UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☑ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 2025
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 000-18590
Good Times Restaurants Inc.
(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:
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. ☐
If securities
are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by
check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received
by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 April 1, 2025 (the last business day of our most recently completed
second fiscal quarter), the aggregate market value of the 7,896,815 shares of common stock held by non-affiliates of the registrant was
$20,057,910.
As of December 22, 2025, the registrant had 10,557,896
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
2026 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 30, 2025.
TABLE OF CONTENTS
PAGE
PART I
Item 1 Business 3
Item 1A Risk Factors 13
Item 1B Unresolved Staff Comments 21
Item 1C Cybersecurity 21
Item 2 Properties 22
Item 3 Legal Proceedings 22
Item 4 Mine Safety Disclosures 23
PART II
Item 6 [Reserved] 24
Item 7A Quantitative and Qualitative Disclosures About Market Risk 33
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 34
PART IV
Item 15 Exhibits, Financial Statement Schedules 34
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 restaurants (“Good Times”). 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 concept
focused on all-natural burgers, fries, and frozen custard.
Through our wholly owned subsidiaries (the “Subsidiaries”),
we currently own and operate or license thirty-eight Bad Daddy’s restaurants in seven states. We own and operate fourteen Bad Daddy’s
restaurants in North Carolina, nine in Colorado, four in Georgia, four in South Carolina, three in Alabama, two in Tennessee and one in
Oklahoma. We license the Bad Daddy’s brand to a third-party licensee who owns and operates the Bad Daddy’s restaurant located
in the Charlotte Douglas International Airport.
We currently own and operate or franchise thirty
Good Times restaurants. Of these restaurants, twenty-eight 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 consolidated subsidiaries. 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 is comprised of
13 weeks. The additional week in a 53-week fiscal year is added to the first quarter, making such quarter consist of 14 weeks. Fiscal
year 2025 ended on September 30, 2025 (“fiscal 2025”) and covered a period of 53 full calendar weeks. Fiscal year 2024 ended
on September 24, 2024 (“fiscal 2024”) and covered a period of 52 calendar weeks. Fiscal 2026 will consist of 52 weeks and
end on September 29, 2026.
Fiscal 2025 Financial & Brand Highlights
● Same store sales decreased by 5.0% at our Good Times brand during fiscal 2025.
Same store sales is 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 Company-owned units open for at least eighteen full fiscal months and use the comparable operating weeks
from the prior year to the current year’s operating weeks. Stores are excluded from the calculation during fiscal periods in which
a store is closed for multiple days for remodels, and for acquired restaurants, during any fiscal periods prior to the first full fiscal
period under Company ownership.
Recent Developments
Macroeconomic Factors and Operating Environment
During fiscal 2025, inflation moderated, however
economic indicators remain volatile and 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. Further, recent concerns have centered more around potential economic
weakness in the global economy, and within the restaurant industry, sales and traffic have exhibited greater weakness than at any time
since the post-pandemic recovery. Within the restaurant industry, sales and traffic have exhibited greater weakness in the general
casual dining sector than at any time since the post-pandemic recovery, and competitors in the QSR burger segment have been aggressively
discounting to address pricing concerns that had been affecting traffic. As a result, traffic and sales trends have recently been more
difficult to predict because of increased volatility in customer perception of the relative strength or weakness of the general economy.
Although we conduct all of our restaurant operations
within the U.S., worldwide product supply chains have been impacted by international conflicts. The lack 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.Additionally, recent policy changes related to tariffs have resulted
in higher input costs, including the costs of food, paper, and operating supplies. These increases have affected the costs of domestic
products, as reduced imports have affected overall supply in the market for comparable products resulting in scarcity and an overall high
price level for certain goods.
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Share Repurchase
On January 31, 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 on the open
market, effective February 7, 2022. On December 12, 2024 the Company announced a $2.0 million expansion to its share repurchase program
bringing the total authorization for repurchases of its common stock to $7.0 million. As of September 30, 2025, a total of 1,822,246 shares
have been repurchased under the plan at an aggregate cost of approximately $5,019,000. In addition to purchases made under this Share
Repurchase Program, on May 5, 2025, the company purchased an aggregate of 11,331 shares of its common stock at a price of $2.00 per share
in a transaction in a private transaction negotiated with its Senior Vice President of Operations who retired on May 30, 2025.
