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Good Times Restaurants Inc. GTIM US Equity

Consumer Discretionary · CIK 825324 · FY ends Sep 29
$1.50
+0.00 (+0.00%)
USD · as of 2026-08-28 · marketstack

Good Times Restaurants Inc. (Nasdaq: GTIM), an SEC filer in Retail-Eating Places, closed at $1.50, +0.0%, on 2026-08-28, with a market cap of $16M as of 2026-08-27, a trailing P/E of 15.0, a return on equity of 3.1%, a net margin of 0.7% and 3-year sales growth of 0.8%. Institutional ownership, earnings history and filed financials are on the tabs below.

GTIM · 10-K · period ended 2022-09-27

← all GTIM documents
filed 2022-12-15 · EDGAR original ↗

Our rendering of the filing — original pagination and typography are not reproduced, and tables are reduced to their short label cells (the figures live on FA). Nothing is summarized: every line below is the filing's own text.

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UNITED STATES

SECURITIES AND

EXCHANGE COMMISSION

WASHINGTON, D.C.

20549

FORM 10-K

☑ANNUAL

REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 27, 2022

OR

☐TRANSITION

REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-18590

(Exact name of registrant as specified in its charter)

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number: (303)384-1400

Securities registered pursuant to Section 12(b)

of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common Stock $.001 par value GTIM NASDAQ Capital Market

Securities registered pursuant to Section 12(g)

of the Act: None

Indicate by

check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐No☑

Indicate by

check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐No☑

Indicate by

check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act

of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has

been subject to such filing requirements for the past 90 days.

Yes☑No ☐

Indicate by

check mark whether the registrant has submitted electronically every interactive Data File required to be submitted pursuant to Rule 405

of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)

Yes☑No ☐

Indicate by check mark whether the registrant

is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”

and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐ Non-accelerated filer ☑

Accelerated filer ☐ Smaller reporting company ☑

Emerging growth company ☐

If an emerging

growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any

new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate

by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of

its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b) by the registered public

accounting firm that prepared or issued its audit report ☐

Indicate by

check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐No☑

As of March 31, 2022 (the last business day of

our most recently completed second fiscal quarter), the aggregate market value of the 9,585,466 shares of common stock held by non-affiliates

of the registrant was $33,549,131.

As of December 9, 2022, the registrant had 11,947,139 shares of common

stock outstanding.

Documents Incorporated

by Reference

Certain information required by Part III

of this Annual Report on Form 10-K is incorporated by reference herein from the registrant’s definitive proxy statement relating

to our 2023 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days after the end of the

registrant's fiscal year ended September 27, 2022.

TABLE OF CONTENTS

PAGE

PART I

Item 1 Business 3

Item 1A Risk Factors 15

Item 1B Unresolved Staff Comments 21

Item 2 Properties 21

Item 3 Legal Proceedings 22

Item 4 Mine Safety Disclosures 22

PART II

Item 6 [Reserved] 23

Item 7A Quantitative and Qualitative Disclosures About Market Risk 32

Item 8 Financial Statements and Supplementary Data 33

Item 9A Controls and Procedures 33

Item 9B Other Information 33

Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 33

PART III

Item 10 Directors, Executive Officers and Corporate Governance 34

Item 11 Executive Compensation 34

Item 14 Principal Accountant Fees and Services 35

PART IV

Item 15 Exhibits, Financial Statement Schedules 35

Signatures 39

Table of Contents

PART I

ITEM 1. BUSINESS

Our Company

Good Times Restaurants Inc., a Nevada corporation

formed on October 6, 1996, operates Bad Daddy’s Burger Bar restaurants ( “Bad Daddy’s”) and Good Times Burgers

& Frozen Custard ( “Good Times”) restaurants. Bad Daddy’s and Good Times are two distinctly different, restaurant

concepts. Each is positioned as a unique brand within its respective segment of the industry. Bad Daddy’s operates in the full-service

dining segment as a specialty burger bar concept and Good Times operates in the quick-service restaurant segment as a drive-thru focused

concept focused on all-natural burgers, fries, frozen custard.

Through our subsidiaries, as of December 14, 2022,

we own and operate, or license a total of forty-one Bad Daddy’s restaurants in seven states. We own and operate fourteen Bad Daddy’s

restaurants in North Carolina, twelve traditional Bad Daddy’s restaurants in Colorado, five in Georgia, four in South Carolina,

two in Alabama, two in Tennessee and one in Oklahoma. Of these restaurants, five restaurants are operated through limited partnership

arrangements where we are the operating partner and own between approximately 23% and 75% interest in the partnership entities. We license

the Bad Daddy’s brand for the Bad Daddy’s restaurant located in the Charlotte Douglas International Airport which is owned

and operated by a third-party licensee.

We currently own and operate or franchise thirty-one

total Good Times restaurants. Of these restaurants, twenty-nine are in Colorado. Two of the restaurants are in Wyoming and are “dual

brand” concept restaurants operated by a franchisee of both Good Times and Taco John’s.

The terms “we,” “us,” “our,”

the “Company,” “Good Times” and similar terms refer to Good Times Restaurants Inc., a Nevada corporation, and

its wholly-owned consolidated subsidiaries, including Bad Daddy’s Franchise Development, LLC; Bad Daddy’s International, LLC

(“BDI”); Good Times Drive-Thru Inc. (“Drive Thru”); and BD of Colorado, LLC. (“BD of Colo”) Unless

otherwise indicated or the context otherwise requires, financial and operating data in this 10-K report reflect the consolidated business

and operations of Good Times Restaurants Inc. and its subsidiaries.

