Good afternoon, ladies and gentlemen. Welcome to the Good Times Restaurants Inc., Fiscal 2024 First Quarter Earnings Call. By now, everyone should have access to the company's earnings release, which is available in the investor section of the company's website. As a reminder, a part of today's discussion will be – I'm sorry, will include forward-looking statements within the meaning of Federal Securities Law. These forward-looking statements are not guarantees of future performance, and therefore you should not put undue reliance on them. These statements involve known and unknown risks, which may cause the company's actual results to differ materially from results expressed or implied by the forward-looking statements. Such risks and uncertainties include, among other things, the market price of the company's stock prevailing from time to time, the nature of other investment opportunities presented to the company, the disruption to our business from pandemics and other public health emergencies, the impact and duration of staffing constraints at our restaurants, the impact of supply chain constraints and inflation, the uncertain nature of current restaurant development plans and the ability to implement those plans and integrate new restaurants. Delays in developing and opening new restaurants because of weather, local permitting or other reasons, increased competition, cost increases or shortages in raw food products, other general economic and operating conditions, risks associated with our share repurchase program, risk associated with the acquisition of additional restaurants, the adequacy of cash flows and the cost and availability of capital or credit facility borrowings to provide liquidity, changes in federal, state or local laws and regulations affecting the operation of our restaurants, including minimum wage and tip credit regulations, and other matters discussed under the Risk Factors section of Good Times Annual Report on form 10-K for the fiscal year ended September 26, 2023, filed with the SEC and other filings with the SEC. 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. And now, I would like to turn the call over to Ryan. Please go ahead, sir.

Thank you, Christina, and thank you all for joining us on the call today. As mentioned, everyone should now have access to our first quarter earnings release. Joining me today is our recently appointed Senior Vice President of Finance and Accounting, Keri August. In a few minutes, she will review the quarter's results. We engaged Keri in a consulting arrangement last August, and she immediately impressed me with her ability to quickly understand the company's structure, identify opportunities within finance and accounting, and quickly build relationships with her now peers as part of our senior leadership team. I couldn't be more pleased to have her join our team. Top line results this quarter were much the same as we reported last quarter with Good Times continuing to generate year-over-year sales growth and strong unit level margins. While at Bad Daddy’s, we continue to work at turning around same store sales declines. Our results in December were encouraging, and even in the first week of the second quarter, we saw exceptional sales results at several stores, which posted single store weekly sales records. January sales have softened in part due to extreme cold and snow in both our Colorado market, which has experience with winter weather, but also in Tennessee and Alabama, where the city and county are not equipped to deal with the snow and ice on the roads. And interestingly in Huntsville, even the airport closed due to excess snow on the runways. In Colorado, the extreme cold contributed to softer sales at both brands with Denver staying below the zero degree mark for nearly three full days. Nevertheless, Bad Daddy’s performance versus the Black Box index has improved significantly from November. And not only has the gap narrowed, but we have beat the USA comp sales index now…

Thank you, Ryan, and thanks for your kind words earlier. I'm happy to be here today and happy to be part of the team. I'll now review this quarter's results. Total revenues decreased approximately 0.8% for the quarter to $33.1 million. Total restaurant sales for Bad Daddy’s Restaurants decreased $1.1 million to $24.1 million for the quarter. The sales decline was a combination of reduced sales associated with the closure of the Cherry Creek Restaurant in prior year, reduced customer traffic in several key markets, partially offset by an approximate 4.2% menu price increase, as well as sales from the Madison, Alabama restaurant, which opened during fourth quarter of 2023. Same store sales declined 6.2% for the quarter, with 39 Bad Daddy’s in the comp base at quarter end. Cost of sales at Bad Daddy’s were 31.5% for the quarter, a 20 basis point decrease from last year's quarter, with benefits from costs versus the prior year period across our basket. Though we have experienced lower purchase prices for food and paper goods recently, we expect ground beef and other food-based commodities to increase in the second half of fiscal 2024. Bad Daddy’s labor cost increased by 100 basis points compared to the prior year quarter to 35.8% for the quarter. This increase as a percentage of sales reflects higher wage rates and the deleveraging impact of lower sales on management costs. Occupancy costs at Bad Daddy’s increased 20 basis points to 7.1%. Bad Daddy’s other operating costs increased by 80 basis points compared to the prior year quarter to 14.8% for the quarter, primarily the result of increased repair and maintenance, technology and utility expenses offset by lower delivery commissions. Overall restaurant level operating profit, a non-GAAP measure for Bad Daddy’s was approximately $2.6 million for the quarter or…

Thank you, Keri. Christina, we can now open the call for questions.

