Q4 2023 Good Times Restaurants Inc Earnings Call
Good afternoon, ladies and gentlemen, welcome to the good times restaurants incorporated fiscal 2023 fourth quarter and year end earnings call.
Good afternoon, ladies and gentlemen. Welcome to the Good Times Restaurants Incorporated fiscal 2023 fourth quarter and year end earnings call. By now, everyone should have access to the company's earnings release, which is available in the investor section of the company's website.
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 security laws. These forward-looking statements are not guarantees of future performance and therefore you should not put undue reliance on them.
As a reminder, a part of today's discussion will include forward looking statements within the meaning of federal security laws.
These forward looking statements are not guarantees of future performance and therefore, you should not put undue reliance on them.
These statements involve known and unknown risks, which may cause the company's actual results to differ materially from results expressed or implied by the forward-looking statement.
These statements involve known and unknown risks, which may cause the company's actual results to differ materially from results expressed or implied by the forward looking statements.
Such risks and uncertainties include, among other things, the market price of the company's stock prevailing from time to time, the nature of other investment opportunities presented to the company, the disruption to our business from pandemics and other public health emergencies.
Risks and uncertainties include among other things the market price of the company's stock prevailing from time to time.
The nature of other investment opportunities presented to the company the disruption to our business from Pandemics and other public health emergencies.
the impact and duration of staff constraints at our restaurants, the impact of supply chain constraints and inflation, the uncertain nature of current restraints, development plans and the ability to implement those plans and integrate new restaurants.
The impact and duration of staff constraints at our restaurants, the impact of supply chain constraints and inflation. The uncertain nature of current restraints restraints development plans and the ability to implement those plans and integrate new restaurants.
Delays in developing and opening new restaurants because of weather, local permitting, or other reasons. Increased competition, costs increase, or shortages in raw food material.
Delays in developing and opening new restaurants, because of weather local permitting or other reasons increased competition cost increase or shortages in raw food material.
Other general economic and operating condition risks associated with our share repurchase program risks associated with the acquisition of additional restaurants, the adequacy of cash flows and the cost and availability of capital or credit facility borrowings to provide liquor.
other general economic and operating conditions, risks associated with our share
risks associated with the acquisition of additional restaurants.
the adequacy of cash flows and the cost and availability of capital or credit facility borrowings to provide liquidity, changes in federal, state or local laws and regulations affecting the operation of our restaurants.
Quiddity changes in federal state or local laws and regulations affecting the operation of our restaurants, including minimum wage and tip credit regulations and other matters discussed under the risk factors section of good times annual report.
including minimum wage and TIP credit regulations and other matters discussed under the risk factors section of Good Times Annual Report.
On form 10 dash K for the fiscal year ended September 26, 2023.
On Form 10-K for the fiscal year ended September 26 2023.
filed with the SCC and other filings with the SCC.
Filed with the ICC and other filings with the SEC.
During today's call, the company will discuss non-GAAT measures which they believe can be useful in evaluating our performance.
During today's call the company will discuss non-GAAP measures, which they believe can be useful in evaluating our performance.
The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with gap and reconciliation to comparable GAAP measures available in our earnings release. And now I would like to turn the call over to Ryan. Please go ahead, sir.
The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP and reconciliation.
Speaker Change: To comparable GAAP measures available in our earnings release, and now I would like to turn the call over to Ryan. Please go ahead Sir.
Speaker Change: Okay.
Thank you, Krista, and thank you all for joining us on the call today. As mentioned, everyone should now have access to our fourth quarter earnings release and our 10k filing.
Ryan: Thank you Christa and thank you all for joining us on the call today as mentioned everyone should now have access to our fourth quarter earnings release, and our 10-K filing.
As with last quarter, the final quarter of the fiscal year delivered mixed results with continued strong performance at our good times brand, where we again posted another quarter of positive same source sales.
Ryan: As with last quarter, the final quarter of the fiscal year delivered mixed results with continued strong performance at our good times brand, where we again posted another quarter of positive same store sales.
In addition to the positive sales, we were able to improve margins compared to the prior year, primarily through the benefit of lower food and packaging costs.
Ryan: In addition to the positive sales, we were able to improve margins compared to the prior year, primarily through the benefit of lower food and packaging cost.
near the end of the fiscal year, as had previously been reported, we purchased two Good Times restaurants from prior franchisees. And though there were the typical transition and integration inefficiencies that initially accompanied the acquisition of these restaurants,
Ryan: Near the end of the fiscal year as had previously been reported we purchased two good times restaurants from prior franchisees.
Ryan: And though there where the typical transition and integration inefficiencies that initially accompanied the acquisition of these restaurants.
We are currently growing year over year sales at both restaurants and both restaurants are profitable and content contributing to the brand's overall results.
Ryan: We are currently growing year over year sales at both restaurants, and both restaurants are profitable and continue contributing to the brands overall results.
We now own an operate 25 company owned good times restaurants, including six restaurants in which we are equal partners with a third party. Additionally, we have six restaurants in the system that are franchisee owned.
Ryan: We now own and operate 25 company owned good times restaurants, including six restaurants in which we're equal partners with a third party.
Ryan: Additionally, we have six restaurants in the system better franchisee out.
Ryan: We launched our loyalty program G T rewards during the quarter.
