Good Times Restaurants (GTIM) 3 Aug 232023 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen. Welcome to the Good Times Restaurants Inc. Fiscal 2023 Third Quarter Earnings Call. By now, everyone should have access to the company's earnings release, which is available in the Investors section of the company's website.

As a reminder, a part of today's discussion will include forward-looking statements within the meaning of Federal Securities Laws. not put future undue are you and statements not should reliance forward-looking guarantees performance, of therefore, These on them.

flows known results company's from other things, involve the stock Such risks by statements and market include which time, to statements. risks These performance among results uncertainties may the time flows. company's forward-looking actual to expressed affect the price operations cash the to and the results from investment adversely materially the presented and differ or nature implied economic unknown prevailing opportunities cause of general of the financial company, company's its could cash conditions, from and of operations which and company's the

business pandemic extent COVID-XX pandemic. customer of pandemic may from the response impact impact could prospects, our condition the on and and duration the and in of local governmental as risks These include our such pandemic the the also of depending to actions on behavior which factors of and and the operations, results vary Federal, financial state the to a and disruption

the increases other September the competition, report with matters and the of impact annual section chain and and shortages to of filings weather, of new The XX-K and nature Good discussed in increases developing opening and development the Factors those and local current ended implement Risk constraints XX, the and restaurants cost raw environment, SEC. current Form uncertain or impact the the of food on inflationary year filed supply permitting restaurants. plans in our Delays increased reasons, at with restaurant and staffing SEC for under for employees ability because new other in XXXX, wage products, plans duration restaurants, constraints the other or fiscal Times integrate

considered in can prepared go this release. the they in reconciliation in During information should now discuss for performance. would with measures, be available be of I presentation ahead, the our earnings not GAAP additional Please GAAP measures to as turn a believe sir. results today's and company And Ryan. to accordance substitute will in The which call over non-GAAP our to comparable isolation like or useful call, evaluating

Abby, you. and you, Thank thank

seasonably to everyone in should early XX-Q earnings quarter concept, third now summer. quarter another mentioned, month As quarter mixed and positive have with filing. wet Times access very exciting our and at results our had spring spite our performance release where same-store this cool of of a Good sales turned we of out We a

able input the addition positive margin and we the and In leveraging benefit with to sales, prior costs of were to compared increases. through controls lower improved productivity labor to the the sales strong significantly improve year

GT if later drive-through a that not can they this payments addition are app-based the loyalty have ordered make technology driving and program with in use the of mobile month, customers We continue believe top we've We're that and launch performance app made that to in of investments the next brand. lane, iteration our to points-based of our ahead. line excited even the Rewards, the

that order an be order and and loyalty through data and of customers are rewards to through additional app customer incentive app, provides The our capability. behavior use and the of app. captured ahead, upon download transparent of convenience time surprise the believe earned customer we of combination card the rich stored addition a over of based rewards delight direct The gift virtual will and already for value delivery use

the revenues, Times brings real sales some will though franchise back incremental company-owned we Last of including our week, We and profit. and Good -- lose operating Times Good will restaurant franchisee, we of one underlying estate. up pick a Good associated purchased one Times from to former purchased our restaurant count restaurant restaurant-level This XX the we

than costs added to have At cost were had for. Despite Bad to grow Southeast, the sales, of and front-of-house hoped continued labor favorable we less increase, have purposely we particularly sales. operating Daddy's, labor results in the

remodel purchased from we Greenville, We the former South Carolina of restaurant the completed that franchisee. our

call, this Huntsville. month. in of began open back of we've completed construction and As mid-month newest training substantially western a our in suburb the of half Alabama, Madison, to of restaurant We the expect

considerably construction our addition to the hundred is Atlanta declines in that several has Sales and quarter. fiscal have that from in restaurant attributable to of market Raleigh, high-volume area immediate and unit which in the being condominium had apartment units in the support built. road and is Seaboard Much of infrastructure our softened Station second a also substantial new

in the The agency, MGH to be conduct us that creating with near years Bad but very released the of new by very location, to our limiting tweaks format year, should the menu and I've long-term a design this Daddy's engaged being X that new parking. and overhaul significant is with construction impact year, of brand Earlier marketing short-term for been the the for fiscal access the company. pain we favorable implementing audit some in first architecture of that are the the beginning brand of some menu a

and mostly with partner partnered campaign ours To pay who will past the future. ads, We've customer social marketing in dividends Delivers with various drive firms, also Marketing in display we we've elevate to previously over location-based two new data in-house and using believe a Liberty Interactive digital partnered we've in ways the years. of X our relatively that which something our handled Data

