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What changed in Good Times Restaurants Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Good Times Restaurants Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+269 added−255 removedSource: 10-K (2024-12-12) vs 10-K (2023-12-14)

Top changes in Good Times Restaurants Inc.'s 2024 10-K

269 paragraphs added · 255 removed · 190 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

90 edited+24 added−24 removed74 unchanged
Biggest changeWe acquired two Good Times restaurants in Greenwood Village and Lafayette, Colorado from franchisees during fiscal 2023. 8 Table of Contents Company-Owned/Co-Developed/Joint-Venture Bad Daddy’s Burger Bar Good Times Burgers & Frozen Custard Total 2023 2022 2023 2022 2023 2022 Alabama 3 2 - - 3 2 Colorado 11 12 25 23 36 35 Georgia 5 5 - - 5 5 North Carolina 14 14 - - 14 14 Oklahoma 1 1 - - 1 1 South Carolina 4 4 - - 4 4 Tennessee 2 2 - - 2 2 Total 40 40 25 23 65 63 Franchise/License Bad Daddy’s Burger Bar Good Times Burgers & Frozen Custard Total 2023 2022 2023 2022 2023 2022 Colorado - - 4 6 4 6 North Carolina 1 1 - - 1 1 South Carolina - - - - - - Wyoming - - 2 2 2 2 Total 1 1 6 8 7 9 Menu Bad Daddy ’ s Burger Bar The Bad Daddy’s Burger Bar menu offers our guests a culinary-driven menu consisting of our own unique blend of high quality and handcrafted 1855 Black Angus® beef burgers with creative, scratch-made toppings including buttermilk-fried bacon, housemade American cheese, creamy ale queso made in-house with our Bad Daddy’s Amber Ale, and our specialty signature Bad Daddy’s sauce.
Biggest changeCompany-Owned/Co-Developed/Joint-Venture Bad Daddy’s Burger Bar Good Times Burgers & Frozen Custard Total 2024 2023 2024 2023 2024 2023 Alabama 3 3 - - 3 3 Colorado 10 11 27 25 37 36 Georgia 5 5 - - 5 5 North Carolina 14 14 - - 14 14 Oklahoma 1 1 - - 1 1 South Carolina 4 4 - - 4 4 Tennessee 2 2 - - 2 2 Total 39 40 27 25 66 65 Franchise/License Bad Daddy’s Burger Bar Good Times Burgers & Frozen Custard Total 2024 2023 2024 2023 2024 2023 Colorado - - 1 4 1 4 North Carolina 1 1 - - 1 1 Wyoming - - 2 2 2 2 Total 1 1 3 6 4 7 Menu Bad Daddy’s Burger Bar The Bad Daddy’s Burger Bar menu offers our guests a culinary-driven menu consisting of our own unique blend of high quality and handcrafted 1855 Black Angus ® beef burgers with creative, scratch-made toppings including buttermilk-fried bacon, creamy ale queso made in-house, and our specialty signature Bad Daddy’s sauce which is also completely made in-house.
We: (1) do things the right way, (2) take pride in our work, (3) take pride in our facilities, and (4) take pride in our brand. The pride that is shared by all of us drives us towards excellence in all of our activities. o Financial Discipline and Strength .
We: (1) do things the right way, (2) take pride in our work, (3) take pride in our facilities, and (4) take pride in our brand. The pride that is shared by all of us and drives us towards excellence in all of our activities. o Financial Discipline and Strength .
We strive to provide competitive salary and benefits, strong development opportunities, and a meaningful job or career for all of our employees and believe that this has translated into good employee relations. None of our employees are covered by a collective bargaining agreement. Competition The restaurant industry, including both limited service and full-service segments, is highly competitive.
We strive to provide a competitive salary and benefits, strong development opportunities, and a meaningful job or career for all of our employees and believe that this has translated into good employee relations. None of our employees are covered by a collective bargaining agreement. Competition The restaurant industry, including both limited service and full-service segments, is highly competitive.
Furthermore, most of our competitors in the fast-food business operate more restaurants, have been established longer, and have greater financial resources and name recognition than we do. There is also active competition for management personnel, as well as for attractive commercial real estate sites suitable for restaurants.
Furthermore, most of our competitors in the fast-food business operate more restaurants, have been established for longer, and have greater financial resources and name recognition than we do. There is also active competition for management personnel, as well as for attractive commercial real estate sites suitable for restaurants.
Many state franchise laws impose restrictions on the franchise agreements, including limitations on non-competition provisions and the termination or non-renewal of a franchise. Some states require that franchise materials be registered before franchises can be offered or sold in that state.
Many state franchise laws impose restrictions on franchise agreements, including limitations on non-competition provisions and the termination or non-renewal of a franchise. Some states require that franchise materials be registered before franchises can be offered or sold in that state.
Certain forward-looking statements are included in this Form 10-K, principally in the sections captioned "Business," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements are related to, among other things: ● our expectations as to the impact of a global or regional pandemic or epidemic on our business; 13 Table of Contents ● the sufficiency of the supply of commodities and labor pool to carry on our business; ● anticipated price increases and the impact of inflation ● business objectives and strategic plans; ● operating strategies; ● our ability to open and operate additional restaurants profitably and the timing of such openings; ● expectations that most, if not all, of the Company’s unit growth will be through the development of additional Bad Daddy’s Burger Bar locations; ● restaurant and franchise acquisitions; ● expected future revenues and earnings, comparable and non-comparable restaurant sales, results of operations, and future restaurant growth (both company-owned and franchised); ● estimated costs of opening and operating new restaurants, including general and administrative, marketing, franchise development and restaurant operating costs; ● anticipated selling, general and administrative expenses and restaurant operating costs, including commodity prices, labor and energy costs; ● future capital expenditures; ● our expectation that we will have adequate cash from operations and credit facility borrowings to meet all future debt service, capital expenditure and working capital requirements in fiscal 2023; ● success of advertising and marketing activities; ● the absence of any material adverse impact arising out of any current litigation in which we are involved; ● impact of the adoption of new accounting standards and our financial and accounting systems and analysis programs; ● expectations regarding competition and our competitive advantages; ● impact of our trademarks, service marks, and other proprietary rights; and ● effectiveness of our internal control over financial reporting.
Certain forward-looking statements are included in this Form 10-K, principally in the sections captioned "Business," and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements are related to, among other things: ● our expectations as to the impact of a global or regional pandemic or epidemic on our business; ● the sufficiency of the supply of commodities and labor pool to carry on our business; ● anticipated price increases and the impact of inflation ● business objectives and strategic plans; ● operating strategies; ● our ability to open and operate additional restaurants profitably and the timing of such openings; ● expectations that most, if not all, of the Company’s unit growth will be through the development of additional Bad Daddy’s Burger Bar locations; ● restaurant and franchise acquisitions; ● expected future revenues and earnings, comparable and non-comparable restaurant sales, results of operations, and future restaurant growth (both company-owned and franchised); ● estimated costs of opening and operating new restaurants, including general and administrative, marketing, franchise development and restaurant operating costs; ● anticipated selling, general and administrative expenses and restaurant operating costs, including commodity prices, labor and energy costs; ● future capital expenditures; ● our expectation that we will have adequate cash from operations and credit facility borrowings to meet all future debt service, capital expenditure and working capital requirements in fiscal 2025; ● success of advertising and marketing activities; ● the absence of any material adverse impact arising out of any current litigation in which we are involved; ● impact of the adoption of new accounting standards and our financial and accounting systems and analysis programs; ● expectations regarding competition and our competitive advantages; ● impact of our trademarks, service marks, and other proprietary rights; and ● effectiveness of our internal control over financial reporting.
We placed an elevated level of focus in managing overhead costs and gaining further efficiencies in supervision and support services costs and believe that those costs will be relatively stable, though we expect to invest in modern human resource and financial planning systems that will provide improved abilities for our restaurant leaders and support capability leaders to best create value for the business. 7 Table of Contents 3.
We placed an elevated level of focus in managing overhead costs and gaining further efficiencies in supervision and support services costs and believe that those costs will be relatively stable, though we expect to invest in modern human resource and financial planning systems that will provide improved abilities for our restaurant leaders and support capability leaders to best create value for the business. 8 Table of Contents 3.
The appeal of Bad Daddy’s is not solely based on a purely on-premises customer experience however, as the focus we place on bold, unique flavors; superior ingredients; and scratch cooking in each kitchen translates into significant off-premises adoption, both through traditional customer carry-out and delivery by third party delivery service providers.
The appeal of Bad Daddy’s is not solely based on a purely on-premises customer experience however, as the focus we place on indulgent meals through bold, unique flavors; superior ingredients; and scratch cooking in each kitchen translates into significant off-premises adoption, both through traditional customer carry-out and delivery by third party delivery service providers.
We believe Bad Daddy’s innovative menu and personalized service combined with a unique, fun restaurant design enhance our customers’ experience and differentiate Bad Daddy’s from its competitors. Good Times Burgers & Frozen Custard Good Times is a drive-thru, quick-service hamburger-focused restaurant concept offering fresh, 100% all-natural beef and chicken.
We believe Bad Daddy’s innovative menu and personalized service combined with a unique, fun restaurant design enhance our customers’ experience and differentiate Bad Daddy’s from its competitors. Good Times Burgers & Frozen Custard Good Times is a drive-thru, quick-service burger-focused restaurant concept offering fresh, 100% all-natural beef and chicken.
Pursue disciplined unit growth of Company-operated Bad Daddy ’ s Burger Bar restaurants . We own the Bad Daddy’s Burger Bar brand, including all associated intellectual property. We have identified potential new restaurant locations in the southeast U.S. market which are in various stages of negotiation.
Pursue disciplined unit growth of Company-operated Bad Daddy’s Burger Bar restaurants . We own the Bad Daddy’s Burger Bar brand, including all associated intellectual property. We have identified potential new restaurant locations in the southeast U.S. market which are in various stages of negotiation.
Additionally, we own trademarks or service marks that have been registered with the United States Patent and Trademark Office including, but not limited to, “Bad Daddy’s Burger Bar EST. 2007”, “Big Daddy Bacon Cheeseburger,” “Spoonbender”, and “Happiness Made To Order”. The registration for our “Bad Daddy’s Burger Bar” mark will be renewed prior to September 2031.
Additionally, we own trademarks or service marks that have been registered with the United States Patent and Trademark Office including, but not limited to, “Bad Daddy’s Burger Bar EST. 2007”, “Big Daddy Bacon Cheeseburger,” and “Spoonbender” The registration for our “Bad Daddy’s Burger Bar” mark will be renewed prior to September 2031.
Accordingly, our general managers and assistant managers in each restaurant participate in a bonus program based upon meeting financial, customer service and quality performance objectives tied to a monthly scorecard of measures. 10 Table of Contents Operational and Management Systems and Processes We have implemented highly-effective operating systems and processes relative to those in the industry for both of our concepts.
Accordingly, our general managers and assistant managers in each restaurant participate in a bonus program based upon meeting financial, customer service and quality performance objectives tied to a monthly scorecard of measures. Operational and Management Systems and Processes We have implemented highly effective operating systems and processes relative to those in the industry for both of our concepts.
We offer our guests an extensive ability to customize their burgers and salads, including Create Your Own Burgers and Salads, restricted only by the ingredients available in the kitchen, which include a variety of different protein options including bison, turkey, chicken, salmon, and plant-based protein. 4 Table of Contents 2. A Bad Ass Bar.
We offer our guests an extensive ability to customize their burgers and salads, including Create Your Own Burgers and Salads, restricted only by the ingredients available in the kitchen, which include a variety of different protein options including bison, turkey, chicken, salmon, and plant-based protein. 2. A Bad Ass Bar.
We Have Assembled a Dedicated Senior Leadership Team with Significant Experience Each of the members of our senior leadership team have many years of relevant experience in their field of expertise, and nearly all have more than fifteen years of industry experience, with some members having worked together for more than twenty years developing the Good Times concept.
We Have Assembled a Dedicated Senior Leadership Team with Significant Experience Each of the members of our senior leadership team have many years of relevant experience in their field of expertise, and most have more than fifteen years of industry experience, with some members having worked together for more than twenty years developing the Good Times concept.
We believe that all-natural beef and chicken deliver a better tasting product and, because of the rigorous protocols and testing that are a part of the Meyer all-natural, all-Angus Beef and Springer Mountain Farms Chicken processes, may also minimize the risk of any food-borne bacteria-related illnesses.
We believe that these attributes of our beef and chicken deliver a better tasting product and, because of the rigorous protocols and testing that are a part of the Meyer all-natural, all-Angus Beef and Springer Mountain Farms Chicken processes, may also minimize the risk of any food-borne bacteria-related illnesses.
We believe Good Times and Bad Daddy’s are both well positioned to capitalize on those macro-trends. 6 Table of Contents Both of our brands currently operate with relatively small market penetration and overall development footprints, providing significant expansion potential.
We believe Good Times and Bad Daddy’s are both well positioned to capitalize on those macro-trends. Both of our brands currently operate with relatively small market penetration and overall development footprints, providing significant expansion potential.
The customizable menu options also include a variety of proteins including black bean, salmon, turkey, bison and chicken. Additionally, we offer giant chopped salads, a full gluten-friendly menu, appetizers including hand-cut fries and housemade potato chips, hand-spun ice cream milkshakes and our scratch-made “southern-style” banana pudding.
The customizable menu options also include a variety of proteins including house-made black bean patty, salmon, turkey, bison and chicken. Additionally, we offer giant chopped salads, a full gluten-friendly menu, appetizers including hand-cut fries and housemade potato chips, hand-spun ice cream milkshakes and our scratch-made banana pudding.
Managers are cross-trained in back of the house skills (prep, kitchen positions and line management), front of the house service positions (host, server and bar) and all management functions, however each manager is assigned one or more specific areas of responsibility over which they have “ownership” and direct accountability for results.
Managers are cross-trained in back of the house skills (kitchen execution, kitchen management, expediting, and line management), front of the house service positions (host, server and bar) and all other management functions, however each manager is assigned one or more specific areas of responsibility over which they have “ownership” and direct accountability for results.
