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01/10 16:01
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call revealed disappointing financial results with decreased revenues, increased costs, and a net loss. Despite some optimistic guidance for fiscal 2026, the lack of Q&A engagement and absence of a clear shareholder return plan add to uncertainty. The negative sentiment is compounded by regulatory challenges and operational cost increases, leading to a likely negative stock reaction.
Total revenues Decreased approximately 5.1% for the quarter to $34 million and decreased approximately 0.5% compared to fiscal year 2024 sales to $141.6 million. The decline was attributed to soft sales and higher costs, particularly elevated ground beef prices.
Bad Daddy's 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 decrease was driven by reduced customer traffic and the closure of the Longmont, Colorado restaurant, partially offset by menu price increases.
Bad Daddy's same-store sales Decreased 4.6% for the quarter. The decline was attributed to reduced customer traffic, though there was sequential improvement in Colorado restaurants.
Bad Daddy's food and beverage costs Increased to 31.6% for the quarter, a 40 basis point increase from last year's quarter. The increase was due to record high ground beef prices and higher prices for other proteins, partially offset by a 24% average increase in menu pricing.
Bad Daddy's labor costs Increased by 140 basis points to 35.7% for the quarter. The increase was due to lower team member productivity resulting from sales deleverage.
Bad Daddy's restaurant-level operating profit Decreased to $2.4 million for the quarter or 9.9% of sales, compared to $3.4 million or 13.2% last year. The decline was due to increases in labor and food and beverage costs, as well as the deleveraging impact of lower sales on fixed costs.
Good Times total restaurant sales Decreased approximately $0.3 million to $9.7 million for the quarter compared to the prior year fourth quarter. The decrease was attributed to soft sales and higher costs.
Good Times same-store sales Decreased 6.6% for the quarter. The decline was attributed to soft sales, though there was a 240 basis point sequential improvement from the fiscal third quarter.
Good Times food and packaging costs Increased to 32.1% for the quarter, a 120 basis point increase compared to last year's quarter. The increase was due to record high beef prices and higher costs for bacon and eggs.
Good Times labor costs Increased to 35.9%, a 200 basis point increase from the prior year's quarter. The increase was due to higher average wage rates resulting from market forces and minimum wage increases, as well as decreased productivity due to sales deleverage.
Good Times restaurant-level operating profit Decreased by $0.4 million for the quarter to $0.8 million. As a percent of sales, it decreased by 420 basis points to 8% due to elevated costs throughout the P&L.
Combined general and administrative expenses Decreased to $2.4 million during the quarter or 7% of total revenues, a decrease of 70 basis points from the prior year quarter. The decrease was primarily related to reduced multi-unit supervision costs, legal and professional services, and outsourced accounting fees.
Net loss to common shareholders $3,000 or $0.00 per share for the quarter, compared to net income of $0.2 million or $0.02 per share in the fourth quarter last year. The decline was due to elevated costs and reduced profitability.
Adjusted EBITDA Negative $74,000 for the quarter, compared to $1.3 million for the fourth quarter of 2024. The decline was due to reduced sales and increased costs.
Cook-to-order process: Good Times is rolling out a true cook-to-order process for all burger products, aiming to improve quality without impacting service speed.
New menu items: Bad Daddy's introduced a giant shareable Bavarian pretzel and a chocolate cookie cheesecake, both of which are being considered for inclusion in the core menu.
Seasonal promotions: Bad Daddy's plans to introduce a burger of the month platform to simplify messaging and focus on product execution.
Same-store sales trends: Good Times saw a 6.6% decline in same-store sales in Q4, but this was a sequential improvement from Q3. Bad Daddy's same-store sales were down 4.6% in Q4 but showed improvement in Colorado locations.
Pricing strategy: Both brands implemented modest price increases (around 1%) to address market positioning while remaining competitive.
Labor cost management: Efforts are being made to realign general manager schedules at Good Times to improve operational efficiency during peak hours.
Training improvements: Enhanced restaurant-level training is being implemented to support operational changes like the cook-to-order process.
Targeted value promotions: Good Times plans to address value concerns with targeted promotions and expanded loyalty program offerings.
Mobile app refresh: Good Times updated its mobile app to simplify the ordering experience and enhance customer engagement.
