Good Times Restaurants Inc. (GTIM): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at the competitive landscape for Good Times Restaurants Inc. as of late 2025, and honestly, the picture shows a business defintely under siege, with margins getting squeezed from every angle. Our analysis using Porter's Five Forces reveals that supplier power is high, driven by persistent, record-high ground beef costs, while customers are reacting sharply to inflation, as shown by the 9.0% same-store sales decline at Good Times in Q3 2025 despite raising menu prices. This intense pressure from suppliers, price-sensitive buyers, and a fragmented QSR market means understanding the full competitive dynamic is crucial; dive in below to see the precise threat level across all five forces.

Good Times Restaurants Inc. (GTIM) - Porter's Five Forces: Bargaining power of suppliers

You're looking at Good Times Restaurants Inc. (GTIM) and seeing how much control their suppliers have over their operation, which is a major factor in profitability, especially when commodity prices are volatile. Honestly, the data suggests suppliers hold significant leverage right now.

The pressure from suppliers is clearly visible in the cost structure. For the second fiscal quarter of 2025, which ended April 1, 2025, Good Times Restaurants Inc. reported that food and packaging costs consumed 30.7% of total revenue, which was up 30 basis points year-over-year from the prior year's quarter. This increase happened despite the company implementing a 4.7% increase in menu pricing. The primary driver here was the elevated purchase prices, particularly for ground beef.

The overall cost environment is tough, which empowers the supply side. Management noted that input costs, in general, increased by roughly ~5% year-over-year for the quarter. This general inflation across inputs, coupled with specific commodity spikes, gives suppliers more room to negotiate or simply pass on higher prices without GTIM having much immediate recourse.

We can map out the key cost pressures in a table for clarity:

The reliance on core commodities like beef and dairy severely limits Good Times Restaurants Inc.'s ability to switch suppliers easily, especially given the market conditions. The problem is structural, not just transactional. The U.S. cattle herd was at 86.7 million cattle and calves as of the start of 2025, which was the lowest number since 1951. This tight supply means beef suppliers have pricing power, and the expectation is that record-high ground beef costs will persist into Q4 2025.

Here's the quick math: when the underlying raw material supply is historically low, the supplier's position strengthens dramatically. This is why Good Times Restaurants' margins at the Good Times brand compressed to 8.0% in Q2 2025, compared to the 13.6% margin maintained by Bad Daddy's Burger Bar. The company ended that quarter with $2.7 million in cash and $2.6 million in long-term debt, so absorbing these costs without passing them on is a real balance sheet concern.

The supplier power is amplified by these specific market dynamics:

• Wholesale beef prices are expected to remain elevated due to the smallest U.S. cattle herds in decades.
• Retail beef prices, including ground beef, may rise another 8-12% year-over-year in Q4 2025.
• Farm-level cattle prices were 26.5% higher in August 2025 than in August 2024.
• Labor costs, another key input, are not expected to moderate in price, adding to overall supplier leverage.

To manage this, Good Times Restaurants Inc. has had to use menu pricing, but the fact that food costs still rose as a percentage of revenue shows the suppliers are winning that negotiation for now. Finance: draft 13-week cash view by Friday.

Good Times Restaurants Inc. (GTIM) - Porter's Five Forces: Bargaining power of customers

You're looking at the customer power within the Good Times Restaurants Inc. (GTIM) ecosystem, and honestly, the Q3 2025 numbers tell a clear story: customers hold significant sway right now. When you see sales decline even after you try to raise prices, it signals that the consumer is feeling the pinch and is highly focused on value. That pressure is definitely something management has to navigate.

The data from the third quarter of fiscal 2025 clearly illustrates this sensitivity. Same-store sales (SSS) performance was weak across the board, with the quick-service Good Times brand seeing a much steeper drop than its fast-casual counterpart, Bad Daddy's Burger Bar. This suggests that value-seeking behavior is pronounced, especially at the lower price point.