Additionally, in the context of a global or regional pandemic or epidemic, future facts and circumstances could change and impact assumptions relied upon in our forward-looking statements. All forward-looking statements speak only as of the date made.
Additionally, in the context of a global or regional pandemic or epidemic, future facts and circumstances could change, and impact assumptions relied upon in our forward-looking statements. 15 Table of Contents All forward-looking statements speak only as of the date made.
Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. 14 Table of Contents
Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
In addition, we are subject to the Americans with Disabilities Act, which requires restaurants and other facilities open to the public to provide for access and use of facilities by the handicapped. Management believes that we are in compliance with the Americans with Disabilities Act.
In addition, we are subject to the Americans with Disabilities Act, which requires restaurants and other facilities open to the public to provide for access and use of facilities for people with disabilities. Management believes that we are in compliance with the Americans with Disabilities Act.
Debt The Company and its wholly owned subsidiaries (the “Subsidiaries”) maintain an amended and restated credit agreement with Cadence Bank (“Cadence”) pursuant to which Cadence agreed to loan the Company up to $8,000,000, which has a maturity date of April 20, 2028 (the “Cadence Credit Facility”).
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 $8,000,000, with a maturity date of April 20, 2028 (the “Cadence Credit Facility”).
Expansion strategy and site selection Bad Daddy ’ s Burger Bar Our development of the Bad Daddy’s Burger Bar concept in company-owned restaurants has focused on urban and suburban upper income demographic areas with median household incomes over $70,000, with a high concentration of daytime employment, specialty retail and entertainment venues.
Expansion strategy and site selection Bad Daddy’s Burger Bar Our development of the Bad Daddy’s Burger Bar concept in company-owned restaurants has focused on urban and suburban upper income demographic areas with median household incomes over $90,000, with a high concentration of daytime employment, specialty retail and entertainment venues.
We make available through our website’s investor relations information section our Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed with or furnished to the Securities and Exchange Commission (“SEC”) under applicable securities laws as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC.
Available Information Our Internet website address is goodtimesburgers.com We make available through our website’s investor relations information section our Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed with or furnished to the Securities and Exchange Commission (“SEC”) under applicable securities laws as soon as reasonably practical after we electronically file such material with, or furnish it to, the SEC.
Rather than merely being a feeding trough for the masses, we strive to differentiate our concepts in a way that creates an emotional connection by the guest to each brand. This emotional connection drives loyalty and long-term strength in same store sales. o Operational Excellence.
Rather than merely being a feeding trough for the masses, we strive to differentiate our concepts through a level of hospitality that creates an emotional connection by the guest to each brand. This emotional connection drives loyalty and long-term strength in same store sales. o Operational Excellence.
The registration for our “Good Times” marks will be renewed prior to December 2023 and March 2032 respectively. We intend to maintain our marks and renew registrations on a timely basis. Government Regulation Each of our restaurants is subject to the regulations of various health, sanitation, safety and fire agencies in the jurisdiction in which the restaurant is located.
The registration for our “Good Times” marks will be renewed prior to February 2028 and December 2033 respectively. We intend to maintain our marks and renew registrations on a timely basis. Government Regulation Each of our restaurants is subject to the regulations of various health, sanitation, safety and fire agencies in the jurisdiction in which the restaurant is located.
We focus on making our bar a place where both newcomers and regular guests can comfortably relax and enjoy a beverage at happy hour, with their meal, or at any other time of day. 3. Genuine Hospitality.
We focus on making our bar a place where both newcomers and regular guests can comfortably relax and enjoy a beverage at happy hour, with their meal, or at any other time of day. 3. Guest-First Mindset.
Same store sales increased for fiscal 2023 primarily due to price increases throughout the fiscal year, partially offset by decreased foot traffic. Our compound annual same store sales growth rate was approximately 5.0% over the past ten years.
Same store sales increased for fiscal 2024 primarily due to price increases throughout the fiscal year, partially offset by decreased foot traffic. Our compound annual same store sales growth rate was approximately 4.4% over the past ten years.
We believe we have people with the right expertise as well as capable processes and systems in place to support both concepts and targeted future growth of the Bad Daddy’s concept. We Have Maintained Operating Momentum Same store sales at Good Times have increased twelve of the past thirteen years.
We believe we have people with the right expertise as well as capable processes and systems in place to support both concepts and targeted future growth of both of our concepts. We Have Maintained Operating Momentum Same store sales at Good Times have increased thirteen of the past fourteen years.
Nevertheless, Bad Daddy’s Burger Bar may be at a competitive disadvantage to other restaurant chains with greater name recognition and operating mass. Good Times competes with many other hamburger-oriented quick-service restaurants in the areas in which it operates.
Nevertheless, Bad Daddy’s Burger Bar may be at a competitive disadvantage to other restaurant chains with greater name recognition and operating scale. 13 Table of Contents Good Times competes with many other hamburger-oriented quick-service restaurants in the areas in which it operates.
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 $299,000 and is amortizing these costs over the term of the credit agreement. As of September 26, 2023, the unamortized balance of these fees was $122,000.
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 $299,000 and is amortizing these costs over the term of the credit agreement. As of September 24, 2024, the unamortized balance of these fees was $95,000.
This brand positioning results in transactions that generate average sales per transaction of approximately $36 across all transaction types. The lunch daypart (open until 2 p.m.) represents approximately 35% and the happy hour and dinner dayparts (2 p.m. until close) represent approximately 65% of restaurant sales.
This brand positioning results in transactions that generate average sales per transaction of approximately $37 across all transaction types. The lunch daypart (open until 2 p.m.) represents approximately 33% and the happy hour and dinner dayparts (2 p.m. until close) represent approximately 67% of restaurant sales.
Double drive-thru restaurant chains such as Rally’s Hamburgers and Checker’s Drive-In Restaurants, which currently operate double drive-thru restaurants in various markets in the United States, are not currently operating in Colorado.
Double drive-thru restaurant chains such as Checkers & Rally’s Restaurants, which currently operate double drive-thru restaurants in various markets in the United States, are not currently operating in Colorado.
The resulting product is smoother, creamier and thicker than typical soft serve or hard-packed ice cream products. We serve the frozen custard as vanilla and a flavor of the month in cups and cones and Spoonbenders, a mix of custard and toppings. Additionally, we offer thirteen flavors of shakes.
The resulting product is smoother, creamier and thicker than typical soft serve or hard-packed ice cream products. We serve the frozen custard as vanilla and a flavor of the month in cups and cones and our Spoonbenders a mix of custard and toppings. Additionally, we serve shakes and floats made with our frozen custard.
Suppliers are chosen based upon their ability to provide (i) a continuous supply of product that meets all safety and quality specifications, (ii) logistics expertise and freight management, (iii) product innovation and differentiation, (iv) customer service, (v) transparency of business relationships and (vi) competitive pricing.
We directly contract with suppliers for key products who are chosen based upon their ability to provide (i) a continuous supply of product that meets all safety and quality specifications, (ii) logistics expertise and freight management, (iii) product innovation and differentiation, (iv) customer service, (v) transparency of business relationships and (vi) competitive pricing.
As of September 26, 2023, there were $750,000 of borrowings against the facility, all of which is due during the fiscal year ending September 2028 and is classified as a long-term liability in the accompanying balance sheet.
As of September 24, 2024, there were $500,000 of borrowings against the facility, all of which is due during the fiscal year ending September 2028 and is classified as a long-term liability in the accompanying balance sheet.
We feature a variety of craft beers from local breweries and a full bar serving spirits, innovative cocktails, and wines including our signature Red and White pours. Our signature recipes include the Bad Ass Burger; Sam I Am Burger and Emilio’s Chicken Sandwich. Signature Chopped Salads include the Texican Chicken Salad and the Stella’s Greek Salad.
We feature a variety of craft beers from local breweries and a full bar serving our Bad Ass Margarita and other innovative cocktails, and both red and white wine. Our signature recipes include the Bad Ass Burger; Sam I Am Burger and Emilio’s Chicken Sandwich. Signature Chopped Salads include the Texican Chicken Salad and the Stella’s Greek Salad.
As of the date of filing of this report, the Company was in compliance with each of these covenants under the Cadence Credit Facility. As of September 26, 2023 the interest rate applicable to borrowings under the Cadence Credit Facility was 8.42%.
As of the date of filing of this report, the Company was in compliance with each of these covenants under the Cadence Credit Facility. As of September 24, 2024, the interest rate applicable to borrowings under the Cadence Credit Facility was 8.41%.
We maintain incentive programs at all levels of management based on balanced metrics addressing performance related to people development and retention; consistent, strong operations; and superior economic value creation. o Our Guests’ Emotional Connection.
We maintain incentive programs at all levels of management based on balanced metrics addressing performance related to people development and retention; consistent, strong operations; and superior economic value creation. o Guest-First Mindset.
We believe that Bad Daddy’s Burger Bar has an advantage in the premium quality of our ingredients, unparalleled ability for guests to customize their order, distinctiveness of its atmosphere and the bold, unique flavors of our scratch-made, chef-inspired menu offerings.
We believe that Bad Daddy’s Burger Bar has an advantage in the premium quality of our ingredients, unparalleled ability for guests to customize their order, distinctiveness of its atmosphere and the indulgence created by our bold, unique flavors.
Availability of the Cadence Credit Facility for borrowings is reduced by the outstanding face value of any letters of credit issued under the facility. As of September 26, 2023, there were approximately $10,000 in outstanding letters of credit issued under the facility, and approximately $7,240,000 of committed funds available.
Availability of the Cadence Credit Facility for borrowings is reduced by the outstanding face value of any letters of credit issued under the facility. As of September 24, 2024, there were approximately $10,000 in outstanding letters of credit issued under the facility, and approximately $7,490,000 of committed funds available. Parker Promissory Note.
Bad Daddy’s Burger Bar strives to provide proprietary flavors and recipes available nowhere else with fresh, handcrafted quality throughout the menu paired with genuine and warm hospitality. We also commit to making occasional changes to keep our menu fresh for our guests while still maintaining the spirited flavor profiles that distinguish us from others.
Bad Daddy’s Burger Bar strives to provide proprietary flavors and recipes available nowhere else with fresh, handcrafted quality throughout the menu paired with genuine and warm hospitality. We also rotate through seasonal food and beverage specials to provide variety for our guests while still maintaining the spirited flavor profiles that distinguish us from others.
The configuration of restaurant point-of-sales systems is performed by our technology shared service capability. 11 Table of Contents We use a cloud-based back-office solution across both brands that collects sales, labor and cash data from the restaurant point-of-sale system in near real-time and is the primary source of capture for inventory and supply chain management information.
We use a cloud-based back-office solution across both brands that collects sales, labor and cash data from the restaurant point-of-sale system in near real-time and is the primary source of capture for inventory and supply chain management information.
Although the rate of inflation has moderated recently, increases in inflation could affect the global and U.S. 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.
Recent Developments Macroeconomic Factors and Operating Environment During fiscal 2024, inflation has moderated, however increases in inflation could affect the global and U.S. 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.
Share Repurchase On February 7, 2022, the Company’s board of directors approved a program to purchase shares of its common stock at an aggregate amount of up to $5.0 million dollars. As of September 26, 2023, a total of 1,127,188 shares have been repurchased under the plan at an aggregate cost of approximately $3,222,000.
Share Repurchase On February 7, 2022, the Company’s board of directors approved a program to purchase shares of its common stock at an aggregate amount of up to $5.0 million dollars on the open market. As of September 24, 2024, a total of 1,670,718 shares have been repurchased under the plan at an aggregate cost of approximately $4,650,000.
Our site selection process includes evaluating several criteria, including a mix of substantial daily traffic, density of at least 30,000 people within a three-mile radius, strong daytime population and employment base, retail and entertainment traffic generators, good visibility and easy access.
Our site selection process includes evaluating several criteria, including a mix of substantial daily traffic, density of at least 30,000 people within a three-mile radius, strong daytime population and employment base, retail and entertainment traffic generators, good visibility and easy access. Restaurant locations We currently own and operate or license a total of forty Bad Daddy’s Burger Bar locations.
Our Brands Have Growth Potential We believe both of our brands are well positioned to take advantage of consumers’ changing demands for restaurants, whether regarding the quality of the ingredients, the ability to customize their order exactly to their liking, or the ability to eat their food in a restaurant dining room, on a patio, in their car, or to either pick it up or have it delivered.
We want to achieve both growth in unit volumes and growth in number of units, but at the same time maintain a low debt load. 7 Table of Contents Our Brands Have Growth Potential We believe both of our brands are well positioned to take advantage of consumers’ changing demands for restaurants, whether regarding the quality of the ingredients, the ability to customize their order exactly to their liking, or the ability to eat their food in a restaurant dining room, on a patio, in their car, or to either pick it up or have it delivered.
Each brand is operated with distinct operations teams led by its own operations leader, while utilizing shared support capabilities in administration, finance, accounting, human resources, development, marketing and information technology, each capability led by its own qualified leader with many years of functional and leadership experience.
Our executive leadership team has significant experience spanning both full service and quick service restaurant concepts. Each brand is operated with distinct operations teams, while utilizing shared support capabilities in administration, finance, accounting, human resources, real estate, marketing and information technology. Each capability is led by its own qualified leader with many years of functional and leadership experience.
Special Note About Forward-Looking Statements This Form 10-K may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such statements are subject to the safe harbors created thereby.
Our website information is not part of or incorporated by reference into this Annual Report on Form 10-K. 14 Table of Contents Special Note About Forward-Looking Statements This Form 10-K may include “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such statements are subject to the safe harbors created thereby.
Refer to Note 10, Segment Reporting , in the notes to our consolidated financial statements for more information. Available Information Our Internet website address is goodtimesburgers.com .
Refer to Note 10, Segment Reporting , in the notes to our consolidated financial statements for more information.
Media is an important component of building our brand awareness and distinctiveness. We spent most of our broadcast advertising dollars on radio advertising during fiscal 2023 and fiscal 2022.
Media is an important component of building our brand awareness and distinctiveness. We spent most of our media advertising dollars on audio advertising during fiscal 2024 and fiscal 2023, including terrestrial radio, podcasts, and advertising-based streaming platforms.
