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Good Times Restaurants Inc. has acquired a high-volume franchised restaurant for a total purchase price of $1,250,000.
"This was a great opportunity for our franchisee to take advantage of 2012 tax rates and create a liquidity event based on the hard work he's put in over the last several years. It's a great opportunity for us to acquire at a reasonable cost a high volume, very profitable restaurant that has been maintained and operated at a very high level," said Boyd Hoback, Good Times' president and CEO.
The company plans to sell the real estate underlying the restaurant in a sale leaseback transaction that it anticipates will yield approximately $1.1M in net proceeds.
Hoback said the company's return on investment on the operating asset investment will be "far in excess" of what could be expected on a new restaurant, even net of the royalties that were received from the franchisee.
"It will be immediately accretive and is a part of the overall rationalization of our existing store base to maximize current and future profitability, including the recent sale a few underperforming stores for cash, reimaging and remodeling of older stores and preparing to build new stores in the Colorado market as opportunities become available," he added.
Good Times also announced it expects to close on another sale leaseback transaction this week that, in combination with the sale leaseback of the recently purchased franchise restaurant, will enable it to pay down all of its remaining term debt.
December sales lifted by strong breakfast performance
The Colorado-based quick-service chain also announced its same-store sales increased 11.6 percent for December and 3.8 percent for its first fiscal quarter. Sales for the new breakfast daypart featuring Hatch Valley Green Chile Breakfast Burritos were approximately 5.9 percent for the quarter, which was rolled out system-wide throughout the quarter.
"We have had a cumulative increase in same-store sales in excess of 20 percent over the last three years in our first quarter and we are excited about additional initiatives planned for this year to continue our momentum. This year we benefitted from the addition of the new breakfast daypart and we've achieved the cumulative sales increases largely without any significant broadcast media advertising, which we plan to revive in the third and fourth quarters to promote new, unique product offerings centered around fresh, all natural, authentic ingredients," Hoback said.
The company reported that several of its restaurants are exceeding 9 percent in total breakfast sales during their first three months' of introduction, aided by trade area giveaways and the company's first direct mail campaign in several years.
"We are gaining traction faster than we had anticipated for sales of our Hatch Valley Green Chile Breakfast Burritos ... We anticipate that the breakfast sales will add incremental profit during the remainder of our fiscal year as we fine tune the labor requirements and decrease our promotional activities," Hoback said.
Good Times first introduced Hatch Valley Chile items to its breakfast lineup in the fall. The breakfast menu consists of four Hatch Valley Green Chile Breakfast Burritos, as well as Daz Bog coffee and fresh orange juice.
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