Boyd Hoback – President and Chief Executive Officer Jim Zielke – Chief Financial Officer.

Billy Sherrill – Stephens Jeremy Hamblin – Dougherty and Company Mark Smith – Feltl and Company.

Good afternoon, ladies and gentlemen. Welcome to the Good Times Restaurants Inc. Fiscal 2016 Fourth Quarter Earnings Call. By now, everyone should have access to the Company's fourth quarter 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 the 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 and reconciliation to comparable GAAP measures available in our earnings release. Please note, this event 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, Nicole. Thanks everyone for joining us again this afternoon. With me today is Jim Zielke, our CFO. I will cover a summary of our fourth quarter and current developments and Jim will provide some more details in on our financial results for the quarter and for the year.

As well as provide additional color on our guidance for the upcoming fiscal 2017 with the balance of that. The total revenues increased 40% to $17.2 million during the quarter with our comp sales increasing 1.9% at Bad Daddy’s and they were down 1.2% at Good Times.

The sales at Good Times are an improvement sequentially over the negative 2%, we reported last quarter. And we are in line with the guidance given last quarter of projected 1% to 2% decline. And the 1.9% increase at Bad Daddy’s was pretty much in line with our expectations in our guidance of 1% to 2% increase.

As mentioned in the call last quarter, our Cherry Creek Bad Daddy’s is still being negatively impacted by construction of a new hotel next door, and most recently includes the partial closing of the street right in front of the store. That shifted the trend of that store from being up high in the high single-digits to down in the high single-digits.

So excluding that store, other nine stores in the comp base were actually up 2.8% for the quarter. And then during our first two periods of fiscal 2017 just ended our same-store sales improved at both brands.

We were flat at Good Times and we were up 3.5% at Bad Daddy’s including the Cherry Creek store, which again partially attributable are really nice weather we had in Colorado. As I discussed last quarter, we continue to work on quality improvements in innovation in our core burgers, in our chicken tenders and our frozen custard.

Those core items in our menu at Good Times we think will continue to separate us from the QSR pack. And our goal is twofold to continue to leverage our all natural positioning as deeply as we can. But also then really boosting the quality of our core menu and particularly those items that represent over 50% of our sales mix.

And really continue to expand our leadership from a quality positioning in QSR. To that end, we are on track with replacing our core production lines that is both. Its more efficient line, and it also provides more flexibility in what we can offer at Good Times.

And our goal is to have that equipment line and all the product improvements implemented that goes along with that in all of our stores by March of 2017. And we began the installation process this month after a couple of months, a very successful testing with good results.

And our advertising as a result of that in fiscal 2017 is also heavily weighted towards the last two quarters of the year to support the new product enhancements and some new product introductions that go along with that.

We remodeled and reimage four Good Times in 2016, we plan on one more major remodel and two reimages in fiscal 2017, in addition to the kitchen production line improvements that we're making. We're also beginning to see more significant sales increases for some of those major remodels we've completed last year.

And it's taken about a six month lag after the remodel is complete for those sales to increases to really kick in. We've got one of that it’s up very high single-digit or double-digits in the high teens over last year after the remodel. We also have one new Good Times under construction in Greeley, Colorado that will open in March.

Labor market remains challenging particularly for Good Times in Colorado just enact with further increase in the minimum wage that will take effect January 1. So far we've been able to offset most of that labor increase with improvements to our cost of sales both with lower commodity costs but also improved purchasing and menu engineering.

And we've got more of that coming in our second quarter of fiscal 2017. We also plan on taking one or two small price increases over the balance of 2017 for both concepts. We have planned to move to a narrowly management structure at Good Times where we put down on hold. As we see what legislative action is taking on the overtime rules.

The other impact of the recent state level labor-related legislative changes has been on our plan to enter the Phoenix market with Bad Daddy’s. We have been tracking the state level proposed wage and labor changes but we put four locations under letters of intent we are negotiating final leases.

But Arizona ended up passing a 40% increase in their tip credit minimum wage and that takes effects on January 1. Along with passing the requirement to provide 40 hours of paid sick time for every full time equivalent employee, and that's a huge whack.

