Participants
Presentation
Ladies and gentlemen, welcome to the Good Times restaurant, Inc., fiscal 2024 second 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 web. As a reminder, a part of today's discussion will include forward-looking statements statements within the meaning of federal security 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 could differ materially from results expressed or implied by 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. So disruption to our business from pandemic 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 costs, increase or shortages in raw food products, other general economic and operating conditions, risks, risks associated with our share repurchase program risks associated with the acquisition of additional restaurants, the adequacy of cash flow and the cost and availability of capital and credit facility borrowings to provide liquidity changes in federal state or local laws and regulations affected the of the operation of the restaurants, including minimum wage and tip credit regulations and other matters discussed under the Risk Factors section of GoodTimes annual report on Form 10-K for the fiscal year ending September 26, 2023, filed with the SEC and other non-GAAP 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 the 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, Ryan will now review this quarter's results. Total revenues increased approximately 1.9% for the quarter to $35.4 million. Total restaurant sales for Bad Daddy's restaurants increased $0.1 million to $26.4 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 restaurants, as well as an approximate 4.7% menu price increase, partially offset by reduced customer traffic in certain restaurants.
Same-store sales declined 3.2% for the quarter, with 39 Bad Daddy's in the comp base at quarter end. Cost of sales at Bad Daddy's were 30.4% for the quarter, a 20 basis points decrease from last year's quarter. The decrease was primarily attributable to the impact of a 4.7% increase in menu pricing, partially offset by slightly higher purchase prices in our commodity basket. Though early in the fiscal year, we experienced lower purchase prices for many commodities ground beef costs have recently begun to increase, and we expect them to continue to increase during the second half of fiscal 2024, along with other proteins and base commodities.
Bad Daddy's labor costs were flat compared to the prior year quarter at 34.7% for the quarter. Occupancy costs at Bad Daddy's increased 20 basis points to 6.6%. Bad Daddy's Other operating costs increased by 20 basis points compared to the prior year quarter to 14.7% for the quarter, primarily the result of increased repair and maintenance, credit card fees and other employee related expenses, partially offset by reduced restaurant supply costs.
Overall, restaurant-level operating profit, a non-GAAP measure for Bad Daddy's was approximately $3.6 million for the quarter were 13.6% of sales compared to $3.6 million or 13.8% last year. Total restaurant sales for Company-owned good times. Restaurants increased approximately $0.6 million to $8.8 million for the quarter compared to the prior year second quarter. The average menu price increase for the quarter was approximately 3.9% over the same prior year quarter. Same store sales increased 0.9% for the quarter was 25. Good Times Restaurants in the comp base at quarter end.
Food and packaging costs for Good Times were 29.1% for the quarter, a decrease of 250 basis points compared to last year's quarter. The decrease is primarily attributable to the impact of a 3.9% increase in menu pricing and to a lesser extent, lower purchase prices on food and paper goods.
As is the case with Bad Daddy's, we expect resumed pressure on beef and other food prices in the last half of the fiscal year. Total labor costs for Good Times increased to 35.1%, a 50 basis points increase from 34.6% we ran during last year's quarter due to labor associated with two additional Company-owned restaurants and higher average wage rates resulting from Market Forces and the CPI. index minimum wage in Denver in the state of Colorado occupancy costs at Good Times were 9.9%, an increase of 100 basis points from the prior year quarter. The increase is primarily due to the late fiscal 2023 acquisition of two Good Times Restaurants previously owned by franchisees as well as real property tax increases resulting from higher property values good times.
Other operating costs were 13.7% for the quarter, an increase of 140 basis points, primarily due to the previously mentioned late fiscal 2023 acquisition of two Good Times Restaurants previously owned by franchisees as well as increased repair and maintenance, credit card fees and customer delivery fees good times. Restaurant-level operating profit increased by $0.1 million for the quarter to $1.1 million as a percent of sales. Restaurant-level operating profit decreased by 30 basis points versus last year to 12.2%. Combined, general and administrative expenses were $2.6 million during the quarter were 7.2% of total revenues, a 60 basis points increase from last year.
Our net income to common shareholders for the quarter was $0.6 million or income of $0.06 per share versus net income of $10.6 million $0.90 per share in the second quarter last year. There was approximately $0.1 million of income tax benefit recorded during the current quarter versus $2 million in the prior year quarter. Adjusted EBITDA for the quarter was $1.3 million compared to $1.5 million for the second quarter of 2023. We finished the quarter with $4 million in cash and $1.3 million of long-term debt.
