UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

    
For the quarterly period ended October 1, 20172023


or
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            



Commission File Number: 001-34851


RED ROBIN GOURMET BURGERS, INC.
(Exact name of registrant as specified in its charter)
Delaware84-1573084
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
10000 E. Geddes Avenue, Suite 500
Englewood, Colorado    80112
6312 S. Fiddler’s Green Circle, Suite 200 N
Greenwood Village, CO80111
(Address of principal executive offices)(Zip Code)
(Address of principal executive offices)             (Zip Code)

(303) 846-6000
(Registrant’sRegistrant's telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueRRGBNasdaq(Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý☒  No o☐


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý☒  No o☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large"large accelerated filer,” “accelerated" "accelerated filer,” “smaller" "smaller reporting company,”" and “emerging"emerging growth company”company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☐Accelerated Filer☒
Non-accelerated Filer☐Smaller Reporting Company☐
Large accelerated filer o
Emerging Growth Company
Accelerated filer ý
Non-accelerated filer o (Do not check if a smaller reporting company)
Smaller reporting company o
Emerging growth company o
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No ý☒


Indicate the numberAs of October 30, 2023, there were 15,480,000 shares outstanding of each of the issuer’s classes ofregistrant's common stock, aspar value of the latest practicable date.$0.001 per share outstanding.

ClassOutstanding at November 6, 2017
Common Stock, $0.001 par value per share12,936,039

Table of Contents
RED ROBIN GOURMET BURGERS, INC.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
21
Condensed Consolidated Balance Sheets
21
Condensed Consolidated Statements of Operations and Comprehensive LossOperations
32
Condensed Consolidated Statements of Comprehensive Income (Loss)Stockholders' Equity (Deficit)
43
Condensed Consolidated Statements of Cash Flows
5
Notes to Condensed Consolidated Financial Statements
6
1015
2030
2130
PART II - OTHER INFORMATION
2231
2331
2431
35
2533
34


i
Table of Contents
PART I — FINANCIAL INFORMATION
ITEM 1.    Financial Statements (unaudited)

RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
  (Unaudited)  
  October 1, 2017 December 25, 2016
Assets:    
Current assets:    
Cash and cash equivalents $14,984
 $11,732
Accounts receivable, net 12,253
 24,166
Inventories 29,480
 29,899
Prepaid expenses and other current assets 28,384
 27,049
Total current assets 85,101
 92,846
Property and equipment, net 647,301
 656,439
Goodwill 97,064
 95,935
Intangible assets, net 39,680
 42,270
Other assets, net 29,089
 31,055
Total assets $898,235
 $918,545
Liabilities and stockholders’ equity:
    
Current liabilities:    
Trade accounts payable $21,119
 $13,740
Construction related payables 11,695
 12,862
Accrued payroll and payroll-related liabilities 38,967
 34,703
Unearned revenue 37,905
 50,199
Accrued liabilities and other 41,079
 29,505
Total current liabilities 150,765
 141,009
Deferred rent 73,780
 72,431
Long-term debt 276,775
 336,375
Long-term portion of capital lease obligations 10,286
 10,805
Other non-current liabilities 9,864
 9,872
Total liabilities 521,470
 570,492
Stockholders’ equity:
    
Common stock, $0.001 par value: 45,000 shares authorized; 17,851 and 17,851 shares issued; 12,935 and 12,828 shares outstanding 18
 18
Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding —
 —
Treasury stock 4,916 and 5,023 shares, at cost (203,296) (207,720)
Paid-in capital 209,520
 208,022
Accumulated other comprehensive loss, net of tax (3,430) (5,008)
Retained earnings 373,953
 352,741
Total stockholders’ equity
 376,765
 348,053
Total liabilities and stockholders’ equity
 $898,235
 $918,545
(Unaudited)
(in thousands, except for per share amounts)October 1, 2023December 25, 2022
Assets:
Current assets:
Cash and cash equivalents$48,550 $48,826 
Accounts receivable, net11,819 21,427 
Inventories27,013 26,447 
Income tax receivable462 562 
Prepaid expenses and other current assets12,945 12,938 
Restricted cash12,268 9,380 
Total current assets113,057 119,580 
Property and equipment, net264,278 318,517 
Operating lease assets, net372,057 361,432 
Intangible assets, net17,114 17,727 
Other assets, net10,808 14,889 
Total assets$777,314 $832,145 
Liabilities and stockholders' equity (deficit):
Current liabilities:
Accounts payable$30,020 $39,336 
Accrued payroll and payroll-related liabilities37,828 33,666 
Unearned revenue31,980 46,944 
Current portion of operating lease obligations50,250 47,394 
Current portion of long-term debt875 3,375 
Accrued liabilities and other53,495 49,498 
Total current liabilities204,448 220,213 
Long-term debt182,142 203,155 
Long-term portion of operating lease obligations389,416 393,157 
Other non-current liabilities10,051 13,831 
Total liabilities786,057 830,356 
Commitments and contingencies (see Note 8. Commitments and Contingencies)
Stockholders' equity (deficit):
Common stock; $0.001 par value: 45,000 shares authorized; 20,449 shares issued; 15,482 and 15,934 shares outstanding as of October 1, 2023 and December 25, 202220 20 
Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding as of October 1, 2023 and December 25, 2022— — 
Treasury stock 4,967 and 4,515 shares, at cost, as of October 1, 2023 and December 25, 2022(176,813)(182,810)
Paid-in capital229,769 238,803 
Accumulated other comprehensive loss, net of tax(34)(34)
Accumulated deficit(61,685)(54,190)
Total stockholders' equity (deficit)(8,743)1,789 
Total liabilities and stockholders' equity (deficit)
$777,314 $832,145 
See Notes to Condensed Consolidated Financial Statements.Statements

1
Table of Contents
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share amounts)
(Unaudited)
  Twelve Weeks Ended Forty Weeks Ended
  October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016
Revenues:        
Restaurant revenue $301,100
 $293,858
 $1,026,902
 $992,745
Franchise royalties, fees, and other revenues 3,148
 3,449
 11,674
 12,237
Total revenues 304,248
 297,307
 1,038,576
 1,004,982
Costs and expenses:        
Restaurant operating costs (excluding depreciation and amortization shown separately below):        
Cost of sales 71,642
 69,447
 240,152
 232,603
Labor 106,205
 102,294
 360,146
 338,125
Other operating 44,846
 42,463
 142,238
 132,446
Occupancy 25,868
 25,121
 84,127
 82,524
Depreciation and amortization 21,258
 21,468
 70,475
 64,578
Selling, general, and administrative expenses 28,870
 29,046
 104,239
 103,453
Pre-opening and acquisition costs 1,503
 2,382
 4,735
 6,992
Other charges —
 9,321
 1,584
 17,906
Total costs and expenses 300,192
 301,542
 1,007,696
 978,627
         
Income (loss) from operations 4,056
 (4,235) 30,880
 26,355
Other expense:        
Interest expense, net and other 2,032
 1,612
 7,469
 4,736
Income (loss) before income taxes 2,024
 (5,847) 23,411
 21,619
Provision (benefit) for income taxes (690) (4,547) 2,199
 1,142
Net income (loss) $2,714
 $(1,300) $21,212
 $20,477
Earnings (loss) per share:        
Basic $0.21
 $(0.10) $1.65
 $1.52
Diluted $0.21
 $(0.10) $1.63
 $1.50
Weighted average shares outstanding:        
Basic 12,927
 13,214
 12,888
 13,471
Diluted 13,023
 13,214
 12,986
 13,606
Twelve Weeks EndedForty Weeks Ended
(in thousands, except for per share amounts)October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Revenues:
Restaurant revenue$273,133 $282,415 $973,307 $951,633 
Franchise and other revenues4,427 4,390 20,713 24,302 
Total revenues277,560 286,805 994,020 975,935 
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Cost of sales65,128 70,640 236,171 234,283 
Labor103,741 100,522 358,841 340,273 
Other operating50,351 52,858 174,243 172,725 
Occupancy23,523 22,828 76,806 76,406 
Depreciation and amortization14,672 17,368 52,253 58,924 
Selling, general, and administrative expenses27,961 35,692 89,348 102,168 
Pre-opening and acquisition costs— 217 586 514 
Other charges (gains), net(5,878)(5,217)(6,726)8,236 
Total costs and expenses279,498 294,908 981,522 993,529 
Income (loss) from operations(1,938)(8,103)12,498 (17,594)
Other expense:
Interest expense, net and other5,945 4,590 19,541 16,151 
Loss before income taxes(7,883)(12,693)(7,043)(33,745)
Income tax provision (benefit)278 (43)453 453 
Net loss$(8,161)$(12,650)$(7,496)$(34,198)
Loss per share:
Basic$(0.52)$(0.80)$(0.47)$(2.16)
Diluted$(0.52)$(0.80)$(0.47)$(2.16)
Weighted average shares outstanding:
Basic15,799 15,892 15,949 15,816 
Diluted15,799 15,892 15,949 15,816 
Other comprehensive income (loss):
Foreign currency translation adjustment$(12)$(45)$1 $(51)
Other comprehensive income (loss), net of tax(12)(45)1 (51)
Total comprehensive loss$(8,173)$(12,695)$(7,495)$(34,249)
See Notes to Condensed Consolidated Financial Statements.

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Table of Contents
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)STOCKHOLDERS'EQUITY (DEFICIT)
(Unaudited)
Common StockTreasury StockAccumulated
Other
Comprehensive
Income/(Loss),
net of tax
Paid-in
Capital		Accumulated Deficit
(in thousands)SharesAmountSharesAmountTotal
Balance, December 25, 202220,449 $20 4,515 $(182,810)$238,803 $(34)$(54,190)$1,789 
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan— — (129)5,330 (5,106)— — 224 
Non-cash stock compensation— — — — 2,179 — — 2,179 
Net loss— — — — — — (3,256)(3,256)
Other comprehensive income (loss), net of tax— — — — — 8 — 8 
Balance, April 16, 202320,449 $20 4,386 $(177,480)$235,876 $(26)$(57,445)$945 
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan— — (250)9,933 (8,297)— — 1,636 
Acquisition of treasury stock— — 382 (4,999)— — — (4,999)
Non-cash stock compensation— — — — 1,519 — — 1,519 
Net income— — — — — — 3,922 3,922 
Other comprehensive income (loss), net of tax— — — — — 4 — 4 
Balance, July 9, 202320,449 $20 4,518 $(172,546)$229,098 $(22)$(53,524)$3,026 
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan— — (31)694 (809)— — (115)
Acquisition of treasury stock— — 480 (4,961)— — — (4,961)
Non-cash stock compensation— — — 1,480 — — 1,480 
Net loss— — — — — — (8,161)(8,161)
Other comprehensive income (loss), net of tax— — — — — (12)— (12)
Balance, October 1, 202320,449 $20 4,967 $(176,813)$229,769 $(34)$(61,685)$(8,743)

3
Table of Contents
  Twelve Weeks Ended Forty Weeks Ended
  October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016
Net income (loss) $2,714
 $(1,300) $21,212
 $20,477
Foreign currency translation adjustment 611
 (141) 1,578
 997
Other comprehensive income (loss), net of tax 611
 (141) 1,578
 997
Total comprehensive income (loss) $3,325
 $(1,441) $22,790
 $21,474
Common StockTreasury StockAccumulated
Other
Comprehensive
Income/(Loss),
net of tax
Paid-in
Capital		Retained
Earnings
(in thousands)SharesAmountSharesAmountTotal
Balance, December 26, 202120,449 $20 4,727 $(192,803)$242,560 $1 $24,693 $74,471 
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan— — (64)2,781 (2,846)— — (65)
Non-cash stock compensation— — — — 3,042 — — 3,042 
Net loss— — — — — — (3,581)(3,581)
Other comprehensive income (loss), net of tax— — — — — 11 — 11 
Balance, April 17, 202220,449 $20 4,663 $(190,022)$242,756 $12 $21,112 $73,878 
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan— — (113)5,817 (5,691)— — 126 
Non-cash stock compensation— — — — 2,542 — — 2,542 
Net loss— — — — — — (17,966)(17,966)
Other comprehensive income (loss), net of tax— — — — — (18)— (18)
Balance, July 10, 202220,449 $20 4,550 $(184,205)$239,607 $(6)$3,146 $58,562 
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan— — (1)36 (40)— — (4)
Non-cash stock compensation— — — — 2,668 — — 2,668 
Net loss— — — — — — (12,650)(12,650)
Other comprehensive income (loss), net of tax— — — — — (45)— (45)
Balance, October 2, 202220,449 $20 4,549 $(184,169)$242,235 $(51)$(9,504)$48,531 
See Notes to Condensed Consolidated Financial Statements.

4
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RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
  Forty Weeks Ended
  October 1, 2017 October 2, 2016
Cash flows from operating activities:    
Net income $21,212
 $20,477
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 70,475
 64,578
Other charges - asset impairment and restaurant closure costs 1,584
 14,006
Stock-based compensation expense 3,588
 3,584
Other, net (678) (1,738)
Changes in operating assets and liabilities, net of business acquisition:    
Accounts receivable and other current assets 11,666
 10,272
Trade accounts payable and accrued liabilities 22,155
 (8,191)
Unearned revenue (9,663) (14,047)
Other operating assets and liabilities, net 1,225
 5,744
Net cash provided by operating activities 121,564
 94,685
Cash flows from investing activities:    
Purchases of property, equipment, and intangible assets (61,033) (136,694)
Acquisition of franchise restaurants, net of cash acquired —
 (39,966)
Proceeds from sales of real estate and property, plant, and equipment and other investing activities 114
 4,208
Net cash used in investing activities (60,919) (172,452)
Cash flows from financing activities:    
Borrowings of long-term debt 148,250
 292,500
Payments of long-term debt and capital leases (208,340) (190,933)
Purchase of treasury stock —
 (31,520)
Debt issuance costs (664) (1,058)
Proceeds from exercise of stock options and employee stock purchase plan and tax benefit from exercise of stock options 2,616
 1,426
Net cash (used in) provided by financing activities (58,138) 70,415
Effect of exchange rate changes on cash 745
 178
Net change in cash and cash equivalents 3,252
 (7,174)
Cash and cash equivalents, beginning of period 11,732
 22,705
Cash and cash equivalents, end of period $14,984
 $15,531
     
Supplemental disclosure of cash flow information    
Income taxes paid $3,189
 $4,104
Interest paid, net of amounts capitalized $7,964
 $4,971
Change in construction related payables $(1,166) $(8,713)
Forty Weeks Ended
(in thousands)October 1, 2023October 2, 2022
Cash flows from operating activities:
Net loss$(7,496)$(34,198)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization52,253 58,924 
Gift card breakage(5,930)(7,781)
Asset impairment7,187 13,048 
Non-cash other charges (gains), net(1,819)(2,287)
Stock-based compensation expense5,171 8,229 
Gain on sale of property, plant, and equipment(29,865)(9,204)
Other, net733 3,240 
Changes in operating assets and liabilities, net of business acquisition:
Accounts receivable9,607 9,487 
Income tax receivable100 15,163 
Inventories(377)(217)
Prepaid expenses and other current assets1,354 2,183 
Operating lease assets, net of liabilities(9,975)(10,562)
Trade accounts payable and accrued liabilities5,416 9,621 
Unearned revenue(9,127)(8,301)
Other operating assets and liabilities, net129 (8,545)
Net cash provided by operating activities17,361 38,800 
Cash flows from investing activities:
Purchases of property, equipment, and intangible assets(37,074)(27,036)
Proceeds from sale-leaseback58,801 — 
Proceeds from sales of property and equipment and other investing activities794 8,739 
Acquisition of franchised restaurants(3,529)— 
Net cash provided by (used in) investing activities18,992 (18,297)
Cash flows from financing activities:
Borrowings of long-term debt— 282,151 
Payments of long-term debt and finance leases(25,525)(266,275)
Purchase of treasury stock(9,960)— 
Debt issuance costs— (4,869)
Proceeds related to real estate sale— 3,856 
Proceeds from other financing activities, net1,744 58 
Net cash provided by (used in) financing activities(33,741)14,921 
Effect of exchange rate changes on cash— (44)
Net change in cash and cash equivalents, and restricted cash2,612 35,380 
Cash and cash equivalents, and restricted cash, beginning of period58,206 22,750 
Cash and cash equivalents, and restricted cash, end of period$60,818 $58,130 
Supplemental disclosure of cash flow information
Income tax paid (refund received), net$210 $(14,729)
Interest paid, net of amounts capitalized$18,261 $11,387 
Right of use assets obtained in exchange for operating lease obligations$50,769 $11,604 
Right of use assets obtained in exchange for finance lease obligations$81 $541 
See Notes to Condensed Consolidated Financial Statements.