So the difference between federal minimum wage state and the higher tip credit states like Arizona just moved to is over $100,000 of additional labor costs per store and that's all went tip service positions and really has nothing to do with the core minimum wage, as we already pay significantly over that for our back of the house staff.

So as a result, we've shifted our development focus to the Midwest and Southeast. Particularly since there doesn't appear to be any leveling of the playing field on wages at the federal level as we had anticipated with the Clinton presidential win. But we’ll continue to be really driven at the state level.

While we have some differential pricing market-to-market at Bad Daddy’s, we really can't make up that labor difference with pricing. So we believe we've got a very large expansion opportunity in the Midwest and Southeast markets, where we can capture most if not all of that labor difference. I'll speak to that in just a minute on where we're going.

As casual theme concepts can continue to move closer to fast casual with the tabletop tablets, larger table stations per server. And what we think is kind of a less personalized service model. We're really committed to differentiating Bad Daddy’s and the Bad Daddy’s experience both with the quality of labor profiles of our food.

But with a high test level of full service and so we're kind of going in the other direction. We strongly believe the end of the day is the total experience of food hospitality in the high energy environment that really creates our concepts differentiation from what's becoming I think the more and more commoditized experience at casual theme.

So internally, we refer that as delivering a Bad Ass experience that goes along with our Bad Ass Burger and our Bad Ass Margarita. We've got a several other initiatives for fiscal 2017 in place. One is to increase our – continue to increase of our bar sales mix to over 20% in Colorado and in new markets that we go into.

We are refining our appetizer and dessert selections for some incremental sales opportunities and we're beginning a test for online ordering delivery at Bad Daddy’s which we've had some demand for. And we've filled our first field marketing position recently, which will increase our community-based engagement and outreach at each store.

In addition to three more Bad Daddy’s opening in Colorado this year and three in North Carolina. We're targeting initial development then for the balance of 2017 and further development in fiscal 2018 and key markets in the Southeast during the Midwest of Oklahoma, Nebraska and Kansas.

And in the Southeast in Tennessee, Georgia and Alabama and possibly Florida we're taking our look at the Northern Florida area as well. We've got initial sites negotiated in Oklahoma and Georgia for 2017 development and are now working on our 2018 pipeline.

We opened six new Bad Daddy’s last year in 2016 and we anticipate one more will open here at the end of the calendar year and one in January. We'll plan to open a total of nine to 11 stores in fiscal 2017 and the pace of that will be approximately – not approximately will be one in the first quarter here in Denver.

Two in the second quarter in Fayetteville, North Carolina and Raleigh, North Carolina. And then three to four in each of the third and fourth quarters with approximately two-thirds of our total development for the year in our existing Colorado, North Carolina markets. And then most of our growth shifting into the newer markets in 2018.

In September, we closed on our $9 million debt facility with Cadence Bank and we ended the year with about a little over $6 million in cash. So we plan to begin to draw on the debt facility in our second fiscal quarter here in 2017. And we think we've got sufficient capital to continue to fund our plan growth in Bad Daddy’s.

Our continued reinvestment in Good Times both of those at the end of fiscal 2017. And then planned to increase our senior debt facility to support expanded growth in 2018.

In our stated goal really is to continue to grow our adjusted EBITDA by around 40% a year for the next few years, as we scale up Bad Daddy’s and reignite Good Times’ same-store sales growth. And that's reflected in our guidance in the earnings release for 2017.

We have now in place our above store level management team to support the next dozen or so new Bad Daddy’s stores that's both here in Colorado and in the Southeast with the recent additions we made. We're in the process of putting a new accounting software in the second quarter.

And that will help provide some additional G&A leverages as the new stores come online. As I mentioned last quarter and then its also reflected in our fourth quarter. A big part of our G&A expense increased in this last year. And what we've got plan for this year is comprised of the excess management trainees.

That are out of their training program but they've not yet been slated into a permanent position. And so we take their training program we put that into pre-opening expense but then any extra holding or seasoning time, we carry that at the G&A level.

