Good Times proposes $21M buyout of Bad Daddy'sGood Times proposes $21M buyout of Bad Daddy's

Good Times Restaurants Inc. is looking to expand its ownership of the 13-unit Bad Daddy’s Burger Bar concept with a $21 million buyout, the company said Tuesday.

In 2013, Golden, Colo.-based Good Times acquired a 48-percent stake in Charlotte, N.C.-based Bad Daddy’s Franchise Development LLC, the burger brand’s franchisor, as well as becoming a licensee of the brand in Colorado, with rights to expand into other states.

Good Times president and CEO Boyd Hoback said the goal is to expand the Bad Daddy’s brand.

Under the agreement, Good Times will acquire Bad Daddy’s International LLC, which includes some or all of the interests in seven North Carolina restaurants, the license for a unit at Charlotte’s airport, intellectual property for the burger bar concept and the remaining interests in the franchisor. Two franchises have been granted for restaurants in South Carolina and Tennessee, the company said.

Subject to financing, Bad Daddy’s would become a wholly-owned subsidiary of Good Times.

A NASDAQ small-cap company, Good Times also operates the 37-unit Good Times Burgers & Frozen Custard brand, a quick-service chain located mostly in Colorado.

Frank Scibelli and Dennis Thompson, founders of the Bad Daddy’s chain, said in a statement that it was a good time to sell.

“After working with Good Times for the last two years, we feel that it is a perfect time to sell and insure the growth and integrity of the brand. We feel that they will do a great job of growing the concept while maintaining its quality and integrity,” they said.

Bad Daddy’s restaurants open more than 15 months average $2.7 million per unit. Hoback said the two restaurants his company opened most recently opened in Colorado are on track to average about $3 million for the year.

“When we first got involved with Bad Daddy’s about two years ago, we were excited about the potential for the brand and had certain first rights of offer to acquire it,” Hoback said in a statement. “Since then, the performance of the Bad Daddy’s restaurants we have opened, and those in which we will be acquiring an interest, has confirmed our original enthusiasm. We believe it is in the best interests of our shareholders to acquire 100 percent of the rights to the brand and all future development now, rather than later.”

Good Times announced a secondary offering of nearly 2.4 million shares of common stock to raise additional capital for the deal. Underwriters have an option to purchase up to 356,250 additional shares.

The purchase price of $21 million consists of $18.5 million in cash and a one-year promissory note for $2.5 million.

Known for gourmet burgers, chopped salads, appetizers and sandwiches, with a full bar and a focus on microbrew beers, Bad Daddy’s is a small-box, casual-dining concept, with units typically between 3,500 square feet and 4,000 square feet.

The concept’s average check is about $16, compared with Good Times Burgers’ average check of about $6.50.

Janney Montgomery Scott acted as exclusive financial advisor to Good Times, and Robert W. Baird & Co. Inc. served as financial advisor to Bad Daddy’s International.

Contact Lisa Jennings at [email protected].
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