We launched our loyalty program GT Rewards during the quarter.
GT Rewards is a points-based loyalty offering that provides our guests an opportunity to earn deals and other rewards driven by their purchasing behavior.
Ryan: <unk> rewards is a points based loyalty offering that provides our guests an opportunity to earn deals and other rewards driven by their purchasing behavior.
The app already provided order ahead and direct order of delivery and the GT rewards platform is accessible by our guests, both in a digital native order. And also in the traditional drive through transaction with the order being placed at the menu ordering board.
Ryan: <unk> already provided order ahead, and direct order of delivery and the G. T rewards platform is accessible by our guest both in digital Native order and also on the traditional drive thru transaction with the order being placed at the menu ordering board.
Ryan: While card based payment for digital native orders has been a part of the App from its initial release payment in the drive thru has not been a feature of our App.
While card-based payment for digital native orders has been a part of the app from its initial release, payment in the drive-through has not been a feature of our app. We intend for the next major release of the app to incorporate the ability to link a credit or debit card or a good times gift card by which payment can be made in the drive-through.
Ryan: We intend for the next major release of the App to incorporate the ability to link a credit or debit card.
Ryan: Org good times gift card by which payment can be made in the drive thru.
In addition to our company owned restaurants participating in the GT Rewards program, all of our franchisee owned restaurants in Colorado also are currently participating in the program.
Ryan: In addition to our company owned restaurants participating in the G. T rewards program all of our franchisees.
Ryan: Owned restaurants in Colorado also are currently participating in the program.
We believe that the convenience, value, and technology and ablement that our app now delivers to our guests is critical to the continued relevance of our brand and our ability to capture incremental share in the QSR burger space.
Ryan: We believe that the convenience value and technology enablement that our App now delivers to our guests is critical to the continued relevance of our brand and our ability to capture incremental share in the <unk> Burger space.
Ryan: Okay.
Further during the first quarter of fiscal 2024, we completed the full digital menu transition of the company owned restaurants. With the installation of digital menu boards at the walk-up windows, complementing the menu boards that were already installed in the drive-throughs during fiscal 2023.
Ryan: Further during the first quarter of fiscal 2024, we completed the full digital menu transition of the company owned restaurants with the installation of digital menu boards at the walk up windows complementing the menu boards that were already installed in the drive throughs during fiscal 2023.
Additionally, the installation of the digital drive-thru menu board at the Lafayette Restaurant that we recently purchased was completed just earlier today.
Ryan: Additionally, the installation of the digital drive through menu board at the Lafayette restaurant that we reach has recently purchased was completed just earlier today.
Our franchise system in Colorado has yet to deploy the digital walk-up menu boards and we still have one Colorado franchise the owned restaurant that does not yet have the drive-through menu board.
Ryan: Our franchise system in Colorado has yet to deploy the digital work at menu boards and we still have one Colorado franchisee owned restaurant that does not yet have the drive through menu boards.
Ryan: Yeah.
We have also completed the re-image of 2 Good Times restaurants and are nearing the completion of a 3rd restaurant.
Ryan: We have also completed the re image of too good times restaurants and are nearing the completion of a third restaurant.
This re-image package includes repainting the building in light and dark shades of gray as opposed to a more beige tone previously, the replacement of highly graphic onings with solid red onings, and the contribution of community art to our buildings through the painting of a unique wall mural by a selection of local artists.
Ryan: This re image package includes repainting the building in light and dark shades of grey as opposed to a more base totaled previously the replacement of highly graphic callings with solid read on things and the contribution of community art to our buildings through the painting of a unique wall mural by a selection of local artists.
These re-image elements combine to create a clean, crisp design for our buildings that align with guest feedback and the results of consumer research we have conducted surrounding the purchasing behavior of our guests.
Ryan: These re image elements combine to create a clean crisp design for our buildings that align with guest feedback and the results of consumer research we've conducted surrounding the purchasing behavior of our guests.
Same-store sales have remained positive to date through the first fiscal quarter, through late November and though late November and December have experienced significant unfavorable weather with colder average temperatures in the prior year. But the greater impact has been too large than various snowfall events occurring on weekends, including Black Friday and the entire weekend following Thanksgiving holiday.
Ryan: Same store sales have remained positive to date through the first fiscal quarter through late November and just though late November and December have experienced significant unfavorable weather with colder average temperatures in the prior year, but the greater impact has been two large denver area snowfall events occurring on weekends.
Ryan: Including Black Friday, and the entire weekend following Thanksgiving holiday.
This weather activity has muted the strong trend we had been experiencing early in the quarter.
Ryan: This weather activity has muted the strong trend we had been experiencing early in the quarter.
Ryan: At Bad Daddy's operating results deteriorated from the prior quarter reduced sales have impacted most other areas of the P&L with significant deleveraging effects and labor cost and other operating expenses.
At bad daddies, operating results deteriorated from the prior quarter. Reduced sales have impacted most other areas of the P&L with significant de-leveraging effects in labor cost and other operating expense.
Sales have further continued to be soft into the first quarter of the new year, and as a result, changes within the Bad Daddy's organization have been made. Our prior operations leader for Bad Daddy's left the company in late August , and for the moment, the four regional directors that previously reported to him are reporting directly to me.
