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Good Times Restaurants Reports Results for the Fourth Quarter and Fiscal Year Ended September 27, 2022

Good Times Restaurants Inc. (Nasdaq: GTIM), operator of Bad Daddy’s Burger Bar and Good Times Burgers & Frozen Custard, today reported financial results for the fiscal fourth quarter and fiscal year ended September 27, 2022.

Key highlights of the Company’s financial results include:

  • Total Revenues increased 11.5% to $138.2 million for the year compared to the 2021 fiscal year
  • Total Restaurant Sales for Bad Daddy’s restaurants increased $1.5 million to $26.0 million for the fourth quarter compared to the prior year fourth quarter and increased $14.6 million to $103.2 million for the year compared to the 2021 fiscal year
  • Same Store Sales1 for company-owned Bad Daddy’s restaurants increased 3.7% for the fourth quarter compared to the prior year fourth quarter and increased 11.2% for the year compared to the 2021 fiscal year
  • Total Restaurant Sales for Good Times restaurants increased $0.2 million to $8.9 million for the fourth quarter compared to the same prior year fourth quarter and decreased $0.4 million to $34.0 million for the year compared to the 2021 fiscal year
  • Same Store Sales for company-owned Good Times restaurants increased 5.9% for the fourth quarter compared to the prior year fourth quarter and increased 1.1% for the year compared to the 2021 fiscal year
  • Net Loss Attributable to Common Shareholders was $1.3 million for the fourth quarter and was $2.6 million for the year
  • Adjusted EBITDA2 (a non-GAAP measure) was $0.9 million for the fourth quarter and was $4.8 million for the year
  • The Company ended the fourth quarter with $8.9 million in cash and no long-term debt

Ryan M. Zink, the Company’s Chief Executive Officer, said, “Fiscal 2022 was an exciting year from a top-line standpoint, as we grew same store sales at both brands for the full year. During the fourth quarter, our Good Times brand grew same store sales by nearly 6%, which included approximately 7.7% year over year price increases. The minimal traffic declines at our primarily drive-thru brand are encouraging as consumers seem to be resuming their pre-pandemic behaviors. Bad Daddy’s has also benefitted from this shift in behavior as seen in the 11% same store sales increase this year. Both brands have started fiscal 2023 with positive same store sales.”

“Profitability, however, has suffered as we have prioritized preservation of food quality, portion sizes, reasonable pricing and restaurant staffing over a single year’s profitability. We believe that long-term profitability is driven by loyal customers, and that loyal customers are created through consistent brand execution. Building on customer loyalty, we are offering gift cards at large box retailers which drives direct sales through gift card redemption and is increasing brand awareness outside our four walls. Although this program caused additional advertising costs, primarily through commissions incurred, we believe that there is significant long-term value through the new customers reached,” Zink continued.

Mr. Zink concluded, “In the first quarter of fiscal 2023, we have completed deployment of new digital menu boards and lane timer systems at Good Times and are actively developing the next generation mobile app for Good Times which will include loyalty and in-restaurant payment functionality, providing greater incentive for loyal customers to engage with this app. Our signage projects at Good Times are underway with completion expected of a third to half of our system in fiscal 2023. At Bad Daddy’s, we intend to resume expansion with the opening of one restaurant in Huntsville, Alabama. Additionally, we are in active negotiation on multiple sites in the Raleigh, North Carolina and Birmingham, Alabama markets.”

Conference Call: Management will host a conference call to discuss its fiscal fourth quarter and year ended September 27, 2022 financial results on Thursday, December 15, 2022 at 5:00 p.m. ET. Hosting the call will be Ryan M. Zink, its Chief Executive Officer and Matthew Karnes, its Senior Vice President of Finance.

The conference call can be accessed live over the phone by dialing 844-200-6205, access code 930485. The conference call will also be webcast live from the Company's corporate website www.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, and licenses 41 Bad Daddy’s Burger Bar restaurants through its wholly owned subsidiaries. Bad Daddy’s Burger Bar is a full-service “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 31 Good Times Burgers & Frozen Custard restaurants located primarily in Colorado.

Forward Looking Statements Disclaimer: 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. 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 Company's financial performance and its cash flows from operations, general economic conditions, which could adversely affect the Company's results of operations and cash flows. These risks also include such factors as the disruption to our business from the COVID-19 pandemic and the impact of the pandemic on our results of operations, financial condition and prospects which may vary depending on the duration and extent of the pandemic and the impact of federal, state and local governmental actions and customer behavior in response to the pandemic, the impact and duration of staffing constraints at our restaurants, the impact of supply chain constraints and the current inflationary environment, 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 27, 2022 filed with the SEC, and other filings with the SEC. Good Times disclaims any obligation or duty to update or modify these forward-looking statements.

