Good Times Restaurants (GTIM) posts Q2 profit as margins improve
Rhea-AI Filing Summary
Good Times Restaurants Inc. reported a modest return to profitability for the quarter ended March 31, 2026. Net revenues fell 3.1% to $33.2 million, but cost controls and lower impairments lifted net income attributable to common shareholders to $0.1 million, or $0.01 per diluted share, from a loss a year ago.
Same store sales declined 0.8% at both Bad Daddy’s and Good Times, as traffic softness and promotions outweighed small menu price increases. Year-to-date, revenue declined 6.6% to $65.9 million, but net income improved to $0.4 million, with EBITDA and operating cash flow stronger and leverage kept relatively low under the Cadence Credit Facility.
Positive
- None.
Negative
- None.
Insights
Profitability improved despite softer sales, driven by cost discipline.
Good Times Restaurants Inc. saw quarterly revenue slip to $33.2M, with both Bad Daddy’s and Good Times concepts posting small same store sales declines of 0.8%. Nevertheless, mix of lower food waste, leaner labor and reduced depreciation pushed operating income positive.
Food and packaging fell to 29.7% of restaurant sales, and payroll to 34.4%, while impairments dropped sharply to $227k. Adjusted EBITDA rose to $1.4M for the quarter and $2.6M year-to-date. Management still faces traffic pressure and elevated beef and wage costs in fiscal 2026, but stronger cash generation and covenant compliance under the Cadence Credit Facility offer some financial flexibility.
Key Figures
Key Terms
Adjusted EBITDA financial
same store sales financial
Cadence Credit Facility financial
restaurant-level operating profit financial
right-of-use assets financial
working capital deficit financial
| 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: |
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(I.R.S. Employer Identification Number) |
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Securities registered pursuant to Section 12(b) of the Act:
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| 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. | ||
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| 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 | ☐ | |
| ☒ | 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 May 1, 2026, there were | ||
Form 10-Q
Quarter Ended March 31, 2026
| INDEX | PAGE | ||
| PART I - FINANCIAL INFORMATION | |||
| Item 1. | Financial Statements | 3 | |
| Condensed Consolidated Balance Sheets (unaudited) – March 31, 2026 and September 30, 2025 | 3 | ||
Condensed Consolidated Statements of Operations (unaudited) for the fiscal quarters and year-to-date periods ended March 31, 2026 and April 1, 2025 |
4 | ||
| Condensed Consolidated Statements of Shareholders’ Equity (unaudited) for the fiscal year-to-date periods ended March 31, 2026 and April 1, 2025 | 5 | ||
| Condensed Consolidated Statements of Cash Flows (unaudited) for the fiscal year-to-date periods ended March 31, 2026 and April 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 | 18 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 26 | |
| Item 4. | Controls and Procedures | 26 | |
| PART II - OTHER INFORMATION | |||
| Item 1. | Legal Proceedings | 27 | |
| Item 1A. | Risk Factors | 27 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 27 | |
| Item 3. | Defaults Upon Senior Securities | 27 | |
| Item 4. | Mine Safety Disclosures | 27 | |
| Item 5. | Other Information | 27 | |
| Item 6. | Exhibits | 27 | |
| SIGNATURES | 28 | ||
| CERTIFICATIONS |
| 2 |
| Table of Contents |
PART I. - FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS |
Good Times Restaurants Inc. and
Subsidiaries
Condensed Consolidated
Balance Sheets (Unaudited)
(In thousands, except share and per share data)
| March 31, 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 | |||||||||||||||
| March 31, 2026 (13 Weeks) |
April
1, 2025 (13 Weeks) |
March 31, 2026 (26 Weeks) |
April
1, 2025 (27 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 | ||||||||||||||||
| Loss (gain) on asset disposals | ( | ) | ||||||||||||||
| Total costs and expenses | ||||||||||||||||
| INCOME (LOSS) FROM OPERATIONS | ( | ) | ( | ) | ||||||||||||
| OTHER (EXPENSE) INCOME | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Total other (expense) income | ( | ) | ( | ) | ( | ) | ||||||||||
| NET INCOME (LOSS) BEFORE INCOME TAXES | ( | ) | ( | ) | ||||||||||||
| Provision for income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| NET INCOME (LOSS) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| (Income) loss attributable to non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| NET INCOME (LOSS) 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
Condensed Consolidated
Statements of Shareholders’ Equity (Unaudited)
for the Year-to-Date Period Ended March
31, 2026
(In thousands, except share and per share data)
| Treasury Stock, at cost |
Common Stock | |||||||||||||||||||||||||||||||
| Shares | Amount | Issued 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 | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
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)
for the Year-to-Date Period Ended April 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 | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| 6 |
| Table of Contents |
Good Times Restaurants Inc. and
Subsidiaries
Condensed Consolidated
Statements of Cash Flows (Unaudited)
(In thousands)
| Fiscal Year to Date | ||||||||
| March 31, 2026 (26 Weeks) |
April 1, 2025 (27 Weeks) |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Net change in ROU assets and operating lease liabilities | ( | ) | ( | ) | ||||
| Recognition of deferred gain on sale of restaurant building | ( | ) | ( | ) | ||||
| Impairment of long-lived assets | ||||||||
| Loss on asset disposals | ||||||||
| Stock-based compensation expense | ||||||||
| Provision for income taxes | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables and prepaids | ( | ) | ( | ) | ||||
| Inventories | ||||||||
| Deposits and other assets | ( | ) | ||||||
| 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 the 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 | ( | ) | ( | ) | ||||
| 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 March 31, 2026 and the results of its operations and its cash flows for the periods presented. Operating results for the fiscal quarter ended March 31, 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 March 31, 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. The quarters ended March 31, 2026 and April 1, 2025 each consisted of 13 weeks. Fiscal 2026 contains 52 weeks and fiscal 2025 contained 53 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 as of:
| March 31, 2026 | September 30, 2025 | |||||||
| Third party delivery partners | ||||||||
| Vendor rebates and incentives | $ | $ | ||||||
| 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.
