Good day, ladies and gentlemen. Welcome to the Good Times Restaurants Inc. Fiscal 2016 First Quarter Earnings Call. By now, everyone should have access to the Company’s first quarter and fiscal 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. Please note that the call is being recorded. Please note that the call is being recorded 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, Emily, thanks for everyone for joining us again this afternoon. With me today is Jim Zielke, our Chief Financial Officer. And again, I will cover a summary of our first quarter and some current developments, and Jim will then provide more color and details on our financial results and the outlook for the balance of the fiscal year. Total revenues increased 76% or $13, 838,000 during the quarter with our comp sales increasing 4.8% at Good Times and 6.5% at Bad Daddy’s. The 4.8% at Good Times, represents a three-year compound growth rate of approximately 33% and the 6.5% increase of Bad Daddy’s exceeded our expectations for the quarter and we are very happy with that. Our brand for fiscal 2016 continues to be low single-digit comp sales at Bad Daddy’s again based on the relatively small base of stores in the comp sales group and approximately 4% comp sales increases at Good Times. Weather tends to impact our sales fairly dramatically in the winter months both positively and negatively and we experienced that in January in both North Carolina with a storm that closed our stores for day and a half and in Colorado, which in comparison to a very nice weather last year. That resulted in flat same-store sales at Good Times in January. However, we were comparing to plus 13% same-store sales in the prior year, so our two-year stack remained at about plus 15% as it was in the first quarter. and the increase of 5.1% at Bad Daddy’s which included the loss sales from the storm that hit the East coast but have also have some slightly positive effect of the timing of the Super Bowl being one week later this year. We also believe we are feeling some moderate effects from the…

Thanks Boyd. As Boyd mentioned, we are very pleased with our top line results and our Good Times brand for the quarter. Despite lapping of two-year comp sales stack of over 25% for the first quarter, we were able to post 4.9% comps for the quarter, which exceeded our expectation of 4%. We had about 4.2% year-over-year price increasing place, the traffic was relatively flat for the quarter versus last year. Cost of sales at Good Times declined 260 basis points to 33.3% during the quarter from 35.9% last year and decreased sequentially from Q4 by 80 basis points. These costs continued to decline during the quarter down approximately 25% from last year and down approximately 12% from the previous quarter. however, bacon costs increased by approximately 76% versus last year and were up slightly per versus last quarter. Custard and egg cost also increased year-over-year, but egg did improve slightly from the previous quarter. Total labor cost at Good Times increased to 33.1% from 31.2% last year, most of which is comprised of a rise in our average wage rate which increased approximately 8% versus last year. As Boyd mentioned, the Colorado labor market is extremely tight with very low unemployment rate as well as statutory minimum wage increases that take place each calendar year. Restaurant level operating profit at Good Times as disclosed in the supplemental information in the earnings release increased to $1.090 million from $1.030 million or 5.8%. Restaurant level operating margin was 15.7% compared to 15.8% last year. We continue the reimaging program of our older drive-through stores in addition to more extensive remodeling of a few stores including two stores that underwent lobbing remodels during the quarter and were opened for only drive-through business for a combined nine weeks of the quarter. When a…

Thank you, Jim. We are again focused on setting the stage for significantly increasing our cash flow from operations and adjusted EBITDA as Jim mentioned, and particularly as we look into the last six months of fiscal 2016 from both the additions of new restaurants and the margin enhancements and then preparing our pipeline for additional really robust growth in fiscal 2017. We feel like our longer term growth thesis is solidly in place, our core Good Times business continues to do well and the Bad Daddy’s concept and its unit economic model is performing very well with significant white space for development as we look forward. We are very optimistic we can create significant shareholder value even in the context of market valuations that have and certainly appear to be moving to more historic norms. As we get further into this fiscal year in 2016, we will be able to and begin to provide more color on our expectations for fiscal 2017s growth. Again, I appreciate your time with us today. With that operator we will open the call for questions.

Thank you. We will now begin the question-and-answer session [Operator Instructions] and our first question is from Will Slabaugh of Stephens. Please go ahead.

