Good Times Restaurants Inc.
Q4 2020 Earnings Call Transcript

Published: 15 Dec 2020

[Operator:]

Good afternoon, ladies and gentlemen. Welcome to the Good Times Restaurants Inc. Fiscal 2020 Fourth Quarter Earnings Call. By now, everyone should have access to the company’s earnings release, which is available in the Investors 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 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.

[Ryan Zink:]

Thank you, Matt, and thank you all for joining us on the call today. As all of you are aware, the COVID-19 pandemic continues to be an unpredictable and formidable challenge for the country, and in particular for the casual dining segment of the restaurant industry. I am proud of the efforts and the performance of the leadership and the team members here at Good Times as we’ve adapted to the dynamic environment that we find our restaurants now operating in. Our Good Times business, which much like the rest of the industry saw an immediate contraction of sales in March and early April, saw traffic bounce back throughout the remainder of our fiscal year as customers began to view the drive-thru is a safer way to experience restaurant dining. To that end, we reported 10% comps for the quarter and nearly 8% comps for the year at Good Times. In addition, we’ve seen, as evidenced by the 15% comps in October and a 22% comps in our fiscal November that we’ve reported in our earnings release, that this strength in sales has been maintained into the first quarter of fiscal 2021. We further believe that the focus we’ve placed on the speed of our drive-thru has resulted in repeat business of former relapsed or even first-time users of the brand as they know that even with the longer stack of cars in the drive-thru, our customers can rely on us to provide quick, accurate service. We concluded the fiscal year with all of the dining rooms in our Bad Daddy’s reopened, though at various levels of occupancy limitations. We posted same-store sales declines of 12% for the quarter and 17.7% for the year with the largest decline having been during the fiscal third quarter. We approached flat comps in November, but with the closing of the dining rooms in Colorado late November and a generally increased awareness of the virus nationwide, we saw same-store sales declines of approximately 8% during our fiscal month of November.

[Operator:]

Our first question comes from Walter Morris with Baraboo Growth. Please go ahead.

[Walter Morris:]

[Ryan Zink:]

Certainly. So, Walter, thank you first for the congratulatory words. I definitely appreciate it. As it relates to G&A, I would first highlight that last year’s quarter did have the separation costs associated with our former CEO, and so those were non-recurring costs in the former year. I would say that our G&A load right now, we expect a little of additional G&A spend, and I would look at our nominal G&A dollars for this quarter; and I think on a quarterly basis, we might see a little bit of accretion from that, but we don’t expect significant large increases in G&A. I would say, we do expect to invest in a new human resource management system we expect to – which, our current one is very antiquated. We expect to invest in some new operations management – operations performance measurement systems. And the other thing I would highlight is we did make a couple of higher-level new hires. We did hire a Director of Technology who also serves as our innovation leader for the whole company. We made that hire late in the quarter and we additionally hired an Assistant Controller shortly after the beginning of this first quarter. So, there is little bit of increased G&A spend that we can expect, but I think as it compares to our former levels of G&A, I don’t think we are immediately going back to that. And I would also comment that as it relates to kind of the next two restaurants, we probably don’t need additional multi-unit management for that. However, kind of once we add – once we get into 2022, our stance of controls will be at a point where we’ll have to start making that decision. Now, as it relates to your second question which was related to CapEx, we haven’t provided guidance for the full fiscal year, and I am reluctant to do so on this call. Just as highlighted in the release, there is so much uncertainty still that is out there. However, I would say, we expect during the first quarter that our EBITDA will be in the $1.5 million range, and I think from a CapEx - and we would expect I think particularly later in the spring and summer, we would certainly hope that the pandemic would be easing and some of the restrictions will be easing by late spring and throughout the summer. And so, I’d say, some that we are confident in being able to continue with these projects, I would say, we have probably about $1.7 million to $1.8 million worth of capital expenditures associated with these two stores. We did begin the Marietta location last year, and so we already have some existing CapEx related to that.

[Walter Morris:]

Excellent. Thank you. Again, great results.

[Ryan Zink:]

Thank you again, Walter.

[Operator:]

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

[Ryan Zink:]

Thank you again, Matt. This year’s results are the direct results of the higher levels of collaboration and teamwork by the team that we’ve achieved in the past; and as always, I want to thank the leaders within Good Times for their strong leadership and the entire team whether leaders or individual contributors for their strength through adversity. Sharing a meal with others is nearly is all this human society itself and this pandemic will not eliminate our physical need to eat nor is it going to destroy the emotional desire to socialize with others over a meal. Our vision for our company is to develop and grow concepts that provide people with a way to satisfy their physical need for food but more than that to satisfy and enhance the emotional fulfillment that so often accompanies the meal. I am excited and confident in the future for restaurants in general, but especially for our concepts for Good Times and for Bad Daddy’s. With that, we’ll conclude today’s call. Thank you all for joining us today. And I wish you safe and healthy – wish you health and safety in this time of the pandemic. Thank you.

[Operator:]

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.