UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October ~~2, 2022~~1, 2023


☐						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)


Delaware						84-1573084
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

10000 E. Geddes Avenue, Suite 500
Englewood, Colorado 80112

(Address of principal executive offices) (Zip Code)

(303) 846-6000

(Registrant'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 class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value

RRGB

Nasdaq

(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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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 accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☐

Accelerated Filer

☒

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

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. ☐

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

~~Securities registered pursuant to Section 12(b) of the Exchange Act:~~

~~Title of each class~~

~~Trading symbol(s)~~

~~Name of each exchange on which registered~~

~~Common Stock, $0.001 par value~~

~~RRGB~~

~~Nasdaq~~

~~(Global Select Market)~~

~~Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.~~

As of October ~~31, 2022,~~30, 2023, there were ~~15,928,045~~15,480,000 shares of the registrant's common stock, par value of $0.001 per share outstanding.

Table of Contents

RED ROBIN GOURMET BURGERS, INC.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements (unaudited)

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands, except for per share amounts)	(in thousands, except for per share amounts)	October 2, 2022		December 26, 2021		(in thousands, except for per share amounts)	October 1, 2023		December 25, 2022
Assets:	Assets:					Assets:
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	50,040	$	22,750	Cash and cash equivalents	$	48,550	$	48,826
Accounts receivable, net	Accounts receivable, net	11,915		21,400		Accounts receivable, net	11,819		21,427
Inventories	Inventories	25,212		25,219		Inventories	27,013		26,447
Income tax receivable	Income tax receivable	754		15,824		Income tax receivable	462		562
Prepaid expenses and other current assets	Prepaid expenses and other current assets	13,044		16,963		Prepaid expenses and other current assets	12,945		12,938
Restricted cash	Restricted cash	8,090		—		Restricted cash	12,268		9,380
Total current assets	Total current assets	109,055		102,156		Total current assets	113,057		119,580
Property and equipment, net	Property and equipment, net	342,386		386,336		Property and equipment, net	264,278		318,517
Operating lease assets, net	Operating lease assets, net	375,747		400,825		Operating lease assets, net	372,057		361,432

Intangible assets, net	Intangible assets, net	19,320		21,292		Intangible assets, net	17,114		17,727
Other assets, net	Other assets, net	14,434		18,389		Other assets, net	10,808		14,889
Total assets	Total assets	$	860,942	$	928,998	Total assets	$	777,314	$	832,145
Liabilities and stockholders' equity:
Liabilities and stockholders' equity (deficit):						Liabilities and stockholders' equity (deficit):
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	33,814	$	32,510	Accounts payable	$	30,020	$	39,336
Accrued payroll and payroll-related liabilities	Accrued payroll and payroll-related liabilities	34,040		32,584		Accrued payroll and payroll-related liabilities	37,828		33,666
Unearned revenue	Unearned revenue	37,539		54,214		Unearned revenue	31,980		46,944
Current portion of operating lease obligations	Current portion of operating lease obligations	47,726		48,842		Current portion of operating lease obligations	50,250		47,394
Current portion of long-term debt	Current portion of long-term debt	2,000		9,692		Current portion of long-term debt	875		3,375
Accrued liabilities and other	Accrued liabilities and other	50,482		45,458		Accrued liabilities and other	53,495		49,498
Total current liabilities	Total current liabilities	205,601		223,300		Total current liabilities	204,448		220,213
Long-term debt	Long-term debt	189,320		167,263		Long-term debt	182,142		203,155
Long-term portion of operating lease obligations	Long-term portion of operating lease obligations	401,274		435,136		Long-term portion of operating lease obligations	389,416		393,157
Other non-current liabilities	Other non-current liabilities	13,120		26,325		Other non-current liabilities	10,051		13,831
Total liabilities	Total liabilities	809,315		852,024		Total liabilities	786,057		830,356
Commitments and contingencies (see Note 8. Commitments and Contingencies)	Commitments and contingencies (see Note 8. Commitments and Contingencies)					Commitments and contingencies (see Note 8. Commitments and Contingencies)
Stockholders' equity:
Common stock; $0.001 par value: 45,000 shares authorized; 20,449 shares issued; 15,900 and 15,722 shares outstanding as of October 2, 2022 and December 26, 2021		20		20
Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding as of October 2, 2022 and December 26, 2021		—		—
Treasury stock 4,549 and 4,727 shares, at cost, as of October 2, 2022 and December 26, 2021		(184,169)		(192,803)
Stockholders' equity (deficit):						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, 2022						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, 2022	20		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						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						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 capital	Paid-in capital	242,235		242,560		Paid-in capital	229,769		238,803
Accumulated other comprehensive income (loss), net of tax		(51)		1
Retained earnings (deficit)		(6,408)		27,196
Total stockholders' equity		51,627		76,974
Total liabilities and stockholders' equity		$	860,942	$	928,998
Accumulated other comprehensive loss, net of tax						Accumulated other comprehensive loss, net of tax	(34)		(34)
Accumulated deficit						Accumulated deficit	(61,685)		(54,190)
Total stockholders' equity (deficit)						Total stockholders' equity (deficit)	(8,743)		1,789
Total liabilities and stockholders' equity (deficit)						Total liabilities and stockholders' equity (deficit)	$	777,314	$	832,145

