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Good afternoon, ladies and gentlemen, and welcome to the Good Times Restaurants Inc. Fiscal 2026 Second Quarter Earnings Call. I am Keri August, the company's chief accounting officer. 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, 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 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 ingredient shortages.

General economic and operating conditions, risks associated with our share repurchase program, risks associated with the acquisition of additional restaurants, 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 our restaurants, including 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 30th, 2025, and other reports filed with the SEC.

During today's call, we 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 reconciliation to comparable GAAP measures available in our earnings release. 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 results that our team has delivered in the second quarter of fiscal 2026. Our same-store sales at both brands again improved sequentially from the first quarter. Profitability also improved from the prior year, the result of a combined partnership between operations and supply chain to improve upon both our food and beverage cost and our cost of labor. While cost management continues to be a fundamental pillar of our forward-looking strategy, our leadership team continues to focus on same-store sales growth as our highest priority. Early in the second quarter, we retained Cultivator, based out of Denver, to serve as our design and advertising agency for the Good Times brand. Cultivator has extensive experience in the restaurant industry and blends expertise built from working on large accounts with a scrappiness that matches our own culture.

During the past couple of months, we have worked with them to create new brand imagery and refine our brand position, and we're excited to activate this new creative image, starting with on-premise merchandising and ultimately in outside-the-four-walls advertising as well. We are having good success with a test of a $2 promotional price for our Bambinos in a handful of our restaurants in northern Colorado. Bambinos are sliders topped with burger sauce, American cheese, and pickles. We've seen strong results in both same-store sales and same-store traffic improvement in the test restaurants as compared to the balance of the system. We expect to roll this promotional price system-wide beginning in June as a summer promotion to catalyze traffic growth with a simple-to-execute tasty burger that fits the needs of today's customers, both in portion size and in price.

It provides a clear message of value to strike right at the value-based promotions being used by many of our competitors. Bambinos are quintessentially Good Times, having been on our menu for 19-years. Though Bambinos have a strong following, we hope to attract new customers and to increase frequency with our Bambino OGs. Simultaneously, we will strongly merchandise our full-size burger lineup, now featuring a larger cook-to-order patty, while remaining a speedy experience for our guests. We continue to have our seasonal burger features as well, with our Jalapeno Popper Burger beginning June first. Our intent is to drive traffic and build guest frequency while managing the impact of the mix shift into the promotionally priced Bambinos.

On May first, based on loud and clear guest feedback, we reintroduced cheese curds to the menu and are promoting this to build traffic and attract returning guests that really love this proprietary product. Within our custard lineup, we have a trio of brand-new spoon benders made with our signature vanilla custard for June, July, and August. The Berry Cool Spoon Bender will kick summer off with strawberries, blueberries, and granola, followed by the Cherry Pie Spoon Bender. Then wrapping up summer will be a Colorado-inspired Trail Mix Spoon Bender. We continue to grow our GT Rewards program, which is a key method we have to connect with and engage with our regular guests.

Fully 7% of our sales are now generated by GT Rewards members. This is up from just shy of 4% immediately prior to switching our loyalty engine to Thanx in December from our prior provider. GT Rewards will be a strong supplement to our messaging strategy around the multiple price and product promotional news we will be sharing with guests this summer. Our approach of growth is aimed at organic sales and traffic growth at Bad Daddy's as well. As discussed during last quarter's call, we've implemented our new monthly drops program that has replaced our previous traditional LTO. Leaning into drop culture, we feature a single item that is limited to a single month.

While to date, these items have been exclusively burgers, and our pipeline for the balance of this fiscal year is burger-centric, the program is designed to be more expansive than a simple burger of the month program, and a drop could apply to any section of our menu. At both concepts, we are nearing completion of the rollout of our new learning management platform that we call Burger Hub. Powered by the Schoox LMS, this platform expands beyond our already existing digital access to concept-specific training materials and provides defined learning paths and validations within the system, along with data and reporting that can be accessed both at the unit level and by above store leadership. Burger Hub itself is but one manifestation of our operations team's strategic focus during the year to deliver high-impact training and learning to employees in all roles within our restaurants.

I will now turn the call back over to Keri for a review of our performance during the quarter.

A reminder to unmute yourself locally if you are.

