Good Times Restaurants (NASDAQ: GTIM) lifts earnings despite revenue decline
Rhea-AI Filing Summary
Good Times Restaurants Inc. reported lower sales but stronger profitability for the quarter ended June 30, 2026. Net revenues fell 5.0% to $35,167,000, yet net income attributable to common shareholders rose to $1,907,000, or $0.18 per diluted share, up from $0.14 a year earlier. Year-to-date, revenues declined 6.1% to $101,105,000 while net income attributable to common shareholders more than doubled to $2,237,000, or $0.21 per diluted share.
Margin improvement came from lower food and packaging and labor ratios, reduced depreciation, lower general and administrative costs, and a $489,000 net gain on lease terminations and asset disposals, partly offset by higher advertising spend and modest impairment charges. Adjusted EBITDA increased to $2,454,000 for the quarter and $5,081,000 year-to-date. Operating cash flow strengthened to $3,698,000 year-to-date, and cash reached $3,597,000, with an undrawn $8,000,000 revolving credit facility and $7,990,000 of availability.
Same store sales were mixed: Bad Daddy’s decreased 2.3% in the quarter and 1.5% year-to-date, while Good Times increased 0.6% in the quarter but decreased 1.0% year-to-date. As of June 30, 2026, the company operated, franchised, or licensed 37 Bad Daddy’s and 28 Good Times restaurants and reported a working capital deficit of $7,649,000, which management expects to manage through existing cash and credit capacity.
Positive
- Profitability and cash generation improved: net income attributable to common shareholders rose to $2,237,000 year-to-date from $1,027,000, while net cash provided by operating activities increased to $3,698,000 from $1,461,000, reflecting better margins and stronger cash flow.
- Leverage and liquidity remain conservative: the company has a $8,000,000 Revolving Credit Facility with $7,990,000 available and no borrowings outstanding as of June 30, 2026, providing meaningful financial flexibility.
Negative
- Top-line softness and traffic pressure: quarterly net revenues declined 5.0% and year-to-date net revenues fell 6.1%, with Bad Daddy’s same store sales down 2.3% in the quarter and 1.5% year-to-date and Good Times down 1.0% year-to-date.
Filing Explained
The quarter adds a secured but undrawn borrowing capacity and a casualty-related lease exit; possible insurance recovery remains unrecorded.
This unaudited Form 10-Q covers the quarter ended
The revolving facility is borrowing capacity rather than reported borrowing: it permits up to
The filing also reports future minimum operating-lease payments and a present value of lease liabilities; these are disclosed lease obligations rather than additional borrowing under the revolver.
Key Figures
Key Terms
Restaurant-level operating profit financial
Revolving Credit Facility financial
Right-of-use assets financial
Same store sales financial
Adjusted EBITDA financial
Non-controlling interests financial
Earnings Snapshot
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Good Times Restaurants (GTIM) perform in the quarter ended June 30, 2026?
What were Good Times Restaurants (GTIM) year-to-date results for June 30, 2026?
How did same store sales trend for Good Times Restaurants (GTIM)?
What is Good Times Restaurants (GTIM) liquidity and debt position?
How did Good Times Restaurants (GTIM) Adjusted EBITDA change?
How many restaurants does Good Times Restaurants (GTIM) operate and franchise?
What is Good Times Restaurants (GTIM) working capital situation?
| UNITED STATES |
| SECURITIES AND EXCHANGE COMMISSION |
| WASHINGTON, D.C. 20549 |
| FORM
|
| (Mark One) |
| ACT OF 1934 |
| For the quarterly period ended |
| OR |
| EXCHANGE ACT OF 1934 |
| Commission File Number: |
 |
| (Exact Name of Registrant as Specified in Its Charter) |
|
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification Number) | |
| (Address of Principal Executive Offices, Including Zip Code) | ||
| (Registrant's Telephone Number, Including Area Code) | ||
| Securities registered pursuant to Section 12(b) of the Act: | ||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | ||
| No ¨ | ||
| Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). | ||
| No ¨ | ||
|
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company”, in Rule 12b-2 of the Exchange Act. | ||
| Large accelerated filer | ¨ | Accelerated filer | ¨ | |
| þ | Smaller reporting company | |||
| Emerging growth company | ||||
| If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ | ||
| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | ||
| Yes ¨ | No |
|
| As of July 31, 2026, there were | ||
Form 10-Q
Quarter Ended June 30, 2026
| INDEX | PAGE | ||
| PART I - FINANCIAL INFORMATION | |||
| Item 1. | Financial Statements | ||
| Condensed Consolidated Balance Sheets (unaudited) – June 30, 2026 and September 30, 2025 | 3 | ||
| Condensed Consolidated Statements of Operations (unaudited) for the fiscal quarters and year-to-date periods ended June 30, 2026 and July 1, 2025 | 4 | ||
| Consolidated Statements of Shareholders’ Equity (unaudited) for the fiscal year-to-date periods ended June 30, 2026 and July 1, 2025 | 5 | ||
| Condensed Consolidated Statements of Cash Flows (unaudited) for the fiscal year-to-date periods ended June 30, 2026 and July 1, 2025 | 7 | ||
| Notes to Condensed Consolidated Financial Statements (unaudited) | 8 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 25 | |
| Item 4. | Controls and Procedures | 25 | |
| PART II – OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 26 | |
| Item 1A. | Risk Factors | 26 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 26 | |
| Item 3. | Defaults Upon Senior Securities | 26 | |
| Item 4. | Mine Safety Disclosures | 26 | |
| Item 5. | Other Information | 26 | |
| Item 6. | Exhibits | 26 | |
| SIGNATURES | 27 | ||
| CERTIFICATIONS | |||
| 2 |
| Table of Contents |
| ITEM 1. | FINANCIAL STATEMENTS |
Good
Times Restaurants Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share and per share data)
| June 30, 2026 | September 30, 2025 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Inventories | ||||||||
| Receivables | ||||||||
| Prepaid expenses and other | ||||||||
| Total current assets | ||||||||
| PROPERTY AND EQUIPMENT | ||||||||
| Land and land improvements | ||||||||
| Buildings | ||||||||
| Leasehold improvements | ||||||||
| Fixtures and equipment | ||||||||
| Total property and equipment | ||||||||
| Less accumulated depreciation and amortization | ( |
) | ( |
) | ||||
| Total net property and equipment | ||||||||
| OTHER ASSETS | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Deferred tax assets, net | ||||||||
| Deposits and other assets | ||||||||
| Trademarks | ||||||||
| Goodwill | ||||||||
| Total other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current maturities of long-term debt | $ | $ | ||||||
| Accounts payable | ||||||||
| Operating lease liabilities, current | ||||||||
| Other accrued liabilities | ||||||||
| Total current liabilities | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Maturities of long-term debt, net of current portion | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Deferred and other liabilities | ||||||||
| Total long-term liabilities | ||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Good Times Restaurants Inc. shareholders’ equity: | ||||||||
| Preferred stock, $ |
||||||||
| Common stock, $ |
||||||||
| Capital contributed in excess of par value | ||||||||
| Treasury stock, at cost; |
( |
) | ( |
) | ||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total Good Times Restaurants Inc. shareholders' equity | ||||||||
| Non-controlling interests | ||||||||
| Total shareholders’ equity | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements (unaudited)
| 3 |
| Table of Contents |
Good
Times Restaurants Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands except share and per share data)
| Quarter Ended | Year-to-Date | |||||||||||||||
| June 30, 2026 (13 Weeks) |
July 1, 2025 (13 Weeks) |
June 30, 2026 (39 Weeks) |
July 1, 2025 (40 Weeks) |
|||||||||||||
| NET REVENUES: | ||||||||||||||||
| Restaurant sales | $ | $ | $ | $ | ||||||||||||
| Franchise and other revenues | ||||||||||||||||
| Total net revenues | ||||||||||||||||
| RESTAURANT OPERATING COSTS: | ||||||||||||||||
| Food and packaging costs | ||||||||||||||||
| Payroll and other employee benefit costs | ||||||||||||||||
| Restaurant occupancy costs | ||||||||||||||||
| Other restaurant operating costs | ||||||||||||||||
| Preopening costs | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total restaurant operating costs | ||||||||||||||||
| General and administrative costs | ||||||||||||||||
| Advertising costs | ||||||||||||||||
| Impairment of long-lived assets and ROU assets | ||||||||||||||||
| Gain on lease terminations and asset disposals | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total costs and expenses | ||||||||||||||||
| INCOME FROM OPERATIONS | ||||||||||||||||
| OTHER (EXPENSE) INCOME: | ||||||||||||||||
| Interest and other expense, net | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other income | ||||||||||||||||
| Total other (expense) income | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| NET INCOME BEFORE INCOME TAXES | ||||||||||||||||
| Provision for income taxes | ||||||||||||||||
| NET INCOME | $ | $ | $ | $ | ||||||||||||
| Income attributable to non-controlling interests | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | $ | $ | $ | ||||||||||||
| NET INCOME PER SHARE, ATTRIBUTABLE TO COMMON SHAREHOLDERS: | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
See accompanying notes to condensed consolidated financial statements (unaudited)
| 4 |
| Table of Contents |
Good
Times Restaurants Inc. and Subsidiaries
Consolidated Statements of Shareholders’ Equity
(Unaudited)
Year-to-Date June 30, 2026
(In thousands, except share and per share data)
| Treasury
Stock, at cost |
Common Stock | |||||||||||||||||||||||||||||||
| Shares | Amount | Outstanding Shares |
Par Value |
Capital Contributed in Excess of Par Value |
Non- Controlling Interest In Partnerships |
Accumulated Deficit |
Total | |||||||||||||||||||||||||
| BALANCES, September 30, 2025 | $ | ( |
) | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||
| Stock-based compensation cost | - | - | ||||||||||||||||||||||||||||||
| Restricted stock unit vesting | - | ( |
) | ( |
) | |||||||||||||||||||||||||||
| Non-controlling interests: | ||||||||||||||||||||||||||||||||
| Income | - | - | ||||||||||||||||||||||||||||||
| Net income attributable to Good Times Restaurants Inc. and comprehensive income |
- | - | ||||||||||||||||||||||||||||||
| BALANCES, December 30, 2025 | $ | ( |
) | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||
| Stock-based compensation cost | - | - | ||||||||||||||||||||||||||||||
| Non-controlling interests: | ||||||||||||||||||||||||||||||||
| Income | - | - | ||||||||||||||||||||||||||||||
| Distributions | - | - | - | ( |
) | ( |
) | |||||||||||||||||||||||||
