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<SEC-DOCUMENT>0000825324-09-000007.txt : 20100121
<SEC-HEADER>0000825324-09-000007.hdr.sgml : 20100121
<ACCEPTANCE-DATETIME>20090320104327
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000825324-09-000007
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20090320

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			GOOD TIMES RESTAURANTS INC
		CENTRAL INDEX KEY:			0000825324
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-EATING PLACES [5812]
		IRS NUMBER:				841133368
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		601 CORPORATE CIRCLE
		CITY:			GOLDEN
		STATE:			CO
		ZIP:			80401
		BUSINESS PHONE:		3033841400

	MAIL ADDRESS:	
		STREET 1:		601 CORPORATE CIRCLE
		CITY:			GOLDEN
		STATE:			CO
		ZIP:			80401

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PARAMOUNT VENTURES INC
		DATE OF NAME CHANGE:	19900205
</SEC-HEADER>
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<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
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<title>March 9, 2009</title>



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<p class=MsoNoSpacing align=center style='margin-bottom:.25in;text-align:center'>March 20, 2009</p>

<p class=MsoNoSpacing style='text-align:justify'>United
  States Securities
and Exchange Commission</p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>Washington, D.C. 20549</p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>Submitted Electronically with
Copy to Staff</p>

<p class=MsoNoSpacing style='margin-left:.5in;text-align:justify;text-indent:
- -.5in'>Re: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Good Times
Restaurants, Inc.</p>

<p class=MsoNoSpacing style='margin-left:.5in;text-align:justify;text-indent:
- -.5in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Form
10-KSB for the year ended September 30, 2008</p>

<p class=MsoNoSpacing style='margin-left:.5in;text-align:justify;text-indent:
- -.5in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Filed
December 29, 2008</p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
12.0pt;margin-left:.5in;text-align:justify;text-indent:-.5in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; File No. 0-18590</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>Good Times Restaurants, Inc. (the
&quot;Company&quot;, &quot;we&quot;, &quot;our&quot; or &quot;us&quot;) has received your letter dated February 19,
2009 containing comments on the Company's above referenced Annual Report on
Form 10-KSB (the &quot;Form 10-KSB&quot;), filed by the Company with the Securities and
Exchange Commission (the &quot;Commission&quot;) on December 29, 2008. This letter on
behalf of the Company responds to each of the comments set forth in your
letter.</p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>For convenience of reference, we
have set forth the Commission's comments in bold below, with the Company's
response following each comment.</p>

<p class=MsoNoSpacing style='text-align:justify'><b><u>Item 1. Description of Business</u></b></p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'><b><u>Recent Developments, page 3</u></b></p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'><b>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</b><b>We
note from the discussion on page 3 of the Company's Form 10-K that the Company
entered into a development agreement with Zen Partners LLC on December 3, 2007,
and that David Grissen, a significant stockholder of the Company and a member
of the Company's Board of Directors has a 20% ownership interest in Zen
Partners LLC. Given the related party nature of this transaction, please revise
the notes to the Company's financial statements in future filings to disclose
the nature and significant terms of this agreement.&nbsp; Refer to the disclosure
requirements outlined in paragraph 2 of SFAS No. 57.</b></p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>We will revise the footnote in
future filings taking into account the disclosure requirements outlined in
paragraph 2 of SFAS No. 57.&nbsp;&nbsp; We also noted in the 10-KSB that all development
under the agreements with Zen Partners LLC had been indefinitely suspended.&nbsp;
There has not been any development, transactions, fees or commitments made
to-date under the agreements and any development will require amending the
agreements. &nbsp;&nbsp;Until such amendment occurs, all development rights under the
agreements with &nbsp;Zen Partners LLC have been indefinitely suspended.</p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>We will add the following
footnote in future filings to the Related Parties section of the Company's
financial statements: </p>



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<p class=MsoHeader>United States Securities and Exchange Commission</p>