Sorry about that. Thank you, Ryan. I'll review this quarter's results now. Total revenues decreased approximately 3.1% for the quarter to $33.2 million. We'll start by going through Bad Daddy's results. Total restaurant sales decreased $0.9 million-$23.9 million for the quarter. The sales decrease was primarily due to the fourth fiscal quarter 2025 closure of one Bad Daddy's restaurant, the first fiscal quarter 2026 closure of one Bad Daddy's restaurant, and decreased guest traffic, partially offset by menu price increases. Our average menu price during the quarter was 0.2% higher than Q2 of 2025. Same-store sales decreased 0.8% for the quarter, which continued the improvement trend over the prior quarter. There were 37 Bad Daddy's in the comp base at quarter end.

Food and beverage costs were 29.6% for the quarter, a 110 basis point decrease from last year's quarter. The decrease is primarily attributable to reduced waste and improved chicken pricing, partially offset by higher beef and bacon purchase prices. Due to seasonality and the continued tightening of beef supply, we anticipate ground beef costs will increase in the last half of the fiscal year. We did not take any menu pricing during the quarter and have year-over-year pricing that is approximately 1% higher than prior year. We took approximately 1% menu pricing in April. Additionally, beginning in May, we have been rolling over our promotional $8 margarita pricing from last year. Labor costs decreased by 20 basis points compared to the prior year quarter to 34.1% for the quarter.

This decrease is primarily attributable to lower employee benefit costs, partially offset by higher average wage rates. Occupancy costs were 6.8%, an increase of 10 basis points from the prior year quarter. Other operating costs were 15.6% for the quarter, an increase of 110 basis points, primarily due to increases in customer delivery and repair and maintenance expenses. Overall, restaurant level operating profit, a non-GAAP measure for Bad Daddy's, remained relatively flat at $3.3 million for the quarter or 13.8% of sales, compared to $3.4 million or 13.8% last year. Moving over to Good Times, total restaurant sales for company-owned restaurants decreased approximately $0.1 million-$9.2 million for the quarter compared to the prior year second quarter.

Same store sales decreased 0.8% for the quarter, which is a notable improvement over the prior quarter's decrease. There were 26 Good Times Restaurants in the comp base at quarter end. The average menu price for the quarter was approximately 1% higher than the prior year quarter. We increased core menu prices by approximately 1% in March and have a blended menu price that is approximately 1.7% higher on a year-over-year basis as of the end of the quarter. Based upon the competitiveness in the current market, we are not currently planning for other price increases during the balance of the year. Food and packaging costs were 29.7% for the quarter, a decrease of 100 basis points compared to last year's quarter.

As with Bad Daddy's, the decrease is primarily attributable to reduced waste, partially offset by higher beef and bacon prices. We expect higher ground beef prices for the remainder of the fiscal year due to seasonality and the continued tightening of supply. Total labor costs decreased to 35%, a 60 basis point decrease from the 35.6% we ran during last year's quarter, primarily attributable to increased labor efficiency, partially offset by higher average wage rates. Occupancy costs were 10%, a decrease of 10 basis points from the prior year quarter. Other operating costs were 15.2% for the quarter, an increase of 10 basis points, primarily due to increased customer delivery expenses. Good Times restaurant level operating profit increased $0.1 million over last year's quarter to $0.9 million.

As a percent of sales, restaurant-level operating profit increased by 150 basis points versus last year to 10.1%. Combined general and administrative expenses were $2.2 million during the quarter or 6.6% of total revenues. A decrease of 90 basis points from the prior year quarter, primarily related to decreased multi-unit supervision costs and technology costs. We anticipate 6%-7% general and administrative costs on a full year basis for fiscal 2026. Our net income to common shareholders for the quarter was $0.1 million or income of $0.01 per share, versus a net loss of $0.6 million, $0.06 per share in the second quarter last year. There was $23,000 of income tax benefit recorded during the quarter, compared to $57,000 of expense in the prior year quarter.

Adjusted EBITDA for the quarter was $1.4 million, compared to $1 million for the second quarter of 2025. We finished the quarter with $2.7 million in cash and $1 million of long-term debt. Now I will turn the call back to Ryan.

Thank you, Keri. As Keri discussed, we've made strides in lowering our leverage, strengthening our balance sheet so far in fiscal 2026. We believe that a debt-free balance sheet with adequate liquidity is important given our scale and the specific operating segment that we operate in. It can additionally create greater flexibility for value creation. At this time, we can open the call for questions.

Thank you. We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Zachary Segal from August Investors. Zachary, your line is now open.

Hi. I was just curious if you guys could speak about the settlement with the White Winston lawsuit, and what proceeds, if any, have been received or will be received from that. Thank you.