| Net income attributable to Good Times Restaurants Inc. and comprehensive income |
- | - | ||||||||||||||||||||||||||||||
| BALANCES, March 31, 2026 | $ | ( |
) | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||
| Stock-based compensation cost | - | - | ||||||||||||||||||||||||||||||
| Non-controlling interests: | ||||||||||||||||||||||||||||||||
| Income | - | - | ||||||||||||||||||||||||||||||
| Distributions | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net income attributable to Good Times Restaurants Inc. and comprehensive income |
- | - | ||||||||||||||||||||||||||||||
| BALANCES, June 30, 2026 | $ | ( |
) | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements (unaudited)
| 5 |
| Table of Contents |
Good Times Restaurants
Inc. and Subsidiaries
Consolidated Statements of Shareholders’ Equity (Unaudited)
Year-to-Date July 1, 2025
(In thousands, except share and per share data)
| Treasury
Stock, at cost |
Common Stock | |||||||||||||||||||||||||||||||
| Shares | Amount | Outstanding Shares |
Par Value |
Capital Contributed in Excess of Par Value |
Non- Controlling Interest In Partnerships |
Accumulated Deficit |
Total | |||||||||||||||||||||||||
| BALANCES, September 24, 2024 | $ | ( |
) | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||
| Stock-based compensation cost | - | - | ||||||||||||||||||||||||||||||
| Repurchases of common stock | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Non-controlling interests: | ||||||||||||||||||||||||||||||||
| Income | - | - | ||||||||||||||||||||||||||||||
| Distributions | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net income attributable to Good Times Restaurants Inc. and comprehensive income |
- | - | ||||||||||||||||||||||||||||||
| BALANCES, December 31, 2024 | $ | ( |
) | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||
| Stock-based compensation cost | - | - | ||||||||||||||||||||||||||||||
| Cash-settled restricted stock units | - | - | - | - | ( |
) | - | - | ( |
) | ||||||||||||||||||||||
| Repurchases of common stock | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Non-controlling interests: | ||||||||||||||||||||||||||||||||
| Loss | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Distributions | - | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Net loss attributable to Good Times Restaurants Inc. and comprehensive income |
- | - | ( |
) | ( |
) | ||||||||||||||||||||||||||
| BALANCES, April 1, 2025 | $ | ( |
) | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||
| Stock-based compensation cost | - | - | ||||||||||||||||||||||||||||||
| Repurchases of common stock | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| Non-controlling interests: | ||||||||||||||||||||||||||||||||
| Income | - | - | ||||||||||||||||||||||||||||||
| Contributions | - | - | ||||||||||||||||||||||||||||||
| Net income attributable to Good Times Restaurants Inc. and comprehensive income |
- | - | ||||||||||||||||||||||||||||||
| BALANCES, July 1, 2025 | $ | ( |
) | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||
See accompanying notes to condensed consolidated financial statements (unaudited)
| 6 |
| Table of Contents |
Good
Times Restaurants Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| Fiscal Year-to-Date | ||||||||
| June
30, 2026 (39 Weeks) |
July 1, 2025 (40 Weeks) |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Net change in operating lease right-of-use assets and liabilities | ( |
) | ( |
) | ||||
| Gain on lease terminations | ( |
) | ||||||
| Recognition of deferred gain on sale of restaurant building | ( |
) | ( |
) | ||||
| Loss on disposal of assets | ||||||||
| Impairment of long-lived assets | ||||||||
| Stock-based compensation expense | ||||||||
| Provision for income taxes | ( |
) | ( |
) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables and prepaids | ( |
) | ( |
) | ||||
| Inventories | ||||||||
| Deposits and other | ( |
) | ||||||
| Accounts payable | ( |
) | ||||||
| Accrued and other liabilities | ( |
) | ( |
) | ||||
| Net cash provided by operating activities | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Payments for the purchase of property and equipment | ( |
) | ( |
) | ||||
| Acquisition of restaurants from franchisees, net of cash acquired | ( |
) | ||||||
| Proceeds from lease assignment and sale of fixed assets | ||||||||
| Net cash used in investing activities | ( |
) | ( |
) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Borrowings from long-term debt | ||||||||
| Payments on long-term debt | ( |
) | ( |
) | ||||
| Repurchases of common stock | ( |
) | ||||||
| Restricted stock unit vesting | ( |
) | ( |
) | ||||
| Contributions from non-controlling interests | ||||||||
| Distributions to non-controlling interests | ( |
) | ( |
) | ||||
| Net cash (used in) provided by financing activities | ( |
) | ||||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ( |
) | ||||||
| CASH AND CASH EQUIVALENTS, beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Change in current liabilities attributable to the purchase of property and equipment | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements (unaudited)
| 7 |
| Table of Contents |
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Tabular dollar amounts in thousands, except share and per share data)
| Note 1. | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements include the accounts of Good Times Restaurants Inc. (the “Company”) and its wholly owned subsidiaries as well as one partnership in which the Company is the general partner. All significant intercompany balances and transactions have been eliminated in consolidation.
The Company owns a
The Company operates and licenses full-service restaurants under the brand Bad Daddy’s Burger Bar (“Bad Daddy’s”) that are primarily located in Colorado and in the Southeast region of the United States.
The Company operates and franchises drive-thru fast-food hamburger restaurants under the brand Good Times Burgers & Frozen Custard (“Good Times”), all of which are located in Colorado and Wyoming.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles and practices of the United States of America (“GAAP”) for interim financial information. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all of the normal recurring adjustments necessary to present fairly the financial position of the Company as of June 30, 2026 and the results of its operations and its cash flows for the periods presented. Operating results for the fiscal quarter ended June 30, 2026 are not necessarily indicative of the results that may be expected for the year ending September 29, 2026. The condensed consolidated balance sheet as of June 30, 2026 is derived from the audited financial statements but does not include all disclosures required by generally accepted accounting principles. As a result, these condensed consolidated financial statements should be read in conjunction with the Company’s Form 10-K for the fiscal year ended September 30, 2025.
Fiscal Year – The Company’s fiscal year is a 52/53-week year ending on the last Tuesday of September. In a 52-week fiscal year, each of the Company’s quarterly periods consist of 13 weeks. The additional week in a 53-week fiscal year is added to the first quarter, making such quarter consist of 14 weeks. Fiscal 2026 contains 52 weeks and fiscal 2025 contained 53 weeks. The quarters ended June 30, 2026 and July 1, 2025 each consisted of 13 weeks.
Reclassification – Certain prior year balances have been reclassified to conform to the current year’s presentation. Such reclassifications had no effect on the net income.
Advertising Costs – The company
utilizes Advertising Funds to administer certain advertising programs for both the Bad Daddy’s and Good Times brands. For the Good
Times brand, the programs benefit both us and our franchisees. We and our franchisees are required to contribute a percentage of gross
sales to the fund. The contributions to these funds are designated and segregated for advertising. We consolidate the Advertising Funds
into our financial statements whereby contributions from franchisees, when due to the Good Times Advertising Fund upon the generation
of sales by a franchisee restaurant, are recorded and included as a component of franchise revenues. Contributions to the Good Times Advertising
Fund from our franchisees were $
Receivables – Our receivables typically consist of royalties and other fees due to us from independent franchisees of our brands as well as product rebates and other incentives due to us under agreements with our food and beverage vendors, payments due from third party delivery and online ordering partners, and payments due to us for sales of gift cards to third party retailers.
Receivables consist of the following (in thousands) as of:
| June 30, 2026 | September 30, 2025 | |||||||
| Vendor rebates and incentives | $ | $ | ||||||
| Third party delivery partners | ||||||||
| Franchise and other | ||||||||
| Third party retailers | ||||||||
| Total | $ | $ | ||||||
| Note 2. | Recent Accounting Pronouncements |
ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures was issued December 2023 and is effective for fiscal years beginning after December 15, 2024. It is to be applied prospectively. However, retrospective application is permitted. The Company expects to implement ASU 2023-09 prospectively in fiscal year 2026 and does not expect that it will have a material effect on the Company’s consolidated financial statements.
ASU 2024-03 Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses was issued November 2024 and is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 17, 2027. It may be applied either prospectively or retrospectively and early implementation is allowed. The Company is assessing the timing and method of implementation of this accounting pronouncement but does not expect that it will have a material effect on the Company’s consolidated financial statements.
The Company reviewed other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on the Company’s consolidated financial statements.
| 8 |
| Table of Contents |
| Note 3. | Revenue |
Revenue Recognition. Revenues consist primarily of sales from restaurant operations, which includes third-party delivery sales and franchise revenue, which includes franchise royalties and contributions to advertising funds. The Company recognizes revenue, pursuant to ASU 2014-09, Revenue from Contracts with Customers (Topic 606), when it satisfies a performance obligation by transferring control over a product or service to a customer, typically a restaurant customer or a franchisee/licensee.
The Company recognizes revenue from restaurant sales, including third-party delivery sales, when our performance obligation, namely the provision of food and beverage and the associated customer service, is satisfied. Restaurant sales are presented net of discounts, coupons, employee meals, complimentary meals and sales tax. Sales taxes collected from customers are included in other accrued liabilities on our consolidated balance sheets until the taxes are remitted to the taxing authorities.