Ryan: Sales have further continued to be soft into the first quarter of the new year and as a result changes within the bad Daddy's organization have been made.
Ryan: Our prior operations leader for Bad Daddy's left the company in late August and for the moment. The four regional directors that previously reported to him a reporting directly to me.
We have long excelled in our back-of-house execution and we continue to excel in that area. We serve remarkable food and our employees throughout the brand, including both management and hourly team members, have so much passion around serving up great burgers.
Ryan: We have long excelled in our back of house execution, and we continue to excel in that area, we serve remarkable food and our employees throughout the brand, including both management and hourly team members have so much passion around serving up great burgers.
However, that same passion had declined in our front of house, and the level of hospitality we have been providing was not meeting our customers' wants or needs.
Ryan: However that same passion had declined in our front of house and the level of hospitality, we have been providing was not meeting our customer's wants or needs.
We also failed to pivot back to the bar side of our business as pandemic behavior faded and our bar execution has lacked.
Ryan: We also failed to pivot back to the bar side of our business as pandemic behavior faded and our bar execution has lacked.
The ultimate solution to this is a mindset shift among our operations leadership team within the brand.
Ryan: The ultimate solution to this is the mindset shift among our operations leadership team within the brand.
However to accomplish that, tactical changes are needed to drive the alignment design.
Ryan: However to accomplish that tactical changes are needed to drive the alignment desired.
We've appointed a bar of beverage leader to complement the culinary processes we already have in place.
Ryan: We've appointed a bar and beverage leader to complement the culinary processes, we already have in place happy.
Happy hour specials have been launched in our Colorado restaurants, and we expect those specials to be system wide by mid January . This is the 1st time in the concept history when drink specials will be available in all restaurants.
Ryan: Happy hour specials have been launched in our Colorado restaurants, and we expect those specials to be system wide by mid January this.
This is the first time in the concept history when drink specials will be available in all restaurants.
Ryan: Further to additionally, support the bar business, we extended operating hours by an average of one hour per day to began closing at 10 P. M Sunday through Thursday, and 11 P M Friday and Saturday beginning on November 27th.
Further to additionally support the bar business, we extended operating hours by an average of one hour per day to begin closing at 10 p.m. Sunday through Thursday and 11 p.m. Friday and Saturday beginning on November 27th.
The extended operating hours have already begun to pay dividends as sales during the last two operating hours of each day have measurably increased.
Ryan: The extended operating hours have already begun to pay dividends as sales during the last two operating hours of each day have measurably increased and.
and the same store sales trend, which had further deteriorated in October and November , has improved sequentially, with significant gains in the dinner and late night day part.
And the same store sales trend, which had further deteriorated in October and November has improved sequentially with significant gains in the dinner and late night day parts.
We've overhauled the beverage portfolio with new core beer and spirits offerings that better align with our guest preferences. And a new cocktail menu with more concept appropriate cocktails that will launch in February .
Ryan: We've overhauled the beverage portfolio with new core beer and spirits offerings that better align with our guest preferences and a new cocktail menu with more concept appropriate cocktails that will launch in February.
Additionally, on a seasonal basis, we've incorporated new cocktails, shakes, and mocktails into our seasonal chef special program.
Ryan: Additionally, on a seasonal basis, we've incorporated new cocktails shakes and mark tails into our seasonal chef special program.
New improved training content and teaching methods have accompanied and will accompany all of these programs.
Ryan: New improved training content and teaching methods have accompanied and will accompany all of these programs.
Ryan: Yeah.
To address the inconsistent hospitality, we're taking a three-pronged approach. First, by replacing our training manager for bad daddies, who was previously a one-person team, and then supplementing that new individual with two other learning and development specialists who will assist our operators in the delivery of training content and the validation of the hard and soft skills that are critical in each role.
Ryan: To address the inconsistent hospitality, we're taking a three pronged approach.
Ryan: First by replacing our training manager for Bad Daddy's, who was previously a one person team and then supplementing that new individual with two other learning and development specialists, who will assist our operators and the delivery of training content and the validation of the hard and soft skills that are critical in each role.
resetting expectations and standards of our multi-unit leaders and resystematizing their roles with appropriate tools, systems and accountability that had become lacking and was resulting in lower than desired standards in the front of the house.
Ryan: Resetting expectations and standards of our multi unit leaders and re systematizing their roles with appropriate tools systems and accountability that had become lacking and was resulting in lower than desired standards in the front of the house and.
And finally, adjusting financial system incentives, aka bonus.
Ryan: And finally, adjusting financial system incentives AK a bonus.
for our restaurant management teams to better incentivize a combination of long-term profitability and sales growth, along with period-by-period guest satisfaction, financial controls, and operations excellence.
Ryan: For our restaurant management teams to better incentivize, our combination of long term profitability and sales growth along with period by period guest satisfaction financial controls and operations excellence.
Our prior bonus structure was also designed to address each of these. However, the revisions to the plan better balance all of these and reduce incentives to prioritize behaviors that improve single period results, but could have negative full year or longer term impact.
Ryan: Our prior bonus structure was also designed to address each of these however, the revisions to the plan better balance all of these and reduce incentives to prioritize behaviors that improved serially single period results, but could have negative full year or longer term impacts.