<p class=MsoHeader>March 9, 2009</p>

<p class=MsoNormal style='margin-bottom:12.0pt'>Page 2 of 8</p>



<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>On December 3, 2007, we entered into a development agreement with Zen Partners LLC that is comprised of a
Development Agreement, a Management Agreement and a Site Selection,
Construction Management and Pre-Opening Services Agreement.&nbsp; David Grissen, a
significant stockholder and a member of our board of directors, has a 20%
ownership interest in Zen Partners LLC.&nbsp; The agreements provide for the development
of up to twenty-five restaurants with a five year development schedule for up
to ten restaurants and an option to develop an additional fifteen restaurants,
exercisable any time during the initial five year period,<b> </b>to-date there
have been no restaurants developed under the agreement.&nbsp; We will operate the
restaurants utilizing our employees on the same basis as we would company-owned
restaurants; however, Zen Partners LLC will provide all development and
operating capital.&nbsp; For each restaurant that is developed, we will receive a
monthly management fee of 5% of gross operating revenues for the restaurant,
and a services fee of $25,000.&nbsp; We may provide a limited lease guaranty on the
initial three restaurants developed, for which we will receive a lease guaranty
fee equal to 1% of net sales of the restaurant for so long as the lease
guaranty is in effect.&nbsp; We may also arrange sale leaseback transactions for
sites of the restaurants developed, for which we will receive a sale leaseback
fee of $7,500 per restaurant.&nbsp; We will also participate in the ongoing
profitability of the restaurants by receiving an incentive fee equal to (i) 30%
of the incentive income (as defined in the Management Agreement) per year until
Zen Partners LLC has received a 25% return on its net equity investment and
(ii) 20% of the incentive income per year thereafter. For the period ending
September 30, 2008 there have been no amounts received or paid under the afore
mentioned agreements. As of September 30, 2008 there were no amounts due from
or to Zen Partners LLC. The total future amounts of these fees and
participations, if any, to be received by us, and the interest therein of David
Grissen, in connection with this transaction are not currently determinable.&nbsp;
In August 2008 we announced the suspension of development of Good Times
restaurants with Zen Partners LLC.&nbsp; We currently plan to reevaluate expansion
discussion as conditions impacting our sales trends, the macroeconomic
environment and credit markets may change.</p>

<p class=MsoNoSpacing style='text-align:justify'><b><u>Management Discussion and Analysis</u></b></p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'><b><u>Results of Operation, page 18</u></b></p>

<p class=MsoNoSpacing style='margin-left:.5in;text-align:justify;text-indent:
- -.25in'><b>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><b>We note that you present the
combined revenues of company-owned and franchised restaurants in your
discussion of net revenues on page 18.&nbsp; In this regard, we do not believe the
presentation of combined revenues for company-owned and franchised restaurants
is appropriate since this non-GAAP financial measure cannot be reconciled to
the most comparable US GAAP measure as required by Item 10 of Regulation S-K,
since the revenues of franchised restaurants are not and cannot be reflected in
your consolidated financial statements prepared in accordance with US GAAP.&nbsp; Please note that we believe no substantive justification exists for aggregating
the revenues of company-owned and franchised restaurants and therefore there
would appear to be no useful purpose for disclosing such aggregated information
in MD&amp;A for purposes of management's discussion of its results of
operations and for purposes of analyzing the Company's business. Accordingly,
please revise to eliminate the presentation of this non-GAAP measure from
future filings.</b></p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'><b>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</b><b>Note
however, that we would not object to the presentation (in a footnote to your
selected financial data) your franchised restaurants, provided the presentation
is made in the context of explaining how you derive franchise fees and
royalties from your franchisees fees and royalties.</b></p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>We will eliminate the
presentation of combined revenues of company-owned and franchised restaurants in
the Management Discussion and Analysis section of future filings of the 10-K.
If we choose to discuss franchise revenues we will do so in the notes to
selected financial data and only do so in the context of explaining how we
derive franchise fees and royalties.</p>

<p class=MsoNoSpacing style='text-align:justify'><b><u>Liquidity and Capital Resources</u></b></p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'><b><u>Financing, page 20</u></b></p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'><b>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</b><b>We note
from the discussion on page 20 of MD&amp;A that the Company purchased two
restaurants from an existing franchisee on March 1, 2008 for total
consideration of $1,330,000 and simultaneously sold the land, building and
improvements related to one of the restaurants in a sale-leaseback
transaction.&nbsp; With regards to this transaction, please tell us and revise the
notes to your financial statements in future filings to disclose the following:</b></p>



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<p class=MsoHeader>United States Securities and Exchange Commission</p>