The Company’s fiscal year is a 52/53-week

year ending on the last Tuesday of September. In a 52-week fiscal year, each of the Company’s quarterly periods comprise 13 weeks.

The additional week in a 53-week fiscal year is added to the first quarter, making such quarter consist of 14 weeks. Our discussion for

fiscal years 2022 and 2021, which ended on September 27, 2022 (‘fiscal 2022”) and September 28, 2021 (“fiscal 2021”),

respectively, each cover periods of 52 full calendar weeks.

Fiscal 2022 Financial & Brand Highlights

● The Good Times brand had a 1.1% increase in same store sales for fiscal 2022.

● One company-owned Good Times restaurant closed during fiscal 2022.

● We ended fiscal 2022 with $8.9 million in cash and no long-term debt.

Same store sales for each brand represents

the comparison of restaurant sales in the current year, to the same comparable weeks in the immediately preceding fiscal year for those

stores open for at least 18 months.

Recent Developments

Macro Economic Factors and Operating Environment

The global crisis resulting from the spread of

coronavirus (“COVID-19”) impacted our restaurant operations for the fiscal years ended September 27, 2022 and September 28,

2021, though in fiscal 2022 the impact was more modest than in the prior year. During fiscal 2022, all restaurants remained open. We expect

local conditions to continue to dictate limitations on restaurant operations, capacity, and hours of operation. COVID-19 has also contributed

to labor challenges, which have increased hourly wages and management salaries at both concepts, and in limited cases have resulted in

reduced operating hours at certain restaurants. Supply chain constraints have affected both of our concepts, resulting in higher food

and beverage cost associated with general increases in input price levels as well as increased product substitutions, elevated freight

costs, and increased variability in product quality, primarily in produce items. In addition, during fiscal 2022 and extending into fiscal

2023, high rates of inflation have been seen globally which have also resulted in increases in commodity, labor and energy costs for both

concepts. Further significant increases in inflation could affect the global and U.S. economies, which could have an adverse impact on

our business and results of operations if we and our franchisees are not able to adjust prices sufficiently to offset the effect of cost

increases without negatively impacting consumer demand.

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Although we conduct all of our restaurant operations

within the USA, worldwide product supply chains have been impacted by the war in Ukraine. Specifically sunflower oil and wheat, which

are fungible commodities, are used as ingredients in our raw materials and purchased by our suppliers, have significant supplies that

typically originate in Ukraine. The lack of availability of supplies of such products may impact the availability and supplier pricing

for products purchased by us for use in our business, which could result in higher food and packaging costs or reduced revenues.

We currently have a meaningful cash balance and

generated significant cash flow from operations during fiscal 2022. We used a portion of this cash balance to repurchase Company stock

by means of the Stock Repurchase Program during fiscal 2022 as described below.

Share Repurchase

On February 7, 2022, the Company’s board

of directors approved a program to purchase shares of its common stock at an aggregate amount of up to $5.0 million dollars. As of September

27, 2022, a total of 316,447 shares have been repurchased under the plan at an aggregate cost of approximately $1,065,000.

Debt

The Company maintains a credit agreement with Cadence

Bank (“Cadence”) pursuant to which, as amended, Cadence has agreed to loan the Company up to $8,000,000 with a maturity date

of January 31, 2023 (as amended, the “Cadence Credit Facility”). As amended by the various amendments, the Cadence Credit

Facility accrues commitment fees on the daily unused balance of the facility at a rate of 0.25%. As of the date of filing of this report,

any borrowings under the Cadence Credit Facility, as amended, bear interest at a variable rate based upon the Company’s election

of (i) 2.5% plus the base rate, which is the highest of the (a) Federal Funds Rate plus 0.5%, (b) the Cadence Bank publicly announced

prime rate, and (c) LIBOR plus 1.0%, or (ii) LIBOR, with a 0.250% floor, plus 3.5%. Interest is due at the end of each calendar quarter

if the Company elects to pay interest based on the base rate and at the end of each LIBOR period if it elects to pay interest based on

LIBOR. The Cadence Credit Facility includes provisions for the Administrative Agent of the facility to amend the facility to replace LIBOR

with an alternate benchmark rate, which may be (but is not required to be) SOFR, at such point in time when appliable LIBOR rates are

no longer available or no longer reliable. The exact timing of any transition of LIBOR to an alternate benchmark rate is not currently

known. The Company is currently reviewing its future credit facility needs and intends to negotiate an amendment to the existing credit

agreement or enter into a new credit agreement prior to January 31, 2023.

As of the date of filing of this report, the Cadence

Credit Facility contains certain affirmative and negative covenants and events of default that the Company considers customary for an

agreement of this type, including financial covenants setting a maximum leverage ratio of 5.15:1, a minimum pre-distribution fixed charge

coverage ratio of 1.25:1, a minimum post-distribution fixed charge coverage ratio of 1.10:1 and minimum liquidity of $2.0 million. As

of the date of filing of this report, the Company was in compliance with all of these financial covenants under the Cadence Credit Facility.

As a result of entering into the Cadence Credit

Facility and the various amendments, the Company paid loan origination costs including professional fees of approximately $308,500 and

is amortizing these costs over the term of the credit agreement. As of September 27, 2022 the unamortized balance of these fees is $20,000.

The obligations under the Cadence Credit Facility

are collateralized by a first-priority lien on substantially all of the Company’s assets.