5
Table of Contents
RED ROBIN GOURMET BURGERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation and Recent Accounting Pronouncements
Red Robin Gourmet Burgers, Inc., a Delaware corporation, together with its subsidiaries (“("Red Robin”Robin" or the “Company”"Company"), primarily develops, operates, franchises, and franchisesdevelops full-service restaurants in North America. As of October 1, 2017,2023, the Company owned and operated 479417 restaurants located in 39 states and two Canadian provinces.states. The Company also had 8691 franchised full-service restaurants in 1514 states as of October 1, 2017.and one Canadian province. The Company operates its business as one operating and one reportable segment.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements include the accounts of Red Robin and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’sCompany's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”("GAAP") for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for any interim period are not necessarily indicative of results for the full year.
The accompanying condensed consolidated financial statementsCondensed Consolidated Financial Statements of Red Robin have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”"SEC"), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the Company’sCompany's annual consolidated financial statements on Form 10-K have been condensed or omitted. The condensed consolidated balance sheetCondensed Consolidated Balance Sheet as of December 25, 20162022 has been derived from the audited consolidated financial statements as of that date but does not include all disclosures required for audited annual financial statements. For further information, please refer to and read these interim condensed consolidated financial statementsCondensed Consolidated Financial Statements in conjunction with the Company’sCompany's audited consolidated financial statements included in the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 25, 2016,2022 filed with the SEC on February 21, 2017.28, 2023.
The Company’s quarterOur current, prior, and upcoming year periods, period end dates, and number of weeks included in the period are summarized in the table below:
PeriodsPeriod End DateNumber of Weeks in Period
Current and Prior Fiscal Quarters:
First Quarter 2023April 16, 202316
First Quarter 2022April 17, 202216
Second Quarter 2023July 9, 202312
Second Quarter 2022July 10, 202212
Third Quarter 2023October 1, 202312
Third Quarter 2022October 2, 202212
Current and Prior Fiscal Years:
Fiscal Year 2023December 31, 202353
Fiscal Year 2022December 25, 202252
Upcoming fiscal year:
Fiscal Year 2024December 29, 202452





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Immaterial Restatement of Prior Period Financial Statements
As previously disclosed in our Form 10-Q for the period ended July 9, 2023, the Company discovered a multi-year error in its calculation and recognition of revenue related to gift cards, primarily related to breakage revenue that ended October 1, 2017 is referred to as third quarter 2017,had been recognized for bonus and discounted gift cards for which no or discounted monetary consideration was received, which resulted in the Company overstating total revenues by $0.1 million and $0.6 million for the twelve and forty weeks ended October 1, 2017;2, 2022. Management has evaluated this misstatement and concluded it was not material to prior periods, individually or in the second quarter ended July 9, 2017 is referred to as second quarter 2017, oraggregate. However, correcting the cumulative effect of the error in the twelve and forty weeks ended July 9, 2017;October 2, 2022 would have had a significant effect on the first quarter ended April 16, 2017results of operations for such periods. Therefore, the Company is referredcorrecting the relevant prior period Condensed Consolidated Financial Statements and related footnotes for this error for comparative purposes.
The following tables reflect the effects of the correction on all affected line items of the Company's previously reported Condensed Consolidated Financial Statements presented in this Form 10-Q:
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)
Twelve Weeks Ended October 2, 2022Forty Weeks Ended October 2, 2022
(in thousands)As Previously ReportedAdjustmentAs CorrectedAs Previously ReportedAdjustmentAs Corrected
Restaurant revenue$282,449 $(34)$282,415 $951,718 $(85)$951,633 
Franchise and other revenues4,439 (49)4,390 24,810 (508)24,302 
Total revenues286,888 (83)286,805 976,528 (593)975,935 
Loss before income taxes(12,610)(83)(12,693)(33,152)(593)(33,744)
Net loss(12,567)(83)(12,650)(33,605)(593)(34,197)
Net loss per share(0.79)(0.01)(0.80)(2.12)(0.04)(2.16)
Total comprehensive loss(12,612)(83)(12,695)(33,656)(593)(34,249)
OTHER NON-GAAP INFORMATION:
Adjusted EBITDA3,960 (83)3,877 43,900 (189)43,711 
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (unaudited)
Forty Weeks Ended October 2, 2022
(in thousands)Retained Earnings/(Accumulated Deficit)Total Shareholders' Equity
As Previously Reported
Balance, July 10, 20226,159 61,575 
Net loss(12,567)(12,567)
Balance, October 2, 2022(6,408)51,627 
Adjustments
Balance, July 10, 2022(3,013)(3,013)
Net loss(83)(83)
Balance, October 2, 2022(3,096)(3,096)
As Corrected
Balance, July 10, 20223,146 58,562 
Net loss(12,650)(12,650)
Balance, October 2, 2022$(9,504)$48,531 
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Forty Weeks Ended October 2, 2022
(in thousands)As Previously ReportedAdjustmentAs Corrected
Net loss$(33,605)$(593)$(34,198)
Gift card breakage(8,289)508 (7,781)
Unearned revenue(8,386)85 (8,301)
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2. Revenue
Disaggregation of revenue
In the following table, revenue is disaggregated by type of good or service (in thousands):
Twelve Weeks EndedForty Weeks Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Restaurant revenue$273,133 $282,415 $973,307 $951,633 
Franchise revenue3,418 4,249 12,245 14,891 
Gift card breakage589 141 5,930 7,782 
Other revenue420 — 2,538 1,629 
Total revenues$277,560 $286,805 $994,020 $975,935 
Contract Liabilities
Components of Unearned revenue in the accompanying Condensed Consolidated Balance Sheets are as follows (in thousands):
October 1, 2023December 25, 2022
Unearned gift card revenue$20,583 $35,837 
Deferred loyalty revenue$11,398 $11,107 
Revenue recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the redemption and breakage of gift cards that were included in the liability balance at the beginning of the fiscal year was as follows (in thousands):
Forty Weeks Ended
October 1, 2023October 2, 2022
Gift card revenue$16,865 $21,222 
3. Leases
The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and real estate taxes, are included in Occupancy on our Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) as follows (in thousands):
Twelve Weeks EndedForty Weeks Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Operating lease cost$16,691 $15,793 $53,865 $53,904 
Finance lease cost:
Amortization of right of use assets216 261 764 841 
Interest on lease liabilities116 111 400 408 
Total finance lease cost$332 $372 1,164 1,249 
Variable lease cost4,994 4,130 15,263 15,136 
Total$22,017 $20,295 $70,292 $70,289 

Refer to as first quarter 2017, orFootnote 5, Other Charges (gains), net, for information regarding the sixteen weeks ended April 16, 2017;sale-leaseback transaction during the twelve and together, the first, second, and third quarters of 2017 are referred to as the forty weeks ended October 1, 2017. The quarter ended October 2, 2016 is referred to as third quarter 2016, or the twelve weeks ended October 2, 2016; the second quarter ended July 10, 2016 is referred to as second quarter 2016, or the twelve weeks ended July 10, 2016; the first quarter ended April 17, 2016 is referred to as first quarter 2016, or the sixteen weeks ended April 17, 2016; and together, the first, second, and third quarters of 2016 are referred to as the forty weeks ended October 2, 2016. The Company’s fiscal year 2017 comprises fifty-three weeks and will end on December 31, 2017.2023.
Reclassifications
Certain amounts presented in prior periods have been reclassified to conform with the current period presentation. For the twelve weeks ended October 2, 2016, the Company reclassified impairment charges and restaurant closure costs of $9.3 million from Asset impairment and restaurant closure costs to Other charges on the condensed consolidated statement of operations. For the forty weeks ended October 2, 2016, the Company reclassified impairment charges and restaurant closure costs of $14.0 million from Asset impairment and restaurant closure costs and litigation contingencies of $3.9 million from Selling, general, and administrative expenses to Other charges on the condensed consolidated statement of operations. Management believes separating these items on the condensed consolidated statement of operations provides more clarity for readers of these financial statements. See Note 4, Other Charges.
Recently Issued Accounting Standards
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Update 2016-02, Leases (“Topic 842”). This guidance requires the recognition of liabilities for lease obligations and corresponding right-of-use assets on the balance sheet and disclosure of key information about leasing arrangements. This guidance is effective for annual and interim reporting periods beginning after December 15, 2018 using a modified retrospective adoption method. Early adoption is permitted. We


are evaluating the full impact Topic 842 will have on our consolidated financial statements but expect this adoption will result in a significant increase in the assets and liabilities on our consolidated balance sheet.
In May 2014, the FASB issued Update 2014-09, Revenue from Contracts with Customers (“Topic 606”), subsequently amended by various standard updates. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements. We have determined Topic 606 will not have an impact on our recognition of food and beverage sales from Company-owned restaurants or our recognition of royalty fees from franchisees. The Company will recognize franchise advertising fund contributions as Franchise royalties, fees, and other revenues, with the related advertising fund expenses recognized as Selling, general, and administrative expenses. The Company will adopt Topic 606 beginning with its fiscal first quarter 2018 and will apply the guidance retrospectively to each prior period presented. Upon adoption of the standard, the Company does not expect the impact of recognizing initial franchise fees over the franchise agreement period or franchise advertising fund contributions as revenues and expenses to have a material effect on our consolidated financial statements.
2. Goodwill and Intangible Assets
The following table presents goodwill as of October 1, 2017 and December 25, 2016 (in thousands):
Balance, December 25, 2016 $95,935
Foreign currency translation adjustment 1,129
Balance, October 1, 2017 $97,064
The Company recorded no goodwill impairment losses in the period presented in the table above or any prior periods.
The following table presents intangible assets as of October 1, 2017 and December 25, 2016 (in thousands):
  October 1, 2017 December 25, 2016
  
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Intangible assets subject to amortization:            
Franchise rights $55,766
 $(30,016) $25,750
 $55,902
 $(27,306) $28,596
Favorable leases 13,931
 (7,955) 5,976
 13,931
 (7,400) 6,531
Liquor licenses 10,128
 (9,662) 466
 10,253
 (9,857) 396
  $79,825
 $(47,633) $32,192
 $80,086
 $(44,563) $35,523
Indefinite-lived intangible assets:            
Liquor licenses and other $7,488
 $—
 $7,488
 $6,747
 $—
 $6,747
Intangible assets, net $87,313
 $(47,633) $39,680
 $86,833
 $(44,563) $42,270
There was an immaterial impairment to franchise rights during the forty weeks ended October 1, 2017 related to two of the restaurants impaired in second quarter 2017. There was an immaterial impairment to franchise rights during the forty weeks ended October 2, 2016 related to one of the restaurants impaired in second quarter 2016.
The estimated aggregate future amortization expense as of October 1, 2017 is as follows (in thousands):
Remainder of 2017 $1,022
2018 4,263
2019 4,216
2020 3,699
2021 3,271
Thereafter 15,721
  $32,192

3.4. Earnings (Loss) Per Share
Basic earnings (loss) per share amounts are calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share amounts are calculated based upon the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period. Potentially dilutive shares are excluded from the computation in periods in which they have an anti-dilutive effect. Diluted earnings (loss) per share reflectreflects the potential dilution that could occur if holders of options exercised their options into common stock. As the Company was in a net loss position for both the twelve and forty weeks ended October 1, 2023 and October 2, 2022, all potentially dilutive common shares are considered anti-dilutive.
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The Company uses the treasury stock method to calculate the effect of outstanding stock options.options and awards. Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):
Twelve Weeks EndedForty Weeks Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Basic weighted average shares outstanding15,799 15,892 15,949 15,816 
Dilutive effect of stock options and awards— — — — 
Diluted weighted average shares outstanding15,799 15,892 15,949 15,816 
Awards excluded due to anti-dilutive effect on diluted income (loss) per share1,420 869 1,421 1,010 
 Twelve Weeks Ended Forty Weeks Ended
 October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016
Basic weighted average shares outstanding12,927
 13,214
 12,888
 13,471
Dilutive effect of stock options and awards96
 —
 98
 135
Diluted weighted average shares outstanding13,023
 13,214
 12,986
 13,606
        
Awards excluded due to anti-dilutive effect on diluted earnings per share209
 355
 324
 224
4.5. Other Charges (Gains), net
Other charges consist(gains), net consisted of the following (in thousands):
  Twelve Weeks Ended Forty Weeks Ended
  October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016
Asset impairment and restaurant closure costs $—
 $9,321
 $1,584
 $14,006
Litigation contingencies —
 —
 —
 3,900
Other charges $—
 $9,321
 $1,584
 $17,906

