Good Times Restaurants Inc

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International Guild of Hospitality & Restaurant Managers

Good Times Restaurants Inc., organized in 1987, is the holding company of Good Times Drive Thru Inc., which is engaged in the business of developing, owning, operating and franchising hamburger-oriented drive-through restaurants under the name Good Times Drive Thru Burgers. During 2001, the restaurants' brand name, trademark and logo were changed to Good Times Burgers & Frozen Custard to reflect a strategic repositioning of the Good Times concept. Most of the Company's restaurants are located in the Denver , Colorado metropolitan area. Also during fiscal 2001, the Company opened its 35th restaurant in Brighton , Colorado , and relocated one franchised restaurant to a new location.

The Company operates and franchises a total of 35 Good Times restaurants, of which 34 are in Colorado, with 31 in the Denver greater metropolitan area, one in Grand Junction, one in Silverthorne and one in Winter Park. There is one franchised Good Times restaurant in Boise , Idaho . Eleven of the restaurants are Company-owned and nine are owned jointly with two separate co-development partners. Fifteen Good Times restaurants are franchised restaurants with ten operating in the Denver metropolitan area, one in Grand Junction, Colorado, one in Greeley, Colorado, one in Longmont, Colorado, one in Winter Park, Colorado, and one in Boise, Idaho. Good Times is also offering franchises for the development of additional Good Times restaurants. In October 2000, Good Times Restaurants entered into a licensing agreement with the Winter Park Ski Resort in Colorado . Under the agreement, the Company receives license revenues for sales of its products by the resort at restaurant facilities at the base of the ski area.

The menu of a Good Times Burgers & Frozen Custard restaurant is limited to hamburgers, cheeseburgers, chicken sandwiches, french fries, onion rings, milkshakes, soft drinks and frozen custard products. Each menu item is made to order at the time the customer places the order and is not pre-prepared. The hamburger patty is prepared with specially formulated and seasoned 100% USDA approved beef, served on a 4 1/4 inch sesame seed bun. Hamburgers and cheeseburgers are garnished with fresh lettuce, fresh sliced sweet red onions, mayonnaise, mustard, ketchup, pickles and fresh sliced tomato. The cheese is 100% pure sharp American, thickly sliced. Other specialty hamburger toppings include guacamole, bacon and proprietary sauces. The chicken sandwiches include a spiced, battered whole muscle breast patty and a grilled spicy breast patty, both served with mayonnaise, lettuce and tomato. Fresh frozen custard is offered in cups, cones, waffle cones, specialty sundaes and "Spoonbenders", a blended combination of custard and various toppings. In addition to fresh vanilla frozen custard, management has developed several other proprietary flavors to be offered seasonally and on a rotating basis in fiscal 2002.

Good Times was initially developed as a drive-through only, limited menu hamburger restaurant concept featuring high quality products and extremely fast service. The Company plans to develop additional double drive-through restaurants in Colorado , which is divided into two primary media markets: Denver and Colorado Springs/Pueblo. The relatively limited menu allows maximum attention to be devoted to food quality and speed of service. The existing double drive-through Good Times restaurants are less than one-third the size of the typical restaurant buildings of the four largest hamburger chains and require approximately one-half to two thirds of the land area. The current standard Good Times restaurant building is a double drive-through and walk-up style structure containing approximately 880 square feet built on 18,000 to 30,000 square-foot lots. The double drive-through buildings are transportable and therefore can be moved from an unsuccessful site to a better location. Future buildings may be "stick built" on-site for greater cost efficiency, limiting the Company's ability to relocate these stores.

As of December 14, 2001 , the Company operated 20 Company-owned and joint venture Good Times restaurants and had 14 franchised restaurants open in Colorado and one in Boise , Idaho . Management anticipates that Good Times and its franchisees will begin development of a total of five to ten Good Times units in the Denver ADI in 2002. Good Times has prepared prototype area rights and franchise agreements, a Uniform Franchise Offering Circular and advertising material to be utilized in soliciting prospective franchisees. Good Times is currently considering potential franchisees only for development of units in Colorado .

Good Times estimates that it will cost a franchisee on average approximately $475,000 to $625,000 to open a Good Times double drive-through restaurant, including pre-opening costs and working capital, assuming the land is leased. A franchisee typically will pay a royalty of 4% of net sales, an advertising fee of at least 0.5% of net sales, plus participation in regional advertising up to 5% of net sales, or a higher amount approved by the advertising cooperative, and initial development and franchise fees totaling $20,000 per restaurant. Among the services and materials which Good Times provides to franchisees are site selection assistance, plans and specifications for construction of the Good Times Drive Thru restaurants, an operating manual that includes product specifications and quality control procedures, training, on-site pre-opening supervision and advice from time to time relating to operation of the franchised restaurant. Good Times has entered into 12 franchise agreements in the Denver ADI. Twelve franchise restaurants and nine joint-venture restaurants are operating in the Denver ADI. One franchise restaurant is open in Grand Junction, Colorado, one in the Winter Park Resort and one franchise restaurant is open in Boise, Idaho.

Restaurant companies that currently compete with Good Times in the Denver market include McDonald's, Burger King, Wendy's and Carl's Jr. The Company's double drive-through restaurant chains compete with Rally's Hamburgers and Checker's Drive-In Restaurants.

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