Quick-service company sees full-service burger concept as growth vehicle
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Good Times Restaurants Inc. has acquired a 48-percent equity stake in Bad Daddy’s Burger Bar, with rights to expand the gourmet burger brand in Colorado, Arizona and Kansas, the company said Monday.
Golden, Colo.-based Good Times is parent to 39-unit quick-service drive-thru chain Good Times Burgers & Frozen Custard. It is known for burgers, fresh-cut fries, lemonade and frozen custard. The NASDAQ small-cap company is owned by Small Island Investments Ltd., which took an equity stake in the brand in 2010.
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Good Times chairman David Dobbin described the full-service concept as a differentiated concept with wide consumer appeal, industry-leading economics and experienced management looking for growth.
“Bad Daddy’s has each of those and more, and we couldn’t be more excited to partner with them to build restaurants for our own account and to own a significant portion of the franchisor as we ramp up franchised growth and development,” Dobbin said in a statement.
Under the agreement, Good Times acquired the stake in Bad Daddy’s Franchise Development LLC, the franchisor of the full-service chain. Good Times will also manage the franchisor under a separate management services agreement.
In addition, Good Times plans to begin opening Bad Daddy’s units in Colorado under a licensing agreement, with the first scheduled to open later this year, probably in Denver, said Good Times president and chief executive Boyd Hoback.
Dobbin said Bad Daddy’s has the elements the company was looking for after spending the past year shopping for a growth opportunity. Owned and operated by Dennis Thompson and Frank Scibelli, five-unit Bad Daddy’s is based in Charlotte, N.C. The concept is known for upscale burgers, chopped salads, appetizers and sandwiches, and it has a full bar with a wide selection of craft microbrew beers.
Scibelli said he's thrilled to have the opportunity to build the Bad Daddy’s brand in the West, along with continued growth on the East Coast. “I’m a control freak and very much a foodie, and I wanted to be sure we found the right guys to do business with without losing the essence of the concept,” he said. “I think we found that with Good Times.”
Bad Daddy’s was founded in 2007, initially with the name Big Daddy’s, which later ran into trademark issues that forced a name change.
Thompson is known for developing brands such as Lone Star Steakhouse, Bailey’s Sports Grille and Firebird’s Wood Fired Grill. Scibelli is a restaurant creator who also founded Mama Ricotta’s, Midwood Smokehouse and Paco’s Tacos & Tequila, all single-unit concepts in North Carolina.
Hoback said Bad Daddy’s is a new growth vehicle to the company, and will eventually become its primary brand. While Good Times Burger will also grow, primarily in Colorado for now, Hoback said the time was right to move into a more upscale concept with a varied menu. “The fast-casual burger space is quickly becoming commoditized and over-built,” he said. “Bad Daddy’s is a good model with long-lasting potential.”
Hoback said Bad Daddy’s units were generating roughly $700 per square foot in locations that are typically about 3,200-3,500 square feet, and show volumes 2.5 times that of Good Times Burgers, which have an average unit volume of about $900,000.
Over the past two years, Good Times has launched a remodel program to refresh older units, closed four underperforming locations and has eliminated debt.
Good Times’ same-store sales increased 3.1 percent in 2012.
Contact Lisa Jennings at [email protected].
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