business

Good Times Restaurants Inc. Reports Mixed Results in Fiscal Second Quarter

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— 2 min read

Executive Summary

Good Times Restaurants Inc. (GTIM) recently announced its fiscal second-quarter results, reflecting a mixed performance for the period. The company experienced both growth and decline across its brands, including Good Times and Bad Daddy's. While the company reported its eighth consecutive quarter of same-store sales growth of 0.9% at Good Times, Bad Daddy's witnessed a decline of 3.2% in same-store sales.

Despite the drop, Ryan Zink, the company's Chief Executive Officer, remains optimistic about the future of both brands. The company is focusing on improving guest experiences, extending operating hours, and emphasizing the bar at Bad Daddy's. Additionally, GTIM is finalizing the purchase of a franchised restaurant in Parker, Colorado, and enhancing its loyalty and point-of-sale systems to drive customer engagement.

The company's total revenues increased by 1.9% to $35.4 million for the quarter. However, restaurant-level operating profit was $3.6 million for Bad Daddy's and $1.1 million for Good Times.

GTIM has a market capitalization of $29.49 million and P/E Ratio of 46.86.

Bullish Highlights

  1. Same-store sales growth continues for Good Times, with mid-single-digit increases.
  2. Bad Daddy's cost of sales decreased due to a menu price increase, despite higher purchase prices.
  3. Good Times' food and packaging costs decreased, benefiting from menu pricing and lower purchase prices.

Bearish Highlights

  1. Overall decline in same-store sales for Bad Daddy's this quarter.
  2. Increased labor costs due to additional restaurants and higher wage rates.
  3. Increased occupancy costs due to acquisitions and property tax increases.

Company Outlook

Good Times is optimistic about the future with strong operating momentum. The company plans to expand its share repurchase program and is negotiating leases for new Bad Daddy's locations.

Remodeled stores have shown double-digit sales increases, and the company is focused on seasonal features at Bad Daddy's, such as a Birria Burger to celebrate National Burger Month.

Q&A Highlights

  1. The company is close to executing leases on a couple of properties and is experiencing hiring challenges, leading to higher pay and tough decisions.
  2. Sales increases from remodeled stores have resulted in an ROI of over 10%.
  3. Negotiations are underway to acquire a franchised restaurant in Parker, Colorado, expected to close in the third fiscal quarter.

InvestingPro Insights: GTIM is not only navigating the current market landscape but also maneuvering through its financial metrics and strategic decisions. The company has a market capitalization of $29.49 million and a P/E Ratio of 46.86. GTIM is trading at a high EBIT valuation multiple and has been profitable over the last twelve months.

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