Yeah. With respect to that, I think the disclosure that we provided last quarter in the 10-Q gives as much information as I'll speak to. I think we said ultimately from that it was, you know, not substantially material to our financials. I will say all of those funds have been received and all of that has been recognized in the results of this quarter.

Thank you.

Thank you for your question. Your next question comes from the line of David Swartz from Morningstar. David, your line is now open.

Thank you. Maybe you can tell us a little bit more about what the marketing plans have been in the last few quarters and how they're gonna change with this new, advertising relationship you talked about. How do you think, this will be more effective than what you've done in the past? Thanks.

I'll step back to maybe about 18-months ago and with that, prior to that. We were significantly heavy on radio advertising. I would say about 12-months ago, we went away from nearly all radio advertising and were pretty much, I'm speaking specifically to Good Times now, that concept, switched really to primarily social media advertising without substantial additional media that we had been using. What we are looking at moving forward, although the final media plans have not been fully developed and committed to, we are looking at a greater deployment of digital media, which could include some digital audio streaming, will likely include digital video streaming, whether that is on connected TV or on platforms such as YouTube, as well as just general display campaigns.

I think the biggest difference in terms of what we are looking at moving forward compared to any of the prior campaigns that we've run in the past year, and I would go so far as to say back towards, you know, even the past two or three-years, is the message itself, and that we are really looking at what our guests are demanding in the market. It's very clear that as components of value, what they are specifically looking for are smaller portion size and lower price. I think the smaller portion size is driven in part by a need for a lower price, but it's also being driven by factors such as healthy eating and even the use of GLP-1 drugs.

What has changed really is our focus on that and the fact that we have a really salient message to deliver with a very compelling $2 price point with a product that already is very attractive to our guests and that we expect to create greater awareness around.

Thanx. That's helpful. How do you plan to use this marketing plan to drive more membership in GT Rewards? I know you had said in past calls that, because it's primarily a drive-through restaurant, that it's difficult to get people to sign up for the loyalty program. Thanx.

We are doing a couple of things there. One is we do have, and we are updating the, I'd call it window-based, point of sale materials. Posters with QR code to invite guests to join with more attractive creative that have a much clearer call to action. Beyond that, we expect to begin using what we call bag stuffers, basically little cards with QR code and/or a link explaining the benefits on that we would include with each order. We have some other ideas that we're tossing around that are not committed to yet. Those are the primary ways.

I will say that in the past, six-months, we have done a much improved job within the operations capability of speaking to GT Rewards at the window and at the order box. We are growing that membership base right now at a clip of about 5% per month. If you do the math on that's about a 75% annual growth rate. As we grow the system base, that obviously will decline at the rate of increase. We're very happy with the progress we're making on a monthly basis of growing the participants in that program right now.

Very good. Thanks a lot.

Thank you.

Pardon me. Thank you for your questions. There are no further questions at this time. I would like to turn the call back to Ryan Zink, CEO, for closing remarks. Ryan, please go ahead.

Our operations leaders, as well as our support capability leaders, are committed to delighting our guests and creating memorable experiences during each visit in the mission of building a same-store sales flywheel. My sincere gratitude goes out to every single member of our team at every level for every contribution they make to our brands. As always, I'd like to thank all of you for joining us today.

