Good Times Restaurants Reports Results for the Third Quarter Ended June 29, 2021

Good Times Restaurants Inc. (Nasdaq: GTIM), operator of Bad Daddy’s Burger Bar and Good Times Burgers & Frozen Custard, reported financial results for the fiscal third quarter ended June 29, 2021.

Key highlights of the Company’s financial results include:

  • Total Revenues increased 39.4% to $33.9 million for the quarter compared to the same prior-year quarter
  • Total Restaurant Sales for Bad Daddy’s restaurants increased $9.5 million to $24.4 million for the quarter
  • Compared to the third quarter of 2019, sales during the quarter increased by 14.3% at Good times and by 0.7% at Bad Daddy’s among restaurants that were open for the full quarter in both years
  • Same Store Sales1 for company-owned Bad Daddy’s restaurants increased 61.4% for the quarter
  • Total Restaurant Sales for Good Times restaurants were $9.3 million for the quarter
  • Same Store Sales for company-owned Good Times restaurants increased 2.9% for the quarter
  • Net Income Attributable to Common Shareholders was $13.6 million for the quarter including approximately $11.8 million in forgiveness of principal and interest amounts on Paycheck Protection Program (“PPP”) loans
  • Adjusted EBITDA2 (a non-GAAP measure) for the quarter was $3.1 million
  • The Company ended the quarter with $10.3 million in cash and no borrowings outstanding under its senior credit facility

Ryan M. Zink, the Company’s President and Chief Executive Officer, said, “Our strong same store sales at both brands, as well as attaining 2019 sales levels beginning in July at Bad Daddy’s, are the results of the commitment and dedication of our restaurant leaders and team members who embrace our mission to serve our guests and operate great restaurants despite the pressures and challenges arising from a difficult hiring environment.”

Mr. Zink continued, “As many other restaurant companies have expressed, we have seen cost pressures, both in commodities and in the labor market. We expect those pressures to continue through the balance of this fiscal year and likely at least through the end of the calendar year. We expect to be able to manage commodity cost increases through targeted menu price adjustments, however, we believe that overall labor costs will be pressured until there is greater slack in the labor market.”

Fiscal 2021 and Fiscal 2022 Outlook:

As previously announced, due to continuing unprecedented economic conditions associated with the ongoing COVID-19 pandemic and unpredictable nature of COVID-19 and government responses to the evolving situation, the Company had not previously provided a complete financial outlook for the remainder of the 2021 fiscal year. However, based on improved cash flow and stabilizing operations, the Company is providing the following expectations for fiscal 2021:

  • One additional new Bad Daddy’s restaurant opening during the fourth quarter
  • Total net income attributable to common shareholders of between $16.5 million and $17.0 million
  • Total capital expenditures of approximately $3.3 million to $3.5 million, including both capitalized maintenance and new store expenditures

Total Adjusted EBITDA2 of between $9.5 and $10.0 million. In light of the ongoing uncertainty surrounding COVID-19, the Company is not at this point providing a complete financial forecast for fiscal 2022, however the company expects to open up to two Bad Daddy’s restaurants, likely in the late second half of the year and believes that its present annualized run-rate net income attributable to common shareholders is between $4.0 million and $4.5 million, including recent accretion in food and labor costs.

Although all Bad Daddy’s dining rooms are currently open and capacity restrictions have been lifted in certain locations, the possibility remains that temporary closures and/or capacity restrictions might be put in place with limited notice. Should such restrictions be enforced, or should customer behaviors be altered by changing public health guidance or perceptions related to COVID-19, the company could reduce development or financial performance expectations.

