Good Times' bad times
Burger chain puts off plans to add stores in Midwest
By Joyzelle Davis, Rocky Mountain News (Contact), David Milstead, Rocky Mountain News (Contact)
Published July 10, 2008 at 6:55 p.m.
Where do you satisfy your burger cravings?
Ken Papaleo / The Rocky
Monique Davis makes a sandwich Thursday at the Good Times on the 16th Street Mall. A soft economy has hurt the chain.
Ken Papaleo / The Rocky
A customer sits outside at the Good Times on the 16th Street Mall. The chain will tweak its store design and menu in Colorado.
Higher food prices, penny- pinching consumers and the credit crunch: These are hard times for Good Times Burgers & Frozen Custard.
The 54-restaurant chain, which has spent years refining its brand and concept with an eye toward regional expansion, has now shelved plans to expand outside its Colorado base.
Good Times said late last month it is indefinitely suspending a franchise development plan to build as many as 25 stores in Nebraska and Iowa, which would've been the Golden-based company's first foray into the Midwest.
News of the retrenchment cut Good Times' share price in half, from $4 to $2, in the days following the June 26 disclosure. The company, never worth much more than $25 million in market capitalization, saw its value drop below $8 million.
"It's a triple whammy with the softening economy, higher commodities and tight capital markets," said Boyd Hoback, Good Times' CEO and co-founder. "We felt it was better to pull back and wait for the stars to align."
Good Times, which started in Boulder in 1987, plans to stick to its Colorado roots in the meantime.
The company modified the development agreement with its Midwest franchisee, Zen Partners, to transfer rights for up to three restaurants from Omaha to Colorado. Good Times also plans to open two company- owned restaurants in Colorado and one dual-branded Good Times-Taco John's franchised location in Sheridan, Wyo.
Along with the announcement, Good Times said that James DeBolt, vice president of franchise development, stepped down on June 30.
DeBolt, who came from fast-growing Back Yard Burgers nine months ago, left in a "mutual decision" after the company decided the timing wasn't right to begin a franchise push, Hoback said.
Good Times also said that Robert Turrill, the company's vice president of marketing for 14 years, is retiring effective Oct. 31.
To keep costs down, the company doesn't plan to hire replacements for DeBolt or Turrill anytime soon, Hoback said.
Expanding a franchise concept into new markets is particularly difficult when turmoil in the markets makes banks hesitant to lend.
Most experienced franchisee partners are sitting on the sidelines or sticking to nationally known brands at this risky time, Hoback said.
Brian Burke, a consultant on small-business lending with the firm SBA Access, says a potential franchisee may have trouble getting a loan to open a Good Times in a market that's never seen the restaurant before.
"Community banks are going to struggle with that, because they won't know the concept," he said. "Not all franchises are created equal."
Good Times, which started out with 880-square-foot drive- through and walk-up stores, in recent years began building restaurants nearly three times as large with wood and slate finishes that encourage customers to linger.
The last seven stores opened in the new format are averaging sales around $1.2 million each, compared with $930,000 for all company-owned stores, Good Times said in its annual filing for the fiscal year ended Sept. 30, 2007. Good Times last year added 75-cent Bambino slider burgers to its menu, helping same-store sales soar 12 percent in the fourth quarter.
Those successes, however, have been blunted by larger economic forces. Restaurants across the board have been hit by higher costs for everything from flour to dairy. Consumers, meanwhile, are eating fewer meals out and ordering less as they worry about $4-a-gallon gas prices. At the same time, Colorado increased its minimum wage at the beginning of 2007.
Good Times considers itself a top-tier fast-food restaurant, offering 100 percent natural Coleman beef and avoiding the dollar menu promotions of industry heavyweights like McDonald's and Burger King. But Good Times' burger prices stay in the $1.89 to $3.99 range, well below fast-casual restaurant chains.
That tight niche "doesn't give them a lot of space to maneuver," said restaurant consultant John Imbergamo. "It would be difficult for them to raise prices or cut portions or quality."
Good Times' net loss for the quarter ended March 31 expanded to $370,000, from $146,000 in the prior-year quarter. Operating cash flow for the six months ended March 31 was just $2,000, compared with $350,000 in the prior- year period.
Good Times has seen lean times before.
After hitting a then-high of $17.5 million in revenue in 2002, revenue dropped below $16 million in 2003 and 2004.
At its low point in market value in late 2000, the company had a market capitalization of barely more than $1 million.
Hoback is optimistic that the pressure on commodities prices and the credit markets eventually will ease, although he isn't expecting it anytime soon. In the meantime, Good Times will continue to tweak its store design and menu in Colorado, he said.
"We still want to be a regional concept," Hoback said. "But it's going to take longer than we'd planned."
Burger chains' stores
Good Times restaurants are primarily in Colorado. Here's how the company stacks up against other burger chains:
McDonald's 31,000 worldwide (13,700 in U.S.)
Burger King 11,200 worldwide (7,500 in U.S.)
Sonic 3,350
Culver's 370
5 Guys Burgers and Fries About 300
Fatburger 93
Good Times 52
Smashburger 6
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July 10, 2008
7:20 p.m.