The Company sells gift cards to customers and
recognizes revenue from gift cards primarily in the form of restaurant revenue. Gift card breakage, which is recognized when the likelihood
of a gift card being redeemed is remote, is determined based upon the Company’s historic redemption patterns. Breakage in the amount
of $
The Company operates a loyalty program known as GT Rewards. With each purchase, GT Rewards members earn loyalty points that can be redeemed in the future for free products. Activity related to the rewards program is immaterial to the Company’s financial statements for the periods ended June 30, 2026 and July 1, 2025.
Revenues we receive from our franchise and license agreements include sales-based royalties, and from our franchise agreements also may include advertising fund contributions, area development fees, and franchisee fees. We recognize sales-based royalties from franchisees and licensees according to the amounts due, calculated from the sales occurring during the relevant accounting period. We similarly recognize Advertising Fund contributions from franchisees according to the amounts due as calculated from the sales occurring during the relevant accounting period. The Company also provides its franchisees with services associated with opening new restaurants and operating them under franchise and development agreements in exchange for area development and franchise fees. The Company would capitalize these fees upon receipt from the franchisee and then would amortize those over the contracted franchise term as the services comprising the performance obligations are satisfied. We have not received material development or franchise fees in the periods presented, and the primary performance obligations under existing franchise and development agreements have been satisfied prior to the earliest period presented in our financial statements.
| Note 4. | Prepaid expenses and other current assets |
Prepaid expenses and other current assets consist of the following (in thousands) as of:
| June 30, 2026 | September 30, 2025 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid software licenses and maintenance contracts | ||||||||
| Prepaid common area rental expenses | ||||||||
| Prepaid licenses and permits | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
| Note 5. | Goodwill and Intangible Assets |
The following table presents goodwill and intangible assets as of June 30, 2026 and September 30, 2025 (in thousands):
| June 30, 2026 | September 30, 2025 | |||||||||||||||||||||||
| Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
|||||||||||||||||||
| Indefinite-lived intangible assets: | ||||||||||||||||||||||||
| Trademarks | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Goodwill | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
There were impairments to goodwill or intangible assets in the periods presented in the table above.
| 9 |
| Table of Contents |
| Note 6. | Other Accrued Liabilities |
Other accrued liabilities consist of the following as of:
| June 30, 2026 | September 30, 2025 | |||||||
| Wages and other employee benefits | $ | $ | ||||||
| Taxes, other than income taxes | ||||||||
| Gift card liability, net of breakage | ||||||||
| General expense accrual and other | ||||||||
| Total | $ | $ | ||||||
| Note 7. | Notes Payable and Long-Term Debt |
Revolving
Credit Facility. The Company and its wholly owned subsidiaries (the “Subsidiaries”) maintain an amended and restated
credit agreement with Huntington Bank (“Huntington”), as successor to Cadence Bank, with whom the facility was originally
established. Pursuant to the credit agreement, as amended to date, Huntington agreed to loan the Company up to $
Proceeds from the Revolving Credit Facility, if and when drawn, may be used (i) to fund new restaurant development, (ii) to finance the buyout of non-controlling partners in certain restaurants, (iii) to finance the redemption, purchase or other acquisition of equity interests in the Company and (iv) for working capital and other general corporate purposes.
The Revolving Credit
Facility includes customary affirmative and negative covenants and events of default. The Revolving Credit Facility also requires the
Company to maintain various financial condition ratios, including minimum liquidity, an amended maximum leverage ratio and an amended
minimum fixed charge coverage ratio. In addition, to the extent the aggregate outstanding balance under the revolver under the Revolving
Credit Facility exceeds $
As a result of entering into the Revolving Credit
Facility and the various amendments, the Company paid loan origination costs including professional fees of approximately $
In connection with the Revolving Credit Facility, the Company and the Subsidiaries entered into an Amended and Restated Security and Pledge Agreement (the “Security Agreement”) with Huntington. Under the Security Agreement, the Revolving Credit Facility is secured by a first priority security interest in substantially all the assets of the Company and the Subsidiaries.
As of June 30, 2026, there were
Parker Promissory
Note. Good Times Drive Thru, Inc., a wholly owned subsidiary of the Company, is the maker of an unsecured promissory note in connection
with the purchase of the previously franchised Good Times Burgers and Frozen Custard restaurant located in the Denver suburb of Parker,
Colorado. JGN Management, Inc., the former franchisee, is the holder of the note. The Parker Promissory Note fully amortizes over its
original ten-year life maturing on
Total interest expense on notes payable was
$
| Note 8. | Earnings per Common Share |
Our basic earnings per share calculation is computed based on the weighted-average number of common shares outstanding. Our diluted earnings per share calculation is computed based on the weighted-average number of common shares outstanding adjusted by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued. Potentially dilutive securities for this calculation consist of in-the-money outstanding stock options and restricted stock units (which were assumed to have been exercised at the average market price of the common shares during the reporting period). The treasury stock method is used to measure the dilutive impact of in-the-money stock options.
| 10 |
| Table of Contents |
The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding:
| Quarter Ended | Year-to-Date | |||||||||||||||
| June 30, 2026 | July 1, 2025 | June 30, 2026 | July 1, 2025 | |||||||||||||
| Weighted-average shares outstanding basic | ||||||||||||||||
| Effect of potentially dilutive securities: | ||||||||||||||||
| Stock options | ||||||||||||||||
| Restricted stock units | ||||||||||||||||
| Weighted-average shares outstanding diluted | ||||||||||||||||
| Excluded from diluted weighted average shares outstanding: | ||||||||||||||||
| Antidilutive | ||||||||||||||||
| Note 9. | Contingent Liabilities and Liquidity |
There may be various claims in process, matters in litigation, and other contingencies brought against the Company by employees, vendors, customers, franchisees, or other parties. Evaluating these contingencies is a complex process that may involve substantial judgment on the potential outcome of such matters, and the ultimate outcome of such contingencies may differ from our current analysis. We regularly review the adequacy of accruals and disclosures related to such contingent liabilities in consultation with legal counsel. While it is not possible to predict the outcome of these claims with certainty, it is management’s opinion that any reasonably possible losses associated with such contingencies have been adequately accrued or would be immaterial to our financial statements.
| Note 10. | Leases |
The Company determines if a contract contains
a lease at inception. The Company’s material long-term operating lease agreements are for the land and buildings for our restaurants
as well as our corporate office. The initial lease terms range from
Components of operating lease costs are as follows for the fiscal quarters ended June 30, 2026 and July 1, 2025:
| Lease cost | Classification | June 30, 2026 | July 1, 2025 | |||||||
| Operating lease cost | Occupancy, Other restaurant operating costs and General and administrative expenses, net | $ | $ | |||||||
| Variable lease cost | Occupancy | ( |
) | |||||||
| Sublease income | Occupancy | ( |
) | ( |
) | |||||
| $ | $ | |||||||||
Weighted average lease term and discount rate are as follows:
| June 30, 2026 | July 1, 2025 | |||||||
| Weighted average remaining lease term (in years) | ||||||||
| Weighted average discount rate | % | % | ||||||
Supplemental cash flow disclosures:
| June 30, 2026 | July 1, 2025 | |||||||
| Cash paid for operating lease liabilities | $ | $ | ||||||
| Non-cash operating lease assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
Future minimum rent payments for our operating leases as of June 30, 2026 are as follows:
| Total | ||||
| One Year | $ | |||
| Two Years | ||||
| Three Years | ||||
| Four Years | ||||
| Five Years | ||||
| Thereafter | ||||
| Total minimum lease payments | ||||
| Less: imputed interest | ( |
) | ||
| Present value of lease liabilities | $ | |||
The above future minimum rental amounts exclude the amortization of deferred lease incentives, renewal options that are not reasonably assured of renewal, and contingent rent. The Company generally has escalating rents over the term of the leases and records rent on a straight-line basis.
| 11 |
| Table of Contents |
|
Note 11. |
Long-Lived Assets and Trademarks |
Long-Lived Assets. We review our long-lived assets including land, property, equipment, and lease right-of-use assets for impairment when there are factors that indicate that the carrying amount of an asset may not be recoverable. We assess recovery of assets at the individual restaurant level and typically include an analysis of historical cash flows, future operating plans, and cash flow projections in assessing whether there are indicators of impairment. The recoverability of assets to be held and used is measured by comparing the net book value of the assets of an individual restaurant to the fair value of those assets. This impairment process involves significant judgment in the use of estimates and assumptions pertaining to future projections and operating results.
There were impairments of long-lived assets
of $
During the quarter ended June 30, 2026 one of the Company’s locations was destroyed in a casualty event and the Company has exercised its right of termination under the terms of that lease. The Company recorded a net gain of $176,000 related to this casualty loss, which is due primarily to the elimination of the lease liability related to this site, as impairment of assets specific to this location had previously been recorded. The Company expects some recovery under its property and casualty insurance coverage, however the net recovery amount cannot yet be reasonably estimated and no amounts related to possible net proceeds from insurance have been recorded.
Trademarks. Trademarks have been determined to have an indefinite life. We evaluate our trademarks for impairment annually and on an interim basis as events and circumstances warrant by comparing the fair value of the trademarks with their carrying amount. There was impairment required for the acquired trademarks as of June 30, 2026 and July 1, 2025.
Goodwill.
Goodwill represents the excess of cost over fair value of the assets of businesses the Company acquired. Goodwill is not amortized, but
rather, the Company is required to test goodwill for impairment on an annual basis or whenever indications of impairment arise. The Company
considers its operations to be comprised of two reporting units: (1) Good Times and (2) Bad Daddy’s. As of June 30, 2026 and July
1, 2025, the Company had $
| Note 12. | Income Taxes |
We account for income taxes using the liability method, whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The deferred tax assets are reviewed periodically for recoverability and valuation allowances are adjusted as necessary.
