Good Times Restaurants Inc.

materially from the 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 that 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. Results during our third fiscal quarter were a mixed bag with notable sequential improvement in same store sales at Bad Daddy's and a 10 basis point improvement in restaurant level operating profit. At good times, however, same store sales performance and restaurant level profitability declined sequentially compared to the second quarter. As we announced in our earnings release, we've hired a new marketing leader for the company, Jason Murphy, who brings with him a strong pedigree in restaurant marketing. Jason will be responsible for leading all advertising and promotion strategy and execution at both brands, including menu, point of purchase materials, and our online ordering experience, in addition to all channels of media and advertising. Welcome aboard, Jason. No pressure. Same-store sales at good times improved sequentially in July, though still down mid-single digits year over year. From a product and service execution standpoint, Craig Soto, our director of operations for Good Times, has made significant improvements to our operations in the past two months, including bringing us much closer to cook to order, rolling out the new burger builds we discussed on last month's call, and making high impact adjustments to schedule expectations so that our restaurant general managers are present during more of the high revenue shifts of the business. Craig successfully implemented our fried ice cream limited time offer, which has been the most successful new product we've launched in several years as measured in units sold. While our competitors are highly focused on discounting, we continue to focus on our quality positioning. Having not taken price since January of 2024, we are now roughly in parity with pricing to our competitors outside of discounted menu offerings. against the historical backdrop of being generally priced at up to a 10% premium to those competitors. We increased pricing by approximately 1% in a subset of our stores on August 1st and are measuring traffic impact prior to increasing across the entire system. Intuitively, we believe that we have the ability to take price without significant traffic erosion beyond the trends we are already seeing. Historically, discounting has preserved sales, but at the expense of restaurant-level margins, and that history continues to guide our overall pricing and menu strategy. Additionally, as mentioned in our earnings release, we will be launching a new campaign centered around Colorado native burgers with refreshed digital assets, including web and mobile app, new digital advertising, and an outdoor advertising campaign that will launch later this month. With respect to Bad Daddy's operations, I was again pleased with our controls during the quarter as we've continued to manage food and beverage costs well in spite of limited net incremental menu price year over year. Our $8 Badass Margarita promotion has performed well throughout the summer with increased beverage incidents per guest. We continue to build additional sales but are yet a point where we're margin accretive on those incremental beverage unit sales. Similar to good times, we've not taken significant overall blended menu price and are sitting on less than 2% year-over-year food price, which has then mostly been offset by the discounted pricing of the badass margarita. Both concepts are facing record high ground beef prices in the fourth fiscal quarter, And as with good times, we are considering incremental menu price to offset the input cost inflation. Sales at Bad Daddy's were choppy during July with the concept experiencing mid single digit negative comps during the first three weeks of the month before a recent modest improvement. Our upcoming fall product promotion features a return of a guest favorite, the bratwurst burger. And we're introducing a giant shareable Bavarian pretzel served with a house-made sauce trio of jalapeno cheddar, Sam Adams Oktoberfest beer cheese, and whole grain Dijonais. Despite the headwinds, both brands continue to provide a differentiated product compared to those offered by our competitors in the market. Our restaurant operations at both concepts are delivering a better guest experience, both in product and service, than at any time during the past several years, and I'm confident in the work that our operators are doing at both bad daddies and good times. We anticipate that the additional professional marketing experience we've added to the team will result in strong communication of each brand's story to our guests and ultimately drive incremental sales and traffic for both concepts. I will now turn the call over to Carrie for a review of our performance during the quarter and some perspective on the company's financial initiatives.

