Good afternoon ladies and gentlemen. Welcome to the Good Times Restaurants, Incorporated Fiscal 2018 Third Quarter earnings call. By now, everyone should have access to the Company's third 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 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 this 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 the GAAP in reconciliation to comparable GAAP measures available in our earnings release. I would now like to turn the call over to Boyd Hoback. Please go ahead, Sir.

Thank you, Brandon. Thanks, again, everyone for joining us this after. With me today is Ryan Zink, our Chief Financial Officer. I'm going to cover a summary of our third quarter and some current developments and then, Ryan will step through more details on our financial results for the quarter as well as updates for our fiscal 2018 year-end guidance as well as our initial guidance that we provided in the press release for our fiscal 2019. We were very pleased again, with our sales results at both brands during the quarter, with Good Times up 3.8% and Bad Daddy's up 0.5% in our same-store sales. Both in line with the guidance we provided last quarter and probably most significantly a two year same-store sale stack about 7.5% for Good Times. We opened our first Tennessee Bad Daddy's at the beginning of the quarter at Chattanooga, and our second store in Atlanta in the Atlanta market in early June. That store happened to a weekly sales record for any Bad Daddy's we've opened yet, so that was fun to see. Subsequent to the end of the quarter, we opened our sixth store in the greater Charlotte market and a store in Greensboro, North Carolina, a new market for us. And we're on track to open two more stores by the end of the fiscal year with our second store in Greenville, South Carolina and our third store in the greater Atlanta market. That will bring a total of nine new restaurants in fiscal 2018. Our guidance for fiscal 2019 is again to open seven to nine new Bad Daddy's, most of which will be in the south east and North Carolina, South Carolina, Georgia, Tennessee and Alabama. The concept is being very well received in each of the new markets…

Thanks, Boyd. At our Good Times brands, restaurant sales decreased $321,000 from around $8.5 million to around $8.2 million in the current year. Due to sales losses from two closed restaurants as well as lower year-over-year sales at our Greeley restaurant, partially offset by a 3.8% increase in same-store sales. For the quarter, we have a year-over-year menu price increase of approximately 4.5%. On a year-to-date basis, Good Times restaurant sales increased from $22.3 million to $23.2 million, driven by strong comp sales, partially offset by lost sales from the closure of two restaurants. Food and packaging costs of Good Times were 32.3% for the quarter, a decrease of 0.4% versus last year's third quarter. We had similar commodity pricing last year at our Good Times concept, which was offset by the impact of higher menu pricing. Year-to-date, food and packaging costs at Good Times were 32.8% an increase of 0.6% versus 32.2% for the same year-to-date period last year. This is the result of higher year-over-year beef and bacon costs, coupled with unfavorable mix shift into the West Coast Burger during the first quarter, which was then offset by the impact of a 4.4% average menu price increase during the year-to-date period. Total labor cost at Good Times decreased to 33.0% from 33.3% for the third quarter last year. This year-over-year decrease is primarily driven by leveraging higher menu pricing, partially offset by the impact of a 9.5% increase in the average hourly wage. Although the Good Times average wage is already well above the statutory minimum, we continue to experience upward pressure on wages, and our weighted-average hourly wage increase by more than the nominal minimum wage increase. Year-to-date, labor costs increased to 34.8% from 34.5%. Restaurant-level operating profit, a non-GAAP measure, at Good Times decreased $22,000 from…

Thanks, Ryan. We're thrilled to be opening really very high-volume new Bad Daddy's restaurants to manage $80,000 to $100,000 weekly sales out of our small facilities of only about 3,700, 3,800 square feet with brand-new team members has just been a huge challenging task. And so I'd just like to give credit and thank our management teams, our opening teams and our support staff for all their hard work. I appreciate your time with us today. With that operator, we'll open the call for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jeremy Hamblin with Dougherty. Please go ahead.

Hey guys. This is actually David on for Jeremy. Thanks for taking my questions and nice job on the quarter.

Thanks David.

So first, just wanted to ask if you could give us a little color on the run rate's on the newer units? And kind of how those are performing?

