,000 increase is primarily attributable to one additional operating restaurant during the current quarter compared to the same prior year quarter, higher wage rates offset by greater labor productivity. The decrease as a percent of sales is attributable to greater labor productivity.

 

Good Times payroll and other employee benefit costs were $3,408,000 (32.7% of restaurant sales) in the fiscal quarter ended June 25, 2024, up from $2,886,000 (31.1% of restaurant sales) in the same prior year period. The increase is attributable to labor associated with three additional company-owned restaurants, an increase in operating hours caused by later closing times in nearly every restaurant, and higher average wage rates resulting from market forces and the CPI-indexed minimum wage in Denver and the state of Colorado.

 

Occupancy Costs. Occupancy costs for the fiscal quarter ended June 25, 2024 increased $148,000 to $2,580,000 (6.8% of restaurant sales) from $2,432,000 (6.9% of restaurant sales) for the fiscal quarter ended June 27, 2023.

 

Bad Daddy’s occupancy costs were $1,727,000 (6.3% of restaurant sales) for the fiscal quarter ended June 25, 2024, up from $1,700,000 (6.5% of restaurant sales) for the fiscal quarter ended June 27, 2023.

 

Good Times occupancy costs were $853,000 (8.2% of restaurant sales) in the fiscal quarter ended June 25, 2024, up from $732,000 (7.9% of restaurant sales) in the fiscal quarter ended June 27, 2023. The increase was primarily due to the costs incurred for three additional company-owned restaurants as well as real property tax increases resulting from higher property values.

 

Other Operating Costs. Other operating costs for the fiscal quarter ended June 25, 2024, increased $384,000 to $5,195,000 (13.8% of restaurant sales) from $4,811,000 (13.6% of restaurant sales) for the fiscal quarter ended June 27, 2023.

 

Bad Daddy’s other operating costs were $3,945,000 (14.4% of restaurant sales) for the fiscal quarter ended June 25, 2024 up from $3,750,000 (14.4% of restaurant sales) for the fiscal quarter ended June 27, 2023. The $195,000 increase was primarily attributable to one additional operating restaurant during the current quarter compared to the same prior year quarter as well as increased repair and maintenance expenses.

 

Good Times other operating costs were $1,250,000 (12.0% of restaurant sales) in the fiscal quarter ended June 25, 2024, up from $1,061,000 (11.4% of restaurant sales) in the fiscal quarter ended March 28, 2023. The increase was primarily due to costs associated with three additional company-owned restaurants, as well as increased repair and maintenance, credit card fees and customer delivery fees.

 

New Store Preopening Costs. In the fiscal quarter ended June 25, 2024, there were no preopening costs compared to $80,000 of preopening costs for the fiscal quarter ended June 27, 2023, which primarily related to re-training costs incurred as part of our closure and remodel of our Greenville, South Carolina Bad Daddy’s location.

 

Depreciation and Amortization Costs. Depreciation and amortization costs for the fiscal quarter ended June 25, 2024, increased $41,000 to $960,000 from $919,000 in the fiscal quarter ended June 27, 2023.

 

Bad Daddy’s depreciation and amortization costs for the fiscal quarter ended June 25, 2024 decreased $19,000 to $749,000 from $768,000 in the fiscal quarter ended June 27, 2023.

 

 17 

 

Good Times depreciation and amortization costs for the fiscal quarter ended June 25, 2024 increased $60,000 to $211,000 from $151,000 in the fiscal quarter ended June 27, 2023. This increase is primarily due to additional depreciation on newly deployed assets including signs, menu boards, and restaurant remodels.

 

General and Administrative Costs. General and administrative costs for the fiscal quarter ended June 25, 2024, increased $303,000 to $2,680,000 (7.1% of total revenues) from $2,377,000 (6.7% of total revenues) for the fiscal quarter ended June 27, 2023.

 

This increase in general and administrative expenses in the fiscal quarter ended June 25, 2024 is primarily attributable to:

Increase in home office payroll and benefits costs of $215,000 associated with additional HR and training roles, and additional staffing related to planned insourcing of accounting, and the vacancy in the prior year quarter of the finance department leader position
Increase in costs associated with multi-unit supervisory roles of $198,000
Increase in routine course legal reserves of $130,000
Increase in general travel-related expenses of $23,000
Increase in recruiting and training related costs of $17,000
Decrease in professional services of $63,000
Decrease in office lease and equipment expense of $37,000
Decrease attributable to health insurance underwriting gains of $45,000
Decrease in all other costs of $135,000

 

For the balance of the fiscal year, we expect general and administrative costs to be approximately 7.0% - 7.5% of total revenues.

 

Advertising Costs. Advertising costs for the fiscal quarter ended June 25, 2024, decreased $2,000 to $749,000 (2.0% of total revenues) from $751,000 (2.1% of total revenue) for the fiscal quarter ended June 27, 2023.

 

Bad Daddy’s advertising costs were $448,000 (1.6% of total revenues) in the fiscal quarter ended June 25, 2024 compared to $384,000 (1.5% of restaurant sales) for the fiscal quarter ended June 27, 2023. The increase is primarily due to increases in third party gift card commissions and printing costs, partially offset by decreases in local store marketing and media services. 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 $301,000 (2.9% of total revenues) in the fiscal quarter ended June 25, 2024 compared to $367,000 (3.9% of restaurant sales) in the fiscal quarter ended June 27, 2023. The decrease is primarily related to the timing of radio advertising, increased product rebates, and the additional revenue from the purchase of three previously franchised restaurants.

 

Good Times advertising costs consist primarily of radio advertising, social media, and on-site and point-of-purchase printing costs. Advertising costs are presented gross, with franchisee contributions to the fund being recognized as a component of franchise revenues.

 

Impairment of Long-Lived Assets Costs. The were $199,000 of costs associated with impairments for the fiscal quarter ended June 25, 2024, compared to $965,000 for the fiscal quarter ended June 27, 2023. The current year impairment costs are primarily attributable to the impairment of the lease right-of-use asset of one Colorado Bad Daddy’s location.

 

Loss (Gain) on Restaurant Asset and Equipment Sales. The net loss on restaurant asset sales and equipment disposals for the fiscal quarter ended June 25, 2024 was $18,000, which is composed of a loss of $27,000 on disposal of miscellaneous assets, and $9,000 of deferred gain recognition, compared to a net gain of $10,000 for the fiscal quarter ended June 27, 2023.

 

Litigation Contingency Costs. There were no litigation contingency costs for the fiscal quarters ended June 25, 2024 or June 27, 2023.

 

Income from Operations. Income from operations was $1,228,000 in the fiscal quarter ended June 25, 2024 compared to income from operations of $444,000 in the fiscal quarter ended June 27, 2023.

 

The change in the income from operations for the fiscal quarter ended June 25, 2024 is primarily due to matters discussed in the relevant sections above.

 

Interest Expense. Interest expense was $27,000 during the fiscal quarter ended June 25, 2024, compared with $18,000 during the fiscal quarter ended June 27, 2023.

 

Provision for Income Taxes. There was a $197,000 benefit from income taxes for the fiscal quarter ended June 25, 2024, compared to a $551,000 benefit for the fiscal quarter ended June 27, 2023. The most significant driver of the tax provision changes related to changes in projected full-year net income and available tax credits.

 

Net Income. Net income was $1,398,000 for the fiscal quarter ended June 25, 2024, compared to net income of $977,000 in the fiscal quarter ended June 27, 2023.

 

 18 

 

The change from the fiscal quarter ended June 25, 2024 to the fiscal quarter ended June 27, 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 joint-venture restaurants.

 

For the fiscal quarter ended June 25, 2024, the income attributable to non-controlling interests was $77,000 compared to $135,000 for the fiscal quarter ended June 27, 2023. This $58,000 decrease is primarily due to the temporary closure for remodel of one joint-venture restaurant during the fiscal quarter ended June 25, 2024.

 

Fiscal three quarters ended June 25, 2024 (39 weeks) compared to fiscal three quarters ended June 27, 2023 (39 weeks):

 

Net Revenues. Net revenues for the three quarters ended June 25, 2024 increased $2,692,000, or 2.6%, to $106,521,000 from $103,829,000 for the three quarters ended June 27, 2023. Bad Daddy’s concept revenues increased $312,000 while our Good Times concept revenues increased $2,380,000.

 

Bad Daddy’s restaurant sales increased $304,000 to $77,896,000 for the three quarters ended June 25, 2024 from $77,592,000 for the three quarters ended June 27, 2023. This increase is a result of the fourth quarter 2023 Madison, Alabama restaurant opening, the prior year remodel temporary closure of the Greenville, South Carolina restaurant, and menu price increases partially offset by reduced customer traffic, concentrated in certain restaurants. The average menu price increase for the three quarters ended June 25, 2024 over the same prior year quarters was approximately 4.4%.

 

Good Times restaurant sales increased $2,526,000 to $28,057,000 for the three quarters ended June 25, 2024 from $25,531,000 for the three quarters ended June 27, 2023. This increase is primarily due to the acquisition, by the Company during fiscal 2023, of two Good Times restaurants previously owned by franchisees, the current fiscal quarter acquisition of a Good Times restaurant previously owned by a franchisee, and menu price increases. The average menu price increase for the three quarters ended June 25, 2024 over the same prior year quarters was approximately 4.1%.