Twelve Weeks EndedForty Weeks Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Gain on sale leaseback, net of expenses$(14,883)$— $(29,413)$— 
Gain on sale of restaurant property— (9,204)— (9,204)
Litigation contingencies3,600 133 9,140 47 
Restaurant closure costs, net(91)(1,570)1,546 309 
Severance and executive transition341 1,825 3,195 1,954 
Asset impairment4,800 2,187 7,187 13,048 
Other277 — 1,366 — 
Closed corporate office costs, net of sublease income78 267 253 267 
Other financing costs— 1,022 — 1,392 
COVID-19 related charges— 123 — 423 
Other charges (gains), net$(5,878)$(5,217)$(6,726)$8,236 
During the third quarter of 2023, the Company sold nine restaurant properties for total proceeds of $30.4 million in a sale-leaseback transaction that resulted in a gain, net of expenses of $14.9 million. This was the second sale-leaseback transaction of the year with the first transaction occurring in the second quarter 2017,of 2023 for another nine restaurant properties. The year-to-date net proceeds of $58.8 million from the sale of 18 restaurant properties are included within cash flows from investing activities on the Condensed Consolidated Statements of Cash Flows for the forty weeks ended October 1, 2023.
During the second quarter of 2022 the Company determinedclosed on an agreement to sell a restaurant property that five Company-owned restaurants, including three restaurants nearing the endCompany owned and leased back on a short-term basis. The Company collected initial net proceeds from the purchaser-lessor of their$3.9 million, which represented a portion of the total consideration received from the sale. During the third quarter of 2022, the Company received the remaining proceeds, upon which the lease were impairedterminated and the sale transaction was completed, and recognized a $9.2 million gain on the sale of the restaurant property. The initial net proceeds of $3.9 million are included within cash flows from financing activities and the final proceeds received of $8.5 million are included within cash flows from investing activities on the Condensed Consolidated Statements of Cash Flows for the forty weeks ended October 2, 2022.
Litigation contingencies during the twelve and forty weeks ended October 1, 2023 and October 2, 2022 represent reserves for various in progress legal matters. Litigation contingencies during the forty weeks ended October 2, 2022 include the impact of cash proceeds received by the Company related to certain legal claims.
Restaurant closure costs (gains) include the ongoing restaurant operating costs of the Company-owned restaurants incurred for closed restaurants and closed restaurant lease termination gains or losses.
Severance and executive transition costs include one-time termination benefits related to a reduction in force of Team Members and costs associated with changes in leadership positions as a result of our strategic pivot and are accounted for in accordance with ASC Topic 420, Exit or Disposal Cost Obligations. The Company expects to make the remaining payments related to these benefits in 2023.
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The Company incurred a cumulative total of $5.0 million related to these one-time termination benefits. Approximately $2.1 million in one-time termination benefits was incurred and recorded in Other charges in the Consolidated Statements of Operations and Comprehensive Income (Loss) during the forty weeks ended October 1, 2023. A reconciliation of our termination benefits liability, which is included in Accrued liabilities and other current liabilities in our Condensed Consolidated Balance Sheets is as follows:
Termination Benefits
Balance as of December 25, 2022$2,505 
Charges2,077 
Cash Payments(4,164)
Balance as of October 1, 2023$418 
The Company recognized non-cash impairment charge of $1.6 million. Duringcharges primarily related to restaurant assets at eight and twelve Company-owned restaurants during the twelve and forty weeks ended October 1, 2023. Additionally, the Company recognized non-cash impairment charges related to subleasing additional space at the Company's closed corporate office during the forty weeks ended October 1, 2023. The Company recognized non-cash impairment charges related to restaurant assets at one and ten Company-owned restaurants for the twelve and forty weeks ended October 2, 2016, the Company determined that two and eight Company-owned restaurants were impaired and recognized2022, respectively.
Other primarily includes non-cash impairment charges of $3.8 million and $7.7 million. The Company recognized the impairment charges resulting from the continuing and projected future results of these restaurants, primarily through projected cash flows. In first quarter 2016, the Company relocated one restaurant and recognized a $0.8 million asset impairment charge due to the relocation.
In third quarter 2016, the Company closed nine limited-service restaurants that were underperforming relative to Company expectations and recognized $5.5 million of restaurant closure costs, which comprised $3.7 million in fixed asset disposal costs, $1.5 million in charges related to future lease obligations,terminated capital projects and immaterial one-time termination benefits, inventory write offdisposals, and certain insurance claim proceeds.
Closed corporate office, net of sublease income includes expense and sublease income related to a corporate office facility that was vacated and subleased.
Other financing costs and other closure-related costs.
In first quarter 2016,include fees related to the entry by the Company recorded $3.9 millioninto the new Credit Agreement (as defined below) on March 4, 2022 that were not capitalized with the closing of litigation contingenciesthe Credit Facility. See Note 6. Borrowings.
COVID-19 related charges include the costs of purchasing personal protective equipment for employment-related claims.restaurant Team Members and Guests and emergency sick pay provided to restaurant Team Members related to the COVID-19 pandemic.
5.6. Borrowings
Borrowings as of October 1, 20172023 and December 25, 20162022 are summarized below (in thousands):
October 1, 2023Variable
Interest Rate		December 25, 2022Variable
Interest Rate
Revolving line of credit$— $15,000 10.44 %
Term loan189,142 12.16 %199,000 9.81 %
Notes payable875 875 
Total borrowings190,017 214,875 
Less: unamortized debt issuance costs and discounts(1)
7,000 8,345 
Less: current portion of long-term debt875 3,375 
Long-term debt$182,142 $203,155 
Revolving line of credit unamortized deferred financing charges(1):
$807 $988 
 October 1, 2017 December 25, 2016
Revolving credit facility and other long-term debt$276,775
 $336,375
Capital lease obligations10,973
 11,463
Total debt287,748
 347,838
Less: Current portion(687) (658)
Long-term debt$287,061
 $347,180

On June 30, 2016, the Company replaced its existing credit facility (“Previous Credit Facility”) with a new credit facility (the “New Credit Facility”). The New Credit Facility provides for a $400 million revolving line of credit with a sublimit for the issuance of up to $25 million in letters of credit and swingline loans up to $15 million. On April 13, 2017, the Company entered into the first amendment (the “Amendment”) to the New Credit Facility. The Amendment increased the lease adjusted leverage ratio to 5.25x through October 1, 2017 before stepping down to 5.0x through July 15, 2018 and returning to 4.75x thereafter. The Amendment also provides for additional pricing tiers that increase LIBOR spread rates and commitment fees to the extent the Company’s lease adjusted leverage ratio exceeds 4.75x, in addition to revising terms for permitted acquisitions and investments under the New Credit Facility. The Amendment is effective through October 7, 2018 and is cancelable at the Company’s discretion.
The New Credit Facility matures on June 30, 2021. As of October 1, 2017, the Company had outstanding borrowings under the New Credit Facility of $275.9 million, in addition to amounts issued under letters of credit of $7.6 million, which reduced the amount available under the facility but were not recorded as debt. As of December 25, 2016, the Company had outstanding borrowings under the New Credit Facility of $335.5 million, in addition to amounts issued under letters of credit of $8.8 million.
(1)Loan origination costs associated with the New Credit FacilityCompany's credit facility are included as deferred costs in Other assets, net for financing charges allocated to the Revolving line of credit, and Long-term debt for financing charges associated with the term loan in the accompanying condensed consolidated balance sheets. Condensed Consolidated Balance Sheets.
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Credit Agreement
On March 4, 2022, the Company replaced its prior amended and restated credit agreement (the "Prior Credit Agreement") with a new Credit Agreement (the "Credit Agreement") by and among the Company, Red Robin International, Inc., as the borrower, the lenders from time to time party thereto, the issuing banks from time to time party thereto, Fortress Credit Corp., as Administrative Agent and as Collateral Agent and JPMorgan Chase Bank, N.A., as Sole Lead Arranger and Sole Bookrunner. The five-year $225.0 million Credit Agreement provides for a $25.0 million revolving line of credit and a $200.0 million term loan (collectively, the "Credit Facility"). The borrower maintains the option to increase the amount of borrowings available under the Credit Agreement in the future, subject to lenders’ participation, by up to an additional $40.0 million in the aggregate on the terms and conditions set forth in the Credit Agreement.
The Credit Facility will mature on March 4, 2027. No amortization is required with respect to the revolving Credit Facility. The term loans require quarterly principal payments in an aggregate annual amount equal to 1.0% of the original principal amount of the term loan. The Credit Facility's interest rate references the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements and backed by U.S. Treasury securities, or the Alternate Base Rate ("ABR"), which represents the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.5% per annum, or (c) one-month term SOFR plus 1.0% per annum.
Red Robin International, Inc. is the borrower under the Credit Agreement, and certain of its subsidiaries and the Company are guarantors of borrower’s obligations under the Credit Agreement. Borrowings under the Credit Agreement are secured by substantially all of the assets of the borrower and the guarantors, including the Company, and are available to: (i) refinance certain existing indebtedness of the borrower and its subsidiaries, (ii) pay any fees and expenses in connection with the Credit Agreement, and (iii) provide for the working capital and general corporate requirements of the Company, the borrower and its subsidiaries, including permitted acquisitions and capital expenditures, but excluding restricted payments.
On March 4, 2022, Red Robin International, Inc., the Company, and the guarantors also entered into a Pledge and Security Agreement (the “Security Agreement”) granting to the Administrative Agent a first priority security interest in substantially all of the assets of the borrower and the guarantors to secure the obligations under the Credit Agreement. This new Security Agreement replaced the existing security agreement, dated January 10, 2020, which was entered into in connection with the Prior Credit Agreement.
Red Robin International, Inc. as the borrower is obligated to pay customary fees to the agents, lenders and issuing banks under the Credit Agreement with respect to providing, maintaining, or administering, as applicable, the credit facilities.
In connection with entry into the new Credit Agreement, the Company’s Prior Credit Agreement was terminated. In connection with such termination and new borrowings under the new Credit Agreement, the Company paid off all outstanding borrowings, accrued interest, and fees under the Prior Credit Agreement.
On July 17, 2023, the Company amended the Credit Agreement (the “Credit Agreement Amendment”) to remove the previously included $50.0 million aggregate cap (the “Prior Cap”) on sale-leasebacks of Company-owned real property. Pursuant to the Credit Agreement Amendment, it also was agreed that (i) the Company may reinvest in the business within 360 days of receipt the net proceeds of sale-leasebacks to the extent that such proceeds are equal to or less than the amount of the Prior Cap and (ii) the Company shall make a mandatory prepayment with the net proceeds of sale-leasebacks to the extent that such proceeds exceed the amount of the Prior Cap. Additionally, the prepayment premium associated with any mandatory prepayments derived from the net proceeds of sale-leasebacks that exceed the Prior Cap is reduced by the Credit Agreement Amendment to a premium equal to 50% of the prepayment premium otherwise applicable. The Amendment also made certain other conforming changes to the Existing Credit Agreement to effect the foregoing.
The summary descriptions of the Credit Agreement, the Credit Agreement Amendment, and the Security Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Credit Agreement, the Credit Agreement Amendment, and the Security Agreement, respectively, which have been filed as exhibits to the Company’s Current Reports on Form 8-K filed with the Securities and Exchange Commission on March 10, 2022, with respect to the Credit Agreement and the Security Agreement, and July 19, 2023, with respect to the Credit Agreement Amendment.
During the first quarter 2017,of 2022, the Company recorded $0.7expensed approximately $1.7 million in debt issuance costsof deferred financing charges related to the Amendmentextinguishment of the Prior Credit Agreement on March 4, 2022. These charges were recorded to interest expense, net and other on the NewCondensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the forty weeks ended October 2, 2022. In association with the execution of the new Credit Facility. Unamortized debtAgreement, the Company recognized $4.8 million of deferred financing charges, and $6.1 million of original issuance costs were $2.5 million and $2.3 million asdiscount.
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Table of October 1, 2017 and December 25, 2016.Contents
6.7. Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The carrying amounts of the Company’sCompany's cash and cash equivalents, accounts receivable, and accounts payable, and current accrued expenses and other liabilities approximate fair value due to the short termshort-term nature or maturity of the instruments.
The Company maintains a rabbi trust to fund obligations under a deferred compensation plan. Amounts in the rabbi trust are invested in mutual funds, which are designated as trading securities and carried at fair value and are included in Other assets, net in the accompanying consolidated balance sheets. Fair market value of mutual funds is measured using level 1 inputs (quoted prices for identical assets in active markets).
The following tables present the Company’sCompany's assets measured at fair value on a recurring basis included in Other assets, net on the accompanying Condensed Consolidated Balance Sheets as of October 1, 20172023 and December 25, 20162022 (in thousands):
October 1, 2023Level 1Level 2Level 3
Assets:    
Investments in rabbi trust$2,137 $2,137 $— $— 
Total assets measured at fair value$2,137 $2,137 $— $— 
December 25, 2022Level 1Level 2Level 3
Assets:
Investments in rabbi trust$4,250 $4,250 $— $— 
Total assets measured at fair value$4,250 $4,250 $— $— 
  October 1, 2017 Level 1 Level 2 Level 3
Assets:        
Investments in rabbi trust $8,936
 $8,936
 $—
 $—
Total assets measured at fair value $8,936
 $8,936
 $—
 $—
         
  December 25, 2016 Level 1 Level 2 Level 3
Assets:        
Investments in rabbi trust $9,165
 $9,165
 $—
 $—
Total assets measured at fair value $9,165
 $9,165
 $—
 $—
Other than as disclosed in Note 9. Acquisition of Franchised Restaurants, as of October 1, 2023, the Company had no financial assets or liabilities that were measured using level 2 or 3 inputs. The Company also had no non-financial assets or liabilities that were required to be measured on a recurring basis.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Assets and liabilities recognized or disclosed at fair value on the consolidated financial statementsCondensed Consolidated Financial Statements on a nonrecurring basis include items such as property, plant and equipment, goodwill,right of use assets, and other intangible assets. These assets are measured at fair value if determined to be impaired.
As of October 1, 2017 and December 25, 2016, theThe Company has measured non-financial assets for impairment using continuing and projected future cash flows, as discussed in Note 4, Other Charges, which were based on significant inputs not observable in the market and thus represented a level 3 fair value measurement. See Note 5. Other Charges (Gains), net.