Our Atlanta market discussed on prior calls has continued to prove to be a challenge. We've invested heavily in management development, new management where necessary, and additional hourly labor to improve our reputation in the market.
Ryan: Our Atlanta market discussed on prior calls has continued to prove to be a challenge and we've invested heavily in management development, new management, where necessary and additional hourly labor to improve our reputation in the market.
These investments are starting to show early indications of delivering results. As the incessant and unrelenting declines in sales at each of these stores have recently given way to days and in some cases weeks of increasing year-over-year sales.
Ryan: These investments are starting to show early indications of delivering results as the incessant an unrelenting declines in sales at each of these stores have recently given way to days and in some cases weeks of increasing year over year sales.
We continue to evaluate the optimal restaurant portfolio in the Atlanta market, which will be influenced by each restaurant's performance in the 1st, 6 to 9 months of this fiscal year.
Ryan: We continue to evaluate the optimum optimal restaurant portfolio in the Atlanta market, which will be influenced by each restaurant's performance in the first six to nine months of this fiscal year.
Ryan: Okay.
While bad daddy's results for the quarter are disappointing and our expectations for the first quarter of the year are for similar, if not slightly lower performance, I'm confident in the relevance and the power of the brand.
Ryan: Well bad Daddy's results for the quarter are disappointing and our expectations for the first quarter of the year are for similar if not slightly lower performance.
Ryan: I'm confident in the relevance and the power of the brand.
Ryan: As our highest volume restaurant in Summerville, South Carolina continues to post positive year over year sales, our second highest volume restaurants in Charlotte North Carolina is also delivering positive sales growth as our several other restaurants.
As our highest volume restaurant in Somerville South Carolina continues to post positive year over year sales, our second highest volume restaurant in Charlotte, North Carolina is also delivering positive sales growth as are several other restaurants.
Additionally, our new restaurant in Madison, Alabama, is continuing to deliver top quartile average weekly sales three full months into operation.
Ryan: Additionally, our new restaurant and Madison, Alabama is continuing to deliver top quartile average weekly sales three full months into operations.
While there has been some honeymoon effect, the typical peak to trough decline experienced in new Bad Daddy's new sore openings has not manifested that same decline here.
Ryan: While there has been some honeymoon effect the typical peak to trough decline experienced in new bad Daddy's, New store openings has not manifested that same decline here.
Ryan: I have great confidence in the future of the bad Daddy's brand as the passion. This team has for the brand is unlike the passion I've seen anywhere in my past.
I have great confidence in the future of the Bad Daddy's brand. As the passion this team has for the brand is unlike the passion I've seen anywhere in my past.
Ryan: Yes.
The company's gone without a finance leader for nearly nine months.
Ryan: The company has gone without a finance leader for nearly nine months, though for the past four months, we have contracted with a highly capable finance and accounting professional in an exclusive consulting engagement, who has performed many of the responsibilities of our former vice president of finance.
Though for the past four months, we have contracted with a highly capable finance and accounting professional in an exclusive consulting engagement, who has performed many of the responsibilities of our former Vice President of Finance.
We expect to have news with respect to a permanent hire for this leadership role in the upcoming weeks.
Ryan: We expect to have news with respect to a permanent hire for this leadership role in the upcoming weeks.
Ryan: I'll now review this quarter's results.
Total revenues decreased approximately 2.5% for the quarter to $34.3 million and decreased approximately 0.1% to $138.1 million for the year compared to fiscal 2022.
Ryan: Total revenues decreased approximately two 5% for the quarter to $34 $3 million and decreased approximately 0.1% to $138 $1 million for the year compared to fiscal 2022.
Total restaurant sales for bad daddy's restaurants decreased 1.4 million dollars to 24.6 million dollars for the 4th quarter. Compared to the prior 4th quarter.
Ryan: Total restaurant sales for bad Daddy's restaurants decreased $1 $4 million to $24 6 million for the fourth quarter compared to the prior fourth quarter and.
And decreased 1.0Million dollars to 102.2Million dollars for the year compared to the 2022 fiscal year.
Ryan: And decreased $1.0 million to $102 $2 million for the year compared to the 2022 fiscal year.
The sales decline was a combination of reduced sales associated with the closure of the Cherry Creek restaurant earlier in the year. The temporary closure of approximately three weeks during the third quarter for the remodel of the formerly franchise Greenville South Carolina restaurant and the decline in same-store sales of 4.9% during the quarter.
Ryan: The sales decline was a combination of reduced sales associated with the closure of the Cherry Creek restaurant earlier in the year.
Ryan: The temporary closure of approximately three weeks during the third quarter for the remodel of the formerly franchise Greenville, South Carolina restaurant and the decline in same store sales of four 9% during the quarter.
with 39 bad daddy's restaurants in the cop face at the end of the quarter.
Ryan: With 39, bad Daddy's restaurants in the comp base at the end of the quarter.
Ryan: Menu prices during the quarter were approximately $4, 4% higher than the prior year.
Menu prices during the quarter were approximately 4.4% higher than the prior year.
We expect same-store sales to be mid-single-digit negative for the first quarter of fiscal 2024.
Ryan: We expect same store sales to be mid single digit negative for the first quarter of fiscal 2024.
Cost of sales at bad daddies were 31.8% for the quarter. A 100 basis point decreased from last year's quarter with benefits from costs versus 2022 across our bath.