As of the date of filing of this report, there

were no outstanding borrowings against the facility. Availability of the Cadence Credit Facility for borrowings is reduced by the outstanding

face value of any letters of credit issued under the facility. As of the date of filing of this report, there were no outstanding letters

of credit issued under the facility.

On May 7, 2020, Good Times and three of its wholly-owned

subsidiaries, BDI, Drive Thru, and BD of Colo (each a “Borrower”), entered into unsecured loans in the aggregate principal

amount of $11,645,000 (the “Loans”) with Cadence Bank, N.A. (the “Lender”) pursuant to the Paycheck Protection

Program.

In June 2021, the SBA approved forgiveness in full

of the Loans, including accrued interest, in the aggregate amount of $11,778,226, which was recognized as gain on debt extinguishment

in the fiscal year ended September 28, 2021. The principal and accrued interest balance on each of these Loans is now zero, as of the

forgiveness date specific to each of the Company’s and its subsidiaries’ Loans.

Total interest expense on notes payable was $20,000

and $269,000 for fiscal 2022 and fiscal 2021, respectively.

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Concepts

Bad Daddy’s Burger Bar

Bad Daddy’s Burger Bar is a full-service,

casual dining small box “better burger” concept. Bad Daddy’s currently operates all of its company-owned restaurants

under a table service / full-bar service model.

There are three primary elements of the concept

that we believe differentiates us from our competition:

While clearly available for on-premises customers,

all three of these elements are available for our off-premises guests as well, as we (1) offer the same customization on our off-premises

ordering platforms as we offer in-restaurant, (2) where allowable by state or local regulation, we also provide our alcoholic beverages

in an off-premises format for those customers who are ordering their meal for carryout or delivery, and (3) we offer the same level of

hospitality to our carry-out guests and tightly manage our delivery service providers to a similar expectation of over-the-top service.

This brand positioning results in transactions

that generate average sales per transaction of approximately $35. The lunch daypart (open until 2pm) represents approximately 35% and

the happy hour and dinner dayparts (2pm until close) represent approximately 65% of restaurant sales. Off-premise sales, including take-out,

delivery and curbside pickup, accounted for approximately 27% of all system-wide sales in Fiscal 2022. Off-premise sales average $29 per

transaction while on-premise sales average $36 per transaction.

A typical Bad Daddy’s restaurant is approximately

3,500-4,000 square feet with an enclosed patio, smaller than most other chain casual dining restaurants. Fiscal 2022 average restaurant

sales averaged $2.57 million per restaurant resulting in average sales per square foot of approximately $670. We believe this is a key

metric indicating the strength and expansion potential of the concept.

While sharing common design elements, each restaurant

has unique features intended to represent the local trade area of each Bad Daddy’s and serves as a further point of differentiation

from the larger casual dining chains. We believe Bad Daddy’s’ innovative menu and personalized service combined with a unique,

fun restaurant design enhance our customers’ experience and differentiate Bad Daddy’s from its competitors.

Good Times Burgers & Frozen Custard

Good Times is a drive-thru, quick-service hamburger-focused

restaurant concept offering fresh, 100% all-natural beef and chicken. We own and operate twenty-three Good Times restaurants, and franchise

an additional eight, located primarily in the Denver market and along the front range of Colorado. We believe Good Times was the first

quick-service chain in our region, and one of the first in the country, to offer a menu of fresh all-natural Angus beef and all-natural

chicken from animals that are humanely raised and vegetarian fed without the use of added hormones, steroids, or antibiotics.

We compete primarily on the quality of our products,

consistently prompt service, and order accuracy. We support our quality position by using only all-natural beef and chicken. Our all-natural

frozen custard is made fresh throughout the day. These quality commitments help Good Times challenge quick-serve restaurant norms and

match quality found at fast casual restaurants. Our focus on speed of service keeps our customers happy as most of our sales come from

the drive thru. With menu innovation, we strive to create flavor profiles unique to Good Times. We have rotating limited time menu items

and custard flavors. Our customers appreciate that we support local causes and do not take ourselves too seriously. Good Times makes use

of various media but primarily communicate these advantages and promotions through the use of terrestrial radio and digital audio streaming.

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Our average per person check is approximately $14.17,

which we believe is slightly lower than the average check at fast casual hamburger concepts such as Habit Burger, Five Guys, and Smashburger,

but well above the typical quick-service restaurant average check such as McDonalds, Wendy’s and Burger King. We do not offer a

low-priced value menu like most national quick-service chains, choosing to define our value proposition based on quality ingredients with

a specific focus on all-natural beef and chicken and products spanning a range of price choices within each of our menu categories. We

have shifted our focus to a blend of quality and speed while slightly reducing the number of items on the menu.

Good Times is primarily a drive-thru concept, as

all our restaurants have at least one drive-thru lane and generally have a walk-up window where customers may additionally place orders.

Most of our restaurants have no indoor seating and consist of one drive-thru lane and outdoor patio seating. Speed of service in this

segment is critical for success and we average less than three-minute transaction times, as measured from the time the customer places

their order until they leave the drive-thru lane. Prior to the COVID-19 pandemic, even in our restaurants that feature dine-in seating,

a majority of our sales were conducted through the drive-thru lane. Due to staffing constraints and customer preference for drive thru,

our dining rooms remain closed.

The success of our strategy is evident in our long-term

same-store sales growth (sales growth over the prior year period at restaurants open more than 18 months, also referred to as comparable

sales). Same store sales increased 1.1% in fiscal 2022, and 10.5% in fiscal 2021, and five-year sales growth of 20.3%.