Here's a quick look at the sales pressure points from Q3 2025:

Despite the top-line softness, Good Times Restaurants Inc. implemented price increases. The average menu price during the quarter was reported as 3.8% higher than in the prior year quarter, partially offset by increased ground beef costs. Furthermore, management noted they increased pricing by approximately 1% in a subset of Good Times stores on August 1st, believing they could take price without significant traffic erosion, though the overall SSS decline suggests otherwise. The CEO specifically mentioned the results reflected 'value-oriented consumers and competitor discounting.' Also, the Good Times brand experienced a negative mix shift, partly attributable to the success of their Smashed Patty burgers, which implies customers traded down to lower-priced items even within the brand's offerings.

Switching costs for the customer are functionally zero. You can walk out of a Good Times drive-through and be at a competitor's location in minutes, or choose a Bad Daddy's for a slightly different experience without any financial penalty. This ease of movement between GTIM's two concepts and the broader competitive Quick-Service Restaurant (QSR) market keeps pricing power constrained.

The company's geographic footprint concentrates this buyer power locally. Good Times Restaurants Inc. owns, operates, and franchises 30 Good Times Burgers & Frozen Custard restaurants primarily in Colorado, and 40 Bad Daddy's Burger Bar restaurants. Being heavily concentrated in a regional market like Colorado means local economic conditions and competitor actions have an outsized, immediate impact on traffic and sales for both concepts. This regional focus means local customer sentiment dictates a larger share of the overall revenue base.

You can see the direct impact of customer behavior on the margin structure:

• Good Times restaurant-level operating profit margin compressed to 11.2% in Q3 2025.
• Bad Daddy's maintained a stronger margin at 14.4% for the same period.
• The company finished Q3 2025 with $3.1 million in cash.
• Adjusted EBITDA for the quarter was $2.2 million.

Finance: draft 13-week cash view by Friday.

Good Times Restaurants Inc. (GTIM) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive rivalry force for Good Times Restaurants Inc. (GTIM), and honestly, the data from the third quarter of fiscal 2025 paints a clear picture: this is a tough fight, especially in the value-conscious space.

The company operates in the highly fragmented and competitive QSR (Quick Service Restaurant) and fast-casual burger segments. This intense competition directly pressures top-line performance. We saw this play out clearly in the fiscal Q3 2025 results, where same-store sales declines are directly linked to competitor discounting and promotional activity. For the quarter ended July 1, 2025, the Good Times brand saw a significant same-store sales decrease of 9.0% year-over-year, while Bad Daddy's Burger Bar was down 1.4%. To be fair, the Good Times brand missed the prior year's comparable quarter sales by a wide margin.

GTIM is small-scale, with only about 70 total locations, compared to national chains. Specifically, Good Times Restaurants Inc. owned, operated, or licensed 40 Bad Daddy's Burger Bar restaurants and 30 Good Times Burgers & Frozen Custard restaurants as of Q3 FY2025. This small footprint means GTIM lacks the national scale and marketing budget of its larger rivals, making it harder to absorb traffic dips. The Good Times concept is geographically concentrated, with 28 of its 30 locations primarily in Colorado, which helps operating and marketing efficiencies, but also limits its national reach.

The Bad Daddy's concept competes in the full-service gourmet burger space, which has high differentiation but also many rivals. While Bad Daddy's cost discipline kept its restaurant-level operating profit margin steady at 14.4% of sales for the quarter, the 1.4% same-store sales decline shows the pressure in this segment. Meanwhile, the Good Times QSR brand saw its restaurant-level operating profit margin compress to 11.2% of sales, partly due to the 9.0% same-store sales drop and elevated costs. Management is actively responding by hiring a new Senior Director of Marketing, Jason Murphy, and planning a new brand campaign at Good Times titled 'Colorado Native Burgers'.