<p class=MsoHeader>March 9, 2009</p>

<p class=MsoNormal style='margin-bottom:12.0pt'>Page 3 of 8</p>



<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.75in;text-align:justify;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<b>Please
tell us and disclose in your financial statements the significant terms of both
the purchase and sale-leaseback transactions involving the two restaurants.&nbsp; As
part of your response and your revised disclosure, please indicate the nature
and amount of the consideration comprising the $1,330,000 paid to acquire the
two restaurants as your disclosure on page 20 indicates that net cash used in
the purchase transaction was only $272,000.&nbsp; Also, please revise the notes to
your financial statements to include all of the disclosures required by
paragraphs 51 through 55 of SFAS No. 141 with respect to the restaurant
operations acquired.</b></p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.75in;text-align:justify;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<b>Tell us
and disclose the carrying value of the assets sold in the sale-leaseback
transaction and explain how you calculated or determined the deferred gain of
$26,000 recognized in connection with the sale-leaseback transaction.&nbsp; Also,
please explain why only $490,000 of assets were recorded as a result of the
purchase and sale-leaseback transactions when the Company paid total
consideration of $1,330,000 to acquire the two restaurants from its franchisee.</b></p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'><u>As further explanation of the
transaction</u>:</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>On March 1, 2008, we acquired the
assets of two restaurants from an existing franchisee for a total purchase
price of $1,330,000, including the land, site improvements, building and
equipment for one restaurant and site improvements, building and equipment on
one restaurant.&nbsp; The purchase price was funded primarily from cash on hand of
$272,000 and $849,000 in net proceeds from a simultaneous sale-leaseback
transaction to a third party investor involving the land, building and
improvements of one of the restaurants acquired. &nbsp;The third party
investor/landlord purchasing the assets completed an MAI appraisal of those
assets.&nbsp; Sale-leaseback transactions have been a recurring method of funding
development of new restaurants for the Company.</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>As additional consideration and
accounting in the acquisition, notes receivable from the franchisee of $250,000
were forgiven, and a deferred gain of $26,000 was written off. The deferred
gain was related to a prior sale to the franchisee of one of the restaurants
acquired. We did not record a gain or loss related to this acquisition. The
financial results of the two restaurants have been included in our financial
results from the acquisition date forward.</p>

<p class=MsoNoSpacing style='margin-top:6.0pt;margin-right:0in;margin-bottom:
12.0pt;margin-left:0in;text-align:justify'>The
sale-leaseback transaction which was entered into at the same time as the
acquisition involved selling the land, building and improvements of one of the
acquired restaurants for net proceeds of $849,000. The sale-leaseback was the
funding vehicle for the purchase of the two restaurants and was not used to
raise cash for the company or increase our liquidity. The assets sold in the
sale-leaseback transaction were never recorded in our financial statements as the
long term lease entered into does not meet any of the criteria for a capital
lease and therefore qualifies as an operating lease, as defined in SFAS No. 13,
<i>Accounting for Leases.</i> After the sale-leaseback transaction was
accounted for, it resulted in $476,000 in fixed assets and $14,000 in current
assets recorded on the Company's financial statements. We believe the $476,000
represents the fair value of the net assets acquired after completion of the
simultaneous sale-leaseback transaction consisting of furniture, fixtures and
equipment in two restaurants and the site improvements and building in one
restaurant.</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'><u>Disclosure in future filings in
the notes to financial statements will include the following</u>:</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>On March 1, 2008, we acquired the
assets of two restaurants from an existing franchisee for a total purchase
price of $1,330,000, including the land, site improvements, building and
equipment for one restaurant and site improvements, building and equipment on
one restaurant.&nbsp; The purchase price was funded primarily from cash on hand of
$272,000 and $849,000 in net proceeds from a simultaneous sale-leaseback
transaction to a third party investor involving the land, building and
improvements of one of the restaurants acquired.</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>As additional consideration and
accounting in the acquisition, notes receivable from the franchisee of $250,000
were forgiven, and a deferred gain of $26,000 was written off. The deferred
gain was related to a prior sale to the franchisee of one of the restaurants
acquired. We did not record a gain or loss related to this acquisition. The financial
results of the two restaurants have been included in our financial results from
the acquisition date forward.</p>





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<p class=MsoHeader>United States Securities and Exchange Commission</p>

