Good afternoon, ladies and gentlemen. Welcome to the Good Times Restaurants Inc. Fiscal 2016 Fourth Quarter Earnings Call. By now, everyone should have access to the Company's fourth quarter earnings release. If not, it can be found at www.goodtimesburgers.com in the Investors section. As a reminder, a part of today's discussion will include forward-looking statements within the meaning of federal securities laws. These statements are commonly identified by words such as anticipate, continue, plan, expect, intend, should, will and other terms with similar meanings. These forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect, and therefore, investors should not place undue reliance on them, and the Company undertakes no obligation to update these statements to reflect the events or circumstances that might arise after the call. The Company refers you to their recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. Lastly, during today's call, the Company will discuss non-GAAP measures, which they believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP and reconciliation to comparable GAAP measures available in our earnings release. Please note, this event is being recorded. And now, I would like to turn the call over to Mr. Boyd Hoback, President and CEO of Good Times. Please go ahead, sir.

Thank you, Nicole. Thanks everyone for joining us again this afternoon. With me today is Jim Zielke, our CFO. I will cover a summary of our fourth quarter and current developments and Jim will provide some more details in on our financial results for the quarter and for the year. As well as provide additional color on our guidance for the upcoming fiscal 2017 with the balance of that. The total revenues increased 40% to $17.2 million during the quarter with our comp sales increasing 1.9% at Bad Daddy’s and they were down 1.2% at Good Times. The sales at Good Times are an improvement sequentially over the negative 2%, we reported last quarter. And we are in line with the guidance given last quarter of projected 1% to 2% decline. And the 1.9% increase at Bad Daddy’s was pretty much in line with our expectations in our guidance of 1% to 2% increase. As mentioned in the call last quarter, our Cherry Creek Bad Daddy’s is still being negatively impacted by construction of a new hotel next door, and most recently includes the partial closing of the street right in front of the store. That shifted the trend of that store from being up high in the high single-digits to down in the high single-digits. So excluding that store, other nine stores in the comp base were actually up 2.8% for the quarter. And then during our first two periods of fiscal 2017 just ended our same-store sales improved at both brands. We were flat at Good Times and we were up 3.5% at Bad Daddy’s including the Cherry Creek store, which again partially attributable are really nice weather we had in Colorado. As I discussed last quarter, we continue to work on quality improvements in innovation in our…

Thanks, Boyd. As it relates to the Good Times brand, as Boyd mentioned comp store sales were down 1.2% for the quarter. But did finished the year slightly positive for our sixth consecutive year of positive comps. We were lapping a three-year comp sale stack of over 36% for the quarter. And as Boyd mentioned not immune to the competitive discounting environment within the industry. As with the case, last quarter we had about 3% year-over-year price increase in place. So traffic was down approximately 4% this quarter versus last year. Cost of sales at Good Times improved 1.7% to 32.4% for both the quarter and for the year from 34.1% last year. This deep decrease versus last year for the quarter was primarily due to the 3% price increase I mentioned and also 11% lower beef costs, and a 31% decrease in bacon costs. For the year, also in addition to the price increase beef cost decline about 21% but bacon for the year did increase 30% year-over-year. Sequentially beef costs were up about 4% in the fourth quarter versus the prior third quarter. Total labor costs at Good Times increased to 32.3% from 31.7% for the quarter last year and increased to 32.7% for the full year from 31.4% last year. As Boyd mentioned most of this relates to the increase in average wage rate, which was about 6% for the quarter and also for the year. This again due to the very competitive labor market in Colorado as we've mentioned. As Boyd mentioned in terms of the increase in the minimum wage that results in about 12% increase in the minimum wage beginning January 1. And that alone in Good Times will increase wages by about 50 basis points. Restaurant-level operating profit at Good Times decreased $23,000…

Thanks, Jim. It’s obviously a tough both macro spending environment and competitive environment in both of our brand segments. However, operating niche concepts does gives us the advantage of moving and adapting pretty quickly and driving our brand positions deeper. So our focus is really on regaining our same-store sales momentum at Good Times, after six years of very significant gains. With what we believe are probably the most significant product improvements we've introduced in the last few years. On top of that opening Bad Daddy’s that can continue to generate $2.5 million in sales in the second year and continue to refine our operating margins in both brands and exercise G&A efficiencies as we add on off of Bad Daddy’s growth. As I mentioned earlier, our goal is to continue to deliver 35% to 40% annual increases in our adjusted EBITDA over the coming years. So we think we will continue to deliver shareholder value as we get Good Times reoccurring that again and expand Bad Daddy’s both in our current markets again primarily this year. But really looking at these new markets in later 2017 and for fiscal 2018. Appreciate your time with us today. So with that operator, we’ll open the call for any questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Billy Sherrill of Stephens. Please go ahead.

