GTIM

Good Times Restaurants Inc. (GTIM) - 10-Q Summary

Business Context and Reporting Period

This Form 10-Q covers the quarterly period ended June 30, 2026 (13 weeks) and the fiscal year-to-date period (39 weeks). Good Times Restaurants Inc. operates two primary concepts: Bad Daddy's Burger Bar (full-service) and Good Times Burgers & Frozen Custard (drive-thru quick-service). As of June 30, 2026, the company operated or franchised 37 Bad Daddy's locations and 28 Good Times locations. The company is a non-accelerated filer and a smaller reporting company.

Key Financial Metrics

Note: Working capital is calculated as Current Assets ($6,668) minus Current Liabilities ($14,317). The deficit is primarily driven by the classification of operating lease liabilities.

Material Changes vs. Prior Period

• Revenue Decline: Total net revenues decreased 5.0% quarter-over-quarter and 6.1% year-to-date. This was driven by a reduction in the number of operating restaurants (Bad Daddy's closed locations) and reduced customer traffic, partially offset by menu price increases (approx. 2.5% for Bad Daddy's and 1.7% for Good Times).
• Profitability Improvement: Despite lower revenues, Net Income increased 26.5% for the quarter and 111.7% year-to-date. This was primarily due to significant cost reductions in General & Administrative expenses (down $188k QoQ) and lower impairment charges compared to the prior year.
• Debt Reduction: Long-term debt decreased significantly from $2,310,000 to $285,000 (net of current portion) as the company paid down $2.5 million in principal during the year-to-date period.
• Same Store Sales: Bad Daddy's same store sales decreased 2.3% for the quarter, while Good Times same store sales increased 0.6%.

Outlook, Risks, and Unusual Items

• Casualty Event: One Bad Daddy's location was destroyed in a casualty event during the quarter. The company recorded a net gain of $176,000 related to the lease termination and asset disposal, though insurance recovery amounts remain unestimated.
• Impairments: The company recorded $18,000 in impairment charges for the quarter (vs. $0 in the prior year quarter) and $245,000 year-to-date (vs. $494,000 in the prior year), primarily related to the casualty event and a closed Good Times restaurant.
• Inflation and Labor: Management cites persistent wage inflation and elevated beef costs as key risks. While menu prices have been raised, the company notes difficulty in passing through the full cost of wage increases without impacting customer frequency.
• Liquidity: The company maintains a $8.0 million Revolving Credit Facility with Huntington Bank. As of June 30, 2026, there were no borrowings against the facility, with approximately $7.99 million available. The company expects to fund future commitments via existing cash or borrowings.
• Share Repurchases: No shares were repurchased during the quarter or year-to-date. Approximately $1.98 million remains authorized under the current program.

Investor Verification Checklist

• Lease Liability Impact: Verify the impact of the working capital deficit, which is largely driven by the accounting treatment of operating lease liabilities rather than a lack of liquid assets.
• Insurance Recovery: Monitor subsequent filings for the final insurance recovery amount regarding the destroyed Bad Daddy's location, as this could materially affect future cash flows.
• Unit Count Stability: Confirm the timeline for reopening the temporarily closed Good Times restaurant and the status of the Bad Daddy's locations that were closed.
• Debt Covenant Compliance: Review the specific leverage and fixed charge coverage ratios required by the Revolving Credit Facility to ensure continued compliance as debt levels fluctuate.
• Non-Controlling Interest: Note that a portion of net income is attributable to non-controlling interests (limited partners in Good Times joint ventures), which reduces the net income available to common shareholders.