Our Business Strengths

Our Brands Are Complementary

While operating in different segments of the restaurant

industry, our two brands complement each other in both their similarities and differences:

Each has a value proposition enhanced by superior

quality ingredients and a focus on the specific elements of service relevant to the concept that deliver an exceptional experience to

each guest. We believe Bad Daddy’s resonates with consumers by consistently executing high-quality, scratch-made menu items with

bold flavors delivered in a high-energy environment with a slightly irreverent brand personality. The appeal of Bad Daddy’s is not

solely based on a purely on-premise customer experience however, as the focus we place on bold, unique flavors; superior ingredients;

and scratch cooking in each kitchen translates into significant off-premise adoption, both through traditional customer carry-out and

delivery by third party delivery service providers.

We believe Good Times is the only drive-thru quick-service

chain in our region with an all-natural platform. We do not offer a low-priced value menu as many national quick-service chains do, choosing

to compete on a market position emphasizing quality with a specific focus on all-natural beef and chicken, and with a variety of price

points across the menu with quick-service restaurant speed of service. The quick-service, and in particular, drive-thru format of our

Good Times concept offers a balancing effect to business cycles that are common in the full-service segment of the restaurant industry.

Our Brands Have a Common Culture and Operating

Philosophy

While each of our brands is led by separate operating

teams, each shares a commitment to four core values and four dimensions of our business:

● Dimensions of the Business:

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Our Brands Have Growth Potential

We believe both of our brands are well positioned

to take advantage of consumers’ changing demands for restaurants, whether regarding the quality of the ingredients, the ability

to customize their order exactly to their liking, or the ability to eat their food in a restaurant dining room, on a patio, in

their car, or to either pick it up or have it delivered so they can eat it at their home or office. We believe Good Times and Bad Daddy’s

are both well positioned to capitalize on those macro-trends.

Both of our brands currently operate with relatively

small market penetration and overall development footprints, providing significant expansion potential. It is our goal to primarily grow

our Bad Daddy’s brand and to do so relatively contiguously from our existing restaurants in order to maximize brand awareness and

operating and distribution efficiencies.

Good Times and Bad Daddy’s operate with a

common point-of-purchase system and we have implemented a common back-office system for both brands. We are also continuing to invest

in sophisticated digital training tools, making each brand’s restaurant level processes, systems, recipes and management tools available

in one commonly accessible database.

We Have Assembled a Dedicated Senior Leadership

Team with Significant Experience

Each of the members of our senior leadership team

have more than fifteen years of relevant experience in their field of expertise, and nearly all have more than fifteen years of industry

experience, with some members having worked together for more than twenty years developing the Good Times concept. Our executive leadership

team has significant experience in both full service and quick service restaurant concepts.

Each brand is operated with distinct operations

teams led by its own operations leader, while utilizing shared support capabilities in administration, finance, accounting, human resources,

development, marketing and information technology, each capability led by its own qualified leader with many years of functional and leadership

experience. We believe we have people with the right expertise as well as capable processes and systems in place to support both concepts

and targeted future growth of the Bad Daddy’s concept.

We Have Maintained Operating Momentum

Same-store sales at Good Times have increased ten

of the past eleven years. Same-store sales increased for fiscal 2022 primarily due price increases throughout the fiscal year, partially

offset by decreased foot traffic Our compound annual same-store sales growth rate was approximately 3.5% from fiscal 2015 to fiscal 2022.

We believe this performance is largely the result of the evolution in our brand positioning, the re-imaging of several of our older restaurants,

effective management of media mix, and consistent execution of the customer experience. We plan to continue to periodically re-image and

remodel our restaurants, maintain a relevant menu with a laser focus on speed and accuracy in execution, in keeping with our brand strategy,

and communicate our brand story to maintain our same-store sales growth.

The Bad Daddy’s concept was started in 2007

in Charlotte, North Carolina by a qualified chef and was initially expanded in partnership with a serial restaurant entrepreneur who remains

a non-controlling partner in five of our Bad Daddy’s restaurants. Sales of the Bad Daddy’s restaurants which were open for

at least 18 months averaged $2.6 million for fiscal 2022. We purchased one previously-franchised Bad Daddy’s during the second fiscal

quarter of 2022. We opened two new Bad Daddy’s restaurants during fiscal 2021 The consistency of our sales growth following the

reopening of our dining rooms gives us confidence in the strength of the Bad Daddy’s concept and the ability for us to deliver upon

our pre-pandemic model in a post-pandemic world, such that we expect significant long-term expansion potential, both in our existing markets

and in new markets, though we expect such expansion to be disciplined and financed primarily from operating cash flow from the Bad Daddy’s

business.

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Business Strategies

We are focused on continuing to grow same store

sales and improve the profitability of the Good Times concept while continuing targeted unit growth of the Bad Daddy’s Burger Bar

concept in domestic markets. We believe that there are significant opportunities to develop new units, grow customer traffic and increase

awareness of our brands. The following sets forth the key elements of our growth strategy:

Expansion

strategy and site selection

Bad Daddy’s Burger Bar

Our development of the Bad Daddy’s Burger

Bar concept in company-owned restaurants has focused on urban and suburban upper income demographic areas with median household incomes

over $70,000, with a high concentration of daytime employment, specialty retail and entertainment venues. We use specialized software

to create a sales forecast for each site and have continued to update the data in that site forecasting software even as we had limited

growth during 2022. We expect to utilize this software as one component of decision making in the selection of sites for future Bad Daddy’s

restaurant locations.