About Good Times Restaurants Inc.: Good Times Restaurants Inc. (GTIM) owns, operates, franchises and licenses 40 Bad Daddy’s Burger Bar restaurants through its wholly owned subsidiaries. Bad Daddy’s Burger Bar is a full-service “small box” restaurant concept featuring a chef-driven menu of gourmet signature burgers, chopped salads, appetizers and sandwiches with a full bar and a focus on a selection of craft beers in a high-energy atmosphere that appeals to a broad consumer base. Additionally, through its wholly-owned subsidiaries, Good Times Restaurants Inc. owns, operates and franchises a regional quick-service restaurant chain consisting of 32 Good Times Burgers & Frozen Custard restaurants located primarily in Colorado.

Good Times Restaurants Inc.

Unaudited Supplemental Information

(In thousands, except per share amounts

       

Quarter Ended

Year-to-Date

June 29, 2021
(13 Weeks)

June 30, 2020
(13 Weeks)

June 29, 2021
(39 Weeks)

June 30, 2020
(40 Weeks)

Statement of Operations

Net revenues:

Restaurant sales

$

33,701

$

24,190

$

89,777

$

80,781

Franchise revenues

245

167

657

572

Total net revenues

33,946

24,357

90,434

81,353

Restaurant Operating Costs:

Food and packaging costs

9,989

7,046

26,037

24,249

Payroll and other employee benefit costs

11,261

7,397

29,787

29,297

Restaurant occupancy costs

2,183

2,089

6,533

6,739

Other restaurant operating costs

3,730

2,840

10,841

8,799

Pre-opening costs

301

31

420

992

Depreciation and amortization

938

983

2,797

3,175

Total restaurant operating costs

28,402

20,386

76,415

73,251

General and administrative costs

2,505

1,683

7,097

5,324

Advertising costs

597

515

1,616

1,571

Franchise costs

5

6

22

14

Impairment of goodwill

10,000

Impairment of long-lived assets

932

5,291

Gain on restaurant asset sale

(9

)

(8

)

(28

)

(36

)

Income (Loss) from operations

2,446

843

5,312

(14,062

)

Other income (expense):

Interest income (expense), net

(66

)

(202

)

(244

)

(638

)

Gain on debt extinguishment

11,778

11,778

Total other income (expense), net

11,712

(202

)

11,534

(638

)

Net income (loss)

$

14,158

$

641

$

16,846

$

(14,700

)

Income attributable to non-controlling interests

(524

)

(352

)

(1,313

)

(738

)

Net income (loss) attributable to common shareholders

$

13,634

$

289

$

15,533

$

(15,438

)

Basic income (loss) per share

$

1.07

$

0.02

$

1.22

$

(1.23

)

Diluted income per share

$

1.04

$

0.02

$

1.21

N/A

Basic weighted average common shares outstanding

12,787,390

12,591,079

12,689,587

12,593,137

Diluted weighted average common shares outstanding

13,076,635

12,696,028

12,793,915

12,593,137

Good Times Restaurants Inc.

Unaudited Supplemental Information

(In thousands)

       
 

June 29, 2021

September 29, 2020

Balance Sheet Data

Cash and cash equivalents

$

10,301

$

11,454

Total assets

$

95,613

$

99,693

Current maturities of long-term debt

$

$

6,242

Long-term debt due after one year

$

$

10,903

Stockholders’ equity

$

31,105

$

14,983

Supplemental Information for Company-Owned Restaurants (dollars in thousands):

               

Bad Daddy’s Burger Bar

Good Times Burgers & Frozen Custard

Third Fiscal Quarter

Year-to-Date

Third Fiscal Quarter

Year-to-Date

2021
(13 weeks)

2020
(13 weeks)

2021
(26 weeks)

2020
(40 weeks)

2021
(13 weeks)

2020
(13 weeks)

2021
(39 weeks)

2020
(40 weeks)

 

Restaurant sales

$

24,408

$

14,916

$

64,082

$

57,028

$

9,293

$

9,275

$

25,695

$

23,753

Restaurants opened during
period

1

1

2

Restaurants closed during period

1

Restaurants open at period end

38

37

38

37

24

25

24

25

Restaurant operating weeks

484.3

481.0

1,446.3

1470.6

312.0

325.0

942.0

1,004.0

Average weekly sales per
restaurant

$

50.4

$

31.1

$

44.3

$

38.8

$

29.8

$

28.5

$

27.3

$

21.5

Reconciliation of Non-GAAP Measurements to U.S. GAAP Results

 

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income from Operations

(In thousands, except percentage data)

           

Bad Daddy’s Burger Bar

Good Times Burgers & Frozen Custard

Good Times
Restaurants Inc.

