Good Times Restaurants Reports Q4 and Fiscal Year End Results

December 13, 2018 ALE

Total Revenues for Fiscal 2018 Increased 25% to $99 Million

Net Loss for the Year Narrowed to $1.0 Million

Conference Call Thursday, December 13, 2018, at 3:00 p.m. MT/5:00 p.m. ET

DENVER–(BUSINESS WIRE)–Good
Times Restaurants Inc. (Nasdaq: GTIM), operator of Bad Daddy’s
Burger Bar, a full-service, upscale burger bar concept, and Good Times
Burgers & Frozen Custard, a regional quick-service restaurant chain
focused on fresh, high-quality, all-natural products, today announced
its preliminary unaudited financial results for the fourth fiscal
quarter ended September 25, 2018.

Key highlights of the Company’s financial results vs prior year
include:

Total revenues increased 19% to $26,796,000 for the quarter and
increased 25% to $99,240,000 for the year, which reflects the addition
of nine new Bad Daddy’s restaurants during the year
Same store sales for company-owned Good Times restaurants increased
0.5% for the quarter and increased 4.2% for the year on top of last
year’s increases of 3.9% for the quarter and 2.1% for the year
Adjusted for the impact of Hurricane Florence, same store sales for
company-owned Bad Daddy’s restaurants increased 0.7% for the quarter
and 0.8% for the year on top of last year’s increases of 1.4% for the
quarter and 1.6% for the year
The company opened five restaurants during the fiscal fourth quarter,
bringing the total new restaurants opened during fiscal 2018 to nine
Income from Operations improved from a loss of $1,422,000 to income of
$372,000 for the year, which includes the impact of $2,784,000 of new
store preopening costs incurred in fiscal 2018
Restaurant Level Operating Profit (a non-GAAP measure) for Bad Daddy’s
restaurants improved 50% to $3,136,000 in the fourth quarter from
$2,081,000 in the fourth quarter last year*
Total Restaurant Level Operating Profit (a non-GAAP measure) increased
26% to $4,318,000 for the quarter and increased 30% to $16,111,000 for
the year*
Net Loss Attributable to Common Shareholders for the year narrowed to
$324,000 for the quarter and $1,034,000 for the full fiscal year
Adjusted EBITDA (a non-GAAP measure) for the quarter increased 38% to
$1,805,000 and increased 52% to $5,758,000* for the fiscal year
The Company ended the year with $3.5 million in cash and $7.5 million
of long term debt

Boyd Hoback, President & CEO, said, “We are very pleased with our
results for the quarter and fiscal year, including our adjusted EBITDA
that was slightly ahead of the upper end of our guidance for the fiscal
year. Even though labor costs continue to be a pressure point on our
operating margins, Bad Daddy’s Restaurant Level Operating Profit margin
improved to 17% for the year from 15.8% last year.”

Commenting on fiscal 2019, Hoback added, “At the end of the fiscal year,
we opened two new Bad Daddy’s restaurants, one in the Atlanta metro area
and one in Greenville, South Carolina and subsequent to year end we’ve
opened one additional restaurant in the Atlanta metro area with another
restaurant scheduled to open on January 2, 2019 in the Raleigh metro
area. During our first fiscal quarter of 2019, our Good Times and Bad
Daddy’s sales have been negatively impacted by much more inclement
weather compared to last year, including the loss of approximately 10
store days due to the snow storm in North Carolina. The new Atlanta &
Greenville, South Carolina restaurants have had relatively softer
openings than the high honeymoon sales we experienced in our fiscal 2017
and 2018 openings, so we’ve moderated our development schedule for the
balance of the year as we fine tune our site selection model for
accelerated growth in fiscal 2020. As a result, we expect our first
fiscal 2019 quarter’s results to be negatively impacted which is
reflected in our overall fiscal 2019 guidance.”

Fiscal 2019 Outlook:

The Company has updated its guidance for fiscal 2019 to reflect its
adjusted development expectations:

Total revenues of approximately $112 million to $114 million with a
year-end revenue run rate of approximately $120 million
Total revenue estimates assume same store sales of approximately -2%
to -3% for the year for Good Times due to inclement weather in Q1 and
Q2 compared to unseasonably warm weather in the prior year, and
approximately +1 to +2% for Bad Daddy’s
General and administrative expenses of approximately $8.4 million to
$8.6 million, including approximately $500,000 of non-cash equity
compensation expense
The opening of 5 to 6 new Bad Daddy’s restaurants
Net loss of approximately $0.9 million, including preopening expenses
of approximately $1.6 million
Total Adjusted EBITDA* of approximately $6.0 million to $6.5 million
Capital expenditures (net of tenant improvement allowances) of
approximately $7.0 – $7.5 million including approximately $0.6 million
related to fiscal 2020 development
Debt balance at the end of the year between $11.0 and $11.5 million

*For a reconciliation of restaurant level operating profit and
Adjusted EBITDA to the most directly comparable financial measures
presented in accordance with GAAP and a discussion of why the Company
considers them useful, see the financial information schedules
accompanying this release.