Hi, thanks guys. Just had a couple, one – last quarter you talked a little bit about some of the labor initiatives, you guys are rolling out both of the brands. And I don't know whether or not you have any parameters for what kind of cost savings you expect, there and whether or not that the EBITDA guidance has any assumptions built into it or with the cost savings you can generate with those initiatives be incremental of the EBITDA.

Billy, I would like to say that the initiatives are not build into the EBITDA guidance but to hit – the high end of that guidance, those initiatives are in there. We do have the significant increase in minimum waging in Colorado that we have to offset with some of those initiatives. So they're pretty much are balanced and included in the guidance right now. I mean, again we'll do everything we can to further refine our labor model. Again we've opened these last six stores here in Colorado, have learned a lot as we've opened those stores and continue to run the other stores here in terms of what the kind of ideal labor matrix is. But I wouldn't plan on significant improvements above what's already in the matrix or in the model.

Got you. That's helpful. And then just one if I could on the Bad Daddy’s side. On the development side of things with a couple of new hires that at your bench. Could just give us some broad context around some of the primary hurdles and also maybe some of the opportunities you're starting to see as you look towards moving into new markets such as the – in the Midwest and Southeast you mentioned.

Yes, I think some of the only real hurdle that we've got from a back door food cost standpoint, we've got a good distribution system in place that will be able to pretty much deliver the same back door costs in these markets that we're going into. Obviously, it's just a huge benefit and we see the difference today between North Carolina and Colorado. It's just a huge benefit in these minimum tip credit stage – states. Again is not so much the core minimum wage, we're paying $11, $12, $13 in our back of the house. It's just that front of the house. Where we can pay $213 rather than what's now $7 in Arizona is a dramatic impact in our margin structure. So we're really looking forward to capture that. I think that probably the bigger challenge that we’ve got, we’ll see for the first store in a new market requires some higher pre-opening expense, just because of the travel involved. Once we have that first store and we can train out of that store. We're back to our normal pre-open costs. So we opened two new markets, the first store in each one of those in fiscal 2017 will have slightly higher pre-open costs. We've got a really talented team in place now we're really confident with our above level store supervision team that we've got. So and we're confident that we'll be able to manage those well. I think real estate remains a bit of a challenge in finding good real estate and end-cap real estate is still very, very competitive. Our rates continue to go up a little bit and so that's why we're trying to work on 2018 now after what we have in the pipeline for 2017. That's probably our bigger challenge. I think that from a consumer standpoint, we think the Midwest and Southeast are great areas for the Bad Daddy’s brand. Again, we are kind of the new kid on the block in a cool concept particularly in some of the secondary and tertiary markets. So we're pretty optimistic about the development into those markets.

Got you. And just one last one if I could, taking a step back and talk a little bit more broadly about the operating environment currently. And how you may have seen that evolve throughout this year, just speaking obviously a little bit more from the Bad Daddy’s side of things and if there’s any post-election commentary to add that you’d be want to give that might be helpful as well?

Yes. The election we really haven't seen much of any change in trend in any way. It remains very, very competitive. We've seen for the first time here in Colorado market for example. Applebee's rolling out at two for one, buy one get one discount which is really, really deep. And I think that's reflective of where their sales are. We haven't seen too much it effect on us. We continue to maintain our sales trends in both North Carolina and Colorado. I don't know if that discounting environment is going to continue to get worse than it already is or not, it's already pretty deep right now. But so far from a consumer standpoint, we haven't seen any negative. We have a number of stores in lifestyle centers, and in major malls that have theatres in them. And the movie selection has been a little weak the last couple of months and we've got a really good month coming up here I think with a lot of new releases. So the stores that we haven't yet been able to go through a holiday season with that we opened this last year. We think we have the opportunity to do some big volume here in December and January particularly. I don’t know, Jim, do you have any commentary on the election?