XXXX The first CFO of that the of for going Matthew company finance just X SVP challenge back former even years. tenure company just hired my its tenure months, being the Karnes, leader when role over with the has XX our role near end the to of average quarter. left in position of including Finance, the a been the

level of and that projects reports lead been meantime, Matthew leadership a of our provide to of we've or over assessment direct was prior in attack to evaluating some working engaged In to his Matthew's resource are alternatives had consulting prior We high-level the being to on candidates. departure. scheduled a methodical and the

for decreased for sales decreased for Total with the Bad for closure to $X.X reduced year, sales revenues XX the to an decline now sales $XX.X million of restaurants restaurant formerly million this quarter's the and closure restaurant in base Creek the comp a $XX.X for quarter. Carolina of earlier million weeks the Bad X.X% approximate sales $XX.X to approximately restaurant in quarter. price of The the Total results. of in the million Daddy's temporary Cherry I'll quarter the of Total franchised combination $X.X end million remodel decline decreased quarter. increase of the quarter. the the review with associated sales Greenville, the location, Daddy's same-store during South menu X the X.X% at quarter, X.X% the during was the

single-digit the expect decrease XX.X% We Daddy's fourth versus sales of across quarter. range basis benefits from the low XXXX from quarter continue goods. for were for with of last our same-store to Cost at quarter, sales flat negative in point year's costs the to Bad XXX a basket

otherwise similar level, likely long-term XX in basket to indices prices XX general on that Though is Commodity historical perspective. stability current in rise their beef, there's expect will results some from upward we believe beef a indicate some QX. months from and our the commodity which there over already pressure next is elevated

points quarter. quarter XX.X% increased to Bad compared sales higher the prior the of for costs levels increase percentage wage as by basis year to reflects to Daddy's rates XX of staffing This higher compared and labor a XXXX.

XX property increase of quarter taxes higher points the basis the basis Bad mix. increased points the Occupancy to and operating year XX costs leverage. continued sales XX.X% result X.X%, Daddy's off-premises other increased of at to by Bad in a quarter of for prior the compared Daddy's result costs lower

sales Good profit, at increase for million, for non-GAAP during of increased quarter. last compared sales or million quarter. approximately $X.X $X.X same The or Bad $X.X an prior Overall, XX.X% a million. X.X% price average for the year XX.X% approximately over of Same-store menu increase operating measure, Times was $X.X the the year. Restaurant sales XX.X% quarter were restaurant-level was to the quarter sales Daddy's million of

As June date an on record record plus earlier, on in Denver. latest was XX-degree year to during more snow in late prior unfavorable season the I rain post weather significantly temperature than the and Denver most with the to mentioned quarter the XXXX,

We're current at the similarly day as fourth results some we escape trended sales hours, Sales with at flat approach sales we to rain peak the been past which of same-store weather upside unfavorable nearly very Good midpoint our every have quarter. we've weather pleased can during the comparables. weeks. X for Times, pattern fourth potential single-digit positive modest of given we the the the expect seeing as With low and quarter, dinner

decrease roll a comps costs packaging year's beef a for as were quarter. relief points Good of to basis saw Times tougher to quarter, for last compared Again, and prices and XXX the started year. to last we XX.X% on compared Food

As ran increased and longer-term Total case a labor by sales, in we Daddy's, higher the wage beef basis driven with Good that improvement market current wage to during offset resume overall costs in pressure the pressure statutory rates from minimum last the Bad productivity levels. Denver. the year's on XX.X% labor of indicates from the increase Colorado decreased quarter forecast in XX.X% X% due partially the by Times XXX prices to the for point

operating taxes. Good Times primarily off our a sequentially increase continued by costs. driven prior million XX increased expect increase sales highest basis XX indexing seasonally at quarter, Occupancy operating the some primarily year estate at other to million. sales higher to quarter, higher an We were as for real percent quarter year-over-year of Restaurant-level costs were Good by $X.X $X.X from for favorability, Good of XX.X% roll delivery higher costs costs points quarter. profit points we basis X.X%, an of Times the as Times due the but

labor and higher $X.X or a and last increased X.X% As XXX G&A a XX.X% in improvements previously sales, restaurant-level primarily Administrative by were or costs the operating points total expenses basis of of to during million due discussed. profit to year revenues. operating percent and sales, other General the Combined as cost sales percent versus quarter

were terms compared flat relatively year. expenses to nominal last in G&A

We the individually, geographically as and recognized terms Alabama store threshold too market. leadership the the costs help South the at added at X% Carolina as market basis. market the growth prepare which Bad to former both with to Madison and Daddy's leader leaders be future the needed greater combined we some approximately multi-unit was to for otherwise, in and of sales full to count, Tennessee were at we've large Carolinas. another expect and year Atlanta multi-unit for at and additional the as would particularly as We've well addition provide General run Administrative of over strength Alabama us in of on a the X.X% restaurant

impairment related approximately primarily recorded in Atlanta the of charges $X.X X We market. million restaurant to

we've team in the this earlier efforts. Atlanta that sales declines. area during replaced over We've prior our appointed has entire suffered director in area roots dedicated have and with market in discussed market the management a and As calls on call, turnaround market nearly the that recently

common income year. $X.XX quarter to income million of share Our million the income $X.X shareholders per quarter versus last share per net in net or for $X.X $X.XX of was or second the

