Good Times Restaurants Reports Total Revenues for the Quarter Increased 1.5% to $33.4 Million Compared to Fiscal 2022 First Quarter

Good Times Restaurants Inc. (Nasdaq: GTIM), operator of the Bad Daddy’s Burger Bar and Good Times Burgers & Frozen Custard restaurant brands, today reported financial results for the first fiscal quarter ended December 27, 2022.

Key highlights of the Company’s financial results include:

• Total Revenues for the quarter increased 1.5% to $33.4 million compared to fiscal 2022 first quarter
• Total Restaurant Sales for Bad Daddy’s restaurants were $25.2 million for the quarter
• Same Store Sales¹ for company-owned Bad Daddy’s restaurants increased 2.4% for the quarter
• Total Restaurant Sales for Good Times restaurants were $8.0 million for the quarter
• Same Store Sales for company-owned Good Times restaurants increased 3.0% for the quarter
• Net Loss Attributable to Common Shareholders was $0.1 million for the quarter
• Adjusted EBITDA² (a non-GAAP measure) for the quarter was $0.7 million
• The Company ended the quarter with $6.9 million in cash and no long-term debt

Ryan M. Zink, the Company’s Chief Executive Officer, said, “During this first quarter of fiscal 2023, we continued to experience challenges with inflationary pressure, particularly at the Good Times brand where our cost of sales increased significantly compared to last year’s quarter with lesser increases throughout the rest of the P&L. These increases in cost of sales have been primarily driven by increases in beef cost, though we have experienced increased costs of other products including buns and burger toppings. We increased prices by 3.4% at the start of calendar 2023 which will partially offset the increases we have seen in cost of sales and should also temper the impact of the eight percent minimum wage increase in Colorado. Though our mission continues to be in long-term profitability, the extent of the input costs we are seeing, coupled with the longer-term forward outlook on beef prices is driving increased focus on cost savings at the restaurant level. We continue to invest in this brand and are on target with our signage replacement program where we expect to replace all of the signage throughout the system by the end of fiscal 2024.”

Mr. Zink continued, “At Bad Daddy’s we experienced improvement on the cost of sales line, as our primary suppliers of certain commodities are different from Good Times and are contracted based upon different pricing strategies. I am pleased with the relatively tame restaurant-level operating profit erosion we saw in the first quarter at Bad Daddy’s and expect some sequential improvement in restaurant margins in the second fiscal quarter” Zink concluded. Subsequent to the end of the quarter we acquired all of the membership interests in five Bad Daddy’s that previously were jointly owned with individuals associated with the founder of the concept. The landlord at our upcoming Huntsville location is nearing completion of the building and we continue to target a late summer opening for that new Bad Daddy’s location.”

“Our sales momentum at both brands is impressive and I am grateful and appreciative for the efforts of our team members and operations management teams who continue to execute our concepts, delivering next-level service experiences and food and beverage that we believe drive customer loyalty to our brands, which are all part of the foundation of our long-term success,” Zink concluded.

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¹ Sales store sales are 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 units open for at least 18 full fiscal months, and use the comparable operating weeks from the prior year to the current year quarter’s operating weeks
² For a reconciliation of Adjusted EBITDA to the most directly comparable financial measures presented in accordance with GAAP.

The Company believes that restaurant-level operating profit is an important measure for management and investors because it 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. The measure excludes depreciation and amortization expense, substantially all of which is related to restaurant level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. The measure also excludes selling, general and administrative costs, and therefore excludes occupancy costs associated with selling, general and administrative functions, and pre-opening costs. The Company excludes restaurant closure costs as they do not represent a component of the efficiency of continuing operations. Restaurant impairment costs are excluded, because like depreciation and amortization, they represent a non-cash charge for the Company’s investment in its restaurants and not a component of the efficiency of restaurant operations. Restaurant-level operating profit is not a measurement determined in accordance with generally accepted accounting principles (“GAAP”) and should not be considered in isolation, or as an alternative, to income from operations or net income as indicators of financial performance. Restaurant-level operating profit as presented may not be comparable to other similarly titled measures of other companies. The tables above set forth certain unaudited information for the current and prior year fiscal quarters and year-to-date periods for fiscal 2023 and fiscal 2022, expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenues.

Reconciliation of Net Income to Non-GAAP Adjusted EBITDA (Thousands of US Dollars)

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³ Depreciation and amortization expense have been reduced by amounts attributable to non-controlling interests of $66,000 thousand and $67,000 for the quarters ended December 27, 2022 and December 28, 2021, respectively.
⁴ Gain on restaurant asset sales and lease termination has been reduced by amounts attributable to non-controlling interests of $0.00and $130,000 for the quarters ended December 27, 2022 and December 28, 2021, respectively.
⁵ Amount represents the portion of a one-time payroll cost rebate attributable to the non-controlling partners in these partnerships for the quarter ended December 28, 2021.