Ryan: Cost of sales at bad Daddy's were 31, 8% for the quarter, a 100 basis point decrease from last year's quarter with benefits from costs versus 2022 across our basket.
though there's somewhat some upward pressure on beef, we believe there is otherwise some general stability in our commodity basket and expect similar results in Q1.
Ryan: So there is somewhat some upward pressure on beef. We believe there is otherwise some general stability in our commodity basket and expect similar results in Q1.
Experts continue to predict that beef prices will likely rise over the next 12 to 18 months from their current level, which is already slightly elevated from a long-term historical perspective.
Ryan: Experts continue to predict that beef prices will likely rise over the next 12 to 18 months from their current level, which is already slightly elevated from a long term historical perspective.
Bad Daddy's labor costs increased by 310 basis points compared to the prior year quarter to 36.3% for the quarter.
Ryan: Bad Daddy's labor costs increased by 310 basis points compared to the prior year quarter to 36, 3% for the quarter.
This increase as a percentage of sales reflects higher wage rates, higher levels of staffing compared to 2022, the de-leveraging impact of lower sales on management costs, and additionally reflects post-opening labor inefficiencies and extended training team presence in our new restaurant in Madison, Alabama.
Ryan: This increase as a percentage of sales reflects higher wage rates higher levels of staffing compared to 2022, the deleveraging impact of lower sales on management cost and Additionally reflects post opening labor inefficiencies and extended training team presence in our new restaurant in Madison, Alabama.
Occupancy costs at bad daddy's decreased 20 basis points to 6.2%.
Ryan: Occupancy costs at bad Daddy's decreased 20 basis points to six 2%.
Ryan: Other operating costs at bad Daddy's increased by 50 basis points compared to the prior year quarter to 15, 2% for the quarter, primarily the result of the deleveraging impact of lower sales on certain fixed costs.
Other operating costs at Bad Daddy's increased by 50 basis points compared to the prior year quarter to 15.2% for the quarter, primarily the result of the deleveraging impact of lower sales on certain fixed costs.
Overall restaurant level operating profit and non gap measure for bad daddies was approximately 2.6M dollars for the quarter or 10.6% as a percent of sales compared to 3.4M dollars or 12.9% last year.
Ryan: Overall restaurant level operating profit a non-GAAP measure for bad Daddy's was approximately $2 6 million for the quarter or 10, 6% as a percent of sales.
Ryan: Compared to $3 $4 million or 12, 9% last year.
Total restaurant sales for company owned good times restaurants increased by approximately 0.6 million dollars to 9.5 million dollars for the fourth quarter compared to the same prior year fourth quarter and increased 1.0 million dollars to 35.0 million dollars for the year compared to the 2022 fiscal year.
Ryan: Total restaurant sales for company owned good times restaurants increased by approximately zero point $6 million to $9 5 million for the fourth quarter compared to the same prior year fourth quarter and increased 1.0 million.
Ryan: To $35.0 million for the year compared to the 2022 fiscal year.
The average menu price increase for the quarter was approximately 6.8% over the same prior year quarter.
Ryan: The average menu price increase for the quarter was approximately six 8% over the same prior year quarter.
Same store sales increased 2.4% for the quarter.
Same store sales increased two 4% for the quarter.
Sales growth accelerated early into the new quarter, but as mentioned earlier, has softened on unfavorable weather comparison.
Ryan: Sales growth accelerated early into the new quarter, but as mentioned earlier has softened on unfair the favorable weather comparisons.
Food and packaging costs for good times were 35, 30.5% for the quarter, a decrease of 180 basis points compared to last year's quarter.
Ryan: Food and packaging costs for good times were 35, 35% for the quarter, a decrease of 180 basis points compared to last year's quarter.
Ryan: As as was the case with bad Daddy's the longer term forecast indicates resumed pressure on beef prices from current levels.
As was the case with bad debtis, the longer term forecast indicates resumed pressure on beef prices from current levels.
Total labor costs for good times increased to 33.1%. A 120 basis point increase from the 31.9% we ran during last year's quarter. Due primarily to higher wage rates driven by overall labor market pressure in Colorado and the 8% increase in the statutory minimum wage in Denver.
Ryan: Total labor costs for good times increased to 33, 1%, a 120 basis point increase from the 31, 9%. We ran during last year's quarter due primarily to higher wage rates driven by overall labor market pressure in Colorado, and the 8% increase.
Ryan: And the statutory minimum wage in Denver.
Occupancy costs at good times were 8.2%, an increase of 40 basis points from the prior year quarter, primarily driven by higher real estate tax.
Occupancy costs at good times were eight 2% an increase of 40 basis points from the prior year quarter, primarily driven by higher real estate taxes.
Good times other operating costs were 12.0% for the quarter, a decrease of 70 basis points.
Ryan: Good times other operating costs were 12.0% for the quarter, a decrease of 70 basis points.
Ryan: Restaurant level operating profit for good times increased by zero point $1 million for the quarter to $1 $5 million.
Restaurant level operating profit for good times increased by 0.1 million dollars for the quarter to 1.5 million dollars.
As a percentage sales restaurant level operating profit increased by 90 basis points versus last year to 16.2% do primarily to higher sales and the improvement in food and packaging costs.