We impaired long-lived restaurant assets with a carrying value (including right of use lease assets) of $15.3 million and $26.7 million during the twelve and forty weeks ended October 1, 2023, recognizing impairment expense of $4.8 million and $6.5 million, respectively, related to the net book value of these long-lived restaurant assets. We determined the fair value of these long-lived assets to be $10.5 million and $20.2 million in the twelve and forty weeks ended October 1, 2023. Additionally, we impaired long-lived assets at the Company's closed corporate office with a carrying value (including right of use lease assets) of $1.0 million, recognizing an impairment expense of $0.7 million during the forty weeks ended October 1, 2023, related to the net book value of these long-lived restaurant assets. We determined the fair value of these long-lived assets to be $0.3 million in the forty weeks ended October 1, 2023. The impairments were recorded as a result of quantitative impairment analyses.
Disclosures of Fair Value of Other Assets and Liabilities
The Company’s liabilitiesCompany's liability under the New Credit Facility and capital leases areits credit facility is carried at historical cost in the accompanying condensed consolidated balance sheets. For disclosure purposes, the Company estimatedCondensed Consolidated Balance Sheets. As of October 1, 2023, the fair value of the New Credit Facility and capital lease obligations using discounted cash flow analysis based on market rates obtained from independent third parties for similar types of debt. Both the New Credit Facilitycredit facility was approximately $188.0 million and the Company’s capital lease obligations are considered to be level 2 instruments. The following table presents theprincipal amount carrying value was $189.1 million. The credit facility term loan is reported net of $7.0 million in unamortized discount and estimateddebt issuance costs in the Condensed Consolidated Balance Sheet as of October 1, 2023. The carrying value of the credit facility was $214.0 million and the fair value of the Company’s New Credit Facility and capital lease obligationscredit facility was $205.1 million as of October 1, 2017 and December 25, 2016 (in thousands):2022. The interest rate on the credit facility represents a level 2 fair value input.
12
  October 1, 2017 December 25, 2016
  Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value
Credit facility $275,900
 $275,821
 $335,500
 $335,611
Capital lease obligations 10,973
 11,787
 11,463
 12,917
Total $286,873
 $287,608
 $346,963
 $348,528
Table of Contents

7.8. Commitments and Contingencies
In the normal course of business, there are various claims in process, matters inBecause litigation and other contingencies. These include employment-related claims and claims alleging illness, injury, or other food quality, health, or operational issues. Evaluatingis inherently unpredictable, assessing contingencies related to litigation is a complex process involving highly subjective judgment on theabout potential outcomeoutcomes of future events,events. When evaluating litigation contingencies, we may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, the availability of appellate remedies, insurance coverage related to the claim or claims in question, the presence of complex or novel legal theories, and the ultimate resolutionongoing discovery and development of litigated claimsinformation important to the matter. In addition, damage amounts claimed in litigation against us may differ frombe unsupported, exaggerated, or unrelated to possible outcomes, and as such are not meaningful indicators of our current analysis. Wepotential liability or financial exposure. Accordingly, we review the adequacy of accruals and disclosures pertaining to litigation matters each quarter in consultation with legal counsel, and we assess the probability and range of possible losses associated with contingencies for potential accrual in the consolidated financial statements.Condensed Consolidated Financial Statements. However, the ultimate resolution of litigated claims may differ from our current estimates.
In the normal course of business, there are various claims in process, matters in litigation, and other contingencies, certain of which are covered by insurance policies. While it is not possible to predict the outcome of these suits, legal proceedings, and claims with certainty, management is of the opinion that adequate provision for potential losses associated with these matters has been made in the financial statements.statements and that the ultimate resolution of any one of these matters will not have a material adverse effect on our financial position and results of operations. A significant increase in the number of these claims, or one or more successful claims resulting in greater liabilities than we currently anticipate, could materially and adversely affect our business, financial condition, results of operations, and cash flows.
As of October 1, 2023, we had a balance of $13.7 million for loss contingencies included within Accrued liabilities and other on our Condensed Consolidated Balance Sheet. In the normal course of business, there are various claims in process, matters in litigation, administrative proceedings, and other contingencies. These include employment related claims and class action lawsuits, claims from Guests or Team Members alleging illness, injury, food quality, health, or operational concerns, and lease and other commercial disputes. We increased our estimate of loss contingency liabilities by approximately $3.6 million for the twelve weeks ended October 1, 2023 and $9.1 million for the forty weeks ended October 1, 2023 related to changes during the third quarter in the status of ongoing litigation matters. We ultimately may be subject to greater or less than the accrued amount for this and other matters.
As of October 1, 2023, we had non-cancellable purchase commitments to certain vendors who provide food and beverages and other supplies to our restaurants, for an aggregate of $216.6 million. We expect to fulfill our commitments under these agreements in the normal course of business, and as such, no liability has been recorded.
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9. Acquisition of Franchised Restaurants
On April 17, 2023, the Company acquired certain assets and liabilities of five restaurants from one of its U.S. franchisees for cash consideration of $3.5 million. The pro forma impact of this acquisition and the operating results of the acquired restaurants are not presented as the impact was not material to reported results.
The acquisition was accounted for using the purchase method as defined in ASC 805, Business Combinations. The goodwill arising from the acquisition consists largely of the benefit of the assembled workforce of the acquired restaurants. The goodwill generated by the acquisition is not amortizable for book purposes but is amortizable and deductible for tax purposes. The Company allocated the purchase price to the fair value of the assets acquired and liabilities assumed as follows (in thousands):
Fair Value at Acquisition Date
Property and equipment, net$2,637 
Operating lease assets7,400 
Operating lease liabilities(8,250)
Operating lease assets, net(850)
Other assets, net of liabilities(1)
299 
Intangible assets, net1,443 
Total purchase price$3,529 
(1)    Includes inventory, prepaid assets, till cash, and gift card and loyalty liabilities.
Of the $2.6 million in property and equipment, $1.7 million is related to leasehold improvements and $1.0 million is related to personal property. The $0.9 million in net operating lease assets is related to acquired unfavorable leases, which reduces the acquired operating lease right-of-use assets. Of the $1.4 million of intangible assets, $1.2 million is related to reacquired franchise rights, which will be amortized on a straight-line basis. The fair value measurement of tangible and intangible assets and liabilities as of the acquisition date is based on significant inputs not observed in the market and thus represents a level 3 fair value measurement.

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ITEM 2.    Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations
Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations provides a narrative of our financial performance and condition that should be read in conjunction with the accompanying condensed consolidated financial statements.Condensed Consolidated Financial Statements. All comparisons under this heading between 20172023 and 20162022 refer to the twelve-twelve and forty-week periods endingforty weeks ended October 1, 20172023 and October 2, 2016,2022, unless otherwise indicated.indicated, and reflect the correction of certain information for the immaterial restatement of prior period financial statements as disclosed in Footnote 1, Basis of Presentation and Recent Accounting Pronouncements.
Overview
Description of Business
Red Robin Gourmet Burgers, Inc., a Delaware corporation, together with its subsidiaries (“("Red Robin,” “we,” “us,” “our”" "we," "us," "our," or the “Company”"Company"), primarily develops, operates, franchises, and franchisesdevelops full-service restaurants with 565508 locations in North America. As of October 1, 2017,2023, the Company operated 479 Company-ownedowned 417 restaurants located in 39 states and two Canadian provinces.states. The Company also had 8691 franchised full-service restaurants in 1514 states as of October 1, 2017.and one Canadian province. The Company operates its business as one operating and one reportable segment.
The following summarizesHighlights for the operationalThird Quarter of Fiscal 2023, Compared to the Third Quarter of Fiscal 2022
•Total revenues are $277.6 million, a decrease of $9.2 million.
•Comparable restaurant revenue(1) decreased 3.4%.
•Comparable restaurant dine-in sales(2) increased 0.5%.
•Net loss is $8.2 million, a decrease of $4.5 million from a net loss of $12.7 million during the same period of 2022.
•Adjusted EBITDA(3) (a non-GAAP metric) is $6.8 million, a $2.9 million increase.
•Completed Sale-Leaseback transaction for nine restaurants, generating net proceeds of approximately $30.4 million and financial highlightsa gain, net of expenses of $14.9 million.
•Repaid $8.4 million of debt and repurchased $5.0 million of stock.
Highlights for the Year-to-Date Period of Fiscal 2023, Compared to the Year-to-Date Period of Fiscal 2022
•Total revenues are $994.0 million, an increase of $18.1 million.
•Comparable restaurant revenue(1) increased 2.9%.
•Comparable restaurant dine-in sales(2) increased 8.4%.
•Net loss is $7.5 million, a decrease of $26.7 million from a net loss of $34.2 million during the same period of 2022.
•Adjusted EBITDA(3) (a non-GAAP metric) is $58.3 million, a $14.5 million increase.
•Completed two Sale-Leaseback transactions for eighteen restaurants, generating net proceeds of $58.8 million and a gain, net of expenses of $29.4 million.
•Repaid $24.9 million of debt and repurchased $10.0 million of stock.
(1)     Comparable restaurant revenue represents revenue from Company-owned restaurants that have operated five full quarters as of the end of the period presented. For the twelve and forty weeks ended October 1, 2017,2023 there were 409 and our outlook408 comparable restaurants, respectively, out of the total 417 Company-owned restaurants.
(2)    Comparable restaurant dine-in sales are calculated based on the Company’s point-of-sale sales data, which does not include adjustments for loyalty breakage.
(3)    See below for a reconciliation of Adjusted EBITDA, a non-GAAP measure, to Net loss.
Restaurant Revenue, compared to the remainder of fiscalsame period in the prior year, 2017:
Financial performance.
is presented in the table below:
◦
(millions)
Restaurant Revenue for the twelve weeks ended October 2, 2022$282.4 
Increase/(decrease) in comparable restaurant revenue increased $7.2 million, or 2.5%, to $301.1 million(1)
(9.6)
Increase/(decrease) in non-comparable restaurant revenue0.3 
Total increase/(decrease)(9.3)
Restaurant Revenue for the twelve weeks ended October 1, 2017, as compared to the twelve weeks ended October 2, 2016, primarily due to a $9.7 million increase in revenue from newly opened restaurants; a $0.2 million, or 0.1%, increase in comparable restaurant revenue, which included a $0.4 million, or 0.2%, favorable foreign currency exchange impact related to our Canadian restaurants; and partially offset by a $2.7 million decrease from closed restaurants. For the forty weeks ended October 1, 2017, restaurant revenues increased $34.2 million or 3.4%, to $1.0 billion as compared to the forty weeks ended October 2, 2016, primarily due to a $45.2 million increase in revenue from newly opened and acquired restaurants, partially offset by a $9.6 million decrease from closed restaurants and a $1.4 million, or 0.2%, decrease in comparable restaurant revenue. We expect total revenues to grow between 6% and 8% in 2017, resulting from comparable revenue growth of flat to 0.5%, increased operating weeks in 2017 compared to 2016 associated with locations opened and acquired since the beginning of 2016, and a 53rd week in 2017.2023

$273.1 
◦
Restaurant operating costs, as a percentage of restaurant revenue, increased 120 basis points to 82.6% for the twelve weeks ended October 1, 2017, as compared to 81.4% for the twelve weeks ended October 2, 2016. The increase was due to higher labor costs, other operating costs, food and beverage costs, and occupancy costs, as a percentage of restaurant revenue. For the forty weeks ended October 1, 2017, restaurant operating costs increased 140 basis points to 80.5% compared to 79.1% for the forty weeks ended October 2, 2016. The increase was primarily driven by higher labor costs and other operating costs, as a percentage of restaurant revenue, partially offset by a decrease in occupancy costs as a percentage of restaurant revenue.
◦Net income was $2.7 million for the twelve weeks ended October 1, 2017 compared to a net loss of $1.3 million for the twelve weeks ended October 2, 2016. Diluted earnings per share were $0.21 for the twelve weeks ended October 1, 2017, as compared to diluted loss per share of $0.10 for the twelve weeks ended October 2, 2016. Excluding the impact of $0.48 per diluted share for asset impairment charges, net income per diluted share for the twelve weeks ended October 2, 2016 was $0.38. For the forty weeks ended October 1, 2017, net income was $21.2 million compared to $20.5 million for the forty weeks ended October 2, 2016. Diluted earnings per share were $1.63 for the forty weeks ended October 1, 2017, as compared to $1.50 for the forty weeks ended October 2, 2016. Excluding the impact of $0.08 per diluted share for asset impairment charges, net income per diluted share for the forty weeks ended October 1, 2017 was $1.71. Excluding the impact of $0.72 per diluted share for asset impairment and restaurant closure costs and $0.20 per diluted share related to litigation contingencies, net income per diluted share for the forty weeks ended October 2, 2016 was $2.42.
Marketing. Our Red Robin Royalty™ loyalty program operates
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Restaurant revenues and operating costs (GAAP measures), and restaurant level operating profit (a non-GAAP measure) for the period are detailed in all our U.S.the table below:
Twelve Weeks EndedForty Weeks Ended
October 1, 2023October 2, 2022Increase/
(Decrease)		October 1, 2023October 2, 2022Increase/
(Decrease)
Restaurant revenue (millions)$273.1 $282.4 (3.3)%$973.3 $951.6 2.3 %
Restaurant operating costs:
Cost of sales65.1 70.6 (7.8)%236.2 234.3 0.8 %
Labor103.7 100.5 3.2 %358.8 340.3 5.5 %
Other operating50.4 52.9 (4.7)%174.2 172.7 0.9 %
Occupancy23.5 22.8 3.0 %76.8 76.4 0.5 %
Total Restaurant Operating Costs$242.7 $246.8 (6.3)%$846.1 $823.7 7.7 %
Restaurant Level Operating Profit(1)
$30.4 $35.6 (14.6)%$127.2 $127.9 (0.5)%
(1) Restaurant Level Operating Profit is a non-GAAP measure. See below for a reconciliation of Restaurant Level Operating Profit to Income from Operations and Canadian Company-owned Red Robin restaurantsIncome from Operations as a percentage of total revenues.
Restaurant revenues and has been rolled outoperating costs (GAAP measures), and restaurant level operating profit(1) (a non-GAAP measure) as a percentage of restaurant revenue for the period are detailed in the table below:
Twelve Weeks EndedForty Weeks Ended
October 1, 2023October 2, 2022Increase/
(Decrease)		October 1, 2023October 2, 2022Increase/(Decrease)
Restaurant revenue (millions)$273.1 $282.4 (3.3)%$973.3 $951.6 2.3 %
Restaurant operating costs:(Percentage of Restaurant Revenue)(Basis
Points)		(Percentage of Restaurant Revenue)(Basis
Points)
Cost of sales23.8 %25.0 %(120)24.3 %24.6 %(30)
Labor38.0 35.6 240 36.9 35.8 110 
Other operating18.4 18.7 (30)17.9 18.2 (30)
Occupancy8.6 8.1 50 7.9 8.0 (10)
Total Restaurant Operating Costs88.8 %87.4 %140 86.8 %86.6 %20 
Restaurant Level Operating Profit(1)
11.1 %12.6 %(150)13.1 %13.4 %(30)
Certain percentage and basis point amounts in the table above do not total due to mostrounding as well as restaurant operating costs being expressed as a percentage of restaurant revenue and not total revenues.
(1) Restaurant Level Operating Profit is a non-GAAP measure. See below for a reconciliation of Restaurant Level Operating Profit to Income from Operations and Income from Operations as a percentage of total revenues.