No. Again, like Boyd said, we haven’t seen any changes in our trends I don’t know if the stock market is indicative of just optimism with the potential for – or with the new executive branch. So we'll see how that really plays out.

Got you. That’s helpful. Thanks guys and congrats on a good quarter.

Thanks.

Our next question comes from Jeremy Hamblin of Dougherty and Company. Please go ahead.

Hey, guys. I want to add my congratulations on some solid results in a tough environment. I want to just go through the change in the guidance metrics, which it looks like you saved a couple of million dollars just off the high end of the total revenues, make sure I understood that. Is there difference on the $2 million at the high end of your fiscal 2017 guidance, just a function of the timing of when those locations are going to open up, or…

One hundred percent exactly that Jeremy – again having kind of decided to move in a different direction in Arizona where we had several stores teed up, which would have – we had pretty much assured of some significant stories from those stores, to now going into some other markets that again we had already looked at. But now where you were needing to tee those up for fiscal 2017 and probably won't get as many store weeks as we originally would have thought four months ago. So that’s definitely the reason for the shave at the top.

Okay. And just to confirm, you're looking for two units to open in Q1 on Bad Daddy’s, one in Q2 but in both cases towards the latter end of those quarters. And then in Q3 and Q4 minimum of six Bad Daddy’s and you're looking for one Good Times to open either at the end of Q2 or beginning of Q3. Is that…

You have that right except for the Q1 and Q2. We have one that's going to open on December 14 here in Colorado. We had a second one that actually started construction earlier than that in Fayetteville, but we lost about three weeks to the hurricane. We didn't get hit in our facility, but the subcontractors and just getting city inspections done, we lost about three weeks. So that's pushed into early January. So that's now slated for a January 15 open. So we have one in Q2 and then two in – one in Q1, two in Q2 and then three to four in each of Q3 and Q4. And then March…

Okay, I see I read that wrong, okay.

And then the Good Times – new Good Times are under construction, will open – should be the first part of March before mid-March, in Greeley.

Okay great, thanks. But then I just want to come back to a couple of things, in terms of an estimate on the growth dollars associated with the minimum wage increase. What are we looking at for 2017?

Yes, so Jeremy on the Good Times side, it's about 50 basis points for again the last nine months of the fiscal year which is being about 120 gram. And then on the Bad Daddy side just the Colorado units. And it's about 150 basis points for those units again just the last three quarters of the year. And that's about little over 300,000 in terms of just those changes alone in the minimum wage. And again that’s build into kind of the guidance that we gave. So basically now we’re somewhat unforeseen back in August when we gave the guidance originally. So that $400,000 to $500,000 increase in wages there has been offset in our guidance with some of the opportunities that we see now in both cost of sales and labor to offset that. So that's why the guidance didn't change even though that $400,000 to $400,000 plus is an extra hit that we hadn’t counted on four months ago.

Okay. And then I just want to – the capital expenditures guidance did increase by $600,000, as well. But I'm thinking that you maybe switching gears into some slightly lower cost environments versus Arizona. I could be wrong on that. But in terms of that increase in CapEx by $600,000 to $14.7 million, is that additional equipment that you're adding in or where does that increase in cost come from? And then when you think of that in context of maybe not quite as high opening volumes along with slightly higher costs on labor. How does your kind of return metrics change now, how do they look today?

So the change Jeremy from last quarter's guidance of the 600,000, 200,000 of that relates to just how we foresee the timing CapEx, first 18 units that occurs this year. So we did bump that up from 1.8 to two. So that really means a $400,000 increase year-over-year in terms of our actual fiscal 2017 CapEx. And I guess some of that relates to the timing of 2017 CapEx versus what we actually spent in 2016. So really net-net it really is only about a $200,000 to $300,000 net increase in the cost of the units we're opening, as well as the CapEx for existing stores. And I would say a couple of hundred thousand of that or really all of that relates to kind of the equipment changes that we're doing in Good Times. We originally estimated that to be in the $300,000 range, now I think it's going to be closer to $0.5 million for those line changes that we're making. So in terms of the new unit CapEx, really no change from where we were before, so really kind of keeping the same metrics on our new store ROI.