Thank you, Ryan. I'll now review this quarter's results. We'll start with Bad Daddy's results. Total restaurant sales decreased 0.8 million to 26.5 million for the quarter. The sales decrease is primarily due to the fourth fiscal quarter 2024 closure of one Bad Daddy's restaurant, reduced customer traffic, and a negative mix shift attributable to the success of our smash patty burgers, partially offset by menu price increases. Our average menu price during the quarter was 3.8% higher than Q3 of 2024. Same-store sales decreased 1.4% for the quarter, with 39 bad daddies in the comp base at quarter end. Food and beverage costs were 30.6% for the quarter, a decrease of 60 basis points from last year's quarter. The decrease is primarily attributable to lower purchase prices, mainly for chicken wings and potatoes, compared to our prior year quarter, and the impact of a 3.8% increase in menu pricing, partially offset by increased ground beef costs. After a slight drop in the first two months of the quarter, beef prices again increased during the last month of the quarter and costs remained elevated over the prior year. Due to the continued tightening of beef supply, we anticipate ground beef costs will continue to increase throughout the remainder of fiscal year 2025. Labor costs increased by 50 basis points compared to the prior year quarter to 34.3%. This increase is primarily attributable to decreased labor productivity resulting from the deleveraging impact of lower sales. Occupancy costs were 6%, a decrease of 30 basis points from the prior year quarter, primarily due to decreases in non-cash rent for the locations with impaired right-of-use lease assets. Other operating costs were 14.7% for the quarter, an increase of 30 basis points, primarily due to increased utilities, technology-related fees, and menu printing, partially offset by decreased customer delivery fees. Overall, restaurant-level operating profit, a non-GAAP measure for bad daddies, was approximately 3.8 million for the quarter, or 14.4% of sales, compared to 3.9 million, or 14.3% last year, due to solid cost controls throughout the quarter. Moving over to good times. Total restaurant sales for company-owned restaurants decreased approximately 0.1 million to 10.4 million for the quarter, compared to the prior year third quarter. Same store sales decreased 9% for the quarter, with 27 Good Times restaurants in the comp base at quarter end. The average menu price for the quarter was approximately the same as the prior year quarter. Discounting activity continues in the QSR, and in particular, burger QSR segment. But recent pricing surveys have indicated that our most direct competitors in Colorado have begun to increase prices on non-discounted items, providing some flexibility for limited price increases during the last quarter of the fiscal year. Food and packaging costs were 31.5% for the quarter, an increase of 100 basis points compared to last year's quarter. The increase is primarily attributable to higher purchase prices for ground beef and eggs compared to the prior year quarter, without the benefit of any price increase, partially offset by savings in potato 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. The cost of eggs, which are a component of each of our breakfast entrees eased during the quarter, but prices are still well above prior year. Macroeconomic and political forces continue to cloud visibility into the magnitude and direction of commodities further into the future. Total labor costs increased to 34.2%, a 150 basis point increase from the 32.7% we ran during last year's quarter. Mostly due to higher average wage rates resulting from market forces and the CPI index minimum wage, in Denver and the state of Colorado, as well as decreased productivity resulting from the deleveraging impact of lower sales. This was partially offset by reduced restaurant-level incentive compensation. Occupancy costs were 8.6%, an increase of 40 basis points from the prior year quarter, driven by the deleveraging impact of the sales decline on fixed costs. Other operating costs were 14.6% for the quarter, an increase of 260 basis points, primarily due to increased technology-related fees, repair and maintenance, and restaurant smallwares and supplies. Good Times restaurant-level operating profit decreased by $0.6 million for the quarter to $1.2 million. As a percent of sales, restaurant-level operating profit decreased by 530 basis points versus last year to 11.2% due to elevated costs throughout the P&L. Combined general and administrative expenses were 2.2 million during the quarter, or 5.9% of total revenues, which decreased 120 basis points from the prior year quarter. We expect to run between 6 and 7% general and administrative costs on a full year basis for fiscal 2025. Our net income to common shareholders for the quarter was 1.5 million, or income of 14 cents per share, versus net income of 1.3 million, 12 cents per share, in the third quarter last year. There was income tax benefit of approximately 0.4 million recorded during the current quarter versus an income tax benefit of 0.2 million in the prior year quarter. Adjusted EBITDA off of the quarter was 2.2 million compared to 2.4 million for the third quarter of 2024. We finished the quarter with 3.1 million in cash and 2.3 million of long-term debt. We repurchased 21,968 shares during the quarter under our share repurchase program. Our share repurchase program continues to be active, but we expect significantly reduced purchases as our focus will remain on cash accumulation for the remainder of the fiscal year. We incurred $0.2 million of CapEx during the third fiscal quarter related to our restaurant remodel and signage projects. And now I will turn the call back to Ryan.