Sure. So our class of fiscal 2018 stores have all, almost without exception, there's one store that opened a little bit slower but have opened up with very high-volume. We're seeing about a four to six month honeymoon period on stores and on average, they're settling in slightly above our system average, which is great. So in the southeast that relates to – that comes to about $2.7 million on our average unit volume that the new stores are settling into similar to where our class of 2017 stores. They were a little bit lower including the ones in Colorado, but overall, we've been thrilled with what we've got opened here so far. We've got two more stores coming this quarter and then two stores first quarter of fiscal 2019 that are under construction.

So, yes, I was just going to ask on the 2019 units. Can you just talk about the progress? And then how we should kind of think about the cadence of those openings throughout the year?

Yes, generally, we've got two stores that are under construction right now. So those opening dates are pretty well locked and loaded for our first fiscal quarter. The balance of the stores, I think, will be probably a little more back-end loaded between Q3 and Q4, pretty evenly. Q2, which is when we don't really like to open restaurants anyway, because the middle of the winter time will be a little bit light for us, which actually, operationally, is a good thing to take a little bit of a breath and catch up from a – just from a training and bench strength standpoint. So most of the development in 2019 will be Q3 and Q4 other than the two that we got lock and loaded for Q1.

Yes. David, I would – the guidance, if you would where to just pick the midpoint of our $7 million to $9 million and say let's model $8 million. I think the way I modeled that is kind of 2-1-3-3 and of the two, both of those would be kind of in the second and third months of the quarter.

Okay, perfect. And then three to four additional new areas you talked about in the press release. Can you just give us a little more details on where those are?

Sure. So we've got leases signed right now for our first Nashville restaurant and we're working on a couple more in Nashville. We have one opened in Chattanooga right now. We're working on a deal for in Alabama, for both Birmingham and Huntsville, and we anticipate both of those being developed in the back half of 2019 and then additional stores in those markets in fiscal 2020, and then, additional stores in South Carolina. We are opening one here this quarter in Greenville, but then we’re finalizing a lease in Columbia, South Carolina and we have a lease signed for our first store in Charlotte, South Carolina. And so still focused largely on the Southeast. We’ll have another North Carolina store – South Carolina. Georgia, we've got a couple of more Atlanta stores, but the new markets are going to be Alabama and Nashville.

Okay, great. And then since those are getting kind of – the Southeast ones are getting higher AUVs. Are you seeing kind of overall better economics for the units?

Yes. I mean, the labor margin alone is over five points on the store margin. So that's why we halted 18, 24 months ago. We stopped development in Colorado and really shifted to the Southeast. So it's fairly dramatic, both in terms of the average volume and the labor margin. All of the other costs in the income statement and development costs are really largely the same, it's simply labor that's the huge advantage.

And I’d say, as Boyd mentioned, there is about 500 to 550 as we lapped kind of yet another round of minimum wage increases here in Colorado, 500 to 550 basis points. I would say that just based upon product purchasing and distribution agreements, there is a slight – the Southeast has a slightly elevated cost of sales, maybe 0.5 to 0.75 versus Colorado. But I think if you're kind of looking at the P&L for next year and trying to model it, I would basically take this year's and – on the cost of sales side, we try to be a little conservative. And I add – compared to the current quarter add a point or so, a point or so to that. And on the labor side I think relatively consistently – relatively consistent on the Bad Daddy's side. As I think just like we saw this year, there's some balancing between the overall inflationary pressures and Colorado impact versus our development in the lower-cost region, I think that's going to balance out. I would say on the Good Times side, we're going to see a little bit of an elevation as a percent of sales on the labor.

Okay, great. Thanks, guys. I appreciate you taking the questions.

[Operator Instructions] Our next question comes from Stephen Anderson with Maxim Group. Please go ahead.

Yes, good afternoon. Just I want to first touch on Bad Daddy’s. And I know last quarter you spoke about some of the initiatives you are looking at to possibly drive traffic on weekdays at Bad Daddy's. Can you give us some comments about that?