Bad Daddy’s Burger Bar locations are primarily

end-cap locations in new and existing shopping center developments using approximately 3,500 to 4,000 square feet. While our Good Times

restaurants are free standing and require extensive site development and entitlement processes, Bad Daddy’s Burger Bar restaurants

can be developed much more quickly due to the requirement for only a building permit, signage approvals and liquor license without the

need for extensive on-site and off-site development or land and zoning submittals and modifications. We estimate that it will take approximately

120 to 150 days to develop a Bad Daddy’s Burger Bar from the time a building permit is issued. We expect that the majority of the

Company’s unit growth will be through the development of additional Bad Daddy’s Burger Bar locations.

Good Times Burgers & Frozen Custard

We do not have explicit plans to develop additional

Good Times restaurants, as we continue to refine the economic model of our primarily drive-thru business. However, we expect that any

opportunistic development in Good Times locations would be through a lens of growth in Colorado and potentially surrounding states, which

would preserve operating and marketing efficiencies created by the geographic concentration of our existing base of restaurants. Any development

of new Good Times restaurants would involve a new prototype restaurant design focused primarily on drive-thru with an outside patio but

without any enclosed dining room.

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We currently lease either the land or the land

and building for all of our Good Times restaurants. If we were to develop additional sites, a lease/buy decision would be based upon the

economics of the property and our long-term point of view on the underlying real estate and do not have an explicit preference for leasing

in the case of future Good Times restaurants. Our primary site objective is to secure a suitable site, with the decision to buy or lease

as a secondary objective. Our site selection process includes evaluating several criteria, including a mix of substantial daily traffic,

density of at least 30,000 people within a three-mile radius, strong daytime population and employment base, retail and entertainment

traffic generators, good visibility and easy access.

Restaurant locations

As of December 14, 2022, we own and operate or

license a total of forty-one Bad Daddy’s Burger Bar locations. The location in the Charlotte Douglas International Airport is operated

pursuant to a License Agreement. We purchased one Bad Daddy’s restaurant from a franchisee during fiscal 2022. We opened two company-owned

Bad Daddy’s restaurants during fiscal 2021. We additionally had one non-traditional location in which we operated the kitchen of

a local craft brewer’s taproom under the brand name Bad Daddy’s at Tivoli. This location opened in August 2021 and closed

in August 2022.

Additionally, we own and operate or franchise a

total of thirty-one Good Times restaurants. One company-owned Good Times restaurant closed due to the landlord’s purchase of the

company’s remaining lease term for the purpose of redevelopment. Additionally, one company-owned Good Times restaurant closed, and

the property was subleased during fiscal 2021.

Company-Owned/Co-Developed/Joint-Venture

Bad Daddy’s Burger Bar Good Times Burgers & Frozen Custard Total

South Carolina 4 3 - - 4 3

Tennessee 2 2 - - 2 2

Franchise/License

Bad Daddy’s Burger Bar Good Times Burgers & Frozen Custard Total

North Carolina 1 1 - - 1 1

South Carolina - 1 - - - 1

Menu

Bad Daddy’s Burger Bar

The Bad Daddy’s Burger Bar menu offers our

guests a culinary-driven menu consisting of our own unique blend of high quality and handcrafted Angus beef burgers with creative, scratch-made

toppings including buttermilk-fried bacon, housemade American cheese, creamy ale queso made in-house with our Bad Daddy’s Amber

Ale, and our specialty signature Bad Daddy’s sauce. The customizable menu options also include a variety of proteins including

black bean, salmon, turkey, bison and chicken. Additionally, we offer giant chopped salads, a full gluten-friendly menu, appetizers including

hand-cut fries and housemade potato chips, hand-spun ice cream milk shakes and our scratch-made “southern-style” banana pudding.

We feature a variety of craft beers from local breweries and a full bar serving spirits, innovative cocktails, and wines including our

signature Red and White pours.

Our signature

recipes include the Bad Ass Burger; Sam I Am Burger and Emilio’s Chicken Sandwich. Signature Chopped Salads include the Texican

Chicken Salad and the Stella’s Greek Salad. However, the true differentiator for the brand is our customers’ ability to build

their meal exactly the way they would like. The Bad Daddy’s Create Your Own menu allows full customization of burgers and

salads offering over sixty topping options. We’ve partnered with Tivoli Brewing, a premier craft brewer in Denver, and Breckenridge

Brewing, to make our Bad Daddy’s draft brews including Bad Daddy’s Amber, IPA, and Light brews. Our creative cocktail menu

uses fresh-squeezed housemade sours and fresh garnishes in our signature Bad Ass Margaritas and features creative and timeless options

including the Daddy’s Dragonberry and spiked milkshakes.

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Bad Daddy’s

Burger Bar strives to provide proprietary flavors and recipes available nowhere else with fresh, handcrafted quality throughout the menu

paired with genuine and warm hospitality. We also commit to making occasional changes to keep our menu fresh for our guests while still

maintaining the spirited flavor profiles that distinguish us from others. In addition, we have rotating chef specials with flavor profiles

unique to Bad Daddy’s. At times we also feature a burger with local ingredients with a giveback to a local charity.

Good Times Burgers & Frozen Custard

The menu of each Good Times restaurant is focused

primarily on hamburgers, cheeseburgers, chicken sandwiches and chicken tenders that are fresh, never frozen, and using only all-natural

beef and chicken. This menu is supplemented by side selections including two types of french fries, green chile potato poppers, and onion

rings. Beverages include typical soft drinks and fresh lemonades, with a selection of frozen custard products. We have a limited breakfast

menu consisting of breakfast burritos, orange juice and coffee and a kid’s meal menu featuring a choice of main item, side, drink,

and a wooden nickel that can be redeemed for a free kid’s cup or cone of custard.

