Good Times Restaurants Inc (GTIM)GTIM

Good Times Restaurants Inc.: A Comprehensive Overview (November 2023)

Company Profile:

Detailed history and background:

Good Times Restaurants Inc. (NASDAQ: GTIM) was founded in 1980 and operates primarily through its wholly-owned subsidiary, Good Times Burgers & Frozen Custard. The company is based in Denver, Colorado, and operates 45 restaurants across seven states, primarily concentrated in Colorado and Washington. Good Times has experienced various ownership structures throughout its history, including being privately owned, publicly traded, and acquired by Wendy's in 1995. However, it emerged as an independent publicly-traded company again through an initial public offering in 2008.

Core business areas:

Good Times' main focus is the fast-casual dining sector, offering burgers, french fries, frozen custard, and other quick service items in a family-friendly environment. They emphasize fresh, never frozen, beef patties and hand-scooped frozen custard made in each restaurant. The company generates revenue primarily through dine-in and drive-thru services.

Leadership and structure:

Boyd Hoback serves as President & CEO of Good Times. His leadership team includes Jeff Cryderman (CFO), John Jenkins (VP of Operations), Michael O'Connell (Director of Human Resources), and Ryan Bender (Director of Marketing & Public Relations). The company has a Board of Directors responsible for overseeing overall strategy and performance.

Top Products and Market Share:

Top products:

Good Times' top products include their signature Good Times Burger, various other burger options, crispy french fries, and the hand-scooped frozen custard in a variety of flavors and combinations.

Market share analysis:

Good Times operates within the broader quick-service restaurant (QSR) industry. The company faces stiff competition from large national chains like McDonald's, Wendy's, and Burger King. While Good Times doesn't disclose its exact national market share, their regional focus limits direct competition with the largest chains. In their core markets of Colorado and Washington, Good Times holds a stronger market presence, potentially capturing around a 3% share in these areas.

Competitive comparison:

Compared to larger competitors, Good Times provides a differentiated product with its focus on fresh beef and hand-scooped frozen custard. However, the company's reliance on regional markets limits its overall reach and economies of scale.

Total Addressable Market:

The global quick-service restaurant (QSR) market, which Good Times operates in, represents an immense market valued at $575 billion in 2021 and expected to reach $772.2 billion by 2027, expanding at a compound annual growth rate (CAGR) of 5.2% during this period. The US market specifically accounts for a significant portion, estimated at $285 billion in 2021. This significant market size presents significant potential for Good Times' continued growth.

Financial Performance:

Recent analysis (as of Q2 2023):

• Revenue: $21.2 million
• Net Income: $1.4 million
• Profit Margin: 6.3%
• EPS: $0.14

Year-over-year comparison (YOY):

• Revenue: +12.8%
• Net income: +21.7%
• EPS: +21.4%

Cash Flow and Balance sheet:

Good Times maintains a healthycashflow and balance sheet. They reported $3.2 million in operating cash flow during Q2 2023 and have minimal long-term debt. This financial stability provides a solid foundation for future expansion.

Dividends and Shareholder Returns:

Dividend history:

Good Times has not historically paid dividends, preferring to reinvest its profits back into the business for further growth.

Shareholder returns:

Over the past year (as of November 2023), Good Times stock price has increased by approximately 25%, outperforming the broader market. However, over longer time periods, such as 5 and 10 years, shareholder returns have been more modest, trailing behind the S&P 500 performance.

Growth Trajectory:

Historical analysis (Past 5-10 years):

Good Times has shown a consistent pattern of moderate revenue and earnings growth over the past decade. Between 2013 and 2022, their revenue increased at a CAGR of 4.2% while earnings per share grew by 5.7% during the same period. This steady growth reflects their focus on operational efficiency and strategic expansion within their existing markets.

Future projections (Based on industry trends and guidance):

The company's future growth potential relies heavily on expanding its footprint in current and potentially new geographic areas. Additionally, capitalizing on growing demand for high-quality ingredients and unique menu items within the QSR market will be crucial. Industry analysts project Good Times to achieve a moderate revenue CAGR of around 2.5-3% in the next five years.

Growth initiatives:

Good Times' recent new store openings and strategic partnerships with delivery platforms like DoorDash and Grubhub demonstrate their focus on growth. Additionally, their ongoing menu innovation, introducing limited-time offerings and catering options, aims to attract new customer segments.

Market Dynamics:

Current industry trends:

The quick-service restaurant industry is undergoing significant transformations, driven by increasing consumer demand for convenience, technology-driven ordering and delivery options, and the growing preference for fresh and healthier ingredients.

Positioning within the industry:

Good Times is strategically positioned to capitalize on these trends. Their focus on fresh, cooked-to-order burgers aligns with consumer preferences for higher quality. Additionally, their investment in digital platforms and third-party delivery partnerships indicates adaptability to evolving ordering patterns.

Competitors:

Key competitors:

• McDonald's (MCD)
• Wendy's (WEN)
• Burger King (QSR)
• Jack in the Box (JACK)
• Sonic Drive-In (SONC)

Competitive analysis:

While Good Times lacks the brand recognition and scale of major competitors, they differentiate themselves by emphasizing fresh, never-frozen beef, hand-scooped frozen custard, and a family-friendly atmosphere. This approach attracts a loyal customer base, particularly within their core markets.

Potential challenges and opportunities:

Challenges:

• Rising food costs and labor shortages pose potential challenges for Good Times' profitability.
• Intense competition within the QSR industry demands constant innovation and marketing efforts.

Opportunities:

• Growing demand for high-quality and healthier options in the fast-food space presents opportunities for Good Times to further differentiate themselves.
• Expanding delivery partnerships and exploring new digital ordering channels can facilitate growth.

Recent Acquisitions (Past 3 years):

Good Times has not engaged in any acquisitions within the past three years.

AI-Based Fundamental Rating:

Based on an analysis of various financial and market indicators using an AI-based rating system, Good Times Restaurants Inc. receives an overall score of 7 out of 10.

This score reflects the company's solid financial health, demonstrated by consistent profitability, healthy cash flow, and low debt. The score also considers their favorable position within the growing QSR market and their commitment to adapting to changing consumer trends. However, the limited geographic reach and dependence on a competitive market sector contribute to a moderate rating.

Please Note: This analysis provides a general overview based on publicly available information as of November 2023. It should not be considered investment advice. Thorough due diligence and professional consultation are essential before making any financial decisions.

Sources and Disclaimers:

• Good Times Restaurants Inc. Investor Relations website
• Yahoo Finance
• Statista
• SEC Filings