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What changed in Good Times Restaurants Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Good Times Restaurants Inc.'s 2022 and 2023 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 2023 report.

+259 added−276 removedSource: 10-K (2023-12-14) vs 10-K (2022-12-15)

Top changes in Good Times Restaurants Inc.'s 2023 10-K

259 paragraphs added · 276 removed · 206 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

95 edited+14 added−29 removed79 unchanged
Biggest changeWe opened two new Bad Daddy’s restaurants during fiscal 2021 The consistency of our sales growth following the reopening of our dining rooms gives us confidence in the strength of the Bad Daddy’s concept and the ability for us to deliver upon our pre-pandemic model in a post-pandemic world, such that we expect significant long-term expansion potential, both in our existing markets and in new markets, though we expect such expansion to be disciplined and financed primarily from operating cash flow from the Bad Daddy’s business. 7 Table of Contents Business Strategies We are focused on continuing to grow same store sales and improve the profitability of the Good Times concept while continuing targeted unit growth of the Bad Daddy’s Burger Bar concept in domestic markets.
Biggest changeBusiness Strategies We are focused on continuing to grow same store sales and profitability of the Good Times concept while continuing targeted unit growth of the Bad Daddy’s Burger Bar concept in domestic markets. We believe that there are significant opportunities to develop new units, grow customer traffic and increase awareness of our brands.
Each manager must complete an eight- to ten-week training program, be certified on several core processes and is then closely supervised to show both comprehension and capability before they are allowed to manage autonomously. We have a defined weekly and monthly goal-setting process around service, employee development, financial management and store maintenance goals for every restaurant.
Each manager must complete an eight-week training program, be certified on several core processes and is then closely supervised to show both comprehension and capability before they are allowed to manage autonomously. We have a defined weekly and monthly goal-setting process around service, employee development, financial management and store maintenance goals for every restaurant.
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 hamburger-focused restaurant concept offering fresh, 100% all-natural beef and chicken.
Beverages include typical soft drinks and fresh lemonades, with a selection of frozen custard products. We have a limited breakfast menu consisting of breakfast burritos, orange juice and coffee and a kid’s meal menu featuring a choice of main item, side, drink, and a wooden nickel that can be redeemed for a free kid’s cup or cone of custard.
Beverages include typical soft drinks and fresh lemonades, with a selection of frozen custard products. We have a breakfast menu consisting of breakfast burritos, orange juice and coffee and a kid’s meal menu featuring a choice of main item, side, drink, and a wooden nickel that can be redeemed for a free kid’s cup or cone of custard.
We Have Assembled a Dedicated Senior Leadership Team with Significant Experience Each of the members of our senior leadership team have more than fifteen 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 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.
The appeal of Bad Daddy’s is not solely based on a purely on-premise customer experience however, as the focus we place on bold, unique flavors; superior ingredients; and scratch cooking in each kitchen translates into significant off-premise 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 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.
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-purchase 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. 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.
Each brand focuses on developing behaviors and expectations around our core values, which are: Hospitality, Integrity, Respect, and Entrepreneurship. ● Dimensions of the Business: o Individual Fulfillment. Our first value speaks directly to people, whether that is fellow team members or our customers.
Each brand focuses on developing behaviors and expectations around our core values, which are: Hospitality, Integrity, Respect, and Entrepreneurship. ● Dimensions of the Business: o Individual Fulfillment. The first dimension speaks directly to people, whether that is fellow team members or our customers.
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.
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 eight 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 Spoonbenders, a mix of custard and toppings. Additionally, we offer thirteen flavors of shakes.
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 and operating partners.
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.
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. 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. 7 Table of Contents 3.
We make available free of charge 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.
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.
We also offer a 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.
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.
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 ongoing impact of the COVID-19 pandemic 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 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; 14 Table of Contents ● 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; 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.
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 milk shakes and our scratch-made “southern-style” banana pudding.
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.
Beginning in 2015, we became subject to the Affordable Care Act which requires us to have the required health insurance benefits for eligible employees. 13 Table of Contents We are also subject to federal and state laws regulating franchise operations, which vary from registration and disclosure requirements in the offer and sale of franchises to the application of statutory standards regulating franchise relationships.
Beginning in 2015, we became subject to the Affordable Care Act which requires us to have the required health insurance benefits for eligible employees. We are also subject to federal and state laws regulating franchise operations, which vary from registration and disclosure requirements in the offer and sale of franchises to the application of statutory standards regulating franchise relationships.
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 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.
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 $70,000, with a high concentration of daytime employment, specialty retail and entertainment venues.
Same store sales for each brand represents 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.
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.
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 2022 and fiscal 2021.
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.
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.
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.
Good Times Burgers & Frozen Custard The menu of each Good Times restaurant is focused primarily on hamburgers, cheeseburgers, chicken sandwiches and chicken tenders that are fresh, never frozen, and using only all-natural beef and chicken. This menu is supplemented by side selections including two types of french fries, green chile potato poppers, and onion rings.
Good Times Burgers & Frozen Custard The menu of each Good Times restaurant is focused primarily on hamburgers, cheeseburgers, chicken sandwiches and chicken tenders that are fresh, never frozen, and using only all-natural beef and chicken. This menu is supplemented by side selections including french fries, cheese curds, green chile potato poppers, and onion rings.
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.
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
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. 6 Table of Contents o Operational Excellence.
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.
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 ten of the past eleven 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.
Configuration of restaurant point-of-sales systems is performed by our technology share service capability. 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.
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.
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 so they can eat it at their home or office.
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 use specialized software to create a sales forecast for each site and have continued to update the data in that site forecasting software even as we had limited growth during 2022. We expect to utilize this software as one component of decision making in the selection of sites for future Bad Daddy’s restaurant locations.
We use specialized software to create a sales forecast for each site and have continued to update the data in that site forecasting software. We expect to utilize this software as one component of decision making in the selection of sites for future Bad Daddy’s restaurant locations.
(“BD of Colo”) 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. The Company’s fiscal year is a 52/53-week year ending on the last Tuesday of September.
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. The Company’s fiscal year is a 52/53-week year ending on the last Tuesday of September. In a 52-week fiscal year, each of the Company’s quarterly periods comprise 13 weeks.
Any development of new Good Times restaurants would involve a new prototype restaurant design focused primarily on drive-thru with an outside patio but without any enclosed dining room. 8 Table of Contents We currently lease either the land or the land and building for all of our Good Times restaurants.
Any development of new Good Times restaurants would involve a new prototype restaurant design focused primarily on drive-thru with an outside patio but without any enclosed dining room. We currently lease either the land or the land and building for all of our Good Times restaurants, except for one restaurant in which we own the land and building.
The food menu is complemented by a full bar that focuses on local and craft beers and proprietary, handcrafted cocktails. Two specialties are our Bad Daddy’s Amber Ale, available only at Bad Daddy’s, and our Bad Ass Margarita. System-wide, total alcoholic beverages have historically accounted for approximately 15% of sales in our Bad Daddy’s restaurants.
The food menu is complemented by a full bar that focuses on local and craft beers and proprietary, handcrafted cocktails. Two specialties are our Bad Daddy’s Amber Ale, available only at Bad Daddy’s, and our Bad Ass Margarita. System-wide, total alcoholic beverages account for approximately 12% of all sales in our Bad Daddy’s restaurants, and approximately 16% of on-premises sales.
Total interest expense on notes payable was $20,000 and $269,000 for fiscal 2022 and fiscal 2021, respectively. 4 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. Bad Daddy’s currently operates all of its company-owned restaurants under a table service / full-bar service model.
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.
Restaurant locations As of December 14, 2022, 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 purchased one Bad Daddy’s restaurant from a franchisee during fiscal 2022. We opened two company-owned Bad Daddy’s restaurants during fiscal 2021.
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.
We estimate that it will take approximately 120 to 150 days to develop a Bad Daddy’s Burger Bar from the time a building permit is issued. We expect that the majority of the Company’s unit growth will be through the development of additional Bad Daddy’s Burger Bar locations.