————————————————————- Fiscal Quarter Ended (13 Weeks)———————————————————————

June 29, 2021

June 30, 2020

June 29, 2021

June 30, 2020

June 29,
2021

June 30,
2020

       

Restaurant sales

$

24,408

 

100.0

%

$

14,915

 

100.0

%

$

9,293

 

100.0

%

$

9,275

 

100.0

%

$

33,701

$

24,190

Restaurant operating costs
(exclusive of depreciation and
amortization shown separately
below):

       

Food and packaging costs

7,257

 

29.7

%

4,254

 

28.5

%

2,732

 

29.4

%

2,792

 

30.1

%

9,989

7,046

Payroll and benefits costs

8,381

 

34.3

%

4,788

 

32.1

%

2,880

 

31.0

%

2,609

 

28.1

%

11,261

7,397

Restaurant occupancy costs

1,485

 

6.1

%

1,486

 

10.0

%

698

 

7.5

%

603

 

6.5

%

2,183

2,089

Other restaurant operating costs

2,939

 

12.0

%

2,095

 

14.1

%

791

 

8.5

%

745

 

8.0

%

3,730

2,840

Restaurant-level operating profit

$

4,346

 

17.8

%

$

2,292

 

15.4

%

$

2,192

 

23.6

%

$

2,526

 

27.2

%

$

6,538

$

4,818

       

Franchise revenues

       

245

167

Deduct – Other operating:

       

Depreciation and amortization

       

938

983

General and administrative

       

2,505

1,683

Advertising costs

       

597

515

Franchise costs

       

5

6

Impairment of goodwill

       

Impairment of long-lived assets

       

932

Gain on restaurant asset sale

       

(9

)

(8

)

Pre-opening costs

       

301

31

Total other operating

       

4,337

4,142

       

Income from operations

       

$

2,446

$

843

Certain percentage amounts in the table above do not total due to rounding as well as the fact that restaurant operating costs are expressed as a percentage of restaurant revenues (as opposed to total revenues).

Reconciliation of Non-GAAP Measurements to U.S. GAAP Results

 

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income from Operations

(In thousands, except percentage data)

 

Bad Daddy’s Burger Bar

Good Times Burgers & Frozen Custard

Good Times
Restaurants Inc.

———————————————————————— Year-to-Date Period Ended———————————————————————–

June 29, 2021
(39 Weeks)

June 30, 2020
(40 Weeks)

June 29, 2021
(39 Weeks)

June 30, 2020

(40 Weeks)

June 29, 2021
(39 Wks)

June 30, 2020
(40 Wks)

       

Restaurant sales

$

64,082

 

100.0

%

$

57,028

 

100.0

%

$

25,695

 

100.0

%

$

23,753

 

100.0

%

$

89,777

$

80,781

Restaurant operating costs
(exclusive of depreciation and
amortization shown separately
below):

       

Food and packaging costs

18,494

 

28.9

%

16,981

 

29.8

%

7,543

 

29.4

%

7,268

 

30.6

%

26,037

24,249

Payroll and benefits costs

21,644

 

33.8

%

21,188

 

37.2

%

8,143

 

31.7

%

8,109

 

34.1

%

29,787

29,297

Restaurant occupancy costs

4,352

 

6.8

%

4,600

 

8.1

%

2,181

 

8.5

%

2,139

 

9.0

%

6,533

6,739

Other restaurant operating costs

8,448

 

13.2

%

6,675

 