Conference Call: Management will host a conference call to
discuss its fourth quarter 2018 financial results on Thursday, December
13, 2018 at 3:00 p.m. MT/5:00 p.m. ET. Hosting the call will be Boyd
Hoback, President and Chief Executive Officer, and Ryan Zink, Chief
Financial Officer.

The conference call can be accessed live by telephone by dialing (888)
339-0806 and requesting the Good Times Restaurants (GTIM) call. The
conference call will also be webcast live from the Company’s corporate
website www.investors.goodtimesburgers.com.
An archive of the webcast will be available at the same location on the
corporate website shortly after the call has concluded.

About Good Times Restaurants Inc.: Good Times Restaurants Inc.
(GTIM) owns, operates, franchises and licenses 34 Bad Daddy’s Burger Bar
restaurants through its wholly-owned subsidiaries. Bad Daddy’s Burger
Bar is a full service, upscale, “small box” restaurant concept featuring
a chef driven menu of gourmet signature burgers, chopped salads,
appetizers and sandwiches with a full bar and a focus on a selection of
craft microbrew beers in a high energy atmosphere that appeals to a
broad consumer base. Additionally, through its wholly-owned
subsidiaries, Good Times Restaurants Inc. operates and franchises a
regional quick service restaurant chain consisting of 35 Good Times
Burgers & Frozen Custard restaurants, located primarily in Colorado.

Good Times Forward-Looking Statements: This press release
contains forward-looking statements within the meaning of federal
securities laws. The words “intend,” “may,” “believe,” “will,” “should,”
“anticipate,” “expect,” “seek” and similar expressions are intended to
identify forward-looking statements. 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. These risks include such factors as 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,
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, 2017 filed with the SEC. Although Good Times may from time to time
voluntarily update its forward-looking statements, it disclaims any
commitment to do so except as required by securities laws.


Good Times Restaurants Inc.
Unaudited Supplemental Information
(In thousands, except per share amounts)

	Fiscal Quarter Ended						Fiscal Year Ended
	Sept. 25,			Sept. 26,			Sept. 25,			Sept. 26,
Statement of Operations	2018			2017			2018			2017
Net revenues:
Restaurant sales	$	26,635		$	22,414		$	98,564		$	78,395
Franchise revenues		161			170			676			685
Total net revenues		26,796			22,584			99,240			79,080

Restaurant Operating Costs:
Food and packaging costs		8,102			7,309			30,256			24,900
Payroll and other employee benefit costs		9,577			8,058			35,653			28,274
Restaurant occupancy costs		1,983			1,552			7,261			5,759
Other restaurant operating costs		2,657			2,081			9,283			7,084
New store preopening costs		1,101			851			2,784			2,588
Depreciation and amortization		1,040			811			3,705			2,897
Total restaurant operating costs		24,460			20,662			88,942			71,502

General and administrative costs		1,973			1,780			7,857			7,002
Advertising costs		404			337			1,991			1,694
Franchise costs		9			28			41			108
Asset impairment costs		–			219			72			219
Gain on disposal of restaurants and equipment		(9	)		(6	)		(35	)		(23	)
Income (loss) from operations		(41	)		(436	)		372			(1,422	)

Other income (expense):
Interest income (expense), net		(118	)		(77	)		(388	)		(182	)
Other expense		(1	)		–			(1	)		(1	)
Total other expense		(119	)		(77	)		(389	)		(183	)
Net loss		($160	)		($513	)		($17	)		($1,605	)
Income attributable to non-controlling interest		(164	)		(151	)		(1,017	)		(650	)
Net loss attributable to Good Times Restaurants Inc.		(324	)		(664	)		(1,034	)		($2,255	)

Basic and diluted loss per share		($0.03	)		($0.05	)		($0.08	)		($0.18	)

Basic and diluted weighted average common shares outstanding		12,474			12,393			12,464			12,321

Good Times Restaurants Inc.
Unaudited Supplemental Information
(In thousands)

	Sept. 25,		Sept. 26,
Balance Sheet Data	2018		2017
Cash & cash equivalents	$	3,477	$	4,337
Current assets		6,381		6,066
Property and Equipment, net		35,245		29,691
Other assets		19,324		19,397
Total assets	$	60,950	$	55,153

Current liabilities, including capital lease obligations and long-term debt due within one year	$	8,335	$	6,916
Long-term debt due after one year		7,472		5,339
Other liabilities		7,922		5,614
Total liabilities	$	23,729	$	17,869
Stockholders’ equity	$	37,221	$	37,284