<p class=MsoHeader>March 9, 2009</p>

<p class=MsoNormal style='margin-bottom:12.0pt'>Page 4 of 8</p>





<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>The acquisition of the two
restaurants was accounted for using the purchase method as defined in SFAS No.
141, <i>Business Combinations,</i> (SFAS 141). The purchase price was allocated
as follows:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:41.4pt;border-collapse:collapse'>
 <tr>
  <td width=264 valign=top style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing style='text-align:justify'>Current assets net of current liabilities</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing align=right style='margin-right:17.1pt;text-align:right'>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 14,000</p>
  </td>
 </tr>
 <tr>
  <td width=264 valign=top style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing style='text-align:justify'>Property and equipment&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing align=right style='margin-right:17.1pt;text-align:right'><u>&nbsp;&nbsp; 1,316,000</u></p>
  </td>
 </tr>
 <tr>
  <td width=264 valign=top style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing style='text-align:justify'>Total purchase price</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing align=right style='margin-right:17.1pt;text-align:right'><u>$ 1,330,000</u></p>
  </td>
 </tr>
</table>



<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>Pro Forma Results (unaudited)</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>The following unaudited pro forma
information presents a summary of the results of operations of the Company
assuming the 2008 acquisition of the franchise restaurants occurred at the
beginning of the period presented as required by SFAS 141. The pro forma
financial information is presented for informational purposes only and is not
indicative of the results of operations that would have been achieved if the
acquisition had taken place at the beginning of the period presented, nor is it
indicative of future operating results.</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:41.4pt;border-collapse:collapse'>
 <tr>
  <td width=264 valign=top style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing align=center style='text-align:center'>Year Ended</p>
  </td>
 </tr>
 <tr>
  <td width=264 valign=top style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing align=center style='text-align:center'><u>September 30, 2008</u></p>
  </td>
 </tr>
 <tr>
  <td width=264 valign=top style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=264 valign=top style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing style='text-align:justify'>Revenue</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing align=right style='margin-right:.3in;text-align:right'>$ 26,364,000</p>
  </td>
 </tr>
 <tr>
  <td width=264 valign=top style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing style='text-align:justify'>Net Loss</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing align=right style='margin-right:17.1pt;text-align:right'>(1,056,000)</p>
  </td>
 </tr>
 <tr>
  <td width=264 valign=top style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing style='text-align:justify'>Basic and Diluted EPS</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNoSpacing align=right style='margin-right:17.1pt;text-align:right'>(0.27)</p>
  </td>
 </tr>
</table>



<p class=MsoNoSpacing style='margin-top:6.0pt;margin-right:0in;margin-bottom:
12.0pt;margin-left:0in;text-align:justify'>The
sale-leaseback transaction was entered into simultaneously with the acquisition
and involved selling the land, building and improvements of one of the acquired
restaurants for net proceeds of $849,000. The sale-leaseback was the funding
vehicle for the purchase of the two restaurants and was not used to raise cash
for the company or increase our liquidity. The assets sold in the
sale-leaseback transaction were never recorded in our financial statements as
the long term lease entered into does not meet any of the criteria for a
capital lease and therefore qualifies as an operating lease, as defined in SFAS
No. 13, <i>Accounting for Leases.</i> After the sale-leaseback transaction was
accounted for, it resulted in $476,000 in fixed assets and $14,000 in current
assets recorded on the Company's financial statements. We believe the $476,000
represents the fair value of the net assets acquired (after completion of the
simultaneous sale-leaseback transaction) consisting of furniture, fixtures and
equipment in two restaurants and the site improvements and building in one
restaurant.</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'><b><u>Consolidated Balance Sheets</u></b></p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'><b>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</b><b>We
note that the Company has recently experienced declines in the trading value of
its outstanding common shares which has resulted in the Company's market
capitalization being less than the recorded book value of the Company's net
assets, indicating a potential impairment in the Company's long-lived assets.&nbsp;
We also note that during the fiscal year ended September 30, 2008, the Company
experienced deterioration in its operating results and recognized a loss from
operations totaling $946,000 as compared to income from operations of $200,000
in the previous fiscal year.&nbsp; Given these negative trends in operating results,
please tell us what consideration has been given to recording an impairment
charge with respect to your long-lived assets at September 30, 2008.&nbsp; As part
of your response, please explain in detail the methods and significant
assumptions used in preparing your impairment analysis for the most recent
fiscal year period and indicate whether any updated analysis has been prepared
for the quarter ended December 31, 2008.</b></p>