See Notes to Condensed Consolidated Financial Statements

Table of Contents

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)


		Twelve Weeks Ended				Forty Weeks Ended					Twelve Weeks Ended				Forty Weeks Ended
(in thousands, except for per share amounts)	(in thousands, except for per share amounts)	October 2, 2022		October 3, 2021		October 2, 2022		October 3, 2021		(in thousands, except for per share amounts)	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Revenues:	Revenues:									Revenues:
Restaurant revenue	Restaurant revenue	$	282,449	$	270,202	$	951,718	$	861,036	Restaurant revenue	$	273,133	$	282,415	$	973,307	$	951,633
Franchise and other revenues	Franchise and other revenues	4,439		5,242		24,810		17,658		Franchise and other revenues	4,427		4,390		20,713		24,302

Total revenues	Total revenues	286,888		275,444		976,528		878,694		Total revenues	277,560		286,805		994,020		975,935
Costs and expenses:	Costs and expenses:									Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):	Restaurant operating costs (excluding depreciation and amortization shown separately below):									Restaurant operating costs (excluding depreciation and amortization shown separately below):
Cost of sales	Cost of sales	70,640		62,671		234,283		193,754		Cost of sales	65,128		70,640		236,171		234,283
Labor	Labor	100,522		99,725		340,273		310,333		Labor	103,741		100,522		358,841		340,273
Other operating	Other operating	52,858		51,462		172,725		156,102		Other operating	50,351		52,858		174,243		172,725
Occupancy	Occupancy	22,828		22,519		76,406		74,233		Occupancy	23,523		22,828		76,806		76,406
Depreciation and amortization	Depreciation and amortization	17,368		18,881		58,924		63,984		Depreciation and amortization	14,672		17,368		52,253		58,924
Selling, general, and administrative expenses	Selling, general, and administrative expenses	35,692		30,343		102,168		89,299		Selling, general, and administrative expenses	27,961		35,692		89,348		102,168
Pre-opening costs		217		418		514		792
Pre-opening and acquisition costs										Pre-opening and acquisition costs	—		217		586		514
Other charges (gains), net	Other charges (gains), net	(5,217)		1,561		8,236		9,228		Other charges (gains), net	(5,878)		(5,217)		(6,726)		8,236
Total costs and expenses	Total costs and expenses	294,908		287,580		993,529		897,725		Total costs and expenses	279,498		294,908		981,522		993,529

Loss from operations		(8,020)		(12,136)		(17,001)		(19,031)
Income (loss) from operations										Income (loss) from operations	(1,938)		(8,103)		12,498		(17,594)
Other expense:	Other expense:									Other expense:
Interest expense, net and other	Interest expense, net and other	4,590		2,870		16,151		9,986		Interest expense, net and other	5,945		4,590		19,541		16,151
Loss on debt refinancing
Interest income and other, net
Total other expenses		4,590		2,870		16,151

Loss before income taxes	Loss before income taxes	(12,610)		(15,006)		(33,152)		(29,017)		Loss before income taxes	(7,883)		(12,693)		(7,043)		(33,745)
Income tax provision (benefit)	Income tax provision (benefit)	(43)		(26)		453		(328)		Income tax provision (benefit)	278		(43)		453		453
Net loss	Net loss	$	(12,567)	$	(14,980)	$	(33,605)	$	(28,689)	Net loss	$	(8,161)	$	(12,650)	$	(7,496)	$	(34,198)
Loss per share:	Loss per share:									Loss per share:
Basic	Basic	$	(0.79)	$	(0.95)	$	(2.12)	$	(1.83)	Basic	$	(0.52)	$	(0.80)	$	(0.47)	$	(2.16)
Diluted	Diluted	$	(0.79)	$	(0.95)	$	(2.12)	$	(1.83)	Diluted	$	(0.52)	$	(0.80)	$	(0.47)	$	(2.16)
Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	15,892		15,709		15,816		15,647		Basic	15,799		15,892		15,949		15,816
Diluted	Diluted	15,892		15,709		15,816		15,647		Diluted	15,799		15,892		15,949		15,816

Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency translation adjustment	Foreign currency translation adjustment	$	(45)	$	(6)	$	(51)	$	14	Foreign currency translation adjustment	$	(12)	$	(45)	$	1	$	(51)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(45)		(6)		(51)		14		Other comprehensive income (loss), net of tax	(12)		(45)		1		(51)
Total comprehensive loss	Total comprehensive loss	$	(12,612)	$	(14,986)	$	(33,656)	$	(28,675)	Total comprehensive loss	$	(8,173)	$	(12,695)	$	(7,495)	$	(34,249)

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

(Unaudited)