In quarter-to-quarter that can sometimes be a very significant number but this gives us adequate bench strength to support our new growth that we've got coming up. I’ll turn it over to Jim now, and he’ll review more of the Good Times and Bad Daddy’s financials..

Thanks, Boyd. As it relates to the Good Times brand, as Boyd mentioned comp store sales were down 1.2% for the quarter. But did finished the year slightly positive for our sixth consecutive year of positive comps. We were lapping a three-year comp sale stack of over 36% for the quarter.

And as Boyd mentioned not immune to the competitive discounting environment within the industry. As with the case, last quarter we had about 3% year-over-year price increase in place. So traffic was down approximately 4% this quarter versus last year.

Cost of sales at Good Times improved 1.7% to 32.4% for both the quarter and for the year from 34.1% last year. This deep decrease versus last year for the quarter was primarily due to the 3% price increase I mentioned and also 11% lower beef costs, and a 31% decrease in bacon costs.

For the year, also in addition to the price increase beef cost decline about 21% but bacon for the year did increase 30% year-over-year. Sequentially beef costs were up about 4% in the fourth quarter versus the prior third quarter.

Total labor costs at Good Times increased to 32.3% from 31.7% for the quarter last year and increased to 32.7% for the full year from 31.4% last year. As Boyd mentioned most of this relates to the increase in average wage rate, which was about 6% for the quarter and also for the year.

This again due to the very competitive labor market in Colorado as we've mentioned. As Boyd mentioned in terms of the increase in the minimum wage that results in about 12% increase in the minimum wage beginning January 1. And that alone in Good Times will increase wages by about 50 basis points.

Restaurant-level operating profit at Good Times decreased $23,000 to $1.313 million from $1.336 million last year during the quarter, and decreased $80,000 to $4.973 million from $5.053 million for the full year last year.

As a percent of sales, restaurant-level operating margin improved by 20 basis points versus last year to 17.5% but did decline about 50 basis points compared to last year to 17.2% for the full year. As it relates to the Bad Daddy’s brand.

Sales increased 44% versus last year from $6,635,000 to $9,540,000 for the quarter and increased almost $15 million for the full year last year to $34.9 million this year. This was due to the six new units open this fiscal year, as well as the seven Bad Daddy’s in North Carolina that we are purchased in the third quarter last year.

As Boyd, mentioned we achieved positive 1.9% comps sales for the quarter, which met our expectations and we are up 3.3% comps for the full year.

8 Bad Daddy’s restaurants were included in the comp base for the entire quarter and two of the units were added to the comp base during the quarter for a total of 10 units in the comp base at the end of the fourth quarter.

Cost of sales at Bad Daddy’s improved 180 basis points to 31.0% of sales, compared to 32.8% last year and did improved for the year 100 basis points to 31.2% from 32.2% last year.

The decrease in cost of sales over the last year is primarily a result of lower beef costs but also better purchasing efficiencies and a small price increase taken earlier this fiscal year in North Carolina. Bad Daddy’s labor costs increased to 36.1% from 36.0% last year for the quarter and also increased for the year from 36.1% to 36.3% this year.

The increase versus last year was due to a higher mix of stores in Colorado than we had last year, which Colorado is higher tipped employee wage rate than North Carolina, as well as a bit of inefficiencies in the newer units.

The upcoming minimum wage increase in Colorado mentioned earlier will have an even larger impact on Bad Daddy’s as the tipped employee wage will go up 19% on January 1.

This result in approximate 150 basis point increase in hourly wages in the Colorado online locations, overall restaurant-level profit for Bad Daddy’s was $1.631 million for the quarter or 17.1% of sales, compared to $992,000 or 14.9% last year, and $5.8 million this year or 16.7% of sales, compared to $2,454,000 or 16.4% last year.

G&A expenses increased $1.587 million during the quarter from $1.241 million and we are flat versus the previous quarter. For the full year, G&A increased $4,167,000 last year to almost $6.3 million this year. The increases over last year consist of an increase in operational supervision and administrative positions.