Here's a quick look at the Q3 FY2025 performance split between the two concepts, which highlights where the rivalry pressure is most acutely felt:

The competitive environment is forcing GTIM to focus intensely on internal controls to maintain profitability despite external sales headwinds. You can see the difference in how the two concepts are handling the pressure:

• Bad Daddy's maintained a relatively stable RLOP margin of 14.4% due to solid cost controls.
• Good Times saw its RLOP margin decrease by 530 basis points year-over-year to 11.2%.
• Combined General & Administrative (G&A) expenses were reduced to 5.9% of total revenues, down 120 basis points year-over-year.
• Management flagged that they expect to run G&A between 6-7% on a full-year basis for fiscal 2025.
• The company is considering incremental menu pricing to offset input cost inflation, including record-high ground beef prices expected into Q4.

Overall, the rivalry is characterized by a smaller player like Good Times Restaurants Inc. fighting for traffic against larger entities, evidenced by the sharp same-store sales decline at the QSR concept, while the better-burger concept relies on cost discipline to shore up margins.

Good Times Restaurants Inc. (GTIM) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for Good Times Restaurants Inc. (GTIM) is substantial because the core products-burgers, chicken sandwiches, and casual dining experiences-are easily replaced by alternatives that satisfy the same fundamental need: convenient, prepared food. You have to look beyond just other burger joints; the entire spectrum of food preparation and consumption is a substitute.

Broad substitute options include home-cooked meals, grocery store prepared foods, and all other restaurant formats. To put this in perspective against the sheer scale of the competition, the United States Quick Service Restaurants (QSR) Market size was valued at USD 447.20 billion in 2025. Furthermore, the Fast-Casual segment, where Bad Daddy's Burger Bar competes, is hitting $191B in 2025. GTIM's trailing twelve months revenue ending April 1, 2025, was $144.35 million, which is a fraction of these massive, accessible markets. This means that any shift in consumer preference toward cooking at home or choosing a different category, like pizza or Mexican food (which together with burgers make up the bulk of the QSR market), directly pulls dollars away from GTIM.

The dual-brand model (quick-service and full-service) diversifies against a single substitute threat. This structure is key because it allows Good Times Restaurants Inc. to compete across different price points and service expectations. For instance, in Q3 of fiscal year 2025, the Good Times brand generated sales of approximately $9.3 million (based on Q2 data scaled to Q3 revenue context, though Q3 specific split isn't provided, Q2 showed $9.3M for Good Times and $24.8M for Bad Daddy's), positioning it against pure QSRs, while Bad Daddy's Burger Bar, operating as a full-service/fast-casual concept, targets a different consumer looking for a slightly higher-quality, sit-down experience.

Convenience-focused substitutes like food delivery apps increase the ease of choosing non-GTIM options. This is a major factor because the modern consumer prioritizes speed and ease of access. A 2025 report indicated that off-premise dining now accounts for 66% of all restaurant sales. When ordering is this easy, the friction to select a competitor's offering-whether it's a different burger chain or a completely different cuisine delivered via the same app-is minimal. This convenience factor often outweighs brand loyalty for many quick transactions.

Customers can easily substitute a gourmet burger (Bad Daddy's) with a cheaper quick-service option (Good Times or a competitor). The burger segment itself is highly contested. The fast food burger market makes up an estimated 40.1% of QSR revenue in 2025. If a Bad Daddy's customer feels price pressure, they can easily trade down to the Good Times brand or a competitor's standard burger offering. Conversely, if a Good Times customer wants a slightly elevated experience without a full sit-down commitment, they might opt for a fast-casual competitor instead of Bad Daddy's. Here's the quick math: if a Bad Daddy's entrée is priced at, say, $16, a customer might substitute it for a $10 competitor's offering or a $7 Good Times offering, representing a 37.5% or 56% price difference, respectively.

We can map the competitive landscape based on the company's reported segments versus the overall market size as of late 2025:

The consumer behavior data further solidifies this pressure, showing that 65% of consumers under 45 are eating out less, but when they do, they prefer value-oriented, high-speed options. This suggests that even when they decide to spend money on dining out, they are actively seeking the most efficient value proposition, which pits GTIM's two brands directly against each other and against every other value-focused substitute available.

• Home-cooked meals are a constant, zero-transaction-fee substitute.
• Grocery store prepared foods compete on convenience and perceived health benefits.
• Fast-casual segment size is $191B in 2025.
• Off-premise dining accounts for 66% of all restaurant sales.
• Bad Daddy's faces substitution from cheaper QSR burgers.