| 8 |
| Table of Contents |
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.
| Note 3. | Revenue |
Revenue Recognition. Revenues consist primarily of sales from restaurant operations, which includes third-party delivery sales, and franchise revenue, which includes franchisee 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 March 31, 2026 and April 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 expense and other current assets |
Prepaid expenses and other current assets consist of the following as of:
| March 31, 2026 | September 30, 2025 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid software licenses and maintenance contracts | ||||||||
| Prepaid common area rental expenses | ||||||||
| Prepaid licenses and permits | ||||||||
| Other | ||||||||
| Total | $ | $ | ||||||
| 9 |
| Table of Contents |
| Note 5. | Goodwill and Intangible Assets |
The following table presents goodwill and intangible assets as of March 31, 2026 and September 30, 2025 (in thousands):
| March 31, 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 above table.
| Note 6. | Other Accrued Liabilities |
Other accrued liabilities consist of the following as of:
| March 31, 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 |
Cadence Credit Facility. The Company and its wholly owned subsidiaries (the “Subsidiaries”) maintain an amended and restated credit agreement with Cadence Bank (“Cadence”). Pursuant to the credit agreement, as amended to date, Cadence agreed to loan the Company up to $
Proceeds from the Cadence 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 Cadence Credit Facility includes customary affirmative and negative covenants and events of default. The Cadence 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 Cadence Credit Facility exceeds $
As of March 31, 2026, the weighted average interest rate applicable to borrowings under the Cadence Credit Facility was
As a result of entering into the Cadence Credit Facility and the various amendments, the Company paid loan origination costs including professional fees of approximately $
In connection with the Cadence Credit Facility, the Company and the Subsidiaries entered into an Amended and Restated Security and Pledge Agreement (the “Security Agreement”) with Cadence. Under the Security Agreement, the Cadence Credit Facility is secured by a first priority security interest in substantially all the assets of the Company and the Subsidiaries.
As of March 31, 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
| 10 |
| Table of Contents |
Total interest expense on notes payable was $
| Note 8. | Earnings (Loss) 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, restricted stock units and warrants (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.
The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding:
| Quarter Ended | Year-to-Date | |||||||||||||||
| March 31, 2026 | April 1, 2025 | March 31, 2026 | April 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 March 31, 2026 and April 1, 2025:
| Lease cost | Classification | March 31, 2026 | April 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:
| March 31, 2026 | April 1, 2025 | |||||||
| Weighted average remaining lease term (in years) | ||||||||
| Weighted average discount rate | % | % | ||||||
Supplemental cash flow disclosures:
| March 31, 2026 | April 1, 2025 | |||||||
| Cash paid for operating lease liabilities | $ | $ | ||||||
| Non-cash operating lease assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
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Future minimum rent payments for our operating leases as of March 31, 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 expense on a straight-line basis.
| Note 11. | Impairment of Long-Lived Assets and Goodwill |
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 $
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 to the acquired trademarks as of March 31, 2026 and April 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 March 31, 2026 and April 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 March 31, 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 2026 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 March 31, 2026.
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| 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.
For the quarters ended March 31, 2026 and April 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 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 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.
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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.