Our hamburger patties are made with Meyer all-natural,

all-Angus beef. Our chicken products are sourced from Springer Mountain Farms, which provides all-natural, antibiotic free, humanely-raised

chicken. All-natural Angus beef and chicken are raised without the use of any hormones, antibiotics or animal byproducts that are normally

used in the open market. We believe that all-natural beef and chicken deliver a better tasting product and, because of the rigorous protocols

and testing that are a part of the Meyer all-natural, all-Angus Beef and Springer Mountain Farms Chicken processes, may also minimize

the risk of any food-borne bacteria-related illnesses. We also believe that the use of premium, all-natural beef and chicken products

help us to differentiate our concept in a crowded quick-service segment of the restaurant industry.

Our fresh frozen custard is a premium ice cream

with a proprietary vanilla blend that is prepared from highly specialized equipment that minimizes the amount of air that is added to

the mix and that creates smaller ice crystals than other frozen dairy desserts. The resulting product is smoother, creamier and thicker

than typical soft serve or hard-packed ice cream products. We serve the frozen custard as vanilla and a flavor of the month in cups and

cones and Spoonbenders, a mix of custard and toppings. Additionally, we offer eight flavors of shakes.

The breakfast menu is centered around Hatch Valley

Green Chile Burritos made with our own proprietary green chile recipe using roasted green chiles sourced exclusively from Hatch Valley,

New Mexico, eggs, potatoes, and cheese offered with the choice of bacon, sausage or chorizo. We also offer a premium coffee made by Daz

Bog, a Colorado-based coffee roaster, and pure 100% orange juice.

Marketing & Advertising

Bad Daddy’s Burger Bar

Our marketing strategy for Bad Daddy’s Burger

Bar focuses on iconic, in-store merchandising materials and local store marketing to the surrounding trade area around each restaurant,

including public relations and community-based events. We generally do not focus on large media buys or “traditional” advertising,

but on the in-store customer experience, building word-of-mouth reputation and recommendations and local public relations based on prior

and recent awards and recognitions received by Bad Daddy’s. We have recently supplemented this with additional investments in social

and digital media using third party resources who specialize in highly targeted advertisements on social media and digital platforms.

We also use public relations, and trade area specific direct mail materials, particularly in support of new restaurant openings, to drive

trial and initial awareness.

Good Times Burgers & Frozen Custard

Our marketing strategy for Good Times focuses on:

1) driving same store restaurant sales through attracting new customers and increasing the frequency of visits by current customers; 2)

communicating specific product news and attributes to build strong points of difference from competitors; and 3) communicating a unique,

strong and consistent brand personality.

Media is an important component of building our

brand awareness and distinctiveness. We spent most of our broadcast advertising dollars on radio advertising during fiscal 2022 and fiscal

2021. We augment our broadcast advertising with a social media presence that affords us a higher level of engagement with current customers

and an increased level of product giveaways to support high sales opportunity products. As with Bad Daddy’s, we have recently supplemented

our legacy advertising approach with additional investments in social and digital media using third party resources who specialize in

highly targeted advertisements on social media and digital platforms.

Operations

We maintain separate operating teams for each of

our concepts and have extensive operating, training and quality control systems in place.

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Restaurant Management

Bad Daddy’s Burger Bar was developed as a

chef-driven concept and utilizes a team of three or four managers in our operations at most restaurants. Managers are cross-trained in

back of the house skills (prep, kitchen positions and line management), front of the house service positions (host, server and bar) and

all management functions, however each manager is assigned one or more specific areas of responsibility over which they have “ownership”

and direct accountability for results. Our managers at each restaurant participate in a bonus pool for each restaurant based on a combination

of restaurant sales, income, and specific financial and operational objectives. As a full-service concept, our operating leadership structure

for Bad Daddy’s Burger Bar operations is distinct and separate, including a separate operations leader, from our Good Times operations

team as the experience, qualifications and compensation of team members are significantly different between the quick service and full-service

segments of the industry. Although this is the case, we have combined recruiting into a single shared services capability and believe

that long-term our training capabilities for the brands will similarly be combined into single shared services capability.

Each Good Times restaurant employs a general manager,

generally between one and three hourly assistant managers, up to four hourly shift managers and approximately 10 to 20 non-management

team members, most of whom work part-time during three shifts. Most of our shift managers, assistant managers, and general managers are

internally promoted from team member positions, and in order to become a shift manager, an eight- to ten-week program over which the team

member becomes fully capable on all phases of the operation, is used to train a new shift manager. Ongoing training and development is

provided as necessary. We believe that incentive compensation of our restaurant managers is essential to the success of our business.

Accordingly, our general managers and assistant managers in each restaurant participate in a bonus program based upon meeting financial,

customer service and quality performance objectives tied to a monthly scorecard of measures.

Operational and Management Systems and Processes

We have implemented highly-effective operating

systems and processes relative to those in the industry for both of our concepts. Detailed processes have been developed for all responsibilities

that drive consistency across our system of restaurants and performance against our standards within different day parts. We utilize a

combination of industry-leading labor programs and proprietary algorithms to determine optimal staffing needs of each restaurant based

on its actual customer flow and demand. We also employ several additional operational tools to continuously monitor and improve speed

of service, food waste, food quality, sanitation, financial performance and employee development. The order system at each Good Times

restaurant is equipped with an internal timing device that displays and records the time each order takes to prepare and deliver.

