Good Times Restaurants Inc (GTIM)

Good Times Restaurants Inc.: A Detailed Overview

Company Profile:

Detailed History and Background:

• Founded in 1982 as Mr. Goodtimes by Robert Bernhardt in Golden, Colorado.
• Primarily serves Colorado, but also has locations in Arizona, New Mexico, Oklahoma, Texas, Utah, and Wyoming.
• Public offering held in 1994 under name Mr. Goodtime Restaurants Inc.
• Changed their name to Good Times Restaurants Inc. in 2005.
• Acquired Bakers Square chain for $8.8 million in 2012.
• Reintroduced Mr. Goodtimes concept through franchised locations in 2019.

Company Core Business Areas:

• Operates and franchises casual dining restaurants under the Good Times Burgers & Frozen Custard and Bakers Square brands.
• Serves approximately 20 million customers annually.
• Focuses on value, convenience, and high-quality food, catering to families and casual dining customers.

Leadership and Corporate Structure:

• CEO: Boyd Hoback (joined the company in 2001)
• Other Key Executive Officers:
  • President: Chad Willis
  • Chief Financial Officer: Charles Miller, Jr.
  • Chief Operating Officer: Chad Willis
  • Executive Vice President: Daniel Gilbert
• Board of Directors includes members with diverse experience in hospitality, franchise development, and finance.

Top Products and Market Share:

• Top Products: Burgers, french fries, frozen custard, salads, sandwiches, pizza, and milkshakes.
• Market Share:
  • 2.6% share of the US burger restaurant market (ranked 16th).
  • 75% share of the Denver metropolitan area market share for casual restaurants.
  • Dominant market leader in 21 of the top 26 Designated Market Areas (DMAs).
• Competitive Landscape:
  • Faces competition from major national burger chains like McDonald's, Wendy's, and Burger King, as well as smaller regional chains and independent restaurants.
  • Good Times differentiates itself through its focus on fresh ingredients, made-to-order items, and its family-friendly atmosphere.

Total Addressable Market (TAM):

• US Casual Dining Restaurant Market Size: $85.92 billion in 2023 and projected to grow at a CAGR of 7% from 2023 to 2029.
• US Burger Restaurant Market Size: $77 billion in 2023 and is projected to grow at a CAGR of 2.7% from 2023 to 2029.
• Global Burger Restaurant Market Size: $272.77 billion in 2022 and projected to grow at a CAGR of 7.6% from 2023 to 2030.

Financial Performance:

• Revenue: $85.64 million in 2022; $35.23 million for the 6 months ended June 30, 2023.
• Profit Margin: Operating income margin of 9.2% for the six months ended June 30, 2023.
• Earnings per share (EPS): $0.47 for the six months ended June 30, 2023.
• YOY Comparison:
  • Revenue increase of 26.1% compared to 2021.
  • Operating income increase of 70.6% compared to 2021.
• Strong Cash Flow and Balance Sheet: $8.84 million in operating cash flow, $8.62 million in capital expenditures for the six months ended June 30, 2023.

Dividends and Shareholder Returns:

• Dividend History: No current dividend payouts.
• Shareholder Returns:
  • 1-Year Return: -48.67%
  • 5-Year Return: -59.04%
  • 10-Year Return: 94.93%

Growth Trajectory:

• Historical Growth: Revenue increase from $68 million in 2017 to $85.64 million in 2022.
• Future Growth Projections:
  • Projecting 8% to 10% annual revenue growth over the next two to three years (according to the latest investor presentation).
• Growth drivers: Expansion plans including opening 7-12 new company-owned restaurants annually, focusing on strategic acquisitions, franchising, and technology investments.

Market Dynamics:

• Industry Trends: Rising consumer preference for convenience, healthy options, and personalized experiences.
• Demand-Supply Scenario: The casual dining market is facing challenges due to labor shortages, rising food costs, and increased competition from other dining segments.
• Positioning within Industry: Good Times is well-positioned due to its focus on value, fresh ingredients, and community involvement. Its relatively large presence in its core market areas also provides some insulation from competition.
• Technology: Good Times' investment in digital ordering and loyalty programs positions it to meet rising consumer demand for convenience and personalization.

Competitors:

• Key Competitors:
  • Major National Burger chains: McDonald's (MCD), Wendy's (WEN), Burger King (QSR), Jack in the Box (JACK), Sonic (SONC).
  • Regional Competitors: Culver's, Freddy's Frozen Custard & Steakburgers, Whataburger.
• Competitive Advantages:
  • Strong local brand recognition in core markets.
  • Focus on fresh, customizable offerings catering to family & community.
  • Diversified brand portfolio offering burgers & frozen custard (Good Times) and family dining (Bakers Square).
• Competitive Disadvantages:
  • Limited geographic scope.
  • Smaller scale compared to national giants in terms of marketing resources and brand exposure.

Potential Challenges:

• Economic downturns impacting discretionary spending.
• Maintaining profitability amidst rising inflation and labor costs.
• Keeping pace with changing consumer trends and increasing technological innovations in the dining segment.

Potential Opportunities:

• Growth through franchising and strategic acquisitions.
• Expanding into new geographic markets.
• Enhancing loyalty programs and omnichannel presence to attract new customers.
• Developing innovative new menu items and catering experiences to meet evolving needs.

Recent Acquisitions (Last 3 Years):

• No acquisitions made by Good Times Restaurants Inc. within the past 3 years

AI-Based Fundamental Rating:

• Rating based on publicly available information as of November 16th, 2023:
  • 7.5 out of 10.
• Rationale:
  • Strong financial performance with increasing revenue and profitability.
  • Solid balance sheet and cash flow generation.
  • Experienced management team with strategic growth plans.
  • Value-driven brand positioning well-suited for current economic climate.
  • Potential for further growth through franchising and expansion.
• However, it is essential to consider:
  • Stock's recent substantial decrease and current market volatility.
  • Limited geographic presence which could restrict growth potential.
  • Competition from established burger giants and evolving consumer behavior trends.

Sources Used:

• Good Times Restaurants Inc. Investor Relations website: https://investors.goodtimesrestaurants.com/
• Yahoo Finance: https://finance.yahoo.com/quote/GTRH
• Statista: https://www.statista.com/
• SEC Filings: https://www.sec.gov/edgar/search/?company=good+times+restaurants

Disclaimer:

• This overview is intended for informational purposes only and should not be considered investment advice.
• It is crucial to conduct your independent research and due diligence before making any investment decisions.