The Company’s effective income tax rate
for the three periods ended June 30, 2026 was (
The Company is subject to U.S. federal income tax and income tax in multiple U.S. state jurisdictions. The Company’s tax years corresponding to the Company’s fiscal years 2023 through 2025 remain open for examination by the authorities under the normal three-year statute of limitations. Should the Company utilize any of its U.S. or state NOLs, the tax year to which the original loss relates will remain open to examination. The Company believes that its income tax filing positions and deductions will be sustained upon audit and does not anticipate any adjustments that will result in a material adverse effect on the Company’s financial condition, results of operations, or cash flows. Therefore, no reserves for uncertain income tax positions have been recorded. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. No accrual for interest and penalties was considered necessary as of June 30, 2026.
| Note 13. | Shareholders’ Equity |
Stock-based
Compensation. The Company has traditionally maintained incentive compensation plans that include provision for the issuance
of equity-based awards. The Company established the 2008 Omnibus Equity Incentive Compensation Plan in 2008 (the “2008 Plan”)
and has outstanding awards that were issued under the 2008 Plan. Subsequently, the 2008 Plan expired in 2018 and the Company established
a new plan, the 2018 Omnibus Equity Incentive Plan (the “2018 Plan”) during the 2018 fiscal year, which was approved by shareholders
on May 24, 2018. Future awards will be issued under the 2018 Plan. On February 8, 2022 the Company’s shareholders approved a proposal
to increase the number of shares available for issuance under the 2018 Plan from
Stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the grant). The Company recognizes the impact of forfeitures as forfeitures occur.
| 12 |
| Table of Contents |
For the quarters ended June 30, 2026 and July
1, 2025, we recognized $
Non-controlling Interests. Non-controlling interests are presented as a separate item in the shareholders’ equity section of the condensed consolidated balance sheet. The amount of consolidated net income or loss attributable to non-controlling interests is presented on the face of the condensed consolidated statement of operations. Changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions, while changes in ownership interest that do result in deconsolidation of a subsidiary require gain or loss recognition based on the fair value on the deconsolidation date.
The equity interest of the unrelated limited partner is shown on the accompanying condensed consolidated balance sheet in the shareholders’ equity section as a non-controlling interest and is adjusted each period to reflect the limited partner’s share of the net income or loss as well as any cash contributions or distributions to or from the limited partner for the period. The limited partner’s share of the net income or loss in the subsidiary is shown as non-controlling interest income or expense in the accompanying condensed consolidated statement of operations. All inter-company accounts and transactions are eliminated.
Non-controlling interests at the end of the
quarter consisted of one joint-venture partnership involving six Good Times restaurants, in which the Company is the controlling partner
and owns a
| Note 14. | Segment Reporting |
Restaurant sales for each operating segment include revenues generated by the operation of Company-owned restaurants, which include food and beverage sales, net of discounts. Franchise and other revenues for each operating segment include franchisee royalties and contributions to advertising funds, license fees, and other service fees, as well as gift card breakage.
Our CODM uses Restaurant-level operating profit as the measure for assessing performance and allocating resources for our segments. Restaurant-level operating profit is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. The Company defines restaurant-level operating profit to be restaurant revenues minus restaurant-level operating costs, excluding restaurant closures and impairment costs. The measure includes restaurant-level occupancy costs, which include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance and other property costs, but excludes depreciation.
We do not rely on any major customers as a source of sales, and the customers and long-lived assets of our operating segments are located in the United States.
Prior to fourth quarter 2025, certain general and administrative expenses now included in Other were combined and reported with our Bad Daddy's segment. In order to better align with our internal reporting and provide a better representation of restaurant-level operating profit, these expenses have been removed from the Bad Daddy's segment and are now stated separately in Other. Fiscal 2025 figures have been recast for comparability.
| 13 |
| Table of Contents |
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP (in thousands):
| Thirteen-Week Period Ended June 30, 2026 | ||||||||||||||||
| Good Times | Bad Daddy's | Other | Consolidated | |||||||||||||
| Restaurant sales | $ | $ | $ | $ | ||||||||||||
| Restaurant operating costs: | ||||||||||||||||
| Food and packaging costs | ||||||||||||||||
| Payroll and other employee benefit costs | ||||||||||||||||
| Restaurant occupancy costs | ( |
) | ||||||||||||||
| Other restaurant operating costs | ( |
) | ||||||||||||||
| Restaurant-level operating profit | $ | $ | $ | $ | ||||||||||||
| Reconciliation of Restaurant-level operating profit to Net income before income taxes | ||||||||||||||||
| Add: | ||||||||||||||||
| Franchise and other revenues | ||||||||||||||||
| Less: | ||||||||||||||||
| Restaurant depreciation and amortization | ||||||||||||||||
| Advertising costs | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Impairment of long-lived assets and ROU assets | ||||||||||||||||
| Gain on lease terminations and asset disposals | ( |
) | ||||||||||||||
| Income from operations | ||||||||||||||||
| Less: | ||||||||||||||||
| Interest and other expense, net | ||||||||||||||||
| Net income before income taxes | $ | |||||||||||||||
| Reconciliation of revenue | ||||||||||||||||
| Restaurant sales | $ | $ | $ | $ | ||||||||||||
| Franchise and other revenues | ||||||||||||||||
| Total consolidated net revenues | $ | $ | $ | $ | ||||||||||||
| Other segment disclosures | ||||||||||||||||
| Restaurant depreciation and amortization | $ | $ | $ | $ | ||||||||||||
| Impairment of long-lived assets and ROU assets | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | $ | $ | ||||||||||||
| 14 |
| Table of Contents |
| Thirteen-Week Period Ended July 1, 2025 | ||||||||||||||||
| Good Times | Bad Daddy's | Other | Consolidated | |||||||||||||
| Restaurant sales | $ | $ | $ | $ | ||||||||||||
| Restaurant operating costs: | ||||||||||||||||
| Food and packaging costs | ||||||||||||||||
| Payroll and other employee benefit costs | ||||||||||||||||
| Restaurant occupancy costs | ( |
) | ||||||||||||||
| Other restaurant operating costs | ( |
) | ||||||||||||||
| Restaurant-level operating profit | $ | $ | $ | $ | ||||||||||||
| Reconciliation of Restaurant-level operating profit to Net income before income taxes | ||||||||||||||||
| Add: | ||||||||||||||||
| Franchise and other revenues | ||||||||||||||||
| Less: | ||||||||||||||||
| Restaurant depreciation and amortization | ||||||||||||||||
| Advertising costs | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Gain on asset disposals | ( |
) | ||||||||||||||
| Income from operations | ||||||||||||||||
| Less: | ||||||||||||||||
| Interest and other expense, net | ||||||||||||||||
| Net income before income taxes | $ | |||||||||||||||
| Reconciliation of revenue | ||||||||||||||||
| Restaurant sales | $ | $ | $ | $ | ||||||||||||
| Franchise and other revenues | ||||||||||||||||
| Total consolidated net revenues | $ | $ | $ | $ | ||||||||||||
| Other segment disclosures | ||||||||||||||||
| Restaurant depreciation and amortization | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | $ | ( |
) | $ | ||||||||||
| Thirty-Nine-Week Period Ended June 30, 2026 | ||||||||||||||||
| Good Times | Bad Daddy's | Other | Consolidated | |||||||||||||
| Restaurant sales | $ | $ | $ | $ | ||||||||||||
| Restaurant operating costs: | ||||||||||||||||
| Food and packaging costs | ||||||||||||||||
| Payroll and other employee benefit costs | ||||||||||||||||
| Restaurant occupancy costs | ( |
) | ||||||||||||||
| Other restaurant operating costs | ( |
) | ||||||||||||||
| Restaurant-level operating profit | $ | $ | $ | $ | ||||||||||||
| Reconciliation of Restaurant-level operating profit to Net income before income taxes | ||||||||||||||||
| Add: | ||||||||||||||||
| Franchise and other revenues | ||||||||||||||||
| Less: | ||||||||||||||||
| Restaurant depreciation and amortization | ||||||||||||||||
| Advertising costs | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Impairment of long-lived assets and ROU assets | ||||||||||||||||
| Gain on lease terminations and asset disposals | ( |
) | ||||||||||||||
| Income from operations | ||||||||||||||||
| Less: | ||||||||||||||||
| Interest and other expense, net | ||||||||||||||||
| Net income before income taxes | $ | |||||||||||||||
| Reconciliation of revenue | ||||||||||||||||
| Restaurant sales | $ | $ | $ | $ | ||||||||||||
| Franchise and other revenues | ||||||||||||||||
| Total consolidated net revenues | $ | $ | $ | $ | ||||||||||||
| Other segment disclosures | ||||||||||||||||
| Restaurant depreciation and amortization | $ | $ | $ | $ | ||||||||||||
| Impairment of long-lived assets and ROU assets | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | $ | $ | ||||||||||||
| 15 |
| Table of Contents |
| Forty-Week Period Ended July 1, 2025 | ||||||||||||||||
| Good Times | Bad Daddy's | Other | Consolidated | |||||||||||||
| Restaurant sales | $ | $ | $ | $ | ||||||||||||
| Restaurant operating costs: | ||||||||||||||||
| Food and packaging costs | ||||||||||||||||
| Payroll and other employee benefit costs | ||||||||||||||||
| Restaurant occupancy costs | ( |
) | ||||||||||||||
| Other restaurant operating costs | ( |
) | ||||||||||||||
| Restaurant-level operating profit | $ | $ | $ | $ | ||||||||||||
| Reconciliation of Restaurant-level operating profit to Net income before income taxes | ||||||||||||||||
| Add: | ||||||||||||||||
| Franchise and other revenues | ||||||||||||||||
| Less: | ||||||||||||||||
| Restaurant depreciation and amortization | ||||||||||||||||
| Advertising costs | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Impairment of long-lived assets and ROU assets | ||||||||||||||||
| Gain on asset disposals | ( |
) | ||||||||||||||
| Preopening costs | ||||||||||||||||
| Income from operations | ||||||||||||||||
| Less: | ||||||||||||||||
| Interest and other expense, net | ||||||||||||||||
| Add: | ||||||||||||||||
| Other income | ||||||||||||||||
| Net income before income taxes | $ | |||||||||||||||
| Reconciliation of revenue | ||||||||||||||||
| Restaurant sales | $ | $ | $ | $ | ||||||||||||
| Franchise and other revenues | ||||||||||||||||
| Total consolidated net revenues | $ | $ | $ | $ | ||||||||||||
| Other segment disclosures | ||||||||||||||||
| Restaurant depreciation and amortization | $ | $ | $ | $ | ||||||||||||
| Impairment of long-lived assets and ROU assets | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | $ | $ | ||||||||||||
| June 30, 2026 | September 30, 2025 | |||||||
| Property and equipment, net: | ||||||||
| Good Times | $ | $ | ||||||
| Bad Daddy’s | ||||||||
| Other | ||||||||
| Consolidated | $ | $ | ||||||
| Right-of-use assets, net: | ||||||||
| Good Times | $ | $ | ||||||
| Bad Daddy’s | ||||||||
| Other | ||||||||
| Consolidated | $ | $ | ||||||
| Total assets: | ||||||||
| Good Times | $ | $ | ||||||
| Bad Daddy’s | ||||||||
| Other | ||||||||
| Consolidated | $ | $ | ||||||
| Note 15. | Subsequent Events |
None.
