Good morning, ladies and gentlemen. Welcome to the Good Times Restaurants Incorporated Fiscal 2015 Year End Earnings Conference Call. By now, everyone should have access to the company’s fourth quarter and fiscal year 2015 year end earnings release. If not, it can be found at www.goodtimesburgers.com in the Investors section. As a reminder, a part of today’s discussion will include forward-looking statements within the meaning of federal securities laws. These statements are commonly identified by words such as anticipate, continue, plan, expect, intend, should, will and other terms with similar meanings. These forward-looking statements are not guarantees of future performance and therefore you should not put undue reliance on them. These statements are also subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect and therefore investors should not place undue reliance on them and the company undertakes no obligation to update these statements to reflect the events or circumstances that might arise after this call. The company refers you to their recent SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial conditions. Lastly, during today’s call, the company will discuss non-GAAP measures, which they believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP in reconciliation to comparable GAAP measures available in our earnings release. And now, I would like to turn the call over to Mr. Boyd Hoback, President and CEO of Good Times. Please go ahead, sir.

Thank you and thanks everybody for joining us this afternoon. With me today are Jim Zielke, our Chief Financial Officer, along with Sue Knutson, our Controller; and Scott LeFever, our Vice President of Operations. I will briefly cover a summary of our fourth quarter and current developments, and then Jim will provide more details on the financial results and our fiscal 2016 outlook. Our total revenues increased approximately $6.3 million to $14.5 million or 77% during the quarter with our comp sales increasing 6.8% at both Good Times and 6.8% at Bad Daddy’s. Those comp sales trends have continued at approximately 5% for both brands for the first two months of this quarter and we feel good about our pipeline of innovation for fiscal 2016 for both concepts. Our expectations for fiscal 2016 are for low-single-digit comp sales increases at Bad Daddy’s based on the relatively small base of stores in the comp sales group and approximately 4% comp sales increases at Good Times. We continue to evolve the Good Times brand based on its fresh all-natural handcrafted positioning. And on a broader level, we believe we are getting significant credit from the consumer around Good Times as sort of a principal brand. This drives to do the right thing. We are continuing to communicate that [indiscernible]way in advertising and hopefully without being preachy or heavy-handed about that positioning in today’s world. As we look into fiscal 2016 into the context of an increasingly value-oriented competitive environment with 4 for $4, 2 for $2, 2 for $5, and other promotions from our larger competitors, we plan to continue that television marketing campaign focused on the broader all-natural principle positioning for Good Times, with a particular focus on products that are unique to us as well as other new limited time…

Thanks Boyd. It was another solid quarter for us on the Good Times brand as Boyd mentioned. Despite lapping a 2-year comp sales stack of over 30% for the fourth quarter, we were able to post 6.8% comps for the quarter, which exceeded our expectations of low to mid single-digit comps. This makes our 3-year compounded annual sales growth for Q4 of more than 40%, that’s about a 3.5% year-over-year price increase in place, so traffic also improved approximately 3% for the quarter versus last year. For the entire fiscal year, Good Times comp sales were up 6.9% on top of fiscal 2014’s comp sales increase of 14.6%. Cost of sales at Good Times declined at 34.1% during the quarter from 34.6% last year. These costs continued to decline during the quarter, however bacon spiked up considerably and egg prices continued their upward trend impacting breakfast and frozen custard cost. Total labor cost at Good Times increased to 31.7% from 31.1% last year, all of which is comprised of an increase in our average wage rate which increased more than 6% versus last year during the quarter. As mentioned in the previous two conference calls, we continue to see a tightening in the labor market. We are selectively increasing wages to remain competitive on a trade area by trade area basis for both existing and entry level positions. Restaurant level operating profit at Good Times as disclosed in the supplemental information and the earnings release increased to $1.337 million from $1.257 million last year or 6.4%. Restaurant level operating margin was 17.3% compared to 18.1% last year. With the decrease related to the increased labor cost just discussed as well as the impact of a couple of remodel stores. We continue our reimaging program of our older drive-through stores in…

Thanks Jim. With the expected opening of six new Bad Daddy’s over the first eight months of fiscal 2016 is obviously a big push for us particularly with our small base here. We are excited about laying the platform or we will hopefully be continued robust growth into fiscal 2017 and we continue to see opportunities for margin enhancements throughout this year, particularly in the North Carolina restaurants. As we move into our second quarter, we will begin to report the results of our new store openings. And we continue to expect some combination of some stores at high honeymoon sales and some stores that will probably have a little bit more of a natural maturation cycle through them, consistent with what we have seen so far as the awareness of the concept and awareness in the individual site builds in each one of the markets that we are entering. Thanks for your time today. We appreciate it. With that, operator, Andrew, we will open the call for questions.