Approximately to was quarter of call the debt. finished $X.X in benefit can during recognized the XXXX. $X.X compared million tax no questions. million with We quarter. the that, of and With Abby, cash open $X.X the for EBITDA for quarter we was third long-term the quarter million Adjusted million income $X.X for

Instructions]. [Operator

the from from of Capital comes Advisors. question first David Our line Kingdom Bastian

color development now? in Appreciate Daddy's opportunities maybe and Could it. the for what quick, some give on Real Bad seeing market us you you're Ryan, right future

terms rents. landlord starting to in see of little of bit on are a we flexibility opening So up

proceeding I of deterring as prior sticking kind landlords high about in think from rent talked with rates. succession that I and fairly us was leases. LOIs of have rapid levels been And calls, in to somewhat

would looking those are restaurants also in in the our of would of negotiations in in I expect try of and we -- handful Charlotte We and couple year. while I with open under with LOI North get some the area. and Birmingham have to we're would a say restaurants area fiscal phase Carolina, a the in particularly XXXX,

I early an think fiscal this point. realistically, that's endeavor XXXX at probably

Okay.

of X restaurants So early we could coming cadence X think end of . maybe that a 'XX to 'XX, there's

try would open the would time not same I I we probably spread I mean to try think and those would those and of that's fair. at all out. say

the towards more would 'XX we or with so fiscal 'XX coming And likely those throughout early start 'XX. end . of with

are back kind Got most another your . also versus sounds potential you makes it. And versus guess, thinking That buying buying return new why? in sense. capital opening -- are like of back franchise what franchises, it terms restaurants I then about and you've how to opportunities interest, allocation, attractive options seeing of buying stock you're your the

own and I challenges think kind its of opportunities. unique Well, alternative each provides own unique

think the price current perspective, attractive to kind won't up for give from buyback was I share that shares. target mid-Xs to buyback where an even I price, of believe to it to the while we be trading think I a share us a specific continues continue price

opportunity I for the opportunity to purchase the around in an an to term, looking using from property we the it I'd a call franchisee was win-win saw of -- for opportunity to or the monetize think I was started in terms us. the spite us turn to himself, definitely for the unique good felt cliche say during value we that and attractive was as franchisee restaurant avoid had repurchase way. to And price mentioned store the in that it also I of mentioned where a this was a a franchisee

I think opportunistically. we those we would -- consider

We where we actively do have, to position a repurchase interests. not franchisee trying are se, per

consider up, not. we and move may as may them those However, pop forward

pertains for. depends all Daddy's really availability think and rents areas for upon looking we're it I deal development, the it great -- trade to to that as within Bad also target a to

a there And in Charlotte, patient, into that X areas really In trying and say are Birmingham, about within There have into trade target each to the to for area. just opportunity situation. We've not trade would trying wait rent trade we're get right I to are being go liked opportunities of load opportunities based rent that were the been that areas. more high us particular has for been the certain in available.

the excited we're excited that to develop sure potential. we're looking excited so is make of and and its certainly that But Madison real just the think the that. about about opening We're right. location And that forward to to brand. brand We I continue estate want expanding to

Got makes legal Times Last it. available Good any for case? on . question sense. update ongoing That Is me. the there

the of have our refer I So a the is recent the the on to which procedural level, one to matter updates would to matter and other XX-Q, due. briefing filing, in the again, refer appeals the you briefings high history. filing the updates which for process. . specifics the parties you filed our I'd At are of And Both filing XX-Q.

Ryan. you, your Thank time. appreciate I

Mr. are further call Ryan Zink, back questions turn no There you. I over the time. this at to

Bad particular, as of Thanks the in again, we're Abby. Despite flat quarter, the restaurant Times level many this at encouraged the rationalization restaurants Good Bad performance at well. in cost sales and at Daddy's, brands, at Daddy's sales by margins of by both

growth units of in We and XXXX. year for have made a fiscal existing we more lot both brands, this rate that of and look investment in to investments slow in towards late shift starting

brands the for thanks of in my to our center the team the field. diligently in reiterate individual worked to both like who advance entire support contributors and leaders of I'd and restaurant

whom our work to the you this grateful lead. of Our and entire dedication Thank a today. business team, in the call be to position I'm hard built for all is joining from

call. conference today's concludes This

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