Good Times Restaurants Inc.

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 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 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 increases or ingredient shortages, general economic and operating conditions, risks associated with our share repurchase program, risks associated with the acquisition of additional restaurants, 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 our restaurants, including wage and tip credit regulations, and other matters discussed under the risk factors section of Good Time's annual report on Form 10-K for the fiscal year ended September 24, 2024, and other reports filed with the SEC. During today's call, we will discuss non-GAAP measures, which we 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 GAAP and reconciliation to comparable GAAP measures available in our earnings release. And now, I would like to turn the call over to our Chief Executive Officer, Ryan Zink.

Thank you, Carrie, and thank you all for joining us today. The first quarter of our new fiscal year was encouraging for bad daddies as we posted a 1.5% increase in same store sales and better restaurant level margins. We're pleased with the results of our holiday seasonal specials as well as our classic smash and smokehouse smash made with our aggressively smashed Angus beef patties. These two burgers are a key component of our sequential improvement food and beverage cost during the quarter. as they've been engineered to meet the sweet spot of providing margin slightly better than our Beattie's American Cheeseburger at a lower cost to our guests, priced at $9.50 in Colorado and $1 less everywhere else. We're expecting to expand our lineup of Smash Patty Burgers with further opportunity to engineer the menu for greater sales and improved costs. I'm looking forward to sharing more about this exciting product during our next quarter. I should note, however, that despite our year-over-year menu price increase being near 4.5%, the mixed shift into our smash patty burgers is offsetting roughly half of that price increase. We're also featuring our winter seasonal specials with two new products, meatball sliders and potato-top soup, along with the return of our winter salad made with cranberries, walnuts, brie and blue cheeses on a bed of mixed greens, and tossed in a strawberry balsamic dressing. The bundle of all three is priced at $12.50, a price point we believe is compelling for the indulgent and premium offerings. Looking towards spring, we're thrilled to bring back the boldly flavorful Birria Burger, as well as a brand new food and drink offerings that I'll share more about during next quarter's call. During our last call, I reviewed the back-to-basics approach we've taken at Bad Daddy's. I also discussed the redesigned standards reviews spanning both front and back of house execution, which are completed by the individual restaurant leader. Beginning this fiscal year, we've incorporated the results of those standards reviews into the performance metrics used to determine each restaurant management team's monthly performance-based compensation. This is aligned compensation with restaurant performance. At lower volume units, which by their nature have less opportunity for the profit-based component of their incentive comp, managers have meaningful financial incentives to deliver great service, recipe right food, and run their restaurant in a way that will drive long-term traffic sales and profit growth. I also believe this is a component of our improved labor controls this quarter compared to the same prior year quarter. Our Good Times brand experienced ongoing challenges resulting from higher costs, less significantly in labor, and a continued intense discounting by our competition. That said, same-store sales for the quarter ended flat to the same prior year quarter, a slight improvement over the range we provided during our last call. We continued to move the business forward during the quarter and accomplished a number of objectives as we execute our long-term plan for Good Times. During the quarter, we analyzed some of the opportunities we have by comparing our products against others in the market. We realized that our fascination with speed has resulted in some compromises to our product that were out of balance. During January, we rolled out new cooking procedures and holding standards for our burger patties and adjusted our process for bun toasting, which has resulted in juicier, larger patties and softer, fresher buns coming out of the drive-through window into our guests' hands. We have also made upgrades to certain operations processes related to custard production to improve the quality of that product, with more adjustments both in process and in product yet to come in the second quarter and back half of the fiscal year. The mindset shift is one of speed at all costs to a focus of delivering high-quality product at QSR speed. In October, we purchased two Good Times restaurants from a former franchisee, both in the northern suburbs of Denver. After a short closure to hire some new employees and