Okay, even though you're experiencing a little bit higher labor cost in general.

Yes, but what we did then was shift more stores opening in Colorado and Arizona, which we had – those already had a higher wage rate. And we've pioneered the Arizona stores reported most likely and replacing those with federal minimum wage states. So our labor actually improves on the new units overall versus what we had in the original model.

But you feel confident that you can still get 2.5 million in these states?

Yes I mean right now North Carolina is the best performing. If you compare North Carolina and Colorado, North Carolina is and has been better performing market. So we feel very comfortable that outside of Colorado we can do the target volume of $2.5 million or better.

Okay great. Thanks for answering the questions. I’ll hop back in the queue.

All right, thank you.

Thanks Jeremy.

[Operator Instructions] Our next question comes from Mark Smith of Feltl and Company. Please go ahead.

Hi guys. First off you guys talked a little bit about pre-election, post-election, can you quantify what the comps were in period one and period two of this quarter?

Well I guess in the release, we said that so far Good Times was flat, through the first really ten weeks of the quarter. This is a first ten weeks of the quarter we were flat on Good Times. Mostly due to really nice weather in Colorado the first couple months offset by some really bad weather this last week, versus last year. But we're pretty much flat on Good Times.

But no meaningful movement pre versus post.

Yes nothing in terms of pre versus post. It was about the same in October as it was in November. And then December last week of November started out good, first week of December has been a tough one, because of the weather. On the Bad Daddy side, again we're up 3.5% so far through 10 weeks and really no meaningful change from pre-November to the post.

Okay. And then just looking at restaurant-level margins at Bad Daddy’s, can you comment at all about comp restaurant versus non-comp restaurants and kind of the delta between the two?

Yes I really haven't gotten into that much – that granular detail on your margins. I will say the six stores have slightly lower sales than the three original stores in Colorado. And therefore, again just leveraging those sales have slightly lower margins. But in terms of labor, once the store has been opened for a few months and pretty much all the other costs are pretty much in line mature stores in line with new stores. And the Carolina being slightly higher volume than Colorado, with the better wage rates was several 100 basis points higher in Colorado – or in Caroline than we experienced in Colorado.

Okay. And then just looking at Good Times and competition really on price within QSR, do you see that changing here in the near-term or do you think that your peers continue to push discounting as we look into this next year?

We anticipate that it's going to be – it's going to mitigate somewhat. But it's still pretty intense they’re still on the bundle deals which I think has lost some of its theme in terms of how effective that's been. Jack just rolled the four for $4 combo and Sonic rolled the five for $5 combo. So it's the bundling deals, it's not so much any individual low value menu push as it is the bundle deals. And so I think we’ve kind of gone through the worst of that at least that's what we're hoping. And we've got one of the initiatives we've got that we've had in test that we're rolling in March with our new equipment line is a new mid-tier pricing on our menu. We have the barbell strategy where we have a small low end menu but a lot of high end on our menu. And we're adding in some new choices in the mid-tier that we think are going to be very successful in test, it's one of the highest incidences on our menu. So that is kind of our approach to value by offering more choice throughout our menu. But again from a transaction standpoint, I think, it's going to remain pretty competitive, with beef costs where they are, but I don't see how – we think it's going to be a little bit better and mitigate somewhat.

Okay. And I think lastly from me, those Arizona units are they completely scrapped and off the table right now? And if so are there any of those deals that you are going to have to pay to get out of a deal?

No fortunately we had them at the late LOI and lease negotiation stage. And so hadn’t inked any of those deals. We've got some very nominal cost that we had on the front end in terms of some design work that we had done. But other than that there are no leases that we have to eat that we don't have to buy our way out of any deals or anything like that. Had that been the case we may have gone ahead with those initial stores. But with – and the big surprise that passed down there was paying every employee a week of wages for sick leave. The minimum wage we didn't know whether that was going to go or not, it went. But the other, the kicker on that was the sick leave piece. So we were able to get out of there without any costs.

Excellent, thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Boyd Hoback for any closing remarks.

Again just thanks for joining us this afternoon. Appreciate your questions and your attention. And look forward to next call. Thank you.