| 16 |
| Table of Contents |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Overview. Good Times Restaurant Inc., through its subsidiaries (collectively, the “Company” or “we”, “us” or “our”) operates and licenses full-service hamburger-oriented restaurants under the name Bad Daddy’s Burger Bar (“Bad Daddy’s”) and operates and franchises hamburger-oriented drive-through restaurants under the name Good Times Burgers & Frozen Custard (“Good Times”).
Forward Looking Statements: This Form 10-Q contains or incorporates by reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the disclosure of risk factors in the Company’s Form 10-K for the fiscal year ended September 30, 2025. Also, documents subsequently filed by the Company with the SEC and incorporated herein by reference may contain forward-looking statements. We caution investors that any forward-looking statements made by us are not guarantees of future performance and actual results could differ materially from those in the forward-looking statements as a result of various factors, including but not limited to the following:
| (I) | The disruption to our business from pandemics or other public health emergencies and the impact it could have on our results of operations, financial condition and prospects. The disruption and effect on our business may vary depending on the duration and extent of the pandemics and other public health emergencies and the impact of federal, state and local governmental actions and customer behavior in response. |
| (II) | We compete with numerous well-established competitors who have substantially greater financial resources and longer operating histories than we do. Competitors have increasingly offered selected food items and combination meals, including hamburgers, at discounted prices, and continued discounting by competitors may adversely affect revenues and profitability of Company restaurants. |
| (III) | We may be negatively impacted if we experience same store sales declines. Same store sales comparisons will be dependent, among other things, on the success of our advertising and promotion of new and existing menu items. No assurances can be given that such advertising and promotions will in fact be successful. |
| (IV) | We may be negatively impacted if we are unable to pass on to customers, through menu price increases, the increased costs that we incur through inflation experienced in our input costs including both the cost of food and the cost of labor. Management regularly monitors industry metrics which indicate that increased levels of price inflation are prevalent throughout the economy. This has resulted in increases in commodity, labor and energy costs for both concepts as well as increased product substitutions, elevated freight costs, and increased variability in product quality. Further significant increases in inflation could affect the global and United States economies, which could have an adverse impact on our business and results of operations if we and our franchisees are not able to adjust prices sufficiently to offset the effect of cost increases without negatively impacting consumer demand. Additionally, tariffs threatened or implemented, or merely the lack of certainty about whether and which tariffs may be implemented could result in higher costs for products sourced from outside of the United States and negatively impact our business and results of operations. |
We may also be negatively impacted by other factors common to the restaurant industry such as changes in consumer tastes away from red meat and fried foods; increases in the cost of food, paper, labor, health care, workers’ compensation or energy; inadequate number of hourly paid employees; increased wages and salaries for hourly and salaried employees; and/or decreases in the availability of affordable capital resources. We caution the reader that such risk factors are not exhaustive, particularly with respect to future filings. For further discussion of our exposure to market risk, refer to Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025.
Growth Strategies and Outlook. We believe there are significant opportunities to grow customer traffic and increase awareness of our brands, leading to organic sales growth. We also believe there are unit growth opportunities for both of our concepts though we continue to execute unit growth with increased scrutiny surrounding real estate selection and a more conservative approach to leverage than we previously took, in light of the higher costs and volatile inflation present in the current operating environment.
Restaurant Locations. As of June 30, 2026, we operated, franchised, or licensed a total of thirty-seven Bad Daddy’s restaurants and twenty-eight Good Times restaurants. The following table presents the number of restaurants operating at the end of the fiscal quarters ended June 30, 2026 and July 1, 2025.
| 17 |
| Table of Contents |
Company-Owned/Co-Developed:
| Bad Daddy’s | Good Times Burgers | Total | ||||||||||||||||||||||
| June 30, 2026 |
July 1, 2025 |
June 30, 2026 |
July 1, 2025 |
June 30, 2026 |
July 1, 2025 |
|||||||||||||||||||
| Alabama | 3 | 3 | - | - | 3 | 3 | ||||||||||||||||||
| Colorado | 9 | 10 | 25 | 27 | 34 | 37 | ||||||||||||||||||
| Georgia | 3 | 5 | - | - | 3 | 5 | ||||||||||||||||||
| North Carolina | 14 | 14 | - | - | 14 | 14 | ||||||||||||||||||
| Oklahoma | 1 | 1 | - | - | 1 | 1 | ||||||||||||||||||
| South Carolina | 4 | 4 | - | - | 4 | 4 | ||||||||||||||||||
| Tennessee | 2 | 2 | - | - | 2 | 2 | ||||||||||||||||||
| Total | 36 | 39 | 25* | 27 | 61 | 66 | ||||||||||||||||||
*Does not include one Good Times restaurant that is temporarily closed.
Franchise/License:
| Bad Daddy’s | Good Times Burgers | Total | ||||||||||||||||||||||
|
June 30, |
July 1, |
June 30, |
July 1, |
June 30, |
July 1, |
|||||||||||||||||||
| Colorado | - | - | 1 | 1 | 1 | 1 | ||||||||||||||||||
| North Carolina | 1 | 1 | - | - | 1 | 1 | ||||||||||||||||||
| Wyoming | - | - | 2 | 2 | 2 | 2 | ||||||||||||||||||
| Total | 1 | 1 | 3 | 3 | 4 | 4 | ||||||||||||||||||
Results of Operations
Fiscal quarter ended June 30, 2026 (13 weeks) compared to fiscal quarter ended July 1, 2025 (13 weeks):
Net Revenues. Net revenues for the fiscal quarter ended June 30, 2026 decreased $1,858,000 or 5.0% to $35,167,000 from $37,025,000 for the fiscal quarter ended July 1, 2025. Bad Daddy’s concept revenues decreased $1,634,000 and our Good Times concept revenues decreased $224,000 compared to the same prior year period.
Bad Daddy’s restaurant sales decreased $1,624,000 to $24,889,000 for the fiscal quarter ended June 30, 2026 from $26,513,000 for the quarter ended July 1, 2025. This decrease is a result of fewer restaurant operating weeks due to a reduced number of operating restaurants and reduced customer traffic, all of which are partially offset by menu price increases. The average menu price for the fiscal quarter ended June 30, 2026 was approximately 2.5% higher than the same prior year quarter.
Good Times restaurant sales decreased $225,000 to $10,131,000 for the fiscal quarter ended June 30, 2026 from $10,356,000 for the quarter ended July 1, 2025. This decrease is primarily due to the second fiscal quarter 2026 temporary closure of one Good Times restaurant, partially offset by menu price increases. The average menu price for the fiscal quarter ended June 30, 2026 was approximately 1.7% higher than the same prior year quarter.
Franchise and other revenues decreased $9,000 to $147,000 for the quarter ended June 30, 2026 compared to $156,000 for the quarter ended July 1, 2025. This decrease is primarily due to reduced gift card breakage.
Same Store Sales
Same store sales is a metric used in evaluating the performance of established restaurants and is a commonly used metric in the restaurant industry. Same store sales for our brands are calculated using all Company-owned units open for at least eighteen full fiscal months and use the comparable operating weeks from the prior year to the current year quarter’s operating weeks.
Bad Daddy’s same store restaurant sales decreased 2.3% during the fiscal quarter ended June 30, 2026 compared to the fiscal quarter ended July 1, 2025, primarily driven by discounts provided through included sides and drink specials along with a decrease in demand across the sector for alcoholic beverages, as well as reduced customer traffic, partially offset by menu price increases and increased revenue from new menu items. There were thirty-six restaurants included in the same store sales base at the end of the quarter.
Good Times same store restaurant sales increased 0.6% during the quarter ended June 30, 2026 compared to the fiscal quarter ended July 1, 2025, primarily driven by increased custard sales and a system-wide value menu offering which drove increased traffic late in the quarter. There were twenty-five restaurants included in the same store sales base at the end of the current quarter.
Restaurant Operating Costs
Food and Packaging Costs. Food and packaging costs for the fiscal quarter ended June 30, 2026 decreased $647,000 to $10,711,000 (30.6% of restaurant sales) from $11,358,000 (30.8% of restaurant sales) for the quarter ended July 1, 2025.
Bad Daddy’s food and packaging costs were $7,546,000 (30.3% of restaurant sales) for the quarter ended June 30, 2026, down from $8,100,000 (30.6% of restaurant sales), for the quarter ended July 1, 2025. The decrease as a percent of sales is primarily attributable to improved non-beef protein costs combined with the impact of a 2.5% average increase in menu pricing, partially offset by higher produce costs and fuel surcharges.
| 18 |
| Table of Contents |
Good Times food and packaging costs were $3,165,000 (31.2% of restaurant sales) for the quarter ended June 30, 2026, down from $3,258,000 (31.5% of restaurant sales) for the quarter ended July 1, 2025. The decrease is primarily attributable to reduced waste along with the impact of a 1.7% average increase in menu pricing, partially offset by higher fuel surcharges.
