GTIM

Good Times Restaurants Inc. (GTIM) - Q1 2026 Filing Summary

Business Context and Reporting Period

This Form 10-Q covers the fiscal quarter ended December 30, 2025 (13 weeks). Good Times Restaurants Inc. operates two primary concepts: Bad Daddy's Burger Bar (full-service) and Good Times Burgers & Frozen Custard (drive-thru fast food). The company operates 37 Bad Daddy's locations and 27 Good Times locations as of the period end. The filing compares results to the prior year quarter ended December 31, 2024, which was a 14-week period.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Decline: Total net revenues decreased 10.0% to $32.7 million. This decline is primarily attributed to the prior year quarter having an additional week (14 weeks vs. 13 weeks) and the closure of one Bad Daddy's restaurant in the current quarter and one in the prior year's fourth quarter.
• Same-Store Sales: Same-store sales decreased 1.2% for Bad Daddy's and 3.1% for Good Times. Drivers included reduced customer traffic, competitive openings, and lower demand for alcoholic beverages, partially offset by menu price increases (1.7% for Bad Daddy's, 0.7% for Good Times).
• Cost Management: Despite revenue declines, operating costs decreased significantly due to the week count difference and closures. Food costs improved as a percentage of sales (30.4% vs. 31.6%), and payroll costs decreased as a percentage of sales (34.6% vs. 35.5%) due to improved labor productivity and reduced incentive compensation.
• Profitability: Income from operations improved to $300,000 from $77,000 in the prior year, driven by cost reductions and the absence of preopening costs ($0 vs. $8,000).
• Cash Flow: Net cash provided by operating activities turned positive at $1.4 million, compared to a use of $0.5 million in the prior year, largely due to timing differences in prepaid rent payments.

Outlook, Risks, and Management Commentary

• Outlook: Management anticipates sufficient capital to meet working capital and recurring capital expenditure needs for fiscal 2026, funded by existing cash or borrowings from the Cadence Credit Facility. Unit growth will be executed with increased scrutiny on real estate selection and a conservative approach to leverage.
• Inflation and Wages: The company faces persistent wage inflation and elevated beef costs. While menu price increases have been implemented, management notes that wage inflation currently exceeds the rate they can reasonably pass through to customers without negatively impacting demand.
• Legal Resolution: A significant legal matter regarding a failed sale of the Good Times Drive Thru subsidiary was settled on December 31, 2025, for an amount significantly less than the $3.8 million judgment previously awarded to the company.
• Share Repurchases: No shares were repurchased during the quarter. Approximately $1.98 million remains available under the current $7.0 million authorization.
• Risks: Key risks include competition, inability to pass on inflation costs, same-store sales declines, and potential impacts from tariffs on imported food and packaging supplies.

Investor Verification Checklist

• Week Count Impact: Verify the impact of the 13-week vs. 14-week comparison on year-over-year revenue and expense trends.
• Restaurant Closures: Confirm the financial impact of the two Bad Daddy's closures (one in Q4 2025, one in Q1 2026) on future revenue projections.
• Working Capital Deficit: Review the $8.2 million working capital deficit and the company's reliance on the $6.5 million available credit facility to fund operations.
• Beef Cost Exposure: Assess the sensitivity of margins to continued elevated beef prices and the company's ability to implement further menu price increases.
• Legal Settlement: Confirm the final settlement amount received from the White Winston litigation and its impact on the balance sheet.