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The following table summarizes net loss, loss per diluted share (GAAP measures), and adjusted loss per diluted share (a non-GAAP measure) for the twelve and forty weeks ended October 1, 2023 and October 2, 2022:

Twelve Weeks EndedForty Weeks Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Net loss as reported$(8,161)$(12,650)$(7,496)$(34,198)
Loss per share - diluted:
Net loss as reported$(0.52)$(0.80)$(0.47)$(2.16)
Gain on sale leaseback, net of expenses(0.94)— (1.84)— 
Gain on sale of restaurant property— (0.58)— (0.58)
Litigation contingencies0.23 0.01 0.57 — 
Restaurant closure costs, net(0.01)(0.10)0.10 0.02 
Severance and executive transition0.02 0.11 0.20 0.12 
Asset impairment0.30 0.14 0.45 0.82 
Other(1)
0.02 — 0.09 — 
Closed corporate office costs, net of sublease income— 0.02 0.02 0.02 
Other financing costs(2)
— 0.06 — 0.09 
COVID-19 related charges— 0.01 — 0.03 
Change in estimate, gift card breakage(3)
— — — (0.33)
Write-off of unamortized debt issuance costs(4)
— — — 0.11 
Income tax expense0.10 0.09 0.11 (0.08)
Adjusted loss per share - diluted$(0.79)$(1.04)$(0.78)$(1.94)
Weighted average shares outstanding:
Basic15,799 15,892 15,949 15,816 
Diluted(5)
15,799 15,892 15,949 15,816 
(1)    Other primarily includes non-cash charges related to terminated capital projects and disposals, and certain insurance claim proceeds.
(2)    Other financing costs includes legal and other charges related to the refinancing of our franchised restaurants. We engagePrior Credit Agreement (as defined below) in the first quarter of 2022.
(3)    During the forty weeks ended October 2, 2022, the Company re-evaluated the estimated redemption pattern related to gift cards. The impact comprises $5.9 million included in Franchise royalties, fees, and other revenue partially offset by $0.6 million in gift card commission costs included in Selling on the Condensed Consolidated Statements of Operations.
(4)    Write-off of unamortized debt issuance costs related to the remaining unamortized debt issuance costs related to our guests through Red Robin RoyaltyPrior Credit Agreement with offers designed to increase frequencythe completion of visits as a key partthe refinancing of our overall marketing strategy. We also inform enrolled guests early about new menu items to generate awareness and trialPrior Credit Agreement in the first quarter of these offerings. Our current marketing strategy comprises a concentrated, rather than continuous, media buying approach which is focused on generating significant reach and frequency during on-air advertising periods. Through the remainder of 2017, we plan to communicate a clear message of value, innovation, and fun across a variety of advertising and social media. We have also begun, and plan to continue, to deploy increased marketing support for our off-premise dining initiatives, including generating guest awareness of our online ordering, to-go, and catering opportunities.
fiscal year 2022.
Restaurant Development. During(5)    For the twelve weeks ended October 1, 2017, we opened seven Red Robin2023, the impact of dilutive shares is excluded in the calculations due to the net loss position for the quarter. For diluted shares reported on the Condensed Consolidated Statement of Operations, the impact of dilutive shares is excluded due to the reported net loss for the quarter.
We believe the non-GAAP measure of adjusted loss per share-diluted gives the reader additional insight into the ongoing operational results of the Company, and it is intended to supplement the presentation of the Company's financial results in accordance with GAAP. Adjusted loss per share-diluted excludes the effects of change in estimate, gift card breakage, asset impairment, litigation contingencies, the write-off of unamortized debt issuance costs, restaurant closure costs, other financing costs, gain on sale leaseback, net of expenses, closed corporate office costs, net of sublease income, COVID-19 related charges, severance and executive transition costs, and income tax effects and other. We have revised our definition of adjusted loss per diluted share to exclude gain on sale leaseback, net of expenses and other. We did not revise the prior year’s adjusted loss per share-diluted because there were no other charges similar in nature to these costs. Other companies may define adjusted net loss per share-diluted differently, and as a result our measure of adjusted loss per share-diluted may not be directly comparable to those of other companies. Adjusted loss per share-diluted should be considered in addition to, and not as a substitute for, net loss as reported in accordance with U.S. GAAP as a measure of performance.

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The following table summarizes Net loss (a GAAP measure), and EBITDA and Adjusted EBITDA (non-GAAP measures) for the twelve and forty weeks ended October 1, 2023 and October 2, 2022:
Twelve Weeks EndedForty Weeks Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Net loss as reported$(8,161)$(12,650)$(7,496)$(34,198)
Interest expense, net5,885 4,419 19,766 15,137 
Income tax provision (benefit)278 (43)453 453 
Depreciation and amortization14,672 17,368 52,253 58,924 
EBITDA12,674 9,094 64,976 40,316 
Change in accounting estimate, gift card breakage— — — (5,246)
Other charges (gains), net:
Gain on sale leaseback, net of expenses(14,883)— (29,413)— 
Gain on sale of restaurant property— (9,204)— (9,204)
Litigation contingencies3,600 133 9,140 47 
Restaurant closure costs, net(91)(1,570)1,546 309 
Severance and executive transition341 1,825 3,195 1,954 
Asset impairment4,800 2,187 7,187 13,048 
Other277 — 1,366 — 
Closed corporate office costs, net of sublease income78 267 253 267 
Other financing costs— 1,022 — 1,392 
COVID-19 related charges— 123 — 423 
Adjusted EBITDA$6,796 $3,877 $58,250 $43,711 
We believe the non-GAAP measures of EBITDA and adjusted EBITDA give the reader additional insight into the ongoing operational results of the Company, and it is intended to supplement the presentation of the Company's financial results in accordance with GAAP. We define EBITDA as net loss before interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA further excludes the effects of change in accounting estimate - gift card breakage, asset impairment, litigation contingencies, restaurant closure costs, net, other financing costs, COVID-19 related charges, severance and executive transition costs, closed corporate office, net of sublease income, and gain of sale leaseback, net of expenses, and other. We have revised our definition of adjusted EBITDA to exclude gain of sale leaseback, net of expenses and other. We did not revise prior years’ adjusted EBITDA because there were no other charges similar in nature to these costs. Other companies may define EBITDA and adjusted EBITDA differently, and as a result our measure of EBITDA and adjusted EBITDA may not be directly comparable to those of other companies. EBITDA and adjusted EBITDA should be considered in addition to, and not as a substitute for, net loss as reported in accordance with U.S. GAAP as a measure of performance.














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The following table summarizes Income from Operations (a GAAP measure), and Restaurant Level Operating Profit (a non-GAAP measure) for the twelve and forty weeks ended October 1, 2023 and October 2, 2022:
Twelve Weeks EndedForty Weeks Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Income (loss) from operations$(1,938)(0.7)%$(8,103)(2.8)%$12,498 1.3%$(17,594)(1.8)%
Less:
Franchise royalties, fees and other revenue4,427 1.6%4,390 1.5%20,713 2.1%24,302 2.5%
Add:
Other charges (gains), net(5,878)(2.1)(5,217)(1.8)(6,726)(0.7)8,236 0.8
Pre-opening costs— —217 0.1586 0.1514 0.1
Selling8,771 3.214,194 4.922,692 2.337,503 3.8
General and administrative expenses19,190 6.921,498 7.566,656 6.764,665 6.6
Depreciation and amortization14,672 5.317,368 6.152,253 5.358,924 6.0
Restaurant level operating profit$30,390 $35,567 $127,246 $127,946 
Income (loss) from operations as a percentage of total revenues(0.7)%(2.8)%1.3%(1.8)%
Restaurant level operating profit margin (as a percentage of restaurant revenue)11.1%12.6%13.1%13.4%
The Company believes restaurant level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant level operating efficiency and performance. The Company defines restaurant level operating profit to be income from operations less franchise royalties, fees and other revenue, plus other charges (gains), net, pre-opening costs, selling costs, general and administrative expenses, and depreciation and amortization. The measure includes restaurant level occupancy costs that include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance, and other property costs, but excludes depreciation and amortization expense, substantially all of which is related to restaurant level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. We planThe measure also excludes selling costs and general and administrative expenses, and therefore excludes costs associated with selling, general, and administrative functions, and pre-opening costs. The Company excludes Other charges (gains), net because these costs are not related to open two Red Robin restaurants during the remainderongoing operations of 2017.its restaurants. Restaurant level operating profit is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to income from operations or net income (loss) as indicators of financial performance. Restaurant level operating profit as presented may not be comparable to other similarly titled measures of other companies in the Company's industry.









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Restaurant Data
The following table details restaurant unit data for our Company-owned and franchised locations for the periods indicated:
Twelve Weeks EndedForty Weeks Ended
October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Company-owned:   
Beginning of period418 426 414 430 
Opened during the period— — 1 — 
Acquired from franchisees— — 5 — 
Closed during the period(1)(2)(3)(6)
End of period417 424 417 424 
Franchised:  
Beginning of period91 102 97 101 
Opened during the period— — 1 
Closed during the period— (1)(1)(1)
Sold to Company during the period— (5)
End of period91 101 91 101 
Total number of restaurants508 525 508 525 
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  Twelve Weeks Ended Forty Weeks Ended
  October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016
Company-owned:        
Beginning of period 472
 460
 465
 439
Opened during the period 7
 11
 16
 21
Acquired from franchisees —
 —
 —
 13
Closed during the period —
 (9) (2) (11)
End of period 479
 462
 479
 462
Franchised:        
Beginning of period 86
 86
 86
 99
Opened during the period —
 —
 1
 —
Sold or closed during the period —
 —
 (1) (13)
End of period 86
 86
 86
 86
Total number of restaurants 565
 548
 565
 548
The following table presents total Company-owned and franchised restaurants by state or province as of October 1, 2023:

 Company-Owned RestaurantsFranchised Restaurants
State:
Arkansas21
Alaska3
Alabama4
Arizona181
California57
Colorado22
Connecticut3
Delaware5
Florida17
Georgia6
Iowa5
Idaho8
Illinois20
Indiana11
Kansas5
Kentucky4
Louisiana1
Massachusetts5
Maryland12
Maine2
Michigan19
Minnesota4
Missouri83
Montana1
North Carolina17
Nebraska4
New Hampshire3
New Jersey111
New Mexico3
Nevada6
New York14
Ohio172
Oklahoma5
Oregon155
Pennsylvania1120
Rhode Island1
South Carolina4
South Dakota1
Tennessee9
Texas189
Utah15
Virginia20
Washington37
Wisconsin11
Province:
British Columbia11
Total41791



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Results of Operations
Operating results for each fiscal period presented below are expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenue.
This information has been prepared on a basis consistent with our audited 20162022 annual financial statements, and, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. Our operating results may fluctuate significantly as a result of a variety of factors, and operating results for any period presented are not necessarily indicative of results for a full fiscal year.

Twelve Weeks EndedForty Weeks Ended
 October 1, 2023October 2, 2022October 1, 2023October 2, 2022
Revenues: 
Restaurant revenue98.4 %98.5 %97.9 %97.5 %
Franchise and other revenues1.6 1.5 2.1 2.5 
Total revenues100.0 100.0 100.0 100.0 
Costs and expenses: 
Restaurant operating costs (excluding depreciation and amortization shown separately below): 
Cost of sales23.8 25.0 24.3 24.6 
Labor38.0 35.6 36.9 35.8 
Other operating18.4 18.7 17.9 18.2 
Occupancy8.6 8.1 7.9 8.0 
Total restaurant operating costs88.8 87.4 86.8 86.6 
Depreciation and amortization5.3 6.1 5.3 6.0 
Selling, general, and administrative expenses10.1 12.4 9.0 10.5 
Pre-opening and acquisition costs— 0.1 0.1 0.1 
Other charges (gains), net(2.1)(1.8)(0.7)0.8 
Income (loss) from operations(0.7)(2.8)1.3 (1.8)
Interest expense, net and other2.1 1.6 2.0 1.7 
Loss before income taxes(2.8)(4.4)(0.7)(3.5)
Income tax provision (benefit)0.1 — — — 
Net loss(2.9)%(4.4)%(0.8)%(3.5)%
  Twelve Weeks Ended Forty Weeks Ended
  October 1, 2017 October 2, 2016 October 1, 2017 October 2, 2016
Revenues:        
Restaurant revenue 99.0 % 98.8 % 98.9% 98.8%
Franchise royalties, fees, and other revenues 1.0
 1.2
 1.1
 1.2
Total revenues 100.0
 100.0
 100.0
 100.0
         
Costs and expenses:        
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):        
Cost of sales 23.8
 23.6
 23.4
 23.4
Labor 35.3
 34.8
 35.1
 34.1
Other operating 14.9
 14.5
 13.9
 13.3
Occupancy 8.6
 8.5
 8.2
 8.3
Total restaurant operating costs 82.6
 81.4
 80.5
 79.1
Depreciation and amortization 7.0
 7.2
 6.8
 6.4
Selling, general, and administrative 9.5
 9.7
 10.1
 10.3
Pre-opening and acquisition costs 0.5
 0.8
 0.5
 0.7
Other charges —
 3.1
 0.2
 1.8
Income (loss) from operations 1.3
 (1.4) 3.0
 2.6
         
Interest expense, net and other 0.7
 0.6
 0.7
 0.4
Income (loss) before income taxes 0.7
 (2.0) 2.3
 2.2
Provision (benefit) for income taxes (0.2) (1.6) 0.2
 0.2
Net income (loss) 0.9 % (0.4)% 2.0% 2.0%

Certain percentage amounts in the table above do not total due to rounding as well as restaurant operating costs being expressed as a percentage of restaurant revenue and not total revenues.