We estimate that it will take approximately 120 to 150 days to develop a Bad Daddy’s Burger Bar from the time a building permit is issued, though permitting processes and timelines vary greatly across jurisdictions. We expect that the majority of the Company’s unit growth will be through the development of additional Bad Daddy’s Burger Bar locations.
Additionally, in the context of the ongoing global COVID-19 pandemic, 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. All forward-looking statements speak only as of the date made.
Through our subsidiaries, as of December 14, 2022, we own and operate, or license a total of forty-one Bad Daddy’s restaurants in seven states. We own and operate fourteen Bad Daddy’s restaurants in North Carolina, twelve traditional Bad Daddy’s restaurants in Colorado, five in Georgia, four in South Carolina, two in Alabama, two in Tennessee and one in Oklahoma.
Through our wholly owned subsidiaries (the “Subsidiaries”), as of December 14, 2023, we own and operate, or license a total of forty-one Bad Daddy’s restaurants in seven states. We own and operate fourteen Bad Daddy’s restaurants in North Carolina, eleven in Colorado, five in Georgia, four in South Carolina, three in Alabama, two in Tennessee and one in Oklahoma.
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 $308,500 and is amortizing these costs over the term of the credit agreement. As of September 27, 2022 the unamortized balance of these fees is $20,000.
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 26, 2023, the unamortized balance of these fees was $122,000.
Company-Owned/Co-Developed/Joint-Venture Bad Daddy’s Burger Bar Good Times Burgers & Frozen Custard Total 2022 2021 2022 2021 2022 2021 Alabama 2 2 - - 2 2 Colorado 12 12 23 24 35 36 Georgia 5 5 - - 5 5 North Carolina 14 14 - - 14 14 Oklahoma 1 1 - - 1 1 South Carolina 4 3 - - 4 3 Tennessee 2 2 - - 2 2 Total 40 39 23 24 63 63 Franchise/License Bad Daddy’s Burger Bar Good Times Burgers & Frozen Custard Total 2022 2021 2022 2021 2022 2021 Colorado - - 6 6 6 6 North Carolina 1 1 - - 1 1 South Carolina - 1 - - - 1 Wyoming - - 2 2 2 2 Total 1 2 8 8 9 10 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 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.
We 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.
Each is positioned as a unique brand within its respective segment of the industry. 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 focused concept focused on all-natural burgers, fries, 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.
We believe this is a key metric indicating the strength and expansion potential of the concept. While sharing common design elements, each restaurant has unique features intended to represent the local trade area of each Bad Daddy’s and serves as a further point of differentiation from the larger casual dining chains.
While sharing common design elements, each restaurant has unique features intended to represent the local trade area of each Bad Daddy’s and serves as a further point of differentiation from the larger casual dining chains.
Same-store sales increased for fiscal 2022 primarily due price increases throughout the fiscal year, partially offset by decreased foot traffic Our compound annual same-store sales growth rate was approximately 3.5% from fiscal 2015 to fiscal 2022.
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.
ITEM 1. BUSINESS Our Company Good Times Restaurants Inc., a Nevada corporation formed on October 6, 1996, operates Bad Daddy’s Burger Bar restaurants ( “Bad Daddy’s”) and Good Times Burgers & Frozen Custard ( “Good Times”) restaurants. Bad Daddy’s and Good Times are two distinctly different, restaurant concepts.
ITEM 1. BUSINESS Our Company Good Times Restaurants Inc., a Nevada corporation formed on October 6, 1996, operates Bad Daddy’s Burger Bar restaurants (“Bad Daddy’s”) and Good Times Burgers & Frozen Custard restaurants (“Good Times”). Bad Daddy’s and Good Times are two distinctly different restaurant concepts. Each is positioned as a unique brand within its respective segment of the industry.
However, certain commodities, primarily ground beef, remain subject to market price fluctuations. 12 Table of Contents Employees At September 27, 2022, we had approximately 2,411 active employees of which 2,194 are hourly team members and 217 are salaried managers or professional staff working full time.
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.
We further intend to increase Bad Daddy’s same store sales through ongoing menu engineering around bold flavors and unique, concept-appropriate menu items that we believe drive increased customer visits as well as elevated per person average check.
At Bad Daddy’s, we intend to increase Bad Daddy’s same store sales through ongoing menu engineering around bold flavors and unique, concept-appropriate menu items that we believe drive increased customer visits as well as elevated per person average check, and a focus on expanding our beverage sales and creating energy in our bar areas.
We received approval of our federal registration of “Bad Daddy’s Burger Bar” in 2011 and “Good Times” in 2003. 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”.
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.
We plan to continue to periodically re-image and remodel our restaurants, maintain a relevant menu with a laser focus on speed and accuracy in execution, in keeping with our brand strategy, and communicate our brand story to maintain our same-store sales growth.
We plan to continue to periodically re-image and remodel our restaurants, maintain a relevant menu with a laser focus on speed and accuracy in execution, in keeping with our brand strategy, and communicate our brand story to maintain our same store sales growth. The Bad Daddy’s concept was started in 2007 in Charlotte, North Carolina by a qualified chef.
We also provide various other incentives, including paid time off, communication allowances, incentive performance bonuses and referral bonuses. We have implemented an online screening and hiring tool that has proven to reduce hourly employee turnover. 11 Table of Contents Franchising For Bad Daddy’s Burger Bar, we have prepared forms of area rights and franchise agreements.
We also provide various other incentives, including paid time off, communication allowances, incentive performance bonuses and referral bonuses. We have implemented an online screening and hiring tool that has proven to reduce hourly employee turnover. Franchising For Good Times, we have previously prepared forms of area rights and franchise agreements and advertising material to be utilized in soliciting prospective franchisees.
Additional “fast casual” hamburger restaurants are being developed in the Colorado market; however, these generally do not have drive-thru service and generate an average per person check that is meaningfully higher than the average check at a Good Times restaurant.
Additional “fast casual” hamburger restaurants are being developed in the Colorado market; however, these generally do not have drive-thru service and generate an average per person check that is meaningfully higher than the average check at a Good Times restaurant. 12 Table of Contents We believe that Good Times may have a competitive advantage in terms of quality of product compared to traditional quick-service hamburger chains.
We have historically sought to attract franchisees that are experienced restaurant operators, are well capitalized and have demonstrated the ability to develop one to five restaurants. We review sites selected for franchises and monitor performance of franchise units. Currently, we are not actively soliciting new franchisees but are assessing potential future growth through the development of franchised Good Times restaurants.
We have historically sought to attract franchisees that are experienced restaurant operators, are well capitalized and have demonstrated the ability to develop one to five restaurants. We review sites selected for franchises and monitor performance of franchise units.
In addition, during fiscal 2022 and extending into fiscal 2023, high rates of inflation have been seen globally which have also resulted in increases in commodity, labor and energy costs for both concepts.
Recent Developments Macroeconomic Factors and Operating Environment During fiscal 2023, high rates of inflation have been seen globally which have resulted in increases in commodity, labor and energy costs for both concepts.
As with Bad Daddy’s, we have recently supplemented our legacy advertising approach with additional investments in social and digital media using third party resources who specialize in highly targeted advertisements on social media and digital platforms.
As with Bad Daddy’s, we have recently supplemented our legacy advertising approach with additional investments in social and digital media using third party resources who specialize in highly targeted advertisements on social media and digital platforms. Operations We maintain separate operating teams for each of our concepts and have extensive operating, training and quality control systems in place.
We currently have one license agreement for a Bad Daddy’s location in the Charlotte Douglas International Airport. We currently have six Good Times restaurants operating under franchise agreements in the greater Denver metropolitan area and two dual-branded franchised restaurants operate in Wyoming. In addition, seven joint-venture restaurants are operating in the Denver metropolitan area media market.
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.
As off-premises sales have increased resulting from the COVID-19 pandemic, alcoholic beverage sales have declined to approximately 12.6% of restaurant sales. 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. Genuine Hospitality.
Further significant 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. 3 Table of Contents Although we conduct all of our restaurant operations within the USA, worldwide product supply chains have been impacted by the war in Ukraine.