	Common Stock			Treasury Stock					Accumulated Other Comprehensive Income/(Loss), net of tax
							Paid-in Capital				Accumulated Deficit
(in thousands)	Shares	Amount		Shares	Amount								Total
Balance, December 25, 2022	20,449	$	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, 2023	20,449	$	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, 2023	20,449	$	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, 2023	20,449	$	20	4,967	$	(176,813)	$	229,769	$	(34)	$	(61,685)	$	(8,743)

~~(Unaudited)~~

Common Stock Treasury Stock Accumulated
Other
Comprehensive
Income/(Loss),
net of tax
Paid-in
Capital Retained
Earnings (Deficit)
(in thousands) Shares Amount Shares Amount Total
Balance, December 26, 2021 20,449 $ 20 4,727 $ (192,803) $ 242,560 $ 1 $ 27,196 $ 76,974
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 — — — — — — (3,105) (3,105)
Other comprehensive income (loss), net of tax — — — — — 11 — 11
Balance, April 17, 2022 20,449 $ 20 4,663 $ (190,022) $ 242,756 $ 12 $ 24,091 $ 76,857
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 — — — — — — (17,932) (17,932)
Other comprehensive income (loss), net of tax — — — — — (18) — (18)
Balance, July 10, 2022 20,449 $ 20 4,550 $ (184,205) $ 239,607 $ (6) $ 6,159 $ 61,575
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 — — — — — — (12,567) (12,567)
Other comprehensive income (loss), net of tax — — — — — (45) — (45)
Balance, October 2, 2022 20,449 $ 20 4,549 $ (184,169) $ 242,235 $ (51) $ (6,408) $ 51,627

Table of Contents


		Common Stock			Treasury Stock					Accumulated Other Comprehensive Income/(Loss), net of tax								Common Stock			Treasury Stock					Accumulated Other Comprehensive Income/(Loss), net of tax
								Paid-in Capital					Retained Earnings											Paid-in Capital					Retained Earnings
(in thousands)	(in thousands)	Shares	Amount		Shares	Amount						Total			Accumulated Other Comprehensive Income/(Loss), net of tax		(in thousands)	Shares	Amount		Shares	Amount						Total			Accumulated Other Comprehensive Income/(Loss), net of tax
Balance, December 27, 2020		20,449	$	20	4,901	$	(199,908)	$	243,407	$	(4)		$	77,198
Balance, December 26, 2021																	Balance, December 26, 2021	20,449	$	20	4,727	$	(192,803)	$	242,560	$	1		$	24,693
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan	Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan	—	—		(74)	3,025		(3,640)		—			—		(615)		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	Non-cash stock compensation	—	—		—	—		880		—			—		880		Non-cash stock compensation	—	—		—	—		3,042		—			—		3,042
Net loss	Net loss	—	—		—	—		—		—			(8,713)		(8,713)		Net loss	—	—		—	—		—		—			(3,581)		(3,581)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—	—		—	—		—		21			—		21		Other comprehensive income (loss), net of tax	—	—		—	—		—		11			—		11

Balance, April 18, 2021		20,449	$	20	4,827	$	(196,883)	$	240,647	$	17		$	68,485	$	112,286
Balance, April 17, 2022																	Balance, April 17, 2022	20,449	$	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	Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan	—	—		(95)	3,844		(3,547)		—			—		297		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	Non-cash stock compensation	—	—		—	—		1,577		—			—		1,577		Non-cash stock compensation	—	—		—	—		2,542		—			—		2,542
Net loss	Net loss	—	—		—	—		—		—			(4,996)		(4,996)		Net loss	—	—		—	—		—		—			(17,966)		(17,966)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—	—		—	—		—		(1)			—		(1)		Other comprehensive income (loss), net of tax	—	—		—	—		—		(18)			—		(18)

Balance, July 11, 2021		20,449	$	20	4,732	$	(193,039)	$	238,677	$	16		$	63,489	$	109,163
Balance, July 10, 2022																	Balance, July 10, 2022	20,449	$	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	Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan	—	—		(5)	220		(280)		—			—		(60)		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	Non-cash stock compensation	—	—		—	—		2,048		—			—		2,048		Non-cash stock compensation	—	—		—	—		2,668		—			—		2,668
Net loss	Net loss	—	—		—	—		—		—			(14,980)		(14,980)		Net loss	—	—		—	—		—		—			(12,650)		(12,650)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—	—		—	—		—		(6)			—		(6)		Other comprehensive income (loss), net of tax	—	—		—	—		—		(45)			—		(45)
Balance, October 3, 2021		20,449	$	20	4,727	$	(192,819)	$	240,445	$	10		$	48,509	$	96,165
Balance, October 2, 2022																	Balance, October 2, 2022	20,449	$	20	4,549	$	(184,169)	$	242,235	$	(51)		$	(9,504)	$	48,531