Hi, thanks guys. This is actually Bill on today and congrats on another good quarter. Wanted to dig in a little bit more as far as we are seeing on traffic trends on the full service side of things with the Bad Daddy’s brand. I think you spoke to this briefly already and we are obviously aware of the cautious tone that many of your peers had heading into 4Q. and I realize you have a concentrated geographical exposure, but maybe could you speak to the cadence of the comp and how that evolve throughout the quarter. Maybe elaborate on the trends you are seeing, any difference between North Carolina and the Colorado market ex-weather impact, I think that would be helpful?

Yes, Billy this is Jim. So for Q1 October to December. October is actually the weakest month of the quarter for Bad Daddy’s and then we were up about 3% and then November, December were both 8% plus. We felt like we really had a really good December for both brands for both locations especially kind of in those high retail areas, we really saw a pick, which you normally expect that again just versus last year we saw pick up as well. So as it relates to the start of this next quarter again, as we mentioned it had some significant weather affecting January in North Carolina even with that we still posted the positive results so far through January for the Bad Daddy’s. and the other piece to that though as we do have some offsetting favorable comparison with the Super Bowl being in February this year versus the end of January last year. And Super Bowl certainly is a really down day for us and we just happen to have the two teams in the Super Bowl this year, which contribute to a really soft Super Bowl Sunday for the Bad Daddy’s brand, but generally were again seeing the traffic cold up fairly well and not really seeing the declines maybe some of our peers are seeing.

Thanks that’s very helpful. And then just one more if I could. What are the biggest constrains on building out more rooftop patio stores. Should we expect to see more of those in fiscal 2017, assuming no issues with the two you guys are opening this year?

I think that’s maybe still to TBD Billy, we like the model a lot, they seem to be generating more volume they do require a little bit more labor to step the bar upstairs. And we are continue to really dial-in in the optimal size of the restaurants and if we can generate an additional $0.5 million in sales it certainly is well worth the rooftop. Particularly, if we can get the landlords to have a major contribution towards them. I think as we opened this third when here in Colorado, we have one more slated in 2017 and in Raleigh with the rooftop patio. It's a little different just weather wise down there just because of the summer humidity, similar to the winter that we have here. So we are really trying to see in terms of the incremental investment and the incremental labor as appose to just the core model, can we generate that much more sales to really make it worthwhile. As that said, from the consumer standpoint they are being really well received just in terms of the coolness of the concept and the developers like them because it's unique for the development. So, I think we will continue to have that as a part of our model, how many we do remains a little bit yet to be the same. I think the core model of that 36, 37 square foot in cap less than $1 million investment, $2.5 million in sales works like a charm and so we just want to make sure that that rooftop also works as well from a return standpoint.

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

Thank you.

Our next question is from Mark Rosenkranz of Craig-Hallum Capital Group. Please go ahead.

Hey guys thanks for taking my questions. I had a couple of questions on the Bad Daddy's opening the two recent ones turning above the average and one below, was this kind of expected given the location of these two restaurants and can you just talk a little more about what's kind of driving the strengthen those two versus the other one and if you expect those to kind a continue to trend upwards or kind of just set that more?

Well it's defiantly not expected over any stores and that has less than our average to our target, the first one was the surprise, the last two again as I mentioned in my comments, I think we have thought that first one to be more similar to the ones I mentioned in North Carolina that are adjacent to downtown. Very high day time employment at some movie theaters, some entertainment, but it just doesn’t have the big weekend pop. Where the last two are in lifestyle centers and one is at a major mall but general growth redeveloped. We have on the outside, I mentioned so both of those have come out very high from the get-go. And the next three are in very similar lifestyle centers, one is in a very upscale center in Colorado Springs, one is on All-Foods movies theater center in Walmart and then another redevelopment of lifestyle center for town. So I think that’s going to be our sweet spot and that certainly continued learning for us. The first one we think will continue to do well and that will make money, and I think it will continue to grow. What we are seeing continued growth in our first store that opened slower in Colorado the Cherry Creek location even with the demolition of an adjacent office building that’s turned into a Marriott Hotel. We are still very positive in that stores. So we think that one is going to continue to grow some of its awareness and again the dynamic for this sights are a little bit different. But we are really dialing in for these lifestyle and retail center. Honestly our North Carolina store our highest volume store during Colorado does not have a lot of retail around it and so again we had flow this one has some of those dynamics. One of our best leading indicators since we are simply taking share, we are not expanding a food pipe, one of our best leading indicator is just the volume of competitors and what they are doing. So we are pegging that as closely as we can as we go into these new areas.