Revenues
Twelve Weeks EndedForty Weeks Ended
(Revenues in thousands)October 1, 2023October 2, 2022Percent ChangeOctober 1, 2023October 2, 2022Percent Change
Restaurant revenue$273,133 $282,415 (3.3)%$973,307 $951,633 2.3 %
Franchise and other revenues4,427 4,390 0.8 %20,713 24,302 (14.8)%
Total revenues$277,560 $286,805 (3.2)%$994,020 $975,935 1.9 %
Average weekly net sales volumes in Company-owned restaurants$54,572 $55,469 (1.6)%$58,446 $55,927 4.5 %
Total operating weeks5,005 5,092 (1.7)%16,653 17,017 (2.1)%
22
  Twelve Weeks Ended Forty Weeks Ended
(Revenues in thousands) October 1, 2017 October 2, 2016 Percent Change October 1, 2017 October 2, 2016 Percent Change
Restaurant revenue $301,100
 $293,858
 2.5 % $1,026,902
 $992,745
 3.4 %
Franchise royalties, fees, and other revenue 3,148
 3,449
 (8.7)% 11,674
 12,237
 (4.6)%
Total revenues $304,248
 $297,307
 2.3 % $1,038,576
 $1,004,982
 3.3 %
Average weekly sales volumes in Company-owned restaurants(1)
 $52,955
 $52,439
 1.0 % $54,614
 $54,555
 0.1 %
Total operating weeks 5,686
 5,613
 1.3 % 18,803
 18,205
 3.3 %
Restaurant revenue per square foot $101
 $101
 0.0 % $348
 $352
 (1.1)%
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(1)Calculated using constant currency rates. Using historical currency rates, the average weekly sales per unit for the twelve and forty weeks ended October 2, 2016 for Company-owned restaurants was $52,362 and $54,534. The Company calculates non-GAAP constant currency average weekly sales per unit by translating prior year local currency average weekly sales per unit to U.S. dollars based on current quarter average exchange rates. The Company considers non-GAAP constant currency average weekly sales per unit to be a useful metric to investors and management as they facilitate a more useful comparison of current performance to historical performance.
Restaurant revenue for the twelve weeks ended October 1, 2017,2023, which comprises primarily food and beverage sales, increased $7.2decreased $9.3 million, or 2.5% as compared to third quarter 2016. The increase was due to a $9.7 million increase in revenue from newly opened restaurants and a $0.2 million or 0.1% increase in comparable restaurant revenue, partially offset by a $2.7 million decrease from closed restaurants. The comparable restaurant revenue increase was driven by a 0.2% favorable foreign exchange impact related to our Canadian restaurants, partially offset by a 0.1% decrease in average guest check. The decrease in average guest check resulted from a 1.6% decrease in menu mix offset by a 1.5% increase in pricing.
Restaurant revenue for the forty weeks ended October 1, 2017 increased by $34.2 million or 3.4%3.3%, as compared to the forty weeks ended October 2, 2016. The increase wasthird quarter of 2022. Restaurant revenue decreased primarily due to a $45.2 million increase in revenue from newly opened and acquired restaurants, partially offset by a $9.6 million decrease from closed restaurants and a $1.4 million or 0.2%3.4% decrease in comparable restaurant revenue. The comparable restaurant revenue decrease was driven by a 0.1%10.4% decrease in guest counts andGuest count, partially offset by a 0.1% decrease7.0% increase in average guestGuest check. The decrease in Guest count is due in part, to the Company's decision not to repeat the deep discount "$10 Meal Deal" promotion that was offered in the third quarter of fiscal 2022, and the decision to discontinue offering virtual brands. These decisions are expected to reduce complexity and support execution of an enhanced Red Robin guest experience, that results in increased guest counts and profitability in time. The increase in average guestGuest check comprisedresulted from a 1.7%7.7% increase in menu prices and a 2.1% decrease in discounts, partially offset by a 2.8% decrease from menu mix. The decrease in menu mix was primarily driven by Guests shifting visits from third party delivery platforms with elevated menu prices, to dine in visits at standard menu prices, and the removal of low Guest preference, but higher priced burger options. Dine-in sales comprised 75.6% of total food and beverage sales during the third quarter of 2023, as compared to 72.4% in the same period in 2022.
Restaurant revenue for the forty weeks ended October 1, 2023, increased $21.7 million, or 2.3%, as compared to the forty weeks ended October 2, 2022. The increase was due to a $26.4 million, or 2.9%, increase in comparable restaurant revenue, partially offset by a 1.6%$4.8 million decrease at non-comparable restaurants, including the impact of restaurant closures. The comparable restaurant revenue increase was driven by a 7.5% increase in pricing.average Guest check, partially offset by a 4.6% decrease in Guest count. The increase in average Guest check resulted from a 7.9% increase in menu pricing and a 0.9% decrease in discounts, partially offset by a 1.3% decrease in menu mix. The decrease in menu mix was primarily driven by Guests shifting visits from third party delivery platforms with elevated menu prices, to dine in visits at standard menu prices, and the removal of low Guest preference, but higher priced burger options. Dine-in sales comprised 74.8% of total food and beverage sales during the forty weeks ended October 1, 2023, as compared to 70.9% in the same period in 2022.
Average weekly net sales volumes represent the total restaurant revenue for all Company-owned Red Robin restaurants for each time period presented, divided by the number of operating weeks in the period. Comparable restaurant revenues include those restaurants that are in the comparable base athave operated five full quarters as of the end of eachthe period presented. New restaurants are restaurants that are open but not included in the comparable category because they have not operated for five full quarters. Fluctuations in average weekly net sales volumes for Company-owned restaurants reflect the effect of comparable restaurant revenue changes as well as the performance of newreopened and acquirednew restaurants during the period and the average square footage of our restaurants.period.
Franchise royalties, fees, and other revenue increased by less than $0.1 million, or 0.8%, for the twelve weeks ended October 1, 2023 compared to the twelve weeks ended October 2, 2022, and decreased $0.3$3.6 million, or 14.8% for the forty weeks ended October 1, 2023 compared to the same period in 2022. Franchise revenue declined primarily due to a reduction in the percentage of sales each franchisee is required to contribute to support Selling activities. This reduction results from an increased focus on local restaurant marketing and reduced national and/or mass media channels pursuant to our North Star strategy. The percentage of sales each franchisee is required to contribute could change in the future, as we expect to align contributions with spending levels, subject to compliance with the respective franchise agreement. Franchise restaurants reported a decrease of 2.3% comparable restaurant revenue for the twelve weeks ended October 1, 2023 compared to the same period in 2022, and an increase of 2.3% for the forty weeks ended October 1, 2023 compared to the same period in 2022. Other revenue increased $0.9 million for the twelve weeks ended October 1, 20172023 compared to the twelve weeks ended October 2, 2016,2022 primarily due to a decrease in licensing royalties. Our franchisees reported comparable restaurant revenue decreased 3.0% forhigher gift card breakage and the twelve weeks ended October 1, 2017 comparedreclassification of the year-to-date closed corporate office sublease income to other charges (gains) during the twelve weeks ended October 2, 2016.
For the forty weeks ended October 1, 2017, franchise royalties, fees, and other2022. Other revenue decreased $0.6$0.9 million primarily due to the loss of royalties from 13 franchised restaurants that we acquired during first quarter 2016. Our franchisees reported that comparable restaurant revenue decreased 2.8% for the forty weeks ended October 1, 20172023 compared to the forty weeks ended October 2, 2016.same period in 2022 primarily due to the change in estimate over gift card breakage in 2022.
Cost of Sales
 Twelve Weeks Ended Forty Weeks EndedTwelve Weeks EndedForty Weeks Ended
(In thousands, except percentages) October 1, 2017 October 2, 2016 Percent Change October 1, 2017 October 2, 2016 Percent Change(In thousands, except percentages)October 1, 2023October 2, 2022Percent ChangeOctober 1, 2023October 2, 2022Percent Change
Cost of sales $71,642
 $69,447
 3.2% $240,152
 $232,603
 3.2%Cost of sales$65,128 $70,640 (7.8)%$236,171 $234,283 0.8 %
As a percent of restaurant revenue 23.8% 23.6% 0.2% 23.4% 23.4% —%As a percent of restaurant revenue23.8 %25.0 %(1.2)%24.3 %24.6 %(0.3)%
Cost of sales, which comprises food and beverage costs, is variable and generally fluctuates with sales volume. Cost of sales as a percentage of restaurant revenue increased 20decreased 120 and 30 basis points for the twelve weeks ended October 1, 2017 as compared

to the same period in 2016, primarily driven by higher ground beef prices, partially offset by lower poultry prices. For theand forty weeks ended October 1, 2017, cost of sales2023 as a percentage of revenue were flat compared to the forty weeks ended October 2, 2016 as higher ground beef pricessame periods in 2022. The decreases were primarily driven by menu price increases and implementation of various cost savings initiatives, partially offset by lower poultry prices.
Laborcommodity inflation.
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  Twelve Weeks Ended Forty Weeks Ended
(In thousands, except percentages) October 1, 2017 October 2, 2016 Percent Change October 1, 2017 October 2, 2016 Percent Change
Labor $106,205
 $102,294
 3.8% $360,146
 $338,125
 6.5%
As a percent of restaurant revenue 35.3% 34.8% 0.5% 35.1% 34.1% 1.0%
Labor
Twelve Weeks EndedForty Weeks Ended
(In thousands, except percentages)October 1, 2023October 2, 2022Percent ChangeOctober 1, 2023October 2, 2022Percent Change
Labor$103,741 $100,522 3.2 %$358,841 $340,273 5.5 %
As a percent of restaurant revenue38.0 %35.6 %2.4 %36.9 %35.8 %1.1 %
Labor costs include restaurant-levelrestaurant level hourly wages and management salaries as well as related taxes and benefits. For the twelve and forty weeks ended October 1, 2017,2023, labor as a percentage of restaurant revenue increased 50240 and 110 basis points compared to the same period in 2016. For the forty weeks ended October 1, 2017, labor as a percentage of restaurant revenue increased 100 basis points as compared to the same period in 2016.2022. The increases wereincrease was primarily driven by increasesinvestments in minimum wages in certain stateshourly and localitiesmanagement labor, payroll taxes, and restaurant manager bonuses,incentive compensation, partially offset by decreasesgroup insurance. In 2023, we made investments in training, projectmanagement and hourly labor expenses related to the Company’s kitchen display system rollout, and duesupport an enhanced Guest experience, with an objective to labor model changes.drive increases in guest traffic count over time, resulting in an increase in restaurant profitability.
Other Operating
  Twelve Weeks Ended Forty Weeks Ended
(In thousands, except percentages) October 1, 2017 October 2, 2016 Percent Change October 1, 2017 October 2, 2016 Percent Change
Other operating $44,846
 $42,463
 5.6% $142,238
 $132,446
 7.4%
As a percent of restaurant revenue 14.9% 14.5% 0.4% 13.9% 13.3% 0.6%
Twelve Weeks EndedForty Weeks Ended
(In thousands, except percentages)October 1, 2023October 2, 2022Percent ChangeOctober 1, 2023October 2, 2022Percent Change
Other operating$50,351 $52,858 (4.7)%$174,243 $172,725 0.9 %
As a percent of restaurant revenue18.4 %18.7 %(0.3)%17.9 %18.2 %(0.3)%
Other operating costs include costs such as equipment repairs and maintenance costs, restaurant supplies, utilities, restaurant technology, local marketing, and other miscellaneous costs. For the twelve weeks ended October 1, 2017,2023, other operating costs as a percentage of restaurant revenue increased 40decreased 30 basis points as compared to the same period in 2016,2022. The decrease was primarily due to higherdriven by reduced third party commission expenses associated with lower off premise mix and lower commission rates, lower supplies costs of local marketing, restaurant technology,driven by negotiated savings, and third-party delivery fees,lower contract janitorial expenses, partially offset by a decrease in equipmenthigher repairs and maintenance and utilities. costs.
For the forty weeks ended October 1, 2017,2023, other operating costs as a percentage of restaurant revenue increased 60decreased 30 basis points as compared to the same period in 2016,2022. The decrease was primarily due to higher costs of local marketing, third-party delivery fees,driven by reduced third party commission expenses associated with lower off premise mix and restaurant technology,lower commission rates, lower contract janitorial expenses which were partially offset by a decrease in equipmenthigher repairs and maintenance.maintenance costs.
Occupancy
  Twelve Weeks Ended Forty Weeks Ended
(In thousands, except percentages) October 1, 2017 October 2, 2016 Percent Change October 1, 2017 October 2, 2016 Percent Change
Occupancy $25,868
 $25,121
 3.0% $84,127
 $82,524
 1.9 %
As a percent of restaurant revenue 8.6% 8.5% 0.1% 8.2% 8.3% (0.1)%
Twelve Weeks EndedForty Weeks Ended
(In thousands, except percentages)October 1, 2023October 2, 2022Percent ChangeOctober 1, 2023October 2, 2022Percent Change
Occupancy$23,523 $22,828 3.0 %$76,806 $76,406 0.5 %
As a percent of restaurant revenue8.6 %8.1 %0.5 %7.9 %8.0 %(0.1)%
Occupancy costs include fixed rents, property taxes, common area maintenance charges, general liability insurance, contingent rents, and other property costs. Occupancy costs incurred prior to opening our new restaurants are included in pre-opening costs. For the twelve weeks ended October 1, 2017, occupancy costs as a percentage of restaurant revenue increased 1050 basis points overfor the prior year, primarilytwelve weeks ended October 1, 2023 compared to the same period in 2022. The increase is due to the impact of an increase in real estate taxes. fixed rents, deleveraging from reduced restaurant revenue, and the sale-leaseback of 18 restaurant properties in 2023.
Our fixed rents for the twelve weeks ended October 1, 20172023 and October 2, 20162022 were $17.4$16.6 million and $17.0$16.1 million, an increase of $0.4$0.5 million, primarily due to 17increased expenses related to the sale-leaseback of 18 locations and the acquisition of five restaurants from a franchisee, partially offset by net additional locations opened since third quarter 2016.Company-owned restaurant closures.
For the forty weeks ended October 1, 2017,2023, occupancy costs as a percentage of restaurant revenue decreased 10 basis points overcompared to the prior year,same period in 2022 primarily due to a decreasethe sale-leaseback of 18 restaurant properties in general liability insurance costs. 2023.
Our fixed rents for the forty weeks ended October 1, 20172023 and October 2, 20162022 were $57.1$53.6 million and $55.0$53.5 million, an increase of $2.1$0.1 million, due to 40increased expenses related to the sale-leaseback of 18 locations and the acquisition of five restaurants from a franchisee, mostly offset by reduced expenses related to net additional locations opened and acquired since fourth quarter 2015.Company-owned restaurant closures.