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
Forty Weeks Ended
(in thousands) October 2, 2022 October 3, 2021
Cash flows from operating activities:
Net loss $ (33,605) $ (28,689)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 58,924 63,984
Gift card breakage (8,289) (3,231)
Restaurant asset impairment 13,048 1,357
Non-cash other charges, net (2,287) 319
Stock-based compensation expense 8,229 4,501
(Gain) loss on sale of property, plant, and equipment (9,204) —
Other, net 3,240 2,228
Changes in operating assets and liabilities:
Accounts receivable 9,487 4,544
Income tax receivable 15,163 520
Inventories (217) —
Prepaid expenses and other current assets 2,183 1,014
Operating lease assets, net of liabilities (10,562) (12,711)
Trade accounts payable and accrued liabilities 9,621 16,948
Unearned revenue (8,386) (4,286)
Other operating assets and liabilities, net (8,545) (8,881)
Net cash provided by operating activities 38,800 37,617
Cash flows from investing activities:
Purchases of property, equipment, and intangible assets (27,036) (19,987)
Proceeds from sales of property and equipment and other investing activities 8,739 20
Net cash used in investing activities (18,297) (19,967)
Cash flows from financing activities:
Borrowings of long-term debt 282,151 109,500
Payments of long-term debt and finance leases (266,275) (125,216)
Debt issuance costs (4,869) (870)
Proceeds related to real estate sale 3,856 —
Proceeds from other financing activities, net 58 549
Net cash provided by (used in) financing activities 14,921 (16,037)
Effect of exchange rate changes on cash (44) 28
Net change in cash and cash equivalents, and restricted cash 35,380 1,641
Cash and cash equivalents, beginning of period 22,750 16,116
Cash and cash equivalents, and restricted cash, end of period $ 58,130 $ 17,757
Supplemental disclosure of cash flow information
Income tax refunds received, net $ (14,729) $ (840)
Interest paid, net of amounts capitalized $ 11,387 $ 7,586


	Forty Weeks Ended
(in thousands)	October 1, 2023		October 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 amortization	52,253		58,924
Gift card breakage	(5,930)		(7,781)
Asset impairment	7,187		13,048
Non-cash other charges (gains), net	(1,819)		(2,287)

Stock-based compensation expense	5,171		8,229
Gain on sale of property, plant, and equipment	(29,865)		(9,204)
Other, net	733		3,240
Changes in operating assets and liabilities, net of business acquisition:
Accounts receivable	9,607		9,487
Income tax receivable	100		15,163
Inventories	(377)		(217)
Prepaid expenses and other current assets	1,354		2,183
Operating lease assets, net of liabilities	(9,975)		(10,562)
Trade accounts payable and accrued liabilities	5,416		9,621
Unearned revenue	(9,127)		(8,301)
Other operating assets and liabilities, net	129		(8,545)
Net cash provided by operating activities	17,361		38,800
Cash flows from investing activities:
Purchases of property, equipment, and intangible assets	(37,074)		(27,036)
Proceeds from sale-leaseback	58,801		—
Proceeds from sales of property and equipment and other investing activities	794		8,739
Acquisition of franchised restaurants	(3,529)		—
Net cash provided by (used in) investing activities	18,992		(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, net	1,744		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 cash	2,612		35,380
Cash and cash equivalents, and restricted cash, beginning of period	58,206		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.

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" or the "Company"), primarily operates, franchises, and develops full-service restaurants in North America. As of October ~~2, 2022,~~1, 2023, the Company owned and operated ~~424~~417 restaurants located in 3839 states. The Company also had ~~101~~91 franchised full-service restaurants in 1614 states 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 Statements include the accounts of Red Robin and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("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 Statements of Red Robin have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "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's annual consolidated financial statements on Form 10-K have been condensed or omitted. The Condensed Consolidated Balance Sheet as of December ~~26, 2021~~25, 2022 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 Statements in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December ~~26, 2021~~25, 2022 filed with the SEC on ~~March 10, 2022.~~February 28, 2023.

Our current, prior, and upcoming year periods, period end dates, and number of weeks included in the period are summarized in the table below:

Periods

Period End Date

Number of Weeks in Period

Current and Prior Fiscal Quarters:

First Quarter 2023

April 16, 2023

First Quarter 2022

April 17, 2022

~~First~~Second Quarter ~~2021~~2023

~~April 18, 2021~~July 9, 2023

1612

Second Quarter 2022

July 10, 2022

~~Second~~Third Quarter ~~2021~~2023

~~July 11, 2021~~October 1, 2023

Third Quarter 2022

October 2, 2022

~~Third Quarter 2021~~

~~October 3, 2021~~

Current and Prior Fiscal Years:

~~Fiscal Year 2022~~

~~December 25, 2022~~

~~Fiscal Year 2021~~

~~December 26, 2021~~

~~Upcoming fiscal year:~~

Fiscal Year 2023

December 31, 2023

Fiscal Year 2022

December 25, 2022

Upcoming fiscal year:

Fiscal Year 2024

December 29, 2024

~~Reclassifications~~

Certain amounts presented have been reclassified within the October 3, 2021 Condensed Consolidated Statement of Cash Flows to conform with the current period presentation, including prior year reclassifications from Lease assets, net of liabilities to Other operating assets and liabilities. The reclassifications had no effect on the Company’s cash flows from operations.