Okay thank you. That’s helpful. Kind of shifting gears a little bit, what you kind of buy is a little more specialty products, your all natural bacon, your beef or chicken. So maybe talk a little bit how those costs have been trending over the last three months relative to kind of the more basic means and what has kind of your outlook been in your food cost relative to your last guidance?

We continue to see really favorable commodity costs, we peg the conventional market on our all natural beef and just pay a premium against that. So we will trending exactly as a conventional beef market trends, which is down and we anticipate that continues to be favorable for the balance of the year. Really same thing on chicken, we pay a slight premium for all natural, but we paid against the conventional pricing in the market. Bacon is really probably the biggest outlier on which we paid a biggest premium just from a supply and demand standpoint. And so we've seen a bigger increase with bacon than really any of the other commodities. But generally we are thinking that we are going to continue to see a favorable environment and low our costs throughout the fiscal year.

Okay great. Thanks for taking my question and congrats your great quarters.

Thanks.

Thanks Mark.

Our next question is from Mark Smith of Feltl and Company. Please go ahead.

Hey guys, first of Boyd can you just repeat what the January comp was for Bad Daddy's?

5.1.

5.1.

5.1?

So again, Mark severely negatively impacted by a couple days of really no sales in North Carolina, but then positively impacted by the timing of Super Bowl in January that turns around in February.

Okay. And did you say Good Times was flat, was that right?

Yes, we were flat, we were comparing up 13% in the prior year so if you look at our first quarter where we're up 4.5%comparing to 8% last year, so we were up about 12.5%in the first quarter on a two-year stack. We kind of maintained that same two years stack. But honestly just month-to-month, it's so hard to peg because its significantly impacted by weather. Again we lost full day and a half here with Good Times with the snowstorm this week at 60 degrees and we're screaming. So we kind of look at it particularly during the winter months, month-to-month is going ebb and flow, but we are still comfortable with that for the quarter and have 4% range.

Okay, perfect. And the new menu coming out in March, can you talk about any price if you have taken on that menu?

Yes. We're not really taking much in a way of absolute price increases, we've done a little bit of tweaking in engineering where we're taking off some lower margin products and putting on some better margin products in each one of the categories, but we have just taken the 2% price increase in North Carolina in December. And with the commodity cost going where they are continued improvement month-to-month, quarter-to-quarter and year-over-year and our costs of sales were not going to be very aggressive on pricing. We try and build check through our chefs' specials and some margins through our chefs' special and our big initiative really is to continue to try and push our bar mix in both North Carolina and Colorado and again testing beer flights and some new summer cocktails and proprietary items. We are aligning a little more closely the North Carolina bar program with our Colorado bar program. As Jim mentioned, we are at about 19% here and 14% there. We think there is some opportunity. But the mid March or the late March menu changes, we're taking a couple of burgers up, putting a couple on, adding a new salad, changing an appetizer and that sort of things. So on the whole it's not a significant price change.

Perfect and then I think last one for me, can you just talk big picture about competition if you look at burger. Do you guys see pressure from the other kind of better burger guys that are better more counter service or do you feel like it really needs to be kind of a full service restaurant for Bad Daddy's in particular to really put pressure on you competitively in the market?

Yes that's a god question and we're competing against everybody here in Colorado with Smashburger being based here Five Guys with the pretty deep presence as well as another half of dozen Fast Casual guys. We really think our business is coming from and our core competitors of the full service guys, because we do close to 20% bar mix, because we're full service, we have a $16 to $17 per person check versus $10 or $11 in Fast Casual the occasion is really different. And so as we look at from a site selections standpoint and just competitively certainly systemically compete with everyone to some degree, but from an occasion standpoint, we are really competing head-to-head I think with the Causal Theme guys. And as I mentioned, when we look at some of the new locations and we're looking at Applebee's Chillies, Red Rob and Olive Garden out back [indiscernible]. And just that feel of Casual Theme, we think and the feedback we're getting is when people - we come into the market as kind of a new cool kid on the block and that’s where our business is coming from.