11.7

%

2,393

 

9.3

%

2,124

 

8.9

%

10,841

8,799

Restaurant-level operating profit

$

11,144

 

17.1

%

7,584

 

13.2

%

$

5,435

 

19.8

%

$

4,113

 

8.9

%

$

16,579

$

11,697

       

Franchise revenues

       

657

572

Deduct – Other operating:

       

Depreciation and amortization

       

2,797

3,175

General and administrative

       

7,097

5,324

Advertising costs

       

1,616

1,571

Franchise costs

       

22

14

Impairment of goodwill

       

10,000

Impairment of long-lived assets

       

5,291

Gain on restaurant asset sale

       

(28

)

(36

)

Pre-opening costs

       

420

992

Total other operating

       

7,587

26,331

       

Income (loss) from operations

       

$

2,866

$

(14,062

)

Certain percentage amounts in the table above do not total due to rounding as well as the fact that restaurant operating costs are expressed as a percentage of restaurant revenues (as opposed to total revenues).

The Company believes that restaurant-level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. The Company defines restaurant-level operating profit to be restaurant revenues minus restaurant-level operating costs, excluding restaurant closures and impairment costs. The measure includes restaurant-level occupancy costs, which include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance and other property costs, but excludes depreciation. The measure excludes depreciation and amortization expense, substantially all of which is related to restaurant level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. The measure also excludes selling, general and administrative costs, and therefore excludes occupancy costs associated with selling, general and administrative functions, and pre-opening costs. The Company excludes restaurant closure costs as they do not represent a component of the efficiency of continuing operations. Restaurant impairment costs are excluded, because like depreciation and amortization, they represent a non-cash charge for the Company’s investment in its restaurants and not a component of the efficiency of restaurant operations. Restaurant-level operating profit is not a measurement determined in accordance with generally accepted accounting principles (“GAAP”) and should not be considered in isolation, or as an alternative, to income from operations or net income as indicators of financial performance. Restaurant-level operating profit as presented may not be comparable to other similarly titled measures of other companies. The tables above set forth certain unaudited information for the current and prior year fiscal quarters and year-to-date periods for fiscal 2021 and fiscal 2020, expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenues.

Reconciliation of Net Income (Loss) to Non-GAAP Adjusted EBITDA (Thousands of US Dollars)

       

Fiscal Quarter Ended

Year-to-Date

June 29, 2021
(13 Weeks)

June 30, 2020
(13 Weeks)

June 29, 2021
(39 Weeks)

June 30, 2020

(40 Weeks)

Adjusted EBITDA:

Net income (loss), as reported

$

13,634

$

289

$

15,533

$

(15,438

)

Depreciation and amortization1

925

968

2,745

3,140

Interest expense, net

67

202

245

638

EBITDA

14,626

1,459

18,523

(11,660

)

Pre-opening expense

301

31

420

992

Non-recurring severance costs

74

223

Non-cash stock-based compensation

50

326

41

GAAP rent-cash rent difference

(108

)

(95

)

(280

)

(118

)

Gain on disposal of assets

(9

)

(8

)

(28

)

(36

)

Gain on debt extinguishment

(11,778

)

(11,778

)

Impairment of goodwill

10,000

Impairment of long-lived assets

932

5,291

Adjusted EBITDA

$

3,082

$

2,393

$

7,183

$

4,733

2021 Full-Year Outlook

(millions of US Dollars)

Adjusted EBITDA:

Net income, as reported

$

16.5

$

17.0

Depreciation and amortization1

3.8

Interest expense, net

0.2

EBITDA

20.5

21.0

Pre-opening expense

0.7

Non-cash stock-based compensation

0.4

GAAP rent-cash rent difference

(0.3)

Gain on debt extinguishment

(11.8)

Adjusted EBITDA

$

9.5

$

10.0

_____________________

1 Depreciation and amortization, and preopening expense have been reduced by any amounts attributable to non-controlling interests.