Debt
Cadence Credit Facility. The Company and
its wholly owned subsidiaries (the “Subsidiaries”) maintain an amended and restated credit agreement with Cadence Bank
(“Cadence”). Pursuant to the credit agreement, Cadence agreed to loan the Company up to $8,000,000, with a maturity date
of April 20, 2028 (as amended to date, the “Cadence Credit Facility”). The Cadence
Credit Facility amended and restated the Company’s prior credit facility with Cadence in its entirety. The Cadence Credit Facility
accrues commitment fees on the daily unused balance of the facility at a rate of 0.25%. The loans may from time to time consist of a
mixture of SOFR Rate Loans and Base Rate Loans with differing interest rates based upon varying additions to the Federal Funds Rate,
the Cadence prime rate or Term SOFR. Each of the Subsidiaries are guarantors of the Cadence Credit Facility. Proceeds from the
Cadence Credit Facility, if and when drawn, may be used (i) to fund new restaurant development, (ii) to finance the buyout of non-controlling
partners in certain restaurants, (iii) to finance the redemption, purchase or other acquisition of equity interests in the Company and
(iv) for working capital and other general corporate purposes.
The Cadence Credit Facility
includes customary affirmative and negative covenants and events of default. The Cadence Credit Facility also requires the Company to
maintain various financial condition ratios, including minimum liquidity, an amended maximum leverage ratio and an amended minimum fixed
charge coverage ratio. In addition, to the extent the aggregate outstanding balance under the revolver under the Cadence Credit Facility
exceeds $4.0 million, the Company is required to meet a new specified leverage ratio, on a pro forma basis, before making further borrowings
as well as certain restricted payments, investments and growth capital expenditures. As of the date of filing of this report, the Company
was in compliance with each of these covenants under the Cadence Credit Facility.
As of September 30, 2025,
the interest rate applicable to borrowings under the Cadence Credit Facility was 7.27%.
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 $324,000 and
is amortizing these costs over the term of the credit agreement. As of September 30, 2025, the unamortized balance of these fees was $93,000.
In connection with the
Cadence Credit Facility, the Company and the Subsidiaries entered into an Amended and Restated Security and Pledge Agreement (the “Security
Agreement”) with Cadence. Under the Security Agreement, the Cadence Credit Facility is secured by a first priority security interest
in substantially all the assets of the Company and the Subsidiaries.
As of September 30, 2025, there were $2,000,000
borrowings against the facility, all of which is due during the fiscal year ending September 2028 and is classified as a long-term liability
in the accompanying balance sheet. 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 September 30, 2025, there were approximately $10,000 in outstanding letters
of credit issued under the facility, and approximately $5,990,000 of committed funds available.
Parker Promissory Note. Good Times
Drive Thru, Inc., a wholly owned subsidiary of the Company, is the maker of an unsecured promissory note in connection with the
purchase of the previously franchised Good Times Burgers and Frozen Custard restaurant located in the Denver suburb of Parker,
Colorado. JGN Management, Inc., the former franchisee, is the holder of the note. The Parker Promissory Note fully amortizes over
its original ten-year life maturing on June 1, 2034, carries an interest rate of 5.00% and is, in all respects, subordinate to
the Cadence Credit Facility. As of September 30, 2025, the outstanding principal balance on the Parker Promissory Note was $342,000.
Annual principal maturities over the next five years are approximately $35,000 each year.
Total interest expense on notes payable was $191,000
and $108,000 for fiscal 2025 and 2024, respectively.
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:
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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 $38 across all transaction types. The lunch daypart (between open and 2 p.m.)
represents approximately 33% and the happy hour and dinner dayparts (2 p.m. until close) represent approximately 67% of restaurant sales.
Off-premises sales, including take-out, delivery and curbside pickup, accounted for approximately 27% of all system-wide sales in fiscal
2025.
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.
