Good afternoon, ladies and gentlemen and welcome to the Good Times Restaurants Inc. Fiscal 2024 Third Quarter Earnings Call. I am Keri August, the company's Senior Vice President of Finance and Accounting. 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 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 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, risks 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, and other reports filed with the SEC. During today’s call, the company will discuss non-GAAP measures, which we 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 reconciliations to comparable GAAP measures available in our earnings release. And now I would like to turn the call over to our Chief Executive Officer, Ryan Zink.

Thank you, Keri and thank you all for joining us today. I'm encouraged by the sales results from both brands, with Good Times delivering same-store sales growth of 5.8% for the quarter. Meanwhile, Bad Daddy's reported a same-store sales increase this quarter, posting a 1.2% increase. Our approach at both brands is centered around an intense focus on the guests and in particular at Bad Daddy's, investing in greater front of house labor to provide better hospitality in our dining rooms and greater engagement and speed at the bar. As of the date of this call, same-store sales during the fourth quarter at Bad Daddy's continued to be growing in the low single-digit range and our performance against the Black Box casual dining index has continued to trend favorably. Smashed patty burgers have been a trend this quarter and Bad Daddy's nailed this trend, releasing its own smashed burgers as a limited time offer for the summer season. Our classic smash is a familiar build with shredded lettuce, our house made kickback sauce, sliced onions and American cheese with a single quarter pound aggressively smashed patty. Our steakhouse smashed burger features the same patty with house made grilled onion aioli, shredded lettuce, A1 onion rings, and sharp cheddar cheese. Both burgers demonstrate our culinary prowess, but at a significant value to our guests, with a price point starting at $8.50 for a single patty classic smash. We expect the classic smash to continue into the fall. As our guests have demonstrated their excitement over this method of cooking a burger, we further expect both the classic smash and the steakhouse smash to ultimately become permanent items on the full menu. The sales stabilization in the Atlanta market that I mentioned last quarter has continued, and although individual store performance has…

Thank you, Ryan. Let's review this quarter's results. Total revenues increased approximately 6.5% for the quarter to $37.9 million. Total restaurant sales for Bad Daddy's restaurants increased $1.2 million to $27.3 million for the quarter. The sales increase was a result of the fourth quarter 2023 Madison, Alabama Restaurant opening, the prior year remodel temporary closure of the Greenville, South Carolina restaurant, as well as an approximate 4.4% menu price increase, partially offset by reduced customer traffic. Same-store sales increased 1.2% for the quarter, with 39 Bad Daddy's in the comp base at quarter end. Cost of sales at Bad Daddy's were 31.2% for the quarter, a 10 basis point increase from last year's quarter. The increase is primarily attributable to higher purchase prices in our commodity basket compared to the prior year quarter, partially offset by the impact of a 4.4% average increase in menu pricing. During the current quarter we began to experience elevated costs across the various proteins in our basket. In particular wholesale ground beef prices have increased and following the end of the quarter increased to an all-time record, and we expect them to continue to remain elevated during the fourth fiscal quarter of 2024 as will likely be the case for other proteins and food based commodities, Bad Daddy's labor costs decreased by 90 basis points compared to the prior year quarter to 33.8% for the quarter. This decrease as a percentage of sales is attributable to greater labor productivity. Occupancy costs at Bad Daddy's decreased 20 basis points to 6.3%. Bad Daddy's other operating costs were flat compared to the prior year quarter at 14.4% for the quarter. Overall restaurant level operating profit, a non-GAAP measure for Bad Daddy's, was approximately $3.9 million for the quarter or 14.3% of sales compared to $3.5…

Thank you, Keri. Our operator's name is also Kerry and so at this time we will turn our call back over to our operator, Kerry for questions at this time.

Thank you. [Operator Instructions] Your first question will come from Roger Lipton [ph].

Yes. Good afternoon, guys. A question with the rising beef prices, maybe you made a quick comment on it, but so I missed it. Do you expect to have to raise menu prices to offset the higher beef prices at both concepts?

Yes Roger thanks for dialing in. Thanks for the question. We evaluate prices in various lenses and one of those is certainly what the competitor environment is doing and there's certainly a customer demand for value right now and so we certainly have to manage to certain costs and to address our costs. But I think just because we have beef prices at the moment that are high, I would not necessarily say, oh that's going to be a Q4 price increase. Now what I would say is that especially as the year rolls over, the calendar year rolls over, the labor costs will likely increase again. And so right now, at the moment I'd say for both concepts we're really targeting the end of fiscal quarter one for our next price increase, although the environment is dynamic and so we'll remain dynamic and make and adjust as we see. I will also say Roger, that based on the commodity reports that we get, the long-term prognosis for beef of all sorts, not just ground beef is somewhat negative from a cost standpoint. In other words, continued elevation of cost in the long-term. And so this is probably an issue that the entire segment is going to have to deal with for a little bit of time.