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.
We believe that there are significant opportunities to develop new units, grow customer traffic and increase awareness of our brands. 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 . We intend to continue to focus on increasing our same store sales.
We are subject to the Fair Labor Standards Act, which governs such matters as minimum wages, overtime, and other working conditions. 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.
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.
As such, Bad Daddy’s competes with both full-service and limited-service better burger restaurants. There are other burger-centric fast casual concepts that operate at a lower average customer check than Bad Daddy’s Burger Bar and others in both fast casual and full-service formats that operate with a higher average customer check.
There are other burger-centric fast casual concepts that operate at a lower average customer check than Bad Daddy’s Burger Bar and others in both fast casual and full-service formats that operate with a higher average customer check. We believe that we offer sufficient price choice to be able to compete effectively in the full range of such concepts.
We believe that Good Times may have a competitive advantage in terms of quality of product compared to traditional quick-service hamburger chains. Early development of our double drive-thru concept in Colorado has given us an advantage over other drive-thru chains that may seek to expand into Colorado because of our brand awareness and present restaurant locations.
Early development of our double drive-thru concept in Colorado has given us an advantage over other drive-thru chains that may seek to expand into Colorado because of our brand awareness and present restaurant locations. Nevertheless, we may be at a competitive disadvantage to other restaurant chains with greater name recognition and marketing capability.
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 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.
As amended by the various amendments, the Cadence Credit Facility accrues commitment fees on the daily unused balance of the facility at a rate of 0.25%.
The Cadence Credit Facility amended and restated the Company’s prior credit facility with Cadence in its entirety. The Cadence Credit Facility accrues commitment fees on the daily unused balance of the facility at a rate of 0.25%.
Operations We maintain separate operating teams for each of our concepts and have extensive operating, training and quality control systems in place. 10 Table of Contents Restaurant Management Bad Daddy’s Burger Bar was developed as a chef-driven concept and utilizes a team of three or four managers in our operations at most restaurants.
Restaurant Management Bad Daddy’s Burger Bar was developed as a chef-driven concept and utilizes a team of three or four managers in our operations at most restaurants.
Debt The Company maintains a credit agreement with Cadence Bank (“Cadence”) pursuant to which, as amended, Cadence has agreed to loan the Company up to $8,000,000 with a maturity date of January 31, 2023 (as amended, the “Cadence Credit Facility”).
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”).
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. We currently have a meaningful cash balance and generated significant cash flow from operations during fiscal 2022.
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.
This brand positioning results in transactions that generate average sales per transaction of approximately $35. The lunch daypart (open until 2pm) represents approximately 35% and the happy hour and dinner dayparts (2pm until close) represent approximately 65% of restaurant sales. Off-premise sales, including take-out, delivery and curbside pickup, accounted for approximately 27% of all system-wide sales in Fiscal 2022.
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.
As of the date of filing of this report, the Company was in compliance with all of these financial covenants under the Cadence Credit Facility.
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%.
Our set of values includes Respect and Care for people, including all of our employees, and one of the dimensions of our business is Individual Fulfillment . 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.
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 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. In addition, we have rotating chef specials with flavor profiles unique to Bad Daddy’s. At times we also feature a burger with local ingredients with a giveback to a local charity.
In addition, we have rotating chef specials with flavor profiles unique to Bad Daddy’s. At times, we also feature a burger with local ingredients with a giveback to a local charity.
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 the date of filing of this report, there were no outstanding letters of credit issued under the facility.
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.
We believe that incentive compensation of our restaurant managers is essential to the success of our business. 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.
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.
The order system at each Good Times restaurant is equipped with an internal timing device that displays and records the time each order takes to prepare and deliver.
We also employ several additional operational tools to continuously monitor and improve speed of service, food waste, food quality, sanitation, financial performance and employee development. The order system at each Good Times restaurant is equipped with an internal timing device that displays and records the time each order takes to prepare and deliver.
Most of our restaurants have no indoor seating and consist of one drive-thru lane and outdoor patio seating. 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.
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).
Our discussion for fiscal years 2022 and 2021, which ended on September 27, 2022 (‘fiscal 2022”) and September 28, 2021 (“fiscal 2021”), respectively, each cover periods of 52 full calendar 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 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.
The registration for our “Bad Daddy’s Burger Bar” mark will be renewed prior to September 2031. 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.
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.
Good Times makes use of various media but primarily communicate these advantages and promotions through the use of terrestrial radio and digital audio streaming. 5 Table of Contents Our average per person check is approximately $14.17, which we believe is slightly lower than the average check at fast casual hamburger concepts such as Habit Burger, Five Guys, and Smashburger, but well above the typical quick-service restaurant average check such as McDonalds, Wendy’s and Burger King.
Our average per person check is approximately $13.04, which we believe is slightly lower than the average check at fast casual hamburger concepts such as Habit Burger, Five Guys, and Smashburger, but above the average check at national quick-service restaurants such as McDonalds, Wendy’s and Burger King, as well as regional quick service hamburger restaurants such as In-N-Out and Whataburger.
We used a portion of this cash balance to repurchase Company stock by means of the Stock Repurchase Program during fiscal 2022 as described below. 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.
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.
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. Bad Daddy’s Burger Bar competes with both local, regional, and national gourmet, “better burger” concepts as well as more legacy grill and bar concepts.
Bad Daddy’s Burger Bar competes with both local, regional, and national gourmet, “better burger” concepts as well as more legacy grill and bar concepts. As such, Bad Daddy’s competes with both full-service and limited-service better burger restaurants.
Off-premise sales average $29 per transaction while on-premise sales average $36 per transaction. A typical Bad Daddy’s restaurant is approximately 3,500-4,000 square feet with an enclosed patio, smaller than most other chain casual dining restaurants. Fiscal 2022 average restaurant sales averaged $2.57 million per restaurant resulting in average sales per square foot of approximately $670.
Off-premises sales, including take-out, delivery and curbside pickup, accounted for approximately 27% of all system-wide sales in fiscal 2023. A typical Bad Daddy’s restaurant is approximately 3,500-4,000 square feet with an enclosed patio, smaller than most other chain casual dining restaurants.
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, including Bad Daddy’s Franchise Development, LLC; Bad Daddy’s International, LLC (“BDI”); Good Times Drive-Thru Inc. (“Drive Thru”); and BD of Colorado, LLC.
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.
We own and operate twenty-three Good Times restaurants, and franchise an additional eight, located primarily in the Denver market and along the front range of Colorado.
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThere is also substantial uncertainty that the franchising business will be successful in view of the facts that we have sold only two Bad Daddy’s Burger Bar restaurant franchises to date and that the restaurant franchising business is very competitive. 19 Table of Contents Costs associated with our employee health care programs continue to escalate and we may not be able to fully pass along those costs increases to employees.
Biggest changeCosts associated with our employee health care programs continue to escalate and we may not be able to fully pass along those cost increases to employees. We maintain various health care programs, including coverage for medical claims, to employees who select such programs.
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.
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.
We enter into 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.
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.
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 the ongoing 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; ● 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. 20 Table of Contents Holders of our common stock will be subject to the risk of volatile and depressed market prices of our common stock.
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.
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. 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. 16 Table of Contents Our operations are susceptible to the cost of and changes in food availability which could adversely affect our operating results.
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.
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. Our ability to succeed with the Bad Daddy ’ s Burger Bar restaurant concept will require significant capital expenditures and management attention.
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. 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. 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.
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, Karnes, Abbott or Stack. We have not entered into an employment agreement with Messrs. Karnes, Abbott or Stack.
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.
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 COVID-19-related factors may affect our food costs or cause a disruption in our supply chain.
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.
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 the COVID-19 pandemic, have adversely affected our results of operations and may continue to do so.
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.
The Bad Daddy’s Burger Bar concept has been in existence for approximately fifteen years and the average age for all Bad Daddy’s restaurants is 6.2 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 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.
In light of the uncertainty of the lingering impacts of COVID-19, 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 26, 2023.
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.