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 burger-focused
restaurant concept offering fresh, 100% all-natural beef and chicken. We own and operate twenty-seven Good Times restaurants, and franchise
an additional three: one located in Aurora, Colorado and two in Wyoming.
We compete primarily on the quality of our products,
consistently prompt service, and order accuracy. We support our quality position by using only beef and chicken raised humanely with no
antibiotics and no added hormones. Our 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 satisfies our guests’
need for convenience as most of our sales come from the drive-thru. With menu innovation, we strive to create flavor profiles unique to
Good Times, such as our Guacamole Bacon Burger and our Mushroom Melt Burger. 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 including
social and digital media,audio platforms including limited terrestrial radio, digital audio streaming, as well as streaming video services
and outdoor media.
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, though about one-fourth of
our Company-owned restaurants have small indoor dining areas. 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.
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 decreased 5.0% in fiscal 2025 and increased 2.9% in fiscal
2024. We have increased same store sales in thirteen of the last fifteen years. Same
store sales have grown at a compound annual growth rate of 3.5% between fiscal 2015 and 2025.
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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-premises customer experience however, as the focus we place on
indulgent meals through bold, unique flavors; superior ingredients; and scratch cooking in each kitchen translates into significant
off-premises adoption, both through traditional customer carry-out and delivery by third-party delivery service providers. 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. Additionally, the Good Times business, being largely concentrated in
a single state and serviced through a single food service distribution warehouse, leverages overhead that is necessary for the Bad
Daddy’s Brand.
Our Brands Have a Common Operating Philosophy
While each of our brands is led by separate operating
teams, each shares a commitment to four dimensions of our business:
Dimensions of the Business:
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. 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.
We Have Assembled a Dedicated Senior Leadership
Team with Significant Experience
Each of the members of our senior leadership team
have many years of relevant experience in their field of expertise, and most have more than fifteen years of industry experience. Our
executive leadership team has significant experience spanning both full-service and quick-service restaurant concepts.
Each brand is operated with distinct operations
teams, while utilizing shared support capabilities in administration, finance, accounting, human resources, real estate, marketing and
information technology. Each capability is 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 both of our concepts.
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We Have Maintained Operating Momentum
Although same store sales at Good Times decreased
in fiscal 2025, they have increased thirteen of the past fifteen years. Our compound annual same store sales growth rate was approximately
3.5% over the past eleven years. 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. Sales for the Bad Daddy’s restaurants which were open for at least
18 months averaged $2.6 million for fiscal 2025. Though this is a decline from fiscal 2024, income from operations for the Bad
Daddy’s segment increased year over year. We believe that both organic growth and unit growth is important to our brand and
expect expansion to be disciplined and financed primarily from operating cash flow from both brands. Near the end of fiscal 2025 and early into fiscal 2026 we closed a total of two Bad Daddy’s restaurants,
both having opened more than six years ago, both of which have demonstrated below average sales volumes during their entire operating
history which current management attributes to misjudgment of the quality of real estate during the site selection process.
Business Strategies
We are focused on continuing to grow same store
sales and 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 $90,000, with a high concentration of daytime employment, specialty retail and entertainment
venues. Site selection is a multi-factor process including the use of specialized applications that create sales forecasts for each site.
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 within a multi-tenant
building. Although the construction process is generally straightforward and comparatively quick compared to the process required to acquire
land and develop a free-standing building, the full process of acquiring acceptable sites is involved and can take in excess of 18 months
including lease negotiation, permitting, construction, and team training.
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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.
We currently lease either the land or the land
and building for all of our Good Times restaurants, except for one restaurant in which we own the land and building. 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
We currently own and operate or license a total
of thirty-eight Bad Daddy’s Burger Bar locations. The location in the Charlotte Douglas International Airport is independently operated
pursuant to a License Agreement with an established airport concessionaire. We closed one company-owned Bad Daddy’s restaurant during
fiscal 2025 and closed one in early fiscal 2026.
Additionally, we currently own and operate or
franchise a total of thirty Good Times restaurants.