Payroll and Other Employee Benefit Costs. Payroll and other employee benefit costs for the quarter ended June 30, 2026 decreased $945,000 to $11,702,000 (33.4% of restaurant sales) from $12,647,000 (34.3% of restaurant sales) for the quarter ended July 1, 2025.
Bad Daddy’s payroll and other employee benefit costs were $8,361,000 (33.6% of restaurant sales) for the quarter ended June 30, 2026 down from $9,103,000 (34.3% of restaurant sales) for the same prior year period. As a percentage of sales, payroll and employee benefit costs decreased by 0.7% primarily attributable to reduced salary costs partially offset by higher hourly labor costs.
Good Times payroll and other employee benefit costs were $3,341,000 (33.0% of restaurant sales) in the quarter ended June 30, 2026, down from $3,544,000 (34.2% of restaurant sales) in the same prior year period. As a percentage of sales, the decrease is primarily due to increased labor efficiency, partially offset by higher average wage rates resulting from a combination of market forces and the inflation-indexed minimum wage rates in Denver and the state of Colorado.
Occupancy Costs. Occupancy costs for the quarter ended June 30, 2026 decreased $15,000 to $2,477,000 (7.1% of restaurant sales) from $2,492,000 (6.8% of restaurant sales) for the quarter ended July 1, 2025.
Bad Daddy’s occupancy costs were $1,578,000 (6.3% of restaurant sales) for the fiscal quarter ended June 30, 2026, down from $1,623,000 (6.1% of restaurant sales) in the same prior year period. The decrease is primarily a result of fewer restaurant operating weeks due to reduced number of operating restaurants.
Good Times occupancy costs were $920,000 (9.1% of restaurant sales) for the quarter ended June 30, 2026, up from $890,000 (8.6% of restaurant sales) in the same prior year period. This was primarily due to an increase in property taxes between the quarterly periods.
Other Operating Costs. Other operating costs for the quarter ended June 30, 2026, decreased $161,000 to $5,069,000 (14.5% of restaurant sales) from 5,230,000 (14.2% of restaurant sales) for the quarter ended July 1, 2025.
Bad Daddy’s other operating costs were $3,809,000 (15.3% of restaurant sales) for the quarter ended June 30, 2026 down from $3,876,000 (14.6% of restaurant sales) in the same prior year period. As a percentage of sales, the increase is primarily due to increased customer delivery and travel expenses, partially offset by decreased repair and maintenance expenses.
Good Times other operating costs were $1,389,000 (13.7% of restaurant sales) in the quarter ended June 30, 2026, down from $1,471,000 (14.2% of restaurant sales) in the same prior year period. As a percentage of sales, the decrease is primarily due to reduced operating supplies and R&M expenses, partially offset by utility cost increases.
New Store Preopening Costs. There were no preopening costs in the quarters ended June 30, 2026 or July 1, 2025.
Depreciation and Amortization Costs. Depreciation and amortization costs for the quarter ended June 30, 2026, decreased $65,000 to $917,000 from $982,000 in the quarter ended July 1, 2025.
Bad Daddy’s depreciation and amortization costs for the quarter ended June 30, 2026 decreased $64,000 to $668,000 from $732,000 in the quarter ended July 1, 2025. The decrease is primarily due to assets performing past their estimated useful lives.
Good Times depreciation and amortization costs were $240,000 for both the quarters ended June 30, 2026 and July 1, 2025.
General and Administrative Costs. General and administrative costs for the quarter ended June 30, 2026, decreased $188,000 to $1,986,000 (5.6% of total revenues) from 2,174,000 (5.9% of total revenues) for the quarter ended July 1, 2025.
This decrease in general and administrative expenses in the quarter ended June 30, 2026 is primarily attributable to:
| · | Decrease in costs associated with multi-unit supervisory roles of $74,000 |
| · | Decrease in legal and professional fees of $47,000 |
| · | Decrease in all other costs of $67,000 |
Advertising Costs. Advertising costs for the quarter ended June 30, 2026, increased $96,000 to $1,009,000 (2.9% of total revenues) from $913,000 (2.5% of total revenues) for the quarter ended July 1, 2025.
Bad Daddy’s advertising costs were $516,000 (2.1% of total revenues) in the quarter ended June 30, 2026 compared to $542,000 (2.0% of total revenues) in the same prior year period. Bad Daddy’s advertising costs consist primarily of third-party gift card commissions, promotional campaigns on third-party delivery platforms, social media and print production.
Good Times advertising costs were $475,000 (4.7% of total revenues) in the quarter ended June 30, 2026 compared to $382,000 (3.7% of total revenues) in the same prior year period. Good Times advertising costs consist primarily of promotional campaigns on third-party delivery platforms, social media and agency fees. Advertising costs are presented as gross, with franchisee contributions to the fund being recognized as a component of franchise revenues.
| 19 |
| Table of Contents |
Impairment of Long-Lived Assets and ROU Assets. There were $18,000 of costs associated with impairments for the quarter ended June 30, 2026. There were no impairment costs for the quarter ended July 1, 2025. The current quarter impairment costs relate to the right-of-use asset for a Bad Daddy’s location destroyed in a casualty event.
Gain on Lease Terminations and Asset Disposals. The net gain on lease terminations and asset disposals for the fiscal quarter ended June 30, 2026 was $489,000, which includes a gain on lease terminations of $587,000, $3,000 of deferred gain recognition, and a loss of $101,000 on asset disposals, inclusive of the assets disposed resulting from lease terminations. The net gain in the prior year fiscal quarter was $4,000, which was composed of a $13,000 gain on lease termination, $3,000 of deferred gain recognition, and a loss of $12,000 on disposal of miscellaneous assets.
Income from Operations. Income from operations was $1,767,000 in the quarter ended June 30, 2026 compared to income from operations of $1,233,000 in the quarter ended July 1, 2025.
The change from the quarter ended July 1, 2025 to the quarter ended June 30, 2026 was primarily due to matters discussed in the relevant sections above.
Interest Expense. Interest expense was $24,000 during the quarter ended June 30, 2026, compared with $51,000 during the quarter ended July 1, 2025.
Other Income. There was no other income for the quarters ended June 30, 2026 or July 1, 2025.
Provision for Income Taxes. There was a $212,000 benefit from income taxes for the quarter ended June 30, 2026, compared to a $363,000 benefit for the quarter ended July 1, 2025.
Net Income. Net income was $1,955,000 for the quarter ended June 30, 2026, compared to net income of $1,545,000 in the quarter ended July 1, 2025.
The change from the quarter ended July 1, 2025 to the quarter ended June 30, 2026 was primarily attributable to the matters discussed in the relevant sections above.
Income Attributable to Non-Controlling Interests. The non-controlling interest represents the limited partners’ share of income in the Good Times joint-venture restaurants.
For the quarter ended June 30, 2026, the income attributable to non-controlling interests was $48,000 compared to $58,000 for the quarter ended July 1, 2025. This $10,000 decrease is due to decreased profitability of the restaurants involved in the limited partnership with a non-controlling partner.
Fiscal three quarters ended June 30, 2026 (39 weeks) compared to fiscal three quarters ended July 1, 2025 (40 weeks):
Net Revenues. Net revenues for the three quarters ended June 30, 2026 decreased $6,532,000, or 6.1%, to $101,105,000 from $107,637,000 for the three quarters ended July 1, 2025. Bad Daddy’s concept revenues decreased $5,458,000 and our Good Times concept revenues decreased $1,074,000.
Bad Daddy’s restaurant sales decreased $5,397,000 to $72,011,000 for the three quarters ended June 30, 2026 from $77,408,000 for the three quarters ended July 1, 2025. This decrease is due to an additional week in the prior year period versus the current year period, fewer restaurant operating weeks due to reduced number of operating restaurants and decreased guest traffic, partially offset by menu price increases. The average menu price increase for the three quarters ended June 30, 2026 over the same prior year quarters was approximately 1.9%.
Good Times restaurant sales decreased $1,060,000 to $28,506,000 for the three quarters ended June 30, 2026 from $29,566,000 for the three quarters ended July 1, 2025. This decrease is due to an additional week in the prior year period versus the current year period and the second fiscal quarter 2026 temporary closure of one Good Times restaurant, partially offset by increases in menu price. The average menu price increase for the three quarters ended June 30, 2026 over the same prior year quarters was approximately 1.2%.
Franchise and other revenues decreased $75,000 to $588,000 in the three quarters ended June 30, 2026 compared to $663,000 in the three quarters ended July 1, 2025. This decrease is due to lower license and royalty fees as well as a decrease in gift card breakage.
Same Store Sales
Same store sales is a metric used in evaluating the performance of established restaurants and is a commonly used metric in the restaurant industry. Same store sales for our brands are calculated using all company-owned units open for at least eighteen full fiscal months and use the comparable operating weeks from the prior year-to-date period to the current year-to-date period’s operating weeks.
Bad Daddy’s same store restaurant sales decreased 1.5% during the three quarters ended June 30, 2026 compared to the same three quarters ended July 1, 2025, primarily driven by discounts provided through included sides and drink specials along with a decrease in demand across the sector for alcoholic beverages, and reduced customer traffic, partially offset by menu price increases. There were thirty-six restaurants included in the same store sales base at the end of the current quarter.
Good Times same store restaurant sales decreased 1.0% during the three quarters ended June 30, 2026 compared to the same three quarters ended July 1, 2025, primarily driven by reduced guest traffic, partially offset by menu price increases. There were twenty-five restaurants included in the same store sales base at the end of the current quarter.
| 20 |
| Table of Contents |
Restaurant Operating Costs
Food and Packaging Costs. Food and packaging costs for the three quarters ended June 30, 2026 decreased $2,818,000 to $30,380,000 (30.2% of restaurant sales) from $33,198,000 (31.0% of restaurant sales) for the three quarters ended July 1, 2025.