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Depreciation and Amortization
 Twelve Weeks Ended Forty Weeks EndedTwelve Weeks EndedForty Weeks Ended
(In thousands, except percentages) October 1, 2017 October 2, 2016 Percent Change October 1, 2017 October 2, 2016 Percent Change(In thousands, except percentages)October 1, 2023October 2, 2022Percent ChangeOctober 1, 2023October 2, 2022Percent Change
Depreciation and amortization $21,258
 $21,468
 (1.0)% $70,475
 $64,578
 9.1%Depreciation and amortization$14,672 $17,368 (15.5)%$52,253 $58,924 (11.3)%
As a percent of total revenues 7.0% 7.2% (0.2)% 6.8% 6.4% 0.4%As a percent of total revenues5.3 %6.1 %(0.8)%5.3 %6.0 %(0.7)%
Depreciation and amortization includesinclude depreciation on capital expenditures for restaurants and corporate assets as well as amortization of acquiredreacquired franchise rights, leasehold interests, and certain liquor licenses. For the twelve weeks ended October 1, 2017, depreciation and amortization expense decreased $0.2 million or 1.0% over the prior year. The decrease was primarily related to higher amortization of certain licenses for Enterprise Resource Planning (“ERP”) software in third quarter 2016 prior to the Company’s migration to a cloud-based ERP system, partially offset by an increase related to new restaurants opened, and restaurants remodeled under our brand transformation initiative, since third quarter 2016.
For the forty weeks ended October 1, 2017,2023, depreciation and amortization expense increased $5.9 million or 9.1% over the prior year. The increase was primarily related to new restaurants opened,as a percentage of revenue decreased 80 and restaurants remodeled under our brand transformation initiative, since fourth quarter 2015, partially offset by higher amortization of certain licenses for ERP software in third quarter 2016 prior70 basis points compared to the Company’s migrationsame period in 2022 primarily due to a cloud-based ERP system.asset impairments and disposals.
Selling, General, and Administrative
  Twelve Weeks Ended Forty Weeks Ended
(In thousands, except percentages) October 1, 2017 October 2, 2016 Percent Change October 1, 2017 October 2, 2016 Percent Change
Selling, general, and administrative $28,870
 $29,046
 (0.6)% $104,239
 $103,453
 0.8 %
As a percent of total revenues 9.5% 9.7% (0.2)% 10.1% 10.3% (0.2)%
Twelve Weeks EndedForty Weeks Ended
(In thousands, except percentages)October 1, 2023October 2, 2022Percent ChangeOctober 1, 2023October 2, 2022Percent Change
Selling, general, and administrative$27,961 $35,692 (21.7)%$89,348 $102,168 (12.5)%
As a percent of total revenues10.1 %12.4 %(2.3)%9.0 %10.5 %(1.5)%
Selling, general, and administrative costs include all corporate and administrative functions. Components of this category include corporate,marketing and advertising costs; restaurant support center, regional, and franchise support salaries and benefits; marketing and advertising costs; travel; professional and consulting fees; corporate information systems; legal expenses; office rent; training; and board of directorsdirectors' expenses.
Selling, general,General and administrative costs in the twelve weeks ended October 1, 20172023 decreased $0.2$2.3 million, or 0.6%10.7%, as compared to the same period in 2016.2022. The decrease was primarily due todriven by a decrease in salaries and benefitsstock compensation due to a reduction in force and professional services costs. Selling, general,executive transition, and decreased travel due to holding a 2022 leadership conference and no leadership conference in 2023, partially offset by higher incentive compensation and lower capitalized wages due to fewer eligible capital projects.
General and administrative costs in the forty weeks ended October 1, 20172023 increased $0.8$2.0 million, or 0.8%3.1%, as compared to the same period in 2016.2022. The increase was primarily driven by higher incentive compensation, increased travel, and lower capitalized costs due to an increase in incentive compensation, selling expenses, and project costs,fewer eligible capital projects, partially offset by a decrease in salarieswages and benefitsstock compensation due to the reduction in force and travel costs.executive transition.
Selling costs in the twelve and forty weeks ended October 1, 2023 decreased $5.4 million, or 38.2%, and $14.8 million, or 39.5%, as compared to the same periods in 2022. The decrease was primarily driven by decreased marketing spend in internet and local media.
Pre-opening and Acquisition Costs
Twelve Weeks EndedForty Weeks Ended
(In thousands, except percentages)October 1, 2023October 2, 2022Percent ChangeOctober 1, 2023October 2, 2022Percent Change
Pre-opening costs$— $217 (100.0)%$586 $514 14.0 %
As a percent of total revenues— %0.1 %(0.1)%0.1 %0.1 %— %
  Twelve Weeks Ended Forty Weeks Ended
(In thousands, except percentages) October 1, 2017 October 2, 2016 Percent Change October 1, 2017 October 2, 2016 Percent Change
Pre-opening and acquisition costs $1,503
 $2,382
 (36.9)% $4,735
 $6,992
 (32.3)%
As a percent of total revenues 0.5% 0.8% (0.3)% 0.5% 0.7% (0.2)%
Pre-opening costs, which are expensed as incurred, comprise the costs ofrelated to preparing restaurants to introduce Donatos® and other initiatives, as well as direct costs, including labor, hiring,occupancy, training, and trainingmarketing, incurred related to opening new restaurants and hiring the initial work force for our new restaurants; occupancy costs incurred prior to opening; travel expenses for our training teams; supply costs; the cost of food and beverages used in training; licenses and marketing; and other direct costs related to the opening of new restaurants.force. Our pre-opening costs fluctuate from period to period, depending upon, but not limited to, the number of restaurants where Donatos® has been introduced, the number of restaurant openings, the size of the restaurants being opened, and the location of the restaurants. Pre-opening costs for any given quarter will typically include expenses associated with restaurants opened during the quarter as well as expenses related to restaurants opening in subsequent quarters.
Pre-opening and acquisition costs decreased $0.9 million forFor the twelve weeks ended October 1, 2017, primarily2023, pre-opening costs decreased by $0.2 million due to fewerno new restaurant openings during the twelve weeks ended October 1, 2017 as compared to the same period in 2016.or rollouts of Donatos®. Pre-opening and acquisition costs decreased $2.3increased by $0.1 million for the forty weeks ended October 1, 2017, primarily due to fewer restaurants opened during the forty weeks ended October 1, 2017 as compared2023 related to one additional new restaurant opening in Glendale, AZ partially offset by the same period in 2016 and $0.7 million in acquisition costs incurred during first quarter 2016.rollout of 25 less Donatos® locations.

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Interest Expense, Net and Other
Interest expense, net and other was $2.0$5.9 million for the twelve weeks ended October 1, 2017, an2023 and $4.6 million for the twelve weeks ended October 2, 2022. Interest expense for the twelve weeks ended October 1, 2023 and October 2, 2022 was $6.1 million and $4.5 million, respectively. The $1.6 million increase of $0.4was primarily due to a higher weighted average interest rate. Our weighted average interest rate for the twelve weeks ended October 1, 2023 and October 2, 2022 was 13.4% and 9.7%, respectively. Lower average outstanding debt, which decreased $5.0 million or 26.1%, fromcompared to the same period in 2016. The increase was primarily related to increased interest rates on our revolving line. 2022, also contributed.
Interest expense, net and other was $7.5$19.5 million for the forty weeks ended October 1, 2017,2023 and $16.2 million for the forty weeks ended October 2, 2022, an increase of $2.7$3.4 million, or 57.7%, from21.0%. Interest expense for the same period in 2016.forty weeks ended October 1, 2023 and October 2, 2022 was $20.4 million and $15.8 million, respectively. The $4.5 million increase was primarily related to increased interest rates on our revolving line and a higher weighted average interest rate, higher average outstanding debt, balance.which increased $5.0 million compared to the same period in 2022, and the write off of approximately $1.7 million of deferred financing charges related to the Company's Prior Credit Facility upon the execution of the Credit Agreement (as defined below) on March 4, 2022. Our weighted average interest rate on our credit facility debt was 3.5%12.6% for the forty weeks ended October 1, 2023 as compared to 8.7% for the same period in 2022.
Interest income and 3.6%other decreased by $0.2 million and $1.1 million for the twelve and forty weeks ended October 1, 2017, as compared2023, respectively. The decreases were due to 2.7% and 2.4%investment changes related to a deferred compensation plan for which assets are held in a rabbi trust, along with lower interest income on bank account balances in the twelve and forty weeks ended October 2, 2016. Interest expense for 2017 is expected to be approximately $10 million.forty-week period.
Provision for Income TaxesTax Provision
The effective tax rate for the twelve weeks ended October 1, 20172023 was 34.1%a 3.5% benefit, compared to 77.8%a 0.3% benefit for the twelve weeks ended October 2, 2016.2022. The change in the twelve-week effective tax rate isfor both periods include changes in the valuation allowance as a result of originating temporary differences during the year and varies from statutory rates primarily due to asset impairment and restaurant closure costs recognizedas a result of the valuation allowance as discussed in third quarter 2016, which resulted in a larger quarterly tax benefit. the Company's Annual Report on Form 10-K for the fiscal year ended December 25, 2022.
The effective tax rate for the forty weeks ended October 1, 2017 and2023 was a 6.4% expense, compared to a 1.3% expense for the forty weeks ended October 2, 2016 was 9.4% and 5.3%.2022. The change in the forty-week effective tax rate isfor both periods include changes in the valuation allowance as a result of originating temporary differences during the year and varies from statutory rates primarily due toas a result of the recognition of a priorvaluation allowance as discussed in the Company's Annual Report on Form 10-K for the fiscal year state tax benefit in 2016.ended December 25, 2022.

Liquidity and Capital Resources
Cash and cash equivalents, and restricted cash increased $3.3$2.6 million to $15.0$60.8 million atas of October 1, 2017,2023, from $11.7$58.2 million at the beginning of the fiscal year. We expect to continue to reinvestThe Company is using available cash flowsflow from operations to develop new restaurants or invest inmaintain existing restaurants and infrastructure, pay down debt, and execute ouron its long-term strategic initiatives. As of October 1, 2023, the Company had approximately $73.6 million in liquidity, including cash and cash equivalents and available borrowing capacity under our Credit Facility (as defined below).
Cash Flows
The table below summarizes our cash flows from operating, investing, and financing activities for each period presented (in thousands):
  Forty Weeks Ended
  October 1, 2017 October 2, 2016
Net cash provided by operating activities $121,564
 $94,685
Net cash used in investing activities (60,919) (172,452)
Net cash (used in) provided by financing activities (58,138) 70,415
Effect of exchange rate changes on cash 745
 178
Net change in cash and cash equivalents $3,252
 $(7,174)
Forty Weeks Ended
October 1, 2023October 2, 2022
Net cash provided by operating activities$17,361 $38,800 
Net cash provided by (used in) investing activities18,992 (18,297)
Net cash provided by (used in) financing activities(33,741)14,921 
Effect of exchange rate changes on cash— (44)
Net change in cash and cash equivalents, and restricted cash$2,612 $35,380 
Operating Cash Flows
Net cash flows provided by operating activities increased $26.9decreased $21.4 million to $121.6$17.4 million for the forty weeks ended October 1, 2017.2023. The increase was primarily driven by a $30.3 million decrease in net cash provided by operating activities is primarily attributable to the receipt of an income tax refund of $14.7 million in 2022, and severance payments to vendors, a $4.0 million decreaseand higher interest payments in team member salaries and benefits, and a $0.9 million decrease in cash paid for taxes, offset by a $7.3 million decrease in cash generated from restaurant operations and a $3.0 million increase in cash paid for interest.2023.
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Investing Cash Flows
Net cash flows used inprovided by investing activities decreased $111.6 million to $60.9were $19.0 million for the forty weeks ended October 1, 2017,2023, as compared to $172.5net cash flows used of $18.3 million for the same period in 2016.2022. The decreaseincrease in cash flows provided by investing activities is primarily due to proceeds from sales of real estate, partially offset by increased investment in restaurant improvements and the acquisition of five franchised restaurants in first quarter 2016, along with decreased investment in restaurant remodels and new restaurant openings.restaurants.
The following table lists the components of our capital expenditures, net of currency translation, effect, for the forty weeks ended October 1, 20172023 and October 2, 2022 (in thousands):
 Forty Weeks Ended October 1, 2017
New restaurants$31,376
Restaurant maintenance capital13,011
Investment in technology infrastructure and other12,728
Restaurant remodels3,918
Total capital expenditures$61,033
We expect total capital investments between $80 million and $85 million for 2017.
Forty Weeks Ended
October 1, 2023October 2, 2022
Restaurant improvement capital and other$16,715 $12,376 
Donatos® expansion
8,602 4,396 
Technology, infrastructure, and other10,336 8,274 
New restaurants and restaurant refreshes1,421 1,989 
Total capital expenditures$37,074 $27,035 
Financing Cash Flows
CashNet cash flows used in financing activities increased $128.6 million to $58.1were $33.7 million for the forty weeks ended October 1, 2017,2023, as compared to net cash flows provided by financing activities of $14.9 million in the same period in 2016. The increase primarily resulted from $161.7 million additional2022.
In 2022, financing activities were a source of cash, due to net repaymentsdraws made on long-term debt partially offset byas a $31.5 million decrease inresult of the Company's refinancing of debt on March 4, 2022. In 2023, the use of cash used to repurchaseresults primarily from the Company’s common stock.repayment of outstanding debt with proceeds from the sale-leaseback transaction, $10.0 million of share repurchases, and standard principal payments due under the terms of the Company’s Credit Agreement.
Credit Facility
On June 30, 2016,March 4, 2022, the Company replaced its existing credit facility (“Previousprior amended and restated Credit Facility”Agreement (the "Prior Credit Agreement") with a new credit facility (the “New Credit Facility”Agreement (as amended to the date hereof, the "Credit Agreement"). The New Credit Facility, which provides for a $400 million revolving linenew Senior Secured Term Loan and Revolving Credit Facility (the "Credit Facility"). The Credit Agreement's interest rate references the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements and backed by U.S. Treasury securities, or the Alternate Base Rate ("ABR"), which represents the highest of credit with a sublimit for(a) the issuance of up to $25 million in letters of credit and swingline loans up to $15 million. On April 13, 2017,Prime Rate, (b) the Company entered into a first amendment (the “Amendment”) to the New Credit Facility. The Amendment increased the lease adjusted leverage ratio to 5.25x through October 1, 2017 before stepping down to 5.0x through July 15, 2018 and returning to 4.75x thereafter. The Amendment also provides for additional pricing tiers that increase LIBOR spread rates and commitment fees to the extent the Company’s lease adjusted leverage ratio exceeds 4.75x, in addition to revising terms for permitted acquisitions andFederal Funds Rate plus 0.5% per annum, or (c) one-month term SOFR plus 1.0% per annum.