Company-Owned/Co-Developed/Joint-Venture
Bad Daddy’s Burger Bar Good Times Burgers & Frozen Custard Total
South Carolina 4 4 - - 4 4
Tennessee 2 2 - - 2 2
Franchise/License
Bad Daddy’s Burger Bar Good Times Burgers & Frozen Custard Total
North Carolina 1 1 - - 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 1855 Black Angus® beef
burgers with creative, scratch-made toppings including buttermilk-fried bacon, creamy ale queso made in-house, and our specialty signature
Bad Daddy’s sauce which is also completely made in-house. The customizable menu options also include a variety of proteins
including house-made black bean patty, 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 milkshakes and our scratch-made banana pudding.
We feature a variety of craft beers from local breweries and a full bar serving our Bad Ass Margarita and other innovative cocktails,
and both red and white wine.
Our signature
recipes include the Bacon Cheeseburger on Steroids; 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 have partnered with a craft brewer to make our Bad Daddy’s Amber Ale. 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 rotate through seasonal food and beverage specials to provide variety for our guests
while still maintaining the spirited flavor profiles that distinguish us from others.
Good Times Burgers & Frozen Custard
The menu of each Good Times restaurant is focused
primarily on burgers made with a fresh custom grind ground beef, chicken sandwiches and chicken tenders using only all-natural chicken
from Springer Mountain Farms, and our signature vanilla and monthly featured-flavor custard. This menu is supplemented by side selections
including our famous Wild Fries, crinkle cut fries, jalapeno cheddar cheese poppers, and onion rings. Beverages include typical soft drinks
and fresh lemonades, with a selection of shakes and floats made with our frozen custard. We have a 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 token redeemable for
a free kid’s custard cup or cone.
Both of our beef and chicken suppliers are committed
to animal welfare and all-natural standards, raising animals without the use of any antibiotics, added hormones, or animal byproducts
that are normally used in the open market. We believe that these attributes of our 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 differentiates our concept in a crowded quick-service segment of the restaurant industry.
Our fresh frozen custard is a premium ice cream
that 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; as Spoonbenders, a mix of custard and toppings; and as shakes and floats made with our frozen
custard.
The breakfast menu is centered around Green Chile
Burritos made with our own proprietary green chile recipe using regional roasted green chiles, eggs, potatoes, and cheese offered with
the choice of bacon, sausage or chorizo. During breakfast we offer soda, coffee and juice, along with Wild Spuds as a signature fried
potato side offering.
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. Though most of our media advertising dollars were spent on audio advertising during fiscal
2024, including terrestrial radio, podcasts, and advertising-based streaming platforms, in 2025 we expanded to outdoor advertising
and significantly reduced audio advertising. We shifted focus significantly to social and digital media that provides us with a
higher level of engagement and targets current customers with an increased level of product giveaways to support high sales
opportunity products.
Operations
We maintain separate operating teams for each
of our concepts and have extensive operating, training and quality control systems in place.
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 (kitchen execution, kitchen management, expediting, and line management), front of the house service positions
(host, server and bar) and all other management functions, however each manager is assigned one or more specific areas of responsibility
over which they have 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.
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Each Good Times restaurant employs a general manager,
generally one or two hourly assistant managers, up to four hourly shift managers and approximately 10 to 20 non-management team members.
Most of our shift managers, assistant managers, and general managers are internally promoted from team member positions. 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 a transaction-driven survey outreach, website comments and
a customer feedback tool that aggregates and analyzes all social media comments. 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-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 when recruiting for managers,
we seek to hire experienced restaurant managers, though increasingly we have pivoted to greater development of high-performing team members
providing a robust source of internal management candidates. At Good Times, substantially all our managers are promoted from team member
positions. We support employees by offering competitive wages and benefits, including a matching 401(k) plan, medical insurance, and incentive
plans for certain management positions 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.
Franchising and Licensing
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 strategies that include 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 one Good Times restaurant operating under
a franchise agreement in the greater Denver metropolitan area and two dual-branded franchised restaurants operating in Wyoming. In addition,
we are, through one of our wholly owned subsidiaries, the controlling partner in a joint venture related to six Good Times restaurants
operating in the greater Denver metropolitan area.