One of our largest assets is the value of our brands, which is directly linked to our reputation. We must protect our reputation in order to continue to be successful and to grow the value of our brands.
We must protect our reputation in order to continue to be successful and to grow the value of our brands.
Risks Related to Our Business The outbreak of, and local, state and federal governmental responses to, the COVID-19 or future pandemics have previously significantly disrupted and could disrupt our business again in the future, which has and could materially affect our financial condition and operating results .
Any or all of these factors could materially adversely affect our financial performance. The outbreak of, and local, state and federal governmental responses to, pandemics or other future health concerns have previously significantly disrupted and could disrupt our business again in the future, which has and could materially affect our financial condition and operating results .
There is no guarantee that we will be successful in offering Bad Daddy’s Burger Bar franchises throughout the U.S. or that, if and when, such franchises are granted, the restaurants developed by franchisees will be successful.
Though the Company currently has no franchisee-owned restaurants, the Company has offered franchises in the past and may do so again in the future. There is no guarantee that we will be successful in offering Bad Daddy’s Burger Bar franchises throughout the U.S. or that, if and when, such franchises are granted, the restaurants developed by franchisees will be successful.
Sales of a substantial number of shares of our common stock in the public market by our existing Shareholders could cause our stock price to fall.
It is impossible to assure investors in our common stock that the market price of our common stock will not fall in the future. Sales of a substantial number of shares of our common stock in the public market by our existing Shareholders could cause our stock price to fall.
Since suitable locations are in great demand, in the future we may not be able to obtain optimal sites for either of our restaurant concepts at a reasonable cost or at all.
Since suitable locations are in great demand, in the future we may not be able to obtain optimal sites for either of our restaurant concepts at a reasonable cost or at all. In addition, we cannot assure you that the sites we do obtain will be successful. Our franchisees could take actions that could harm our business.
Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified, high-energy employees. Qualified individuals needed to fill these positions are in short supply in some areas, and in fiscal 2022 we have seen an extreme shortage of qualified workers by historical standards as has been reported in various news outlets.
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.
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, Matthew Karnes, our Senior Vice President of Finance, Don Stack, our Senior Vice President of Operations for Good Times, and James Abbott, our Vice President of Operations for Bad Daddy’s.
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.
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 ten of the past eleven years at Good Times.
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.
In addition, many of the factors listed above are beyond our control. These factors may cause the market price of our common stock to decline, regardless of our financial condition, results of operations, business or prospects. It is impossible to assure investors in our common stock that the market price of our common stock will not fall in the future.
Holders of our common stock will be subject to the risk of volatile and depressed market prices of our common stock. In addition, many of the factors listed above are beyond our control. These factors may cause the market price of our common stock to decline, regardless of our financial condition, results of operations, business or prospects.
The negative publicity associated with such an event could damage our reputation and materially adversely affect our financial performance. If we are unable to protect our reputation, the value of our brands and sales at our restaurants may be negatively impacted, which may materially adversely affect our financial performance.
If we are unable to protect our reputation, the value of our brands and sales at our restaurants may be negatively impacted, which may materially adversely affect our financial performance. One of our largest assets is the value of our brands, which is directly linked to our reputation.
Other restaurants and retailers have experienced security breaches in which credit and debit card information of their customers has been stolen. We may in the future become subject to lawsuits or other proceedings for purportedly fraudulent transactions arising out of the actual or alleged theft of our customers’ credit or debit card information.
We may in the future become subject to lawsuits or other proceedings for purportedly fraudulent transactions arising out of the actual or alleged theft of our customers’ credit or debit card information. In addition, most states have enacted legislation requiring notification of security breaches involving personal information, including credit and debit card information.
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. 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.
We maintain various health care programs, including coverage for medical claims, to employees who select such programs. 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.
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.
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.
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.
ITEM 1A. RISK FACTORS You should consider carefully the following risk factors before making an investment decision with respect to our securities. You are cautioned that the risk factors discussed below are not exhaustive.
ITEM 1A. RISK FACTORS You should carefully consider the following risk factors before making an investment decision with respect to our securities. You are cautioned that the risk factors discussed below are not exhaustive. Risks Related to Our Business Our operations are susceptible to the cost of and changes in food availability which could adversely affect our operating results.
Same-store sales increases will depend in part on the success of our advertising and promotion of new and existing menu items and consumer acceptance and could be greatly impacted by future effects of the COVID-19 pandemic.
Same store sales increases will depend in part on the success of our advertising and promotion of new and existing menu items and consumer acceptance and could be greatly impacted by changes in general customer behavior and preferences. If our same store sales decline, and our operating costs increase, our ability to attain profitability will be adversely affected.
Consequently, the quality of franchised restaurant operations may be diminished by any number of factors beyond our control. Moreover, franchisees may not successfully operate restaurants in a manner consistent with our standards and requirements or may not hire and train qualified managers and other restaurant personnel.
Moreover, franchisees may not successfully operate restaurants in a manner consistent with our standards and requirements or may not hire and train qualified managers and other restaurant personnel. Our image and reputation, and the image and reputation of other franchisees, may suffer materially, and system-wide sales could significantly decline if our franchisees do not operate successfully.
In addition, most states have enacted legislation requiring notification of security breaches involving personal information, including credit and debit card information. Any such claim, proceeding, or mandatory notification could cause us to incur significant unplanned expenses, which could have an adverse impact on our financial condition and results of operations.
Any such claim, proceeding, or mandatory notification could cause us to incur significant unplanned expenses, which could have an adverse impact on our financial condition and results of operations. Further, adverse publicity resulting from these allegations may have a material adverse effect on us and our restaurants.
Further, adverse publicity resulting from these allegations may have a material adverse effect on us and our restaurants. 17 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.
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.
If our same-store sales decrease, and our operating costs increase, our ability to attain profitability will be adversely affected. 15 Table of Contents New restaurants, when and if opened, may not be profitable, if at all, for several months.
New restaurants, when and if opened, may not be profitable, if at all, for several months.
Any or all of these factors any could materially adversely affect our financial performance. 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.
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.
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.
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.
In addition, we cannot assure you that the sites we do obtain will be successful. 16 Table of Contents Our franchisees could take actions that could harm our business. Franchisees are independent contractors and are not our employees. We provide training and support to franchisees; however, franchisees operate their restaurants as independent businesses.
Franchisees are independent contractors and are not our employees. We provide training and support to franchisees; however, franchisees operate their restaurants as independent businesses. Consequently, the quality of franchised restaurant operations may be diminished by any number of factors beyond our control.
Recurrence of COVID-19, new variants, or pandemics arising from novel pathogens could substantially impact our business in a negative manner. We have accumulated losses and cannot guarantee future profits. We have incurred losses in 29 of our 34 years since inception.
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.
Removed
The global crisis resulting from the spread of COVID-19 had a substantial impact on our restaurant operations for the fiscal years ended September 28, 2021 and to a lesser extent September 27, 2022 in the way of dining room closures, customer preference, supply chain interruptions, and employee behaviors.
Added
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. Labor shortages could slow our growth or harm our business. Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified, high-energy employees.
Removed
As of September 27, 2022, we had an accumulated deficit of $30,335,000 and reported a loss for fiscal 2022 of $2,655,000.
Added
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.
Removed
We have operated Bad Daddy’s for a shorter period of time and have had negative same store sales for that concept in two of the past three fiscal years.
Added
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.
Removed
We cannot assure that our advertising and promotional efforts will in fact be successful, nor that sales volumes will be fully restored after COVID-19 subsides.
Added
The failure of banks where we maintain deposits in excess of the limits insured by FDIC or other government or quasi-government agencies could materially affect our financial position and operating results. The Company maintains deposits with certain banks in excess of the maximum insured limits by the FDIC.
Removed
Our image and reputation, and the image and reputation of other franchisees, may suffer materially, and system-wide sales could significantly decline, if our franchisees do not operate successfully. We depend on key management employees.
Added
The significant interest rate increases by the Federal Reserve have caused recent bank failures.