Category: Financial

_____________________

1 Same store sales are a metric used in evaluating the performance of established restaurants and is a commonly used metric in the restaurant industry. Same store sales for our brands are calculated using all units open for at least 18 full fiscal months and use the comparable operating weeks from the prior year to the current year quarter’s operating weeks.

2 For a reconciliation of 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.

Good Times Restaurants Inc.

Unaudited Supplemental Information

(In thousands, except per share amounts

 

Fiscal Quarter Ended

 

Fiscal Year Ended

 

September 27,

2022

 

September 28,

2021

 

September 27,

2022

 

September 28,

2021

NET REVENUES:

 

 

 

 

 

 

 

Restaurant sales

$

34,945

 

 

$

33,281

 

 

$

137,250

 

 

$

123,058

 

Franchise revenues

 

245

 

 

238

 

 

950

 

 

895

 

Total net revenues

 

35,190

 

 

 

33,519

 

 

 

138,200

 

 

 

123,953

 

 

 

 

 

 

 

 

 

RESTAURANT OPERATING COSTS:

 

 

 

 

 

 

 

Food and packaging costs

 

11,427

 

 

 

10,127

 

 

 

43,877

 

 

 

36,164

 

Payroll and other employee benefit costs

 

11,488

 

 

 

11,262

 

 

 

46,515

 

 

 

41,049

 

Restaurant occupancy costs

 

2,352

 

 

 

2,282

 

 

 

9,440

 

 

 

8,815

 

Other restaurant operating costs

 

4,957

 

 

 

4,070

 

 

 

18,515

 

 

 

14,911

 

Preopening costs

 

1

 

 

 

346

 

 

 

51

 

 

 

766

 

Depreciation and amortization

 

905

 

 

1,045

 

 

3,895

 

 

3,842

 

Total restaurant operating costs

 

31,130

 

 

 

29,132

 

 

 

122,293

 

 

 

105,547

 

 

 

 

 

 

 

 

 

General and administrative costs

 

2,845

 

 

 

2,340

 

 

 

10,506

 

 

 

9,437

 

Advertising costs

 

904

 

 

 

466

 

 

 

3,164

 

 

 

2,082

 

Franchise costs

 

6

 

 

 

5

 

 

 

22

 

 

 

27

 

Impairment of long-lived assets

 

1,381

 

 

 

-

 

 

 

3,437

 

 

 

-

 

Gain on restaurant asset sale and lease termination

 

(10

)

 

(9

)

 

(676

)

 

-

 

Litigation contingencies

 

-

 

 

-

 

 

332

 

 

(37

)

 

(LOSS) INCOME FROM OPERATIONS:

 

(1,066

)

 

 

1,585

 

 

 

(878

)

 

 

6,897

 

 

 

 

 

 

 

 

 

Other Expenses:

 

 

 

 

 

 

 

Interest and other expense, net

 

(13

)

 

 

(25

)

 

 

(54

)

 

 

(25

)

Gain on debt extinguishment

 

-

 

 

 

-

 

 

 

-

 

 

 

11,778

 

 

NET (LOSS) INCOME BEFORE INCOME TAXES:

 

(1,079

)

 

 

1,560

 

 

 

(932

)

 

 

18,406

 

Provision for income taxes

 

14

 

 

(6

)

 

5

 

 

(6

)

 

NET (LOSS) INCOME:

$

(1,065

)

$

1,554

 

 

$

(927

)

$

18,400

 

Income attributable to non-controlling interests

 

(225

)

 

 

(300

)

 

(1,714

)

 

 

(1,613

)

 

 

 

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(1,290

)

$

1,254

 

$

(2,641

)

$

16,787

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME PER SHARE, ATTRIBUTABLE TO COMMON SHAREHOLDERS:

 

 

 

 

 

 

 

Basic

$

(0.10

)

 

$

0.10

 

 

$

(0.21

)

 

$

1.32

 

Diluted

$

(0.10

)

 

$

0.10

 

 

$

(0.21

)

 

$

1.31

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

 

Basic

 

12,350

 

 

 

12,778

 

 

 

12,464

 

 

 

12,677

 

Diluted

 

12,350

 

 

 

13,085

 

 

 

12,464

 

 

 

12,828

 

Good Times Restaurants Inc.

Unaudited Supplemental Information

(In thousands)

 

September 27, 2022

 

September 28, 2021

Selected Balance Sheet Data

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

8,906

 

 

 

$

8,856

 

 

 

 

 

 

 

 

 

Current Assets

 

$

11,875

 

 

 

$

11,444

 

 

 

 

 

 

 

 

 

Total assets1

 

$

86,388

 

 

 

$

93,681

 

 

 

 

 

 

 

 

 

Current Liabilities

 

$

12,897

 

 

 

$

12,886

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

$

27,788

 

 

$

30,870

1Includes operating lease right-of-use assets.