We actively work with and monitor our franchisees to ensure successful franchise operations as well as compliance with our systems and procedures. We advise the franchisee on menu, management training and marketing. On an ongoing basis we conduct standards reviews of all franchise restaurants in key areas including product quality, service standards, restaurant cleanliness and sanitation and food safety.
We advise the franchisee on menu, management training and marketing. On an ongoing basis we conduct standards reviews of all franchise restaurants in key areas including product quality, service standards, restaurant cleanliness and sanitation and food safety.
Specified products are distributed to all restaurants through US Foods under negotiated contracts directly to our restaurants two to four times per week depending on restaurant requirements.
Specified products are distributed to all restaurants through US Foods, or directly in the case of certain bread and produce suppliers, under negotiated contracts directly to our restaurants two to five times per week depending on restaurant requirements.
Bad Daddy’s operates in the full-service dining segment as a specialty burger bar concept and Good Times operates in the quick-service restaurant segment as a drive-thru concept focused on all-natural burgers, fries, and frozen custard.
Bad Daddy’s operates in the full-service dining segment as a specialty burger bar concept and Good Times operates in the quick-service restaurant segment as a drive-thru concept focused on all-natural burgers, fries, and frozen custard. Through our wholly owned subsidiaries (the “Subsidiaries”), we currently own and operate or license forty Bad Daddy’s restaurants in seven states.
Part of the training team remains on-site for a period after the opening of the restaurant while an additional team provides several weeks of support following opening. Recruiting and Retention At Bad Daddy’s we seek to hire experienced restaurant managers.
Part of the training team remains on-site for a period after the opening of the restaurant while an additional team provides several weeks of support following opening.
The lack of availability of supplies of such products may impact the availability and supplier pricing for products purchased by us for use in our business, which could result in higher food and packaging costs or reduced revenues. 3 Table of Contents During fiscal 2023, the significant interest rate increases by the Federal Reserve have caused regional bank failures.
The lack of supplies of such products may impact the availability and supplier pricing for products purchased by us for use in our business, which could result in higher food and packaging costs or reduced revenues.
We believe that both organic growth and unit growth is important to our brand and expect expansion to be disciplined and financed primarily from operating cash flow from the Bad Daddy’s business.
Sales for the Bad Daddy’s restaurants which were open for at least 18 months averaged $2.6 million for fiscal 2024. We believe that both organic growth and unit growth is important to our brand and expect expansion to be disciplined and financed primarily from operating cash flow from the Bad Daddy’s business.
We also offer premium coffee made by Daz Bog, a Colorado-based coffee roaster, and pure 100% orange juice. Marketing & Advertising Bad Daddy ’ s Burger Bar Our marketing strategy for Bad Daddy’s Burger Bar focuses on iconic, in-store merchandising materials and local store marketing to the surrounding trade area around each restaurant, including public relations and community-based events.
Marketing & Advertising Bad Daddy’s Burger Bar Our marketing strategy for Bad Daddy’s Burger Bar focuses on iconic, in-store merchandising materials and local store marketing to the surrounding trade area around each restaurant, including public relations and community-based events.
We currently have four Good Times restaurants operating under franchise agreements in the greater Denver metropolitan area and two dual-branded franchised restaurants operating in Wyoming. In addition, six joint-venture restaurants are operating in the Denver metropolitan area media market.
We currently have one Good Times restaurant operating under a franchise agreement in the greater Denver metropolitan area and two dual-branded franchised restaurants operating in Wyoming.
Same store sales increased 3.7% in fiscal 2023, and 1.1% in fiscal 2022. We have increased same store sales for four consecutive years, and in twelve of the last thirteen years. Same store sales have grown at a compound annual growth rate of 5.0% between fiscal 2014 and 2023.
We have increased same store sales for five consecutive years, and in thirteen of the last fourteen years. Same store sales have grown at a compound annual growth rate of 4.4% between fiscal 2015 and 2024.
Fiscal 2023 Financial & Brand Highlights ● Our net revenues for fiscal 2023 decreased by $78,000 (0.1%) to $138,122,000 from $138,200,000 in fiscal 2022, primarily due to the closure of one Good Times restaurant during the second half of fiscal 2022 and the closure of one Bad Daddy’s restaurant at the end of the first quarter of fiscal 2023, partially offset by same store sales growth at Good Times. ● Same store sales increased by 0.1% at our Bad Daddy’s brand during fiscal 2023. ● Same store sales increased by 3.7% at our Good Times brand during fiscal 2023. ● We acquired the non-controlling interests in subsidiaries owning five Bad Daddy’s restaurants during fiscal 2023. ● We acquired two previously franchised Good Times restaurants near the end of fiscal 2023. ● We ended fiscal 2023 with $4.2 million in cash and $0.8 million in long-term debt.
Fiscal 2024 Financial & Brand Highlights ● Our net revenues for fiscal 2024 increased by $4,155,000 (3.0%) to $142,315,000 from $138,160,000 in fiscal 2023, primarily due to a late fiscal 2023 Bad Daddy’s restaurant opening, the late fiscal 2023 acquisitions of two Good Times restaurants from franchisees and the fiscal 2024 purchase of one Good Times restaurant from a franchisee. ● Same store sales decreased by 1.2% at our Bad Daddy’s brand during fiscal 2024. ● Same store sales increased by 2.9% at our Good Times brand during fiscal 2024. ● We acquired one previously franchised Good Times restaurant in the third quarter of fiscal 2024. ● We ended fiscal 2024 with $3.9 million in cash and $0.8 million in long-term debt.
We also believe that the use of premium, all-natural beef and chicken products help us to differentiate our concept in a crowded quick-service segment of the restaurant industry. 9 Table of Contents Our fresh frozen custard is a premium ice cream with a proprietary vanilla blend that is prepared from highly specialized equipment that minimizes the amount of air that is added to the mix and that creates smaller ice crystals than other frozen dairy desserts.
Our fresh frozen custard is a premium ice cream with a proprietary vanilla blend that is prepared from highly specialized equipment that minimizes the amount of air that is added to the mix and that creates smaller ice crystals than other frozen dairy desserts.
We do not offer a low-priced value menu like most national quick-service chains, choosing to define our value proposition based on quality ingredients with a specific focus on all-natural beef and chicken and products spanning a range of price choices within each of our menu categories.
Good Times makes use of various media but primarily communicates these advantages and promotions through the use of audio platforms including terrestrial radio, digital audio streaming, and podcasting. 6 Table of Contents We do not offer a low-priced value menu like most national quick-service chains, choosing to define our value proposition based on quality ingredients with a specific focus on all-natural beef and chicken and products spanning a range of price points within each of our menu categories.
The following sets forth the key elements of our growth strategy: 1. Organic sales growth in both brands . We intend to continue to focus on increasing our same store sales.
The following sets forth the key elements of our growth strategy: 1. Organic sales growth in both brands . Our primary strategy is to drive ongoing sales growth from our existing restaurants and therefore increasing our same store sales.
There are three primary elements of the concept that we believe differentiates us from our competition: 1. Scratch Cooking. The menu consists of chef-inspired burgers, sandwiches, main-course salads, and appetizers carefully crafted in-house with high-quality ingredients to deliver bold flavor profiles along with portion sizes and presentations that are uncommon in the casual dining segment of the industry.
The menu consists of burgers, sandwiches, main-course salads, and appetizers carefully crafted in-house with high-quality ingredients to deliver bold flavor profiles along with portion sizes and presentations that are uncommon in the casual dining segment of the industry. Beyond simply assembling finished ingredients on a plate, most of our sauces and dressings are prepared from scratch in our restaurant kitchens.
It is our goal to primarily grow our Bad Daddy’s brand and to do so relatively contiguously from our existing restaurants in order to maximize brand awareness and operating and distribution efficiencies. Good Times and Bad Daddy’s operate with a common point-of-sale system and we have implemented a common back-office system for both brands.
It is our goal to primarily grow our Bad Daddy’s brand and to do so relatively contiguously from our existing restaurants in order to maximize brand awareness and operating and distribution efficiencies.
The breakfast menu is centered around Hatch Valley Green Chile Burritos made with our own proprietary green chile recipe using roasted green chiles sourced exclusively from Hatch Valley, New Mexico, eggs, potatoes, and cheese offered with the choice of bacon, sausage or chorizo.
The breakfast menu is centered around Hatch Valley Green Chile Burritos made with our own proprietary green chile recipe using regional roasted green chiles, eggs, potatoes, and cheese offered with the choice of bacon, sausage or chorizo. During breakfast we offer coffee and pure 100% orange juice, along with Wild Spuds as a fried potato side offering.
Speed of service in this segment is critical for success and we average less than three-minute transaction times, as measured from the time the customer places their order until they leave the drive-thru lane. 5 Table of Contents The success of our strategy is evident in our long-term same store sales growth (sales growth over the prior year period at restaurants open more than 18 months, also referred to as comparable sales).
Speed of service in this segment is critical for success, and we average less than three-minute transaction times, as measured from the time the customer places their order until they leave the drive-thru lane.
We own and operate twenty-five Good Times restaurants, and franchise an additional six, located primarily in the Denver market and along the front range of Colorado. We compete primarily on the quality of our products, consistently prompt service, and order accuracy. We support our quality position by using only all-natural beef and chicken.
We own and operate twenty-seven Good Times restaurants, and franchise an additional three: one located in Aurora, Colorado and two in Wyoming. We compete primarily on the quality of our products, consistently prompt service, and order accuracy.
Restaurant locations As of December 14, 2023, we own and operate or license a total of forty-one Bad Daddy’s Burger Bar locations. The location in the Charlotte Douglas International Airport is operated pursuant to a License Agreement. We opened one company-owned Bad Daddy’s restaurant during fiscal 2023 and closed one Bad Daddy’s restaurant.
The location in the Charlotte Douglas International Airport is independently operated pursuant to a License Agreement with an established airport concessionaire. We closed one Company-owned Bad Daddy’s restaurant during fiscal 2024. 9 Table of Contents Additionally, we currently own and operate or franchise a total of thirty Good Times restaurants.
Bad Daddy’s Burger Bar locations are primarily end-cap locations in new and existing shopping center developments using approximately 3,500 to 4,000 square feet.
Site selection is a multi-factor process including the use of specialized applications that create sales forecasts for each site. Bad Daddy’s Burger Bar locations are primarily end-cap locations in new and existing shopping center developments using approximately 3,500 to 4,000 square feet within a multi-tenant building.
Our Brands Have a Common Culture and Operating Philosophy While each of our brands is led by separate operating teams, each shares a commitment to four core values and four dimensions of our business: ● Core Values.
Our Brands Have a Common Operating Philosophy While each of our brands is led by separate operating teams, each shares a commitment to four dimensions of our business: ● Dimensions of the Business: o Individual Fulfillment. The first dimension speaks directly to people, whether that is fellow team members or our customers.
The additional week in a 53-week fiscal year is added to the first quarter, making such quarter consist of 14 weeks. Our discussion for fiscal years 2023 and 2022, which ended on September 26, 2023 (“fiscal 2023”) and September 27, 2022 (‘fiscal 2022”), respectively, each cover periods of 52 full calendar weeks.
Our discussion for fiscal years 2024 and 2023, which ended on September 24, 2024 (“fiscal 2024”) and September 26, 2023 (‘fiscal 2023”), respectively, each cover periods of 52 full calendar weeks. Fiscal 2025 will consist of 53 weeks and end on September 30, 2025.
Total interest expense on notes payable was $31,000 and $20,000 for fiscal 2023 and 2022, respectively. Concepts Bad Daddy ’ s Burger Bar Bad Daddy’s Burger Bar is a full-service, casual dining small box “better burger” concept. Bad Daddy’s currently operates all of its company-owned restaurants under a table service / full bar service model.
Annual principal maturities over the next five years are approximately $35,000 each year. Total interest expense on notes payable was $108,000 and $31,000 for fiscal 2024 and 2023, respectively. 5 Table of Contents Concepts Bad Daddy’s Burger Bar Bad Daddy’s Burger Bar is a full-service, casual dining small box “better burger” concept.
However, certain commodities, primarily ground beef, remain subject to market price fluctuations. Employees At September 26, 2023, we had approximately 2,245 active employees of which 2,016 are hourly team members and 229 are salaried managers or professional staff working full time.
Employees At September 24, 2024, we had approximately 2,110 active employees of which 1,879 are hourly team members and 231 are salaried managers or professional staff working full time.
Although this is the case, we have combined recruiting into a single shared services capability and believe that long-term our training capabilities for the brands will similarly be combined into single shared services capability.
Although this is the case, we have combined recruiting into a single shared services capability and believe that long term, our training capabilities for the brands will similarly be combined into single shared services capability. 11 Table of Contents Each Good Times restaurant employs a general manager, generally one or two hourly assistant managers, up to four hourly shift managers and approximately 10 to 20 non-management team members.
We license the Bad Daddy’s brand to a third-party licensee who owns and operates the Bad Daddy’s restaurant located in the Charlotte Douglas International Airport. As of December 14, 2023, we own and operate or franchise thirty-one total Good Times restaurants. Of these restaurants, twenty-nine are in Colorado.
We own and operate fourteen Bad Daddy’s restaurants in North Carolina, ten in Colorado, five in Georgia, four in South Carolina, three in Alabama, two in Tennessee and one in Oklahoma. We license the Bad Daddy’s brand to a third-party licensee who owns and operates the Bad Daddy’s restaurant located in the Charlotte Douglas International Airport.
Two of the restaurants are in Wyoming and are “dual brand” concept restaurants operated by a franchisee of both Good Times and Taco John’s. The terms “we,” “us,” “our,” the “Company,” “Good Times” and similar terms refer to Good Times Restaurants Inc., a Nevada corporation, and its wholly owned consolidated subsidiaries.
The terms “we,” “us,” “our,” the “Company,” “Good Times” and similar terms refer to Good Times Restaurants Inc., a Nevada corporation, and its wholly owned consolidated subsidiaries. Unless otherwise indicated or the context otherwise requires, financial and operating data in this 10-K report reflect the consolidated business and operations of Good Times Restaurants Inc. and its subsidiaries.
We currently purchase 100% of the food and paper supplies for our Good Times restaurants and the majority of the food and paper supplies for our Bad Daddy’s restaurants from US Foods. In addition, we maintain multiple approved suppliers for all key components of our menu to mitigate risk and ensure supply.