Thank you. [Operator Instructions] Our first question comes from Sanjay Raghada [ph], who is a Personal Investor. Please go ahead, sir.

Hi, Ryan. So I wanted to talk about – I think you touched on the cash flow aspect of it. So I think fiscal year ‘23 operating cash flow was about $8 million. Is that kind of the projection for this year? How is it looking for this year?

Yeah, so I think in terms of adjusted EBITDA, last year was a little bit less than that. I'm going from the top of my head to say that full year was on the order of between $5 million and $6 million. I think for this year, obviously we have started off the year behind last year's cash flow and adjusted EBITDA. I do expect for improvement in future quarters from what we're -- from what we produce this quarter. And so, I think my best projection for that, although we're not offering any official guidance, is really that on the same order of last year is probably reasonable to expect for this year.

Okay. And for bad debt, are you still expecting the same stores sales increase in the second half of the fiscal year?

So I think on the last call that we had, I had said that – I wasn't making any official projections, but that I had hoped that by the second half of the year that that might be possible. I think one of the things that we've noticed in the Black Box numbers, which is a benchmarking service that's specific to the restaurant industry and also if you're familiar with KNAPP-TRACK, is that there's been some deterioration in the casual dining segment. And so that's somewhat affected my point of view around that. However, I do think that our performance relative to Black Box, as I mentioned in my prepared remarks has improved. And I do attribute a substantial amount of that improvement compared to the index to the initiatives that we talked about earlier on this call and some on our last call. And so while I'm not prepared to prognosticate that we're going to get back to positive comps by the back half of the year, I think directionally, we see comp sales improving from where we reported them out for this quarter.

Okay. And I mean for Bad Daddy’s, do you feel like, operationally you've been able to identify where things slipped a bit and are all of those you feel being addressed now?

So, during the call last quarter, we did address several things, specifically related to hospitality and our focus on the Bar aspect of the business that we had felt had slipped a bit. I would say in terms of both of those, we have programs in place to improve those going forward. I think we have already made progress, specifically with the Bar and the return of happy hour or daily drinks specials, I think was one big aspect that we had been missing for quite some time. We have new Bar training, as well as a new beverage menu that is very soon to be released. That's another element of what we're doing to improve the operations in particular in the front of the house. And then we have, as mentioned on the prior call, invested in training, learning and development resources in terms of people that we believe are going to help our operating teams improve in their assessment of their front of house, but also in their training and development, in their servers, their hosts and their bartenders. And so, this is a bit of a process and not a flip of a light switch, but I think we have the right programs in place to continue to make advancements. And I believe that we already have in terms of a mindset shift, really changed the point of view of our operators in terms of where performance has been at and where it needs to be.

Thank you. Our next question comes from the line of David Swartz from Morningstar. Your line is open.

Yes, thanks for taking my question. So looking at the restaurant level operating margins that you just reported, and given that expenses are higher than they have been in past years, is there any reason why you cannot reach historical restaurant level operating margins? And what would be the same store sales numbers that you would need to report to reach the historical higher levels?

Yeah, I think there are a couple of elements to that. One is the labor pressures, particularly in Colorado. Although, to a certain extent, we have also seen wage pressure, particularly among salaried managers in our other markets. And so I think depending upon what you're referring to, if you're referring to say the peak in 2021, I don't know that the peak margins that we attained in 2021 are realizable. I think that was a moment in time. But I would say that our vision is to improve restaurant level operating profit, restaurant level margins closer to 15%, particularly in the southeast part of the country where wage pressures are less and maybe a little less, so blended in the 13% to 14% range. That is going to take same store sales on the order of 3.5% to 4%. I think the other element of this, which applies to same store sales as well, is that as we discussed in prior calls, we have a handful of stores that have had sequential declines in same store sales. And turning those around or identifying other solutions for those restaurants, it would be part of our approach to improving restaurant level margins.