The following tables reconcile our segment results to our consolidated results reported in accordance with GAAP (in thousands):
| Thirteen Week Period Ended March 31, 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 | ||||||||||||||||
| Loss 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 | $ | $ | $ | $ | ||||||||||||
| Impairment of long-lived assets and ROU assets | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | $ | $ | ||||||||||||
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| Thirteen Week Period April 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 | ||||||||||||||||
| Loss on asset disposals | ||||||||||||||||
| Loss from operations | ( | ) | ||||||||||||||
| Less: | ||||||||||||||||
| Interest and other expense, net | ||||||||||||||||
| Net loss 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 | $ | $ | $ | $ | ||||||||||||
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| Twenty-Six Week Period Ended March 31, 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 | ||||||||||||||||
| Loss 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 | $ | $ | $ | $ | ||||||||||||
| Impairment of long-lived assets and ROU assets | $ | $ | $ | $ | ||||||||||||
| Capital expenditures | $ | $ | $ | $ | ||||||||||||
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| Twenty-Seven Week Period April 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 | ||||||||||||||||
| Loss from operations | ( | ) | ||||||||||||||
| Less: | ||||||||||||||||
| Interest and other expense, net | ||||||||||||||||
| Add: | ||||||||||||||||
| Other income | ||||||||||||||||
| Net loss 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 | $ | $ | $ | $ | ||||||||||||
| March 31, 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.
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| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Overview. Good Times Restaurants 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 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. Recent metrics have indicated that increased levels of price inflation are prevalent throughout the economy which have 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, considering the higher costs and volatile inflation present in the current operating environment.
Restaurant locations. As of March 31, 2026, we operated, franchised, or licensed a total of thirty-eight Bad Daddy’s restaurants and thirty Good Times restaurants. The following table presents the number of restaurants operating at the end of the fiscal quarters ended March 31, 2026 and April 1, 2025.
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Company-Owned / Joint-Venture:
| Bad Daddy’s Burger Bar |
Good Times Burgers & Frozen Custard |
Total | ||||||||||||||||||||||
|
March 31, 2026 |
April 1, 2025 |
March 31, 2026 |
April 1, 2025 |
March 31, 2026 |
April 1, 2025 |
|||||||||||||||||||
| Alabama | 3 | 3 | - | - | 3 | 3 | ||||||||||||||||||
| Colorado | 9 | 10 | 27 | 27 | 36 | 37 | ||||||||||||||||||
| Georgia | 4 | 5 | - | - | 4 | 5 | ||||||||||||||||||
| North Carolina | 14 | 14 | - | - | 14 | 14 | ||||||||||||||||||
| Oklahoma | 1 | 1 | - | - | 1 | 1 | ||||||||||||||||||
| South Carolina | 4 | 4 | - | - | 4 | 4 | ||||||||||||||||||
| Tennessee | 2 | 2 | - | - | 2 | 2 | ||||||||||||||||||
| Total | 37 | 39 | 27 | 27 | 64 | 66 | ||||||||||||||||||
*Includes one Good Times restaurant that is temporarily closed for lease negotiation.
Franchisee / Licensee:
| Bad Daddy’s Burger Bar |
Good Times Burgers & Frozen Custard |
Total | ||||||||||||||||||||||
|
March 31, 2026 |
April 1, 2025 |
March 31, 2026 |
April 1, 2025 |
March 31, 2026 |
April 1, 2025 |
|||||||||||||||||||
| 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 March 31, 2026 (13 weeks) compared to fiscal quarter ended April 1, 2025 (13 weeks):
Net Revenues. Net revenues for the quarter ended March 31, 2026 decreased $1,047,000 or 3.1% to $33,232,000 from $34,279,000 for the quarter ended April 1, 2025. Bad Daddy’s concept revenues decreased $930,000 while our Good Times concept revenues decreased $117,000 compared to the same prior-year quarter.
Bad Daddy’s restaurant sales decreased $897,000 to $23,920,000 for the quarter ended March 31, 2026 from $24,817,000 for the quarter ended April 1, 2025. This decrease is primarily due to the fourth fiscal quarter 2025 closure of one Bad Daddy’s restaurant, the first fiscal quarter 2026 closure of one Bad Daddy’s restaurant and decreased guest traffic, partially offset by menu price increases. The average menu price increase for the quarter ended March 31, 2026 over the same prior-year quarter was approximately 0.2%.
Good Times restaurant sales decreased $119,000 to $9,204,000 for the quarter ended March 31, 2026 from $9,323,000 for the quarter ended April 1, 2025. This decrease is driven by the current quarter temporary closure of one Good Times restaurant, partially offset by increases in menu price. The average menu price increase for the quarter ended March 31, 2026 over the same prior-year quarter was approximately 1.0%.
Franchise and other revenues decreased $31,000 to $108,000 in the quarter ended March 31, 2026 compared to $139,000 in the quarter ended April 1, 2025. This decrease is primarily due to reduced gift card breakage.
Same Store Sales
Sales 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 0.8% during the fiscal quarter ended March 31, 2026 compared to the fiscal quarter ended April 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. There were thirty-seven restaurants included in the same store sales base at the end of the quarter.