We currently distribute nearly all of the food and paper supplies for our Good Times restaurants and the majority of the food and paper supplies for our Bad Daddy’s restaurants through US Foods.
Many of these restaurants are owned and operated by regional and national restaurant chains, many of which have greater financial resources and experience than we do. In-N-Out, a California-based, burger-focused quick-service restaurant concept, has expanded into the Colorado market and Whataburger, a Texas-based burger-focused quick-service restaurant concept has announced its intent to expand into the Colorado market.
Many of these restaurants are owned and operated by regional and national restaurant chains, many of which have greater financial resources and experience than we do.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to the Ownership of Our Common Stock Our business could be negatively affected as a result of significant shareholders or potential shareholders attempting to effect changes or acquire control over our company, which could cause us to incur significant expense, hinder execution of our business strategy and impact the trading value of our securities.
Biggest changeAny new or modified immigration laws or a change in these policy decisions may have an adverse impact on the number of individuals participating in these markets, and may reduce the total number of employees in the population from which we recruit, affecting our ability to conduct our business, and with respect to our suppliers, may have an adverse impact on their ability to produce products that we purchase for ingredients in our recipes. 21 Table of Contents Risks Related to the Ownership of Our Common Stock Our business could be negatively affected as a result of significant shareholders or potential shareholders attempting to effect changes or acquire control over our company, which could cause us to incur significant expense, hinder execution of our business strategy and impact the trading value of our securities.
If this trend continues, it will negatively impact our ability to effectively operate and grow our business and revenues and materially adversely affect our financial performance. 15 Table of Contents If we fail to appropriately plan and sustain our workforce and proactively respond to employee dissatisfaction, it could adversely impact guest satisfaction and operational efficiency, lead to increased litigation and unionization efforts and negatively impact restaurant profitability.
If this trend continues, it will negatively impact our ability to effectively operate and grow our business and revenues and materially adversely affect our financial performance. 16 Table of Contents If we fail to appropriately plan and sustain our workforce and proactively respond to employee dissatisfaction, it could adversely impact guest satisfaction and operational efficiency, lead to increased litigation and unionization efforts and negatively impact restaurant profitability.
All of our salaried managers are eligible to participate in these programs and those of our hourly employees who meet the service requirements under the Affordable Care Act are also eligible. We maintain insurance coverage for claims in excess of a certain threshold on a per-member basis but do not maintain insurance coverage for aggregate claims.
All of our salaried managers are eligible to participate in these programs and those of our hourly employees who meet the service requirements under the Affordable Care Act are also eligible. We maintain insurance coverage for claims in excess of a certain threshold on a per-member basis (“Stop-Loss” insurance) but do not maintain insurance coverage for aggregate claims.
If we are unable to continue to increase same store sales at existing restaurants, our ability to attain profitability may be adversely affected. We have increased same store sales for twelve of the past thirteen years at Good Times. We have operated Bad Daddy’s for a shorter period of time and have recently experienced declines in same store sales.
If we are unable to continue to increase same store sales at existing restaurants, our ability to attain profitability may be adversely affected. We have increased same store sales for thirteen of the past fourteen years at Good Times. We have operated Bad Daddy’s for a shorter period of time and have recently experienced declines in same store sales.
The negative publicity associated with such an event could damage our reputation and materially adversely affect our financial performance. The inability of the company to successfully negotiate extended terms on leases reaching end-of-term may reduce future profitability. The company leases the real estate underlying substantially all of its restaurants.
The negative publicity associated with such an event could damage our reputation and materially adversely affect our financial performance. 19 Table of Contents The inability of the company to successfully negotiate extended terms on leases reaching end-of-term may reduce future profitability. The company leases the real estate underlying substantially all of its restaurants.
If we cannot successfully execute our growth strategies for Bad Daddy’s Burger Bar, our business and results of operations may be adversely affected. Our growth, including the development of Bad Daddy ’ s Burger Bar restaurants, may strain our management and infrastructure.
If we cannot successfully execute our growth strategies for Bad Daddy’s Burger Bar, our business and results of operations may be adversely affected. Our growth, including the development of Bad Daddy’s Burger Bar restaurants, may strain our management and infrastructure.
The risk of similar government and consumer response to future pandemics or other public health concerns, and the risk of similar impacts within the labor markets and global supply chain, could cause significant disruption to our business.
The risk of similar government and consumer response to future public health concerns, and the risk of similar impacts within the labor markets and global supply chain, could cause significant disruption to our business.
If our infrastructure is insufficient to support our growth, our ability to open new restaurants, including the development of the Bad Daddy’s Burger Bar concept, would be adversely affected. 19 Table of Contents Bad Daddy ’ s Burger Bar is subject to all of the risks of a relatively new business, including competition, and there is no guarantee of a return on our capital investment.
If our infrastructure is insufficient to support our growth, our ability to open new restaurants, including the development of the Bad Daddy’s Burger Bar concept, would be adversely affected. 20 Table of Contents Bad Daddy’s Burger Bar is subject to all of the risks of a relatively new business, including competition, and there is no guarantee of a return on our capital investment.
The Bad Daddy’s Burger Bar concept has been in existence for approximately sixteen years and the average age for all Bad Daddy’s restaurants, as of the date of this filing, is 7.0 years. Existing restaurants are currently located in Alabama, Colorado, Georgia, North Carolina, Oklahoma, South Carolina, and Tennessee.
The Bad Daddy’s Burger Bar concept has been in existence for approximately seventeen years and the average age for all Bad Daddy’s restaurants, as of the date of this filing, is approximately eight years. Existing restaurants are currently located in Alabama, Colorado, Georgia, North Carolina, Oklahoma, South Carolina, and Tennessee.
Zink, he may voluntarily terminate his employment with us at any time. In addition, we do not currently maintain key-person insurance on the lives of Messrs. Zink or Stack. We have not entered into an employment agreement with Mr. Stack. The loss of services by Messrs.
Although we have entered into an employment agreement with Mr. Zink, he may voluntarily terminate his employment with us at any time. In addition, we do not currently maintain key-person insurance on the lives of Messrs. Zink or Stack or Ms. August. We have not entered into any employment agreements with Ms. August or Mr.
The market price of our common stock is likely to continue to be volatile and may fluctuate significantly in response to many factors, including: ● the impact pandemics, including the COVID-19 pandemic on our business; ● operating results that vary from the expectations of management, securities analysts and investors; ● developments in our business; ● the operating and securities price performance of companies that investors consider to be comparable to us; ● announcements of implementation of strategic transactions or developments and other material events by us or our competitors; 20 Table of Contents ● negative economic conditions that adversely affect the economy, commodity prices, the job market and other factors that may affect the markets in which we operate; ● publication of research reports about us or the sectors in which we operate generally; ● changes in market valuations of similar companies; ● additions or departures of key management personnel; ● actions by institutional shareholders; ● speculation in the press or investment community; and ● the realization of any of the other risk factors included in this Annual Report on Form 10-K.
The market price of our common stock is likely to continue to be volatile and may fluctuate significantly in response to many factors, including: ● the impact of public health concerns on our business; ● operating results that vary from the expectations of management, securities analysts and investors; ● developments in our business; ● the operating and securities price performance of companies that investors consider to be comparable to us; ● announcements of implementation of strategic transactions or developments and other material events by us or our competitors; ● negative economic conditions that adversely affect the economy, commodity prices, the job market and other factors that may affect the markets in which we operate; ● publication of research reports about us or the sectors in which we operate generally; ● changes in market valuations of similar companies; ● news, publication of research reports, or speculation related to companies similar to us ● additions or departures of key management personnel; ● actions by institutional shareholders; ● speculation in the press, investment community, or on social media about our company, our stock or similar companies or of their stock; 22 Table of Contents ● increased trading volume in our stock caused by individual or algorithmic trading activity; and ● the realization of any of the other risk factors included in this Annual Report on Form 10-K.
A smaller reporting company prepares and files SEC reports and registration statements using the same forms as other SEC reporting companies, though the information required to be disclosed may differ and be less comprehensive.
Currently we qualify as a “smaller reporting company” under SEC rules. A smaller reporting company prepares and files SEC reports and registration statements using the same forms as other SEC reporting companies, though the information required to be disclosed may differ and be less comprehensive.
Changes to existing rules or differing interpretations with respect to our current practices may adversely affect our reported financial results. Because we currently qualify as a “ smaller reporting company, ” our disclosures of non-financial and financial information are less than is required by non-smaller reporting companies. Currently we qualify as a “smaller reporting company” under SEC rules.
New pronouncements and varying interpretations of pronouncements have occurred and may occur in the future. Changes to existing rules or differing interpretations with respect to our current practices may adversely affect our reported financial results. Because we currently qualify as a “smaller reporting company,” our disclosures of non-financial and financial information are less than is required by non-smaller reporting companies.
Changes in accounting standards can have a significant effect on our reported results and may affect our reporting of transactions completed before the change is effective. See Note 1 to our Consolidated Financial Statements for further discussion. New pronouncements and varying interpretations of pronouncements have occurred and may occur in the future.
Future changes in financial accounting standards may cause adverse unexpected operating results and affect our reported results of operations. Changes in accounting standards can have a significant effect on our reported results and may affect our reporting of transactions completed before the change is effective. See Note 1 to our Consolidated Financial Statements for further discussion.
Though we recognized net income in fiscal 2023, in light of the uncertainty of macro-economic conditions, increasing inflation and other factors affecting our supply chain and employee markets, we cannot provide assurance that we will produce income again or generate a loss for the fiscal year ending September 24, 2024.
Though we recognized net income in fiscal 2024, in light of the uncertainty of macroeconomic conditions, increasing inflation and other factors affecting our supply chain and employee markets, we cannot provide assurance that we will produce income again for the fiscal year ending September 30, 2025.
The COVID-19 pandemic and the associated government response, change in consumer behavior, labor market effects and supply chain impacts significantly affected the results of operations and financial condition of our business.
Public health concerns including pandemics and the associated government response, change in consumer behavior, labor market effects and supply chain impacts significantly affected the results of operations and financial condition of our business.
We have accumulated losses and cannot guarantee future profits. We have incurred losses in 29 of our 36 years since inception. As of September 26, 2023, we had an accumulated deficit of $19,235,000.
We have accumulated losses and cannot guarantee future profits. We have incurred losses in 29 of our 36 years since inception. As of September 24, 2024, we had an accumulated deficit of $17,622,000.
Any of these impacts could materially and adversely affect our business and operating results. Further, the market price of our common stock could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties described above. Future changes in financial accounting standards may cause adverse unexpected operating results and affect our reported results of operations.
Any of these impacts could materially and adversely affect our business and operating results. Further, the market price of our common stock could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties described above.
The majority of our restaurant sales are by credit or debit cards. Other restaurants and retailers have experienced security breaches in which credit and debit card information of their customers has been stolen.
Security breaches of confidential customer information in connection with our electronic processing of credit and debit card transactions may adversely affect our business. The majority of our restaurant sales are by credit or debit cards. Other restaurants and retailers have experienced security breaches in which credit and debit card information of their customers has been stolen.
Any failure by our suppliers, or their suppliers, could cause our ingredients to be contaminated, which could be difficult to detect and put the safety of our food in jeopardy. 18 Table of Contents In addition to the novel coronavirus that causes COVID-19, consumer preferences could be affected by health concerns about outbreaks of other viruses, including various strains of influenza; the consumption of beef, the key ingredient in many of our menu items; or negative publicity concerning food quality, illness and injury generally, such as negative publicity concerning E. coli, “mad cow” or “foot-and-mouth” disease, publication of government or industry findings concerning food products served by us, or other health concerns or operating issues stemming from one restaurant or a limited number of restaurants.
Consumer preferences could be affected by health concerns about outbreaks of other viruses, including various strains of influenza; the consumption of beef, the key ingredient in many of our menu items; or negative publicity concerning food quality, illness and injury generally, such as negative publicity concerning E. coli, “mad cow” or “foot-and-mouth” disease, publication of government or industry findings concerning food products served by us, or other health concerns or operating issues stemming from one restaurant or a limited number of restaurants.
Although the Company has generally been successful in negotiations with our landlords, the risk that we are unable negotiate additional lease term on expiring leases at reasonable rental rates could materially impact our future profitability.
Although the Company has generally been successful in negotiations with our landlords, the risk that we are unable to negotiate additional lease term on expiring leases at reasonable rental rates could materially impact our future profitability, and even in the case we are able to negotiate additional term at rates that are acceptable to us, those rates may be significantly higher than the expiring rate and may result in lower profitability for the Company.
We depend on key management employees. We believe our current operations and future success depend largely on the continued services of our management employees, in particular Ryan Zink, our President and Chief Executive Officer and Don Stack, our Senior Vice President of Operations for Good Times. Although we have entered into an employment agreement with Mr.
We depend on key management employees. We believe our current operations and future success depend largely on the continued services of our management employees, particularly Ryan Zink, our President and Chief Executive Officer, Keri August our Senior Vice President of Finance and Accounting and Don Stack, our Senior Vice President of Operations for Good Times.
Local authorities may suspend or deny renewal of our food licenses if they determine that our conduct does not meet applicable standards or if there are changes in regulations.
Difficulties or failures in obtaining the required licenses and approvals could delay, or result in our decision to cancel, the opening of new restaurants. Local authorities may suspend or deny renewal of our food licenses if they determine that our conduct does not meet applicable standards or if there are changes in regulations.
The inability to recruit and retain these individuals may delay the planned openings of new restaurants or result in high employee turnover in existing restaurants, which could harm our business.
Qualified individuals needed to fill these positions are in short supply in some areas, and in recent years we have seen an extreme shortage of qualified workers by historical standards. The inability to recruit and retain these individuals may delay the planned openings of new restaurants or result in high employee turnover in existing restaurants, which could harm our business.
Sales at restaurants opened in new markets may take longer to reach average annual company-owned restaurant sales, if at all, thereby affecting the profitability of these restaurants. 16 Table of Contents Our operations are susceptible to the cost of and changes in food availability which could adversely affect our operating results.