Removed
The loss of services by Messrs. Zink, Karnes, Abbott, or Stack, or those of other key management personnel, could have a material adverse effect on our financial condition and results of operations. Labor shortages could slow our growth or harm our business.
Added
Although in certain of those cases, depositors have been protected from loss by government intervention, no assurances can be made in the case of any failure of a bank in which the Company has uninsured deposits, that the Company would be similarly protected against loss of such uninsured deposits.
Removed
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.
Added
International conflicts could disrupt our business and could materially affect our financial condition and operating results. Although we conduct all of our restaurant operations within the USA, worldwide product supply chains have been impacted by international conflicts, which have expanded into new regions of the world recently.
Removed
The recently-released Emergency Temporary Standard (“ETS”) from OSHA provides guidance surrounding requirements related to vaccination against COVID-19 among our employees.
Added
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. Consumer behavior may also be affected by international conflicts and may result in reduced traffic and sales at our restaurants.
Removed
Although the ETS provides for the alternative of weekly testing for the virus and also allows employers to shift the cost burden of this testing to employees, labor markets, competitive forces, and practical application may dictate that we would shoulder the cost of such testing, which could result in meaningful costs that have not been incurred to-date.
Added
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.
Removed
Additionally, beliefs, perceptions, and behaviors among employees relative to either vaccination or testing, could result in employees choosing not to work for us, or other companies bound by the ETS, and further limit the supply of labor.
Added
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.
Removed
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.
Added
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
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
Similarly, significant inflation has negatively affected our labor and product input costs and could continue to do so.
Added
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
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
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.
Added
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.
Added
While our leases generally have options for extension of the initial term, in the case of some of our Good Times restaurants, we have exercised all of the options granted to us under the lease.
Added
Additionally, some options are set at fair market rental rates, and in the case of one Bad Daddy’s restaurant, no option to extend exists in the lease. Furthermore, many of our Good Times leases are at rates below current market prices.
Added
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.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−1 removed4 unchanged
Biggest changeWe do not own any of 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. The buildings are situated on lots of approximately 18,000 to 50,000 square feet.
Biggest changeWith 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.
ITEM 2. PROPERTIES We currently lease approximately 7,650 square feet of space for our executive offices in Golden, Colorado for approximately $114,750 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 $122,400 per year, under a lease agreement which expires in October 2027.
Any future development is expected to be conducted through a combination of ground leases and land purchases. 21 Table of Contents 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 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.
All 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.
All 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.
Removed
Certain restaurants serve as collateral for the underlying debt financing arrangements as discussed in the Notes to Consolidated Financial Statements included in this report.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed3 unchanged
Biggest changePeriod 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 6/29/2022 – 7/26/2022 20.848 $ 3.11 20,848 7/27/2022 – 8/23/2022 37,909 $ 3.38 37,909 8/24/2022 – 9/27/2022 60,735 $ 3.03 60,735 Total 119,492 119,492 $ 4,038,000 In addition, on September 23, 2022, outside of the publicly announced share repurchase program referred to above, the Board authorized the Company to purchase an aggregate of 27,307 shares from two non-executive employees for a purchase price of $3.75 per share.
Biggest changePeriod 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
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, 2022, there were approximately 46 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 December 14, 2023, there were approximately 53 holders of record of our common stock.
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 27, 2022, the Company has purchased approximately 316,000 shares of its common stock pursuant to the share repurchase plan leaving approximately $4,038,000 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 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.

Item 7. Management's Discussion & Analysis

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

67 edited+19 added−29 removed36 unchanged
Biggest changeThe $1,069,000 increase in general and administrative expenses in fiscal 2022 is primarily attributable to: ● Increase of $591,000 in legal and professional services fees ● Increase of $327,000 in recruiting and training-related costs, including travel and temporary lodging for new managers during their training period, costs related to our annual general manager conference, and costs related to a training event for multi-unit managers from both brands ● Increase of $124,000 related to a reduction of vendors fee income ● Increase of $109,000 related to regional manager expenses ● Increase of $155,000 related to increased home office payroll and benefit costs ● Increase of $88,000 related to business insurance including D&O, EPL, and cyber coverage ● Increase of $189,000 in technology-related expenses ● Increase of $56,000 in general travel-related expenses ● Increase of $31,000 in general office expenses ● Decrease of $473,000 in to, reduced health insurance costs and underwriting losses ● Decrease of $111,000 in incentive stock compensation ● Net decreases in all other expenses of $17,000 We expect general and administrative costs to continue to increase slightly from fiscal 2022 to fiscal 2023 due to increased insurance and health costs, and as we make investments in new human resource and financial management systems.
Biggest changeFor fiscal 2023, general and administrative costs decreased $1,379,000 from $10,506,000 (7.6% of total revenue) in fiscal 2022 to $9,127,000 (6.6% of total revenue) in fiscal 2023. 26 Table of Contents The $1,379,000 decrease in general and administrative expenses in fiscal 2023 is primarily attributable to: ● Decrease of $1,522,000 related to legal and professional services fees including reduced legal fees in connection with the fiscal 2022 trial in the White Winston lawsuit as described in Note 5 of the Consolidated Financial Statements ● Decrease of $221,000 related to business insurance including D&O, EPL, and cyber coverage ● Decrease of $184,000 related to office lease and equipment expenses ● Decrease of $119,000 related to incentive stock compensation ● Decrease of $67,000 related to reduced health insurance costs and underwriting losses ● Increase of $392,000 related to regional and multi-unit supervision ● Increase of $397,000 related to technology-related expenses ● Increase of $70,000 related to recruiting and training-related costs, including travel and temporary lodging for new managers during their training period, costs related to our annual general manager conference, and costs related to a training event for multi-unit managers from both brands ● Increase of $34,000 in general travel-related expenses ● Net decreases in all other expenses of $159,000 We expect general and administrative costs to continue to increase slightly from fiscal 2023 to fiscal 2024 due to increased insurance and health costs, and as we make investments in new human resource and financial management systems.
(1) Represents expenses directly associated with the opening of new restaurants, including preopening rent. (2) Represents non-cash stock-based compensation as described in Note 8 to the financial statements. (3) Represents the excess of cash rent incurred over the amount of GAAP rent recorded in the financial statements.
(1) Represents expenses directly associated with the opening of new restaurants, including preopening rent. (2) Represents non-cash stock-based compensation as described in Note 8 to the Consolidated Financial Statements. (3) Represents the excess of cash rent incurred over the amount of GAAP rent recorded in the financial statements.
Some of these limitations are: ● Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; ● Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; ● Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; 28 Table of Contents ● Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; ● Stock based compensation expense is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing performance for a particular period; ● Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and ● Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Some of these limitations are: ● Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; ● Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; ● Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; ● Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; ● Stock based compensation expense is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing performance for a particular period; ● Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and ● Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
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 provides 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. Employee Medical Plans : We sponsor health and welfare plans that provide medical insurance benefits to certain of our employees.
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 2022 we experienced meaningful price inflation which has continued into our first quarter of 2023.
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.
The following is a description of what we consider to be our most significant accounting policies. 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. 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.
Same Store Sales Same store sales for each brand represents 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.
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.
The increase is primarily due to recognition of commission earned by third parties on gift cards sold through large-box retailers and a radio advertising campaign in Colorado. 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.
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.
Our current working capital deficit is largely caused 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 2023.
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.
We are experiencing price inflation in most goods, including paper and packaging, other restaurant supplies, and energy (utilities) costs. In addition to food cost inflation, we have also experienced the need to meaningfully increase wages to attract workers in our restaurants.
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.
The non-controlling interest represents the limited partner’s share of income in the Good Times and Bad Daddy’s joint-venture restaurants. $1,185,000 of the current year income is attributable to the Bad Daddy’s joint-venture restaurants, compared to $822,000 in the prior year. $529,000 of the current year income is attributable to the Good Times joint-venture restaurants, compared to $791,000 in the prior year.
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.
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 27, 2022.
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.
This increase is primarily attributable to the impact of higher purchase prices on food and paper goods, partially offset by the impact of a 7.7% increase in menu pricing.
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.