Good Times same store restaurant sales decreased 0.8% during the quarter ended March 31, 2026 compared to the fiscal quarter ended April 1, 2025, primarily driven by promotional discounts along with lost revenue from exited items and category declines, partially offset by a menu price increase. There were twenty-six restaurants included in the same store sales base at the end of the quarter.
Restaurant Operating Costs
Food and Packaging Costs. Food and packaging costs for the fiscal quarter ended March 31, 2026 decreased $649,000 to $9,828,000 (29.7% of restaurant sales) from $10,477,000 (30.7% of restaurant sales) for the quarter ended April 1, 2025.
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Bad Daddy’s food and packaging costs were $7,092,000 (29.6% of restaurant sales) for the quarter ended March 31, 2026, down from $7,619,000 (30.7% of restaurant sales) for the quarter ended April 1, 2025. The decrease as a percentage of sales is primarily attributable to reduced waste and improved chicken pricing, partially offset by higher beef and bacon purchase prices compared to the prior-year quarter.
Good Times food and packaging costs were $2,736,000 (29.7% of restaurant sales) for the quarter ended March 31, 2026, down from $2,858,000 (30.7% of restaurant sales) for the quarter ended April 1, 2025. The decrease as a percentage of sales is primarily attributable to reduced waste partially offset by higher beef and bacon prices compared to the prior-year quarter.
Payroll and Other Employee Benefit Costs. Payroll and other employee benefit costs for the quarter ended March 31, 2026 decreased $439,000 to $11,387,000 (34.4% of restaurant sales) from $11,826,000 (34.6% of restaurant sales) for the quarter ended April 1, 2025.
Bad Daddy’s payroll and other employee benefit costs were $8,168,000 (34.1% of restaurant sales) for the quarter ended March 31, 2026, down from $8,510,000 (34.3% of restaurant sales) in the same prior year period. As a percentage of sales, payroll and employee benefits costs decreased by 0.2% primarily attributable to lower employee benefit costs, partially offset by higher average wage rates.
Good Times payroll and other employee benefit costs were $3,219,000 (35.0% of restaurant sales) in the quarter ended March 31, 2026, down from $3,316,000 (35.6% of restaurant sales) in the same prior year period. As a percentage of sales, payroll and employee benefits costs decreased by 0.6% primarily attributable to increased labor efficiency, partially offset by higher average wage rates.
Occupancy Costs. Occupancy costs for the quarter ended March 31, 2026 decreased $59,000 to $2,524,000 (7.6% of restaurant sales) from $2,583,000 (7.6% of restaurant sales) for the quarter ended April 1, 2025.
Bad Daddy’s occupancy costs were $1,625,000 (6.8% of restaurant sales) for the quarter ended March 31, 2026, down from $1,665,000 (6.7% of restaurant sales) in the same prior year period. The decrease was primarily due to the fourth fiscal quarter 2025 closure of one Bad Daddy’s restaurant and the first fiscal quarter 2026 closure of one Bad Daddy’s restaurant.
Good Times occupancy costs were $920,000 (10.0% of restaurant sales) in the quarter ended March 31, 2026, down from $939,000 (10.1% of restaurant sales) in the same prior year period. This was primarily due to a decrease in property taxes between the quarterly periods.
Other Operating Costs. Other operating costs for the quarter ended March 31, 2026, increased $33,000 to $4,951,000 (14.9% of restaurant sales) from $4,918,000 (14.4% of restaurant sales) for the quarter ended April 1, 2025.
Bad Daddy’s other operating costs were $3,739,000 (15.6% of restaurant sales) for the quarter ended March 31, 2026, up from $3,591,000 (14.5% of restaurant sales) in the same prior year period. As a percentage of sales, the increase is primarily due to increases in customer delivery and repair and maintenance expenses.
Good Times other operating costs were $1,400,000 (15.2% of restaurant sales) for the quarter ended March 31, 2026, down from $1,407,000 (15.1% of restaurant sales) in the same prior year period. As a percentage of sales, the increase is primarily due to increases in customer delivery expenses.
New Store Preopening Costs. There were no preopening costs in the fiscal quarters ended March 31, 2026 and April 1, 2025
Depreciation and Amortization Costs. Depreciation and amortization costs for the quarter ended March 31, 2026 decreased $118,000 to $878,000 from $996,000 in the quarter ended April 1, 2025.
Bad Daddy’s depreciation and amortization costs for the quarter ended March 31, 2026 decreased $127,000 to $621,000 from $748,000 in the quarter ended April 1, 2025. The decrease is primarily due to assets performing past their estimated usable lives.
Good Times depreciation and amortization costs for the quarter ended March 31, 2026 increased $8,000 to $246,000 from $238,000 in the quarter ended April 1, 2025.