[Operator Instructions] Our first question comes from the line of William Slabaugh from Stephens. Your line is open.

Hey, guys. This is actually Billy on this afternoon and thanks for taking my questions and congrats again on the strong quarter. I was wondering if you could expand upon the current trends you are seeing at Bad Daddy’s and maybe frame that up in the context of say sort of weakening trends we have seen across casual dining recently? And maybe speak to why you haven’t – why you believe you weren’t experiencing that? Is that attributed to your brand you think or maybe a more product-view narrow geographical exposure?

Billy, I think it’s maybe the latter. Obviously, we are operating in Denver and Charlotte, which happens to be both very, very strong economies compared to maybe some other markets across the country. I will tell you though we had an unseasonable rain in October in Charlotte connected with the hurricane down there, and so – but we bounced back in November, and so we are still in that 5% range on both Good Times and Bad Daddy’s. So, we haven’t really seen a softening yet and maybe that’s some of the newness of the brand. Again, we have got a very small comp base. We only had 7 stores in that comp sales base, so that maybe a part of it as well.

Great, thanks. That’s helpful. And just real quick sticking with the Bad Daddy’s brand, can you review for us the store economics of the Bad Daddy’s stores that include the rooftop patio? I know you only have a couple right now. I think we all saw the release yesterday regarding the Southglenn location. And I was wondering if you could just remind us of what you are seeing as far as a lift to AUVs, and the additional build-out cost for those units?

Yes, it’s probably too early to tell on the AUV, because we only really have one opened, but it does 25% more volume than the average. And the investment is really dependent on the tenant improvement allowance that we get from the landlord. We got a big tenant improvement allowance on Northglenn. We have got a big one on Southglenn. So, we anticipate our investment being probably less than a couple of hundred thousand dollars to do the rooftop, and we have one more that we are finalizing, which is up in Fort Collins that didn’t have quite as much tenant improvement allowance though we may not be doing quite the level of development on that one as either. But long story short, probably somewhere between $150,000 and $300,000 more on the investment side and we certainly hope that we can continue to bang out 20%, 25% higher volume out of those stores. It does require a little bit more labor, because we have got a separate bar in the rooftops. We have separate bartenders, separate servers up there. But particularly, during the spring to the fall months, we really see it’s a nice amenity. I think developers really like it for their developments. And from our standpoint, we think it’s a good, nice addition to the concept.

Great. That’s very helpful. Thanks guys and congrats again.

Thank you.

Thank you. Our next question comes from the line of Greg McKinley from Dougherty. Your line is open.

Yes, thank you. Good afternoon. I was wondering if you could expand a little bit more on – you talked about the timing of Bad Daddy openings and the impact that’s having on your fiscal year EBITDA view. Just wanted to make sure I understood that because my guess is the thought that there’s fewer store operating weeks earlier in the year or I just want to make sure I clarify that?

No, that’s exactly right, Greg. And it’s not – I mean, we have lost a few weeks on each one. So again, we had originally anticipated having three opened by the end of this quarter that we are in now. One of those will probably lop over into the first week of January, but the good news is then what we have got slated for February, for March, for – those are kind of ahead of schedule and really, it’s more operating timing than it is waiting on any construction. So, we are really confident now between what we opened today, first week of January, mid-February, and mid-March. We should be on track with each one of those and then the balance of the stores will be spread out over the balance of the fiscal year. So, the impact I think is largely a result of the timing of those stores. And again, not knowing how each one is going to – each store is going to open, again some may open really big with high honeymoons, others may take a little bit of time to mature. So, we have kind of adjusted our expectations. I don’t know what to expect. We have two of the stores in the pipeline that do have rooftops, including the one we opened today. And so, we will certainly plan to get it out here in our second quarter on how the new stores are doing.

Okay, great. Thank you. And then I think you had indicated you believe you have 6 Bad Daddy’s opened in the first 8 months of ‘16. Can you just walk us through, from a timing standpoint, what needs to happen, when in terms of lease signing and shovels on the ground to get a new store opened so that we can understand at what point in this fiscal year do you have to have those other two locations firmed up?

Sure. It takes about – it varies quite a bit quite honestly depending on the municipality of the development, and again we have been waiting on some of the turnovers. But once we sign a lease on a normal cycle, it takes us about 5 to 6 months to get through design, permitting, and construction. It can take a little bit longer if it’s a larger development that we have to work through. But typically, I think on average 5 to 6, it may go as long as 8 months from the time that we sign the deal.

Okay. Okay, thank you. And then you talked about initially making some labor investments in the Carolinas to make sure that you have really the ideal store operating processes in place and the right people managing them. Can you just be a little more specific for us where are you making those investments, and what do you think that – where are the anticipated paybacks on those?