Okay. So is it safe to say, as you look at locations you would much rather go on somewhere with those that feel Casual Dining competitors compared to maybe those counter serve burger players?

Yes, I mean we typically see them both, we're not concerned about either price point or really occasion competing head-to-head to with the Fast Casual guys. I think we are competing more head-to-head with the full service. And again, because that’s been somewhat commoditized and they are focused on not so much growth and transaction growth, but really getting margin. We think that there is an opportunity for us to really step in with and we run a little bit higher food cost, we run a little bit higher labor and that's part of our value proposition. We infuse our stores with more labor and we certainly think we have a better quality product at similar slightly higher price points. And the feedback again from the customers as they get that they will want to pay a couple of bucks more for a better quality product and more vibrant atmosphere.

Okay. Perfect. Thank you.

Thanks Mark.

[Operator Instructions] Our next question is coming from Greg McKinley of Dougherty. Please go ahead.

Yes thank you. I wondered if you could talk us a little bit about how you feel the quality of the people you've been able to put in place both in terms of waged staff and store management for the recent Bad Daddy's store in Colorado and then given I guess the tight labor market? And then how do you feel about the people you anticipate having in place for the next couple of opening?

Sure and it's interesting when you look between Good Times and Bad Daddy's, I think we have more pressure from a labor and quality of employee on the Good Times side than we do on the Bad Daddy's side. Bad Daddy's we feel really good and fortunate about the quality of people that we've got. Front of the house is really not so much a wage issue because it's all tipped. Our host, our servers and our bar tenders are all tipped positions. And so the volume that we do and with four table stations, we are able to make a really good wage. Back of the house we've seen a little bit of inflation but even that we tend to be able to hire a little bit higher wage in our back of the house positions. So competitively we've been able to get a good crew back there. That's again probably the more difficult piece of our hiring Longmont which is opening next week for example we had just way, way more applications then we could even being the hiring. So again but for whatever reason we're seeing a really good flow. Management wise I think and I've talked about this before, were really beginning to dial-in and be able to I think see which systems as a training ground serve us the best and so as we get other full service experience management, a lot of those systems has stopped going they are pealing positions out, they are squeezing labor, they are adding lunch times from to dinner only concepts. That's really changing the landscape from a management standpoint and so were giving some really high quality management over that are looking for growth opportunity. So knock on a word so far so good really at all levels, we are not really feeling much in terms of pressure on the quality of employee, nor on really having the boost wages much. We try and have a pretty competitive compensation system so that based on performance on financial on a customer service metrics that they can do well and make more than they could competitively at other ones, but again on part of that is really driven by $2.5 million average unit volume model out of a small box. So if that answers your question Greg.

Yes. Thank you. And then I guess the other topic is just wanted to get a sense for if you could give us some color on the remaining Bad Daddy’s store openings and the remaining Good Times. So the Good Time location did I hear correctly that we should expect that to open in the June quarter?

Yes that's right. We have that under contract, we are in design and engineering right now and we will then move into the entitlement permitting process and start construction hopefully late spring. And then again we've got Bad Daddy’s opening on Monday on Longmont, we've got Colorado Spring Burger Gate opening in late March and we have Fort Collins then push back a little bit from the development standpoint again not from ours and then we've got another two beyond that that we are targeting for late summer.

Okay.

Mid February, late March, early summer and then late summer we are on the last two.

Okay. Just from a planning standpoint are there landlord challenges at all that you can foresee at this point on those summer openings or do you feel like you and the Landlord and the development are for enough down the path where if you are ready to go they will be ready to support you for that late summer opening.

With where we are today, we feel good about it. However, there are some risks or could there be certainly, we have actually killed one deal that we had in the pipeline. Again, just based on our learning that we've had so far, but we have these other two in the works. So I think these next 60 days are really key as we line it out in terms of lease negotiations, the design period permitting and then construction. Construction we've gotten down to 75 to 80 days it's really the frontend piece that's longer to get through the process, but with where are today Greg we feel okay.

Okay, very good. Thank you guys.

Thank you.

[Operator Instructions] If there are no further questions, this concludes our question-and-answer session and conference call. Thank you for attending today's presentation. You may now disconnect.