to make some much-needed repairs, we reopened both restaurants and they're performing well. One restaurant needs an extensive remodel, which will likely occur in fiscal 2026, and the other has already been updated with new paint and awnings. Both restaurants will have signs replaced during the next two years. Additionally, just a few miles away from both of these restaurants, we remodeled the Good Times in the northern suburb of Thornton. It was closed for nearly six weeks of the quarter and received significant structural repairs, wall replacements, as well as all of the guest-facing improvements that all of our remodels are receiving. We recently ended our limited-time offer of our Bambino Suprimos and Dirty Sodas. Neither of these achieved the sales that we really hoped for, but we continue to sell them post-promotion as off-menu items and have developed a small but loyal following for both. And neither require ingredients that we don't already have in-house. As we shared last quarter, our latest limited-time offer is the West Slope Double, paying homage to the western side of the Rockies. This burger features the same Bambino sauce as our current West Coast Burger and our Bambinos. It is a bold flavored burger with two full slices of sweet yellow onion on the double and a single full slice in a single patty version. Our goal with this product is to create another two patty burger with a distinct look and flavor from our traditional Good Times Deluxe. This will run throughout February and then in March we look forward to our seasonally featured fish sandwich made with Atlantic cod and our house made tartar sauce. We continue to experiment with audio-based advertising with a combination of terrestrial radio, audio streaming, and podcasts. In October and November, we removed all audio-based advertising with the exception of one sports radio station with features during the Denver Broncos games and one full-year campaign with a single station in a demographic that we believe continues to be a radio user. Then on December 9th, we went live again with our traditional radio buy and are measuring the impact of its reinstatement. Late December trends looked favorable, but January's unfavorable weather prevented us from getting a solid read, and we're continuing our current radio buy through experimenting with shorter 15-second spots into the spring. While terrestrial radio is certainly a declining medium, streaming and podcasts are both a meaningful portion of the campaigns. We are also experimenting at both brands with YouTube pre-roll advertising and video streaming services in certain markets. As we noted in our press release, January was a particularly difficult month for both brands. With negative temperatures and meaningful snow on three different weekends of the month, our Colorado restaurants experienced significantly reduced sales compared to the prior year. Beyond that, The weekend beginning January 10th dropped snow across nearly all of the Bad Daddy's markets in the southeast part of the country, during which several of our restaurants closed early, opened late, and in some cases were unable to open at all. Fame store sales at Bad Daddy's were down approximately 5.5% during the first four weeks of the second fiscal quarter and down more than 7% at good times. Friends have improved since then, but weather will continue to be an unpredictable element, particularly in Colorado, for the rest of this quarter. I'll now turn the call back over to Terri for a review of our performance during the quarter and some perspective on the company's financial initiatives.

Thank you, Ryan. Let's discuss this quarter's results. I'll review Bad Daddy's results first. Total restaurant sales increased $2 million to $26.1 million for the quarter. The sales increase is primarily due to an additional week in the current fiscal quarter versus the same prior year quarter, as well as menu price increases, partially offset by the prior quarter closure of one Bad Daddy's restaurant and by negative mix shift attributable to the success of the company's smash patty burgers, along with slightly reduced traffic, in part due to the impact of a reduced number of days between Thanksgiving and Christmas day compared to the prior year and the shift of Christmas day from Monday in the current quarter to Wednesday in prior year first fiscal quarter. Our average menu price during the quarter was 4.5% higher than quarter one of 2024. Same store sales increased 1.5% for the quarter with 38 bad daddies in the comp base at quarter end. Food and beverage costs were 31.5% for the quarter which was unchanged from last year's quarter. The steadiness as a percent of sales is attributable to the impact of the menu price increase and the favorable cost of sales of our highly successful classic smash patty burgers, offset by higher purchase prices in our commodity basket compared to the prior year quarter. Although our beef prices declined sequentially during the quarter, costs were still elevated over prior year, as were our potato and bread costs. both of which are product categories in which we rely on a