Good Times Restaurants Inc. Q2 FY2026 earnings call

• CEO encouraged by second quarter 2026 results, same-store sales at both brands improved sequentially, profitability improved due to operations and supply chain partnership. - Retained Cultivator as design and advertising agency for Good Times brand, worked on new brand imagery and position. - Test of $2 promotional price for Bambinos in Northern Colorado had strong same store sales and traffic improvement, plan to roll out system wide in June as summer promotion. - Reintroduced cheese curds to menu on May 1st based on guest feedback. - New spoon benders in custard lineup for June, July, August. - GT rewards program growing, 7% of sales from members, up from near 4% prior. - Bad Daddies implemented new monthly drops program, pipeline burger centric but designed to be expansive. - Nearing completion of rollout of Burger Hub learning management platform.

Total revenues decreased approximately 3.1% for the quarter to 33.2 million. Bad Daddy's: Total restaurant sales decreased 0.9 million to 23.9 million for the quarter. Same store sales decreased 0.8% for the quarter. Food and beverage costs were 29.6% for the quarter, a 110 basis point decrease from last year's quarter. Labor costs decreased by 20 basis points compared to the prior year quarter to 34.1% for the quarter. Occupancy costs were 6.8%, an increase of 10 basis points from the prior year quarter. Other operating costs were 15.6% for the quarter, an increase of 110 basis points. Restaurant-level operating profit remained relatively flat at 3.3 million for the quarter, or 13.8% of sales compared to 3.4 million or 13.8% last year. Good Times: Total restaurant sales for company owned restaurants decreased approximately 0.1 million to 9.2 million for the quarter compared to the prior year second quarter. Same store sales decreased 0.8% for the quarter. The average menu price for the quarter was approximately 1% higher than the prior year quarter. Food and packaging costs were 29.7% for the quarter, a decrease of 100 basis points compared to last year's quarter. Total labor costs decreased to 35%, a 60 basis point decrease from the 35.6% we ran during last year's quarter. Occupancy costs were 10%, a decrease of 10 basis points from the prior year quarter. Other operating costs were 15.2% for the quarter, an increase of 10 basis points. Good Times restaurant level operating profit increased 0.1 million over last year's quarter to 0.9 million. As a percent of sales, restaurant-level operating profit increased by 150 basis points versus last year to 10.1%. Combined general and administrative expenses were 2.2 million during the quarter, or 6.6% of total revenues, a decrease of 90 basis points from the prior year quarter. Our net income to common shareholders for the quarter was 0.1 million, or income of one cent per share, versus a net loss of 0.6 million, six cents per share, in the second quarter last year. Adjusted EBITDA for the quarter was 1.4 million, compared to one million for the second quarter of 2025.

• Anticipate 6 to 7% general and administrative costs on a full year basis for fiscal 2026. - Adjusted EBITDA for the quarter was 1.4 million, compared to one million for the second quarter of 2025.

• Known and unknown risks include market price of stock, other investment opportunities, disruption from pandemics, staffing constraints, supply chain and inflation, restaurant development plans, new restaurant delays, competition, cost and ingredient shortages, general economic and operating conditions, risks associated with share repurchase program, acquisition of additional restaurants, adequacy of cash flows and capital, changes in laws and regulations affecting restaurants.

Q: I was just curious if you guys could speak about the settlement with the White-Winston lawsuit and what proceeds, if any, have been received or will be received from that.

A: With respect to that, I think the disclosure that we provided last quarter in the 10-Q gives as much information as I'll speak to. I think we said ultimately from that that it was not substantially material to our financials. I will say all of those funds have been received and all of that has been recognized in the results of this quarter.

Q: So maybe you can tell us a little bit more about what the marketing plans have been in the last few quarters and how they're going to change with this new advertising relationship you talked about. And how do you think this will be more effective than what you've done in the past?

A: I'll step back to maybe about 18 months ago and with that prior to that. We were significantly heavy on radio advertising, and I would say about 12 months ago, we went away from nearly all radio advertising and were pretty much, and I'm speaking specifically to Good Times now, that concept, and switched really to primarily social media advertising. without substantial additional media that we had been using. What we are looking at moving forward, and although the final media plans have not been fully developed and committed to, we are looking at a greater deployment of digital media, which could include some digital audio streaming, will likely include digital video streaming, whether that is on connected TV or on platforms such as YouTube, as well as just general display campaigns. I think the biggest difference in terms of what we are looking at moving forward compared to any of the prior campaigns that we've run in the past year And I would go so far as to say back towards, you know, even the past two or three years is the message itself. And that we are really looking at what our guests are demanding in the market. And it's very clear that as components of value, what they are specifically looking for are smaller portion size and lower price. And I think the smaller portion size is driven in part by a need for a lower price, but it's also being driven by factors such as healthy eating and even the use of GLP-1 drugs. And I think so what has changed really is our focus on that and the fact that we have a really salient message to deliver with a very compelling $2 price point with a product that already is very attractive to our guests. and that we expect to create greater awareness around.

Q: How do you plan to use this marketing plan to drive more membership and GT rewards? I know you had said in past calls that because it's primarily a drive-through restaurant that it's difficult to get people to sign up for the loyalty program.

A: We are doing a couple of things there. One is we do have, and we are updating the, uh, I'd call it window based, uh, point at point of sale materials. Uh, and so posters with, with QR code to invite guests to join with more attractive, creative that have a much clearer call to action. Uh, beyond that, we expect to begin using what we call bag stuffers, basically little cards. with QR code and or a link explaining the benefits on that that we would include with each order. We have some other ideas that we're tossing around that are not committed to yet. Those are the primary ways. I will say that in the past six months, we have done a much improved job within the operations capability of speaking to GT Rewards, at the window and at the order box. And we are growing that membership base right now at a clip of about 5% per month. So if you do the math on that, that's about a 75% annual growth rate. As we grow the system base, that obviously will decline at the rate of increase, but we're very happy with the progress we're making on a monthly basis. on a monthly basis of growing the participants in that program right now.