investments under the New Credit Facility. The Amendment is effective through October 7, 2018 and is cancelable at the Company’s discretion. As of October 1, 2017, the Company’s lease adjusted leverage ratio was 4.20x.
The New Credit Facility matures on June 30, 2021. Borrowings under the New Credit Facility are secured by first priority liens and security interests in substantially all of the Company’s assets, including the capital stock of certain Company subsidiaries. Borrowings are available for financing activities including restaurant construction costs, working capital, and general corporate purposes, including, among other uses, to refinance certain indebtedness, permitted acquisitions, and redemption of capital stock. We do not believe any of our lenders will be unable to fulfill their lending commitments under our New Credit Facility. Loan origination costs associated with the New Credit Facility are included as deferred costs in Other assets, net in the accompanying condensed consolidated balance sheet. As of October 1, 2017,2023, the Company had outstanding borrowings under the New Credit Facility of $275.9$182.1 million in addition to amounts issuednet of $7.0 million of unamortized deferred financing charges and discounts, of which $0.9 million was classified as current. As of October 1, 2023, the Company had $25.0 million of available borrowing capacity under its Credit Facility.
As of October 1, 2023, the Company had $11.7 million of letters of credit issued against cash collateral, compared to $7.8 million as of $7.6 million, which reduce the amount available underprior comparable period. The Company's cash collateral is recorded in Restricted cash on our Condensed Consolidated Balance Sheets as of the New Credit Facility but are not recorded as debt.quarter ended October 1, 2023.
Covenants.  Covenants
We are subject to a number of customary covenants under our New Credit Facility, including limitations on additional borrowings, acquisitions, stock repurchases, sales of assets, and dividend payments.payments, as well as a Total Net Leverage ratio covenant. As of October 1, 2017,2023, we were in compliance with all debt covenants.
Debt Outstanding.Outstanding
Total debt and capital lease obligations outstanding decreased $60.1$24.9 million to $287.7$190.0 million at October 1, 2017,2023, from $347.8$214.9 million at December 25, 2016,2022, primarily due to net repaymentsdriven by payments of $59.6 million on the New Credit Facilitylong-term debt during the forty weeks ended October 1, 2017.2023.
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Working Capital
We typically maintain current liabilities in excess of our current assets which results in a working capital deficit. We are able to operate with a working capital deficit because restaurant sales are primarily conducted on a cash or credit card basis. Rapid turnover of inventory results in limited investment in inventories, and cash from sales is usually received before related payables for food, supplies, and payroll become due. In addition, receipts from the sale of gift cards are received well in advance of related redemptions. Rather than maintain higher cash balances that would result from this pattern of operating cash flows, we typically utilize operating cash flows in excess of those required for currently-maturingcurrently maturing liabilities to pay for capital expenditures, debt repayment, or to repurchase stock.stock as allowed. When necessary, we utilize our revolving credit facility to satisfy short-term liquidity requirements. We believe our future cash flows generated from restaurant operations combined with our remaining borrowing capacity under the New Credit Facilitycredit facility will be sufficient to satisfy any working capital deficits and our planned capital expenditures.
InflationShare Repurchase
On August 9, 2018, the Company's board of directors authorized the Company's current share repurchase program of up to a total of $75.0 million of the Company's common stock. The primary inflationary factors affectingshare repurchase authorization was effective as of August 9, 2018, and will terminate upon completing repurchases of $75.0 million of common stock unless otherwise terminated by the board. Pursuant to the repurchase program, purchases may be made from time to time at the Company's discretion and the Company is not obligated to acquire any particular amount of common stock.
Effective March 14, 2020, the Company temporarily suspended its share repurchase program to provide additional liquidity during the COVID-19 pandemic. In May 2023, the Company resumed its repurchase program.
During the third quarter of fiscal 2023, we repurchased 480,071 shares at an average price of $10.33 per share, for an aggregate amount of $5.0 million.
Under the current authorization through October 1, 2023, we have repurchased a total of 1,088,588 shares at an average price of $15.18 per share for an aggregate amount of $16.5 million. As of October 1, 2023, we had $58.5 million of availability under the current share repurchase program. Our Credit Agreement limits our operations are food, labor costs, energy costs, and materials usedability to repurchase shares to certain conditions set forth by the lenders in the construction of new restaurants. A large number of our restaurant personnel are paid at rates based on the applicable minimum wage, and increases in the minimum wage have directly affected our labor costs in recent years. Many of our leases require us to pay taxes, maintenance, repairs, insurance, and utilities, all of which are generally subject to inflationary increases. We believe labor cost inflation along with food cost inflation due primarily to ground beef had a negative impact on our financial condition and results of operations during the forty weeks ended October 1, 2017. Uncertainties related to fluctuations in costs, including energy costs, commodity prices, annual indexed or other minimum wage increases, and construction materials make it difficult to predict what impact, if any, inflation may continue to have on our business, but it is anticipated inflation will have a negative impact on labor and commodity costs for the remainder of 2017.Credit Facility.
Seasonality
Our business is subject to seasonal fluctuations. Historically, sales in most of our restaurants have been higherwere greater during the summer months and winter holiday season and lowerlesser during the fall season. As a result, our quarterly and annual operating results and comparable restaurant revenue may fluctuate significantly as a result of seasonality.significantly. Accordingly, results for any one quarter or year are not necessarily indicative of results to be expected for any other quarter or for any year, and comparable restaurant sales for any particular future period may decrease.
Off Balance Sheet Arrangements
Except for operating leases, primarily restaurant leases entered into in the normal course of business, we do not have any material off balance sheet arrangements.quarter.
Contractual Obligations
There were no other material changes outside the ordinary course of business to our contractual obligations since the filing of Company’s Annual Report onthe 2022 Form 10-K for the fiscal year ended December 25, 2016.

2022. Our current purchase obligations for system-wide fixed price commitments for food, beverage, equipment, and restaurant supply items are $223.7 million as of October 1, 2023 of which $43.3 million are due in 2023.
Critical Accounting Policies and Estimates
Critical accounting policies and estimates are those we believe are both significant and that require us to make difficult, subjective, or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors we believe to be appropriate under the circumstances. Actual results may differ from these estimates, including our estimates of future restaurant level cash flows, which are subject to the current economic environment and potentially unknown future events, and we might obtain different results if we use different assumptions or conditions. We had no significant changes in our critical accounting policies and estimates which were disclosed in our Annual Report on Form 10-K for the fiscal year ended December 25, 2016.2022.
Recently Issued and Recently Adopted Accounting Standards
See Note 1, BasisNone noted.



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Table of Presentation and Recent Accounting Pronouncements, of Notes to Condensed Consolidated Financial Statements of this report.Contents
Forward-Looking Statements
Certain information and statements contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”"PSLRA") codified at Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. This statement is included for purposes of complying with the safe harbor provisions of the PSLRA.amended (the "Exchange Act"). Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “may,” “will,” “would,”"anticipate," "assume," "believe," "could," "estimate," "expect," "future," "intend," "may," "plan," "project," "will," "would," and similar expressions. Certain forward-looking statements are included in this Quarterly Report on Form 10-Q, principally in the sections captioned “Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Forward-looking statements in this report include,relate to, among other things: (i) our financial performance, including revenues; our marketing strategybusiness objectives and promotions; anticipated numberstrategic plans; (ii) working capital, and timing of new restaurant openings and the resulting number of operating weeks; restaurant relocations and restaurant development efforts; expected uses for available cash flow; capital investments; beliefs about the ability of our lenders to fulfill their lending commitments under our New Credit Facility and about the sufficiency of future cash flows from restaurant operations and our borrowing capacity to satisfy future working capital deficit; anticipated funding for newdeficits and capital expenditures; (iii) our share repurchase program; (iv) our expectations about restaurant openings; anticipated effective tax rate for 2017;operating costs, including commodity and utility costs,food prices and the anticipated effects of inflation; the effect of the adoption of new accounting standards on our financial and accounting systems; estimated aggregate future amortization expenses; estimated future interest expense; and the possibility of new interest rate swap or other similar mechanisms.
Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those we express in these forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the effectiveness of our business improvement initiatives; the ability to fulfill planned expansion and restaurant remodeling; the effectiveness of our marketing campaigns; uncertainty regarding general economic conditions and economic recovery; concentration of restaurants in certain markets and lack of consumer awareness of our brand in new markets; changes in consumer disposable income, consumer spending trends and habits; the effectiveness of our information technology and new technology systems, including cyber security with respect to those systems; regional mall and lifestyle center traffic trends or other trends affecting traffic at our restaurants; increased competition and discounting in the casual-dining restaurant market; costs and availability of food and beverage inventory; changes in commodity prices, particularly ground beef; changes in labor and energy costs; limitations oncosts, and our ability to execute stock repurchases due to lackmitigate potential increases in such costs; (v) anticipated continued investments in our partnership with Donatos® and other restaurant improvements, including the timing thereof; (vi) our expectations about anticipated uses of, available shares or acceptable stock price levels orand risks associated with, future cash flows, liquidity, capital expenditures, other market or Company-specific conditions;capital deployment opportunities and taxes; (vii) the seasonality of our business; (viii) our ability to attract qualified managerssuccessfully implement, and team members;our expectations regarding, our North Star five-point plan to enhance the Company’s competitive positioning, including the timing of our expected payments in connection with severance and executive transition costs; (ix) litigation contingencies and the adequacy of our reserves for legal matters; (x) our expectations regarding, and our ability to mitigate changes in, the availability of credit facility borrowings or other access to capital; minimum wage increases; changes in health care and insurance costs; costsinterest rates, commodity prices and other effectsfactors; and (xi) transactions including sale-leaseback transactions and acquisitions of legal claims by team members, franchisees, customers, vendors, stockholders, and others, including settlement of those claims; effectiveness of management strategies and decisions; weather conditions and related events in regions where ourcertain restaurants are operated; changes in accounting standards policies and practices or related interpretations by auditors or regulatory entities; and other risk factors described from time to time in our SEC reports, including the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 25, 2016, filed with the SEC on February 21, 2017 and the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended April 16, 2017 filed with the SEC on May 17, 2017.a franchisee.
Although we believe the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risks and uncertainties.
In some cases, information regarding certain important factors that could cause actual results to differ materially from a forward-looking statement appears together with such statement. In addition, the factors described under Risk Factors, as well as other possible factors not listed, could cause actual results to differ materially from those expressed in forward-looking statements, including, without limitation, the following:
•our ability to implement, and the effectiveness of, the Company's strategic initiatives, including our North Star plan, labor models, service and operational improvement initiatives;
•general economic conditions, including changes in consumer disposable income, weather conditions, and related events in regions where our restaurants are operated;
•menu changes, including the anticipated sales growth, costs, and timing of restaurant improvements including the Donatos® expansion;
•the implementation of and realization of benefits from our restaurant management transition program;
•changes in consumer spending trends and habits;
•changes in the cost and availability of key food products, distribution, labor, and energy;
•the adequacy of cash flows and the cost and availability of capital or Credit Facility borrowings and our potential sale-leaseback transactions;
•the impact of, and changes in, federal, state, or local laws and regulations affecting the operation of our restaurants, including minimum wages, consumer health and safety, health insurance coverage, nutritional disclosures, and employment eligibility-related documentation requirements;
•changes in interest rates and commodity prices, and our ability to mitigate the impacts of such changes;
•risks associated with our share repurchase program;
•costs and other effects of legal claims by Team Members, franchisees, customers, vendors, stockholders, and others, including negative publicity regarding food safety or cyber security; and
•the other Risk Factors identified in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 25, 2022.
All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except as required by law,

we undertake no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
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ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk
There has been no material change in the interest rate risk foreign currency exchange risk, or commodity price risk since the filing of the Company’sCompany's Annual Report on Form 10-K for the fiscal year ended December 25, 2016.2022.
We continue to monitor our interest rate risk on an ongoing basis and may use interest rate swaps or similar instruments in the future to manage our exposure to interest rate changes related to our borrowings as the Company deems appropriate. As of October 1, 2017,2023, we had $275.9$189.1 million of borrowings subject to variable interest rates. A 1.0% change in the effective interest rate applied to these loans would have resulted in pre-tax interest expense fluctuation of $2.8$1.9 million on an annualized basis.
The Company’sCompany's restaurant menus are highly dependent upon a few select commodities, including ground beef, poultry, and potatoes. We may or may not have the ability to increase menu prices, or vary menu items, in response to food commodity price increases. A 1.0% increase in food and beverage costs would negatively impact cost of sales by approximately $3.0$3.1 million on an annualized basis.

ITEM 4.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’sCompany's reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SEC’sSEC's rules and forms, and that such information is accumulated and communicated to the management of the Company (“Management”("Management"), including the Company’sCompany's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, Management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives. The Company’sCompany's CEO and CFO have concluded that, based upon the evaluation of disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act), the Company’sCompany's disclosure controls and procedures were effective, as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’sCompany's internal control over financial reporting that occurred during the Company’sCompany's most recent fiscal quarter that hashave materially affected, or are reasonably likely to materially affect, the Company’sCompany's internal control over financial reporting.

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PART II — OTHER INFORMATION
ITEM 1.    Legal Proceedings
Evaluating contingencies related to litigation is a complex process involving subjective judgment on the potential outcome of future events and the ultimate resolution of litigated claims may differ from our current analysis. Accordingly, we review the adequacy of accruals and disclosures each quarter in consultation with legal counsel and we assess the probability and range of possible losses associated with contingencies for potential accrual in the consolidated financial statements.
For a description offurther information related to our legal proceedings,litigation contingencies, see Note 7, 8. Commitments and Contingencies,, of in the Notes to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this report.Quarterly Report on Form 10-Q.

ITEM 1A.    Risk Factors
A description of the riskRisk factors associated with our business isare contained in Item 1A, “Risk1, "Risk Factors,”" of our Annual Report on Form 10-K for the fiscal year ended December 25, 20162022 filed with the SEC on February 21, 2017 and our Quarterly Report on Form 10-Q for the fiscal quarter ended April 16, 2017 filed with the SEC on May 17, 2017 (the “Quarterly Report on Form 10-Q”).28, 2023. There have been no material changes to our Risk Factorsfrom the risk factors disclosed in our 2016the fiscal year 2022 Annual Report on Form 10-K and Quarterly Report on Form 10-Q.10-K.

ITEM 2.    Unregistered Sales of Equity Securities and Use of Proceeds
During the twelve weeks ended October 1, 2017,2023, the Company did not have any sales of securities in transactions that were not registered under the Securities Act of 1933, as amended, that have not been reported in a Current Report on Form 8-K.8-K or that are reported in this Item. On February 11, 2016,August 9, 2018, the Company’s board of directors re-authorizedauthorized the Company’s current share repurchase program and approved the repurchase of up to a total of $100$75 million of the Company’s common stock. The share repurchase authorization became effective on February 11, 2016,August 9, 2018 and will terminate upon completing repurchases of $100$75 million of common stock unless otherwise terminated by the board. Purchases under the repurchase program may be made in open market or privately negotiated transactions.transactions and may include transactions pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended. Purchases may be made from time to time at the Company’s discretion and the timing and amount of any share repurchases will be determined based on share price, market conditions, legal requirements, and other factors. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the Company may suspend or discontinue the repurchase program at any time.
The Company did not repurchase anytable below provides a summary of the Company’s purchases of its own common stock during the third quarter of 2023. In response to the COVID-19 pandemic, the Company temporarily suspended share repurchases effective March 14, 2020. In May 2023, the Company resumed share repurchases.
Period (1)
Total Number of Shares (or Units) PurchasedAverage Price Paid per Share (or Unit)Total Number of Shares (or Units) Purchased as Part of Publicly announced Plans or ProgramsMaximum Dollar Value of Shares (or Units) that May yet be Purchased Under the Plan (in thousands)
7/10/2023 - 8/6/20230$0.00
8/7/2023 - 9/3/20230$0.00
9/4/2023 - 10/1/2023480,071$10.331,088,58858,480
(1) The reported periods conform to the Company's fiscal calendar composed of thirteen 28-day periods.
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ITEM 5.    Other Information
Securities Trading Plans of Directors and Executive Officers

During the twelve weeks ended October 1, 2017. Since February 11, 2016, the Company has purchased 940,034 shares for2023, none of our directors or officers adopted, modified or terminated a total“Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as such terms are defined under Item 408 of $46.1 million. The current repurchase program had a remaining authorized purchase limitRegulation S-K.
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Table of $53.9 million as of October 1, 2017.Contents

ITEM 6.    Exhibits
Exhibit
Number		Description
(3.1)
Exhibit
Number(3.2)
Description
31.1
(10.1)
(10.2)*
31.1
31.2
32.1
101
The following financial information from the Quarterly Report on Form 10-Q of Red Robin Gourmet Burgers, Inc. for the quarter ended October 1, 2017,2023 formatted in XBRL (eXtensible(extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at October 1, 20172023 and December 25, 2016;2022; (ii) Condensed Consolidated Statements of Operations and Comprehensive Loss for the twelve and forty weeks ended October 1, 20172023 and October 2, 2016;2022; (iii) Condensed Consolidated Statements of Comprehensive Income for the twelve and forty weeks endedStockholders' Equity at October 1, 20172023 and October 2, 2016;2022; (iv) Condensed Consolidated Statements of Cash Flows for the forty weeks ended October 1, 20172023 and October 2, 2016;2022; and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
( ) Exhibits previously filed in the Company's periodic filings as specifically noted.

* Management contract or compensatory plan or arrangement.
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RED ROBIN GOURMET BURGERS, INC.
(Registrant)
November 7, 20173, 2023By:/s/ Guy J. ConstantTodd Wilson
(Date)
Guy J. ConstantTodd Wilson
(Chief Financial Officer)



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