Sales at restaurants opened in new markets may take longer to reach average annual company-owned restaurant sales, if at all, thereby affecting the profitability of these restaurants. 17 Table of Contents The hamburger restaurant market is highly competitive. The hamburger restaurant market is highly competitive.
Additionally, we rely on our network of suppliers to properly handle, store and transport our ingredients for delivery to our restaurants.
Additionally, we rely on our network of suppliers to properly handle, store and transport our ingredients for delivery to our restaurants. Any failure by our suppliers, or their suppliers, could cause our ingredients to be contaminated, which could be difficult to detect and put the safety of our food in jeopardy.
The price of our common stock may fluctuate significantly. The trading price of our shares of common stock has from time-to-time fluctuated widely and, in the future may be subject to similar fluctuations. This volatility may affect the price at which you could sell your common stock.
The price of our common stock may fluctuate significantly. The trading price of our shares of common stock has from time to time fluctuated widely and, in the future may be subject to similar fluctuations. Our average daily volume traded is extremely low and even smaller amounts of activity can cause significant movements in the price of our common stock.
In-N-Out has expanded into the state of Colorado, the primary state in which we operate, and is continuing to expand in the market, and Whataburger has announced its intention to expand into the state of Colorado. We also compete with small regional and local hamburger and other fast-food restaurants, many of which feature drive-thru service.
In-N-Out has expanded into the state of Colorado, the primary state in which we operate, and is continuing to expand in the market, and Whataburger has expanded into the state of Colorado with future development expected in markets where we currently operate.
We are subject to extensive government regulation that may adversely hinder or impact our ability to govern various aspects of our business including our ability to expand and develop our restaurants. The restaurant industry is subject to various federal, state and local government regulations, including those relating to the sale of food.
The restaurant industry is subject to various federal, state and local government regulations, including those relating to the sale of food. Our failure to maintain necessary governmental licenses, permits and approvals, including food licenses, could adversely affect our operating results.
Negative publicity about us could harm our reputation and damage the value of our brands, which could materially and adversely affect our financial performance. Our ability to succeed with the Bad Daddy ’ s Burger Bar restaurant concept will require significant capital expenditures and management attention.
Negative publicity about us could harm our reputation and damage the value of our brands, which could materially and adversely affect our financial performance. Ongoing capital expenditures at existing restaurants will require significant capital expenditures and remodel initiatives may not result in increased sales. Most of our Good Times restaurants are more than a decade old.
Zink or Stack, or those of other key management personnel, could have a material adverse effect on our financial condition and results of operations. 17 Table of Contents Security breaches of confidential customer information in connection with our electronic processing of credit and debit card transactions may adversely affect our business.
Stack, and both are employees at will. The loss of services by Messrs. Zink or Stack or Ms. August, or those of other key management personnel, could have a material adverse effect on our financial condition and results of operations.
Removed
Qualified individuals needed to fill these positions are in short supply in some areas, and in fiscal 2023 we have seen an extreme shortage of qualified workers by historical standards as has been reported in various news outlets.
Added
We also compete with small regional and local hamburger and other fast-food restaurants, many of which feature drive-thru service. Increasingly, fast casual burger restaurants such as Shake Shack have incorporated drive-thru service into their operating model, and in the case of Shake Shack, also feature an all-natural beef platform.
Removed
Our profitability depends in part on our ability to anticipate and react to changes in food costs. Various factors beyond our control, including adverse weather conditions, governmental regulation, production, availability, recalls of food products, seasonality and supply chain impacts due to pandemics or other public health situations may affect our food costs or cause a disruption in our supply chain.
Added
Information technology system failures or breaches of our network security could interrupt our operations and harm our business, financial condition and results of operations. We rely on our computer systems and network infrastructure across our operations, including point-of-sale processing at our restaurants and various cloud-based systems that are an integral part of our operations and financial reporting processes.
Removed
We enter annual contracts with our chicken and other miscellaneous suppliers. Our Good Times contracts for chicken are fixed price contracts. Our Bad Daddy’s contracts for chicken and all contracts for beef are generally based on current market prices plus a processing fee.
Added
Our operations depend upon our ability to protect our technology and digital assets against damage from physical theft, fire, power loss, telecommunications failure or other catastrophic events, as well as from internal and external security breaches or attacks, malware, and other disruptions.
Removed
Changes in the price or availability of our all-natural chicken or beef supply or other commodities could materially adversely affect our profitability. We cannot predict whether we will be able to anticipate and react to changing food costs by adjusting our purchasing practices and menu prices, and a failure to do so could adversely affect our operating results.
Added
Any damage or failure of our computer systems or network infrastructure or any cybersecurity incident that causes an interruption in our operations or otherwise compromises our technology or digital assets, an interruption in our operations or otherwise compromises our computer systems or network infrastructure, or if software or third-party vendors that support our information technology environment are compromised, our business, financial condition and results of operations could be harmed and subject us to litigation or actions by regulatory authorities.
Removed
In addition, we may not be able to pass along higher costs through price increases to our customers. Macroeconomic conditions and inflation could affect our operating results. General economic conditions, including economic downturns related to pandemics or other public health emergencies, have adversely affected our results of operations and may continue to do so.
Added
Further, adverse publicity resulting from such an event may harm our business, financial condition and results of operations.
Removed
Similarly, significant inflation has negatively affected our labor and product input costs and could continue to do so.
Added
Although we have a comprehensive program to protect and mitigate risks associated with physical infrastructure and digital assets, including various vulnerability thefts, firewalls, data encryption and other security controls and intend to maintain and upgrade our security technology and operational procedures to prevent damage, breaches or other disruptions, these measures may not eliminate all risks Further, although we purchase cybersecurity insurance, such insurance is a responsive, not a preventive measure, and there can be no assurances that the limits of the policy will be sufficient to cover the costs associated with a cybersecurity event. 18 Table of Contents We are subject to extensive government regulation that may adversely hinder or impact our ability to govern various aspects of our business including our ability to expand and develop our restaurants.
Removed
If the economy experiences a more significant economic downturn or there are uncertainties regarding continued economic prosperity, declines in stock market indices, or other negative macroeconomic occurrences, consumer spending and the unemployment rate may be affected, which may adversely affect our sales in the future.
Added
As a result, we are in the process of replacing signage and making other significant capital investments in our existing restaurants.
Removed
A proliferation of heavy discounting or highly competitive pricing by our major competitors may also negatively affect our sales and operating results. Price increases may impact customer visits. We may make price increases on selected menu items in order to offset increased operating expenses we believe will be recurring.
Added
These signage, technology, and other remodeling expenditures may not increase sales and we may not be able to attract enough additional customers to meet our targeted level of performance and our business and results of operations may be adversely affected. Our ability to succeed with the Bad Daddy’s Burger Bar restaurant concept will require significant capital expenditures and management attention.
Removed
Although we have not experienced significant consumer resistance to our past price increases, future price increases may deter customers from visiting our restaurants or affect their purchasing decisions. The hamburger restaurant market is highly competitive. The hamburger restaurant market is highly competitive.
Added
Further, excessive claims may result in the inability for us to renew our Stop-Loss policies at reasonable rates, if at all, and we may be required to self-insure significantly higher levels of claims or to completely self-insure all claims under the plans which could have a material and adverse effect on our business and financial performance.
Removed
Our failure to maintain necessary governmental licenses, permits and approvals, including food licenses, could adversely affect our operating results. Difficulties or failures in obtaining the required licenses and approvals could delay, or result in our decision to cancel, the opening of new restaurants.
Added
Our business is subject to evolving corporate governance and public disclosure regulations, including environmental, social and governance (“ESG”) matters, that could expose us to numerous risks. We are subject to changing rules and regulations arising from governmental, quasi-governmental, and other self-regulatory organizations, including state and local governments, the SEC, the Nasdaq Stock Market and the Financial Accounting Standards Board.
Added
These rules and regulations are evolving in scope and complexity and many new requirements have been created in response to recently enacted laws, making compliance more difficult and uncertain. In addition, increasingly regulators, customers, investors, employees and other stakeholders are focusing on environmental, social and governance (“ESG”) matters and related disclosures.
Added
Within our industry, concerns have been expressed regarding energy sourcing and management, water usage, chemicals used in food and supplies (such as PFAS or other “forever chemicals”), food safety, labor policies and practices and supply chain and management of food sourcing.
Added
These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.
Added
For example, developing and acting on policies, procedures, and practices within the scope of ESG, and collecting, measuring and reporting ESG related information may be costly and time intensive. Further, these issues are subject to evolving reporting standards, including the SEC’s recently proposed climate-related reporting requirements.
Added
We may also communicate certain information regarding ESG-related matters in our SEC filings or in other public disclosures.
Added
Even to the extent to which we are not subject to certain rules or regulations, shareholders or other interested parties could make intensive efforts to push for our voluntary compliance with such rules or regulations, or could be criticized for the accuracy or completeness of the disclosure; all of which could lead to increased costs.
Added
Our approach towards compliance, whether required or voluntary, toward ESG-related matters, and criticism over such, could adversely affect our reputation, business and financial performance.
Added
Changes in enforcement practices related to existing immigration laws and/or modified or newly adopted immigration legislation may affect labor markets related to our suppliers or the QSR business segment The upcoming Presidential administration change may increase the likelihood for Congress to amend existing immigration laws or adopt new immigration laws.
Added
Further, policy decisions related to the enforcement of, and rulemaking related to, immigration laws have been volatile and subject to changes resulting from election cycles. Those policies include the degree of tolerance of undocumented workers employed in various segments of the workforce.
Added
Various subsegments of the agricultural industry, as well as the QSR subsegment of the restaurant industry itself are at risk for employees who obtain fraudulent documentation but that contains data related to actual individuals or are of such quality that they may not be detected through appropriate document validation practices.
Added
A future ownership change as defined by Section 382 of the Internal Revenue Code (“IRC”) could limit our ability to utilize tax loss and credit carryforwards to offset our taxable income. Our deferred tax assets include certain general business credit tax credits and loss carryforwards.
Added
Our ability to realize these deferred tax assets through their use to offset future taxable income may be significantly limited if we experience an ownership change, as defined by Section 382 of the IRC.
Added
In general, an ownership change under Section 382 occurs if the percentage of stock owned by an entity’s 5% stockholders (as defined for tax purposes) increases by more than 50 percentage points over a rolling three-year period.
Added
Such an ownership change has occurred several times in the Company’s history, although during the periods in which such prior ownership changes occurred, the Company had placed a 100% valuation allowance on its deferred tax assets.
Added
The limitation on our ability to utilize these credits and tax loss carryforwards that could arise from an ownership change under Section 382 would depend on the value of our equity at the time of any ownership change.
Added
If we were to experience an ownership change, it is possible that a significant portion of our tax loss and credit carryforwards could expire before we would be able to use them to offset future taxable income and could result in the recognition of loss associated with the reduced value of the Company’s deferred tax assets.
Added
This volatility may affect the price at which you could sell your common stock.

Item 2. Properties

Properties — owned and leased real estate

5 edited+0 added−0 removed3 unchanged
Biggest changeAll of our properties are covered up to replacement cost under our property and casualty insurance policies and in the opinion of management are adequately covered by insurance. Our restaurants serve as collateral for the Cadence Credit Facility as discussed in the Notes to Consolidated Financial Statements included in this report.
Biggest changeAll of our properties are covered up to replacement cost under our property and casualty insurance policies and in the opinion of management are adequately covered by insurance. Our restaurants serve as collateral for the Cadence Credit Facility as discussed in the Notes to Consolidated Financial Statements included in this report. 24 Table of Contents
We expect future development to be conducted through the leasing of end-cap spaces in retail developments, ground leases, and or land purchases upon which we would be able to build 3,000 – 4,000 square foot standalone building suitable for restaurants, or if the site characteristics otherwise met our criteria, larger sites where we would be able to construct multi-tenant buildings, where we would be able to occupy a portion of the space with a Bad Daddy’s restaurant and lease other portions of the building to restaurant or non-restaurant tenants.
We expect future development to be conducted through the leasing of end-cap spaces in retail developments, ground leases, and or land purchases upon which we would be able to build 3,500 – 4,000 square foot standalone building suitable for restaurants, or if the site characteristics otherwise met our criteria, larger sites where we would be able to construct multi-tenant buildings, where we would be able to occupy a portion of the space with a Bad Daddy’s restaurant and lease other portions of the building to restaurant or non-restaurant tenants.
The buildings are situated on lots of approximately 18,000 to 50,000 square feet. Any future development is expected to be conducted through a combination of ground leases and land purchases. Our Bad Daddy’s restaurants are leased spaces of approximately 3,500 to 4,000 square feet in retail developments located in Alabama, Colorado, Georgia, North Carolina, Oklahoma, South Carolina, and Tennessee.
The buildings are situated on lots of approximately 16,000 to 50,000 square feet. Any future development is expected to be conducted through a combination of ground leases and land purchases. Our Bad Daddy’s restaurants are leased spaces of approximately 3,500 to 4,000 square feet in retail developments located in Alabama, Colorado, Georgia, North Carolina, Oklahoma, South Carolina, and Tennessee.
With the exception of one Good Times restaurant where we own both the land and building underlying, we do not own the land underlying these restaurants and either lease the land or the land and building. In addition, we have several restaurants that are conversions from other concepts in various sizes ranging from 1,700 square feet to 3,500 square feet.
Except for one Good Times restaurant where we own both the land and building underlying, we do not own the land underlying these restaurants and either lease the land or the land and building. In addition, we have several restaurants that are conversions from other concepts in various sizes ranging from 1,700 square feet to 3,500 square feet.
ITEM 2. PROPERTIES We currently lease approximately 7,650 square feet of space for our executive offices in Golden, Colorado for approximately $122,400 per year, under a lease agreement which expires in October 2027.
ITEM 2. PROPERTIES We currently lease approximately 7,650 square feet of space for our executive offices in Golden, Colorado for approximately $126,225 per year, under a lease agreement which expires in October 2027.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed1 unchanged
Biggest changeIn addition, we have obtained financing under loan agreements that restrict the payment of dividends. Our ability to pay future dividends will necessarily depend on our earnings and financial condition. However, since restaurant development is capital intensive, we currently intend to retain any earnings for that purpose. Recent Sales of Unregistered Securities None.