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<p class=MsoHeader>United States Securities and Exchange Commission</p>

<p class=MsoHeader>March 9, 2009</p>

<p class=MsoNormal style='margin-bottom:12.0pt'>Page 5 of 8</p>



<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>The Company reviews its
long-lived assets in accordance with SFAS No. 144, including land, property and
equipment for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability of
assets to be held and used is measured by a comparison of the capitalized costs
of the assets to the future undiscounted net cash flows expected to be
generated by the assets and the expected cash flows are based on recent
historical cash flows at the restaurant level (the lowest level that cash flows
can be determined). If the assets are determined to be impaired, the amount of
impairment recognized is the amount by which the carrying amount of the assets
exceeds their fair value. Fair value is determined using forecasted cash flows
discounted using an estimated average cost of capital. Based on the results of
our tests no impairment was required to be recorded in 2008.</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>We did not prepare an updated
analysis for the quarter ended December 31, 2008 as we do not believe there was
an event that would trigger the requirement of analysis.&nbsp; We do not believe the
results from the quarter ending December 31, 2008 are indicative of future
results due to the adverse seasonal nature of our restaurant sales during the
first and second quarters of our fiscal year. Therefore, we will reevaluate our
impairment analysis at the end of the current fiscal year, or sooner if a
triggering event does occur.</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>Other than the impairment
analysis of long lived assets described above, the Company does not have any
goodwill or intangible assets on its balance sheet that are subject to, or that
would require, additional impairment analysis.&nbsp;&nbsp; As a thinly traded, micro-cap
public company, we believe the Company's market capitalization does not bear a
direct relationship to the recorded book value of the Company's net assets and our
common stock may trade significantly below or above that net book value.&nbsp; The
loss from operations for the fiscal year ended September 30, 2008 was
negatively affected by an increased level of general and administrative and
other fixed costs incurred for expansion that are not associated with the
restaurant level operations or cash flow, which have subsequently been
significantly reduced.</p>



<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'><b>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</b><b>Please
note that assuming a satisfactory response to the above comment, we would
expect your critical accounting policy disclosures in future filings to be
significantly expanded to explain the methods and significant assumptions used
in preparing your impairment analysis with respect to long-lived assets.&nbsp;
MD&amp;A should also be revised to explain the facts or circumstances
management believes are responsible for the fact that the Company's market
capitalization is less than the book value of the Company's net assets.</b></p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>We will modify our critical
accounting policy disclosures in future filings to explain the methods and
significant assumptions used in preparing our impairment analysis with respect
to long-lived assets.&nbsp; We do not believe that a reconciliation of market
capitalization to the Company's book value of its net assets is a meaningful
disclosure in the MD&amp;A because the market capitalization is affected by
market factors that are unrelated to the Company's financial statements and net
asset value.&nbsp; </p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'><b><u>Consolidated Statements of Cash
Flows</u></b></p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'><b>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</b><b>We
note from the disclosure in the Company's Consolidated Statements of Cash Flows
that the Company received proceeds from sale-leaseback transactions aggregating
$747,000 and $1,580,000 during the fiscal years ended September 30, 2008 and
2007.&nbsp; Given the materiality of the gross proceeds realized in these
transactions, please tell us and revise the notes to the Company's financial
statements to disclose the significant terms of these sale-leaseback
transactions.&nbsp; As part of your response and your revised disclosure, please
indicate the amounts of any gains or losses recognized in connection with these
transactions and explain how they were calculated or determined, as well as how
they are being accounted for in the Company's consolidated financial
statements.&nbsp; Refer to the disclosure requirements outlined in paragraph 17 of
SFAS No. 98.</b></p>



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<p class=MsoHeader>United States Securities and Exchange Commission</p>