Bad Daddy’s food and packaging costs were $21,653,000 (30.1% of restaurant sales) for the three quarters ended June 30, 2026, down from $23,933,000 (30.9% of restaurant sales) for the three quarters ended July 1, 2025. The decrease as a percentage of sales is primarily attributable to reduced food waste, lower non-beef commodity costs, as well as the impact of a 1.9% increase in menu pricing compared to the prior year-to-date period, partially offset by increased ground beef costs and increased fuel surcharges.
Good Times food and packaging costs were $8,727,000 (30.6% of restaurant sales) for the three quarters ended June 30, 2026, down from $9,265,000 (31.3% of restaurant sales) for the three quarters ended July 1, 2025. The decrease as a percent of sales is primarily attributable to reduced food waste, lower non-beef commodity costs, and the impact of a 1.2% increase in menu pricing compared to the prior year-to-date period, partially offset by increased ground beef costs and fuel surcharges.
Payroll and Other Employee Benefit Costs. Payroll and other employee benefit costs for the three quarters ended June 30, 2026 were $34,299,000 (34.1% of restaurant sales) from $37,256,000 (34.8% of restaurant sales) for the three quarters ended July 1, 2025.
Bad Daddy’s payroll and other employee benefit costs were $24,530,000 (34.1% of restaurant sales) for the three quarters ended June 30, 2026 down from $26,770,000 (34.6% of restaurant sales) for the three quarters ended July 1, 2025. As a percent of sales, payroll and employee benefits costs decreased by 0.5% primarily attributable to reduced salary expenses, partially offset by increased hourly labor costs.
Good Times payroll and other employee benefit costs were $9,769,000 (34.3% of restaurant sales) in the three quarters ended June 30, 2026, down from $10,486,000 (35.5% of restaurant sales) in the same prior year period. As a percent of sales, payroll and employee benefits costs decreased by 1.2% primarily due to increased labor efficiency, partially offset by higher average wage rates.
Occupancy Costs. Occupancy costs for the three quarters ended June 30, 2026 decreased $248,000 to $7,510,000 (7.5% of restaurant sales) from $7,758,000 (7.3% of restaurant sales) for the three quarters ended July 1, 2025.
Bad Daddy’s occupancy costs were $4,818,000 (6.7% of restaurant sales) for the three quarters ended June 30, 2026, down from $5,041,000 (6.5% of restaurant sales) for the three quarters ended July 1, 2025. The decrease was primarily due to fewer restaurant operating weeks due to the reduced number of operating restaurants.
Good Times occupancy costs were $2,756,000 (9.7% of restaurant sales) in the three quarters ended June 30, 2026, down from $2,778,000 (9.4% of restaurant sales) in the three quarters ended July 1, 2025.
Other Operating Costs. Other operating costs for the three quarters ended June 30, 2026, decreased $307,000 to $14,582,000 (14.5% of restaurant sales) from $14,889,000 (13.9% of restaurant sales) for the three quarters ended July 1, 2025.
Bad Daddy’s other operating costs were $10,933,000 (15.2% of restaurant sales) for the three quarters ended June 30, 2026 down from $11,035,000 (14.3% of restaurant sales) for the three quarters ended July 1, 2025. As a percentage of sales, the increase was primarily due to increases in customer delivery expenses.
Good Times other operating costs were $4,067,000 (14.3% of restaurant sales) in the three quarters ended June 30, 2026, down from $4,139,000 (14.0% of restaurant sales) in the three quarters ended July 1, 2025. As a percentage of sales, the increase was primarily attributable to increases in customer delivery and utility expenses, partially offset by decreases in training and recruiting expenses.
New Store Preopening Costs. There were no preopening costs for the three quarters ended June 30, 2026, compared to $8,000 for the three quarters ended July 1, 2025. The prior fiscal year’s costs primarily relate to training costs incurred as part of our two Good Times restaurant acquisitions.
Depreciation and Amortization Costs. Depreciation and amortization costs for the three quarters ended June 30, 2026, decreased $261,000 to $2,735,000 from $2,996,000 in the three quarters ended July 1, 2025.
Bad Daddy’s depreciation and amortization costs for the three quarters ended June 30, 2026 decreased $272,000 to $1,974,000 from $2,246,000 in the three quarters ended July 1, 2025. The decrease is primarily due to assets performing past their estimated useful lives.
Good Times depreciation and amortization costs for the three quarters ended June 30, 2026 increased $9,000 to $730,000 from $721,000 in the three quarters ended July 1, 2025.
General and Administrative Costs. General and administrative costs for the three quarters ended June 30, 2026, decreased $1,103,000 to $6,237,000 (6.2% of total revenues) from $7,340,000 (6.8% of total revenues) for the three quarters ended July 1, 2025.
| 21 |
| Table of Contents |
This decrease in general and administrative expenses in the three quarters ended June 30, 2026 is primarily attributable to:
| · | Decrease in costs associated with multi-unit supervisory roles of $562,000 |
| · | Decrease in technology costs of $91,000 |
| · | Decrease in insurance related costs of $56,000 |
| · | Decrease in franchise related costs of $41,000 |
| · | Decrease in all other costs of $353,000, primarily activity related to legal matters |
Advertising Costs. Advertising costs for the three quarters ended June 30, 2026, increased $311,000 to $3,268,000 (3.2% of total revenues) from $2,957,000 (2.7% of total revenues) for the three quarters ended July 1, 2025.
Bad Daddy’s advertising costs were $1,689,000 (2.3% of total revenues) for the three quarters ended June 30, 2026 compared to $1,872,000 (2.4% of total revenues) for the three quarters ended July 1, 2025. The decrease is primarily due to a reduction in promotional campaigns on third-party delivery platforms, local store marketing and video streaming expenses, partially offset by an increase in brand research. Bad Daddy’s advertising costs consist primarily of promotional campaigns on third-party delivery platforms, social media, third-party gift card commissions and print production.
Good Times advertising costs were $1,537,000 (5.4% of total revenues) in the three quarters ended June 30, 2026 compared to $1,103,000 (3.7% of total revenues) in the three quarters ended July 1, 2025. The increase is primarily due to increased advertising campaigns including video streaming, promotional campaigns on third-party delivery platforms, and celebrity and influencer partnerships. Good Times advertising costs consist primarily of third-party delivery promotions, video streaming, social media, and agency costs. Advertising costs are presented as gross, with franchisee contributions to the fund being recognized as a component of franchise revenues.
Impairment of Long-Lived Assets Costs. The were $245,000 of costs associated with impairments for the three quarters ended June 30, 2026. There were $494,000 of impairment costs for the three quarters ended July 1, 2025. The current year impairment costs are primarily attributable to one Good Times restaurant. Impairment costs in the prior year were primarily attributable to the impairment of lease right-of-use assets and new assets deployed in restaurants where impairment was previously assessed, and the Company’s current analysis indicated impairment of assets associated with those restaurants.
Gain on Lease Terminations and Asset Disposals. The net gain on lease terminations and asset disposals for the three quarters ended June 30, 2026 was $390,000, which includes a gain on lease terminations of $587,000, $9,000 of deferred gain recognition, and a loss of $206,000 on asset disposals, inclusive of the assets disposed resulting from lease terminations. The net gain in the prior fiscal year period was $55,000 and was composed of a $13,000 gain on lease termination, $11,000 of deferred gain recognition, and a net gain of $31,000 on disposal of miscellaneous assets.
Income from Operations. Income from operations was $2,239,000 in the three quarters ended June 30, 2026 compared to income from operations of $796,000 in the three quarters ended July 1, 2025.
The change from the three quarters ended July 1, 2025 to the three quarters ended June 30, 2026 was primarily attributable to the matters discussed in the relevant sections above.
Interest Expense. Interest expense was $111,000 during the three quarters ended June 30, 2026, compared with $153,000 during the three quarters ended July 1, 2025.
Other Income: There was no other income for the three quarters ended June 30, 2026, compared to $140,000 of other income in the three quarters ended July 1, 2025, which related to the termination of an agreement in connection with the Company’s management services, and lease negotiations on behalf of a former franchisee, with respect to real estate previously subleased to a third party by the former franchisee.
Provision for Income Taxes. There was a $184,000 benefit from income taxes for the three quarters ended June 30, 2026 compared to a $309,000 benefit from income taxes for the three quarters ended July 1, 2025.
Net Income. Net income was $2,312,000 for the three quarters ended June 30, 2026 compared to net income of $1,092,000 in the three quarters ended July 1, 2025.
The change from the three quarters ended July 1, 2025 to the three quarters ended June 30, 2026 was primarily attributable to the matters discussed in the relevant sections above.
Income Attributable to Non-Controlling Interests. The non-controlling interest represents the limited partners’ share of income in the Good Times joint-venture restaurants.
For the three quarters ended June 30, 2026, the income attributable to non-controlling interests was $75,000 compared to $65,000 for the three quarters ended July 1, 2025. The $10,000 increase is due to increased profitability during the three quarters of the restaurants involved in the partnership.
Adjusted EBITDA
EBITDA is defined as net income before interest, income taxes and depreciation and amortization.
Adjusted EBITDA is defined as EBITDA plus non-cash stock-based compensation expense, preopening expense, non-recurring acquisition costs, asset impairment costs, and non-cash disposal of assets. Adjusted EBITDA is intended as a supplemental measure of our performance that is not required by or presented in accordance with GAAP. We believe that EBITDA and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results. Our management uses EBITDA and Adjusted EBITDA (i) as a factor in evaluating management's performance when determining incentive compensation and (ii) to evaluate the effectiveness of our business strategies.
| 22 |
| Table of Contents |
We believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial measures with other restaurant operating companies, which may present similar non-GAAP financial measures to investors. In addition, you should be aware when evaluating EBITDA and Adjusted EBITDA that in the future we may incur expenses similar to those excluded when calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies do not calculate Adjusted EBITDA in the same fashion.