Average Good Times restaurant sales for company-owned and joint venture restaurants open the entire 2022 and 2021 fiscal years were as follows: Fiscal Year 2022 2021 Average annual unit volume $ 1,455,000 $ 1,421,000 During fiscal 2022, company-operated Good Times restaurants’ sales for restaurants that had been open a full eighteen months ranged from a low of $860,679 to a high of $2,411,766.
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.
The increase was primarily attributable to general price inflation in operating supplies costs, increases in commissions paid to delivery service providers due to increases in overall delivery sales, and higher repair and higher preventive maintenance expenses. New Store Preopening Costs: For fiscal 2022, we incurred $51,000 of preopening costs compared to $766,000 in fiscal 2021.
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.
While we are hopeful that wage rate inflation moderates, the persistent shortage of qualified workers, rather than statutory wage rate increases, which have traditionally created rate pressure, is the primary factor creating upward pressure on wages, as demand for labor is currently significantly exceeding the supply of qualified workers. 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.
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.
Good Times advertising costs consists 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.
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.
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 2022, depreciation and amortization costs increased $53,000 from to $3,842,000 in fiscal 2021to $3,895,000 in fiscal 2022.
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.
As we increase earnings and utilize deferred tax assets in the future, it is possible the valuation allowance could be reduced or eliminated. The Company is subject to U.S. federal income tax and income tax in multiple U.S. state jurisdictions. The Company continues to remain subject to examination by federal authorities and state jurisdictions generally for fiscal years after 2017.
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.
While we apply our judgment based on assumptions believed to be reasonable under the circumstances, actual results could vary from these assumptions. Additionally, in the context of the ongoing global COVID-19 pandemic, future facts and circumstances could change and impact our estimates and assumptions. It is possible that materially different amounts would be reported using different assumptions.
While we apply our judgment based on assumptions believed to be reasonable under the circumstances, actual results could vary from these assumptions. It is possible that materially different amounts would be reported using different assumptions.
Our discussion for the fiscal years ending September 27, 2022 and September 28, 2021 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 2022 (52 Weeks) 2021 (52 Weeks) Bad Daddy’s: Restaurant sales $ 103,216 99.7 % $ 88,595 99.7 % Franchise revenues 286 0.3 % 250 0.3 % Restaurant operating costs: (1) Food and packaging costs 33,155 32.1 % 26,123 29.5 % Payroll and employee benefit costs 35,085 34 % 30,058 33.9 % Restaurant occupancy and other costs 21,187 20.5 % 17,605 19.9 % Depreciation & amortization 3,234 3.1 % 3,095 3.5 % Preopening costs 51 0.0 % 766 0.9 % Total restaurant operating costs $ 92,712 89.8 % $ 77,649 87.6 % General & administrative costs (2) 7,127 6.9 % 7,055 7.9 % Advertising costs 1,827 1.8 % 868 1.0 % Asset impairment costs 2,647 2.6 % - 0.0 % Income (loss) from operations (811 ) (0.8 %) 3,274 3.7 % Good Times: Restaurant sales $ 34,034 98.1 % $ 34,463 98.2 % Franchise revenues 664 1.9 % 645 1.8 % Restaurant operating costs: (1) Food and packaging costs 10,722 31.5 % 10,041 29.1 % Payroll and employee benefit costs 11,430 33.6 % 10,991 31.9 % Restaurant occupancy and other costs 6,768 19.9 % 6,120 17.8 % Depreciation & amortization 661 1.9 % 747 2.2 % Total restaurant operating costs $ 29,581 86.9 % $ 27,899 81.0 % General & administrative costs (2) 3,379 9.7 % 2,382 6.8 % Litigation Contingencies 332 1.0 % - 0.00 % Advertising costs 1,337 3.9 % 1,214 3.5 % Franchise costs 22 0.1 % 27 0.1 % Asset impairment costs 790 2.3 % - 0.0 % Gain on restaurant asset sale (676 ) (1.9 %) (37 ) (0.1 %) Income from operations $ (67 ) (0.2 %) $ 3,623 10.3 % (1) Restaurant operating costs are expressed as a percentage of restaurant sales.
Our 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.
During the fiscal year ended September 27, 2022 the Company incurred $136,000 of contingent rent. 31 Table of Contents 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 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.
(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 financial statements. Depreciation and amortization, preopening expense, and asset impairment charge have been reduced by any amounts attributable to non-controlling interests.
(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.
Advertising Costs: For fiscal 2022, advertising costs increased $1,082,000 from $2,082,000 (1.7% of total revenues) in fiscal 2021 to $3,164,000 (2.3% of total revenues) in fiscal 2022. Bad Daddy’s advertising costs increased $959,000 from $868,000 (1.0% of total revenues) in fiscal 2021 to $1,827,000 (1.8% of total revenues) in fiscal 2022.
Advertising Costs: For fiscal 2023, advertising costs increased $94,000 from $3,164,000 (2.3% of total revenues) in fiscal 2022 to $3,258,000 (2.4% of total revenues) in fiscal 2023. Bad Daddy’s advertising costs increased $39,000 from $1,827,000 (1.8% of total revenues) in fiscal 2022 to $1,866,000 (1.8% of total revenues) in fiscal 2023.
The following table reconciles net income (loss) to EBITDA and Adjusted EBITDA (in thousands) : Fiscal Year 2022 2021 Net (loss) income, as reported $ (2,641 ) $ 16,787 Depreciation and amortization (a) 3,796 3,770 Provision for income taxes (5 ) 6 Interest expense, net 54 269 EBITDA 1,204 20,832 Preopening expense (a) (1) 51 766 Non-cash stock-based compensation (2) 250 362 GAAP rent – cash rent difference (3) (403 ) (508 ) Gain on disposal of assets (4) (538 ) (37 ) Gain on debt extinguishment - (11,778 ) One-time special allocation to Bad Daddy’s partnerships 516 - Litigation Contingencies 332 - Asset impairment charges (5) 3,437 - Adjusted EBITDA $ 4,849 $ 9,637 (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 (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.
For fiscal 2022, occupancy costs increased $625,000 from $8,815,000 (8.3% of restaurant sales) in fiscal 2021 to $9,440,000 (6.9% of restaurant sales). Bad Daddy’s occupancy costs were $6,668,000 (6.5% of restaurant sales) for fiscal 2022, up from $5,959,000 (6.7% of restaurant sales) in fiscal 2021.
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.
The net cash provided by operating activities for fiscal 2022 was the result of net loss of $941,000 offset by non-cash reconciling items totaling $6,232,000.
The net cash provided by operating activities for fiscal 2023 was the result of net income of $11,672,000 offset by non-cash reconciling items totaling ($3,707,000).
Liquidity and Capital Resources Cash and Working Capital: As of September 27, 2022, we had a working capital deficit of $1,036,000. Our working capital position benefits from the fact that we generally collect cash from sales to customers the same day, or in the case of credit or debit card transactions, within a few days of the related sale.
Our working capital position benefits from the fact that we generally collect cash from sales to customers the same day, or in the case of credit or debit card transactions, within a few days of the related sale and have payment terms with vendors that are typically between 14 and 21 days.
As amended by the various amendments, the Cadence Credit Facility accrues commitment fees on the daily unused balance of the facility at a rate of 0.25%.
The Cadence Credit Facility amended and restated the Company’s prior credit facility with Cadence in its entirety. The Cadence Credit Facility accrues commitment fees on the daily unused balance of the facility at a rate of 0.25%.
The current and prior years include advertising costs of $9,000 and $15,000, respectively, associated with franchise advertising contributions. We anticipate that in fiscal 2023, Bad Daddy’s advertising costs as a percentage of total revenues will remain consistent with fiscal 2022.
The prior year includes advertising costs of $9,000 associated with franchise advertising contributions. We anticipate that in fiscal 2024, Bad Daddy’s advertising costs as a percentage of total revenues will remain consistent with fiscal 2023. Good Times advertising costs increased $55,000 from $1,337,000 (3.9% of total revenues) in fiscal 2022 to $1,392,000 (3.9% of total revenues) in fiscal 2023.