<p class=MsoHeader>March 9, 2009</p>

<p class=MsoNormal style='margin-bottom:12.0pt'>Page 6 of 8</p>



<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>The sale-leaseback proceeds of
$1,580,000 in fiscal 2007 were equal to the cost of the development of a new
restaurant and were not used to raise cash for the company or increase our
liquidity. The terms of the sale-leaseback transaction involved the sale of the
land, building and site improvements of one restaurant and the leasing back of
those assets under a long term operating lease. The initial lease term is fifteen
years and there are no other future commitments, obligations, provisions or
circumstances, other than the typical terms of the operating lease that would
require or result in our continuing involvement. There was an immaterial gain
recorded of $15,000 related to this sale-leaseback transaction, calculated as
the difference between the sale-leaseback proceeds and the book value of the
assets sold. The assets sold in the sale-leaseback transaction were removed
from our financial statements as the long term lease entered into does not meet
any of the criteria for a capital lease and therefore qualifies as an operating
lease, as defined in SFAS No. 13, <i>Accounting for Leases.</i></p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>The sale-leaseback transaction in
fiscal 2008 is described in the answer to question number four above.</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'><b><u>Note 2. Liquidity, page F-12</u></b></p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'><b>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</b><b>As
indicated in Note 2 to the Company's financial statements for the year ended
September 30, 2008, it was anticipated that the Company would be in default
with respect to certain technical loan covenants under the Wells Fargo note as
of December 31, 2008 at the time the Company filed its annual report on From
10-K.&nbsp; We also note from the report on Form 8-K dated January 23, 2009, that on
January 20, 2009, the Company determined that it was not in compliance with the
certain covenants under the credit agreement with Wells Fargo regarding the
Company's financial condition as of December 31, 2008, including covenants
requiring that the Company's tangible net worth be not less than $5,000,000 and
that the Company's EBITDA coverage ratio not be less than 1.50 to 1.00 as of
each fiscal quarter end.&nbsp; We also note from the report on Form 8-K that the
Company is currently seeking a waiver from the bank of the covenant violations
existing at December 31, 2008.</b></p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>Noted and agreed.</p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'><b>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</b><b>Please
tell us and explain in the notes to your financial statements in future filings
how you are classifying this debt obligation in your interim financial
statements for the quarter ended December 31, 2008.&nbsp; As part of your response
and your revised disclosure, please indicate whether any portion of this
obligation is being classified as long-term debt and explain your basis or
rationale for this classification pursuant to the guidance in EITF 86-30.&nbsp; In
addition, please discuss in MD&amp;A and the notes to your financial statements
whether the Company expects to comply with its technical debt covenants in
future periods and discuss in MD&amp;A and the notes to the Company's financial
statements the potentially adverse consequences to the Company in the event it
is unable to do so and cannot obtain waivers of covenant violation from its
lender.</b></p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'>We considered and disclosed EITF
86-30 in our quarterly report on form 10-Q for December 31, 2008, filed on
February 20, 2009. That disclosure is as follows:</p>

<p class=MsoNormal style='margin-bottom:6.0pt;text-align:justify'>As reported on the form 8-K filed on January 23, 2009,
we are in default of certain technical loan covenants as of December 31, 2008
on our note payable to Wells Fargo Bank, N.A. (&quot;the Bank&quot;), therefore, all
amounts owing under this facility are reflected as current in the accompanying
Condensed Consolidated Balance Sheet as of December 31, 2008. We have never
been in payment default on the note and expect to be able to remain current on
payments in fiscal 2009, depending on our sales trends and cash flow from
operations.&nbsp; On February 9, 2009 we received a Reservation of Rights letter
from the Bank formally notifying us of the default of the Earnings Before
Interest Taxes and Depreciation (&quot;EBITDA&quot;) Coverage Ratio of not less than 1.5
to 1.0 and the Tangible Net Worth of not less than $5,000,000 as set forth in
the Credit Agreement for the period ending December 31, 2008. The letter serves
as notice that notwithstanding the foregoing events of default, the Bank is
reserving all of its rights and remedies under the Credit Agreement and related
agreements.</p>



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<p class=MsoHeader>United States Securities and Exchange Commission</p>

<p class=MsoHeader>March 9, 2009</p>

<p class=MsoNormal style='margin-bottom:12.0pt'>Page 7 of 8</p>



<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>The Bank is not now accelerating
the Loan and is willing to continue to accept regularly scheduled payments of
principal and interest under the Loan, however the acceptance of payments under
the Loan does not constitute a modification of the Credit Agreement or a waiver
of any of the covenants or of the Bank's rights or remedies under the Credit
Agreement, including the right to accelerate the loan in the future after the
giving of notice.&nbsp; We will continue to work with the Bank on a Required
Corrective Action for compliance with existing or modified loan covenants.&nbsp;
There can be no assurance that the Bank will agree to modify or waive any of
the loan covenants or waive any of its rights or remedies under the Credit
Agreement and we would require additional financing to repay the loan balance.&nbsp;
The loan is secured by security agreements in the equipment of four restaurants
and a blanket security on all equipment not covered by prior existing security
agreements.</p>