 

Franchise revenues decreased $138,000 to $568,000 in the three quarters ended June 25, 2024 compared to $706,000 in the three quarters ended June 27, 2023. This decrease is primarily due to the acquisition, during the fourth fiscal quarter of 2023, by the Company, of two Good Times restaurants previously owned by franchisees, and the current fiscal quarter acquisition of a Good Times restaurant previously owned by a franchisee, resulting in reduced royalties collected.

 

Same Store Sales

 

Same 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.

 

Bad Daddy’s same store restaurant sales decreased 2.7% during the three quarters ended June 25, 2024 compared to the same three quarters ended June 27, 2023, primarily driven by general weakness in the casual dining restaurant segment as indicated by sequentially lower same store sales as 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.

 

Good Times same store restaurant sales increased 3.7% during the three quarters ended June 25, 2024 compared to the same three quarters ended June 27, 2023, primarily due to menu price increases and increased customer traffic, There were twenty-six 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 three quarters ended June 25, 2024 increased $439,000 to $32,624,000 (30.8% of restaurant sales) from $32,185,000 (31.2% of restaurant sales) for the three quarters ended June 27, 2023.

 

Bad Daddy’s food and packaging costs were $24,156,000 (31.0% of restaurant sales) for the three quarters ended March 25, 2024, up from $24,131,000 (31.1% of restaurant sales) for the three quarters ended June 27, 2023. This increase is primarily attributable to the fourth quarter 2023 Madison, Alabama restaurant opening, and the prior year remodel temporary closure of the Greenville, South Carolina restaurant, partially offset by lower average unit volumes. The decrease, as a percent of sales, is primarily attributable to the impact of a 4.4% average annual increase in menu pricing.

 

Good Times food and packaging costs were $8,468,000 (30.2% of restaurant sales) for the three quarters ended June 25, 2024, up from $8,054,000 (31.5% of restaurant sales) for the three quarters ended June 25, 2023. This increase is primarily attributable to the acquisition, by the Company during fiscal 2023, of two Good Times restaurants previously owned by franchisees and the current fiscal quarter acquisition of a Good Times restaurant previously owned by a franchisee. The decrease, as a percent of sales, is primarily attributable to the impact of a 4.1% average annual increase in menu pricing.

 

 19 

 

Payroll and Other Employee Benefit Costs. Payroll and other employee benefit costs for the three quarters ended June 25, 2024 increased $1,048,000 to $36,525,000 (34.5% of restaurant sales) from $35,477,000 (34.4% of restaurant sales) for the three quarters ended June 27, 2023.

 

Bad Daddy’s payroll and other employee benefit costs were $27,040,000 (34.7% of restaurant sales) for the three quarters ended June 25, 2024 up from $26,951,000 (34.7% of restaurant sales) for the three quarters ended June 27, 2023. The $89,000 increase is primarily attributable to the fourth quarter 2023 Madison, Alabama restaurant opening, and the prior year remodel temporary closure of the Greenville, South Carolina restaurant, partially offset by greater labor productivity and the deleveraging impact of lower average unit volumes.

 

Good Times payroll and other employee benefit costs were $9,485,000 (33.8% of restaurant sales) in the three quarters ended June 25, 2024, up from $8,526,000 (33.4% of restaurant sales) in the same prior year period. The $959,000 increase was attributable to labor associated with three 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 Colorado, and higher average wage rates, partially offset by increased labor productivity. As a percent of sales, payroll and employee benefits costs increased by 0.4% primarily attributable to increased wage rates, partially offset by menu price increases and increased labor productivity.

 

Occupancy Costs. Occupancy costs for the three quarters ended June 25, 2024 increased $380,000 to $7,698,000 (7.3% of restaurant sales) from $7,318,000 (7.1% of restaurant sales) for the three quarters ended June 27, 2023.

 

Bad Daddy’s occupancy costs were $5,188,000 (6.7% of restaurant sales) for the three quarters ended June 25, 2024, up from $5,124,000 (6.6% of restaurant sales) for the three quarters ended June 27, 2023.

 

Good Times occupancy costs were $2,510,000 (8.9% of restaurant sales) in the three quarters ended June 25, 2024, up from $2,194,000 (8.6% of restaurant sales) in the three quarters ended June 27, 2023. The increase was primarily due to the acquisition, by the Company during fiscal 2023, of two Good Times restaurants previously owned by franchisees and the current fiscal quarter acquisition of a Good Times restaurant previously owned by a franchisee, as well as real property tax increases resulting from increased property valuations.

 

Other Operating Costs. Other operating costs for the three quarters ended June 25, 2024, increased $899,000 to $15,028,000 (14.2% of restaurant sales) from $14,129,000 (13.7% of restaurant sales) for the three quarters ended June 27, 2023.

 

Bad Daddy’s other operating costs were $11,421,000 (14.7% of restaurant sales) for the three quarters ended June 25, 2024 up from $11,084,000 (14.3% of restaurant sales) for the three quarters ended June 27, 2023. The $337,000 increase was attributable to the fourth quarter 2023 Madison, Alabama restaurant opening, and the prior year remodel temporary closure of the Greenville, South Carolina restaurant, increased repair and maintenance and other employee-related expenses, partially offset by a reduced restaurant supply cost.

 

Good Times other operating costs were $3,607,000 (12.9% of restaurant sales) in the three quarters ended June 25, 2024, up from $3,045,000 (11.9% of restaurant sales) in the three quarters ended June 27, 2023. The increase was primarily due to the acquisition, by the Company during fiscal 2023, of two Good Times restaurants previously owned by franchisees, and the current fiscal quarter acquisition of a Good Times restaurant previously owned by a franchisee, as well as increased repair and maintenance, credit card fees and customer delivery fees.

 

New Store Preopening Costs. There were no new store preopening costs for the three quarters ended June 25, 2024, compared to $110,000 for the three quarters ended June 27, 2023 which were primarily related to re-training costs incurred as part of our closure and remodel of our Greenville, South Carolina Bad Daddy’s location.

 

Depreciation and Amortization Costs. Depreciation and amortization costs for the three quarters ended June 25, 2024, increased $73,000 to $2,813,000 from $2,740,000 in the three quarters ended June 27, 2023.

 

Bad Daddy’s depreciation and amortization costs for the three quarters ended June 25, 2024 decreased $63,000 to $2,240,000 from $2,303,000 in the three quarters ended June 27, 2023.

 

Good Times depreciation and amortization costs for the three quarters ended June 25, 2024 increased $136,000 to $573,000 from $437,000 in the three quarters ended June 27, 2023. This increase is primarily due to additional depreciation on newly deployed assets including signs, menu boards, and restaurant remodels.

 

General and Administrative Costs. General and administrative costs for the three quarters ended June 25, 2024, increased $721,000 to $7,791,000 (7.3% of total revenues) from $7,070,000 (6.8% of total revenues) for the three quarters ended June 27, 2023.

 

 20 

 

This increase in general and administrative expenses in the three quarters ended June 27, 2024 is primarily attributable to:

 

Increase in costs associated with multi-unit supervisory roles of $439,000
Increase in routine course legal reserves of $365,000
Increase in home office payroll and benefits costs of $362,000 associated with additional HR and training roles, and additional staffing related to planned insourcing of accounting, and the vacancy in the prior year third quarter of the finance department leader position
Increase in technology costs of $37,000
Decrease in professional services of $141,000
Decrease attributable to health insurance underwriting gains of $133,000
Decrease in recruiting and training related costs of $103,000
Decrease in general travel-related costs of $49,000
Decrease in all other costs of $56,000

 

Advertising Costs. Advertising costs for the three quarters ended June 25, 2024, increased to $2,665,000 (2.5% of total revenues) from $2,423,000 (2.3% of total revenues) for the three quarters ended June 27, 2023.

 

Bad Daddy’s advertising costs were $1,715,000 (2.2% of total revenues) for the three quarters ended June 25, 2024 compared to $1,414,000 (1.8% of restaurant sales) for the three quarters ended June 27, 2023. The $301,000 increase is primarily due to recognition of commission earned by third parties on gift cards sold through large-box retailers as well as increased social media and printing costs, partially offset by reduced 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 $950,000 (3.3% of total revenues) in the three quarters ended June 25, 2024 compared to $1,009,000 (3.9% of restaurant sales) in the three quarters ended June 27, 2023. The decrease is primarily related to the timing of radio advertising, increased product rebates, and the additional revenue from the purchase of three previously franchised restaurants.

 

Good Times advertising costs consist primarily of radio advertising, social media, and on-site and point-of-purchase printing costs. Advertising costs are presented gross, with franchisee contributions to the fund being recognized as a component of franchise revenues.

 

Impairment of Long-Lived Assets Costs. The were $199,000 of costs associated with impairments for the three quarters ended June 25, 2024, compared to $1,041,000 for the three quarters ended June 27, 2023, which primarily consists of the impairment of the lease right-of-use asset of one Colorado Bad Daddy’s location.

 

Loss (Gain) on Restaurant Asset and Equipment Sales. The net loss on restaurant asset sales and equipment disposals for the three quarters ended June 25, 2024 was $12,000, which is composed of a loss of $41,000 on disposal of miscellaneous assets and $29,000 of deferred gain recognition, compared to a net gain of $32,000 for the three quarters ended June 27, 2023.

 

Litigation Contingency Costs. There was $332,000 of income related to the adjustment of the Company’s litigation contingency reserve during the three quarters ended June 25, 2024, compared to $0 for the three quarters ended June 27, 2023. This adjustment is due to the reversal of our previous contingency reserve of $332,000.

 

Income from Operations. Income from operations was $1,498,000 in the three quarters ended June 25, 2024 compared to income from operations of $1,368,000 in the three quarters ended June 27, 2023.