We use several sources of customer feedback to

evaluate each restaurant’s service and quality performance, including an extensive secret shopper program, telephone surveys, website

comments and a customer feedback tool that aggregates all social media comments as well as store-by-store surveys each week for each restaurant.

We believe that information will assist us in evaluating opportunities for improved execution of the customer experience.

Training

We strive to maintain quality and consistency in

each of our restaurants for both Good Times and Bad Daddy’s through the careful training and supervision of our restaurant leadership

team members and the establishment of, and adherence to, high standards relating to personnel performance, food and beverage preparation

and maintenance of our restaurants. Each manager must complete an eight- to ten-week training program, be certified on several core processes

and is then closely supervised to show both comprehension and capability before they are allowed to manage autonomously. We have a defined

weekly and monthly goal-setting process around service, employee development, financial management and store maintenance goals for every

restaurant. Additionally, we have a library of video training tools to drive training efficiencies and consistency at both brands.

Prior to opening a new restaurant, a training and

opening team travels to the new restaurant location to prepare for an intensive training program for all team members hired for the new

restaurant opening. Part of the training team remains on-site for a period after the opening of the restaurant while an additional team

provides several weeks of support following opening.

Recruiting and Retention

At Bad Daddy’s we seek to hire experienced

restaurant managers and operating partners. We support employees by offering competitive wages and benefits, including a matching 401(k)

plan, medical insurance, and incentive plans at every level of management that are tied to performance against key goals and objectives.

We motivate and prepare our employees by providing them with opportunities for increased responsibilities and advancement. We also provide

various other incentives, including paid time off, communication allowances, incentive performance bonuses and referral bonuses. We have

implemented an online screening and hiring tool that has proven to reduce hourly employee turnover.

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Franchising

For Bad Daddy’s Burger Bar, we have prepared

forms of area rights and franchise agreements. We anticipate that a franchisee will typically pay a royalty of 4% to 5% of net sales and

will participate in an advertising fund and local advertising by contributing up to 2% of net sales. Initial development and franchise

fees are projected to be $35,000 per restaurant. We estimate that it will cost a Bad Daddy’s Burger Bar franchisee $590,000 to $1,382,000

to open a 3,500 to 4,000 square foot restaurant in an in-line or end-cap retail center, based on our knowledge of the development costs

of the existing Bad Daddy’s Burger Bar restaurants. We are not currently actively soliciting new franchisees but are assessing potential

future growth through the development of franchised Bad Daddy’s restaurants.

For Good Times, we have previously prepared forms

of area rights and franchise agreements and advertising material to be utilized in soliciting prospective franchisees. We have historically

sought to attract franchisees that are experienced restaurant operators, are well capitalized and have demonstrated the ability to develop

one to five restaurants. We review sites selected for franchises and monitor performance of franchise units. Currently, we

are not actively soliciting new franchisees but are assessing potential future growth through the development of franchised Good Times

restaurants.

We currently have one license agreement for a Bad

Daddy’s location in the Charlotte Douglas International Airport. We currently have six Good Times restaurants operating under franchise

agreements in the greater Denver metropolitan area and two dual-branded franchised restaurants operate in Wyoming. In addition, seven

joint-venture restaurants are operating in the Denver metropolitan area media market.

We actively work with and monitor our franchisees

to ensure successful franchise operations as well as compliance with our systems and procedures. We advise the franchisee on menu, management

training and marketing. On an ongoing basis we conduct standards reviews of all franchise restaurants in key areas including product quality,

service standards, restaurant cleanliness and sanitation and food safety.

Management Information Systems

The systems in our restaurants are designed in

a manner to minimize the amount of time our managers spend on administrative tasks. We utilize up-to-date versions of a leading point-of-sale

system in each of our company-owned restaurants that captures transaction-level data required to support information about sales, product

mix, and average check. Configuration of restaurant point-of-sales systems is performed by our technology share service capability.

We use a cloud-based back-office solution across

both brands that collects sales, labor and cash data from the restaurant point-of-sale system in near real-time and is the primary source

of capture for inventory and supply chain management information. This back-office solution interfaces with our primary financial accounting

systems and provides all levels of management with relevant daily, weekly and monthly reports across substantially all store-level income

and expense categories.

Food Preparation, Quality Control & Purchasing

We believe that we have excellent food quality

standards relative to the industry. Our systems are designed to protect our food supply throughout the preparation process. We inspect

specific qualified manufacturers and work together with those manufacturers to provide specifications and quality controls. Our operations

management teams are trained in a nationally recognized comprehensive safety and sanitation course specific to food service. Minimum cook

temperature requirements, periodic line checks throughout the day, and daily facilities checklists ensure the safety and quality of both

burgers and other items we use in our restaurants.

We currently purchase 100% of the food and paper

supplies for our Good Times restaurants and the majority of the food and paper supplies for our Bad Daddy’s restaurants from US

Foods. In addition, we maintain multiple approved suppliers for all key components of our menu to mitigate risk and ensure supply. Suppliers

are chosen based upon their ability to provide (i) a continuous supply of product that meets all safety and quality specifications, (ii)

logistics expertise and freight management, (iii) product innovation and differentiation, (iv) customer service, (v) transparency of business

relationships and (vi) competitive pricing. Specified products are distributed to all restaurants through US Foods under negotiated contracts

directly to our restaurants two to four times per week depending on restaurant requirements. We do not believe that the current reliance

on these distributors will have any long-term material adverse effect since we believe that there are a sufficient number of other suppliers

from which food and paper supplies could be purchased with little or no interruption in service. We do not anticipate any difficulty in

continuing to obtain an adequate quantity of food and paper supplies of acceptable quality and at acceptable prices. We monitor the primary

commodities we purchase and extend contract positions when applicable in order to minimize the impact of fluctuations in price and availability.