Right. Did you mention your advertising expense in the quarter? Probably you did and I missed it.

Keri, do you have at your disposal the advertising expense for the quarter?

I do. We had 700, what's that, Ryan?

Go ahead, Keri.

Okay. Advertising expense was 2% of revenues for the quarter, $749,000.

Okay. And do you expect that to remain roughly the same order of magnitude for Q4?

So, Roger, I would say for Q4 that's probably the case. Q1 is always a little bit of an elevated number because we do a lot of gift cards through large box retailers and so Q1 tends to have outsized advertising expense with the other quarters generally being similar in nature to each other. And so, yes for Q4 I'd say probably 2% give or take is a good estimate.

Okay. And lastly, your best guess in terms of store level margins in this current quarter, how do you think they'll look or what's your best guesses? How it might look compared to the quarter just ended 13th, the 14th [indiscernible]?

Yes, certainly. Seasonally, this Q3 tends to be, from a sales standpoint, the highest volume quarter of the fiscal year. And so I think just in terms of some sales deleverage that's a result of seasonality, we'll see a little bit of compression. I expect, generally speaking, that the margin trend year-over-year will be similar to what we saw this quarter.

The margin trend being, how do you, could you?

Well, so let me, I think from a cost of sales standpoint, we'll see a little bit of elevation in cost of sales. I think labor will be a little bit elevated, but the other costs will be rather similar. Got it.

Got it. Okay, good. All right, good luck. You're doing, making some good progress, so good to see, so that's all I've got for now. Thank you.

Thanks again, Roger.

[Operator Instructions] There are no further questions at this time. You do have a question from Mark Schuller [ph].

Hi, Ryan. Great quarter. Just a quick, can you just give us an update on where things stand with things that are in the development pipeline right now?

Sure. So we are at the final stages of negotiating a lease in the Greater Charlotte DMA. And while things can always fall apart, and I'll caveat it with that, we do have one lease that's very, very close. We would expect that, that if we're able to get that across the finish line, we would be able to open that probably late fiscal Q2 of 2025, possibly early fiscal Q3. So I'd say in the late March-April timeline of next year. And then we have some other, LOIs in markets that we're looking at. I would say our current cadence is generally one every 12 months approximately, maybe a second one. That said, we have enough CapEx allocated towards our remodels at Good Times that we think is really important to reinvest in our existing restaurants. And our general approach around conservatism with respect to debt that we think one over the next 12 months will be sufficient.

Okay. Thank you. And then just kind of a followup on your mentioning the possibility of some closures. I mean, are we talking a couple or are we talking more than that kind of thing that you're potentially looking at?

I think we're talking very low single digits and I think there's not really anything there in terms of like, oh this is that we're going to close massive amounts of stores, but rather just to kind of alert our investors, hey we may be closing one or two, and that's not an indication of anything bad. It's just an indication of smart and timely real estate management.

Okay. I appreciate it. Great quarter.

Yes, thanks again.

Your final question will come from David Schwartz [Morningstar].

Yes, thanks for taking my question. So following up on the last question and on your comments earlier, are some of the lowest performing stores currently unprofitable on a four wall basis, meaning have they been actually detracting from profitability?

Yes, the store two that we are considering closing are negative restaurant, what we would call internally restaurant level cash flow what I think we would say in the investment community is restaurant level operating profit. So for those individual stores, they're negative contributors. And ultimately, while a couple of them may have a little bit of life left on the lease, the goal would be that ultimately closing those become income accretive.

Okay, thanks again and thanks for all the information on today's call.

Thanks David.

There are no further questions at this time. I'll go ahead and turn the call back over to Ryan.

I am very optimistic about the future for both brands. We have exciting initiatives that will translate into both guest and employee engagement at both concepts. Their strong operating momentum is promising. These improvements are driven by our team members, managers and leaders throughout our company, whose focus on hospitality, customer service and pride in their work and in our concepts is evident every shift of every day. I want to again thank you all for joining us today.

Thank you for your participation. This does conclude today's conference. You may now disconnect.