Ryan: As a percent of sales restaurant level operating profit increased by 90 basis points versus last year to 16, 2% due primarily to higher sales and the improvement in food and packaging costs.
Combined general and administrative expenses were 2.0 million during the quarter or 6.1% as a percent of total revenues. The decline in GNA costs is primarily attributable to the reduction in legal and professional entities, legal and professional fees incurred in the prior year associated with litigation defense.
Ryan: Combined general and administrative expenses were $2.0 million during the quarter or six 1% as a percent of total revenues. The decline in G&A cost is primarily attributable to the reduction in legal and professional fees legal and professional fees incurred in the prior year associated with <unk>.
Ryan: <unk> defense.
We continue to expect for general and administrative costs to run at approximately seven to seven and a half percent of sales on a full year base.
Ryan: We continue to expect for general and administrative costs to run at approximately seven to seven 5% of sales on a full year basis with some of the additional support personnel.
some of the additional support personnel detailed earlier in this call.
Ryan: Detailed earlier in this call.
Okay.
We recorded impairment charges of approximately $0.5 million, primarily related to the Greenville North Carolina restaurant, which has long been marginally profitable, but has seen some trade-area deterioration over the past six months.
Ryan: We recorded impairment charges of approximately <unk> $5 million.
Ryan: Primarily related to the Greenville, North Carolina restaurant.
Ryan: Which has long been marginally profitable, but has seen some trade area deterioration over the past six months.
Our net loss to common shareholders for the quarter was <unk> $3 million or.
Our net loss to common shareholders for the quarter was $0.3 million, or a loss of $2 per share versus net loss of $1.3 million, or $0.10 per share in the fourth quarter last year.
Ryan: <unk> <unk> per share versus net loss of $1 3 million or <unk> 10 per share in the fourth quarter last year.
Ryan: Approximately <unk> $3 million of income tax benefit was recognized during the quarter.
Approximately $0.3 million of income tax benefit was recognized during the quarter.
Adjusted EBITDA for the quarter was $1.1 million compared to $0.9 million for the fourth quarter of 2022.
Ryan: Adjusted EBITDA for the quarter was $1 1 million compared to zero point $9 million for the fourth quarter of 2022.
Ryan: We finished the quarter with $4 2 million in cash and approximately zero point $8 million of long term debt.
We finished the quarter with $4.2 million in cash and approximately $0.8 million of long-term debt. With that, Kristen.
Ryan: With that Krista we.
Speaker Change: We'll open the call for questions.
If you would like to ask a question, please press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, again, press star one. We'll pause for a moment to compile the Q&A Ross.
Speaker Change: If you would like to ask a question. Please press star followed by the number one on your telephone keypad and if you would like to withdraw your question again press Star one we'll pause for a moment to compile the Q&A roster.
We have no we have a question your first question comes from Brian London an Individual investor, please go ahead
Speaker Change: Well, we have no. We have a question. Your first question comes from Bryan London, an individual investor. Please go ahead.
Hi, Ryan. Just a quick question. On the Good Times brand, you guys invested money and seems like you're reaping some of the benefits of improving the stores. Do you think there's any opportunity for growing the Good Times restaurant?
Bryan London: Hi, Ryan.
Bryan London: A quick question.
Bryan London: When the good times brand.
When you guys invested money and it seems like you're reaping some of the benefits of an improving the stores do you think there's any opportunity for growing the good times restaurants.
Bryan London: Looking forward over the next two or three years.
looking forward for the next two or three years.
I think the challenges associated with that in the immediate future are we have a large presence here in the Colorado market and real estate prices combined with wages.
Speaker Change: I think the challenges are.
Speaker Change: <unk> with that in the immediate future or we have a <unk>.
Speaker Change: A large presence here in the in the Colorado market and real estate prices combined with wages.
Speaker Change: Decrease the attractiveness of doing so.
decrease the attractiveness of doing so. And I think it's a bit of a big bet to jump to another market. With that, I would say.
Speaker Change: And I think it's a bit of a big bet to jump to another market.
Speaker Change: With that I would say we continue to believe in the good times brand and I would say that if if we continue to see strong sales that accompany.
We continue to believe in the good times brand, and I would say that if we continue to see strong sales that accompany the investments that we've made and the continued investments that we will make in some of the light refreshes, the remodels that I described earlier in the call, the possibility exists for future development of that brand.
Speaker Change: The investments that we've made and the continued investments that we will make in some of the light refreshes. The remodels that I described earlier in the call the possibility exists for future development of that brand.
Thanks. The bad daddy results. I mean, I'm, you know, I know this is anecdotal, but I'm following a lot of restaurants. I'm feeling like there's recessionary pressures kind of on that type of restaurant. I don't know, you know, if you have any feel for that or feedback, that kind of led me a little bit into the good times question. I'm wondering like if there are pressures like
Speaker Change: Okay. Thanks.
Speaker Change: The bad Daddy results I mean, you know.
Speaker Change: I know this is anecdotal but.
Speaker Change: Following a lot of restaurants.
Speaker Change: Feeling like Theres recessionary pressures kind of on that type of <unk>.
Speaker Change: Restaurant I don't know if you have any feel for that or feedback does that kind of led me a little bit into the good times question I'm wondering like if there are pressures lake.