Biggest changeIn addition, the Cadence Credit Facility places restrictions on the payment of dividends. Any ability to pay future dividends would necessarily depend on our earnings, financial condition and willingness of our lender to allow for the payment of dividends. Recent Sales of Unregistered Securities None.
Because many shares of our common stock are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these holders of record. Dividend Policy We have never paid dividends on our common stock and do not anticipate paying dividends in the foreseeable future.
Because many shares of our common stock are held by brokers and other institutions on behalf of shareholders, we are unable to estimate the total number of shareholders represented by these holders of record. Dividend Policy We have never paid dividends on our common stock and at the present time do not anticipate paying dividends in the immediate future.
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 September 26, 2023, the Company has purchased approximately 1,127,188 shares of its common stock pursuant to the share repurchase plan leaving approximately $1,778,000 available for repurchases under the plan.
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 September 24, 2024, the Company has purchased approximately 1,670,718 shares of its common stock pursuant to the share repurchase plan leaving approximately $350,000 available for repurchases under the plan.
ITEM 5. MARKET FOR REGISTRANT ’ S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Shares of our Common Stock are listed for trading on the NASDAQ Capital Market under the symbol “GTIM”. As of December 14, 2023, there were approximately 53 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Shares of our Common Stock are listed for trading on the NASDAQ Capital Market under the symbol “GTIM”. As of the date of this filing, there were approximately 45 holders of record of our common stock.
Period Total number of shares (or units) purchased Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum dollar value of shares that may yet be purchased under the plans or programs 6/28/2023 – 7/25/2023 62,530 $ 3.44 62,530 7/26/2023 – 8/22/2023 54,850 $ 2.99 54,850 8/23/2023 – 9/26/2023 58,760 $ 2.88 58,760 Total 176,140 176,140 $ 1,778,000
Period Total number of shares (or units) purchased Average price paid per share (or unit) Total number of shares (or units) purchased as part of publicly announced plans or programs Maximum dollar value of shares that may yet be purchased under the plans or programs 6/26/2024 – 7/23/2024 17,000 $ 2.57 17,000 7/24/2024 – 8/20/2024 23,312 $ 2.70 23,312 8/21/2024 – 9/24/2024 17,124 $ 2.92 17,124 Total 57,436 57,436 $ 350,000
Added
On December 12, 2024, the Company the Company announced a $2 million expansion of its existing share repurchase program, which now provides authorization for a total of $7 million dollars of aggregate share repurchases.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+27 added−31 removed32 unchanged
Biggest changeOur discussion for the fiscal years ending September 26, 2023 and September 27, 2022 each cover periods of 52 full calendar weeks. 23 Table of Contents The following tables present information about our reportable segments for the respective periods, all dollar values are represented in thousands: Fiscal Year 2023 (52 Weeks) 2022 (52 Weeks) Bad Daddy ’ s: Restaurant sales $ 102,241 99.7 % $ 103,216 99.7 % Franchise revenues 276 0.3 % 286 0.3 % Restaurant operating costs: (1) Food and packaging costs 31,972 31.3 % 33,155 32.1 % Payroll and employee benefit costs 35,892 35.1 % 35,085 34 % Restaurant occupancy and other costs 21,476 21.0 % 21,187 20.5 % Depreciation & amortization 3,060 3.0 % 3,234 3.1 % Preopening costs 484 0.5 % 51 0.0 % Total restaurant operating costs $ 92,884 90.9 % $ 92,712 89.8 % General & administrative costs (2) 7,594 7.4 % 7,127 6.9 % Advertising costs 1,866 1.8 % 1,827 1.8 % Asset impairment costs 1,519 1.5 % 2,647 2.6 % Gain on disposal of assets (4 ) 0.0 % 0 0.0 % Income (loss) from operations (1,342 ) (1.3% ) (811 ) (0.8% ) Good Times : Restaurant sales $ 34,988 98.3 % $ 34,034 98.1 % Franchise revenues 617 1.7 % 664 1.9 % Restaurant operating costs: (1) Food and packaging costs 10,938 31.3 % 10,722 31.5 % Payroll and employee benefit costs 11,657 33.3 % 11,430 33.6 % Restaurant occupancy and other costs 7,144 20.4 % 6,768 19.9 % Depreciation & amortization 603 1.7 % 661 1.9 % Total restaurant operating costs $ 30,342 86.7 % $ 29,581 86.9 % General & administrative costs (2) 1,533 4.3 % 3,401 9.8 % Litigation Contingencies 0 0.0 % 332 1.0 % Advertising costs 1,392 3.9 % 1,337 3.9 % Asset impairment costs 70 0.2 % 790 2.3 % Gain on restaurant asset sale (37 ) (0.1% ) (676 ) (1.9% ) Income from operations $ 2,305 6.5 % $ (67 ) (0.2% ) (1) Restaurant operating costs are expressed as a percentage of restaurant sales.
Biggest changeFiscal 2025 will consist of 53 weeks and end on September 30, 2025. 26 Table of Contents The following tables present information about our reportable segments for the respective periods, all dollar values are represented in thousands: Fiscal Year 2024 (52 Weeks) 2023 (52 Weeks) Bad Daddy’s: Restaurant sales $ 103,539 99.7 % $ 102,241 99.7 % Franchise revenues 305 0.3 % 276 0.3 % Restaurant operating costs: (1) Food and packaging costs 32,155 31.1 % 31,972 31.3 % Payroll and employee benefit costs 35,831 34.6 % 35,892 35.1 % Restaurant occupancy and other costs 21,972 21.2 % 21,476 21.0 % Depreciation & amortization 2,962 2.9 % 3,060 3.0 % Preopening costs - 0.0 % 484 0.5 % Total restaurant operating costs $ 92,920 89.7 % $ 92,884 90.9 % General & administrative costs (2) 8,270 8.0 % 7,594 7.4 % Advertising costs 2,173 2.1 % 1,866 1.8 % Asset impairment costs 689 0.7 % 1,519 1.5 % Gain on disposal of assets 23 0.0 % (4 ) 0.0 % Loss from operations (231 ) (0.2 %) (1,342 ) (1.3 %) Good Times: Restaurant sales $ 38,016 98.8 % $ 34,988 98.2 % Franchise revenues 455 1.2 % 655 1.8 % Restaurant operating costs: (1) Food and packaging costs 11,549 30.4 % 10,938 31.3 % Payroll and employee benefit costs 12,858 33.8 % 11,657 33.3 % Restaurant occupancy and other costs 8,403 22.1 % 7,144 20.4 % Depreciation & amortization 793 2.1 % 603 1.7 % Total restaurant operating costs $ 33,603 88.4 % $ 30,342 86.7 % General & administrative costs (2) 2,246 5.8 % 1,571 4.4 % Litigation Contingencies (332 ) (0.9 %) 0 0.0 % Advertising costs 1,355 3.5 % 1,392 3.9 % Asset impairment costs 9 0.0 % 70 0.2 % Gain on restaurant asset sale (21 ) (0.0 %) (37 ) (0.1 %) Income from operations $ 1,611 4.2 % $ 2,305 6.5 % (1) Restaurant operating costs are expressed as a percentage of restaurant sales.
Overview We operate as two reportable business segments: Good Times Burgers and Frozen Custard restaurants (“Good Times”) and Bad Daddy’s Burger Bar restaurants (“Bad Daddy’s”). All of our Good Times restaurants compete in the quick service drive-thru segment of the restaurant industry while our Bad Daddy’s restaurants compete in the full-service casual dining segment of the restaurant industry.
Overview We operate as two reportable business segments: Good Times Burgers and Frozen Custard (“Good Times”) and Bad Daddy’s Burger Bar (“Bad Daddy’s”). All of our Good Times restaurants compete in the quick service drive-thru segment of the restaurant industry while our Bad Daddy’s restaurants compete in the full-service casual dining segment of the restaurant industry.
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 2023.
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 2025.
The following is a description of what we consider to be our most significant accounting policies. 30 Table of Contents 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 following is a description of what we consider to be our most significant accounting policies and estimates. 33 Table of Contents 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 Company’s tax years corresponding to the Company’s fiscal years 2020 through 2022 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’s tax years corresponding to the Company’s fiscal years 2021 through 2023 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.
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.
Availability of the Cadence Credit Facility for borrowings is reduced by the outstanding face value of any letters of credit issued under the facility. As of September 26, 2023, there were approximately $10,000 in outstanding letters of credit issued under the facility, and approximately $7,240,000 of committed funds available.
Availability of the Cadence Credit Facility for borrowings is reduced by the outstanding face value of any letters of credit issued under the facility. As of September 24, 2024, there were approximately $10,000 in outstanding letters of credit issued under the facility, and approximately $7,490,000 of committed funds available.
As of September 26, 2023, there were $750,000 of borrowings against the facility, all of which is due during the fiscal year ending September 2028 and is classified as a long-term liability in the accompanying balance sheet.
As of September 24, 2024, there were $500,000 of borrowings against the facility, all of which is due during the fiscal year ending September 2028 and is classified as a long-term liability in the accompanying balance sheet.
In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance. Based on our review of this evidence, we determined that a full valuation allowance against all of our deferred tax assets was appropriate.
In making such assessment, more weight was given to evidence that could be objectively verified, including recent cumulative income. Future sources of taxable income were also considered in determining the necessity of a valuation allowance. Based on our review of this evidence, we determined that no valuation allowance against our deferred tax assets was necessary.
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 $299,000 and is amortizing these costs over the term of the credit agreement. As of September 26, 2023, the unamortized balance of these fees was $122,000.
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 $299,000 and is amortizing these costs over the term of the credit agreement.
Additional sales data related to Bad Daddy’s company-owned restaurants: Fiscal Year 2023 2022 Total operating store weeks 2,042.5 2,054.0 Average sales per week $ 50,100 $ 50,300 Annualized net sales per square foot (1) $ 694 $ 685 (1) Based on comparable stores for the full fiscal year.
Additional sales data related to Bad Daddy’s company-owned restaurants: Fiscal Year 2024 2023 Total operating store weeks 2,074.5 2,042.5 Average sales per week $ 49,900 $ 50,100 Annualized net sales per square foot (1) $ 677 $ 694 (1) Based on comparable stores for the full fiscal year.
Average Good Times restaurant sales for company-owned and joint venture restaurants open the entire 2023 and 2022 fiscal years were as follows: Fiscal Year 2023 2022 Average annual unit volume $ 1,506,000 $ 1,455,000 During fiscal 2023, company-operated Good Times restaurants’ sales for restaurants that had been open a full eighteen months ranged from a low of $908,502 to a high of $2,426,689.
Average Good Times restaurant sales for company-owned and joint venture restaurants open the entire 2024 and 2023 fiscal years were as follows: Fiscal Year 2024 2023 Average annual unit volume $ 1,538,000 $ 1,506,000 During fiscal 2024, company-operated Good Times restaurants’ sales for restaurants that had been open a full eighteen months ranged from a low of $1,037,762 to a high of $2,545,795.
We anticipate that in fiscal 2024 Good Times advertising costs as a percentage of net revenues will remain relatively stable, between approximately 3.5% and 4.0%. Gain or Loss on Restaurant Asset Disposals: For fiscal 2023, the gain on restaurant asset disposals was $41,000 compared to a gain of $676,000 in fiscal 2022.
We anticipate that in fiscal 2025 Good Times advertising costs as a percentage of net revenues will decrease to between 2.5% and 3.0%. Loss (Gain) on Restaurant Asset Disposals: For fiscal 2024, the loss on restaurant asset disposals was $2,000 compared to a gain of $41,000 in fiscal 2023.
(4) Primarily related to deferred gains on previous sale-leaseback transactions on two Good Times restaurants. (5) Represents costs recognized in connection the asset impairment charges as described in Note 1 to the Consolidated Financial Statements.
(2) Represents non-cash stock-based compensation as described in Note 8 to the Consolidated Financial Statements. (3) Primarily related to deferred gains on previous sale-leaseback transactions on two Good Times restaurants. (4) Represents costs recognized in connection with the asset impairment charges as described in Note 1 to the Consolidated Financial Statements.
As of the date of filing of this report, the Company was in compliance with each of these covenants under the Cadence Credit Facility. 29 Table of Contents As of September 26, 2023 the interest rate applicable to borrowings under the Cadence Credit Facility was 8.42%.
As of the date of filing of this report, the Company was in compliance with each of these covenants under the Cadence Credit Facility. As of September 24, 2024, the interest rate applicable to borrowings under the Cadence Credit Facility was 8.41%.
This most significant driver of this provision was the release of the valuation allowance previously assessed on the deferred tax assets. See Note 7 to the Consolidated Financial Statements included in this report for further information. 27 Table of Contents Net (Loss) Income: Net income for fiscal 2023 was $11,672,000 compared to net loss of $927,000 in fiscal 2022.
The most significant driver of the prior year benefit was the release of the valuation allowance previously assessed on the deferred tax assets. See Note 7 to the Consolidated Financial Statements included in this report for further information. Net Income: Net income for fiscal 2024 was $1,879,000 compared to net income of $11,672,000 in fiscal 2023.
As a percent of sales, payroll and employee benefits costs decreased by 0.3% in fiscal 2023 compared to fiscal 2022. This decrease was primarily attributable to an 8.9% increase in menu pricing, mostly offset by increased wage rates. Occupancy Costs: Occupancy costs include rent, real and personal property taxes, common area maintenance expenses, licenses and insurance expense.
As a percent of sales, payroll and employee benefits costs increased by 0.5% in fiscal 2024 compared to fiscal 2023. This increase was primarily attributable to increased wage rates, partially offset by menu price increases and increased labor productivity. Occupancy Costs: Occupancy costs include rent, real and personal property taxes, common area maintenance expenses, licenses and insurance expense.
During the fiscal year ended September 26, 2023, the Company had income of $23,000 related to contingent rent adjustments. Some of the leases provide for base rent, plus additional rent based on gross sales, as defined in each lease agreement.
During the fiscal year ended September 24, 2024, the Company incurred $54,000 of contingent rent. Some of the leases provide for base rent, plus additional rent based on gross sales, as defined in each lease agreement.
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.
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.