Table of Contents

~~Change in Accounting Estimate - Gift Card Breakage~~Immaterial Restatement of Prior Period Financial Statements

As ~~part~~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 ~~its annual assessment~~revenue related to gift cards, primarily related to breakage revenue that 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 2, 2022. Management has evaluated this misstatement and concluded it was not material to prior periods, individually or in the aggregate. However, correcting the cumulative effect of ~~gift card breakage~~the error in the twelve and ~~during the~~ forty weeks ended October 2, 2022 would have had a significant effect on the results of operations for such periods. Therefore, the Company ~~re-evaluated~~is correcting the ~~estimated redemption pattern~~relevant prior period Condensed Consolidated Financial Statements and related to gift cards and aligned the recognition of gift card breakage to the updated estimated redemption pattern. As a result, the Company recognized $5.9 million of additional gift card breakage in Franchise and other revenues, partially offset by $0.6 million of associated commissions costs recognized in Selling, general and administrative expenses, in the first quarter of 2022. This change in accounting estimate decreased net loss by $5.2 million, or $0.33 per basic and diluted sharefootnotes for ~~the forty weeks ended October 2, 2022. The Company does not expect the impact of~~ this ~~change in estimate to be material to its future financial statements.~~

~~Recent Tax Legislation~~error for comparative purposes.

The ~~CHIPS and Science Act of 2022 (CHIPS) and~~following tables reflect the Inflation Reduction Act (IRA) of 2022 were signed into law by President Biden on August 9, 2022 and August 16, 2022, respectively. The legislation introduces new options for monetizing certain credits, a corporate alternative minimum tax, and a stock repurchase excise tax. The Company is currently evaluating the impact of CHIPS and IRA, but at present does not expect that anyeffects of the ~~provisions included~~correction on all affected line items of the Company's previously reported Condensed Consolidated Financial Statements presented in ~~these acts would result in a material impact to our deferred tax assets, liabilities, or income taxes payable.~~this Form 10-Q:


CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)
	Twelve Weeks Ended October 2, 2022						Forty Weeks Ended October 2, 2022
(in thousands)	As Previously Reported		Adjustment		As Corrected		As Previously Reported		Adjustment		As Corrected
Restaurant revenue	$	282,449	$	(34)	$	282,415	$	951,718	$	(85)	$	951,633
Franchise and other revenues	4,439		(49)		4,390		24,810		(508)		24,302
Total revenues	286,888		(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 EBITDA	3,960		(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, 2022	6,159		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, 2022	3,146		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 Reported		Adjustment		As 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 Ended Forty Weeks Ended
October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021
Restaurant revenue $ 282,449 $ 270,202 $ 951,718 $ 861,036
Franchise revenue 4,249 4,303 14,891 13,123
Gift card breakage(1)
190 438 8,290 3,231
Other revenue — 501 1,629 1,304
Total revenues $ 286,888 $ 275,444 $ 976,528 $ 878,694

~~(1)~~ During the forty weeks ended October 2, 2022, the Company re-evaluated the estimated redemption pattern related to gift cards and aligned the recognition of gift card breakage revenue to the updated estimated redemption pattern. See Note 1. Basis of Presentation and Recent Accounting Pronouncements.


	Twelve Weeks Ended				Forty Weeks Ended
	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Restaurant revenue	$	273,133	$	282,415	$	973,307	$	951,633
Franchise revenue	3,418		4,249		12,245		14,891
Gift card breakage	589		141		5,930		7,782
Other revenue	420		—		2,538		1,629
Total revenues	$	277,560	$	286,805	$	994,020	$	975,935

Contract ~~liabilities~~Liabilities

Components of Unearned revenue in the accompanying Condensed Consolidated Balance Sheets are as follows (in thousands):


		October 2, 2022		December 26, 2021			October 1, 2023		December 25, 2022
Unearned gift card revenue	Unearned gift card revenue	$	23,971	$	41,128	Unearned gift card revenue	$	20,583	$	35,837
Deferred loyalty revenue	Deferred loyalty revenue	$	13,568	$	13,086	Deferred loyalty revenue	$	11,398	$	11,107

Revenue recognized in the Condensed Consolidated Statements of Operations and Comprehensive ~~Loss~~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 2, 2022 October 3, 2021
Gift card revenue $ 19,788 $ 14,448


	Forty Weeks Ended
	October 1, 2023		October 2, 2022
Gift card revenue	$	16,865	$	21,222

~~Table of Contents~~

3. Leases

~~The Company's finance and operating lease assets and liabilities as of October 2, 2022 and December 26, 2021 were as follows (in thousands):~~

October 2, 2022
Finance(1)
Operating(2)
Lease assets, net(3)
$ 7,233 $ 375,747
Current portion of lease obligations 1,015 47,726
Long-term portion of lease obligations 8,630 401,274
Total $ 9,645 $ 449,000
December 26, 2021
Finance(1)
Operating(2)
Lease assets, net(3)
$ 9,664 $ 400,825
Current portion of lease obligations 1,194 48,842
Long-term portion of lease obligations 10,765 435,136
Total $ 11,959 $ 483,978

~~(1)~~ Finance lease assets and obligations are included in Other assets, net, Accrued liabilities and other current liabilities, and Other non-current liabilities on our October 2, 2022 and December 26, 2021 Condensed Consolidated Balance Sheets.