Speaker Change: Recessionary type pressures on the bad Daddy's brand over the next few years I was wondering like if you might look towards you know good times expansion, but yes.
Recessionary type pressures on the bad daddy's brand over the next few years. I was wondering like if you might look towards, you know, good times expansion, but yeah, no, I totally understand your comments in regards to real estate prices and
Speaker Change: Yes, no I totally understand your comments in regards to real estate prices.
Speaker Change: I appreciate your answer yeah.
Yeah, and I'll offer some color on that. I mean, you know,
Speaker Change: Yeah, and I'll offer some color on that I mean.
We have to be cognizant of the reality and the environment that we operate in. And I don't want to make excuses for our team and I don't want our team to make excuses for the restaurant's performance.
Speaker Change: We have to be.
Speaker Change: Cognizant of the reality in the environment that we operate in and you know I don't want to make excuses for our team and I don't want our team to make excuses for the restaurant's performance.
I do believe that if you look at other burger centric casual dining brands, there are pressures there. And so I think our performance while disappointing is not entirely surprising compared considering some of the results have been reported by similar
Speaker Change: I do believe that if you look at other Burger centric casual dining brands. There are pressures there and so I think our performance while disappointing is not entirely surprising compared.
Speaker Change: <unk> some of the results have been reported by <unk>.
Speaker Change: Similar concepts.
That said, I think our Bad Daddy's concept has a greater degree of relevance. And I think if we execute the operations strategies and tactics that I've outlined on this call, that we're going to be in a good position to compete against our casual dining peers now and in the future. That said, I think it's...
Speaker Change: That said I think our bad Daddy's concept has a greater degree of relevance and I think if we execute the operations strategies and tactics that I've outlined on this call.
Speaker Change: That we're going to be in a good position to compete against our casual dining peers.
Speaker Change: Now and in the future.
Speaker Change: That said I think it's it's beneficial to have a portfolio that includes concepts both in the full service and in the <unk> segment.
It's beneficial to have a portfolio that includes concepts, both in the full service and in the QSR segment, because I think the QSR segment does tend to perform better when there are recessionary pressures.
Speaker Change: Because I think the <unk> segment does tend to perform better when there are refract recessionary pressures.
Speaker Change: Okay. Yeah I appreciate the answer also again I appreciate it I think that your strong balance sheet will help you out and happy holidays to you guys. Thanks.
Yeah, I appreciate the answer. Also, again, I appreciate, I think, that your strong balance sheet will help you out. And happy holidays to you guys. Thanks.
Speaker Change: Happy holidays to you as well.
Your next question comes from the line of Sanjay <unk>, who is also a private investor. Please go ahead.
Your next question comes from the line of Sanjay Raghaga, who is also a private investor. Please go ahead.
Hi Ryan. I just wanted to ask on the bed that is the brand. So first of all, if you could...
Speaker Change: Alright.
Sanjay: So I just wanted to ask.
Sanjay: On the bad Daddy's, though brand so first of all if you could.
Just give a brief update on the seaboard station location. What's going on there? And just in general,
Sanjay: Just give a brief update on the seaboard station location of what's going on there.
Sanjay: And just in general.
Sanjay: Do you guys have like an expectation of when you would.
Do you guys have an expectation of when the bad daddies, the same for sales will start?
Well you know when the bad Daddy's same store sales will start.
you know, kind of either being neutral or positive. Is this like the first quarter, second quarter? Do you guys have some sort of idea there?
Sanjay: Condos.
Sanjay: These are being <unk>.
Sanjay: Neutral or positive is this like.
Sanjay: In the first quarter or second quarter or do you guys have some sort of idea there.
Yeah, so to answer your first question on Seaboard Station, I was there about six to eight weeks ago. And...
Speaker Change: Yeah. So to answer your first question on seaborne station I was there about six to eight weeks ago.
Speaker Change: And.
The, to be quite frank, the traffic and construction situation there is pretty painful. There are main entrants, has been blocked off, access to the site, is extremely compromised.
Speaker Change: The.
Speaker Change: To be quite Frank.
Speaker Change: The traffic and construction situation there is is pretty painful.
Speaker Change:
Speaker Change: There are our main entrance has been blocked off access to the site is extremely compromised. We believe there is a lot of multi unit residential being constructed there and the long term outlook for that site is extremely strong once the construction.
We believe there is a lot of multi-unit residential being constructed there. And the long-term outlook for that site is extremely strong once the construction is finished. However, it seems like it has been and continues to be a bit of a never-ending...
Speaker Change: <unk> is finished however, it seems like it has been and continues to be a bit of a never ending.
point of pain in terms of the construction that is occurring and the impact of that. I don't believe that we've...
Speaker Change: Point of pain.
Speaker Change: In terms of the construction that is occurring and the impact of that.
Speaker Change: I don't believe that we've received from <unk>.
our landlord or other developers who are participating in that construction, a real clear timeline on when that's going to end. And I would like that as much as you and other investors would like that.
Speaker Change: Our landlord or other developers who are participating in that construction.
Speaker Change: A real clear timeline on when that's going to end and.
Speaker Change: I would like that as much as you under other investors would like that.
Speaker Change: With respect to same store sales turnaround.
Speaker Change: That's that's a.
Speaker Change: An interesting question and one that I.