Yes. So, it’s a combination of both hourly staffing as well as getting some new management trained up. They were pretty thin when we acquired the stores without any bench strength. And so we have been attacking both of those. As Jim mentioned, we think there is about 1% that we have added in labor here in the last quarter, notwithstanding the impact of just the seasonality on sales. We are looking at kind of transitioning here over the next 4 to 6 month period of time to kind of normalize that down there. I think the larger issue Greg is the opportunities we see on the cost of sales line since they are running 300 basis points higher than where we are on Colorado. So, we took the price increase, we put the new menu design in place. We have got some purchasing economies, including beef that will begin to take effect this month. And then on the labor side, again, that should begin to normalize from a staffing standpoint and a wage standpoint here over the next 4 to 6 month period if that makes sense.

Yes. And just to clarify that real quick, you are going to take a little more menu price, you anticipate alcohol mix perhaps benefiting. You got a new beef blend, but was there a fourth item you identified?

On the cost of sales side, there are some other purchasing things that we are working on that we expect to get some benefit from as we move forward. I think there is both from an operating standpoint in terms of our waste at the unit level as well as some of the purchasing that we have been putting in place and we will be putting in place, we don’t have quite the same economies of scale that we do when we combine Good Times here in Colorado, but we are kind of working through with our supplier there item by item and finding some opportunity.

Very good. Thank you. Good luck.

Thanks, Greg.

Thanks, Greg.

Thank you. Our next question comes from the line of Mark Smith from Feltl and Company. Your line is open.

Hi, guys.

Hi, Mark.

First, can you talk a little bit about the Good Times opening for this year? It sounds like it will be this coming year it will be in Colorado, but really why pullback a little bit from growing in some adjacent states? Is it a matter of capital, people, resources? What’s kind of your thought process there? And when do you think you could get more aggressive on growth?

It’s a good question, Mark. Again, we have given out a lot of thought. I think yes, it’s capital and people resources with the pace that we have got on our Bad Daddy’s development. I think probably more importantly as we take a look at a freestanding QSR burger concept with an average volume of $1.2 million, which again is relatively healthy, but in the context of looking at real estate prices in the adjacent markets and the risk reward in exporting an unknown brand into a brand new market, that whereas in Colorado, we have critical mass for media. We have got brand awareness plopping a store or two down on the corner in a new market, we think is a fairly risky proposition. And with our hands full right now with where we are on our growth, we may choose to do that at some point. But I think we would require a little bit larger capital base and I mean Scott has got a good team on the Good Times side and we can handle that. I think it’s more kind of a risk reward proposition right now as we look strategically and don’t want to get too far ahead of ourselves on capital commitments. And at the end of the day, I think you have to look at regardless of how you may choose to leverage a location, it’s kind of the same reason in this market that you don’t see other concepts with average unit volume as whether that be Burger King, Wendy’s, Taco Bell, the cost of real estate has just gotten nuts. We look to in a couple of new markets and we are looking at $700,000 to $1 million plus to get just a piece of land and then the investment we have to put on top of that, on a fully capitalized basis, the sales to an investment and ultimately the return on investment, we can lever that with a sale-leaseback and get a good operating return. But again at the end of the day, we tend to look at things in a more fully capitalized basis. And I think that risk and we just don’t think it’s the appropriate time.

Okay. Could you get more aggressive on the franchising front or do you think that you really need to lead the way in some other states before bringing franchisees to grow the system?

Yes. I think for sophisticated franchisees, I think the first question they ask is can the brand travel, which is really on us I think. And that’s why we have looked at thus can we go ahead and test the waters and put a couple of stores out of market. And as we looked at it, for us with our hands so full on the Bad Daddy’s side and the capital commitments that we have got, we are reluctant to make them move right now. Could somebody come in and run with it from a franchise standpoint. Yes, but again I think they look at the same thing, as what’s really the unit economic model and $1.2 million on today’s real estate, it does become a little bit stretched.

Okay. And then can you give us any insight into the opening of the Bad Daddy’s in October initial results and thoughts, is there enough – are you getting some brand equity where people know it in that Colorado market or just any insight you can give us on that restaurant would be great?

Yes. We don’t have a lot to say yet. Again, as we get into the second quarter and as we get these new stores open, we will certainly we would be putting our store performance out there. It’s hard to say, I think there is some brand awareness. Again as we look at each one of these stores, some I think are going to require a little bit of time. It’s annualizing not at our average yet, but it’s growing each week and we certainly expect it to get there. So not trying to be evasive, but we only have a few weeks of operating history so far. And again, I think we opened the store today. So I think as we get a little bit more experienced, we will start putting the new store performance out there.

Okay. And then last one for me. Any update or updated thoughts on potential joint venture restaurants?