 

The change in the income from operations for the three quarters ended June 25, 2024 is primarily due to matters discussed in the relevant sections above.

 

Interest Expense. Interest expense was $101,000 during the three quarters ended June 27, 2024, compared with $56,000 during the three quarters ended June 27, 2023.

 

Provision for Income Taxes. There was a $198,000 benefit from income taxes for the three quarters ended June 25, 2024, primarily driven by changes in the projections of full-year net income and available tax credits. There was a $10,503,000 benefit for the three quarters ended June 27, 2023. The most significant driver of the prior year benefit was the release of the valuation allowance previously assessed on the deferred tax assets.

 

Net Income. Net income was $1,595,000 for the three quarters ended June 25, 2024 compared to net income of $11,815,000 in the three quarters ended June 27, 2023.

 

The change from the three quarters ended June 25, 2024 to the three quarters ended June 27, 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.

 

 21 

 

For the three quarters ended June 25, 2024, the income attributable to non-controlling interests was $212,000 compared to $479,000 for the three quarters ended June 27, 2023.

 

Of the three quarters’ income attributable to non-controlling interests, none is attributable to Bad Daddy’s joint-venture restaurants, compared to $219,000 in the same prior year period. This reduction is due to the acquisition by the Company of the interests in the limited liability companies held by non-controlling parties during the second fiscal quarter of 2023.

 

The full $212,000 of the current three quarters’ income is attributable to the Good Times joint-venture restaurants, compared to $260,000 in the same prior year period. This $48,000 decrease is primarily due to the temporary closure for remodel of one joint-venture restaurant during the fiscal quarter ended June 25, 2024, as well decreased profitability during the three fiscal quarters of the six restaurants involved in the 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 restaurant operating companies, 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.

 

 22 

 

The following table reconciles net income to EBITDA and Adjusted EBITDA (in thousands) for the fiscal quarter ended June 25, 2024:

    Quarter Ended (13 weeks)     Year-to-Date (39 weeks)  
    June 25, 2024     June 27, 2023     June 25, 2024     June 27, 2023  
Adjusted EBITDA:                                
Net Income, as reported   $ 1,321     $ 842     $ 1,383     $ 11,336  
Depreciation and amortization     959       924       2,817       2,691  
Interest expense, net     27       18       101       56  
Provision for income taxes     (197 )     (551 )     (198 )     (10,503 )
EBITDA     2,110       1,233       4,103       3,580  
Preopening expense     -       80       -       110  
Non-cash stock-based compensation1     28       15       106       104  
Asset impairment     199       965       199       1,041  
GAAP rent-cash rent difference2     (211 )     (135 )     (537 )     (450 )
Loss (gain) on restaurant and equipment asset sales3     18       (10 )     12       (32 )
Litigation contingencies     -       -       (332 )     -  
Adjusted EBITDA   $ 2,144     $ 2,148     $ 3,551     $ 4,353  

 

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 Financial Statements.
3 Represents deferred gains on previous sale-leaseback transactions on two Good Times restaurants as well as losses on miscellaneous equipment disposals.

 

Depreciation and amortization, the difference between GAAP rent and cash rent and loss (gain) on restaurant and equipment asset sales have been reduced by any amounts attributable to non-controlling interests.

 

Liquidity and Capital Resources

 

Cash and Working Capital. As of June 25, 2024, we had a working capital deficit of $8,834,000. 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 and have payment terms with vendors that are typically between 14 and 21 days.  Further, we have increased our sale of gift cards through large box retailers and the outstanding balance on unredeemed cards has increased in concert with those additional sales, further increasing the deficit. Our current working capital deficit is additionally affected by the recognition of short-term lease liabilities, as we lease substantially all of our real estate and have both current and long-term obligations to our landlords. We believe that we will have sufficient capital to meet our working capital, and recurring capital expenditure needs in fiscal 2024.  We anticipate any commitments in fiscal 2024 will be funded out of existing cash or future borrowings against the 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. In addition, the Company has entered, and may in the future enter, into agreements with holders of common stock to repurchase shares outside of the share repurchase program.

 

Financing

 

For a discussion of the Company’s credit arrangements and long-term financing, see Note 8 to the unaudited, consolidated financial statements included in this report.

 

Cash Flows

    Year-to-Date Period Ended  
    June 25, 2024     June 27, 2023  
Net cash provided by operating activities   $ 4,736     $ 4,707  
Net cash used in investing activities     (2,802 )     (7,572 )
Net cash used in financing activities     (1,297 )     (2,357 )
Net change in cash and cash equivalents   $ 637     $ (5,222 )

 

Operating Cash Flows. Net cash from operating activities increased by $29,000, primarily due to decreased net income, income tax provision and long-lived asset impairments as well as increased cash usage for accounts payable, offset by decreased cash usage for accrued liabilities, other assets and deferred income, as presented on the Condensed Consolidated Statements of Cash Flows.

 

 23 

 

Investing Cash Flows. Net cash used in investing activities for the three quarters ended June 25, 2024 and June 27, 2023 were $2,802,000 and $7,572,000, respectively, which primarily reflect the purchases of property and equipment in each period as well as the acquisition of a restaurant from a franchisee in the current year period, and the net purchase of all non-controlling interests in our Bad Daddy’s locations in the prior year period.

 

Financing Cash Flows. Net cash used in financing activities for the three quarters ended June 25, 2024 was $1,297,000, which includes proceeds from long-term debt of $1,380,000, including the making of the Parker Promissory Note, payments of long-term debt of $1,000,000, net contributions from non-controlling interests of $112,000, and $1,789,000 in payments for the purchase of treasury stock.

 

Net cash used in financing activities for the three fiscal quarters ended June 27, 2023 was $2,357,000, which includes proceeds from stock option exercises of $5,000 and net distributions to non-controlling interests of $550,000, $92,000 in restricted stock unit vesting paid in cash, and $1,720,000 in payments for the repurchase of common stock.

 

Impact of Inflation

 

Commodity prices, particularly for key proteins, remain high and volatile. During the third fiscal quarter of 2024, we began to experience elevated costs across the various proteins in our basket. In particular, wholesale ground beef prices have increased, and following the end of the quarter increased to an all-time record, and we expect them to continue to remain elevated during the fourth fiscal quarter of 2024, as will likely be the case for other proteins and food-based commodities.

 

In addition to food and supplies cost inflation, we have also experienced the need to meaningfully increase wages to attract restaurant employees, and in Colorado inflation-indexed statutory wage rate increases have created upward pressure on wages. Further, as 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 relative pricing of competitors including aggressive discounting may prevent us from raising prices sufficient to offset the significant increases in labor costs and may require additional discounts or promotional pricing which may put pressure on our ability to offset input cost inflation.

 

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 June 25, 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 June 25, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

 24 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There may be various claims in process, matters in litigation, and other contingencies brought against the Company 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, 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.

 

The Company was 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’ 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.  On 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’ breach of their covenant not to sue Good Times. The court of appeals ordered that Good Times’ counterclaim be remanded to the trial court for further consideration. Due to this favorable decision, during the quarter ended March 26,2024 we reversed our previous contingency reserve of $332,000. The plaintiffs petitioned the court of appeals for rehearing on its reversal of the trial court’s dismissal of Good Times’ counterclaim. The court of appeals’ ruling on the petition for rehearing is pending. The amount of Good Times’ claimed damages (which consists substantially of its prior legal fees) exceeds $3 million. While Good Times plans to vigorously pursue this 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. On June 20, 2024 the court of appeals affirmed its previous reversal of the trial court’s dismissal of Good Times’ counterclaim. The trial court will now consider the issue of White Winston’s liability to Good Times.

 

ITEM 1A. RISK FACTORS

 

Risk factors associated with our business are contained in Item 1, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended September 2023 filed with the SEC on December 14, 2023 and in Item 1A, “Risk Factors,” of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 26, 2024 filed with the SEC on May 2, 2024. There have been no material changes from the risk factors disclosed in the aforementioned filings.

 

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 “2022 Share Repurchase Program”). 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 June 25, 2024, the Company has purchased 1,613,282 shares of its common stock pursuant to the share repurchase plan leaving approximately $507,000 available for repurchases under the plan.

