Good Times Restaurants (NASDAQ:GTIM) reported fiscal 2026 second-quarter results showing improved profitability and sequential progress in same-store sales trends at both of its brands, even as total revenue declined year over year.
Chief Executive Officer Ryan Zink said he was “encouraged by the results” in the quarter, pointing to sequential improvement in same-store sales for both concepts and better profitability versus the prior year. Zink attributed the margin gains to “a combined partnership between operations and supply chain to improve upon both our food and beverage cost and our cost of labor,” while reiterating that the company’s “highest priority” remains same-store sales growth.
Quarterly financial performance
At Bad Daddy’s, August said total restaurant sales declined $0.9 million to $23.9 million. She attributed the decrease primarily to the closure of one restaurant in the fourth quarter of fiscal 2025 and another in the first quarter of fiscal 2026, as well as lower guest traffic, partially offset by menu price increases. Average menu price was 0.2% higher than the year-ago quarter, while same-store sales fell 0.8%—which August noted continued an improvement trend versus the prior quarter. There were 37 Bad Daddy’s restaurants in the comparable-store base at quarter end.
On costs, August said Bad Daddy’s food and beverage costs were 29.6% of sales, down 110 basis points year over year due mainly to reduced waste and improved chicken pricing, partially offset by higher beef and bacon prices. She added that, due to seasonality and “the continued tightening of beef supply,” the company anticipates ground beef costs will rise in the second half of the fiscal year. Labor cost was 34.1% of sales, down 20 basis points, helped by lower employee benefit costs but offset by higher wage rates. Occupancy costs were 6.8% (up 10 basis points), while other operating costs rose 110 basis points to 15.6%, primarily from higher delivery and repair and maintenance expenses.
Bad Daddy’s restaurant-level operating profit (a non-GAAP measure) was $3.3 million, or 13.8% of sales, roughly flat compared to $3.4 million and 13.8% in the prior-year quarter.
At the Good Times concept, August said company-owned restaurant sales decreased about $0.1 million to $9.2 million. Same-store sales declined 0.8%—which she described as “a notable improvement over the prior quarter’s decrease.” There were 26 restaurants in the comparable base at quarter end. Average menu price was about 1% higher year over year; August said the company increased core menu prices about 1% in March and ended the quarter with blended pricing about 1.7% higher year over year. She added that, given competitive conditions, the company is not currently planning additional price increases for the remainder of the year.
Good Times food and packaging costs were 29.7% of sales, down 100 basis points due mainly to reduced waste, partially offset by higher beef and bacon prices. Labor costs improved 60 basis points to 35.0%, driven by increased labor efficiency but partially offset by higher wage rates. Good Times restaurant-level operating profit increased $0.1 million to $0.9 million and rose 150 basis points to 10.1% of sales.
At the consolidated level, August said combined general and administrative expense was $2.2 million, or 6.6% of total revenues, down 90 basis points year over year, primarily due to lower multi-unit supervision and technology costs. She said the company anticipates G&A will run 6% to 7% for the full fiscal year 2026.
Net income attributable to common shareholders was $0.1 million, or $0.01 per share, compared to a net loss of $0.6 million, or $0.06 per share, in the year-ago quarter. Adjusted EBITDA was $1.4 million versus $1.0 million a year earlier. The company ended the quarter with $2.7 million in cash and $1.0 million of long-term debt.
Promotions, menu news, and brand marketing changes
Zink outlined several initiatives aimed at driving traffic and reinforcing value messaging at Good Times. Early in the quarter, the company retained Cultivator, a Denver-based firm, as its design and advertising agency for the Good Times brand. Zink said the company has been working with Cultivator on “new brand imagery” and to “refine our brand position,” with plans to roll out new creative first through on-premise merchandising and later through external advertising.
He also highlighted testing a $2 promotional price for Bambinos (sliders) in select northern Colorado locations. Zink said the test has generated “strong results” in both same-store sales and traffic compared to the rest of the system, and the company expects to roll the promotion out system-wide beginning in June as a summer traffic driver. He said the value message is intended to compete directly with value-based promotions in the broader market, while also continuing to merchandise full-size burgers, including a lineup now featuring a larger cook-to-order patty.
Additional summer offerings include the return of cheese curds to the menu as of May 1, which Zink said was driven by guest feedback, and a rotating custard lineup featuring three new “spoon benders” for June through August.
Loyalty growth and updated advertising strategy
Zink said GT Rewards now generates 7% of sales, up from “just shy of 4%” before the company switched its loyalty provider to Thanx in December. During Q&A, he described efforts to grow membership, including updated window and point-of-sale materials with QR codes, bag stuffer cards included with orders, and improved operational execution in mentioning the program at the order box and window.
He said membership is currently growing about 5% per month, adding, “If you do the math on that’s about a 75% annual growth rate,” though he noted the growth rate may slow as the base expands.
Also during Q&A, Zink described how the company’s media mix has evolved. He said Good Times had previously been “significantly heavy on radio advertising,” but moved away from “nearly all radio” about 12 months ago toward primarily social media advertising. Looking ahead, he said the company is considering increased digital media, potentially including digital audio streaming, digital video streaming (such as connected TV and YouTube), and display campaigns. He emphasized that the biggest change is the message itself, with a focus on “smaller portion size and lower price” as key elements of value sought by guests.
Bad Daddy’s operational initiatives and cost outlook
For Bad Daddy’s, Zink reiterated the company’s focus on organic sales and traffic growth. He said the brand has rolled out a “monthly drops” program that replaces traditional limited-time offers, featuring a single item limited to one month. While the items have been burger-focused to date, he said the program is designed to expand beyond burgers.
Across both brands, Zink said the company is nearing completion of a rollout of a learning management platform called Burger Hub, powered by Schoox, intended to provide structured training paths, validation, and reporting.
On pricing at Bad Daddy’s, August said the company did not take menu pricing during the quarter, had year-over-year pricing of roughly 1%, and took about 1% pricing in April. She also said the company began rolling over promotional $8 margarita pricing from the prior year beginning in May.
Legal settlement and balance sheet comments
Asked about the White Winston lawsuit settlement, management said it would not go beyond prior disclosures and characterized the matter as not substantially material to the financials. Management added that all settlement funds have been received and were recognized in the quarter’s results.
In closing remarks, Zink said the company has made progress “lowering our leverage” and strengthening the balance sheet, adding that the company views “a debt-free balance sheet with adequate liquidity” as important given its scale and operating segment.
About Good Times Restaurants (NASDAQ:GTIM)
Good Times Restaurants International, Inc (NASDAQ: GTIM) owns, develops, operates and franchises quick-service restaurants under the Good Times Burger & Frozen Custard brand. The company’s restaurants feature a signature menu built around hand-pressed, fresh-never-frozen beef burgers, homemade buns, fresh-cut fries, handcrafted milkshakes and frozen custard desserts. Good Times supplements its core offerings with seasonal items and limited-time promotions designed to appeal to a variety of customer tastes.
Founded in 1987 and headquartered in Lakewood, Colorado, Good Times has expanded through a mix of company-owned locations and franchising agreements.