The Company is also generally obligated to pay certain real estate taxes, insurance and common area maintenance charges, and various other expenses related to properties, which are expensed as incurred. Employee Medical Plans : We sponsor health and welfare plans that provide medical insurance benefits to certain of our employees.
The Company is also generally obligated to pay certain real estate taxes, insurance and common area maintenance charges, and various other expenses related to properties, which are expensed as incurred.
Other Operating Costs: For fiscal 2023, other operating costs increased $498,000 to $19,013,000 (13.9% of restaurant sales) up from $18,515,000 (13.5% of restaurant sales) in fiscal 2022. Bad Daddy’s other operating costs were $14,834,000 (14.5% of restaurant sales) for fiscal 2023, up from $14,519,000 (14.1% of restaurant sales) in fiscal 2022.
Other Operating Costs: For fiscal 2024, other operating costs increased $1,275,000 to $20,288,000 (14.3% of restaurant sales) up from $19,013,000 (13.9% of restaurant sales) in fiscal 2023. Bad Daddy’s other operating costs were $15,296,000 (14.8% of restaurant sales) for fiscal 2024, up from $14,834,000 (14.5% of restaurant sales) in fiscal 2023.
Food and Packaging Costs: For fiscal 2023, food and packaging costs decreased $967,000 to $42,910,000 (31.3% of restaurant sales) compared to $43,877,000 (32.0% of restaurant sales) in fiscal 2022. Bad Daddy’s food and packaging costs were $31,972,000 (31.3% of restaurant sales) in fiscal 2023, down from $33,155,000 (32.1% of restaurant sales) in fiscal 2022.
Food and Packaging Costs: For fiscal 2024, food and packaging costs increased $794,000 to $43,704,000 (30.9% of restaurant sales) compared to $42,910,000 (31.3% of restaurant sales) in fiscal 2023. Bad Daddy’s food and packaging costs were $32,155,000 (31.1% of restaurant sales) in fiscal 2024, up from $31,972,000 (31.3% of restaurant sales) in fiscal 2023.
In a 52-week fiscal year, each of the Company’s quarterly periods comprises 13 weeks. The additional week in a 53-week fiscal year is added to the first quarter, making such quarter consist of 14 weeks.
In a 52-week fiscal year, each of the Company’s quarterly periods comprises 13 weeks. The additional week in a 53-week fiscal year is added to the first quarter, making such quarter consist of 14 weeks. Our discussion for the fiscal years ending September 24, 2024 and September 26, 2023 each cover periods of 52 full calendar weeks.
Depreciation and Amortization Costs: Depreciation and amortization includes depreciation on capital expenditures for restaurants and corporate assets as well as amortization of acquired franchise rights and leasehold interests. For fiscal 2023, depreciation and amortization costs decreased $232,000 to $3,663,000 compared to $3,895,000 in fiscal 2022.
New Store Preopening Costs: For fiscal 2024, we had no preopening costs compared to $484,000 in fiscal 2023. Depreciation and Amortization Costs: Depreciation and amortization includes depreciation on capital expenditures for restaurants and corporate assets as well as amortization of acquired franchise rights and leasehold interests.
The increase is primarily due to increased gift card related expenses. Good Times advertising costs consist primarily of contributions made to the advertising materials fund and a regional advertising cooperative based on a percentage of restaurant sales which are used to provide radio advertising, social media, on-site and point-of-purchase materials.
Good Times advertising costs consist primarily of contributions made to the advertising materials fund and a regional advertising cooperative based on a percentage of restaurant sales which are used to provide radio advertising, social media, on-site and point-of-purchase materials. Advertising costs are presented gross, with franchisee contributions to the fund being recognized as a component of franchise revenues.
For fiscal 2023, occupancy costs increased $167,000 from $9,440,000 (6.9% of restaurant sales) in fiscal 2022 to $9,607,000 (7.0% of restaurant sales). Bad Daddy’s occupancy costs were $6,642,000 (6.5% of restaurant sales) for fiscal 2023, down from $6,668,000 (6.5% of restaurant sales) in fiscal 2022.
For fiscal 2024, occupancy costs increased $480,000 from $9,607,000 (7.0% of restaurant sales) in fiscal 2023 to $10,087,000 (7.1% of restaurant sales). Bad Daddy’s occupancy costs were $6,676,000 (6.4% of restaurant sales) for fiscal 2024, up from $6,642,000 (6.5% of restaurant sales) in fiscal 2023.
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 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.
The average menu price increase in fiscal 2023 over fiscal 2022 was approximately 8.9%. Additionally, revenues for fiscal 2023 decreased by $47,000 in lower franchise revenues compared to fiscal 2022. Fiscal 2023 and fiscal 2022 for Good Times include franchise advertising contributions of $261,000 and $273,000, respectively.
This increase is primarily due to menu price increases and increased customer traffic. The average menu price increase in fiscal 2024 over fiscal 2023 was approximately 4.0%. Additionally, revenues for fiscal 2024 decreased by $200,000 in lower franchise revenues compared to fiscal 2023. Fiscal 2024 and fiscal 2023 for Good Times include franchise advertising contributions of $179,000 and $261,000, respectively.
The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. We have accrued $0 for interest and penalties as of September 26, 2023.
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 September 24, 2024.
The $315,000 increase was attributable to higher utility and repair and maintenance expenses, as well as increased customer delivery fees, offset by reduced technology-related expenses. Good Times other operating costs were $4,179,000 (11.9% of restaurant sales) in fiscal 2023, up from $3,996,000 (11.7% of restaurant sales) in fiscal 2022.
Good Times other operating costs were $4,992,000 (13.1% of restaurant sales) in fiscal 2024, up from $4,179,000 (11.9% of restaurant sales) in fiscal 2023. The increase was primarily attributable to costs associated with three additional company-owned restaurants, as well as increased repair and maintenance, credit card and customer delivery fees and higher utility expenses.
We are experiencing price inflation in most goods, including paper and packaging, other restaurant supplies, and energy (utilities) costs. In addition to food and supplies cost inflation, we have also experienced the need to meaningfully increase wages to attract restaurant employees.
In addition to food and supplies cost inflation, we have experienced the need to meaningfully increase wages to attract restaurant employees.
This reduction is primarily due to the acquisition by the Company during January of the interests in the limited liability companies held by non-controlling parties. $367,000 of the current year income is attributable to the Good Times joint-venture restaurants, compared to $529,000 in the prior year, such reduction is primarily due to reduced profitability of the restaurants involved in the limited partnership with a non-controlling partner.
This reduction is due to the acquisition by the Company of the interests in the limited liability companies held by non-controlling parties during the second fiscal quarter of 2023. 30 Table of Contents The full $266,000 of the current fiscal year’s income is attributable to the Good Times joint-venture restaurants, compared to $367,000 in the same prior year period.
You should review the reconciliation of net income (loss) to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business. 28 Table of Contents The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA (in thousands) : Fiscal Year 2023 2022 Net (loss) income, as reported $ 11,086 $ (2,641 ) Depreciation and amortization (a) 3,617 3,796 Provision for income taxes (10,787 ) (5 ) Interest expense, net 78 54 EBITDA 3,994 1,204 Preopening expense (a) (1) 484 51 Non-cash stock-based compensation (2) 131 250 GAAP rent – cash rent difference (3) (666 ) (403 ) Gain on disposal of assets (4) (41 ) (538 ) One-time special allocation to Bad Daddy’s partnerships - 516 Litigation Contingencies - 332 Asset impairment charges (5) 1,589 3,437 Adjusted EBITDA $ 5,491 $ 4,849 (a) Depreciation and amortization expenses are presented net of the share attributable to the non-controlling interest.
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. 31 Table of Contents The following table reconciles net income to EBITDA and Adjusted EBITDA (in thousands) : Fiscal Year 2024 2023 Net income, as reported $ 1,613 $ 11,086 Depreciation and amortization 3,757 3,617 Provision for income taxes (624 ) (10,787 ) Interest expense, net 125 78 EBITDA 4,871 3,994 Preopening expense (1) - 484 Non-cash stock-based compensation (2) 134 131 Gain on disposal of assets (3) (8 ) (41 ) Litigation Contingencies (332 ) - Asset impairment charges (4) 698 1,589 Adjusted EBITDA $ 5,363 $ 6,157 (1) Represents expenses directly associated with the opening of new restaurants, including preopening rent.
We review long-lived assets and intangibles subject to amortization for impairment when there are factors that indicate the carrying value of such assets may not be recoverable. During fiscal 2023 we recorded non-cash charges of $1,519,000 and $70,000 related to four Bad Daddy’s locations and two Good Times locations, respectively.
Long-lived Asset Impairment Charges: For fiscal 2024, the asset impairment charge was $698,000 compared to $1,589,000 in fiscal 2023. We review long-lived assets and intangibles subject to amortization for impairment when there are factors that indicate the carrying value of such assets may not be recoverable.
Results of Operations for Fiscal 2023 Compared to Fiscal 2022 Net Revenues: Net revenues for fiscal 2023 decreased $78,000 (-0.1%) to $138,122,000 from $138,200,000 for fiscal 2022. Bad Daddy’s concept revenues decreased $985,000 while our Good Times concept revenues increased $907,000. Bad Daddy’s restaurant sales decreased $975,000 to $102,241,000 in fiscal 2023 from $103,216,000 in fiscal 2022.
Results of Operations for Fiscal 2024 Compared to Fiscal 2023 Net Revenues: Net revenues for fiscal 2024 increased $4,155,000 (3.0%) to $142,315,000 from $138,160,000 for fiscal 2023. Bad Daddy’s concept revenues increased $1,327,000 while our Good Times concept revenues increased $2,828,000. Bad Daddy’s restaurant sales increased $1,298,000 to $103,539,000 in fiscal 2024 from $102,241,000 in fiscal 2023.
Good Times depreciation costs decreased $58,000 from $661,000 in fiscal 2022 to $603,000 in fiscal 2023. General and Administrative Costs: General and administrative costs include all corporate and administrative functions.
Bad Daddy’s depreciation costs decreased $98,000 from $3,060,000 in fiscal 2023 to $2,962,000 in fiscal 2024. Good Times depreciation costs increased $190,000 from $603,000 in fiscal 2023 to $793,000 in fiscal 2024. General and Administrative Costs: General and administrative costs include all corporate and administrative functions.
Payroll and Other Employee Benefit Costs: For fiscal 2023, payroll and other employee benefit costs increased $1,034,000 to $47,549,000 (34.6% of restaurant sales) compared to $46,515,000 (33.9% of restaurant sales) in fiscal 2022. Bad Daddy’s payroll and other employee benefit costs were $35,892,000 (35.1% of restaurant sales) for fiscal 2023, up from $35,085,000 (34.0% of restaurant sales) in fiscal 2022.
Bad Daddy’s payroll and other employee benefit costs were $35,831,000 (34.6% of restaurant sales) for fiscal 2024, down from $35,892,000 (35.1% of restaurant sales) in fiscal 2023.
We anticipate any commitments in fiscal 2024 will be funded out of existing cash or future borrowings against the Cadence Credit Facility.
As of September 24, 2024, the Company had approximately $268,000 in outstanding commitments related to the remodel of one Good Times restaurant. We anticipate any commitments in fiscal 2025 will be funded out of existing cash or future borrowings against the Cadence Credit Facility.
Bad Daddy’s same store restaurant sales, also referred to as comparable sales, increased 0.1% during fiscal 2023 compared to fiscal 2022. Bad Daddy’s restaurants are included in same store sales after they have been open a full eighteen months. This increase is due to average menu price increases throughout the year, offset by weaker traffic in some markets.
Bad Daddy’s same store restaurant sales, also referred to as comparable sales, decreased 1.2% during fiscal 2024 compared to fiscal 2023. Bad Daddy’s restaurants are included in same store sales after they have been open a full eighteen months.
Depreciation and amortization, preopening expense, asset impairment charge, and the difference between GAAP rent and cash rent have been reduced by any amounts attributable to non-controlling interests. Liquidity and Capital Resources Cash and Working Capital: As of September 26, 2023, we had a working capital deficit of $8,297,000.
Depreciation and amortization and gain on disposal of assets have been reduced by any amounts attributable to non-controlling interests. Liquidity and Capital Resources Cash and Working Capital: As of September 24, 2024, we had a working capital deficit of $9,130,000.
Recent Accounting Pronouncements The information contained in Note 1 to our Consolidated Financial Statements included in this report concerning a description of recent accounting pronouncements, including our expected dates of adoption and the estimated effects on our results of operations and financial condition, is incorporated by reference herein.
Our impairment assessment process requires the use of estimates and assumptions regarding future cash flows and operating outcomes, which are based upon a significant degree of management’s judgment, including judgment surrounding the Company’s ability to improve the operating performance of its restaurants. 34 Table of Contents Recent Accounting Pronouncements The information contained in Note 1 to our Consolidated Financial Statements included in this report concerning a description of recent accounting pronouncements, including our expected dates of adoption and the estimated effects on our results of operations and financial condition, is incorporated by reference herein.
As we increase earnings and utilize deferred tax assets in the future, it is possible the valuation allowance could be reduced or eliminated. 31 Table of Contents The Company is subject to U.S. federal income tax and income tax in multiple U.S. state jurisdictions.
If future earnings decrease or the liklihood of deferred tax asset utilization decreases, it is possible that a valuation allowance would be appropriate. The Company is subject to U.S. federal income tax and income tax in multiple U.S. state jurisdictions.
The change from fiscal 2022 to fiscal 2023 was primarily attributable to the matters discussed in the relevant sections above. Income Attributable to Non-Controlling Interests: For fiscal 2023, the income attributable to non-controlling interests was $586,000 compared to $1,714,000 in fiscal 2022.
Income from Operations: Income from operations was $1,380,000 in fiscal 2024 compared to income from operations of $963,000 in fiscal 2023. The change from fiscal 2023 to fiscal 2024 was primarily attributable to matters discussed in the relevant sections above . Interest Expense: Interest expense was $125,000 during fiscal 2024, compared with $78,000 during fiscal 2023.
Good Times occupancy costs were $2,965,000 (8.5% of restaurant sales) in fiscal 2023, up from $2,772,000 (8.1% of restaurant sales) in fiscal 2022. The increase was primarily attributable to increased property and liability insurance costs.