This concludes today's call. Thank you for attending. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to Good Times Restaurants Inc. Fiscal 2025 Fourth Quarter and Year End Earnings Call. I am Keri A. 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 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 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 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 ingredient shortages, general economic or operating conditions, risks associated with our share repurchase program, risks associated with the acquisition of additional restaurants, 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 our restaurants, including wage and tip credit regulations, and other matters discussed under the risk factor section of Good Times annual report on Form 10-K for the fiscal year ended 09/24/2024, and other reports filed with the SEC, including Form 10-K for the fiscal year ended 09/30/2025. During today's call, we 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 reconciliation to comparable GAAP measures is 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. As has been reported by other company-operated quick-service burger companies, the fourth fiscal quarter was a challenging one for us, in particular, at our Good Times concept. The combination of soft sales and higher costs, most specifically the significantly elevated cost of ground beef, put a dent in profitability for the quarter. Keri will go into details surrounding the financial performance during the quarter, but it goes without saying that we are disappointed in the results and committed to immediate improvement. Of note, although the same-store sales at Good Times remained negative in the fourth quarter, the 6.6% decline represented a 240 basis point sequential improvement from the fiscal third quarter, and through the first eleven weeks of the first fiscal quarter, Good Times same-store sales are down approximately 3.6% compared to the same time period in the prior year. Craig So to, our director of operations for Good Times, continues to demonstrate strong leadership and has been holding a higher level of accountability among above-store leaders, which has cascaded down to our restaurant-level general managers. Craig has focused on realigning general manager schedules to better align the time GMs are in the restaurant with peak revenue periods, which is creating greater GM-level awareness and interaction with team members throughout the day, enabling them to address product and service opportunities that exist primarily in the dinner and late-night dayparts. Craig, along with our learning and development team, have made significant strides in improving restaurant-level training, paving the way for us to roll out true cook-to-order among all of our burger products with minimal impact on speed of service. We have several different price tiers within our system and remain sensitive to menu price increases, as the quick-service burger segment has earned a poor reputation recently for value as a result of the significant price increases major players have taken in the years since the pandemic. Our core menu pricing at Good Times remains near its lowest premium to our large competitors in fast food, as we have only taken approximately 1% of menu price since January 2024. With our upcoming cook-to-order process and continued improvements in ops execution, we believe we can re-earn a premium to those competitors over time. We continue to be averse to large-scale discounting due to its impacts on profitability. However, we will be addressing value concerns with highly targeted value promotions starting this spring and expect expanded offerings through our GT rewards loyalty program, a recently refreshed mobile app meant to simplify the mobile ordering experience. For Bad Daddy's, although our same-store sales weakened during the fourth quarter, they have improved sequentially to date in the first quarter, and we are down approximately 1.6% through the first eleven weeks of the quarter compared to the same time period in the prior year. Same-store sales improvement has been most evident in our Colorado restaurants, marking a change in trend from 2025 when our Colorado restaurants have been a drag on same-store sales for the Bad Daddy's system. Similar to Good Times, we've made some targeted pricing adjustments and have made some upward adjustments to our Badass Margarita pricing in the fall. We currently have a blended year-over-year price increase covering food and beverage of less than 1%, and expect an average year-over-year price increase for the first quarter of approximately 1.7%. Our fall product promotion, which among other items featured a giant shareable Bavarian pretzel served with a house-made sauce trio of jalapeno cheddar Sam Adams beer cheese, whole grain dijonnaise, was a hit with our guests. And we see an opportunity for the pretzel to be included in our core menu at some point in the future. Our holiday promotion includes a chocolate cookie cheesecake that is made in-house and has satisfied a long-term guest request for a chocolate dessert. Similar to the pretzel, we see the cheesecake as a potential future core menu addition. Following a winter promotion anchored by a Mediterranean Power Bowl and two regional burger features, we expect to move to a burger of the month platform, which will simplify messaging around the product feature, enable a sharper focus on product execution and salesmanship, but more importantly, will feature approachable and familiar items to our guests but still with Bad Daddy's quality and scratch-made ingredients. I'll now turn the call over to Keri for a review of our performance during the quarter.

