The company's first-quarter results reflected the positive sales momentum related to the brand repositioning to Good Times Burgers & Frozen Custard and the introduction and marketing of the frozen custard product that began in August 2001.
For the first quarter, same store sales increased 12 percent over the prior year. Net income increased to $62,000 from a loss of $12,000 in the prior year. The restaurant level operating income increased to 21.1 percent of restaurant sales from 18 percent last year.
"We are extremely pleased with our start to fiscal 2002, with the initial results of our repositioning efforts exceeding our expectations,'' said Boyd Hoback, president and CEO. "The response to our frozen custard product has been overwhelmingly positive, driving both increased frequency amongst our current customer base and new trial amongst consumers that have never been to Good Times. We are in the very early stages of our communications and marketing program, so we are very optimistic about the longer-term potential the brand repositioning will have on sales and profits. We have yet to go through a peak season for frozen treats and yet we are maintaining a very strong growth in sales during the winter months, with frozen custard at a higher percentage of sales than we had anticipated.''
Hoback noted that the improvement in Good Times' operating margin was driven by both the increase in same-store sales and a lower cost of sales from decreased beef costs and menu and portioning changes that were implemented at the beginning of the quarter. "We continue to engineer our core menu at the same time we are developing our frozen custard menu to provide increased value and the highest quality products to our customers,'' he said. "Frozen custard provides both a powerful way to differentiate Good Times as well as an opportunity to be tremendously creative in our offerings. We are continuing to develop our operating standards and core menu offerings to fully leverage the brand repositioning and to meet the expectations of a new customer base, without compromising the tremendous equity we have with our current customers.''
According to Hoback, the strong same store sales trends continued in January with an increase of 10.1 percent on top of a 9 percent increase last year. "As a result of the strength in our sales trends and improved operating margins, we are accelerating our initiatives to support a three-tiered growth strategy consisting of (1) continued double-digit same-store sales growth, (2) maintaining over 2 percent improvement in our operating margin, and (3) accelerating our growth in new stores,'' Hoback said.
Concluding, Hoback said: "We believe we are only in the beginning stages of leveraging the opportunity we have with Good Times' brand and our development as a dominant regional chain. We are developing a unique position in the marketplace with a store-level model that can fuel exceptional sales and earnings growth over the coming years. We are filling our real estate, financing, franchising, and people pipelines to support that growth.''
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