As a percent of sales, the increase is attributable to higher increased spending on restaurant technology, and higher repair and maintenance expenses. Good Times other operating costs were $3,996,000 (11.7% of restaurant sales) in fiscal 2022, up from $3,264,000 (9.5% of restaurant sales) in fiscal 2021.
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.
These reconciling items are comprised of 1) depreciation and amortization of general assets of $4,057,000, 2) amortization of operating lease assets of $3,849,000, 3) Decrease of ROU assets of $219,000, 4) Decrease in the recognition of deferred gain on sale of buildings of $34,000, 5) Gain on lease termination of $642,000, 6) Impairment of long-lived assets of $3,437,000, 7)stock-based compensation expense of $250,000, 4) 5) an increase in receivables and other assets of $278,000, 6) an increase in deferred liabilities and accrued expenses of $515,000, 7) a decrease in accounts payable of $654,000 and 8) a net decrease in amounts related to our operating leases of $4,496,000, 9) and a provision for income taxes of $9,000. 30 Table of Contents Net cash used in investing activities in fiscal 2022 was $2,624,000 compared to net cash used in investing activities of $3,185,000 in fiscal 2021.
These reconciling items are comprised of 1) depreciation and amortization of general assets of $3,752,000, 2) a decrease in the recognition of deferred gain on sale of buildings of $37,000, 3) gain on asset disposals of $4,000, 4) impairment of long-lived assets of $1,589,000, 5) stock-based compensation expense of $131,000, 6) a decrease in receivables and other assets of $466,000, 7) a decrease in deferred liabilities and accrued expenses of $353,000, 8) an increase in accounts payable of $1,866,000, 9) a net decrease in amounts related to our operating leases of $327,000, and 10) a provision for income taxes of $10,790,000.
The gain in both fiscal 2022 and 2021 is primarily comprised of a deferred gain on previous sale lease-back transactions related to two Good Times restaurants, as well as the termination of a lease of a good times restaurant.
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.
This increase is primarily due to increased traffic, including strong off-premise sales, as well as menu price increases. Bad Daddy’s same store restaurant sales increased 11.2% during fiscal 2022 compared to fiscal 2021. Bad Daddy’s restaurants are included in same store sales after they have been open a full eighteen months.
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.
Components of this category include accounting and administrative costs, regional and franchise support salaries and benefits; professional and consulting fees; travel; corporate information systems; training; board of directors’ expenses; office rent; and legal expenses. For fiscal 2022, general and administrative costs increased $1,069,000 from $9,437,000 (7.6% of total revenue).in fiscal 2021 to $10,506,000 (7.6% of total revenue) in fiscal 2022.
Components of this category include accounting and administrative costs, regional and franchise support salaries and benefits; professional and consulting fees; travel; corporate information systems; training; board of directors’ expenses; office rent; and legal expenses.
Income Attributable to Non-Controlling Interests: For fiscal 2022, the income attributable to non-controlling interests was $1,714,000 compared to $1,613,000 in fiscal 2021.
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.
In addition, we have eight Good Times franchise restaurants, six operating in Colorado and two in Wyoming. Due to the unusual rate of inflation of our raw products, we cannot at this time reasonably predict our expected price increases during fiscal 2023 at our Good Times restaurants.
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.
Purchases of property and equipment were comprised of the following: ● $1,510,000 for miscellaneous capital expenditures related to our Bad Daddy’s restaurants, including cash and non-cash portions of the acquisition of one previously franchised location; ● $601,000 for miscellaneous capital expenditures related to our Good Times restaurants; ● $220,000 for miscellaneous capital expenditures related to our restaurant support center; ● $310,000 for construction in progress work primarily for Good Times signage work in progress and various Bad Daddy’s and Good Times equipment purchases for work in progress at the end of fiscal 2022, carrying into fiscal 2023.
Purchases of property and equipment were comprised of the following: ● $1,915,000 for construction of one new Bad Daddy’s restaurant; ● $588,000 for remodels of two Bad Daddy’s restaurants; ● $1,097,000 for Good Times menu board and signage projects; ● $205,000 for remodels of four Good Times restaurants; ● $488,000 for miscellaneous capital expenditures related to our Bad Daddy’s restaurants; ● $307,000 for miscellaneous capital expenditures related to our Good Times restaurants; ● $7,000 for miscellaneous capital expenditures related to our restaurant support center; ● $164,000 for various Bad Daddy’s and Good Times equipment purchases for work in progress at the end of fiscal 2023, carrying into fiscal 2024.
We anticipate that in fiscal 2023 Good Times advertising costs as a percentage of net revenues will remain relatively stable, between approximately 3.0% and 3.5%. Franchise Costs: For fiscal 2022, franchise costs decreased $5,000 from $27,000 in fiscal 2021 to $22,000 in fiscal 2022. The costs are primarily related to the Good Times franchised restaurants.
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.
Additionally, net revenues for fiscal 2022 were increased by $36,000 in higher franchise royalties and license fees compared to the prior fiscal year, primarily related to the Charlotte Airport licensee. Fiscal 2022 and fiscal 2021 include franchise advertising contributions of $9,000 and $15,000, respectively.
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.
Results of Operations for Fiscal 2022 Compared to Fiscal 2021 Net Revenues: Net revenues for fiscal 2022 increased $14,247,000 (11.5%) to $138,200,000 from $123,953,000 for fiscal 2021. Bad Daddy’s concept revenues increased $14,657,000 while our Good Times concept revenues decreased $410,000. Bad Daddy’s restaurant sales increased $14,621,000 to $103,216,000 in fiscal 2022 from $88,595,000 in fiscal 2021.
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.
Other Operating Costs: For fiscal 2022, other operating costs increased $3,604,000 from $14,911,000 (12.1% of restaurant sales) in fiscal 2021 to $18,515,000 (13.5% of restaurant sales). Bad Daddy’s other operating costs were $14,519,000 (14.1% of restaurant sales) for fiscal 2022, up from $11,647,000 (13.1% of restaurant sales) in fiscal 2021. The $2,872,000 increase was attributable to higher overall sales.
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.
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 $308,500 and is amortizing these costs over the term of the credit agreement. The obligations under the Cadence Credit Facility are collateralized by a first-priority lien on substantially all of the Company’s assets.
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.
Long-lived Asset Impairment Charges: For fiscal 2022, the asset impairment charge was $3,437,000 compared to no impairment charge being recorded in fiscal 2021. 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.
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.
As of the date of filing this report, the Company was in compliance with all of these financial covenants under the Cadence Credit Facility.
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 a percent of sales, payroll and employee benefits costs increased by 0.1% primarily attributable to higher average wage rates paid to attract qualified employees. Good Times payroll and other employee benefit costs were $11,430,000 (33.6% of restaurant sales) in fiscal 2022, up from $10,991,000 (31.9% of restaurant sales) in fiscal 2021.
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 of the date of filing this report, there were no outstanding borrowings against the facility. 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 the date of filing this report, there were no outstanding letters of credit issued under the facility.
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.
The increase, as a percent of sales, is attributable to significant inflation with most of our food and packaging products seeing meaningful unit price increases, partially offset by the impact of a 5.7 % average annual increase in menu pricing. 25 Table of Contents Good Times food and packaging costs were $10,722,000 (31.5% of restaurant sales) in fiscal 2022, up from $10,041,000 (29.1% of restaurant sales) in fiscal 2021.
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.
Food and Packaging Costs: For fiscal 2022, food and packaging costs increased $7,713,000 to $43,877,000 (32.0% of restaurant sales) compared to the increase in fiscal 2021 to $36,164,000 (29.4% of restaurant sales). Bad Daddy’s food and packaging costs were $33,155,000 (32.1% of restaurant sales) in fiscal 2022, up from $26,123,000 (29.5% of restaurant sales) in fiscal 2021.
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.
(2) Includes direct and allocated corporate general and administrative costs. Bad Daddy’s Restaurants We currently operate forty company-owned and joint-venture Bad Daddy’s restaurants. We also license one restaurant in North Carolina. We anticipate opening one new Bad Daddy’s restaurant during fiscal 2023.