General and Administrative Costs. General and administrative costs for the quarter ended March 31, 2026, decreased $382,000 to $2,196,000 (6.6% of total revenues) from $2,578,000 (7.5% of total revenues) for the quarter ended April 1, 2025.
This decrease in general and administrative expenses for the quarter ended March 31, 2026 is attributable to:
| · | Decrease in costs associated with multi-unit supervisory roles of $295,000 |
| · | Decrease in technology costs of $54,000 |
| · | Decrease in franchise-related costs of $39,000 |
| · | Increase attributable to net health insurance underwriting gain/loss of $194,000 |
| · | Net decreases in all other expenses of $188,000 |
Advertising Costs. Advertising costs for the quarter ended March 31, 2026 increased $69,000 to $984,000 (3.0% of total revenues) from $915,000 (2.7% of total revenues) for the quarter ended April 1, 2025.
Bad Daddy’s advertising costs were $479,000 (2.0% of total revenues) in the quarter ended March 31, 2026 compared to $494,000 (2.0% of total revenues) in the same prior year period.
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Good Times advertising costs were $488,000 (5.3% of total revenues) in the quarter ended March 31, 2026 compared to $424,000 (4.5% of total revenues) in the same prior year period. The increase is primarily due to increased advertising campaigns including video streaming, promotional campaigns on third-party delivery platforms, and celebrity and influencer partnerships, partially offset by reduced radio media. Good Times advertising costs consist primarily of social media, third-party delivery promotions and video streaming advertising. Advertising costs are presented gross, with franchisee contributions to the fund being recognized as a component of franchise revenues.
Impairment of Long-lived Assets and ROU Assets. There were $227,000 of costs associated with impairments for the quarter ended March 31, 2026. There were $494,000 of impairment costs for the quarter ended April 1, 2025. The current quarter impairment costs are attributable to the temporary closure of one Good Times restaurant. Impairment costs in the prior year quarter relate 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.
Loss (Gain) on Asset Disposals. The net loss on asset disposals for the fiscal quarter ended March 31, 2026 was $85,000, which is composed of a loss of $88,000 on disposal of miscellaneous assets, and $3,000 of deferred gain recognition, compared to a net loss of $6,000 for the fiscal quarter ended April 1, 2025. The net loss in the prior year fiscal quarter was primarily due to disposal of miscellaneous assets, partially offset by deferred gain recognition.
Income (Loss) from Operations. Income from operations was $172,000 in the quarter ended March 31, 2026 compared to a loss of $514,000 in the quarter ended April 1, 2025.
The change in the income (loss) from operations for the quarter ended March 31, 2026 from the quarter ended April 1, 2025 is primarily attributable to matters discussed in the relevant sections above.
Interest Expense. Interest expense was $36,000 during the quarter ended March 31, 2026 compared with $56,000 during the quarter ended April 1, 2025.
Other Income. There was no other income for the quarters ended March 31, 2026 or April 1, 2025.
Provision for Income Taxes. There was a $23,000 benefit from income taxes for the quarter ended March 31, 2026, compared to $57,000 of expense for the quarter ended April 1, 2025.
Net Income (Loss). Net income was $159,000 for the quarter ended March 31, 2026 compared to a net loss of $627,000 in the quarter ended April 1, 2025.
The change from the quarter ended March 31, 2026 to the quarter ended April 1, 2025 was primarily attributable to the matters discussed in the relevant sections above.
Income (Loss) Attributable to Non-Controlling Interests. The non-controlling interest represents the limited partner’s share of income in the Good Times joint-venture restaurants.
For the quarter ended March 31, 2026, the income attributable to non-controlling interests was $10,000 compared to a loss of $3,000 for the quarter ended April 1, 2025. The $13,000 increase is due to increased profitability of the restaurants involved in the limited partnership with a non-controlling partner.
Fiscal two quarters ended March 31, 2026 (26 weeks) compared to fiscal two quarters ended April 1, 2025 (27 weeks):
Net Revenues. Net revenues for the two quarters ended March 31, 2026 decreased $4,674,000, or 6.6%, to $65,938,000 from $70,612,000 for the two quarters ended April 1, 2025. Bad Daddy’s concept revenues decreased $3,823,000 and our Good Times concept revenues decreased $851,000.
Bad Daddy’s restaurant sales decreased $3,772,000 to $47,123,000 for the two quarters ended March 31, 2026 from $50,895,000 for the two quarters ended April 1, 2025. This decrease is due to an additional week in the prior year period versus the current year period, the fourth fiscal quarter 2025 closure of one Bad Daddy’s restaurant, the first fiscal quarter 2026 closure of one Bad Daddy’s restaurant and decreased guest traffic, partially offset by menu price increases. The average menu price increase for the two quarters ended March 31, 2026 over the same prior year quarters was approximately 1.0%.