However, certain commodities, primarily ground beef, remain subject to market price fluctuations.

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Employees

At September 27, 2022, we had approximately 2,411

active employees of which 2,194 are hourly team members and 217 are salaried managers or professional staff working full time. Our set

of values includes Respect and Care for people, including all of our employees, and one of the dimensions of our business is Individual

Fulfillment. We strive to provide competitive salary and benefits, strong development opportunities, and a meaningful job or career

for all of our employees and believe that this has translated into good employee relations. None of our employees are covered by a collective

bargaining agreement.

Competition

The restaurant industry, including both limited

service and full-service segments, is highly competitive. Bad Daddy’s Burger Bar competes with both local, regional, and national

gourmet, “better burger” concepts as well as more legacy grill and bar concepts. As such, Bad Daddy’s competes

with both full-service and limited-service better burger restaurants. There are other burger-centric fast casual concepts that operate

at a lower average customer check than Bad Daddy’s Burger Bar and others in both fast casual and full-service formats that operate

with a higher average customer check. We believe that we offer sufficient price choice to be able to compete effectively in the full range

of such concepts. We believe that Bad Daddy’s Burger Bar has an advantage in the premium quality of our ingredients, unparalleled

ability for guests to customize their order, distinctiveness of its atmosphere and the bold, unique flavors of our scratch-made, chef-inspired

menu offerings. Nevertheless, Bad Daddy’s Burger Bar may be at a competitive disadvantage to other restaurant chains with greater

name recognition and operating mass.

Good Times competes with many other hamburger-oriented

quick-service restaurants in the areas in which it operates. Many of these restaurants are owned and operated by regional and national

restaurant chains, many of which have greater financial resources and experience than we do. In-N-Out, a California-based, burger-focused

quick-service restaurant concept, has expanded into the Colorado market and Whataburger, a Texas-based burger-focused quick-service restaurant

concept has announced its intent to expand into the Colorado market. Double drive-thru restaurant chains such as Rally’s Hamburgers

and Checker’s Drive-In Restaurants, which currently operate double drive-thru restaurants in various markets in the United States,

are not currently operating in Colorado. We are aware of only two significant quick-service competitors offering frozen custard as a primary

menu item operating in the Colorado market and both have a significant presence in Midwestern markets that may be targeted for expansion.

Additional “fast casual” hamburger restaurants are being developed in the Colorado market; however, these generally do not

have drive-thru service and generate an average per person check that is meaningfully higher than the average check at a Good Times restaurant.

We believe that Good Times may have a competitive

advantage in terms of quality of product compared to traditional quick-service hamburger chains. Early development of our double drive-thru

concept in Colorado has given us an advantage over other drive-thru chains that may seek to expand into Colorado because of our brand

awareness and present restaurant locations. Nevertheless, we may be at a competitive disadvantage to other restaurant chains with greater

name recognition and marketing capability. Furthermore, most of our competitors in the fast-food business operate more restaurants, have

been established longer, and have greater financial resources and name recognition than we do. There is also active competition for management

personnel, as well as for attractive commercial real estate sites suitable for restaurants.

Intellectual Property

We have registered our marks “Bad Daddy’s

Burger Bar” and “Good Times” with the United States Patent and Trademark Office. We received approval of our federal

registration of “Bad Daddy’s Burger Bar” in 2011 and “Good Times” in 2003. Additionally, we own trademarks

or service marks that have been registered with the United States Patent and Trademark Office including, but not limited to, “Bad

Daddy’s Burger Bar EST. 2007”, “Big Daddy Bacon Cheeseburger,” “Spoonbender”, and “Happiness

Made To Order”. The registration for our “Bad Daddy’s Burger Bar” mark will be renewed prior to September

2031. The registration for our “Good Times” marks will be renewed prior to December 2023 and March 2032 respectively. We intend

to maintain our marks and renew registrations on a timely basis.

Government Regulation

Each of our restaurants is subject to the regulations

of various health, sanitation, safety and fire agencies in the jurisdiction in which the restaurant is located. Difficulties or failures

in obtaining the required licenses or approvals could delay or prevent the opening of a new restaurant. Federal and state environmental

regulations have not had a material effect on our operations. More stringent and varied requirements of local governmental bodies with

respect to zoning, land use and environmental factors could delay or prevent development of new restaurants in particular locations. We

are subject to the Fair Labor Standards Act, which governs such matters as minimum wages, overtime, and other working conditions. In addition,

we are subject to the Americans with Disabilities Act, which requires restaurants and other facilities open to the public to provide for

access and use of facilities by the handicapped. Management believes that we are in compliance with the Americans with Disabilities Act.

Beginning in 2015, we became subject to the Affordable Care Act which requires us to have the required health insurance benefits for eligible

employees.

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We are also subject to federal and state laws regulating

franchise operations, which vary from registration and disclosure requirements in the offer and sale of franchises to the application

Source: SEC EDGAR (public domain) · 10-K for the period ended 2022-09-27, filed 2022-12-15 · accession 0001214659-22-014979

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