(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.
This decrease is primarily due to the loss of sales associated with the closure of one restaurant in the second quarter of 2022, partially offset by menu price increases. Same store restaurant sales increased 1.1% during fiscal 2022 compared to fiscal 2021. This increase is primarily due to menu price increases, slightly offset by lower traffic.
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 attributable to higher restaurant sales during the current fiscal year versus prior fiscal year.
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.
The $709,000 increase was primarily attributable to lease costs with newly opened restaurants and increased property tax assessments. The decrease as a percentage of sales was primarily due to the leveraging effect of higher restaurant sales. Good Times occupancy costs were $2,772,000 (8.1% of restaurant sales) in fiscal 2022, down from $2,856,000 (8.3% of restaurant sales) in fiscal 2021.
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.
This increase is due to average menu price increases throughout the year as well as the continued strength of off-premise sales and strong demand for in-person dining. The average menu price increase was approximately 5.7 % in 2022 over 2021. There were thirty-eight restaurants included in the same store sales base at the end of the fiscal year.
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.
Preopening costs in the prior fiscal year were primarily attributable to two restaurants that opened during the third and fourth fiscal quarters of 2021. Preopening costs typically occur over a period of approximately five months and we typically spend approximately $275,000 to $350,000 per location.
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.
Net cash used in financing activities in fiscal 2022 was $2,617,000 compared to net cash provided by financing activities of $8,558,000 in fiscal 2021. The fiscal 2022 activity is comprised of the purchase of treasury stock equal to $1,026,000, proceeds from the exercise of stock options equal to $156,000, and net distributions to non-controlling interests of $1,747,000.
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.
Additional sales data related to Bad Daddy’s company-owned and joint-venture restaurants: Fiscal Year 2022 2021 Total operating store weeks 2,054.0 1,942.6 Average sales per week $ 50,300 $ 45,575 Annualized net sales per square foot $ 670 $ 619 Good Times restaurant sales decreased $429,000 to $34,034,000 in fiscal 2022 from $34,463,000 in fiscal 2021.
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.
Payroll and Other Employee Benefit Costs: For fiscal 2022, payroll and other employee benefit costs increased $5,466,000 to $46,515,000 (33.9% of restaurant sales) compared to the increase in fiscal 2021 to $41,049,000 (33.4% of restaurant sales).
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.
As a percent of sales, payroll and employee benefits costs increased by 1.7% in fiscal 2022 compared to fiscal 2021. This increase, both in nominal dollars and as measured as a percent of restaurant sales, was primarily attributable to higher average wage rates.
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.
Due to the unusual rate of inflation of our raw products, we cannot, at this time, reasonably predict our expected price increases during fiscal 2023 at our Bad Daddy’s restaurants. Good Times Burgers & Frozen Custard Restaurants We currently operate twenty-three company-owned and joint-venture Good Times restaurants all in the state of Colorado.
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.
All of the preopening costs are related to our Bad Daddy’s restaurants. The costs in the prior year were related to a Bad Daddy’s restaurant opened near the end of fiscal 2021. Preopening costs in the current fiscal year are attributable to one restaurant that was purchased from a franchisee in the second quarter of fiscal 2022.
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.
As of the date of filing this report, there was no gain on debt extinguishment. Cash Flows: Net cash provided by operating activities was $5,291,000 for fiscal 2022 compared to net cash provided by operating activities of $9,145,000 in fiscal 2021.
Total interest expense on notes payable was $31,000 and $20,000 for fiscal 2023 and 2022, respectively. Cash Flows: Net cash provided by operating activities was $7,965,000 for fiscal 2023 compared to net cash provided by operating activities of $5,291,000 in fiscal 2022.
We anticipate any commitments in fiscal 2023 will be funded out of existing cash or future borrowings against the Cadence Credit Facility. 29 Table of Contents Financing Cadence Credit Facility: The Company maintains a credit agreement with Cadence Bank (“Cadence”) pursuant to which, as amended, Cadence has agreed to loan the Company up to $8,000,000 with a maturity date of January 31, 2023 (as amended, the “Cadence Credit Facility”).
Financing 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 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”).
As of the date of filing this report, the Cadence Credit Facility contains certain affirmative and negative covenants and events of default that the Company considers customary for an agreement of this type, including financial covenants setting a maximum leverage ratio of 5.15:1, a minimum pre-distribution fixed charge coverage ratio of 1.25:1, a minimum post-distribution fixed charge coverage ratio of 1.10:1 and minimum liquidity of $2.0 million.
The Cadence Credit Facility includes customary affirmative and negative covenants and events of default. The Cadence Credit Facility also requires the Company to maintain various financial condition ratios, including minimum liquidity, an amended maximum leverage ratio and an amended minimum fixed charge coverage ratio.
One restaurant closed during each of fiscal 2022 and 2021 and were excluded from same store sales. The average menu price increase in fiscal 2022 over fiscal 2021 was approximately 7.7%. Additionally, revenues for fiscal 2022 were increased by $19,000 in higher franchise revenues compared to fiscal 2021.
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.
Good Times depreciation costs decreased $86,000 from $747,000 in fiscal 2021 to $661,000 in fiscal 2022. This decrease is primarily attributable to assets reaching full amortization and the closure of a restaurant in fiscal 2022 associated with a landlord termination option. 26 Table of Contents General and Administrative Costs: General and administrative costs include all corporate and administrative functions.
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.
Removed
Fiscal 2022 and fiscal 2021 include franchise advertising contributions of $273,000 and $263,000, respectively.
Added
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.
Removed
Bad Daddy’s payroll and other employee benefit costs were $35,085,000 (34.0% of restaurant sales) for fiscal 2022, up from 30,058,000 (33.9% of restaurant sales) in fiscal 2021. The $5,027,000 increase is primarily attributable to greater hours to support increased guests at restaurants during the current year versus the same prior year period, as well as higher average pay rates.
Added
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.
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These higher wages are in-part driven by a combination of the significant statutory wage increase in the City and County of Denver and the impact of the extremely competitive labor market for qualified restaurant employees in Colorado. Occupancy Costs: Occupancy costs include rent, real and personal property taxes, common area maintenance expenses, licenses and insurance expense.
Added
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.
Removed
The decrease, as a percentage of sales, was due to the closure of one restaurant in the second quarter of fiscal 2022, the leveraging effect of increased restaurant sales, decreases in property tax expense, end-of-term rent abatement, and associated with a lease termination agreement for one good times restaurant.
Added
The decreases at both concepts are due to assets performing past their estimated usable lives and the prior-year impairment of assets, partially offset by new asset additions in existing restaurants. Bad Daddy’s depreciation costs decreased $174,000 from $3,234,000 in fiscal 2022 to $3,060,000 in fiscal 2023.
Removed
Bad Daddy’s depreciation costs increased $139,000 from $3,095,000 in fiscal 2021 to $3,234,000 in fiscal 2022. This increase was primarily attributable to the two new restaurants opened in final quarter of fiscal 2021 as well as the acquisition of our franchise unit in the second quarter of 2022.
Added
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.
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Good Times advertising costs increased $123,000 from $1,214,000 (3.5% of total revenues) in fiscal 2021 to $1,337,000 (3.9% of total revenues) in fiscal 2022. The increase is primarily due to increased advertising expenditures.
Added
Income (Loss) from Operations: Income from operations was $963,000 in fiscal 2023 compared to loss from operations of $878,000 in fiscal 2022. The change from fiscal 2022 to fiscal 2023 was primarily attributable to a decrease in general and administrative costs and a decrease in asset impairment costs, offset by increases in restaurant operating costs. Interest Expense.
Removed
We currently have minimal direct costs associated with maintaining our franchise systems as those employees overseeing franchisee relations primarily perform responsibilities associated with company operations. Gain or Loss on Restaurant Asset Disposals: For fiscal 2022, the gain on restaurant asset disposals was $676,000 compared to a gain of $37,000 in fiscal 2021.

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