Yes. We tested and expanded happy hour food menu, and then certain day of the week, drink specials in Colorado, and we're still playing around with that. We haven't seen anything dramatic from that, Stephen. Colorado sales generally have been strong, but it's really not been driven by those weekday activities as much as just some very strong performance, some of our existing stores that I think are beginning to mature and just showing year-over-year increases. We’re still playing around with different menu initiatives, including some day of the week drink specials. And we have rolled a test on Bad Ass Tuesday’s that we’re refining and continuing to work with those.

Okay. Shifting to Good Times, I saw the – you're looking at about 1% comp for the quarter, is that correct?

That’s right.

Okay. Now that would seem to apply deceleration in what your two-year comp you've been running, right, or lower 7% now implies it's just under 5%. And can you explain why like you – have you seen any weakness that has been going sequentially from the last quarter? And what you would see to do to maybe get that momentum going again?

Yes, we've been a little lighter on our television schedule, which I think is leading into part of that. And then as we come into the election season, we're going to be off TV just because costs go through the roof. So we've allowed for a little bit of that. I think sequentially that we're again trying to be conservative, but there – we anticipate a little bit of softening. I can't point to anything other than kind of a continued aggressive discounting nature of the promotions from all our competitors. And generally, a couple of those larger competitors have been doing well, but really nothing specific, and we're continuing, as I mentioned in my comments, we've got some new LTOs that we're going to be rolling and continuing to pound kind of a two-tier strategy on what we think are attractive price points and price choice for Good Times as well as new news.

Now continuing on that the theme, I remember you guys – it's been a couple of years now since you've opened that new prototype location in Greeley, and do you see yourself maybe restarting your growth of maybe one more store just to see how that works before you consider anymore expansion?

Yes, we would like to build some more. We're having a difficult time in Colorado. I think the larger issue is do we take the times out of Colorado and we have not yet pulled that strategic trigger. Just difficulty in finding locations here in Colorado. So that's the short version.

I think the other thing, Stephen, that I would add to that is I think in terms of the – in terms of our capital structure, I mean, while we have availability on our debt – our credit facility, we are capital constrained to a bit and so we really focus our capital deployment, our highest returns, and that's really going to be in – Bad Daddy's in the Southeast. And so while we think we could get a good return by potentially expanding Good Times, our focus is really how can we grow Bad Daddy's as quickly as possible.

Okay. And with the – your commodity outlook for fiscal 2019, and looking at the some of the EBITDA numbers, what kind of run rate are you looking at for commodities next year?

I think – we're anticipating fairly benign just because we're so heavily weighted towards beef and bacon on both concepts. Beef, bacon and dairy are really the three, and we don't see a lot of pressure on either – on anyone of those three.

Final question on delivery. Now is that just for the Bad Daddy's where you've entered the agreement on – with DoorDash? Or have you done that for Good Times as well?

That's just for Bad Daddy's. We did do a limited test on Good Times, and we just didn't really see the incremental that we're seeing on Bad Daddy's. I think the economics are a lot more difficult for delivery in QSR than they are on casual theme. But we're seeing pretty good results from the DoorDash delivery with Bad Daddy's.

Are you seeing –

Go ahead, Stephen.

Are you seeing any cannibalization from the dining customer?

So far I would say not substantially. If there is been any, it's really been some cannibalization from existing take-out. That said, we've recently, as Boyd mentioned, we've expended that service. We are going to offer delivery in – through DoorDash in all of our Colorado restaurants, and that's kind of a progression of the methodical pace that we've taken to really explore this. We do have a handful of small number of units, two or three in the Southeast, where we offer delivery. But I'll tell you on the Bad Daddy's concept, we are really focused on, how do we deliver a great, in-store experience and how do we offer the choice and flexibility for those guests who want to experience Bad Daddy's, but may not want to have an in-store visit. It's really about how do we make sure that we keep the quality and the service at the level that we really want, and that's our primary focus, not necessarily just can we expand delivery as quickly as possible.

The other thing that we're working to complete is the integration between Olo and DoorDash, so that is more seamless from an operation standpoint and from a consumer standpoint.

All right, thank you.

Thanks, Stephen.

[Operator Instructions] At this time, I'm seeing no further questions. So this concludes our question-and-answer survey as well as today's conference. Thank you for attending today's presentation. You may now disconnect.