single supplier. Due to the tightening beef supply, as evidenced by the sequential increase in wholesale boneless beef prices in January, we anticipate ground beef costs will continue to increase throughout fiscal year 2025. Labor costs decreased by 70 basis points compared to the prior year quarter to 35.1%. This decrease is primarily attributable to the leveraging impact of higher sales on fixed labor costs, predominantly manager salaries, the increase in menu pricing, and the increased labor productivity, partially offset by higher average wage rates paid to attract qualified employees. Although we expect continued solid labor controls on a full year basis, our second quarter labor costs will not have the same year-over-year improvement as the first quarter of 2025. In January, Colorado's minimum wage increased to $14.81, a 2.7% increase. and the tipped minimum wage increased to $11.79, a 3.3% increase. Based upon our pricing surveys, we did not increase menu prices enough to cover the impact of these minimum wage increases as a percent of sales. Further, the deleveraging impact of the weather-induced decline in January sales, as discussed by Ryan, will likely result in higher year-over-year labor costs as a percent of sales in the second fiscal quarter. Overall, restaurant-level operating profit, a non-GAAP measure for Bad Daddies, was approximately $3.3 million for the quarter, or 12.6% of sales, compared to $2.6 million, or 10.7% last year, primarily due to labor and other operating cost savings. Moving over to good times, total restaurant sales for company-owned restaurants increased approximately $1.1 million to $9.9 million for the quarter, compared to the prior year first quarter. Same-store sales remained consistent with the prior year quarter, with 27 good times restaurants in the comp base at quarter end. The average menu price increase for the quarter was approximately 3.9% over the same prior year quarter. We did not take any menu price increase in the first quarter, and we will continue to assess our relative pricing position in the market, and will make adjustments based on competitor pricing. Food and packaging costs were 31.8% for the quarter, an increase of 100 basis points compared to last year's quarter. The increase is primarily attributable to higher purchase prices on food and paper goods, partially offset by the impact of the 3.9% average increase in menu pricing. As is the case with Bad Daddies, based upon current commodity forecasts, we expect ground beef costs to continue to increase throughout the remainder of fiscal year 2025. Additionally, avian flu has at least temporarily caused some extreme price increases in the cost of eggs, which are a component of each of our breakfast entrees. Macroeconomic and political forces cloud visibility into the magnitude and direction of commodities further into the future. Total labor cost increased to 36.7%, a 290 basis point increase from the 33.8% we ran during last year's quarter, mostly due to higher average wage rates resulting from the market forces and the CPI index minimum wage in Denver and the state of Colorado, and decreased labor productivity, partially offset by a 3.9% increase in menu pricing. Occupancy costs were 9.6%, an increase of 70 basis points from the prior year quarter. The increase is primarily due to lease extensions and rent escalations, as well as real property tax increases resulting from higher property values. Other operating costs were 13.2% for the quarter, an increase of 20 basis points, primarily due to increased technology-related fees and utilities. Good Times restaurant-level operating profit decreased by 0.3 million for the quarter to 0.9 million. As a percent of sales, restaurant-level operating profit decreased by 490 basis points versus last year to 8.6% due to elevated costs throughout the P&L. Combined general and administrative expenses were 2.6 million during the quarter, or 7.1% of total revenues, which remains steady from the prior year quarter. We expect to run approximately 7% general and administrative costs on a full year basis for fiscal 2025. Our net income to common shareholders for the quarter was 0.2 million, or income of two cents per share, versus a net loss of 0.6 million, five cents per share, in the first quarter last year. There was approximately $3,000 of income tax benefit recorded during the current quarter versus .1 million of income tax expense in the prior year quarter. Adjusted EBITDA for the quarter was 1.2 million compared to .5 million for the first quarter of 2024. We finished the quarter with 3 million in cash and 2.6 million of long-term debt. We repurchased 59,125 shares during the quarter under our share repurchase program. Share repurchases will continue to be balanced with other capital needs. We continue to budget approximately 1% of sales for ongoing maintenance CapEx, and we incurred 0.9 million of CapEx during the first fiscal quarter related to our remodel of the Good Times Restaurant and the North Denver Metro, and our acquisition of the two previously franchised restaurants. And now I will turn the call back to Ryan.