Good Times occupancy costs were $3,411,000 (9.0% of restaurant sales) in fiscal 2024, up from $2,965,000 (8.5% of restaurant sales) in fiscal 2023. The increase was primarily attributable to the costs incurred for three additional company-owned restaurants as well as real property tax increases resulting from increased property valuations .
The gain in both fiscal 2023 and 2022 is primarily comprised of a deferred gain on previous sale lease-back transactions related to two Good Times restaurants, and additionally in 2022 to the termination of a lease of a Good Times restaurant. Long-lived Asset Impairment Charges: For fiscal 2023, the asset impairment charge was $1,589,000 compared to $3,437,000 in fiscal 2022.
The net loss in fiscal 2024 is primarily due to restaurant fixed asset retirements, mostly offset by a deferred gain on previous sale lease-back transactions related to two Good Times restaurants. The gain in fiscal 2023 is primarily comprised of a deferred gain on previous sale lease-back transactions related to two Good Times restaurants.
The increase is primarily due to recognition of commission earned by third parties on gift cards sold through large-box retailers. Bad Daddy’s advertising costs consist primarily of menu development, printing costs, local store marketing and social media. All restaurants contribute to an advertising materials fund based on a percentage of restaurant sales.
Bad Daddy’s advertising costs consist primarily of menu development, printing costs, local store marketing and social media. All restaurants contribute to an advertising materials fund based on a percentage of restaurant sales. We anticipate that Bad Daddy’s advertising costs as a percentage of net revenues will decrease to between 1.5% and 2.0% in fiscal 2025.
The non-controlling interest represents the limited partner’s share of income in the Good Times and Bad Daddy’s joint-venture restaurants. $219,000 of the current year income is attributable to the Bad Daddy’s joint-venture restaurants, compared to $1,185,000 in the prior year.
For fiscal 2024, the income attributable to non-controlling interests was $266,000 compared to $586,000 for fiscal 2023. Of the fiscal 2024 income attributable to non-controlling interests, none is attributable to Bad Daddy’s joint-venture restaurants, compared to $219,000 in the same prior year period.
Good Times payroll and other employee benefit costs were $11,657,000 (33.3% of restaurant sales) in fiscal 2023, up from $11,430,000 (33.6% of restaurant sales) in fiscal 2022. The $227,000 increase is attributable to higher sales and higher average wage rates, partially offset by increased labor productivity.
As a percent of sales, payroll and employee benefits costs decreased by 0.5% primarily attributable to incentive compensation plan revisions and a 4.6% increase in menu pricing. Good Times payroll and other employee benefit costs were $12,858,000 (33.8% of restaurant sales) in fiscal 2024, up from $11,657,000 (33.3% of restaurant sales) in fiscal 2023.
Good Times Burgers & Frozen Custard Restaurants We currently operate twenty-five company-owned and joint-venture Good Times restaurants all in the state of Colorado. In addition, we have six Good Times franchise restaurants, four operating in Colorado and two in Wyoming.
(2) Includes direct and allocated corporate general and administrative costs. Bad Daddy’s Restaurants We currently operate thirty-nine company-owned Bad Daddy’s restaurants. We also license one restaurant in North Carolina. Good Times Burgers & Frozen Custard Restaurants We currently operate twenty-seven company-owned and joint-venture Good Times restaurants all in the state of Colorado.
Adjusted EBITDA EBITDA is defined as net income (loss) before interest, income taxes and depreciation and amortization. Adjusted EBITDA is defined as EBITDA, adjusted for non-cash stock-based compensation expense, preopening expense, non-recurring acquisition costs, U.S. Generally Accepted Accounting Principles (“GAAP”) rent in excess of cash rent, non-cash disposal of assets and non-cash asset impairment charges.
Adjusted EBITDA is defined as EBITDA, adjusted for non-cash stock-based compensation expense, preopening expense, non-recurring acquisition costs, non-cash disposal of assets and non-cash asset impairment charges. Adjusted EBITDA is intended as a supplemental measure of our performance that is not required by or presented in accordance with GAAP.
The fiscal 2023 activity is comprised of the purchase of treasury stock equal to $2,274,000, borrowings from notes payable of $750,000, restricted stock vesting settled in cash of $92,000, proceeds from the exercise of stock options equal to $5,000, and net distributions to non-controlling interests of $635,000.
Net cash used in financing activities for the fiscal year ended September 26, 2023 was $2,246,000, which includes proceeds from long-term debt of $750,000, stock option exercises of $5,000 and net distributions to non-controlling interests of $635,000, $92,000 in restricted stock unit vesting paid in cash, and $2,274,000 in payments for the repurchase of common stock.
While we are hopeful that wage rate inflation moderates, the persistent shortage of qualified workers, and in Colorado inflation-indexed statutory wage rate increases are creating upward pressure on wages. 24 Table of Contents We have historically used menu price increases to manage profitability in times of inflation, however the current unusually high rate of inflation, both of goods and labor, exceeds what we believe we can reasonably pass through to our customers without negatively affecting frequency and trial by our customers.
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. 27 Table of Contents Same Store Sales Same store sales for each brand represent the comparison of restaurant sales in the current year, to the same comparable weeks in the immediately preceding fiscal year for those stores open for at least 18 months.
Good Times restaurant sales increased $954,000 to $34,988,000 in fiscal 2023 from $34,034,000 in fiscal 2022. This increase is primarily due to menu price increases. Same store restaurant sales increased 3.7% during fiscal 2023 compared to fiscal 2022. This increase is primarily due to menu price increases, slightly offset by lower traffic.
This increase is primarily due to the acquisition, by the Company during fourth quarter 2023, of two Good Times restaurants previously owned by franchisees, the current fiscal year acquisition of a Good Times restaurant previously owned by a franchisee, increased customer traffic, and menu price increases. Same store restaurant sales increased 2.9% during fiscal 2024 compared to fiscal 2023.
The average menu price increase was approximately 4.4% in 2023 over 2022. There were thirty-nine restaurants included in the same store sales base at the end of the fiscal year.
There were thirty-eight restaurants included in the same store sales base at the end of the fiscal year. Additionally, net revenues for fiscal 2024 were increased by $29,000 in license fees compared to the prior fiscal year.
The decrease, as a percent of sales, is attributable to the impact of a 4.4% average annual increase in menu pricing as well as generally lower purchase prices in our commodity basket compared to the prior-year period. 25 Table of Contents Good Times food and packaging costs were $10,938,000 (31.3% of restaurant sales) in fiscal 2023, up from $10,722,000 (31.5% of restaurant sales) in fiscal 2022.
The decrease, as a percent of sales, is primarily attributable to the impact of a 4.0% average annual increase in menu pricing. 28 Table of Contents Payroll and Other Employee Benefit Costs: For fiscal 2024, payroll and other employee benefit costs increased $1,140,000 to $48,689,000 (34.4% of restaurant sales) compared to $47,549,000 (34.6% of restaurant sales) in fiscal 2023.
During fiscal 2022 we recorded non-cash charges of $2,647,000 and $790,000 related to two Bad Daddy’s locations and three Good Times restaurants, respectively. Litigation Contingencies: The Company did not record any changes in litigation contingencies in fiscal 2023. The Company recorded a contingent loss of $332,000 in fiscal 2022 related to in-process litigation.
The current year impairment costs are primarily attributable to the impairment of the lease right-of-use assets of two Bad Daddy’s locations. During fiscal 2023 we recorded non-cash charges of $1,519,000 and $70,000 related to four Bad Daddy’s locations and two Good Times locations, respectively.
Net cash used in investing activities in fiscal 2023 was $10,443,000 compared to net cash used in investing activities of $2,624,000 in fiscal 2022. Fiscal 2023 activity primarily reflects the purchases of property and equipment of $4,771,000, the $4,394,000 purchase of non-controlling interests in subsidiaries, as well as acquisitions of restaurants from franchisees of $1,326,000.
Net cash used in investing activities for the fiscal year ended September 24, 2024 and September 26, 2023 were $3,662,000 and $10,443,000, respectively, which primarily reflect the purchases of property and equipment in each period as well as the acquisition of a restaurant from a franchisee in the current year period, and the net purchase of all non-controlling interests in our Bad Daddy’s locations in the prior year period.
Impact of Inflation at Both Concepts Commodity prices, particularly for key proteins, have recently been at near-record highs and have exhibited extreme volatility. During the fourth quarter of fiscal 2023 we experienced meaningful price inflation which has continued into our first quarter of 2024.
In addition, we have three Good Times franchise restaurants, one operating in Colorado and two in Wyoming. Impact of Inflation at Both Concepts Commodity prices have been more stable during fiscal 2024, though beef and bacon are at or are near record highs and have exhibited extreme volatility.
This decrease is primarily attributable to a combination of lower restaurant sales during the current fiscal year versus the prior fiscal year and lower purchase prices for food and paper goods.
This increase is primarily attributable to the acquisition, by the Company during fiscal 2023, of two Good Times restaurants previously owned by franchisees and the current fiscal year acquisition of a Good Times restaurant previously owned by a franchisee.
Removed
(2) Includes direct and allocated corporate general and administrative costs. Bad Daddy ’ s Restaurants We currently operate forty company-owned Bad Daddy’s restaurants, including five restaurants that were previously owned by subsidiaries with third parties. We acquired the non-controlling interests in those subsidiaries during January 2023. We also license one restaurant in North Carolina.
Added
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.
Removed
We anticipate opening one new Bad Daddy’s restaurant during fiscal 2024. Due to the volatile rate of inflation of our raw products, we cannot, at this time, reasonably predict our expected price increases during fiscal 2024 at our Bad Daddy’s restaurants. Commodity costs have in general trended moderately upward early in fiscal 2024.
Added
This increase is a result of the fourth quarter 2023 Madison, Alabama restaurant opening, the prior year remodel temporary closure of the Greenville, South Carolina restaurant, and menu price increases partially offset by the prior year closure of the Cherry Creek restaurant and reduced customer traffic, concentrated in certain restaurants.
Removed
Due to the volatility in the rate of inflation of our raw products, we cannot at this time reasonably predict our expected price increases during fiscal 2024 at our Good Times restaurants. Commodity costs have in general trended moderately upward early in fiscal 2024.
Added
This decrease is primarily driven by general weakness in the casual dining restaurant segment as indicated by sequentially lower same store sales as measured by Black Box Intelligence, weaker traffic specific to Bad Daddy’s in certain restaurants, partially offset by menu price increases. The average menu price increase was approximately 4.6% in 2024 over 2023.
Removed
Same Store Sales Same store sales for each brand represent the comparison of restaurant sales in the current year, to the same comparable weeks in the immediately preceding fiscal year for those stores open for at least 18 months.
Added
Good Times restaurant sales increased $3,028,000 to $38,016,000 in fiscal 2024 from $34,988,000 in fiscal 2023.
Removed
Sales were negatively affected by the closure of the Cherry Creek location and the temporary closure of one restaurant for remodeling. Sales were also affected by reduced customer traffic, more heavily in the Atlanta and Raleigh markets, partially offset by menu price increases.
Added
This increase is primarily attributable to the fourth quarter 2023 Madison, Alabama restaurant opening, and the prior year closure of the Cherry Creek restaurant partially offset by lower average unit volumes. The decrease, as a percent of sales, is attributable to the impact of a 4.6% average annual increase in menu pricing.
Removed
Additionally, net revenues for fiscal 2023 were decreased by $10,000 in lower franchise royalties and license fees compared to the prior fiscal year, primarily related the acquisition of a franchisee-owned restaurant in mid-fiscal 2022. Fiscal 2022 revenues for Bad Daddy's include franchise advertising contributions of $9,000.
Added
Good Times food and packaging costs were $11,549,000 (30.4% of restaurant sales) in fiscal 2024, up from $10,938,000 (31.3% of restaurant sales) in fiscal 2023.
Removed
This increase is primarily attributable to the impact of higher sales and higher purchase prices on food and paper goods, partially offset by the impact of an 8.9% increase in menu pricing.
Added
The $61,000 decrease is primarily attributable to incentive compensation plan revisions, the prior fiscal year closure of one Denver, Colorado restaurant mostly offset by increases due to the fourth quarter 2023 Madison, Alabama restaurant opening, and the prior year remodel temporary closure of the Greenville, South Carolina restaurant.
Removed
The $807,000 increase is primarily attributable to higher average pay rates. As a percent of sales, payroll and employee benefits costs increased by 1.1% primarily attributable to higher average wage rates paid to attract qualified employees and higher levels of management staffing.
Added
The $1,201,000 increase is attributable to labor associated with three additional company-owned restaurants, an increase in operating hours caused by later closing times in nearly every restaurant, and higher average wage rates resulting from market forces and the CPI-indexed minimum wage in Denver and the state of Colorado, partially offset by increased labor productivity.
Removed
The increase was primarily attributable to increases in commissions paid to delivery service providers due to increases in overall delivery sales, higher utility expenses, and general price inflation in operating supplies costs, offset by decreased repair and maintenance and technology-related expenses. New Store Preopening Costs: For fiscal 2023, we incurred $484,000 of preopening costs compared to $51,000 in fiscal 2022.
Added
The $462,000 increase is attributable to the fourth quarter 2023 Madison, Alabama restaurant opening, and the prior year remodel temporary closure of the Greenville, South Carolina restaurant, increased repair and maintenance and other employee-related expenses, partially offset by reduced restaurant supply costs.
Removed
The preopening costs in the current fiscal year are primarily related to one new Bad Daddy’s restaurant opened in the fourth quarter and to the closure and remodel of the previously franchisee-owned Bad Daddy’s during the second and third fiscal quarters.
Added
For fiscal 2024, depreciation and amortization costs increased $92,000 to $3,755,000 compared to $3,663,000 in fiscal 2023. The increases are due to additional company-owned restaurants, newly deployed assets including signs, menu boards, and restaurant remodels, partially offset by the prior year impairment of assets for two restaurants.
Removed
Preopening costs in the prior fiscal year were primarily attributable to one restaurant that was purchased from a franchisee in the second quarter of fiscal 2022. Preopening costs typically occur over a period of approximately five months and we expect to spend approximately $300,000 to $400,000 per location depending upon specific factors associated with the opening.

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