We actively work with and monitor our franchisees
and licensees to ensure successful operations as well as compliance with our systems and procedures. We advise franchisees 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.
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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. The configuration of restaurant point-of-sales systems is performed by our technology shared service capability.
We are implementing a new cloud-based point of sale system and have completed the implementation at all company-owned Good Times restaurants
and expect to complete the implementation at all traditional Bad Daddy’s restaurants in the next eighteen months.
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 distribute nearly all 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
through US Foods. We directly contract with suppliers for key products who 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, or directly in the case of certain bread and produce suppliers, under negotiated
contracts directly to our restaurants two to five 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 actively monitor the
primary commodities we purchase and selectively contract pricing when practical in order to minimize the impact of fluctuations in price
and availability. Most pricing agreements are based on published commodity indices and so in spite of pricing agreements, most of our
commodities, including ground beef, chicken, and bacon remain subject to monthly market price fluctuations.
Employees
At September 30, 2025, we had approximately 2,078
active employees of which 1,839 are hourly team members and 239 are salaried managers or professional staff working full time. 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 indulgence created by our bold, unique flavors.
Nevertheless, Bad Daddy’s Burger Bar may be at a competitive disadvantage to other restaurant chains with greater name recognition
and operating scale.
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, and Whataburger, a Texas-based burger-focused quick-service restaurant
concept have expanded into Colorado with future development expected in markets where we currently operate. Double drive-thru restaurant
chains such as Checkers & Rally’s 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 three significant quick-service competitors offering frozen custard
as a primary menu item operating in the Colorado market, two of which have a significant presence in Midwestern markets that may be targeted
for expansion. New concepts centered around sliders compete with our Bambino product; one such concept has begun development in the greater
Denver area. Fast casual hamburger restaurants have been developed in the Colorado market, including markets where we operate. Increasingly,
traditionally fast-casual concepts are including drive-thru ordering and pickup as part of their operating model, and though they generate
an average per person check that is meaningfully higher than the average check at a Good Times restaurant, now represent competition that
is more relevant than it was previously.
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We believe that Good Times may have a competitive
advantage in terms of quality of product compared to traditional quick-service burger chains. 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 for 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,” and “Spoonbender”. 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 February 2028 and December 2033 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 for people with disabilities. 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.
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
of statutory standards regulating franchise relationships. Many state franchise laws impose restrictions on franchise agreements, including
limitations on non-competition provisions and the termination or non-renewal of a franchise. Some states require that franchise materials
be registered before franchises can be offered or sold in that state.
In addition, each Bad Daddy’s Burger Bar
restaurant requires a liquor license and adherence to the attendant laws and requirements regulating the serving and consumption of alcohol.
Alcoholic beverage control regulations govern various aspects of these restaurants’ daily operations, including the minimum age
of patrons and employees, hours of operation, advertising, wholesale purchasing and inventory control, handling and storage. Typically,
licenses to sell alcoholic beverages require annual renewal and may be suspended or revoked at any time for cause, the definition of which
varies by locality.
Segment Reporting
We operate as two reportable business segments:
Good Times Burgers and Frozen Custard restaurants and Bad Daddy’s Burger Bar restaurants. Refer to Note 10, Segment Reporting,
in the notes to our consolidated financial statements for more information.
Available Information
Our Internet website address is goodtimesburgers.com
We make available through our website’s investor relations information section our Annual Reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed with or furnished to the Securities and Exchange
Commission (“SEC”) under applicable securities laws as soon as reasonably practical after we electronically file such material
with, or furnish it to, the SEC. Our website information is not part of or incorporated by reference into this Annual Report on Form 10-K.
Special Note About Forward-Looking Statements
This Form 10-K may include “forward looking
statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and
Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such statements are subject to the
safe harbors created thereby. A forward-looking statement is neither a prediction nor a guarantee of future events. We try, whenever possible,
to identify these forward-looking statements by using words such as "anticipate," "assume," "believe," "estimate,"
"expect," "intend," "plan," "project," "may," "will," "would," and
similar expressions. Certain forward-looking statements are included in this Form 10-K, principally in the sections captioned "Business,"
and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements are
related to, among other things:
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