Good Times restaurant sales decreased $836,000 to $18,374,000 for the two quarters ended March 31, 2026 from $19,210,000 for the two quarters ended April 1, 2025. This decrease is due to an additional week in the prior year period versus the current year period and the current quarter temporary closure of one Good Times restaurant, partially offset by increases in menu price. The average menu price increase for the two quarters ended March 31, 2026 over the same prior year quarters was approximately 0.9%.
Franchise and other revenues decreased $66,000 to $441,000 in the two quarters ended March 31, 2026 compared to $507,000 in the two quarters ended April 1, 2025. This decrease is primarily 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 1.0% during the two quarters ended March 31, 2026 compared to the same two quarters ended April 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. There were thirty-seven restaurants included in the same store sales base at the end of the current quarter.
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Good Times same store restaurant sales decreased 1.9% during the two quarters ended March 31, 2026 compared to the same two quarters ended April 1, 2025, primarily driven by reduced guest traffic and promotional discounts, partially offset by menu price increases. There were twenty-six 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 two quarters ended March 31, 2026 decreased $2,171,000 to $19,669,000 (30.0% of restaurant sales) from $21,840,000 (31.2% of restaurant sales) for the two quarters ended April 1, 2025.
Bad Daddy’s food and packaging costs were $14,107,000 (29.9% of restaurant sales) for the two quarters ended March 31, 2026, down from $15,834,000 (31.1% of restaurant sales) for the two quarters ended April 1, 2025. The decrease as a percentage of sales is primarily attributable to reduced waste and favorability in dairy and chicken input prices as well as the impact of a 1.0% average increase in menu pricing, partially offset by higher beef and bacon purchase prices compared to the prior year period.
Good Times food and packaging costs were $5,562,000 (30.3% of restaurant sales) for the two quarters ended March 31, 2026, down from $6,006,000 (31.3% of restaurant sales) for the two quarters ended April 1, 2025. The decrease as a percentage of sales is primarily attributable to reduced waste and the impact of a 0.9% average increase in menu pricing compared to the prior year-to-date period, partially offset by higher beef and bacon prices.
Payroll and Other Employee Benefit Costs. Payroll and other employee benefit costs for the two quarters ended March 31, 2026 decreased $2,012,000 to $22,597,000 (34.5% of restaurant sales) from $24,609,000 (35.1% of restaurant sales) for the two quarters ended April 1, 2025.
Bad Daddy’s payroll and other employee benefit costs were $16,169,000 (34.3% of restaurant sales) for the two quarters ended March 31, 2026 down from $17,667,000 (34.7% of restaurant sales) for the two quarters ended April 1, 2025. As a percentage of sales, payroll and employee benefits costs decreased by 0.4% primarily attributable to reduced salary costs and incentive compensation, partially offset by decreased labor productivity and higher average wage rates.
Good Times payroll and other employee benefit costs were $6,428,000 (35.0% of restaurant sales) in the two quarters ended March 31, 2026, down from 6,942,000 (36.1% of restaurant sales) in the same prior year period. As a percentage of sales, payroll and employee benefits costs decreased by 1.1% primarily attributable to increased labor efficiency partially offset by higher average wage rates.
Occupancy Costs. Occupancy costs for the two quarters ended March 31, 2026 decreased $233,000 to $5,033,000 (7.7% of restaurant sales) from $5,266,000 (7.5% of restaurant sales) for the two quarters ended April 1, 2025.
Bad Daddy’s occupancy costs were $3,241,000 (6.9% of restaurant sales) for the two quarters ended March 31, 2026, down from $3,418,000 (6.7% of restaurant sales) for the two quarters ended April 1, 2025. The decrease was primarily due to the fourth fiscal quarter 2025 closure of one Bad Daddy’s restaurant and the first fiscal quarter 2026 closure of one Bad Daddy’s restaurant.
Good Times occupancy costs were $1,835,000 (10.0% of restaurant sales) in the two quarters ended March 31, 2026, down from $1,888,000 (9.8% of restaurant sales) in the two quarters ended April 1, 2025. This was primarily due to a decrease in property taxes between the two periods.
Other Operating Costs. Other operating costs for the two quarters ended March 31, 2026, decreased $146,000 to $9,513,000 (14.5% of restaurant sales) from $9,659,000 (13.8% of restaurant sales) for the two quarters ended April 1, 2025.
Bad Daddy’s other operating costs were $7,123,000 (15.1% of restaurant sales) for the two quarters ended March 31, 2026 down from $7,159,000 (14.1% of restaurant sales) for the two quarters ended April 1, 2025. As a percentage of sales, the increase is primarily due to increases in customer delivery and repair and maintenance expenses.