Finance: review the impact of the 3.7% same-store sales decline at Bad Daddy's in Q2 2025 versus the 3.6% decline at Good Times on the overall substitution risk profile by next quarter.

Good Times Restaurants Inc. (GTIM) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for a new competitor trying to muscle into Good Times Restaurants Inc.'s space. Honestly, the restaurant industry has some structural defenses, but they aren't impenetrable, especially for deep-pocketed players.

High Capital Expenditure as a Barrier

Starting a new chain, or even just one new location, demands serious upfront cash. This is a classic barrier. Good Times Restaurants Inc. itself is investing in its existing footprint; for instance, they incurred $300,000 in capital expenditures (CapEx) during the second fiscal quarter of 2025 specifically for Good Times remodels and signage projects, plus a patio remodel at a Bad Daddy's location. They budget approximately 1% of sales for ongoing maintenance CapEx. New entrants face this same initial outlay for site acquisition, build-out, and equipment. Furthermore, Good Times Restaurants Inc. still has units requiring more significant work, expecting those remodels to occur in fiscal 2026. That ongoing need for capital to refresh assets shows that the investment doesn't stop once you open the doors.

Here's a quick look at the cost structure that new entrants must immediately absorb:

Local Regulatory Hurdles and Cost Structure

Operating in Good Times Restaurants Inc.'s primary market, Colorado, means navigating rapidly increasing local labor costs, which immediately raises the bar for any new entrant. You're hiring before product-market fit, and the minimum wage is already high. For example, Denver's minimum wage was $18.81 at the start of 2025, projected to hit $19.29 next year. Restaurant owners in Denver noted that wage increases amounted to about $3 per person per hour for them, forcing them to pass costs to guests or absorb them, with one co-owner citing an annual cost impact of about $37,000 last year. New entrants must price their menu items to cover these high fixed labor costs from day one, which is tough when trying to gain initial traction against established players.

The regulatory environment creates specific cost pressures:

• Denver's regular minimum wage reached $18.81 in early 2025.
• Denver's tipped minimum wage was $15.79 in early 2025.
• The statewide minimum wage is set to reach $15.16 in 2026.
• Wage hikes can lead to price increases that scare customers.

Vulnerability Due to Small Market Capitalization

Good Times Restaurants Inc.'s relatively small scale makes it a potential target or, conversely, a company that can be easily overshadowed by a well-capitalized competitor. The market capitalization cited for Good Times Restaurants Inc. around Q2 2025 was around $20.75 million. To be fair, other readings put it closer to $20.32 million or even $14.14 million depending on the exact date in 2025. Still, this valuation is tiny compared to national chains. A larger, well-funded entrant can sustain initial losses, aggressively market, and outspend Good Times Restaurants Inc. on real estate or technology upgrades. This small market cap signals investor skepticism about sustained growth, which can limit Good Times Restaurants Inc.'s own ability to raise expansion capital cheaply.

Labor Shortages as an Operational Barrier

The persistent, high-volume labor churn in the restaurant sector acts as a massive operational deterrent for any new chain attempting to scale. New entrants will immediately face the same hiring and retention struggles as incumbents. In 2025, the average restaurant employee turnover rate is reported to exceed 75% annually. For fast-food segments, this rate can hit a staggering 150%. Even in full-service operations like those run by Good Times Restaurants Inc., Front-of-House staff turnover is around 41% and Back-of-House staff turnover is around 43%. This constant cycle means new entrants must dedicate significant, immediate resources to training and replacement, diverting focus from service quality and brand building. If onboarding takes 14+ days, churn risk rises.

Consider the specific turnover statistics for 2025:

• Average industry annual employee turnover: Over 75%.
• Fast-food sector turnover: Can exceed 130% to 150%.
• Annual turnover for BOH staff: Approximately 43%.
• Annual turnover for FOH staff: Approximately 41%.

Finance: draft 13-week cash view by Friday.