And now and I will turn the call back to Ryan. Thank you, Carrie. Krista, we can open the call for questions at this time.
Question and Answer Session
Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw your question, simply press star one again. Your first question comes from the line of David Bastion from Kingdom Capital Advisors. Please go ahead. I will not want to do that, David. A first question on the velocity. I saw you guys on appeal. You won that award and court costs. I just wanted to confirm one that we're past any other further appeal windows and two, what a rough estimate of that court cost award would be given with it, the judge ruled? Yes. So we believe that we are kind of past any liability that we might have with the with respect to the plaintiffs in that case. And so from that standpoint, we do think the matter is, I'd say, relatively closed with respect to the and legal fees that might be subject for us to be awarded. I'd make a couple of comments there. I would refer you to the 10-Q filing where we talk about that. The total of those costs does exceed $3 million.However, the collectability of that and the amount of those that may be awarded ultimately may be much less or even zero on. And so I would I would hesitate to really forecast anything that would be recoverable there at this point. Understood. Thank you. And secondly, could you give an update on quarter-to-date same-store sales pacing for both brands? Yes. So I in some in the earlier comments. I did mention that both brands are positive same-store sales and I think I would say low single digits at Bad Daddy's, mid single digits at Good Times. And note that when I say that that's been adjusted that we've adjusted those for the closure of the store that is under remodel, removing it from the comp base for that period of time. Understandable fix. And then I'm sorry, David G. you press star one again, please. David, are you there a chance you achieve Nasdaq. Okay, great. Our Phase I lastly on the share repurchase program. Is there any thought regarding increasing that authorization further? Or are you guys looking at potential expansion of your Bad Daddy's footprint as maybe being a better use of capital allocation going forward? No, I think in my prepared remarks, I had said that we would we've got about six months of have purchases left at the current at the current velocity and that I would expect prior to the completion of that, that we would expand to that, assuming pricing and market conditions remain the same. Got it. Thanks, Ryan. And then any thoughts on pacing of new Bad Daddy's locations right now. So we have several leases that we are working on. We have a couple that are fairly close to on being able to execute a lease does still need to be reviewed by our Board and real estate committee.
But we've got a couple that are pretty close if they're ultimately approved. Great. Well, it sounds like it went to before on stuff that I missed. Sorry for that, but just taking my questions. No worries, David, always always a pleasure to speak with you. Your next question comes from the line of David Schwartz with Morningstar.
Please go ahead by. Thanks for taking my question. You talked about the remodels of some of the stores. Can you tell us a little bit more about the performance of stores that have been remodeled in the past? And what kind of ROIC do you expect from the remodels that you're doing now? Yes. So the most the three remodels that we've done previously have been, I'd say, more kind of cosmetic remodels, new new openings, paint, new signage and the silage of which could be could be expensive. We typically are seeing double digit sales. It increases as a result of those remodels, which does translate into a better than better than 10%, maybe better maybe higher than that OII., but the current remodel is a bit more extensive and I would say is it includes a lot of deferred maintenance. And so I think the ROI on that. Some of that is maintaining a level of sales and is less about it also would include growing sales.
But I think there's a preservation of the existing business. That's expected in our current remodel. Okay, thanks. Also, you talked about changes in both the manager and staff at the stores and but also the challenges in hiring maybe you can tell us what you've seen so far in stores, we have made management changes and how it's going and in terms of being able to hire new new replacements for people that have left? Yes. I think my commentary on the market is really that hiring the quality of talent that we need to run our business requires higher levels of pay than it than it has required in the past. And that's kind of the big takeaway there. I think among our existing management team, we have a great and we really have a great team of general managers and assistant restaurant managers. There have been cases where in certain markets or in certain stores, and we've been challenged with management staffing and I think we have made some tough decisions there and those tough decisions, at least at this point, as I had mentioned earlier, look to be paying off. All right. Thanks a lot. And good luck. Thank you. That concludes our question and answer session. Ryan, I'll turn it back to you for closing comments. Thanks again, Christa, I am very optimistic about the future of both of our brands. We have exciting initiatives that will translate into both guest and employee engagement at both concepts. And this certainly feels like we have strong operating momentum this is directly the result of the efforts of our team members, our managers and our leaders throughout our company whose focus on hospitality, customer service and pride in their work into their concepts is manifest every shift of every day. I'd like to thank all of you for joining our call today. This concludes today's conference call. Thank you for your participation and you may now disconnect.