Good Times other operating costs were $2,679,000 (14.6% of restaurant sales) in the two quarters ended March 31, 2026, up from $2,668,000 (13.9% of restaurant sales) in the two quarters ended April 1, 2025. As a percentage of sales, the increase is primarily due to increases in customer delivery expenses.
New Store Preopening Costs. There were no preopening costs for the two quarters ended March 31, 2026, compared to $8,000 for the two quarters ended April 1, 2025. The prior fiscal year 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 two quarters ended March 31, 2026, decreased $196,000 to $1,818,000 from $2,014,000 ended for the two quarters ended April 1, 2025.
Bad Daddy’s depreciation and amortization costs for the two quarters ended March 31, 2026 decreased $208,000 to $1,306,000 from $1,514,000 in the two quarters ended April 1, 2025. The decrease is primarily due to assets performing past their estimated useful lives.
Good Times depreciation and amortization costs for the two quarters ended March 31, 2026 increased $9,000 to $490,000 from $481,000 in the two quarters ended April 1, 2025.
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General and Administrative Costs. General and administrative costs for the two quarters ended March 31, 2026, decreased $915,000 to $4,251,000 (6.4% of total revenues) from $5,166,000 (7.3% of total revenues) for the two quarters ended April 1, 2025.
This decrease in general and administrative expenses in the two quarters ended March 31, 2026 is primarily attributable to:
| · | Decrease in costs associated with multi-unit supervisory roles of $489,000 |
| · | Decrease in technology costs of $92,000 |
| · | Decrease attributable to health insurance underwriting gain/loss of $59,000 |
| · | Decrease in insurance related costs $40,000 |
| · | Decrease in franchise related costs $40,000 |
| · | Decrease in all other costs of $195,000 |
Advertising Costs. Advertising costs for the two quarters ended March 31, 2026, increased to $2,259,000 (3.4% of total revenues) from $2,044,000 (2.9% of total revenues) for the two quarters ended April 1, 2025.
Bad Daddy’s advertising costs were $1,173,000 (2.5% of total revenues) for the two quarters ended March 31, 2026 compared to $1,331,000 (2.6% of total revenues) for the two quarters ended April 1, 2025. The decrease is primarily due to a reduction in promotional campaigns on third-party delivery platforms and local store marketing expenses. Bad Daddy’s advertising costs consist primarily of third-party gift card commissions, promotional campaigns on third-party delivery platforms and social media.
Good Times advertising costs were $1,062,000 (5.8% of total revenues) in the two quarters ended March 31, 2026 compared to $720,000 (3.7% of total revenues) in the two quarters ended April 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, partially offset by reduced radio media. Good Times advertising costs consist primarily of third-party delivery promotions, video streaming, social media, sponsorships and email marketing. Advertising costs are presented gross, with franchisee contributions to the fund being recognized as a component of franchise revenues.
Impairment of Long-lived Assets and ROU Assets. There were $227,000 of costs associated with impairments for the two quarters ended March 31, 2026. There were $494,000 of impairment costs for the two quarters ended April 1, 2025. The current year impairment costs are attributable to the temporary closure of one Good Times restaurant. Impairment costs in the prior year relate 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.
Loss (Gain) on Asset Disposals. The net loss on asset disposals for the two quarters ended March 31, 2026 was $99,000, which is composed of a net loss of $105,000 on disposal of miscellaneous assets and $6,000 of deferred gain recognition, compared to a net gain of $51,000 for the two quarters ended April 1, 2025, which is composed of a net gain of $43,000 on disposal of miscellaneous assets and $8,000 of deferred gain recognition.
Income (Loss) from Operations. Income from operations was $472,000 in the two quarters ended March 31, 2026 compared to loss from operations of $437,000 in the two quarters ended April 1, 2025.
The change in the income (loss) from operations for the two quarters ended March 31, 2026 is primarily due to matters discussed in the relevant sections above.
Interest Expense. Interest expense was $87,000 during the two quarters ended March 31, 2026, compared with $102,000 during the two quarters ended April 1, 2025.
Other Income. There was no other income for the two quarters ended March 31, 2026, compared to $140,000 of other income in the two quarters ended April 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. The benefit from income taxes was $28,000 for the two quarters ended March 31, 2026, compared to expense of $54,000 for the two quarters ended April 1, 2025.
Net Income (Loss). Net income was $357,000 for the two quarters ended March 31, 2026 compared to net loss of $453,000 in the two quarters ended April 1, 2025.
The change from the two quarters ended April 1, 2025 to the two quarters ended March 26, 2024 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 two quarters ended March 31, 2026, the income attributable to non-controlling interests was $27,000 compared to $7,000 for the two quarters ended April 1, 2025. The $20,000 increase is due to increased profitability during the two quarters of the restaurants involved in the partnership.
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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, 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.
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.