Our management does not consider EBITDA or Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of EBITDA and Adjusted EBITDA is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. Some of these limitations are:
| · | Adjusted EBITDA does not reflect our cash expenditures or future requirements, for capital expenditures or contractual commitments; |
| · | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
| · | Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; |
| · | Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; |
| · | Stock based compensation expense is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing performance for a particular period; |
| · | Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and |
| · | Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only as a supplemental measure. You should review the reconciliation of net income to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.
| 23 |
| Table of Contents |
| Quarter Ended | Year-to-Date | |||||||||||||||
|
June 30, 2026 (13 Weeks) |
July 1, 2025 (13 Weeks) |
June 30, 2026 (39 Weeks) |
July 1, 2025 (40 Weeks) |
|||||||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Net income attributable to common shareholders, as reported | $ | 1,907 | $ | 1,487 | $ | 2,237 | $ | 1,027 | ||||||||
| Depreciation and amortization | 922 | 1,000 | 2,783 | 3,071 | ||||||||||||
| Depreciation and amortization attributable to non-controlling interest | (28 | ) | (24 | ) | (81 | ) | (74 | ) | ||||||||
| Provision for income taxes | (212 | ) | (363 | ) | (184 | ) | (309 | ) | ||||||||
| Interest expense, net | 24 | 51 | 111 | 153 | ||||||||||||
| EBITDA | 2,613 | 2,151 | 4,866 | 3,868 | ||||||||||||
| Preopening expense (1) | - | - | - | 8 | ||||||||||||
| Non-cash stock-based compensation (2) | 21 | 25 | 66 | 90 | ||||||||||||
| Asset impairment (3) | 18 | - | 245 | 494 | ||||||||||||
| Non-cash gain on lease terminations and asset disposals (4) | (198 | ) | (105 | ) | (96 | ) | (99 | ) | ||||||||
| Non-cash loss on asset disposals attributable to non-controlling interests (4) | - | - | - | (3 | ) | |||||||||||
| Adjusted EBITDA | $ | 2,454 | $ | 2,071 | $ | 5,081 | $ | 4,358 | ||||||||
| (1) | Represents expenses directly associated with the opening of new or acquired restaurants, including preopening rent. |
| (2) | Represents non-cash stock-based compensation as described in Note 13 to the unaudited condensed consolidated financial statements. |
| (3) | Represents costs recognized in connection with the asset impairment charges described in Note 11 to the unaudited condensed consolidated financial statements. |
| (4) | Represents deferred gains on previous sale-leaseback transactions on two Good Times restaurants, gains on lease terminations, as well as (gains) losses on asset disposals. |
Liquidity and Capital Resources
Cash and Working Capital.
As of June 30, 2026, we had a working capital deficit of $7,649,000. Our working capital position benefits from the fact that we generally collect cash from sales to customers on the same day, or in the case of credit or debit card transactions, within a few days of the related sale and have payment terms with vendors that are typically between 14 and 21 days. Our current working capital deficit is additionally affected by the recognition of short-term lease liabilities, as we lease substantially all of our real estate and have both current and long-term obligations to our landlords. We believe that we will have sufficient capital to meet our working capital and recurring capital expenditure needs in fiscal 2026. We anticipate any commitments in fiscal 2026 will be funded out of existing cash or future borrowings against the Revolving Credit Facility.
See Part II, Item 2 of this filing for a discussion of the Company’s share repurchase program.
Financing
For a discussion of the Company’s financing arrangements (including the Revolving Credit Facility), refer to Note 7 of the unaudited condensed consolidated financial statements included in this report.
Cash Flows
| Year-to-Date Period Ended | ||||||||
| June 30, 2026 | July 1, 2025 | |||||||
| Net cash provided by operating activities | $ | 3,698 | $ | 1,461 | ||||
| Net cash used in investing activities | (630 | ) | (3,192 | ) | ||||
| Net cash (used in) provided by financing activities | (2,076 | ) | 1,016 | |||||
| Net change in cash and cash equivalents | $ | 992 | $ | (715 | ) | |||
Operating Cash Flows
Net cash from operating activities increased by $2,237,000 for the three quarters ended June 30, 2026 compared to the three quarters ended July 1, 2025. The increase is primarily attributable to an increase in net income and the net change in ROU assets and lease liabilities between the comparable periods. Additionally, there was decreased cash usage for accounts payable and accrued liabilities, as presented on the condensed consolidated statements of cash flows.
Investing Cash Flows
Net cash used in investing activities for the three quarters ended June 30, 2026 and July 1, 2025 were $630,000 and $3,192,000, respectively, which primarily reflect the purchases of property and equipment and proceeds from lease assignments and asset sales in each period, as well as the acquisitions of Good Times restaurants previously owned by franchisees in the prior year period.
| 24 |
| Table of Contents |
Financing Cash Flows
Net cash used in financing activities for the three quarters ended June 30, 2026 was $2,076,000, which includes proceeds from long-term debt of $500,000, payments of long-term debt of $2,524,000, distributions to non-controlling interests of $37,000, and cash settlement of restricted stock units of $15,000.
Net cash provided by financing activities for the three quarters ended July 1, 2025 was $1,016,000, which includes proceeds from long-term debt of $2,250,000, payments of long-term debt of $774,000, net distributions to non-controlling interests of $38,000, cash settlement of restricted stock units of $58,000, and $364,000 of payments for the repurchase of common stock under the Company’s share repurchase program.
Impact of Inflation and Wage Increases at Both Concepts
Some commodity prices, such as dairy byproducts, chicken, and eggs, have been more stable over recent quarters. Although beef prices have decreased from their high points in the fourth fiscal quarter of 2025, they remain elevated. Based on general industry consensus and normal seasonality, we expect ground beef costs to remain elevated throughout the remainder of fiscal year 2026. There continues to be uncertainty related to the degree of inflation and its associated impact on our business related to tariffs that have been implemented or threatened to be imposed on other countries, some of which are sources of food and packaging supplies for our business. Furthermore, although New World Screwworm (“NWS”) has not yet materially affected the cost of beef and other proteins, the potential exists for it to do so if the NWS outbreak is not contained.
In addition to food cost inflation, we have also experienced the need to meaningfully increase wages to attract restaurant employees. While we are hopeful that wage rate inflation moderates as overall inflation, as evidenced by the Consumer Price Index (CPI-U), has moderated the persistent shortage of qualified workers, and in Colorado inflation-indexed statutory wage rate increases continue to place upward pressure on wages.
We have historically used menu price increases to manage profitability in times of inflation, however the current unusually high rate of wage inflation, exceeds what we believe we can reasonably pass through to our customers without negatively affecting frequency and trial by our customers, and we are not able to predict the impact of beef price inflation or our ability to offset the potential increase in cost of beef with menu price increases.
Seasonality
Revenues of the Company are subject to seasonal fluctuations based on weather conditions adversely affecting Colorado restaurant sales primarily during the months of December, January, February, and March, which affect both of the Company’s brands, though increasingly winter weather events have impacted our restaurants outside of Colorado and late season weather events in April and May have occurred in Colorado during recent years. The Company’s Bad Daddy’s restaurants typically experience seasonal reductions in revenues between the months of October and January resulting from general consumer spending patterns.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Not required.
| ITEM 4. | CONTROLS AND PROCEDURES |
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Based on an evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the period covered by this report on Form 10-Q, the Company’s Chief Executive Officer (its principal executive officer) and Chief Accounting Officer (its principal financial officer) have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2026.
Changes in Internal Control over Financial Reporting
There have been no significant changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 25 |
| Table of Contents |
PART II - OTHER INFORMATION
| ITEM 1. | LEGAL PROCEEDINGS |
There may be various claims in process, matters in litigation, and other contingencies brought against the Company by employees, vendors, customers, franchisees, or other parties. Evaluating these contingencies is a complex process that may involve substantial judgment on the potential outcome of such matters, and the ultimate outcome of such contingencies may differ from our current analysis. We regularly review the adequacy of accruals and disclosures related to such contingent liabilities in consultation with legal counsel. While it is not possible to predict the outcome of these claims with certainty, it is management’s opinion that any reasonably possible losses associated with such contingencies have been adequately accrued or would be immaterial to our financial statements.
| ITEM 1A. | RISK FACTORS |
Risk factors associated with our business are contained in Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025 filed with the SEC on December 29, 2025. There have been no material changes from the risk factors disclosed in the aforementioned filings.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
The Company‘s Board of Directors authorized a $5.0 Million share repurchase program which became effective February 7, 2022. On December 9, 2024 the Company’s Board of Directors authorized the purchase of another $2.0 million of common stock, bringing the total authorization for share repurchases to $7.0 million. The authorization to repurchase will continue until the maximum value of shares is achieved or the Company terminates the program. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities. As of June 30, 2026 the Company has purchased 1,822,246 shares of its common stock pursuant to the share repurchase program. Approximately $1,981,000 remains authorized for repurchases under the plan.
There were no repurchases of common stock under the share repurchase program during the quarter or three quarters ended June 30, 2026.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
During the quarter ended June 30,
2026, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended)
| ITEM 6. | EXHIBITS |
(a) Exhibits. The following exhibits are furnished as part of this report:
| Exhibit No. | Description | |
| *31.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 | |
| *31.2 | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 | |
| *32.1 | Certification of Chief Executive Officer and Principal Financial Officer pursuant to Section 906 | |
| 101.INS | XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| *104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
*Filed herewith
| 26 |
| Table of Contents |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GOOD TIMES RESTAURANTS INC. | |||
| DATE: August 6, 2026 | |||
 |
|||
|
Ryan M. Zink Chief Executive Officer (Principal Executive Officer) |
|||
 |
|||
|
Keri A. August Chief Accounting Officer (Principal Financial Officer) |
|||
27