The cost of manager is on hold prior to new store openings. Stock-based compensation expenses and legal and accounting expenses as we equipped the company for rapid growth, we do anticipate that G&A expenses will decline as a percent of revenues in fiscal 2017 and continue to decline in future years.

As we expand our base of restaurants even as we do increase G&A spending in key areas. Our net loss for the quarter was $71,000 versus loss of $53,000 last year.

For the full year, the net loss was $1.321 million versus the loss of $791,000 last year, largely from approximately $900,000 in higher pre-opening costs this year versus last year but less $600,000 in fewer acquisition costs versus last year when we had the BDI acquisition.

Our adjusted EBITDA increased by 20% for the quarter to $2.51 million, compared to $876,000 last year and increased 35% for the full year to $3.368 million from $2.503 million last year. As we announced earlier, we made a change in our fiscal year and fiscal quarters.

From a fiscal year with calendar month quarters ending on September 30 to a 52/53-week year ending on the last Tuesday of September. Future quarters will be 13-weeks long except in the case of the fiscal year with third 53-week when the fiscal fourth quarter will be 14-weeks long. And that won't occur until the year 2020.

This change was made effective at the end of fiscal 2016, which resulted in the quarter in the year ending September 27 versus September 30. The impact of the loss of those three days impacted sales by approximately $577,000 and estimated to impact adjusted EBITDA by approximately $150,000.

Our expectations for fiscal 2016 are essentially the same as the guidance given our call last August. Total expected revenues of $80 million to $82 million with the revenue run rate at the end of fiscal 2017 of $94 million to $98 million.

This revenue estimate includes same-store sales assumptions of plus 1% to plus 2% for both Good Times and Bad Daddy’s.

Based on our current trends, we expect Good Times’ comps to start out flat to slightly negative in Q1, but return to positive territory in the latter part of Q2 and improved to plus 3% to plus 3.5% in Q3 and Q4, reflecting the impact of the initiatives Boyd mentioned earlier.

We expect to open one new Good Times restaurant in March and 9 to 11 new Bad Daddy’s restaurants during fiscal 2017. We also expect that one Good Times restaurants will be closed during Q2 for approximately 6 to 8 weeks for a major remodel. During that time, that store will not be included in the comp sales calculation.

Total adjusted EBITDA has expected to be $4.5 million to $5 million for an increase of 34% to 48% over fiscal 2016. We do expect approximately $7 million to $7.2 million in G&A expenses in fiscal 2017, which includes approximately $900,000 in non-cash equity compensation expense.

We also expect pre-opening expenses of $3.5 million and capital expenditures of approximately $14.7 million of which $2 million of that is estimated our CapEx for fiscal 2018 development that will be incurred in 2017. We finished the year with $6.3 million of cash, so we believe that with our $9 million debt facility with the Cadence Bank.

We can support our total CapEx needs related to new store development and the continued remodeling and improvements at Good Times through the end of fiscal 2017. Now I'd like to turn the call back over to Boyd..

Thanks, Jim. It’s obviously a tough both macro spending environment and competitive environment in both of our brand segments. However, operating niche concepts does gives us the advantage of moving and adapting pretty quickly and driving our brand positions deeper.

So our focus is really on regaining our same-store sales momentum at Good Times, after six years of very significant gains. With what we believe are probably the most significant product improvements we've introduced in the last few years.

On top of that opening Bad Daddy’s that can continue to generate $2.5 million in sales in the second year and continue to refine our operating margins in both brands and exercise G&A efficiencies as we add on off of Bad Daddy’s growth.

As I mentioned earlier, our goal is to continue to deliver 35% to 40% annual increases in our adjusted EBITDA over the coming years. So we think we will continue to deliver shareholder value as we get Good Times reoccurring that again and expand Bad Daddy’s both in our current markets again primarily this year.

But really looking at these new markets in later 2017 and for fiscal 2018. Appreciate your time with us today. So with that operator, we’ll open the call for any questions..

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Billy Sherrill of Stephens. Please go ahead..

Hi, thanks guys. Just had a couple, one – last quarter you talked a little bit about some of the labor initiatives, you guys are rolling out both of the brands.