No. Only that we have got some leases signed down in North Carolina and those are the two I had mentioned that kind of got pushed early in 2017. We are interested and our partners I think are interested in continuing to joint venture with us down there. That really ultimately becomes I think both an operating decision as well as just the cost of financing on the joint venture side. It’s our plan and we had talked about last quarter that we would continue to do some more joint venture stores down in particularly in the Raleigh and surrounding markets down there as those guys want to continue to build with it.

Okay, excellent. Thank you.

Alright Mark. Thanks.

Thank you. Our next question comes from the line of Greg McKinley from Dougherty. Your line is open.

Yes. Thanks. Just a quick follow-up guys, as we look into 2016, I think right now you are running about a 4% menu price increase at Good Times, I think I am not sure what you said at Bad Daddy’s, I know you just took 2% in North Carolina. But should we think of the menu price staying at roughly those levels as you progress through the year?

Yes. Greg. Sorry Greg, on Good Times yes, we will take a couple price increases throughout the year, which is kind of consistent with the timing of a couple of price increases we took last year. So I would anticipate we would on the Good Times’ side, remain in that 4% to low 4% plus year-over-year price increase. On the Bad Daddy’s side just to clarify we took 2% this December, on just the Carolina stores and no price increases or just a few little tweaks on the Colorado side. And we don’t have any real structured anticipated additional price increases on either Colorado or North Carolina, but we will opportunistically look at that especially if we roll new products. But right now, we don’t have any planned price increases on the Bad Daddy’s side than what we have already taken.

Okay. Thank you. And then in terms of CapEx, obviously you are investing to open new stores, but from a systems standpoint, do you have in place what you feel like you need to in order to have great access to information to manage your operating decisions in the Carolinas and at the Bad Daddy’s in Colorado, are there any changes needed there?

The changes we need won’t be – won’t include a major investment. We already have a really good back office program that we use for both Good Times and Bad Daddy’s. The key is to really get a pilot, dedicated pilot to run that thing, so to really get the most information out of it. So that of itself won’t require any additional investment. We are looking at improving at our accounting software here in the next year. We are using an old sage platform, but what we have seen so far in terms of upgrading that, again won’t require a real significant infrastructure investment.

Yes. Okay, very good. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Mark Rosenkranz from Craig-Hallum Capital. Your line is open.

Hi everyone. Thanks for taking my question. Hello, can you hear me okay.

Please standby for one moment please. Ladies and gentlemen, please standby your conference call will be resuming momentarily. Once again ladies and gentlemen, thank you for your patience. Please standby. [Technical Difficulty] Speakers you may now resume your conference.

Thank you. We didn’t hear that last question, so sorry about that. Could you repeat that?

Can you hear me okay?

Yes. That’s great. Sorry about that.

Well, great. No problem at all. Thanks for taking my questions. A lot of my questions have been asked, I was wondering if you could talk a little bit about the rising labor costs you have seen at Good Times with your comps for sales has gone up about 4% in 2016, for your guidance, what kind of ranges are you going to see in the labor costs, are we going to see an increase in staffing hours as well is kind of this a general per hour cost, could you just give us more color on that please?

Yes. It’s really all rate right now. We are not seeing I mean – again, we have a very laid out labor model that we use. As we see price increases, we actually obviously get benefit with respect to labor. However, I think we mentioned you are running about 6% higher in Q4 versus last year. And for October, just to give you – for October versus last year October, we are about 7.3% higher in the average wage rate. So, that’s kind of been the run-rate here in the last few months, the 6% to 7% higher average wages versus last year. And we probably anticipate that being around that level for the balance of the year, so that a 4% price increase again won’t make up for a 6% to 7% wage increase on the percent margin side, but hopefully will kind of on the $0.01 profit site we will make up for that as well as hopefully your flattish to favorable commodities will help us on cost of sales side.

Okay, good.

This is Scott LeFever. Yes, we saw an increase in the hourly run-rate and then we also had a little bit of an increase in our salary personnel as far as the number of people in our stores. So that one did a little bit of additional staffing or higher level staffing than what we had last year, but most of it is in hourly run-rate and a little bit pass-through in the cost of those salary individuals, because the rate moves right through the salary scale just like it does the hourly scale.

Okay. Well, thanks for answering my questions, guys.

Thank you. [Operator Instructions] And no other questioners in the queue at this time, so, I would like to turn the call back over to management for closing remarks.

Great. Thanks, Andrew. Thanks again everybody for joining us and we look forward to reporting our results here as we get the new stores opened as we move into fiscal 2016. Thanks very much for your time.

Ladies and gentlemen, thank you again for your participation in today’s conference. This now concludes the program and you may all disconnect your telephone lines at this time. Everyone have a great day.