Good afternoon, ladies and gentlemen. Welcome to the Good Times Restaurants Incorporated Fiscal 2024 Second Quarter Earnings Call. By now everyone should have access to the company’s earnings release, which is available in the Investor section of the company’s website. As a reminder, a part of today’s discussion will include forward-looking statements within the meaning of federal security laws. These forward-looking statements are not guarantees of future performance and therefore you should not put undue reliance on them. These statements involve known and unknown risks, which may cause the company’s actual results to differ materially from results expressed or implied by forward-looking statements. Such risks and uncertainties include, among other things, the market price of the company’s stock prevailing from time to time, the nature of other investment opportunities presented to the company, the disruption to our business from pandemics and other public health emergencies, the impact and duration of staffing constraints at our restaurants, the impact of supply chain constraints and inflation, the uncertain nature of current restaurant development plans and the ability to implement those plans and integrate new restaurants, delays in developing and opening new restaurants because of weather, local permitting or other reasons, increased competition, cost increases or shortages in raw food products, other general economic and operating conditions, risk associated with our share repurchase program, risk associated with the acquisition of additional restaurants, the adequacy of cash flow and the cost and availability of capital and credit facility borrowings to provide liquidity, changes in federal, state or local laws and regulation affected the operation of the restaurants, including minimum wage and tip credit regulations and other matters discussed under the Risk Factors section of Good Times Annual Report on Form 10-K for the fiscal year ending September 26, 2023, filed with the SEC and other non-GAAP filings with the SEC. During today’s call, the company will discuss non-GAAP measures, which they believe can be useful in evaluating our performance. The presentation of the additional information should not be considered in isolation or as a substitute for results prepared in accordance with GAAP and reconciliation to comparable GAAP measures available in our earnings release. And now I would like to turn the call over to Ryan. Please go ahead, sir.

Thank you, Christa and thank you all for joining us on the call today. As mentioned, everyone should now have access to our second quarter earnings release and our 10-Q filing. Joining me today is our Senior Vice President of Finance and Accounting, Keri August. In just a few minutes, she will review the quarter’s results. I’m pleased with the sales results from both brands, with Good Times delivering its eighth consecutive quarter of same-store sales growth, posting 0.9% for the quarter and a 2-year stack for the quarter of 8.5% in spite of very tough weather conditions with recurring snow events on Fridays and Saturdays during the quarter. Meanwhile, Bad Daddy’s reported a same-store sales decline of 3.2%, a sequential improvement from the first quarter of the year. Restaurant level margins for the quarter compressed a bit of both brands and we’re currently tolerant of reduced levels of restaurant level operating profit to deliver the guest experience needed to continue to grow restaurant sales, which will ultimately benefit margins from the sales leverage generated. As of the date of this call, same-store sales during the third quarter are positive for both brands. And Bad Daddy’s performance versus the National Black Box casual dining index has improved to the point that we’re now often beating the benchmark compared to the mid-single-digit unfavorable GAAP that we saw as recently as 5 months ago. I believe this improvement at Bad Daddy’s is directly attributable to three specific factors: first, the expansion of operating hours to stay open an hour later every day of the week, with us now closing at 10:00 p.m. weekdays and 11:00 p.m. on the weekends. We know from data both brands that our guests are out later and we’re taking advantage of that trend. Second, our enhanced focus…

Thank you, Ryan. We’ll now review this quarter’s results. Total revenues increased approximately 1.9% for the quarter to $35.4 million. Total restaurant sales for Bad Daddy’s restaurants increased $0.1 million to $26.4 million for the quarter. The sales increase was a result of the fourth quarter 2023 Madison, Alabama restaurant opening, the prior year remodeled temporary closure of the Greenville, South Carolina restaurant as well as an approximate 4.7% menu price increase, partially offset by reduced customer traffic in certain restaurants. Same-store sales declined 3.2% for the quarter with 39 Bad Daddy’s in the comp base at quarter end. Cost of sales at Bad Daddy’s were 30.4% for the quarter, a 20 basis point decrease from last year’s quarter. The decrease is primarily attributable to the impact of a 4.7% increase in menu pricing, partially offset by slightly higher purchase prices in our commodity basket. Though early in the fiscal year, we experienced lower purchase prices for many commodities, ground beef costs have recently begun to increase and we expect them to continue to increase during the second half of fiscal 2024, along with other proteins and food-based commodities. Bad Daddy’s labor costs were flat compared to the prior year quarter at 34.7% for the quarter. Occupancy costs at Bad Daddy’s increased 20 basis points to 6.6%. Bad Daddy’s other operating cost increased by 20 basis points compared to the prior year quarter to 14.7% for the quarter, primarily the result of increased repair and maintenance, credit card fees and other employee-related expenses, partially offset by reduced restaurant supply costs. Overall, restaurant-level operating profit, a non-GAAP measure for Bad Daddy’s was approximately $3.6 million for the quarter or 13.6% of sales compared to $3.6 million or 13.8% last year. Total restaurant sales for company-owned Good Times restaurants increased approximately $0.6…

Thank you, Keri. Christa, we can open the call for questions at this time.