Supplemental Information for Company-Owned Restaurants (dollars in thousands):

 

Bad Daddy’s Burger Bar

 

Good Times Burgers & Frozen Custard

 

Fourth Fiscal Quarter

 

Fiscal Year Ended

 

Fourth Fiscal Quarter

 

Fiscal Year Ended

 

2022

(13 weeks)

 

2021

(13 weeks)

 

2022

(52 weeks)

 

2021

(52 weeks)

 

2022

(13 weeks)

 

2021

(13 weeks)

 

2022

(52 weeks)

 

2021

(52 weeks)

Restaurant sales

$

25,971

 

$

24,447

 

$

103,216

 

$

88,595

 

$

8,939

 

$

8,768

 

 

34,034

 

$

34,463

Restaurants opened or acquired

during period

 

-

 

 

2

 

 

1

 

 

2

 

 

-

 

 

-

 

 

-

 

 

-

Restaurants closed during period

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

1

 

 

1

Restaurants open at period end

 

40

 

 

39

 

 

40

 

 

39

 

 

23

 

 

24

 

 

23

 

 

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restaurant operating weeks

 

520

 

 

496

 

 

2,054

 

 

1,943

 

 

299

 

 

312

 

 

1,226

 

 

1,254

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average weekly sales per

restaurant

$

49.9

 

$

49.3

 

$

50.3

 

$

45.6

 

$

29.9

 

$

28.1

 

$

27.8

 

$

27.5

Information in the above tables excludes the non-traditional Bad Daddy’s at Tivoli restaurant which was open from August 2021 to July 2022 and excludes the restaurant at Charlotte International Airport operated by a licensee.

Reconciliation of Non-GAAP Measurements to U.S. GAAP Results

Reconciliation of Non-GAAP Restaurant-Level Operating Loss to Income from Operations

(In thousands, except percentage data)

 

Bad Daddy’s Burger Bar

 

Good Times Burgers & Frozen Custard

 

Good Times

Restaurants Inc.

 

------------------------------------------------------------- Fiscal Quarter Ended (13 weeks) -----------------------------------------------------------------------

 

September 27,

2022

 

September 28, 2021

 

September 27, 2022

 

September 28, 2021

 

Sept. 27,

2022

 

Sept. 28,

2021

Restaurant sales

$

26,006

100.0

%

 

$

24,513

100.0

%

 

$

8,939

100.0

%

 

$

8,768

100.0

%

 

$

34,945

 

 

$

33,281

 

Restaurant operating costs

(exclusive of depreciation and

amortization and preopening, shown separately below):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and packaging costs

 

8,540

32.8

%

 

 

7,629

31.1

%

 

 

2,887

32.3

%

 

 

2,498

28.5

%

 

 

11,427

 

 

 

10,127

 

Payroll and benefits costs

 

8,635

33.2

%

 

 

8,414

34.3

%

 

 

2,853

31.9

%

 

 

2,848

32.5

%

 

 

11,488

 

 

 

11,262

 

Restaurant occupancy costs

 

1,657

6.4

%

 

 

1,608

6.6

%

 

 

695

7.8

%

 

 

674

7.7

%

 

 

2,352

 

 

 

2,282

 

Other restaurant operating costs

 

3,823

14.7

%

 

3,195

13.0

%

 

1,134

12.7

%

 

875

10.0

%

 

4,957

 

 

4,070

 

Restaurant-level operating profit

$

3,351

12.9

%

$

3,667

15.0

%

$

1,370

15.3

%

$

1,873

21.4

%

$

4,721

 

$

5,540

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

245

 

 

 

238

 

Deduct - Other operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

905

 

 

 

1,045

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

2,845

 

 

 

2,340

 

Advertising costs

 

 

 

 

 

 

 

 

 

 

 

 

 

904

 

 

 

466

 

Litigation Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

Franchise costs

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

5

 

Impairment of long-lived assets

 

 

 

 

 

 

 

 

 

 

 

 

 

1,381

 

 

 

-

 

Gain on restaurant asset sale

 

 

 

 

 

 

 

 

 

 

 

 

 

(10

)

 

 

(9

)

Pre-opening costs

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

346

 

Total other operating

 

 

 

 

 

 

 

 

 

 

 

 

 

6,032

 

 

 

4,193

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from operations

 

 

 

 

 

 

 

 

 

 

 

 

$

(1,066

)

 

$

1,585

 

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 U.S. GAAP Results

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to Income from Operations

(In thousands, except percentage data)

 

Bad Daddy’s Burger Bar

 

 

Good Times Burgers & Frozen Custard

 

 

Good Times

Restaurants Inc.