And I don't know whether or not you have any parameters for what kind of cost savings you expect, there and whether or not that the EBITDA guidance has any assumptions built into it or with the cost savings you can generate with those initiatives be incremental of the EBITDA..

Billy, I would like to say that the initiatives are not build into the EBITDA guidance but to hit – the high end of that guidance, those initiatives are in there. We do have the significant increase in minimum waging in Colorado that we have to offset with some of those initiatives.

So they're pretty much are balanced and included in the guidance right now. I mean, again we'll do everything we can to further refine our labor model. Again we've opened these last six stores here in Colorado, have learned a lot as we've opened those stores and continue to run the other stores here in terms of what the kind of ideal labor matrix is.

But I wouldn't plan on significant improvements above what's already in the matrix or in the model..

Got you. That's helpful. And then just one if I could on the Bad Daddy’s side. On the development side of things with a couple of new hires that at your bench.

Could just give us some broad context around some of the primary hurdles and also maybe some of the opportunities you're starting to see as you look towards moving into new markets such as the – in the Midwest and Southeast you mentioned..

Yes, I think some of the only real hurdle that we've got from a back door food cost standpoint, we've got a good distribution system in place that will be able to pretty much deliver the same back door costs in these markets that we're going into. Obviously, it's just a huge benefit and we see the difference today between North Carolina and Colorado.

It's just a huge benefit in these minimum tip credit stage – states. Again is not so much the core minimum wage, we're paying $11, $12, $13 in our back of the house. It's just that front of the house. Where we can pay $213 rather than what's now $7 in Arizona is a dramatic impact in our margin structure. So we're really looking forward to capture that.

I think that probably the bigger challenge that we’ve got, we’ll see for the first store in a new market requires some higher pre-opening expense, just because of the travel involved. Once we have that first store and we can train out of that store. We're back to our normal pre-open costs.

So we opened two new markets, the first store in each one of those in fiscal 2017 will have slightly higher pre-open costs. We've got a really talented team in place now we're really confident with our above level store supervision team that we've got. So and we're confident that we'll be able to manage those well.

I think real estate remains a bit of a challenge in finding good real estate and end-cap real estate is still very, very competitive. Our rates continue to go up a little bit and so that's why we're trying to work on 2018 now after what we have in the pipeline for 2017. That's probably our bigger challenge.

I think that from a consumer standpoint, we think the Midwest and Southeast are great areas for the Bad Daddy’s brand. Again, we are kind of the new kid on the block in a cool concept particularly in some of the secondary and tertiary markets. So we're pretty optimistic about the development into those markets..

Got you. And just one last one if I could, taking a step back and talk a little bit more broadly about the operating environment currently.

And how you may have seen that evolve throughout this year, just speaking obviously a little bit more from the Bad Daddy’s side of things and if there’s any post-election commentary to add that you’d be want to give that might be helpful as well?.

Yes. The election we really haven't seen much of any change in trend in any way. It remains very, very competitive. We've seen for the first time here in Colorado market for example. Applebee's rolling out at two for one, buy one get one discount which is really, really deep. And I think that's reflective of where their sales are.

We haven't seen too much it effect on us. We continue to maintain our sales trends in both North Carolina and Colorado. I don't know if that discounting environment is going to continue to get worse than it already is or not, it's already pretty deep right now. But so far from a consumer standpoint, we haven't seen any negative.

We have a number of stores in lifestyle centers, and in major malls that have theatres in them. And the movie selection has been a little weak the last couple of months and we've got a really good month coming up here I think with a lot of new releases.

So the stores that we haven't yet been able to go through a holiday season with that we opened this last year. We think we have the opportunity to do some big volume here in December and January particularly.

I don’t know, Jim, do you have any commentary on the election?.

No. Again, like Boyd said, we haven’t seen any changes in our trends I don’t know if the stock market is indicative of just optimism with the potential for – or with the new executive branch. So we'll see how that really plays out..

Got you. That’s helpful. Thanks guys and congrats on a good quarter..