 

 25 

 

Repurchases of common stock under the share repurchase plan during the fiscal quarter ended June 25, 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
 
03/27/2024 – 04/23/2024       31,235     $ 2.55       31,235          
04/24/2024 – 05/21/2024       36,700     $ 2.78       36,700          
05/22/2024 – 06/25/2024       24,305     $ 2.61       24,305          
Total       92,240               92,240     $ 507,000  

 

In addition to the purchases made under the 2022 Share Repurchase Program, on May 30, 2024, the Company purchased an aggregate of 171,276 shares of its common stock, at a price of $2.60 per share in a transaction negotiated with a private seller.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

During the quarter ended June 25, 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
   
10.1 First Amendment to Credit Agreement dated May 22, 2024, by and among Good Times Restaurants Inc., each of its wholly owned subsidiaries and Cadence Bank, N.A. (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on May 29, 2024)
10.2 Second Amendment to Credit Agreement dated May 30, 2024, by and among Good Times Restaurants Inc., each of its wholly owned subsidiaries and Cadence Bank, N.A. (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on June 5, 2024)
*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 Certification of Chief Executive Officer and Principal Financial Officer pursuant to Section 906
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

 

 26 

 

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: August 1, 2024      
       
       
   

Ryan M. Zink

Chief Executive Officer

(Principal Executive Officer)

 
       
       
   

Keri A. August

Senior Vice President of Finance and Accounting

(Principal Financial Officer)

 

 

 

27

 

 

 

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Exhibit 31.1

 

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

 

I, Ryan M. Zink, certify that:

 

1.I have reviewed this Form 10-Q of Good Times Restaurants Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

  

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 1, 2024

 

 

Ryan M. Zink

Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

 

 

 

Exhibit 31.2

 

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

 

I, Keri A. August, certify that:

 

1.I have reviewed this Form 10-Q of Good Times Restaurants Inc.;

 

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a)       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: August 1, 2024

 

 

Keri A. August

Senior Vice President of Finance and Accounting

(Principal Financial Officer and Principal Accounting Officer)

 

 

 

 

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection this Form 10-Q of Good Times Restaurants Inc. (the “Company”) for the quarter ended June 25, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ryan M. Zink, as Chief Executive Officer and I, Keri August, as Principal Financial Officer of the Company, hereby certify, pursuant to and solely for the purpose of 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

 

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

 

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

     
Ryan M. Zink   Keri August

Chief Executive Officer

(Principal Executive Officer)

 

Senior Vice President of Finance and Accounting

(Principal Financial Officer and Principal Accounting Officer)

     
August 1, 2024   August 1, 2024

 

 

 

 

 

 

v3.24.2.u1
Cover - shares
9 Months Ended
Jun. 25, 2024
Jul. 23, 2024
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Transition Report false  
Entity Interactive Data Current Yes  
Amendment Flag false  
Document Period End Date Jun. 25, 2024  
Document Fiscal Year Focus 2024  
Document Fiscal Period Focus Q3  
Entity Information [Line Items]    
Entity Registrant Name Good Times Restaurants Inc.  
Entity Central Index Key 0000825324  
Entity File Number 0-18590  
Entity Tax Identification Number 84-1133368  
Entity Incorporation, State or Country Code NV  
Current Fiscal Year End Date --09-26  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Contact Personnel [Line Items]    
Entity Address, Address Line One 651 CORPORATE CIRCLE  
Entity Address, City or Town GOLDEN  
Entity Address, State or Province CO  
Entity Address, Postal Zip Code 80401  
Entity Phone Fax Numbers [Line Items]    
City Area Code (303)  
Local Phone Number 384-1400  
Entity Listings [Line Items]    
Title of 12(b) Security Common Stock $.001 par value  
Trading Symbol GTIM  
Security Exchange Name NASDAQ  
Entity Common Stock, Shares Outstanding   10,752,803
v3.24.2.u1
Condensed Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Jun. 25, 2024
Sep. 26, 2023
CURRENT ASSETS:    
Cash and cash equivalents $ 4,819 $ 4,182
Receivables 782 769
Prepaid expenses and other 662 163
Inventories 1,446 1,407
Total current assets 7,709 6,521
PROPERTY AND EQUIPMENT:    
Land and building 6,103 5,722
Leasehold improvements 39,241 38,191
Fixtures and equipment 34,328 33,040
Total property and equipment 79,672 76,953
Less accumulated depreciation and amortization (56,721) (53,917)
Total net property and equipment 22,951 23,036
OTHER ASSETS:    
Operating lease right-of-use assets, net 37,728 40,007
Deferred tax assets 11,781 11,583
Deposits and other assets 259 277
Trademarks 3,900 3,900
Other intangibles, net 36 51
Goodwill 5,713 5,713
Total other assets 59,417 61,531
TOTAL ASSETS: 90,077 91,088
CURRENT LIABILITIES:    
Current maturities of long-term debt 30  
Accounts payable 2,884 2,585
Deferred revenue 187 67
Operating lease liabilities, current 6,176 5,787
Other accrued liabilities 7,266 6,451
Total current liabilities 16,543 14,890
LONG-TERM LIABILITIES:    
Maturities of long-term debt 1,100 750
Operating lease liabilities, net of current portion 39,307 42,332
Deferred revenues and other liabilities 109 122
Total long-term liabilities 40,516 43,204
Good Times Restaurants Inc. shareholders’ equity:    
Preferred stock, $.01 par value; 5,000,000 shares authorized, no shares issued and outstanding as of June 25, 2024 and September 26, 2023
Common stock, $.001 par value; 50,000,000 shares authorized; 12,977,433 issued; and 10,769,803 and 11,446,587 outstanding as of June 25, 2024 and September 26, 2023, respectively 13 13
Capital contributed in excess of par value 56,807 56,701
Treasury stock, at cost; 2,207,630 and 1,530,846 shares as of June 25, 2024 and September 26, 2023, respectively (6,697) (4,908)
Accumulated deficit (17,852) (19,235)
Total Good Times Restaurants Inc. shareholders’ equity 32,271 32,571
Non-controlling interests 747 423
Total shareholders’ equity 33,018 32,994
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 90,077 $ 91,088
v3.24.2.u1
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares
Jun. 25, 2024
Sep. 26, 2023
Statement of Financial Position [Abstract]    
Preferred stock, par value (in Dollars per share) $ 0.01 $ 0.01
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, outstanding
Preferred stock, issued
Common stock, par value (in Dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 50,000,000 50,000,000
Common stock, shares issued 12,977,433 12,977,433
Common stock, shares outstanding 10,769,803 11,446,587
Treasury stock at cost, shares 2,207,630 1,530,846
v3.24.2.u1
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 25, 2024
Jun. 27, 2023
Jun. 25, 2024
Jun. 27, 2023
Total net revenues $ 37,942 $ 35,632 $ 106,521 $ 103,829
RESTAURANT OPERATING COSTS:        
Food and packaging costs 11,698 10,923 32,624 32,185
Payroll and other employee benefit costs 12,635 11,940 36,525 35,477
Restaurant occupancy costs 2,580 2,432 7,698 7,318
Other restaurant operating costs 5,195 4,811 15,028 14,129
Preopening costs   80 110
Depreciation and amortization 960 919 2,813 2,740
Total restaurant operating costs 33,068 31,105 94,688 91,959
General and administrative costs 2,680 2,377 7,791 7,070
Advertising costs 749 751 2,665 2,423
Impairment of long-lived assets 199 965 199 1,041
Loss (gain) on restaurant and equipment asset sales 18 (10) 12 (32)
Litigation contingencies   (332)
INCOME FROM OPERATIONS: 1,228 444 1,498 1,368
Interest and other expense, net (27) (18) (101) (56)
NET INCOME BEFORE INCOME TAXES: 1,201 426 1,397 1,312
Provision for income taxes 197 551 198 10,503
NET INCOME: 1,398 977 1,595 11,815
Income attributable to non-controlling interests (77) (135) (212) (479)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ 1,321 $ 842 $ 1,383 $ 11,336
NET INCOME PER SHARE, ATTRIBUTABLE TO COMMON SHAREHOLDERS:        
Basic (in Dollars per share) $ 0.12 $ 0.07 $ 0.12 $ 0.96
Diluted (in Dollars per share) $ 0.12 $ 0.07 $ 0.12 $ 0.95
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:        
Basic (in Shares) 10,933,758 11,700,044 11,149,181 11,853,441
Diluted (in Shares) 11,034,487 11,769,286 11,246,353 11,910,491
Restaurant sale        
Revenues $ 37,742 $ 35,376 $ 105,953 $ 103,123
Franchise revenues        
Revenues $ 200 $ 256 $ 568 $ 706
v3.24.2.u1
Consolidated Statements of Shareholders’ Equity (Unaudited) - USD ($)
$ in Thousands
Treasury Stock, at cost
Common Stock
Capital Contributed in Excess of Par Value
Non- Controlling Interest In Partnerships
Accumulated Deficit
Total
BALANCES at Sep. 27, 2022 $ (2,634) $ 13 $ 59,427 $ 1,303 $ (30,321) $ 27,788
BALANCES (in Shares) at Sep. 27, 2022 692,798 12,274,351        
Stock-based compensation cost 46 46
Restricted stock unit vesting (92) (92)
Restricted stock unit vesting (in Shares) 8,284        
Stock option exercise 5 5
Stock option exercise (in Shares) 2,000        
Repurchases of common stock $ (873) (873)
Repurchases of common stock (in Shares) 371,395 (371,395)        
Non-controlling interests:            
Contributions 13 13
Income 222 222
Distributions (172) (172)
Net income attributable to Good Times Restaurants Inc and comprehensive income (127) (127)
BALANCES at Dec. 27, 2022 $ (3,507) $ 13 59,386 1,366 (30,448) 26,810
BALANCES (in Shares) at Dec. 27, 2022 1,064,193 11,913,240        
Stock-based compensation cost 43 43
Repurchases of common stock $ (467)     (467)
Repurchases of common stock (in Shares) 166,890 (166,890)        
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 at Mar. 28, 2023 $ (3,974) $ 13 56,754 363 (19,827) 33,329
BALANCES (in Shares) at Mar. 28, 2023 1,231,083 11,746,350        
Stock-based compensation cost   14 14
Repurchases of common stock $ (380)     (380)
Repurchases of common stock (in Shares) 123,623 (123,623)        
Non-controlling interests:            
Income     135 135
Distributions     (97) (97)
Net income attributable to Good Times Restaurants Inc and comprehensive income 842 842
BALANCES at Jun. 27, 2023 $ (4,354) $ 13 56,768 401 (18,985) 33,843
BALANCES (in Shares) at Jun. 27, 2023 1,354,706 11,622,727        
BALANCES at Sep. 26, 2023 $ (4,908) $ 13 56,701 423 (19,235) 32,994
BALANCES (in Shares) at Sep. 26, 2023 1,530,846 11,446,587        
Stock-based compensation cost 38 38
Repurchases of common stock $ (438)     (438)
Repurchases of common stock (in Shares) 160,772 (160,772)        
Non-controlling interests:            
Income 73 73
Distributions (29) (29)
Net income attributable to Good Times Restaurants Inc and comprehensive income (556) (556)
BALANCES at Dec. 26, 2023 $ (5,346) $ 13 56,739 467 (19,791) 32,082
BALANCES (in Shares) at Dec. 26, 2023 1,691,618 11,285,815        
BALANCES at Sep. 26, 2023 $ (4,908) $ 13 56,701 423 (19,235) 32,994
BALANCES (in Shares) at Sep. 26, 2023 1,530,846 11,446,587        
Non-controlling interests:            
Contributions           200
Income           212
Net income attributable to Good Times Restaurants Inc and comprehensive income           1,383
BALANCES at Jun. 25, 2024 $ (6,697) $ 13 56,807 747 (17,852) 33,018
BALANCES (in Shares) at Jun. 25, 2024 2,207,630 10,769,803        
BALANCES at Dec. 26, 2023 $ (5,346) $ 13 56,739 467 (19,791) 32,082
BALANCES (in Shares) at Dec. 26, 2023 1,691,618 11,285,815        
Stock-based compensation cost 40 40
Repurchases of common stock $ (646)     (646)
Repurchases of common stock (in Shares) 252,496 (252,496)        
Non-controlling interests:            
Income 62 62
Distributions (21) (21)
Net income attributable to Good Times Restaurants Inc and comprehensive income     618 618
BALANCES at Mar. 26, 2024 $ (5,992) $ 13 56,779 508 (19,173) 32,135
BALANCES (in Shares) at Mar. 26, 2024 1,944,114 11,033,319        
Stock-based compensation cost   28 28
Repurchases of common stock $ (705)     (705)
Repurchases of common stock (in Shares) 263,516 (263,516)        
Non-controlling interests:            
Contributions     200 200
Income     77 77
Distributions     (38) (38)
Net income attributable to Good Times Restaurants Inc and comprehensive income     1,321 1,321
BALANCES at Jun. 25, 2024 $ (6,697) $ 13 $ 56,807 $ 747 $ (17,852) $ 33,018
BALANCES (in Shares) at Jun. 25, 2024 2,207,630 10,769,803        
v3.24.2.u1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
9 Months Ended
Jun. 25, 2024
Jun. 27, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 1,595 $ 11,815
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 2,883 2,809
Net change in operating lease right-of-use assets and liabilities (544) (451)
Recognition of deferred gain on sale of restaurant building (29) (76)
Impairment of long-lived assets 199 1,041
Loss on disposal of assets 30 44
Stock-based compensation expense 106 103
Provision for income taxes (198) (10,510)
Changes in operating assets and liabilities:    
Receivables and other (15) (35)
Prepaid expense (499) (513)
Inventories (27) 34
Deposits and other 18 (119)
Accounts payable 276 444
Deferred income 138 24
Accrued and other liabilities 803 97
Net cash provided by operating activities 4,736 4,707
CASH FLOWS FROM INVESTING ACTIVITIES:    
Payments for the purchase of property and equipment (2,282) (3,178)
Acquisition of restaurant from franchisee, net of cash acquired (534)
Proceeds from sale of fixed assets 14
Net cash used in investing activities (2,802) (3,178)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Borrowings from long-term debt 1,380
Payments on long-term debt (1,000)
Repurchases of common stock (1,789) (1,720)
Payments for restricted stock vesting settled in cash (92)
Proceeds from stock option exercise 5
Purchase of non-controlling interests (4,394)
Contributions from non-controlling interests 200 13
Distributions to non-controlling interests (88) (563)
Net cash used in financing activities (1,297) (6,751)
NET CHANGE IN CASH AND CASH EQUIVALENTS 637 (5,222)
CASH AND CASH EQUIVALENTS, beginning of period 4,182 8,906
CASH AND CASH EQUIVALENTS, end of period 4,819 3,684
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:    
Cash paid for interest 69 15
Change in accounts payable attributable to the purchase of property and equipment $ (23) $ (50)
v3.24.2.u1
Basis of Presentation
9 Months Ended
Jun. 25, 2024
Basis of Presentation [Abstract]  
Basis of Presentation

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 owned subsidiaries as well as one partnership in which the Company is the general partner, and five limited liability companies in which the Company is the sole owner following the January 2023 purchase of the membership interests 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’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 (United States) (“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 June 25, 2024 and the results of its operations and its cash flows for the fiscal quarters ended June 25, 2024 and June 27, 2023. Operating results for the fiscal quarter ended June 25, 2024 are not necessarily indicative of the results that may be expected for the year ending September 24, 2024. The condensed consolidated balance sheet as of September 26, 2023 is derived from the audited financial statements but does not include all disclosures required by GAAP. As a result, these condensed consolidated financial statements should be read in conjunction with the Company’s Form 10-K for the fiscal year ended September 26, 2023.

 

Fiscal Year – The Company’s fiscal year is a 52/53-week year ending on the last Tuesday of September. In a 52-week fiscal year, each of the Company’s quarterly periods consist of 13 weeks. The additional week in a 53-week fiscal year is added to the first quarter, making such quarter consist of 14 weeks. The quarters ended June 25, 2024 and June 27, 2023 each consisted of 13 weeks and the year-to-date periods each consisted of 39 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.

 

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.  Contributions to the Advertising Funds from our franchisees were $144,000 and $212,000 for the two quarters ended June 25, 2024 and June 27, 2023, 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.

 

Receivables consist of the following as of:

   June 25, 2024   September 26, 2023 
Third party delivery partners  $        304   $        269 
Vendor rebates and incentives   298    185 
Third party retailers   141    291 
Franchise and other   39    24 
Total  $782   $769 
v3.24.2.u1
Recent Accounting Pronouncements
9 Months Ended
Jun. 25, 2024
Recent Accounting Pronouncements [Abstract]  
Recent Accounting Pronouncements

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.

v3.24.2.u1
Revenue
9 Months Ended
Jun. 25, 2024
Revenue [Abstract]  
Revenue

Note 3.      Revenue

 

Revenue Recognition. Revenues consist primarily of sales from restaurant operations and franchise revenue, which also includes franchisee contributions to 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 June 25, 2024 and June 27, 2023.

 

Revenues we receive from our franchise and license agreements include sales-based royalties and, from our franchise agreements, may also include Advertising Fund contributions, area development fees, and franchisee fees. We recognize sales-based royalties and advertising fund contributions from franchisees and licensees 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.

v3.24.2.u1
Goodwill and Intangible Assets
9 Months Ended
Jun. 25, 2024
Goodwill and Intangible Assets [Abstract]  
Goodwill and Intangible Assets

Note 4.     Goodwill and Intangible Assets

 

The following table presents goodwill and intangible assets as of June 25, 2024 and September 26, 2023 (in thousands):

 

   June 25, 2024   September 26, 2023 
   Gross
Carrying
Amount
   Accumulated
Amortization
   Net
Carrying
Amount
   Gross
Carrying
Amount
   Accumulated
Amortization
   Net
Carrying
Amount
 
Intangible assets subject to amortization:                        
Non-compete agreements  $50   $(26)  $24   $50   $(14)  $36 
Reacquired franchise rights  $15   $(3)  $12   $15   $
-
   $15 
   $65   $(29)  $36   $65   $(14)  $51 
Indefinite-lived intangible assets:                              
Trademarks  $3,900   $
-
   $3,900   $3,900   $
-
   $3,900 
Intangible assets, net  $3,965   $(29)  $3,936   $3,965   $(14)  $3,951 
                               
Goodwill  $5,713   $
-
   $5,713   $5,713   $
-
   $5,713 

 

Intangible assets subject to amortization primarily consist of non-compete agreements associated with prior restaurant purchases. The aggregate amortization expense related to these intangible assets subject to amortization was $15,000 for the three quarters ended June 25, 2024 and $6,000 for the three quarters ended June 27, 2023. As of both June 25, 2024 and June 27, 2023, 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.

v3.24.2.u1
Stock-Based Compensation
9 Months Ended
Jun. 25, 2024
Stock-Based Compensation [Abstract]  
Stock-Based Compensation

Note 5.     Stock-Based Compensation

 

The Company has traditionally maintained incentive compensation plans that include provisions for the issuance of equity-based awards. The Company established the 2008 Omnibus Equity Incentive Compensation Plan in 2008 (the “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 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 they occur.

 

For the quarters ended June 25, 2024 and June 27, 2023, we recognized $28,000 and $14,000, respectively, related to stock-based compensation arrangements. Our net income for the three quarters ended June 25, 2024 and June 27, 2023 includes $106,000 and $104,000, respectively, of compensation costs related to our stock-based compensation arrangements.

v3.24.2.u1
Prepaid Expenses and Other Current Assets
9 Months Ended
Jun. 25, 2024
Prepaid Expense and Other Current Assets [Abstract]  
Prepaid expenses and other current assets

Note 6.     Prepaid expenses and other current assets

 

Prepaid expenses and other current assets consist of the following as of:

 

   June 25, 2024   September 26, 2023 
Prepaid insurance  $     290   $
-
 
Prepaid software licenses and maintenance contracts   180         88 
Prepaid licenses and permits   82    42 
Other   110    33 
Total  $662   $163 
v3.24.2.u1
Other Accrued Liabilities
9 Months Ended
Jun. 25, 2024
Other Accrued Liabilities [Abstract]  
Other Accrued Liabilities

Note 7.     Other Accrued Liabilities

 

Other accrued liabilities consist of the following as of:

 

   June 25, 2024   September 26, 2023 
Wages and other employee benefits  $3,207   $2,893 
Gift card liability, net of breakage   1,511    1,108 
Taxes, other than income taxes   1,388    1,275 
General expense accrual and other   1,160    1,175 
Total  $7,266   $6,451 
v3.24.2.u1
Notes Payable and Long-Term Debt
9 Months Ended
Jun. 25, 2024
Notes Payable and Long-Term Debt [Abstract]  
Notes Payable and Long-Term Debt

Note 8.     Notes Payable and Long-Term Debt

 

Cadence Credit Facility. The Company and its wholly owned subsidiaries (the “Subsidiaries”) maintain an amended and restated credit agreement with Cadence Bank (“Cadence”). Pursuant to the credit agreement, as amended to date, Cadence agreed to loan the Company up to $8,000,000, with a maturity date of April 20, 2028 (the “Cadence Credit Facility”). The Cadence 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%. 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. Each of the Subsidiaries are guarantors of the Cadence Credit Facility.

 

Proceeds from the Cadence Credit Facility, if and when drawn, may be used (i) to fund new restaurant development, (ii) to finance the buyout of non-controlling 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 Cadence Credit Facility includes customary affirmative and negative covenants and events of default. The Cadence 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 outstanding balance under the revolver 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 June 25, 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 June 25, 2024, the unamortized balance of these fees was $102,000.

 

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 June 25, 2024, there were $750,000 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 June 25, 2024, there were approximately $10,000 in outstanding letters of credit issued under the facility, and approximately $7,240,000 of committed funds available.

 

Total interest expense on notes payable was $24,000 and $0 for the quarters ended June 25, 2024 and June 27, 2023, respectively.

 

Parker Promissory Note. Good Times Drive Thru, Inc., a wholly owned subsidiary of the Company is the maker of an unsecured promissory note in connection with the purchase of the previously franchised Good Times Burgers and Frozen Custard restaurant located in the Denver suburb of Parker, Colorado. JGN Management, Inc., the former franchisee, is the holder of the note. The Parker Promissory Note fully amortizes over its original ten-year life and carries an interest rate of 5.00% and is, in all respects, subordinate to the Cadence Credit Facility. As of June 25, 2024 the outstanding principal balance on the Parker Promissory Note was $380,000.

v3.24.2.u1
Earnings per Common Share
9 Months Ended
Jun. 25, 2024
Earnings per Common Share [Abstract]  
Earnings per Common Share

Note 9.     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 (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 
   June 25, 2024   June 27, 2023   June 25, 2024   June 27, 2023 
Weighted-average shares outstanding basic   10,933,758    11,700,044    11,149,181    11,853,441 
Effect of potentially dilutive securities:                    
Stock options   11,479    19,242    7,922    7,050 
Restricted stock units   89,250    50,000    89,250    50,000 
Weighted-average shares outstanding diluted   11,034,487    11,769,286    11,246,353    11,910,491 
Excluded from diluted weighted average shares outstanding:                    
Antidilutive   345,623    345,691    345,623    354,024 
v3.24.2.u1
Contingent Liabilities and Liquidity
9 Months Ended
Jun. 25, 2024
Contingent Liabilities and Liquidity [Abstract]  
Contingent Liabilities and Liquidity

Note 10.     Contingent Liabilities and Liquidity

 

There may be various claims in process, matters in litigation, and other contingencies brought against the Company 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, 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.

v3.24.2.u1
Leases
9 Months Ended
Jun. 25, 2024
Leases [Abstract]  
Leases

Note 11.     Leases

 

The Company determines if a contract contains a lease at inception. The Company’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 to 20 years, most of which include renewal options of 10 to 15 years.

 

Components of operating lease costs are as follows for the fiscal quarters ended June 25, 2024 and June 27, 2023:

 

Lease cost  Classification  June 25, 2024   June 27, 2023 
Operating lease cost  Occupancy, Other restaurant operating costs and General and administrative expenses, net  $1,876   $1,824 
Variable lease cost  Occupancy   19    60 
Sublease income  Occupancy   (132)   (137)
      $1,763   $1,747 

 

Weighted average lease term and discount rate are as follows:

   June 25, 2024   June 27, 2023 
Weighted average remaining lease term (in years)   7.52    8.16 
           
Weighted average discount rate   5.2%   5.0%

 

Supplemental cash flow disclosures:

   June 25, 2024   June 27, 2023 
Cash paid for operating lease liabilities  $5,817   $5,771 
           
Non-cash operating lease assets obtained in exchange for
operating lease liabilities
  $933   $1,201 

 

Future minimum rent payments for our operating leases as of June 25, 2024 are as follows:

 

   Total 
One Year  $8,402 
Two Years   8,066 
Three Years   7,754 
Four Years   7,202 
Five Years   5,867 
Thereafter   17,952 
Total minimum lease payments   55,243 
Less: imputed interest   (9,760)
Present value of lease liabilities  $45,483 

 

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.

v3.24.2.u1
Impairment of Long-Lived Assets and Trademarks
9 Months Ended
Jun. 25, 2024
Impairment of Long-Lived Assets and Trademarks [Abstract]  
Impairment of Long-Lived Assets and Trademarks

Note 12.     Impairment of Long-Lived Assets and Trademarks

 

Long-Lived Assets. We review our long-lived assets including land, property, equipment and lease right-of-use assets 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 impairments of $199,000 in the three quarters ended June 25, 2024, related primarily to lease right-of-use assets and 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 three quarters ended June 27, 2023, there were impairments of $1,041,000.

 

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 for the acquired trademarks as of June 25, 2024 or June 27, 2023.

v3.24.2.u1
Income Taxes
9 Months Ended
Jun. 25, 2024
Income Taxes [Abstract]  
Income Taxes

Note 13.     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 periods ended June 25, 2024 was (15.21%), an increase from the effective income tax rate of (189.98%) for the three periods ended June 27, 2023. The increase is due to the additional release of the Company’s valuation allowance in the prior year quarter, and an increase in book income. The Company’s effective tax rate for the nine periods ended June 25, 2024 was (15.09%), an increase from an effective income tax rate of (1,261.02%) for the nine periods ended June 27, 2023. The increase is due to the Company’s valuation allowance release that occurred during the prior year.

 

The Company is subject to taxation in various jurisdictions within the United States. The Company continues to remain subject to examination by United States federal authorities for the years 2021 through 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 June 25, 2024.

v3.24.2.u1
Non-controlling Interests
9 Months Ended
Jun. 25, 2024
Non-controlling Interests [Abstract]  
Non-controlling Interests

Note 14.     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 three quarters ended June 25, 2024 (in thousands):

   Total 
Balance at September 26, 2023  $423 
Income   212 
Contributions   200 
Distributions   (88)
Balance at June 25, 2024  $747 

 

Non-controlling interests at the quarter ended June 25, 2024 consisted of one joint-venture partnership involving six Good Times restaurants, in which the Company is the general partner and owns a 50.0% interest.

v3.24.2.u1
Segment Reporting
9 Months Ended
Jun. 25, 2024
Segment Reporting [Abstract]  
Segment Reporting

Note 15.     Segment Reporting

 

All of our Bad Daddy’s compete in the full-service segment of the restaurant industry while our Good Times compete in the quick-service segment of the restaurant 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 (13 Weeks)   Year-to-Date (39 Weeks) 
   June 25, 2024   June 27, 2023   June 25, 2024   June 27, 2023 
Revenues:                
Bad Daddy’s  $27,410   $26,161   $78,107   $77,795 
Good Times   10,532    9,471    28,414    26,034 
   $37,942   $35,632   $106,521   $103,829 
Income (loss) from operations:                    
Bad Daddy’s  $388   $(946)  $7   $(277)
Good Times   840   $1,390    1,491   $1,645 
   $1,228   $444   $1,498   $1,368 
Capital expenditures:                    
Bad Daddy’s  $481   $1,295   $968   $1,901 
Good Times   1,264    302    1,871    1,277 
   $1,745   $1,597   $2,839   $3,178 

 

 

   June 25, 2024   September 26, 2023 
Property and equipment, net:          
Bad Daddy’s  $17,747   $18,053 
Good Times   5,204    4,983 
   $22,951   $23,036 
Total assets:          
Bad Daddy’s  $65,319   $67,720 
Good Times   24,758    23,368 
   $90,077   $91,088 
v3.24.2.u1
Subsequent Events
9 Months Ended
Jun. 25, 2024
Subsequent Events [Abstract]  
Subsequent Events

Note 16.     Subsequent Events

 

On July 29, 2024, the Company settled an investigation conducted by the United States Department of Justice related to alleged violations of the Americans with Disabilities Act with respect to an incident at one of the Company’s restaurants.  All expected payments in association with this settlement have been adequately accrued as of the quarter ended June 25, 2024.

v3.24.2.u1
Pay vs Performance Disclosure - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 25, 2024
Mar. 26, 2024
Dec. 26, 2023
Jun. 27, 2023
Mar. 28, 2023
Dec. 27, 2022
Jun. 25, 2024
Jun. 27, 2023
Pay vs Performance Disclosure                
Net Income (Loss) $ 1,321 $ 618 $ (556) $ 842 $ 10,621 $ (127) $ 1,383 $ 11,336
v3.24.2.u1
Insider Trading Arrangements
3 Months Ended
Jun. 25, 2024
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.24.2.u1
Accounting Policies, by Policy (Policies)
9 Months Ended
Jun. 25, 2024
Basis of Presentation [Abstract]  
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.

v3.24.2.u1
Basis of Presentation (Tables)
9 Months Ended
Jun. 25, 2024
Basis of Presentation [Abstract]  
Schedule of Receivables Consist Receivables consist of the following as of:
   June 25, 2024   September 26, 2023 
Third party delivery partners  $        304   $        269 
Vendor rebates and incentives   298    185 
Third party retailers   141    291 
Franchise and other   39    24 
Total  $782   $769 
v3.24.2.u1
Goodwill and Intangible Assets (Tables)
9 Months Ended
Jun. 25, 2024
Goodwill and Intangible Assets [Abstract]  
Schedule of Goodwill and Intangible Assets The following table presents goodwill and intangible assets as of June 25, 2024 and September 26, 2023 (in thousands):
   June 25, 2024   September 26, 2023 
   Gross
Carrying
Amount
   Accumulated
Amortization
   Net
Carrying
Amount
   Gross
Carrying
Amount
   Accumulated
Amortization
   Net
Carrying
Amount
 
Intangible assets subject to amortization:                        
Non-compete agreements  $50   $(26)  $24   $50   $(14)  $36 
Reacquired franchise rights  $15   $(3)  $12   $15   $
-
   $15 
   $65   $(29)  $36   $65   $(14)  $51 
Indefinite-lived intangible assets:                              
Trademarks  $3,900   $
-
   $3,900   $3,900   $
-
   $3,900 
Intangible assets, net  $3,965   $(29)  $3,936   $3,965   $(14)  $3,951 
                               
Goodwill  $5,713   $
-
   $5,713   $5,713   $
-
   $5,713 
v3.24.2.u1
Prepaid Expenses and Other Current Assets (Tables)
9 Months Ended
Jun. 25, 2024
Prepaid Expense and Other Current Assets [Abstract]  
Schedule of Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following as of:
   June 25, 2024   September 26, 2023 
Prepaid insurance  $     290   $
-
 
Prepaid software licenses and maintenance contracts   180         88 
Prepaid licenses and permits   82    42 
Other   110    33 
Total  $662   $163 
v3.24.2.u1
Other Accrued Liabilities (Tables)
9 Months Ended
Jun. 25, 2024
Other Accrued Liabilities [Abstract]  
Schedule of Other Accrued Liabilities Other accrued liabilities consist of the following as of:
   June 25, 2024   September 26, 2023 
Wages and other employee benefits  $3,207   $2,893 
Gift card liability, net of breakage   1,511    1,108 
Taxes, other than income taxes   1,388    1,275 
General expense accrual and other   1,160    1,175 
Total  $7,266   $6,451 
v3.24.2.u1
Earnings per Common Share (Tables)
9 Months Ended
Jun. 25, 2024
Earnings per Common Share [Abstract]  
Schedule of Reconciles Basic Weighted-Average Shares Outstanding to Diluted Weighted-Average Shares Outstanding The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding:
   Quarter Ended   Year-to-Date 
   June 25, 2024   June 27, 2023   June 25, 2024   June 27, 2023 
Weighted-average shares outstanding basic   10,933,758    11,700,044    11,149,181    11,853,441 
Effect of potentially dilutive securities:                    
Stock options   11,479    19,242    7,922    7,050 
Restricted stock units   89,250    50,000    89,250    50,000 
Weighted-average shares outstanding diluted   11,034,487    11,769,286    11,246,353    11,910,491 
Excluded from diluted weighted average shares outstanding:                    
Antidilutive   345,623    345,691    345,623    354,024 
v3.24.2.u1
Leases (Tables)
9 Months Ended
Jun. 25, 2024
Leases [Abstract]  
Schedule of components of operating lease costs Components of operating lease costs are as follows for the fiscal quarters ended June 25, 2024 and June 27, 2023:
Lease cost  Classification  June 25, 2024   June 27, 2023 
Operating lease cost  Occupancy, Other restaurant operating costs and General and administrative expenses, net  $1,876   $1,824 
Variable lease cost  Occupancy   19    60 
Sublease income  Occupancy   (132)   (137)
      $1,763   $1,747 
Schedule of weighted average lease term and discount rate Weighted average lease term and discount rate are as follows:
   June 25, 2024   June 27, 2023 
Weighted average remaining lease term (in years)   7.52    8.16 
           
Weighted average discount rate   5.2%   5.0%
Schedule of supplemental cash flow disclosures Supplemental cash flow disclosures:
   June 25, 2024   June 27, 2023 
Cash paid for operating lease liabilities  $5,817   $5,771 
           
Non-cash operating lease assets obtained in exchange for
operating lease liabilities
  $933   $1,201 
Schedule of future minimum rent payments for our operating leases Future minimum rent payments for our operating leases as of June 25, 2024 are as follows:
   Total 
One Year  $8,402 
Two Years   8,066 
Three Years   7,754 
Four Years   7,202 
Five Years   5,867 
Thereafter   17,952 
Total minimum lease payments   55,243 
Less: imputed interest   (9,760)
Present value of lease liabilities  $45,483 
v3.24.2.u1
Non-controlling Interests (Tables)
9 Months Ended
Jun. 25, 2024
Non-controlling Interests [Abstract]  
Schedule of Activity in Non-Controlling Interests The following table summarizes the activity in non-controlling interests during the three quarters ended June 25, 2024 (in thousands):
   Total 
Balance at September 26, 2023  $423 
Income   212 
Contributions   200 
Distributions   (88)
Balance at June 25, 2024  $747 
v3.24.2.u1
Segment Reporting (Tables)
9 Months Ended
Jun. 25, 2024
Segment Reporting [Abstract]  
Schedule of Reportable Segments The following tables present information about our reportable segments for the respective periods (in thousands):
   Quarter Ended (13 Weeks)   Year-to-Date (39 Weeks) 
   June 25, 2024   June 27, 2023   June 25, 2024   June 27, 2023 
Revenues:                
Bad Daddy’s  $27,410   $26,161   $78,107   $77,795 
Good Times   10,532    9,471    28,414    26,034 
   $37,942   $35,632   $106,521   $103,829 
Income (loss) from operations:                    
Bad Daddy’s  $388   $(946)  $7   $(277)
Good Times   840   $1,390    1,491   $1,645 
   $1,228   $444   $1,498   $1,368 
Capital expenditures:                    
Bad Daddy’s  $481   $1,295   $968   $1,901 
Good Times   1,264    302    1,871    1,277 
   $1,745   $1,597   $2,839   $3,178 
   June 25, 2024   September 26, 2023 
Property and equipment, net:          
Bad Daddy’s  $17,747   $18,053 
Good Times   5,204    4,983 
   $22,951   $23,036 
Total assets:          
Bad Daddy’s  $65,319   $67,720 
Good Times   24,758    23,368 
   $90,077   $91,088 
v3.24.2.u1
Basis of Presentation (Details) - USD ($)
9 Months Ended
Jun. 25, 2024
Jun. 27, 2023
Basis of Presentation (Details) [Line Items]    
Advertising funds from franchisees $ 144,000 $ 212,000
Good Times Restaurants [Member]    
Basis of Presentation (Details) [Line Items]    
Percentage of interest 50.00%  
Management Control [Member]    
Basis of Presentation (Details) [Line Items]    
Percentage of interest 50.00%  
v3.24.2.u1
Basis of Presentation (Details) - Schedule of Receivables - USD ($)
$ in Thousands
Jun. 25, 2024
Sep. 26, 2023
Basis of Presentation (Details) - Schedule of Receivables [Line Items]    
Receivable net current $ 782 $ 769
Third party delivery partners [Member]    
Basis of Presentation (Details) - Schedule of Receivables [Line Items]    
Receivable net current 304 269
Vendor rebates and incentives [Member]    
Basis of Presentation (Details) - Schedule of Receivables [Line Items]    
Receivable net current 298 185
Third party retailers [Member]    
Basis of Presentation (Details) - Schedule of Receivables [Line Items]    
Receivable net current 141 291
Franchise and other [Member]    
Basis of Presentation (Details) - Schedule of Receivables [Line Items]    
Receivable net current $ 39 $ 24
v3.24.2.u1
Goodwill and Intangible Assets (Details) - USD ($)
9 Months Ended
Jun. 25, 2024
Jun. 27, 2023
Sep. 26, 2023
Goodwill and Intangible Assets [Line Items]      
Amortization expense $ 15,000 $ 6,000  
Goodwill 5,713,000   $ 5,713,000
Good Times Reporting Unit [Member]      
Goodwill and Intangible Assets [Line Items]      
Goodwill $ 96,000 $ 5,617,000  
v3.24.2.u1
Goodwill and Intangible Assets (Details) - Schedule of Goodwill and Intangible Assets - USD ($)
$ in Thousands
Jun. 25, 2024
Sep. 26, 2023
Intangible assets subject to amortization:    
Goodwill, Gross Carrying Amount $ 5,713 $ 5,713
Goodwill, Accumulated Amortization
Goodwill, Net Carrying Amount 5,713 5,713
Non-compete agreements [Member]    
Intangible assets subject to amortization:    
Goodwill, Gross Carrying Amount 50 50
Goodwill, Accumulated Amortization (26) (14)
Goodwill, Net Carrying Amount 24 36
Reacquired franchise rights [Member]    
Intangible assets subject to amortization:    
Goodwill, Gross Carrying Amount 15 15
Goodwill, Accumulated Amortization (3)
Goodwill, Net Carrying Amount 12 15
Intangible assets subject to amortization [Member]    
Intangible assets subject to amortization:    
Goodwill, Gross Carrying Amount 65 65
Goodwill, Accumulated Amortization (29) (14)
Goodwill, Net Carrying Amount 36 51
Trademarks [Member]    
Intangible assets subject to amortization:    
Goodwill, Gross Carrying Amount 3,900 3,900
Goodwill, Accumulated Amortization
Goodwill, Net Carrying Amount 3,900 3,900
Intangible assets, net [Member]    
Intangible assets subject to amortization:    
Goodwill, Gross Carrying Amount 3,965 3,965
Goodwill, Accumulated Amortization (29) (14)
Goodwill, Net Carrying Amount $ 3,936 $ 3,951
v3.24.2.u1
Stock-Based Compensation (Details) - USD ($)
3 Months Ended 9 Months Ended
Jun. 25, 2024
Jun. 27, 2023
Jun. 25, 2024
Jun. 27, 2023
Feb. 08, 2022
Stock-Based Compensation [Line Items]          
Stock-based compensation expense $ 28,000 $ 14,000 $ 106,000 $ 104,000  
Minimum [Member]          
Stock-Based Compensation [Line Items]          
Shares available for issuance (in Shares)         900,000
Maximum [Member]          
Stock-Based Compensation [Line Items]          
Shares available for issuance (in Shares)         1,050,000
v3.24.2.u1
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid Expenses and Other Current Assets - USD ($)
$ in Thousands
Jun. 25, 2024
Sep. 26, 2023
Schedule of Prepaid Expenses and Other Current Assets [Abstract]    
Prepaid insurance $ 290
Prepaid software licenses and maintenance contracts 180 88
Prepaid licenses and permits 82 42
Other 110 33
Total $ 662 $ 163
v3.24.2.u1
Other Accrued Liabilities (Details) - Schedule of Other Accrued Liabilities - USD ($)
$ in Thousands
Jun. 25, 2024
Sep. 26, 2023
Schedule of Other Accrued Liabilities [Abstract]    
Wages and other employee benefits $ 3,207 $ 2,893
Gift card liability, net of breakage 1,511 1,108
Taxes, other than income taxes 1,388 1,275
General expense accrual and other 1,160 1,175
Total $ 7,266 $ 6,451
v3.24.2.u1
Notes Payable and Long-Term Debt (Details) - USD ($)
9 Months Ended
Jun. 25, 2024
Jun. 27, 2023
Jun. 25, 2024
Apr. 20, 2028
Notes Payable and Long-Term Debt [Line Items]        
Committed funds $ 7,240,000      
Total interest expense on notes payable 24,000 $ 0    
Parker Promissory Note [Member]        
Notes Payable and Long-Term Debt [Line Items]        
Borrowings credit facility     5.00%  
Outstanding principal balance 380,000      
Cadence Credit Facility [Member]        
Notes Payable and Long-Term Debt [Line Items]        
Interest rate     0.25%  
Aggregate outstanding balance     $ 4,000,000  
Borrowings credit facility     8.42%  
Professional fees     $ 299,000  
Unamortized balance 102,000   102,000  
Borrowings facility 750,000   750,000  
Outstanding letters of credit issued $ 10,000   $ 10,000  
Cadence Bank [Member]        
Notes Payable and Long-Term Debt [Line Items]        
Maturity date     Apr. 20, 2028  
Forecast [Member] | Cadence Bank [Member]        
Notes Payable and Long-Term Debt [Line Items]        
Cadence agreed loan       $ 8,000,000
v3.24.2.u1
Earnings per Common Share (Details) - Schedule of Reconciles Basic Weighted-Average Shares Outstanding to Diluted Weighted-Average Shares Outstanding - shares
3 Months Ended 9 Months Ended
Jun. 25, 2024
Jun. 27, 2023
Jun. 25, 2024
Jun. 27, 2023
Earnings per Common Share (Details) - Schedule of Reconciles Basic Weighted-Average Shares Outstanding to Diluted Weighted-Average Shares Outstanding [Line Items]        
Weighted-average shares outstanding basic 10,933,758 11,700,044 11,149,181 11,853,441
Effect of potentially dilutive securities:        
Stock options 11,479 19,242 7,922 7,050
Restricted stock units 89,250 50,000 89,250 50,000
Weighted-average shares outstanding diluted 11,034,487 11,769,286 11,246,353 11,910,491
Excluded from diluted weighted average shares outstanding:        
Antidilutive 345,623 345,691 345,623 354,024
v3.24.2.u1
Leases (Details)
Jun. 25, 2024
Minimum [Member]  
Leases [Line Items]  
Lease renewal term 10 years
Initial lease term 10 years
Maximum [Member]  
Leases [Line Items]  
Lease renewal term 15 years
Initial lease term 20 years
v3.24.2.u1
Leases (Details) - Schedule of components of operating lease costs - USD ($)
$ in Thousands
Jun. 25, 2024
Jun. 27, 2023
Schedule of Components of Operating Lease Costs [Abstract]    
Operating lease cost $ 1,876 $ 1,824
Variable lease cost 19 60
Sublease income (132) (137)
Total $ 1,763 $ 1,747
v3.24.2.u1
Leases (Details) - Schedule of weighted average lease term and discount rate
Mar. 28, 2023
Mar. 29, 2022
Schedule of Weighted Average Lease Term and Discount Rate [Abstract]    
Weighted average remaining lease term (in years) 7 years 6 months 7 days 8 years 1 month 28 days
Weighted average discount rate 5.20% 5.00%
v3.24.2.u1
Leases (Details) - Schedule of supplemental cash flow disclosures - USD ($)
$ in Thousands
Jun. 25, 2024
Jun. 27, 2023
Schedule of Supplemental Cash Flow Disclosures [Abstract]    
Cash paid for operating lease liabilities $ 5,817 $ 5,771
Non-cash operating lease assets obtained in exchange for operating lease liabilities $ 933 $ 1,201
v3.24.2.u1
Leases (Details) - Schedule of future minimum rent payments for our operating leases
$ in Thousands
Jun. 25, 2024
USD ($)
Schedule of Future Minimum Rent Payments For Our Operating Leases [Abstract]  
One Year $ 8,402
Two Years 8,066
Three Years 7,754
Four Years 7,202
Five Years 5,867
Thereafter 17,952
Total minimum lease payments 55,243
Less: imputed interest (9,760)
Present value of lease liabilities $ 45,483
v3.24.2.u1
Impairment of Long-Lived Assets and Trademarks (Details) - USD ($)
9 Months Ended
Jun. 25, 2024
Jun. 27, 2023
Impairment of Long-Lived Assets and Trademarks [Line Items]    
Asset impairments $ 199,000 $ 1,041,000
v3.24.2.u1
Income Taxes (Details)
1 Months Ended 9 Months Ended
Jun. 25, 2024
Jun. 27, 2023
Jun. 25, 2024
Jun. 27, 2023
Income Tax [Abstract]        
Effective income tax rate 15.21% 189.98% 15.09% 1261.02%
v3.24.2.u1
Non-controlling Interests (Details)
Jun. 25, 2024
Good Times Restaurants [Member]  
Noncontrolling Interest [Line Items]  
Percentage of non-controlling interests 50.00%
v3.24.2.u1
Non-controlling Interests (Details) - Schedule of Activity in Non-Controlling Interests - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 25, 2024
Dec. 27, 2022
Jun. 25, 2024
Jun. 27, 2023
Schedule of Summarizes the Activity in Non-Controlling Interests [Abstract]        
Balance at September 26, 2023     $ 423  
Income     212  
Contributions $ 200 $ 13 200  
Distributions     (88) $ (563)
Balance at June 25, 2024 $ 747   $ 747  
v3.24.2.u1
Segment Reporting (Details) - Schedule of Reportable Segments - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Jun. 25, 2024
Jun. 27, 2023
Jun. 25, 2024
Jun. 27, 2023
Sep. 26, 2023
Revenues:          
Total Revenues $ 37,942 $ 35,632 $ 106,521 $ 103,829  
Income (loss) from operations:          
Total Income (Loss) from operations 1,228 444 1,498 1,368  
Capital expenditures:          
Total Capital expenditures 1,745 1,597 2,839 3,178  
Property and equipment, net:          
Total Property and equipment, net 22,951   22,951   $ 23,036
Total assets:          
Total assets 90,077   90,077   91,088
Bad Daddy’s [Member]          
Revenues:          
Revenues 27,410 26,161 78,107 77,795  
Income (loss) from operations:          
Total Income (Loss) from operations 388 (946) 7 (277)  
Capital expenditures:          
Total Capital expenditures 481 1,295 968 1,901  
Property and equipment, net:          
Total Property and equipment, net 17,747   17,747   18,053
Total assets:          
Total assets 65,319   65,319   67,720
Good Times [Member]          
Revenues:          
Revenues 10,532 9,471 28,414 26,034  
Income (loss) from operations:          
Total Income (Loss) from operations 840 1,390 1,491 1,645  
Capital expenditures:          
Total Capital expenditures 1,264 $ 302 1,871 $ 1,277  
Property and equipment, net:          
Total Property and equipment, net 5,204   5,204   4,983
Total assets:          
Total assets $ 24,758   $ 24,758   $ 23,368

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