~~(2)~~ Operating lease assets and obligations are included in Operating lease assets, net, Current portion of operating lease liabilities, and Long-term portion of operating lease liabilities on our October 2, 2022 and December 26, 2021 Condensed Consolidated Balance Sheets.

~~(3)~~ ~~The Lease assets, net caption includes the right of use assets associated with the Company's Finance and Operating leases, net of the associated amortization of these right of use assets.~~

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 ~~Loss~~Income (Loss) as follows (in thousands):

Twelve Weeks Ended Forty Weeks Ended
October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021
Operating lease cost $ 15,793 $ 16,061 $ 53,904 $ 53,765
Finance lease cost:
Amortization of right of use assets 261 197 841 657
Interest on lease liabilities 111 131 408 407
Total finance lease cost $ 372 $ 328 $ 1,249 $ 1,064
Variable lease cost 4,130 4,496 15,136 15,271
Total $ 20,295 $ 20,885 $ 70,289 $ 70,100

~~Table of Contents~~


	Twelve Weeks Ended				Forty Weeks Ended
	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Operating lease cost	$	16,691	$	15,793	$	53,865	$	53,904
Finance lease cost:
Amortization of right of use assets	216		261		764		841
Interest on lease liabilities	116		111		400		408
Total finance lease cost	$	332	$	372	1,164		1,249
Variable lease cost	4,994		4,130		15,263		15,136
Total	$	22,017	$	20,295	$	70,292	$	70,289

~~Maturities of our lease liabilities as of~~

Refer to Footnote 5, Other Charges (gains), net, for information regarding the sale-leaseback transaction during the twelve and forty weeks ended October ~~2, 2022 were as follows (in thousands):~~1, 2023.
Finance Leases Operating Leases
Remainder of 2022 $ 260 $ 13,829
2023 1,386 76,978
2024 1,479 76,047
2025 1,189 71,921
2026 1,245 66,078
Thereafter 6,454 323,647
Total future lease payments $ 12,013 $ 628,500
Less imputed interest 2,368 179,500
Total lease liability $ 9,645 $ 449,000

~~Supplemental cash flow and other information related to leases is as follows (in thousands, except other information):~~
Forty Weeks Ended
October 2, 2022 October 3, 2021
Cash flows from operating activities
Cash paid related to lease liabilities
Operating leases $ 65,943 $ 68,036
Finance leases 408 406
Cash flows from financing activities
Cash paid related to lease liabilities
Finance leases 1,048 1,447
Cash paid for amounts included in the measurement of lease liabilities: $ 67,399 $ 69,889
Right of use assets obtained in exchange for operating lease obligations $ 11,604 $ 27,483
Right of use assets obtained in exchange for finance lease obligations $ 541 $ 988
Other information related to operating leases as follows:
Weighted average remaining lease term (years) 9.21 9.86
Weighted average discount rate 7.24 % 7.01 %
Other information related to finance leases as follows:
Weighted average remaining lease term (years) 10.49 11.04
Weighted average discount rate 4.89 % 4.56 %

4. ~~Loss~~Earnings (Loss) Per Share

Basic ~~loss~~earnings (loss) per share amounts are calculated by dividing net ~~loss~~income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted ~~loss~~earnings 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 ~~loss~~earnings per share reflects 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 ~~each of~~both the twelve and forty weeks ended October ~~2, 2022~~1, 2023 and October ~~3, 2021,~~2, 2022, all potentially dilutive common shares are considered anti-dilutive.

Table of Contents

The Company uses the treasury stock method to calculate the effect of outstanding stock options and awards. Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):


		Twelve Weeks Ended		Forty Weeks Ended			Twelve Weeks Ended		Forty Weeks Ended
		October 2, 2022	October 3, 2021	October 2, 2022	October 3, 2021		October 1, 2023	October 2, 2022	October 1, 2023	October 2, 2022
Basic weighted average shares outstanding	Basic weighted average shares outstanding	15,892	15,709	15,816	15,647	Basic weighted average shares outstanding	15,799	15,892	15,949	15,816
Dilutive effect of stock options and awards	Dilutive effect of stock options and awards	—	—	—	—	Dilutive effect of stock options and awards	—	—	—	—
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	15,892	15,709	15,816	15,647	Diluted weighted average shares outstanding	15,799	15,892	15,949	15,816

Awards excluded due to anti-dilutive effect on diluted loss per share		869	545	1,010	390
Awards excluded due to anti-dilutive effect on diluted income (loss) per share						Awards excluded due to anti-dilutive effect on diluted income (loss) per share	1,420	869	1,421	1,010