Thanks..

Our next question comes from Jeremy Hamblin of Dougherty and Company. Please go ahead..

Hey, guys. I want to add my congratulations on some solid results in a tough environment. I want to just go through the change in the guidance metrics, which it looks like you saved a couple of million dollars just off the high end of the total revenues, make sure I understood that.

Is there difference on the $2 million at the high end of your fiscal 2017 guidance, just a function of the timing of when those locations are going to open up, or….

One hundred percent exactly that Jeremy – again having kind of decided to move in a different direction in Arizona where we had several stores teed up, which would have – we had pretty much assured of some significant stories from those stores, to now going into some other markets that again we had already looked at.

But now where you were needing to tee those up for fiscal 2017 and probably won't get as many store weeks as we originally would have thought four months ago. So that’s definitely the reason for the shave at the top..

Okay. And just to confirm, you're looking for two units to open in Q1 on Bad Daddy’s, one in Q2 but in both cases towards the latter end of those quarters. And then in Q3 and Q4 minimum of six Bad Daddy’s and you're looking for one Good Times to open either at the end of Q2 or beginning of Q3. Is that….

You have that right except for the Q1 and Q2. We have one that's going to open on December 14 here in Colorado. We had a second one that actually started construction earlier than that in Fayetteville, but we lost about three weeks to the hurricane.

We didn't get hit in our facility, but the subcontractors and just getting city inspections done, we lost about three weeks. So that's pushed into early January. So that's now slated for a January 15 open. So we have one in Q2 and then two in – one in Q1, two in Q2 and then three to four in each of Q3 and Q4. And then March….

Okay, I see I read that wrong, okay..

And then the Good Times – new Good Times are under construction, will open – should be the first part of March before mid-March, in Greeley..

Okay great, thanks. But then I just want to come back to a couple of things, in terms of an estimate on the growth dollars associated with the minimum wage increase.

What are we looking at for 2017?.

Yes, so Jeremy on the Good Times side, it's about 50 basis points for again the last nine months of the fiscal year which is being about 120 gram. And then on the Bad Daddy side just the Colorado units. And it's about 150 basis points for those units again just the last three quarters of the year.

And that's about little over 300,000 in terms of just those changes alone in the minimum wage. And again that’s build into kind of the guidance that we gave. So basically now we’re somewhat unforeseen back in August when we gave the guidance originally.

So that $400,000 to $500,000 increase in wages there has been offset in our guidance with some of the opportunities that we see now in both cost of sales and labor to offset that. So that's why the guidance didn't change even though that $400,000 to $400,000 plus is an extra hit that we hadn’t counted on four months ago..

Okay. And then I just want to – the capital expenditures guidance did increase by $600,000, as well. But I'm thinking that you maybe switching gears into some slightly lower cost environments versus Arizona. I could be wrong on that.

But in terms of that increase in CapEx by $600,000 to $14.7 million, is that additional equipment that you're adding in or where does that increase in cost come from? And then when you think of that in context of maybe not quite as high opening volumes along with slightly higher costs on labor.

How does your kind of return metrics change now, how do they look today?.

So the change Jeremy from last quarter's guidance of the 600,000, 200,000 of that relates to just how we foresee the timing CapEx, first 18 units that occurs this year. So we did bump that up from 1.8 to two. So that really means a $400,000 increase year-over-year in terms of our actual fiscal 2017 CapEx.

And I guess some of that relates to the timing of 2017 CapEx versus what we actually spent in 2016. So really net-net it really is only about a $200,000 to $300,000 net increase in the cost of the units we're opening, as well as the CapEx for existing stores.

And I would say a couple of hundred thousand of that or really all of that relates to kind of the equipment changes that we're doing in Good Times. We originally estimated that to be in the $300,000 range, now I think it's going to be closer to $0.5 million for those line changes that we're making.

So in terms of the new unit CapEx, really no change from where we were before, so really kind of keeping the same metrics on our new store ROI..

Okay, even though you're experiencing a little bit higher labor cost in general..

