Good Times Restaurants Inc.

Good afternoon, ladies and gentlemen. Welcome to the Good Times Restaurant Incorporated Fiscal 2024 Second Quarter 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. 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 under due 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 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. The impact and duration of staffing constraints at our restaurants. The impact of supply chain constraints and inflation. The uncertain nature of current restaurant 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, cost increase or shortages in raw food products, other general economic and operating conditions, risk associated with our share repurchase program, risk associated with the acquisition of additional restaurants, the adequacy of cash flow and the cost and availability of capital and credit facility borrowings to provide liquidity, changes in federal, state, or local laws and regulations, affected the operation of the restaurants, including minimum wage and CHIP credit regulations and other matters discussed under the Risk Factors section of Good Times Annual Report on Form 10-K for the fiscal year ending September 26, 2023, filed with the SEC and other non-GAAP filings with the SEC. During today's call, the company will discuss non-GAAP measures, which they believe can be useful in evaluating our performance. The presentation of the additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP 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.

Thank you, Krista. And thank you all for joining us on the call today. As mentioned, everyone should now have access to our second quarter earnings release and our 10Q filing. Joining me today is our Senior Vice President of Finance and Accounting, Carrie August. In just a few minutes, she will review the quarter's results. I'm pleased with the sales results from both brands, with Good Times delivering its eighth consecutive quarter of same-store sales growth, posting 0.9% for the quarter and a two-year stack for the quarter of 8.5% in spite of very tough weather conditions. with recurring snow events on Fridays and Saturdays during the quarter. Meanwhile, Bad Daddies reported a same-store sales decline of 3.2%, a sequential improvement from the first quarter of the year. Restaurant-level margins for the quarter compressed a bit of both brands and we're currently tolerant of reduced levels of restaurant-level operating profit to deliver the guest experience needed to continue to grow restaurant sales, which will ultimately benefit margins from the sales leverage generated. As of the date of this call, same store sales during the third quarter are positive for both brands. And Bad Daddy's performance versus the National Black Box Casual Dining Index has improved to the point that we're now often beating the benchmark compared to the mid single digit unfavorable gap that we saw as recently as five months ago. I believe this improvement of Bad Daddy's is directly attributable to three specific factors. the expansion of operating hours to stay open an hour later every day of the week, with us now closing at 10 p.m. weekdays and 11 p.m. on the weekends. We know from data at both brands that our guests are out later, and we're taking advantage of that trend. Second, our enhanced focus on the bar is increasing our beverage mix, and we know that there is huge opportunity for us to grow sales both of beverage and food in our restaurants if we increase the level of service we provide at our bars, which had not kept up with competitors during late 2022 and 2023. Finally, our overall change in mindset around standards and execution has resulted in a greater amount of involuntary turnover at both restaurant staff and management levels as we no longer tolerate mediocrity and performance and are proactively making the right staffing decisions for great operating restaurants. At Bad Daddies, we've seen moderation in our Atlanta market, and though that market continues to be challenging, our discipline and talent management seems to finally be manifesting results as the market has generated positive same-store sales in a majority of the restaurants in the market for the last two months. We know that having the right GMs or general managers in place is really the secret sauce for successful restaurants in all markets. And we have confidence in the leaders we now have in this market. To be clear, continued improvements in execution are still needed, but the foundation for market recovery has been set. Beyond that market, we continue to see labor as a perpetual challenge. And though hiring has become easier than it had been, Salary and wage pressures continue to be present, and the quality of talent is still heavily weighted toward less experienced and less motivated candidates in the market. We have increased average pay for restaurant staff and management and are highly focused on market indicators of compensation to remain competitive. Our focus on seasonal features at Bad Daddies has been a hit with our guests. And our current food features, including a pizza burger and a chicken Parmesan sandwich, have seen some of the largest customer adoption of any similar feature we've run. These products are in harmony with our culinary heritage, including house-made marinara, house-sliced and grilled pepperoni, and fresh mozzarella cheese. During May, as we celebrate National Burger Month, We have developed a birria burger with a house-made that is intensely flavorful and has a taste profile that's tremendously popular right now. It's also nicely timed to coincide with the Cinco de Mayo holiday. We will also feature a margarita promotion on that holiday and found that on National Margarita Day in February, the margarita promotion we ran generated significant adoption and sales lift for the day. We are committed to the right balance of price promotion, as we're clear on our premium position in the market, our uncompromising on product quality and service levels, but recognizing that there is certainly promotional value in a limited level of discounts that are strategic and well-timed. Our Madison, Alabama restaurant continues to perform well, and I'm excited about the continuity of the highly capable management team we have in that restaurant. It continues to be a top quartile store, and while we did experience a bit of the typical new store honeymoon, sales have not fallen off at the usual rate, and it continues to be a top quartile, nearly top decile restaurant in terms of sales performance. We have several leases we're working on in the pipeline, but remain focused on selecting only the right sites and opening great restaurants, then being unduly focused on unit growth at the expense of additional risk of picking lower quality sites. At good times, our sales have been supported by strong sales trends at the two restaurants we purchased in late fiscal 2023. The Lafayette, Colorado restaurant received a light reskin with fresh building paint, new signage throughout, new awnings, and new menu boards. This location is one of several that does have a dining room. and we chose not to include a mural at this time on the exterior of the building due to its different footprint and configuration. In our earnings release today, we also announced that we're in negotiations to purchase the currently franchised Good Times Restaurant in the southeast Denver suburb of Parker, Colorado. This restaurant is the same generation as the Lafayette location and also features a dining room. We expect to make similar improvements to this location and are extremely optimistic about the population growth and demographics of this trade area. We expect to close on the purchase of this restaurant during the third fiscal quarter. GT Rewards, our loyalty program, continues to be a focus for us. However, we've seen the challenges involved in customer adoption in a primarily drive-through concept. We are seeing growth in membership but not at the pace we really would like. Nevertheless, we have several strategies we have implemented or expect to implement to improve member acquisition as we're still convinced that digital engagement with our customers at good times is critical to continuing our sales momentum. In the same vein, reducing friction at all points in the transaction is critical so that we can improve speed, accuracy, and ultimately customer satisfaction. We are in test currently at two restaurants with our selected next generation point of sale system, which is Toast, the leading most feature-rich cloud-based point of sale system. This test has been highly successful, and at the conclusion of the pilot period, we expect to roll out the Toast POS system to the balance of company-owned good times restaurants prior to the end of the fiscal year, and we'll encourage our franchisees to follow suit. We are conducting a similar evaluation of Bad Daddy's, and it is likely that a test of the toast system at Bad Daddy's will be forthcoming within the next several quarters. We are near the end of the fourth remodel of a typical double drive-through Good Times, including a mural by a local artist, new awnings, and new signage. This restaurant in Lakewood, Colorado, is one of three company-owned Good Times that has never had a prior remodel. and has an older kitchen layout that is less efficient. The construction associated with this remodel will remove approximately five store weeks from the third fiscal quarter, and we expect this restaurant to reopen next week. We repurchased just over 250,000 shares during the quarter under a share repurchase program and one purchase from a non-executive employee. We continue to believe that the share repurchase program, particularly at current trading prices for our stock, generates a good return for shareholders. We are currently conducting repurchases at a reduced pace with an interest in reducing borrowings against our credit facility and anticipating other capital investments. At the current repurchase rate, we have about six months left on the existing authorization, and assuming market factors remain similar, we would expect the authorization to be expanded sometime prior to the completion of the current authorization. I will now turn the call over to Carrie to review our financial performance for the quarter.

Thank you, Ryan. We'll now review this quarter's results.