Supplemental Information:

	Company-Owned Restaurants
	Bad Daddy’s Burger Bar							Good Times Burgers & Frozen Custard
	Fiscal Quarter Ended				Fiscal Year Ended			Fiscal Quarter Ended				Fiscal Year Ended
	Sept. 25, 2018		Sept. 26, 2017		Sept. 25, 2018	Sept. 26, 2017		Sept. 25, 2018		Sept. 26, 2017		Sept. 25, 2018	Sept. 26, 2017
Restaurant Sales	$	18,723	$	14,036	67,428	$	47,706	$	7,912	$	8,378	31,136	$	30,689
Average weekly sales per restaurant		51.0		50.6	50.3		49.3		22.5		23.0	21.9		21.4

Restaurant operating weeks		367		277.3	1,341		968.1		351		364	1,422		1,432
Restaurants open during period		5		1	9		6		0		0	0		1
Restaurants open at period end		31		22	31		22		26		28	26		28

Reconciliation of Non-GAAP Measurements to US
GAAP Results

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income (Loss) from Operations
(In thousands, except percentage data)

	Bad Daddy’s Burger Bar								Good Times Burgers & Frozen Custard								Good Times Restaurants Inc.
	Fiscal Quarter Ended
	Sept. 25, 2018				Sept. 26, 2017				Sept. 25, 2018				Sept. 26, 2017				Sept. 25, 2018		Sept. 26, 2017
Restaurant Sales	$	18,723	100.0	%	$	14,036	100.0	%	$	7,912	100.0	%	$	8,378	100	%	26,635		$	22,414
Restaurant Operating Costs (exclusive of depreciation and amortization shown separately below):
Food and packaging costs		5,510	29.4	%		4,507	32.1	%		2,592	32.8	%		2,802	33.4	%	8,102			7,309
Payroll and other employee benefit costs		6,858	36.6	%		5,215	37.2	%		2,719	34.4	%		2,843	33.9	%	9,577			8,058
Restaurant occupancy costs		1,236	6.6	%		855	6.1	%		747	9.4	%		697	8.3	%	1,983			1,552
Other restaurant operating costs		1,983	10.6	%		1,378	9.8	%		674	8.5	%		703	8.4	%	2,657			2,081
Restaurant-level operating profit		3,136	16.8	%		2,081	14.8	%		1,180	15.0	%		1,333	15.9	%	4,316			3,414

Franchise royalty income and expense, net																	161			170
Deduct – Other operating:
Depreciation and amortization																	1,040			811
General and administrative																	1,973			1,780
Advertising costs																	404			337
Franchise costs																	9			28
Gain on disposal of restaurants and equipment																	(9	)		(6	)
Asset impairment costs																	–			219
Preopening costs																	1,101			851
Total other operating																	4,518			4,020

Loss from Operations																	($41	)		($436	)

Certain percentage amounts in the table above do not total due to
rounding as well as the fact that restaurant operating costs are
expressed as a percentage of restaurant revenues, as opposed to total
revenues.

Reconciliation of Non-GAAP Measurements to US
GAAP Results

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income (Loss) from Operations
(In thousands, except percentage data)

	Bad Daddy’s Burger Bar							Good Times Burgers & Frozen Custard							Good Times Restaurants Inc.
	Fiscal Year Ended
	Sept. 25, 2018			Sept. 26, 2017				Sept. 25, 2018			Sept. 26, 2017				Sept. 25, 2018		Sept. 26, 2017
Restaurant Sales	67,428	100.0	%	$	47,706	100.0	%	31,136	100.0	%	$	30,689	100	%	98,564		$	78,395
Restaurant Operating Costs (exclusive of depreciation and amortization shown separately below):
Food and packaging costs	20,048	29.7	%		14,906	31.2	%	10,208	32.8	%		9,994	32.6	%	30,256			24,900
Payroll and other employee benefit costs	24,861	36.9	%		17,726	37.2	%	10,792	34.7	%		10,548	34.4	%	35,653			28,274
Restaurant occupancy costs	4,348	6.4	%		2,987	6.3	%	2,913	9.4	%		2,772	9.0	%	7,261			5,759
Other restaurant operating costs	6,719	10.0	%		4,548	9.5	%	2,564	8.2	%		2,536	8.3	%	9,283			7,084
Restaurant-level operating profit	11,452	17.0	%		7,539	15.8	%	4,659	15.0	%		4,839	15.8	%	16,111			12,378

Franchise royalty income and expense, net															676			685
Deduct – Other operating:
Depreciation and amortization															3,705			2,897
General and administrative															7,857			7,002
Advertising costs															1,991			1,694
Franchise costs															41			108
Gain on disposal of restaurants and equipment															(35	)		(23	)
Asset impairment costs															72			219
Preopening costs															2,784			2,588
Total other operating															16,415			14,485

Income (Loss) from Operations															372			($1,422	)

The Company believes that restaurant-level operating profit is an
important measure for management and investors because it is widely
regarded in the restaurant industry as a useful metric by which to
evaluate restaurant-level operating efficiency and performance. The
Company defines restaurant-level operating profit to be restaurant
revenues minus restaurant-level operating costs, excluding restaurant
closures and impairment costs. The measure includes restaurant level
occupancy costs, which include fixed rents, percentage rents, common
area maintenance charges, real estate and personal property taxes,
general liability insurance and other property costs, but excludes
depreciation. The measure excludes depreciation and amortization
expense, substantially all of which is related to restaurant level
assets, because such expenses represent historical sunk costs which do
not reflect current cash outlay for the restaurants. The measure also
excludes selling, general and administrative costs, and therefore
excludes occupancy costs associated with selling, general and
administrative functions, and preopening costs. The Company excludes
restaurant closure costs as they do not represent a component of the
efficiency of continuing operations. Restaurant impairment costs are
excluded, because, similar to depreciation and amortization, they
represent a non-cash charge for the Company’s investment in its
restaurants and not a component of the efficiency of restaurant
operations. Restaurant-level operating profit is not a measurement
determined in accordance with generally accepted accounting principles
(“GAAP”) and should not be considered in isolation, or as an
alternative, to income from operations or net income as indicators of
financial performance. Restaurant-level operating profit as presented
may not be comparable to other similarly titled measures of other
companies. The tables above set forth certain unaudited information for
the fiscal quarters and fiscal years ended September 25, 2018 and
September 26, 2017, expressed as a percentage of total revenues, except
for the components of restaurant operating costs, which are expressed as
a percentage of restaurant revenues.

Reconciliation of Net Loss to Non-GAAP Adjusted EBITDA
(In thousands)
Good Times Restaurants Inc.
	Fiscal Quarter Ended						Fiscal Year Ended
	Sept. 25,			Sept. 26,			Sept. 25,		Sept. 26,
	2018			2017			2018		2017
Net loss as reported		($324	)		($664	)	($1,034	)		($2,255	)

Adjustments to net loss:
Depreciation and amortization		977			774		3,528			2,776
Interest expense, net		118			77		391			185
EBITDA		771			187		2,885			706
Asset impairment cost		–			219		72			219
Preopening expense		922			759		2,463			2,154
Non-cash stock-based compensation		114			139		417			748
GAAP rent – cash rent difference		7			7		(44	)		(27	)
Non-cash disposal of assets		(9	)		(6	)	(35	)		(23	)
Adjusted EBITDA	$	1,805		$	1,305		5,758		$	3,777

Adjusted EBITDA is a supplemental measure of operating performance that
does not represent and should not be considered as an alternative to net
income or cash flow from operations, as determined by GAAP, and our
calculation thereof may not be comparable to that reported by other
companies. This measure is presented because we believe that investors’
understanding of our performance is enhanced by including this non-GAAP
financial measure as a reasonable basis for evaluating our ongoing
results of operations.

Adjusted EBITDA is calculated as net income before interest expense,
provision for income taxes and depreciation and amortization and further
adjustments to reflect the additions and eliminations presented in the
table above.

Adjusted EBITDA is presented because: (i) we believe it is a useful
measure for investors to assess the operating performance of our
business without the effect of non-cash charges such as depreciation and
amortization expenses and asset disposals, closure costs and restaurant
impairments and (ii) we use adjusted EBITDA internally as a benchmark
for certain of our cash incentive plans and to evaluate our operating
performance or compare our performance to that of our competitors. The
use of adjusted EBITDA as a performance measure permits a comparative
assessment of our operating performance relative to our performance
based on our GAAP results, while isolating the effects of some items
that vary from period to period without any correlation to core
operating performance or that vary widely among similar companies.
Companies within our industry exhibit significant variations with
respect to capital structures and cost of capital (which affect interest
expense and income tax rates) and differences in book depreciation of
property, plant and equipment (which affect relative depreciation
expense), including significant differences in the depreciable lives of
similar assets among various companies. Our management believes that
adjusted EBITDA facilitates company-to-company comparisons within our
industry by eliminating some of these foregoing variations. Adjusted
EBITDA as presented may not be comparable to other similarly-titled
measures of other companies, and our presentation of adjusted EBITDA
should not be construed as an inference that our future results will be
unaffected by excluded or unusual items.

Contacts

Good Times Restaurants Inc.
Investor Relations Contacts:
Boyd
E. Hoback, President and CEO, 303-384-1411
Ryan M. Zink, Chief
Financial Officer, 303-384-1432
Christi Pennington, 303-384-1440

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