Speaker Change: I would love to be able to provide you a precise answer on.
What I would say is that our comparable start to get easier in the third fiscal quarter, so the June quarter. I'm not predicting that it will be turned around by then to the point where we're posting positive same store sales.
Speaker Change: What I would say is that our our comparables start to get easier in the third fiscal quarter. So the the June quarter.
Speaker Change: I'm not predicting that it will be turned around by then to the point, where we're posting positive same store sales.
But, you know, internally we have the goals that we've set and I'm setting aggressive goals with my team. And certainly, you know, I would love to be in a position where come June quarter that's what I'm reporting.
Speaker Change: But internally we have the goals that we've set and I'm setting aggressive goals with my team.
Speaker Change: And certainly.
Speaker Change: I would love to be in a position where come June quarter, that's what I'm reporting.
Speaker Change: Okay.
Okay, thanks. And just on going back to the balance sheet and the 4.2 million cash.
Speaker Change: Okay. Thanks.
Speaker Change: And just.
Speaker Change: Just on the going back to the balance sheet and the $4 2 million cash.
Speaker Change: Cash.
I see from the 10k I believe you have a plan of opening one bad at this location.
Speaker Change: I see from the 10-K I believe you have a plan of opening one.
Speaker Change: Daddy's locations.
Speaker Change: In fiscal 'twenty four.
in fiscal 24. Any other plans for the liquidity and could you touch on what prompted borrowing from the credit facility if you have cash on hand? Thanks.
Speaker Change: Any other plans.
Speaker Change: For the liquidity.
Speaker Change: Could you just touch on what.
Speaker Change: What prompted our borrowings from the credit facility, if you have cash on hand.
Speaker Change: So in terms of.
in terms of investments in use of liquidity. We have Share Repurchase Program.
Speaker Change: In terms of investments and use of liquidity, we have share repurchase program.
Speaker Change: And as you have seen this past year, we've made investments whether that's through the acquisition of of minority interest or noncontrolling interests I should say, whether it is through the acquisition of franchisees.
As you've seen this past year, we've made investments, whether that's through the acquisition of minority interests or non-controlling interests, I should say, whether it's through the acquisition of franchisees. You know, we don't have any of those.
Speaker Change: We don't have any of those in the works, but we are obviously still have some of those out there and would be opportunistic if if.
But we obviously still have some of those out there and would be opportunistic if...
situations would arise where we could where we could do something similar either this year or or in fiscal 2025
Speaker Change: Situations would arise where we could where we could do something similar either this year or in fiscal 2025.
I think with respect to new units, we are building a pipeline. I think, you know, we would like to be able to get one done this year. And we're going to try to, I think, some of those may bleed into fiscal 2025. And we're trying to get multiple units opened between now and fiscal 25.
Speaker Change: I think with respect to new units.
Speaker Change: We are building a pipeline I think.
We would like to be able to get one done this year.
Speaker Change: And we're going to try to I think some of those may bleed that may bleed into fiscal 2025.
Speaker Change: And we're trying to get multiple units opened between now and fiscal 'twenty five.
Speaker Change: With respect to borrowing.
with respect to borrowing.
Speaker Change: Yeah.
You know, I would say really there's some cash management and treasury strategies that are involved in that. And it is not, I think. There's also a certain amount of cash on hand that's required to run the business. And so just from an overall. From an overall treasury standpoint, we believed it was a wise decision.
Speaker Change: I'd say really there is some cash management and treasury strategies that are involved in that and it is not I think there's also a certain amount of cash on hand, that's required to run the business.
Speaker Change: And so just from an overall.
Speaker Change: And overall treasury standpoint.
Speaker Change: We believed it was a wise decision to borrow that money.
All right, got it. All right, thanks Ryan. Happy holidays. Appreciate it. Thanks.
Speaker Change: Alright got it alright, thanks, Brian I'm happy holidays I appreciate it.
Speaker Change: Thanks same to you.
We have no further questions in this time. Ryan, I'll turn the call back over to you for closing remarks.
Speaker Change: And we have no further questions at this time, Ryan I'll turn the call back over to you for closing remarks.
I'm grateful to lead a talented team of people who have the same commitment to our brands and passion for our industry and for our guests as I do. I thank them for their continued hard work and meaningful contribution to our brands. I'm encouraged by the continued strength that good times has manifested over my tenure with the company, with sales growth in five of the six years I've been part of this organization.
Ryan: I am grateful to lead a talented team of people who have the same commitment to our brands and passion for industry and for our guests as I do.
Ryan: Thank them for their continued hard work and meaningful contribution to our brands I'm encouraged by the continued strength at good times has manifested over my tenure with the company with sales growth in five of the six years I've been part of this organization.
I know as does our leadership team and our operations leaders in bad daddies, the sales and profitability improvements are needed.
Ryan: I know as does our leadership team and our operations leaders and bad Daddy's, the sales and profitability improvements are needed at that brand.
and that the best marketing is strong operations, which we are laser focused on. Thanks.
Ryan: And that the best marketing is strong operations, which we are laser focused on.
Thank you all for joining our call today.
This concludes today's conference call. Thank you for your participation, and you may now disconnect.
Ryan: This concludes today's conference call. Thank you for your participation and you may now disconnect.
Ryan: [music].