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Good Times explores options as results dip

GOLDEN Colo. Good Times Restaurants Inc. said last week it hired financial advisory firm Mastodon Ventures Inc. to explore options for the 52-unit Good Times Burgers and Frozen Custard chain, which could mean a sale or other move to go private.

Good Times has seen its net loss widen in recent months and its same-store sales for the first nine months of its fiscal 2009 fell 13.8 percent from the same nine fiscal months a year ago. The double-digit decline is more common among full-service restaurants than quick-service brands. At the outset of the year, Good Times attempted to move more upscale rather than compete with the discounting of other quick-service chains and began to offer larger, more premium burgers made with all-natural Angus beef.

The latest-quarter same-store sales decline of 12.5 percent lapped a year-ago decline of 5.7 percent.

“[Hiring Mastodon] means all different things,” Boyd Hoback, president and chief executive of Good Times Restaurants, said in an interview with Nation’s Restaurant News. “I can’t comment on it. But clearly the cost benefit of being public is much more than being privately held. The costs are difficult to justify.”

Acompany statement said officials would not provide any updates or comment further “until the outcome of the process is determined, or until there are significant developments.”

The announcement noted that the market for shares of Good Times stock is relatively inactive and Good Times has realized losses from operations during recent periods. Good Times trades on the Nasdaq Small Cap exchange. Its stock has traded between 75 cents and $3.50 per share during the past 52 weeks.

For its latest quarter ended June 30, Good Times reported its net loss widened about 49 percent to $180,000, or 5 cents a share, compared with a net loss of $121,000 or 3 cents a share, for the same quarter in 2008. Revenues for the third quarter totaled $6.3 million, compared with $6.9 million from the same quarter last year.

For the company’s nine fiscal months of 2009, its net loss grew to $1.2 million, compared with a net loss of $746,000 in the first nine months of fiscal 2008. Revenue totaled $17.5 million, an 8.9 percent drop from the first nine months of 2008.

“Clearly it’s the economy,” Hoback said. “We operate at the top end of quick service and don’t really offer a two-tier [pricing] option. We’re disproportionally punished because of that.”

“We have some stores in some markets that are doing great and even running positive,” he continued. “Sales trends are beginning to flatten out so it’s not all gloom and doom. We expect a tough environment for the balance of this year, but in the fall we do expect sales trends to flatten as we lap from the downward trend last year.”

Aspecial committee including Good Times board members Richard Stark, Alan Teran and Geoff Bailey is working with Austin, Texas-based Mastodon Ventures, the company said.

Contact Dina Berta at [email protected].

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