Thank you, Ryan. Let's review this quarter's results. Total revenues decreased approximately 5.1% for the quarter to $34 million and decreased approximately 0.5% compared to our all-time record fiscal year 2024 sales to $141.6 million. We'll start by going through Bad Daddy's results. Total restaurant sales decreased $1.7 million to $24 million for the quarter and decreased $2.2 million to $101.4 million for the full year. The sales decrease for the quarter was primarily driven by reduced customer traffic as well as the closure of the Longmont, Colorado restaurant in 2024, partially offset by menu price increases. Our average menu price during the quarter was 0.4% higher than Q4 2024. Same-store sales decreased 4.6% for the quarter with 38 Bad Daddy's in the comp base at quarter-end. As Ryan mentioned, same-store sales have improved into the first quarter of the New Year, with the most significant improvement in our Colorado restaurants. We expect an average price increase of approximately 1.7% for the quarter 2026. With the exception of certain targeted adjustments due to menu engineering, we do not expect any significant price increases over the next six months. Food and beverage costs were 31.6%, a 40 basis point increase from last year's quarter. The increase is primarily attributable to record high ground beef prices in the fourth quarter of 2025, as well as significantly higher prices for other proteins over the prior year quarter, partially offset by the impact of the 0.4% average increase in menu pricing. Thus far into the first quarter of 2026, we have experienced lower input costs. And despite the large number of complimentary burgers for our military guests on Veterans Day, we expect food and beverage costs as a percent of sales to improve quarter over quarter. Labor costs increased by 140 basis points compared to the prior year quarter to 35.7% for the quarter. This increase as a percentage of sales is primarily attributable to lower team member productivity resulting from sales deleverage. Although we expect improvement in this metric in the current year, in January, Colorado's minimum wage increases to $15.16, a 2.4% increase, and the tipped minimum wage increases to $12.14, a 3% increase. Occupancy costs were 6.7%, an increase of 50 basis points from the prior year quarter. The increase is primarily due to a decrease in benefit from the GAAP-required noncash rent adjustments between the quarterly periods. Other operating costs were 16% for the quarter, an increase of 80 basis points, primarily due to increased repair and maintenance and utility expenses. Overall, restaurant-level operating profit, a non-GAAP for Bad Daddy's, was approximately $2.4 million for the quarter or 9.9% of sales, compared to $3.4 million or 13.2% last year, primarily due to increases in labor and food and beverage costs as well as the deleveraging impact of lower sales on various fixed costs. Moving over to Good Times. Total restaurant sales for company-owned restaurants decreased approximately $300,000 to $9.7 million for the quarter compared to the prior year fourth quarter, and increased $1.2 million to $39.2 million for the year compared to the 2024 fiscal year. Same-store sales decreased 6.6% for the quarter with 27 Good Times restaurants in the comp base at quarter-end. The average menu price for the quarter was approximately the same as the prior year quarter. We have taken a small menu price increase for 2026 and currently expect to take only modest price increases as we have assessed our relative pricing position in the market. We expect to monitor competitive pricing in January and continue to make very targeted adjustments to the pricing of specific menu items but believe it is unlikely we will take any significant across-the-board price increases. Food and packaging costs were 32.1% for the quarter, an increase of 120 basis points compared to last year's quarter. As with Bad Daddy's, we experienced record high beef prices during the quarter. We also saw significantly higher costs for bacon and eggs. As is the case with Bad Daddy's, input costs have decreased into the first quarter, and we expect food and beverage costs as a percent of sales to improve quarter over quarter. Total labor cost increased to 35.9%, a 200 basis point increase from the 33.9% we ran during last year's quarter, due to higher average wage rates resulting from market forces and the CPI index minimum wage in Denver and the state of Colorado, as well as decreased productivity due to sales deleverage. Occupancy costs were 9.1%, an increase of 10 basis points from the prior year quarter. Other operating costs were 15% for the quarter, an increase of 110 basis points primarily due to increased customer delivery, technology, and utility expenses. Good Times restaurant-level operating profit decreased by $400,000 for the quarter to $800,000. As a percent of sales, restaurant-level operating profit decreased by 420 basis points versus last year to 8% due to elevated costs throughout the P&L. Combined general and administrative expenses were $2.4 million during the quarter or 7% of total revenues, a decrease of 70 basis points from the prior year quarter, primarily related to decreased multiunit supervision costs, legal and professional services, and outsourced accounting fees, as well as health insurance underwriting costs, partially offset by an increase in recruiting and training-related costs. We anticipate 6% to 7% general and administrative costs in fiscal 2026. Our net loss to common shareholders for the quarter was $3,000 or $0 per share, versus net income of $200,000 or $0.02 per share in the fourth quarter last year. There was approximately $500,000 income tax benefit recorded during the current quarter versus $400,000 in the prior year quarter. Adjusted EBITDA for the quarter was negative $74,000 compared to $1.3 million for 2024. We finished the quarter with $2.6 million in cash and $2.3 million of long-term debt. And now I will turn the call back to Ryan.

Thank you, Keri. Abby, we can open the call for questions at this time.

Thank you. If you have dialed in and would like to ask a question, please press 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press 1 a second time. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, it is 1 if you would like to join the queue. Again, it is 1 if you'd like to join the queue. And we have no questions at this time. I will turn the conference back over to Mr. Ryan Zink.

Thank you, Abby. Although the fourth quarter was a difficult one for our concepts, 2026 is shaping up to mark improvement in same-store sales and in adjusted EBITDA. Our product and promotional roadmap at both concepts is robust and targeted towards broad guest appeal, and we continue to drive operating improvements translating into great guest experiences. I am proud of our leaders and team members in our restaurants who each day deliver memorable experiences for our guests and who are ultimately the ones who create value for our shareholders. Thank you all for joining us today. And in conclusion, I wish all of you, as well as all of the members of the Good Times and Bad Daddy's teams, happy holidays.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.