Thank you. [Operator Instructions] And your first question comes from the line of David Bastian from Kingdom Capital Advisors. Please go ahead.

Hey, Ryan. Thanks for your time here. I got in a little late, so sorry if I missed any of the – any key comments from the first part of the call. So feel free to send me back to the transcript here. First question...

I won’t do that, David.

Okay. First question on the lawsuit. I saw you guys on appeal, you won and you got awarded court costs. I just want to confirm, one, we’re past any other further appeal windows. And two, what rough estimate of that court cost award would be given with the judge rule?

Yes. So we believe that we are kind of past any liability that we might have with respect to the plaintiffs in that case. And so from that standpoint, we do think the matter is, I’d say, relatively closed. With respect to the legal fees that might be subject – for us to be awarded, I’d make a couple of comments there. I would refer you to the 10-Q filing, where we talk about that the total of those costs does exceed $3 million. However, the collectibility of that and the amount of those that may be awarded ultimately may be much less or even zero. And so I would hesitate to really forecast anything that would be recoverable there at this point.

Understood. Thank you. Secondly, could you give an update on quarter-to-date same-store sales pacing for both brands?

Yes. So in the earlier comments, I did mention that they – both brands are positive same-store sales. And I think – I would say low-single-digits at Bad Daddy’s, mid-single-digits at Good Times. And note that when I say that, that’s been adjusted – that we’ve adjusted those for the closure of the store that is under remodel, removing it from the comp base for that period of time.

Understandable. Thanks. And then...

I’m sorry, David, could you press star one again, please?

David, are you there by chance?

Yes, he’s there.

Okay. Great. Thanks. And then lastly, on the share repurchase program, is there any thoughts regarding increasing that authorization further, or are you guys looking at potential expansion of your Bad Daddy’s footprint as maybe being a better use of capital allocation going forward?

No, I think in my prepared remarks, I had said that we would – we’ve got about 6 months of purchases left at the current velocity and that I would expect prior to the completion of that that we would expand that, assuming pricing and market conditions remain the same.

Got it. Thanks, Ryan. And then any thoughts on pacing of new Bad Daddy’s locations right now?

So we have several leases that we are working on. We have a couple that are fairly close to being able to execute a lease. Those still need to be reviewed by our Board and real estate committee. But we’ve got a couple that are pretty close if they’re ultimately approved.

Great. Well, it sound like I went 2 for 4 on stuff that I missed. So, sorry for that. But thank you for taking my questions.

No worries, David. Always a pleasure to speak with you.

Your next question comes from the line of David Swartz with Morningstar. Please go ahead.

Hi, thanks for taking my question. You talked about the remodels of some of the stores. Can you tell us a little bit more about the performance of stores that have been remodeled in the past? And what kind of ROICs you expect from the remodels that you’re doing now?

Yes. So most – the three remodels that we’ve done previously have been, I’d say, more kind of cosmetic remodels, new awnings, paint, new signage and the signage of which could be expensive. We typically are seeing double-digit sales increases as a result of those remodels, which does translate into a better than 10%, maybe better – maybe higher than that ROI. The current remodel is a bit more extensive and I would say it includes a lot of deferred maintenance. And so I think the ROI on that – some of that is maintaining a level of sales and is less about – it also would include growing sales, but I think there’s a preservation of the existing business that’s expected in our current remodel.

Okay. Thanks. Also you talked about changes in both manager and staff at the stores, but also the challenges in hiring. Maybe you can tell us what you’ve seen so far in stores where you have made management changes and how it’s going in terms of being able to hire new replacements for people that have left.

Yes, I think my commentary on the market is really that hiring the quality of talent that we need to run our business requires higher levels of pay than it has required in the past. And that’s kind of the big takeaway there. I think among our existing management team, we have a great – we really have a great team of general managers and assistant restaurant managers. There have been cases where in certain markets or in certain stores, we’ve been challenged with management staffing. And I think we have made some tough decisions there and those tough decisions, at least at this point, as I’ve mentioned earlier, look to be paying off.

Alright. Thanks a lot. And good luck.

Thank you.

That concludes our question-and-answer session. Ryan, I’ll turn it back to you for closing comments.

Thanks again, Christa. I am very optimistic about the future of both of our brands. We have exciting initiatives that will translate into both guest and employee engagement at both concepts and it certainly feels like we have strong operating momentum. This is directly the result of the efforts of our team members, our managers and our leaders throughout our company whose focus on hospitality, customer service and pride in their work into their concepts is manifest every shift of every day. I’d like to thank all of you for joining our call today.

This concludes today’s conference call. Thank you for your participation and you may now disconnect.