Yes, but what we did then was shift more stores opening in Colorado and Arizona, which we had – those already had a higher wage rate. And we've pioneered the Arizona stores reported most likely and replacing those with federal minimum wage states. So our labor actually improves on the new units overall versus what we had in the original model..

But you feel confident that you can still get 2.5 million in these states?.

Yes I mean right now North Carolina is the best performing. If you compare North Carolina and Colorado, North Carolina is and has been better performing market. So we feel very comfortable that outside of Colorado we can do the target volume of $2.5 million or better..

Okay great. Thanks for answering the questions. I’ll hop back in the queue..

All right, thank you..

Thanks Jeremy..

[Operator Instructions] Our next question comes from Mark Smith of Feltl and Company. Please go ahead..

Hi guys.

First off you guys talked a little bit about pre-election, post-election, can you quantify what the comps were in period one and period two of this quarter?.

Well I guess in the release, we said that so far Good Times was flat, through the first really ten weeks of the quarter. This is a first ten weeks of the quarter we were flat on Good Times. Mostly due to really nice weather in Colorado the first couple months offset by some really bad weather this last week, versus last year.

But we're pretty much flat on Good Times..

But no meaningful movement pre versus post..

Yes nothing in terms of pre versus post. It was about the same in October as it was in November. And then December last week of November started out good, first week of December has been a tough one, because of the weather. On the Bad Daddy side, again we're up 3.5% so far through 10 weeks and really no meaningful change from pre-November to the post..

Okay.

And then just looking at restaurant-level margins at Bad Daddy’s, can you comment at all about comp restaurant versus non-comp restaurants and kind of the delta between the two?.

Yes I really haven't gotten into that much – that granular detail on your margins. I will say the six stores have slightly lower sales than the three original stores in Colorado. And therefore, again just leveraging those sales have slightly lower margins.

But in terms of labor, once the store has been opened for a few months and pretty much all the other costs are pretty much in line mature stores in line with new stores.

And the Carolina being slightly higher volume than Colorado, with the better wage rates was several 100 basis points higher in Colorado – or in Caroline than we experienced in Colorado..

Okay.

And then just looking at Good Times and competition really on price within QSR, do you see that changing here in the near-term or do you think that your peers continue to push discounting as we look into this next year?.

We anticipate that it's going to be – it's going to mitigate somewhat. But it's still pretty intense they’re still on the bundle deals which I think has lost some of its theme in terms of how effective that's been. Jack just rolled the four for $4 combo and Sonic rolled the five for $5 combo.

So it's the bundling deals, it's not so much any individual low value menu push as it is the bundle deals. And so I think we’ve kind of gone through the worst of that at least that's what we're hoping.

And we've got one of the initiatives we've got that we've had in test that we're rolling in March with our new equipment line is a new mid-tier pricing on our menu. We have the barbell strategy where we have a small low end menu but a lot of high end on our menu.

And we're adding in some new choices in the mid-tier that we think are going to be very successful in test, it's one of the highest incidences on our menu. So that is kind of our approach to value by offering more choice throughout our menu.

But again from a transaction standpoint, I think, it's going to remain pretty competitive, with beef costs where they are, but I don't see how – we think it's going to be a little bit better and mitigate somewhat..

Okay.

And I think lastly from me, those Arizona units are they completely scrapped and off the table right now? And if so are there any of those deals that you are going to have to pay to get out of a deal?.

No fortunately we had them at the late LOI and lease negotiation stage. And so hadn’t inked any of those deals. We've got some very nominal cost that we had on the front end in terms of some design work that we had done. But other than that there are no leases that we have to eat that we don't have to buy our way out of any deals or anything like that.

Had that been the case we may have gone ahead with those initial stores. But with – and the big surprise that passed down there was paying every employee a week of wages for sick leave. The minimum wage we didn't know whether that was going to go or not, it went. But the other, the kicker on that was the sick leave piece.

So we were able to get out of there without any costs..

Excellent, thank you..

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Boyd Hoback for any closing remarks..

Again just thanks for joining us this afternoon. Appreciate your questions and your attention. And look forward to next call. Thank you..

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect..