Good Times Restaurants Inc. Q1 FY2025 earnings call

• Bad Daddy's had 1.5% same-store sales increase and better restaurant-level margins, with smash patty burgers contributing to beverage cost improvements. Winter and spring seasonal specials were featured. Standards reviews were incorporated into restaurant management compensation.
• Good Times faced challenges with higher costs and competition, same-store sales flat. New products and remodels were discussed. Audio and YouTube advertising experiments were ongoing. Weather impacted sales in January.

Bad Daddy's

• Total restaurant sales increased to $26.1 million, a $2 million increase from the prior year quarter. Same-store sales rose 1.5% with 38 units in the comp base. Food and beverage costs were 31.5% of sales, unchanged from the prior year. Labor costs decreased by 70 basis points to 35.1% of sales. Restaurant-level operating profit was approximately $3.3 million, or 12.6% of sales.

Good Times

• Total company-owned restaurant sales increased to $9.9 million. Same-store sales were flat. Average menu price increased ~3.9%. Food and packaging costs were 31.8% of sales, a 100 basis point increase. Labor costs rose to 36.7%, a 290 basis point increase. Occupancy costs were 9.6%, a 70 basis point increase. Other operating costs were 13.2%, a 20 basis point increase. Restaurant-level operating profit decreased to $0.9 million, or 8.6% of sales.

• Anticipates ground beef costs to continue increasing in fiscal 2025. Second-quarter labor costs not expected to improve as much as Q1. Continues to have appetite for share repurchases and capital allocation for remodels and brand improvements.

• Weather unpredictability impacting sales. Supply chain constraints and inflation affecting costs. Intense competition. Labor cost pressures. Regulatory changes affecting operations.

Q: Can you talk a little bit about Bad Daddy's plans for new locations?

A: Continue to look for locations, particular on two-tenant buildings like Madison, Alabama. Picky about locations that fit economic model.

Q: What's the capital allocation plan moving forward?

A: Continue to repurchase shares, focus on renovating Good Times brand, and look opportunistically at both brands.

Q: Any update on legal case?

A: Appeals court remanded to district court, briefing closed, now in court's hands.

Q: Thoughts on seasonality and Bad Daddy's?

A: November, January are slow, March-June peak. Weather patterns unpredictable.

Q: Anecdotal feel for customer age groups of both brands?

A: Good Times: slightly male, 30-40 age group. Bad Daddy's: 25-45, evenly split male/female.

Q: Plans to offset costs at Good Times?

A: Focus on product quality, menu rationalization, and media experiments.

Q: Why not pre-announce comp sales?

A: Observed most companies stopped pre-releasing, will evaluate going forward.