5. Other Charges (Gains), net

Other charges (gains), net consisted of the following (in thousands):


		Twelve Weeks Ended				Forty Weeks Ended					Twelve Weeks Ended				Forty Weeks Ended
		October 2, 2022		October 3, 2021		October 2, 2022		October 3, 2021			October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Gain on sale leaseback, net of expenses										Gain on sale leaseback, net of expenses	$	(14,883)	$	—	$	(29,413)	$	—
Gain on sale of restaurant property										Gain on sale of restaurant property	—		(9,204)		—		(9,204)
Litigation contingencies										Litigation contingencies	3,600		133		9,140		47
Restaurant closure costs, net										Restaurant closure costs, net	(91)		(1,570)		1,546		309
Severance and executive transition										Severance and executive transition	341		1,825		3,195		1,954
Asset impairment	Asset impairment	$	2,187	$	—	$	13,048	$	1,357	Asset impairment	4,800		2,187		7,187		13,048
Gain on sale of restaurant property		(9,204)		—		(9,204)		—
Executive transition		1,825		—		1,954		—
Other										Other	277		—		1,366		—
Closed corporate office costs, net of sublease income										Closed corporate office costs, net of sublease income	78		267		253		267
Other financing costs	Other financing costs	1,022		—		1,392		—		Other financing costs	—		1,022		—		1,392
COVID-19 related charges	COVID-19 related charges	123		299		423		1,112		COVID-19 related charges	—		123		—		423
Restaurant closure costs (gains)		(1,570)		1,102		309		5,301
Closed corporate office, net of sublease income		267		—		267		—
Litigation contingencies		133		160		47		1,330

Board and stockholder matter costs		—		—		—		128

Other charges (gains), net	Other charges (gains), net	$	(5,217)	$	1,561	$	8,236	$	9,228	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 of 2023 for another nine restaurant properties. The ~~Company recognized non-cash impairment charges primarily related to~~year-to-date net proceeds of $58.8 million from the sale of 18 restaurant ~~assets at one and ten Company-owned restaurants during~~properties are included within cash flows from investing activities on the ~~twelve and forty weeks ended October 2, 2022, respectively, and one Company-owned restaurant~~Condensed Consolidated Statements of Cash Flows for the forty weeks ended October ~~3, 2021.~~1, 2023.

During the second quarter of 2022 the Company closed on an agreement to sell a restaurant property that the Company owned and leased back on a short-term basis. The Company collected initial net proceeds from the purchaser-lessor of $3.9 million, which represented a portion of the total consideration received from the sale. ~~The Company did not recognize a sale in~~During the ~~second quarter of 2022 as certain criteria to recognize a sale in accordance with ASC Topic 842,~~ ~~Leases, and ASC Topic 606,~~ ~~Revenue from Contracts with Customers, were not met. During~~ third quarter of 2022, the Company received the remaining proceeds, upon which the lease terminated and the sale transaction was completed, and recognized a $9.2 million gain on the sale of the restaurant ~~property .~~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.

~~Executive~~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 ~~transitioning~~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.

Table of Contents

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
Charges	2,077
Cash Payments	(4,164)
Balance as of October 1, 2023	$	418

The Company recognized non-cash impairment charges 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, 2022, respectively.

Other primarily includes non-cash charges related to terminated capital projects and disposals, and certain insurance claim proceeds.

Closed corporate office, net of sublease income includes expense and sublease income related to a ~~new Chief Executive Officer.~~corporate office facility that was vacated and subleased.

Other financing costs include fees related to the entry by the Company into the new Credit Agreement (as defined below) on March 4, 2022 that were not capitalized with the closing of the Credit Facility. See Note 6. Borrowings.

COVID-19 related ~~costs~~charges include the costs of purchasing personal protective equipment for restaurant Team Members and Guests and emergency sick pay provided to restaurant Team Members related to the COVID-19 pandemic.

Restaurant closure costs (gains) include the ongoing restaurant operating costs of the Company-owned restaurants incurred for permanently closed restaurants and closed restaurant lease termination gains or losses.

~~Closed corporate office, net of sublease income includes expense and sublease income related to a corporate office facility that was vacated and subleased.~~

~~Litigation contingencies during the~~ ~~twelve~~ ~~and forty weeks ended October 2, 2022 include the impact of cash proceeds received by the Company related to certain legal claims. Litigation contingencies during the~~ ~~twelve~~ ~~and forty weeks ended October 2, 2022 and October 3, 2021 include legal settlement costs accrued related to pending or threatened litigation.~~

~~Table of Contents~~

~~Board and stockholder matters costs were primarily related to the recruitment and appointment of a new board member in the first quarter of 2021.~~

6. Borrowings

Borrowings as of October ~~2, 2022~~1, 2023 and December ~~26, 2021~~25, 2022 are summarized below (in thousands):