<p class=MsoNoSpacing style='text-align:justify'><b><u>Definitive Schedule 14A Proxy Statement filed
December 29, 2008</u></b></p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'><b><u>Certain relationships and related
transactions, page 11</u></b></p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
6.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'><b>10.&nbsp;
</b><b>We
note from the disclosure on page 7 of the proxy statement that the Bailey Group
is a principal shareholder of the Company's common stock and also holds certain
rights to elect directors to the Company's board of directors based on the
discussion on page 11 of the proxy statement.&nbsp; In future filings, please revise
Note 10 to Company's financial statements to clearly explain the nature of the
Company's related party relationship with The Bailey Group.&nbsp; Refer to the
disclosure requirements outlined in paragraph 2 of SFAS No. 57.</b></p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>In future filings we will revise and
expand our Note 10 to clearly explain the nature of the Company's related party
relationship with The Bailey Company and their rights to elect directors to the
Company's board of directors.</p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>In future filings Note 10 will
read as follows, taking into consideration paragraph 2 of SFAS No. 57: </p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>The Erie County Investment
Company (owner of 99% of The Bailey Company) is a substantial holder of our
common stock and has certain contractual rights to elect up to three members of
the Company's board of directors under the Series B Convertible Preferred Stock
Agreements entered into in February, 2005.</p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>The Company leases office space
from The Bailey Company under a lease agreement which expires in 2009.&nbsp; Rent
paid to them in fiscal 2008 and 2007 for office space was $55,000 and $54,000,
respectively.&nbsp; </p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>The Bailey Company is also the
owner of two franchised Good Times Drive Thru restaurants which are located in Thornton and Loveland, Colorado.&nbsp; The Bailey Company has entered into two franchise and
management agreements with us, franchise royalties and management fees paid
under those agreements totaled approximately $94,000 and $90,000 for the fiscal
years ending September 30, 2008 and 2007, respectively. Amounts due from The
Bailey Company in regards to these agreements at September 30, 2008 and 2007
were $18,000 and $16,000, respectively.</p>

<p class=MsoNoSpacing style='margin-bottom:6.0pt;text-align:justify'><b><u>Other</u></b></p>

<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
12.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'><b>11.&nbsp;
</b><b>We
urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all information
required under the Securities Exchange Act of 1934 and that they have provided
all information investors require for an informed investment decision.&nbsp; Since
the Company and its management are in possession of all facts relating to a
Company's disclosure, they are responsible for the accuracy and adequacy of the
disclosures they have made.</b></p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>In connection with our response
to your comments, we acknowledge that:</p>

<p class=MsoNoSpacing style='margin-left:.5in;text-align:justify;text-indent:
- -.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the Company
and its management &nbsp;is responsible for the adequacy and accuracy of the
disclosure in our filings;</p>

<p class=MsoNoSpacing style='margin-left:.5in;text-align:justify;text-indent:
- -.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Staff
comments or changes to disclosure in response to Staff comments do not
foreclose the Commission from taking action with respect to the filing; and</p>



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<p class=MsoHeader>United States Securities and Exchange Commission</p>

<p class=MsoHeader>March 9, 2009</p>

<p class=MsoNormal style='margin-bottom:12.0pt'>Page 8 of 8</p>



<p class=MsoNoSpacing style='margin-top:0in;margin-right:0in;margin-bottom:
12.0pt;margin-left:.5in;text-align:justify;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the Company
may not assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United States.</p>

<p class=MsoNoSpacing style='margin-bottom:12.0pt;text-align:justify'>If you have any additional
questions or comments, please feel free to contact me directly at 303-384-1411
or Sue Knutson at 303-384-1424.</p>

<p class=MsoNoSpacing style='margin-bottom:.25in;text-align:justify'>Sincerely,</p>

<p class=MsoNoSpacing style='margin-bottom:.25in;text-align:justify'>/s/ Boyd E. Hoback</p>

<p class=MsoNoSpacing style='text-align:justify'>Boyd
E. Hoback</p>

<p class=MsoNoSpacing style='text-align:justify'>President
and CEO</p>

<p class=MsoFooter>Good Times Restaurants Inc. </p>

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