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The following table reconciles net income to EBITDA and Adjusted EBITDA (in thousands):
| Quarter Ended | Year-to-Date | |||||||||||||||
| March 31, 2026 (13 Weeks) |
April 1, 2025 (13 Weeks) |
March 31, 2026 (26 Weeks) |
April 1, 2025 (27 Weeks) |
|||||||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Net income (loss) attributable to common shareholders, as reported | $ | 149 | $ | (624 | ) | $ | 330 | $ | (460 | ) | ||||||
| Depreciation and amortization | 896 | 1,029 | 1,862 | 2,071 | ||||||||||||
| Depreciation and amortization attributable to non-controlling interest | (28 | ) | (24 | ) | (54 | ) | (50 | ) | ||||||||
| Provision for income taxes | (23 | ) | 57 | 28 | 54 | |||||||||||
| Interest expense, net | 36 | 56 | 87 | 102 | ||||||||||||
| EBITDA | 1,030 | 494 | 2,253 | 1,717 | ||||||||||||
| Preopening expense (1) | - | - | - | 8 | ||||||||||||
| Non-cash stock-based compensation (2) | 22 | 30 | 45 | 65 | ||||||||||||
| Asset impairment (3) | 227 | 494 | 227 | 494 | ||||||||||||
| Non-cash loss on asset disposals (4) | 86 | 9 | 101 | 5 | ||||||||||||
| Non-cash loss on asset disposals attributable to non-controlling interests(4) | - | (3 | ) | - | (3 | ) | ||||||||||
| Adjusted EBITDA | $ | 1,365 | $ | 1,024 | $ | 2,626 | $ | 2,286 | ||||||||
| (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 as well as (gains) losses on miscellaneous asset disposals. |
Liquidity and Capital Resources
Cash and Working Capital
As of March 31, 2026, we had a working capital deficit of $8,888,000. 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 Cadence 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 Cadence Credit Facility), refer to note 7 to the unaudited condensed consolidated financial statements included in this report.
Cash Flows
The table below summarizes our cash flows from operating, investing, and financing activities for each period presented (in thousands):
Year-to-Date Period Ended |
||||||||
| March 31, 2026 | April 1, 2025 | |||||||
| Net cash provided by operating activities | $ | 1,934 | $ | 196 | ||||
| Net cash used in investing activities | (507 | ) | (2,662 | ) | ||||
| Net cash provided by (used in) financing activities | (1,283 | ) | 1,325 | |||||
| Net change in cash and cash equivalents | $ | 144 | $ | (1,141 | ) | |||
Operating cash flows
Net cash from operating activities increased by $1,738,000 as of the fiscal year-to-date period ended March 31, 2026 compared to the fiscal year-to-date period ended April 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, accrued liabilities and prepaid expenses, as presented on the Condensed Consolidated Statements of Cash Flows.
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Investing cash flows
Net cash used in investing activities for the two quarters ended March 31, 2026 and April 1, 2025 were $507,000 and $2,662,000, respectively, which primarily reflect the purchases of property and equipment in each period as well as the acquisition in the prior year fiscal period of two Good Times restaurants previously owned by a franchisee.
Financing cash flows
Net cash used in financing activities for the two quarters ended March 31, 2026 was $1,283,000, which includes proceeds from long-term debt of $500,000, $1,765,000 of payments on long-term debt, cash usage for restricted stock unit vesting of $15,000, and distributions to non-controlling interests of $3,000.
Net cash provided by financing activities for the two quarters ended April 1, 2025 was $1,325,000, which includes proceeds from long-term debt of $2,250,000, payments of long-term debt of $517,000, distributions to non-controlling interests of $47,000, cash settlement of restricted stock units of $58,000, and $303,000 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 are still elevated. Based on general industry consensus, we expect that due to the continued tightening of supply, ground beef costs will remain elevated throughout most 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.
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 affects 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 March 31, 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 March 31, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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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 March 31, 2026 the Company has purchased 1,822,246 shares of its common stock pursuant to the share repurchase plan leaving approximately $1,981,000 available for repurchases under the plan.
There were no repurchases of common stock under the share repurchase plan during the quarter ended March 31, 2026.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
During the quarter ended March 31, 2026, none of the Company’s directors or our 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 | |
| 10.1 | Third Amendment to Credit Agreement dated September 30, 2025, by and among Good Times Restaurants Inc., each of its wholly owned subsidiaries and Cadence Bank, N.A. (previously filed as Exhibit 10.1 to the Registrant’s Form 8-K filed with the SEC on October 3, 2025) | |
| *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
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| 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: May 7, 2026 | |
 | |
|
Ryan M. Zink Chief Executive Officer (Principal Executive Officer) | |
 | |
|
Keri A. August Chief Accounting Officer (Principal Financial Officer) |
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