Suggest removal
Eddard writes:
It is sad when people can't afford to buy a burger anymore. What's happening to us?
July 10, 2008
8:28 p.m.
Suggest removal
renaldo_phlegm writes:
I agree with Skyebeader; having decent food should come before worrying/making excuses about the economy, restaurant layout, etc. The burgers are a little overpriced (normal people don't go to a sit down restaurant for burgers, so the price comparison is irrelevant), but the big issue for me is that the greasy spiced fries stink. Everyone likes McD's fries, but the spiced, breaded french fry thing is so 80s and so bad...I have a GT around the corner but take my son to McD's because, while the GT burgers are better, I can't eat their fries.
July 10, 2008
11:07 p.m.
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Chadley25 writes:
I love Good Times, and I'm actually a bit proud that we have quite a few Colorado-created chains here (GT, Quizno's, Chipotle (I think), and a couple of others I can't think of)... but GT is definitely a bit on the pricey side, and in a soft economy, people shy away from the $2 burgers and hit the 79¢ taco specials more and more. I'd like to see some more health-conscious fare on the GT menu... keep the fatty frozen custard, greasy fries and dipping sauce, etc., but at least give a few more reasonable options for people who don't necessarily want to ingest 3,000 calories in one sitting.
July 10, 2008
11:52 p.m.
Suggest removal
nutz22 writes:
I tried Good Times back in the late 90's and thought that it was the best fast food that i had ever tried.I know they were more expensive but they were worth it in my eyes.I noticed a few years later that they were serving much smaller beef patties and the food in general was no longer a good value.I guess good things never last.
Try bringing back the quality,We don't need another Wendy's or Mickey Dee's
July 11, 2008
12:12 a.m.
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Domino writes:
Sorry, any chain that relies on drive throughs as much as Good Times is going to suffer as folks need to use their cars less. And sorry to Good Times, less driving is not a bad thing. I would imagine that some of the distant outlet malls are going to suffer when the amount saved is less than the increase in gas cost.
July 11, 2008
12:59 a.m.
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misterchinaski writes:
i guess they aren't going to be as big as they make it seem in the commercials. they do have good burgers though. and the chicken bambinos, wow, so delicious!
July 11, 2008
6:34 a.m.
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LuvAmerica writes:
Interesting nutz22, I had a parallel experience: I used to eat there in the '90's as well, and thought the burgers were most tasty. Then I had to stop eating there for obscure health reasons (not GT's fault!) for a number years. I finally went back to try it again a couple of years ago and the whole experience was just really mediocre. Every element of the burgers just seem marginalized to me, with smaller less tasty patties, buns that are Wonder-Bread-ish, and even the fries didn't seem to have the spicy kick I recall them having.
Okay, if your whole focus is hamburgers, and you're charging a premium for same, don't you think you should that really well??? Not any more apparently. Eaten by bean counters I'd say.
July 11, 2008
8:59 a.m.
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DenverDan writes:
George Jr. great job he has done. Failing economy. Poor med class,
gas $4.10. To bad we cant give him four more years!
July 11, 2008
9:27 a.m.
Suggest removal
tucucca writes:
I agree with nutz22 and LuvAmerica. I used to eat faithfully at GTs every time I went out for a burger. I've noticed over the last few years the burgers just aren't as good as they used to be. They used to be a lot more like Culver's, juicy and fresh tasting. Not so much anymore. Their fries are also getting a little old. How about just plain fries in non-partially hydrogenated oil? I'm pulling for you, Good Times.
July 11, 2008
9:36 a.m.
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hdfresh writes:
Good Times is pretty good. Only complaint would be that the burgers are a bit smaller than the competition. Love their wild dipping sauce with the fries.
July 11, 2008
10:02 a.m.
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j_jetson_s writes:
I love Good Times!
My body fat %, however, does not.
I could eat there every day. Sad that I cannot.
July 11, 2008
10:43 a.m.
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xeeian writes:
I love the writer that said:
"Sorry, any chain that relies on drive throughs as much as Good Times is going to suffer as folks need to use their cars less. And sorry to Good Times, less driving is not a bad thing."
like less than .1% of fast food customers walk to the restaurant.
July 11, 2008
11:36 a.m.
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P_Denver writes:
I like Good Times, but I like In-n-Out Burgers better. More variety, better fries. Too bad they haven't moved to Colorado yet.
July 11, 2008
2:21 p.m.
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whatsupjay writes:
The biggest problem Good Times has is it's marketing approach. It seems like every one of their radio or tv ads include this incredibly annoying voice-over guy who talks in this stupid voice and says even stupider ad copy and jokes. I have to be honest, the ONLY reason I never go to Good Times is because I can't stand that guy, who forces me to either flip the channel or hit the mute button every time one of those ads come on. They fired the head Marketing VP (excuse me, "retired"), but they should have fired that voiceover guy instead, or in addition to the VP. True, responsibility lies with the head guy, but that doesn't make the guy they apparently haven't fired, any less annoying. Good Times, just get it done please...