 

------------------------------------------------------------------------ Fiscal Year Ended--------------------------------------------------------------------------------

 

September 27, 2022

 

September 28, 2021

 

September 27, 2022

 

September 28, 2021

 

Sept. 27,

2022

 

Sept. 28,

2021

Restaurant sales

$

103,216

 

100.0

%

 

$

88,595

 

100.0

%

 

$

34,034

 

100.0

%

 

$

34,463

 

100.0

%

 

$

137,250

 

 

$

123,058

 

Restaurant operating costs

(exclusive of depreciation and

amortization, and preopening,

shown separately

below):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food and packaging costs

 

33,155

 

32.1

%

 

 

26,123

 

29.5

%

 

 

10,722

 

31.5

%

 

 

10,041

 

29.1

%

 

 

43.877

 

 

 

36,164

 

Payroll and benefits costs

 

35,085

 

34.0

%

 

 

30,058

 

33.9

%

 

 

11,430

 

33.6

%

 

 

10,991

 

31.9

%

 

 

46,515

 

 

 

41,049

 

Restaurant occupancy costs

 

6.668

 

6.5

%

 

 

5,959

 

6.7

%

 

 

2,772

 

8.1

%

 

 

2,856

 

8.3

%

 

 

9,440

 

 

 

8,815

 

Other restaurant operating costs

 

14,519

 

14.1

%

 

11,647

 

13.1

%

 

3,996

 

11.7

%

 

3,264

 

9.5

%

 

18,515

 

 

14,911

 

Restaurant-level operating profit

$

13,789

 

13.4

%

$

14,808

 

16.7

%

$

5,114

 

15.0

%

$

7,311

 

21.2

%

$

18,903

 

$

22,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Franchise revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

950

 

 

 

895

 

Deduct - Other operating:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,895

 

 

 

3,842

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,506

 

 

 

9,437

 

Advertising costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,164

 

 

 

2,082

 

Litigation Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

332

 

 

 

-

 

Franchise costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

-

 

Impairment of long-lived assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,437

 

 

 

27

 

Gain on restaurant asset sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(676

)

 

 

766

 

Pre-opening costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

(37

)

Total other operating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,731

 

 

 

16,117

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(878

)

 

$

6,897

 

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).

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 pre-opening 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 like 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 (loss) 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 current and prior year fiscal quarters and year-to-date periods for fiscal 2022 and fiscal 2021, expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenues.

 

Quarter Ended

 

Fiscal Year Ended

 

Sept. 27, 2022

(13 Weeks)

 

Sept. 28, 2021

(13 Weeks)

 

Sept. 27, 2022

(52 Weeks)

 

Sept. 28, 2021

(52 Weeks)

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income, as reported

 

$

(1,290

)

 

 

 

$

1,254

 

 

 

 

$

(2,641

)

 

 

 

$

16,787

 

 

Depreciation and amortization

 

 

863

 

 

 

 

 

1,025

 

 

 

 

 

3,796

 

 

 

 

 

3,770

 

 

Interest expense, net

 

13

 

 

 

 

24

 

 

 

 

54

 

 

 

 

269

 

Provision for income taxes

 

(14

)

 

 

 

6

 

 

 

 

(5

)

 

 

 

 

6

 

 

EBITDA

 

 

(428

)

 

 

 

 

2,309

 

 

 

 

 

1,204

 

 

 

 

 

20,832

 

 

Preopening expense

 

 

1

 

 

 

 

 

346

 

 

 

 

 

51

 

 

 

 

 

766

 

 

Non-cash stock-based compensation

 

 

43

 

 

 

 

 

36

 

 

 

 

 

250

 

 

 

 

 

362

 

 

Asset Impairment

 

 

1,381

 

 

 

 

 

-

 

 

 

 

 

3,437

 

 

 

 

 

-

 

 

GAAP rent-cash rent difference

 

 

(117

)

 

 

 

 

(228

)

 

 

 

 

(403

)

 

 

 

 

(508

)

 

(Gain) Loss on restaurant asset sales and lease termination

 

 

(10

)

 

 

 

 

(9

)

 

 

 

 

(538

)

 

 

 

 

(37

)

 

Litigation Contingencies

 

-

 

 

 

 

 

-

 

 

 

 

 

332

 

 

 

 

 

-

 

 

One-time special allocation to Bad Daddy's partnerships

 

-

 

 

 

 

-

 

 

 

 

516

 

 

 

 

-

 

Gain on debt extinguishments

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(11,778

)

Adjusted EBITDA

$

870

 

 

 

$

2,454

 

 

 

$

4,849

 

 

 

$

9,637

 

Adjusted EBITDA is a supplemental measure of operating performance that does not represent and should not be considered as an alternative to net (loss) 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 (loss) 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.

Ryan M. Zink, Chief Executive Officer (303) 384-1432

Christi Pennington (303) 384-1440

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