Market Conditions: Soft sales in the fourth fiscal quarter, particularly at the Good Times concept, negatively impacted profitability. Same-store sales at Good Times remained negative, with a 6.6% decline in the fourth quarter and a 3.6% decline in the first 11 weeks of the first fiscal quarter.
Cost Pressures: Significantly elevated costs of ground beef and other proteins, as well as higher labor costs due to wage increases and decreased productivity, have adversely affected profitability. Labor costs increased by 140 basis points for Bad Daddy's and 200 basis points for Good Times compared to the prior year.
Supply Chain Constraints: Record high beef prices and significantly higher costs for bacon and eggs were experienced during the quarter, contributing to increased food and packaging costs.
Economic Uncertainties: General economic and operating conditions, including inflation and wage increases, have created financial pressures. Colorado's minimum wage increase in January 2026 will further impact labor costs.
Strategic Execution Risks: Challenges in implementing restaurant development plans, including delays due to weather, local permitting, and other reasons, have been noted. Additionally, the company faces risks associated with integrating new restaurants and executing targeted pricing adjustments.
Competitive Pressures: The quick service burger segment has faced a poor reputation for value due to significant price increases by competitors. The company remains sensitive to menu price increases and is averse to large-scale discounting, which could impact its competitive positioning.
Operational Challenges: Decreased customer traffic and closure of a restaurant in Longmont, Colorado, contributed to reduced sales for Bad Daddy's. Increased repair, maintenance, and utility expenses have also added to operational costs.
Regulatory Hurdles: Changes in federal, state, or local laws and regulations, including wage and tip credit regulations, could impact operations and financial performance.
Good Times same-store sales: Same-store sales at Good Times were down approximately 3.6% for the first 11 weeks of the first fiscal quarter compared to the same period in the prior year. The company expects to address value concerns with targeted value promotions starting in spring and expanded offerings through the GT Rewards loyalty program and a refreshed mobile app.
Bad Daddy's same-store sales: Same-store sales for Bad Daddy's improved sequentially in the first quarter and were down approximately 1.6% for the first 11 weeks of the quarter compared to the same period in the prior year. The company expects an average year-over-year price increase of approximately 1.7% for the first quarter of 2026.
Menu pricing adjustments: The company plans to take only modest price increases for both Good Times and Bad Daddy's in fiscal 2026, with targeted adjustments to specific menu items rather than significant across-the-board increases.
Food and beverage costs: Input costs, including record-high beef prices, have decreased into the first quarter of 2026. The company expects food and beverage costs as a percentage of sales to improve quarter-over-quarter for both Good Times and Bad Daddy's.
Labor costs: Labor costs are expected to improve in fiscal 2026 despite challenges such as minimum wage increases in Colorado. The company is focused on improving team member productivity to offset these increases.
General and administrative expenses: The company anticipates general and administrative costs to be in the range of 6% to 7% of total revenues in fiscal 2026.
share repurchase program: Risks associated with the share repurchase program were mentioned as part of the forward-looking statements. However, no specific details or updates about the program were provided in the transcript.
The earnings call revealed disappointing financial results with decreased revenues, increased costs, and a net loss. Despite some optimistic guidance for fiscal 2026, the lack of Q&A engagement and absence of a clear shareholder return plan add to uncertainty. The negative sentiment is compounded by regulatory challenges and operational cost increases, leading to a likely negative stock reaction.
The earnings call reveals several concerns: decreased sales, increased costs, and underperformance of the Good Times concept, despite some positive aspects like improved net income and cash reserves. The Q&A highlights management's reluctance to provide forward guidance, contributing to uncertainty. Despite strategic shifts and potential future projects, the immediate outlook appears challenging, leading to a likely negative stock reaction.
The earnings call reveals a mix of challenges and strategic efforts. Financial performance was weak, with declining sales and increased costs, particularly in labor and food. The Q&A section highlighted management's commitment but lacked clarity on addressing operational challenges. The temporary pause in share repurchases and increased costs, coupled with a net loss, suggest negative sentiment. Despite some strategic initiatives, the overall outlook is challenging, leading to a negative stock price prediction.
The earnings call presents a mixed picture. Record revenue and improved net income are positive, while rising costs and flat same-store sales present challenges. The share repurchase program is a positive signal, but the lack of clear guidance on the legal case and location expansion limits optimism. The Q&A reveals cautious sentiment from analysts, especially regarding cost management and growth strategy. These factors balance each other out, suggesting a neutral stock price movement.
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