Yeah, thank you, that's helpful. And looking at the development plan, are you holding off on opening more Bad Daddy’s until the results improve or what's the current outlook for new stores over the next couple of years?

Yeah, so we are developing a pipeline. I think less concerning maybe than current operating results, which we believe we can improve upon is really the cost of development and the cost of construction, which we have less control over, outside of reengineering aspects of the concept. We are confident in our ability to develop new units. We do want to take that reasonably slow, both for operating and financial reasons. And so as of last quarter, I think we had said we expected to develop on in fiscal 2025 and I think that's still our point of view. That said, we're taking a very measured approach and making sure that the economics, including the development costs make sense.

Yeah, thank you. And maybe I missed this, but what were the stock buybacks in the quarter? Were there stock buybacks?

There were. There were. So, we repurchased – let me go back to that page in my prepared remarks. We repurchased 160,772 shares during the quarter.

Alright, thanks a lot. That's all I had.

Thank you.

Our next question comes from the line of Mark Shuler [ph], who is a Personal Investor. Your line is open.

Hi, Ryan. Welcome Keri. Thanks for taking my questions. So over the last year you've made significant investments to include the joint venture purchase, the stock rate purchase, which you just discussed, the purchase of two Good Times. And then you've also made some rather significant investments in Good Times. And earlier you mentioned that somewhere around that $6 million in cash flow is kind of a target that you'd probably be looking at running going forward. What in 2024 here are we looking at as far as from a perspective of the kind of the big ticket items where you're at from a cap extent point on these Good Times redevelopment related activities. Any color you can put to that?

Yeah, I would say that in terms of just maintenance CapEx. So we'll break down the CapEx in a couple of different ways. In terms of maintenance CapEx, we generally budget about 1% of sales for ongoing routine maintenance CapEx. We have had a significant amount of more project CapEx, and we have completed signage at, I want to say seven of our restaurants. We've done full remodels of three of those, so just a little over, say 12% of the system. Those remodels are on the order of $80,000 to $100,000 with signage being on top of that. Three of our restaurants need more extensive remodels similar to the one I described in my prepared remarks today. And we are looking to schedule those in over time over the next – over fiscal 2025 and maybe fiscal 2026. I think my hope would be to be able to get the entire system remodeled by the end of fiscal 2025, but cash flow and other opportunities for capital use will really determine that. So did that answer your question?

It did. Thank you very much. And then along those lines too, you talked about the stock price and the value as the below book value state of where the stock is right now. Have you discussed in the past, and I'm sure at some point you have. With Bad Daddy’s being the growth vehicle and being the more recognized brand operating in more states, have you ever considered a name change, a stock symbol like BADY B-A-D-Y or something along those lines, something that would draw additional kind of interest or perhaps better reflect where the company is going forward with Good Times doing great things in Colorado right now, but being kind of a limited vehicle going forward.

Yeah, so we actually had in the past and we had considered a rename of the company and a change of the ticker symbol just as you described. That was pre pandemic. The pandemic came and things somewhat changed. I think it's an interesting question, because you are right in terms of our point of view that Bad Daddy’s is the growth vehicle. Nevertheless, Good Times is performing remarkably well. And so I think it's an ongoing topic of conversation. But I think not something that we think is really, in and of itself is going to drive the business results. It's really more around, optics around the investment community. And so it's something that we continue to bat around, but haven't taken any action on. And I can't say that we have any specific plans to do something like that in the near future.

Okay. Thanks guys.

Thank you.

Thank you. And with no further questions, I'd like to turn the floor back over to Ryan.

I remain confident in both of our brands, and I'm encouraged by recent performance at Bad Daddy’s and believe that the investments at Good Times we've been making are a large part of the strong performance that brand is generating. I would again like to thank the more than 2,500 team members, managers and leaders throughout our organization to create great experiences and great food for our guests every day. Thank you all for joining our call today.

Thank you. Once again, this does conclude today's conference call. You may now disconnect.