		October 2, 2022		Weighted Average Interest Rate		December 26, 2021		Weighted Average Interest Rate			October 1, 2023		Variable Interest Rate		December 25, 2022		Variable Interest Rate
Revolving line of credit	Revolving line of credit	$	—			$	57,000			Revolving line of credit	$	—			$	15,000	10.44	%
Term loan	Term loan	199,000		8.70	%	119,080		7.10	%	Term loan	189,142		12.16	%	199,000		9.81	%
Notes payable, non-current		875				875
Notes payable										Notes payable	875				875
Total borrowings	Total borrowings	199,875				176,955				Total borrowings	190,017				214,875
Less: unamortized debt issuance costs and discounts(1)	Less: unamortized debt issuance costs and discounts(1)	8,555				—				Less: unamortized debt issuance costs and discounts(1)	7,000				8,345
Less: current portion of long-term debt	Less: current portion of long-term debt	2,000				9,692				Less: current portion of long-term debt	875				3,375
Long-term debt	Long-term debt	$	189,320			$	167,263			Long-term debt	$	182,142			$	203,155

Revolving line of credit unamortized deferred financing charges(1):	Revolving line of credit unamortized deferred financing charges(1):	$	1,042			$	2,015			Revolving line of credit unamortized deferred financing charges(1):	$	807			$	988

(1) Loan origination costs associated with the Company'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.

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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 ~~Agreement's~~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. ~~The variable interest rate on the term loan was 10.31% as of October 2, 2022.~~

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.

~~Table of Contents~~

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 ~~were~~have been filed as exhibits to the Company’s Current ~~Report~~Reports on Form 8-K filed with the Securities and Exchange Commission on March 10, ~~2022.~~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 of 2022, the Company expensed approximately $1.7 million of deferred financing charges related to the extinguishment of the Prior Credit Agreement on March 4, 2022. These charges were recorded to interest expense, net and other on the Condensed Consolidated Statements of Operations and Comprehensive ~~Loss~~Income (Loss) for the forty weeks ended October 2, 2022. In association with the execution of the new Credit Agreement, the Company recognized $4.8 million of deferred financing charges, and $6.1 million of original issuance discount.

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7. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accounts payable, and current accrued expenses and other liabilities approximate fair value due to the ~~short term~~short-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'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 ~~2, 2022~~1, 2023 and December ~~26, 2021~~25, 2022 (in thousands):


		October 2, 2022		Level 1		Level 2		Level 3			October 1, 2023		Level 1		Level 2		Level 3
Assets:	Assets:									Assets:
Investments in rabbi trust	Investments in rabbi trust	$	4,020	$	4,020	$	—	$	—	Investments in rabbi trust	$	2,137	$	2,137	$	—	$	—
Total assets measured at fair value	Total assets measured at fair value	$	4,020	$	4,020	$	—	$	—	Total assets measured at fair value	$	2,137	$	2,137	$	—	$	—

		December 26, 2021		Level 1		Level 2		Level 3			December 25, 2022		Level 1		Level 2		Level 3
Assets:	Assets:									Assets:
Investments in rabbi trust	Investments in rabbi trust	$	6,276	$	6,276	$	—	$	—	Investments in rabbi trust	$	4,250	$	4,250	$	—	$	—
Total assets measured at fair value	Total assets measured at fair value	$	6,276	$	6,276	$	—	$	—	Total assets measured at fair value	$	4,250	$	4,250	$	—	$	—

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 Condensed Consolidated Financial Statements on a nonrecurring basis include items such as property, plant and equipment, right of use assets, and other intangible assets. These assets are measured at fair value if determined to be impaired.

The Company has measured non-financial assets for impairment using continuing and projected future cash flows, 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 ~~$5.8~~$15.3 million and ~~$27.3 million, recognizing an impairment expense of $2.2 million and $13.0~~$26.7 million during the twelve and forty weeks ended October ~~2, 2022,~~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 ~~$3.6~~$10.5 million and ~~$14.3~~$20.2 million in the twelve and forty weeks ended October ~~2, 2022, respectively.~~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 ~~impairment was~~impairments were recorded as a result of quantitative impairment analyses.

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Disclosures of Fair Value of Other Assets and Liabilities

The Company's liability under its credit facility is carried at historical cost in the accompanying Condensed Consolidated Balance Sheets. As of October ~~2, 2022,~~1, 2023, the fair value of the credit facility was approximately ~~$194.8~~$188.0 million and the principal amount carrying value was ~~$199.0~~$189.1 million. The credit facility term loan is reported net of ~~$8.6~~$7.0 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of October ~~2, 2022.~~1, 2023. The carrying value ~~approximated~~of the credit facility was $214.0 million and the fair value of the credit facility was $205.1 million as of December ~~26, 2021, as the interest rate on the instrument approximated current market rates.~~25, 2022. The interest rate on the credit facility represents a level 2 fair value input.

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8. Commitments and Contingencies

Because litigation is inherently unpredictable, assessing contingencies related to litigation is a complex process involving highly subjective judgment about potential outcomes of future 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 ongoing discovery and development of information important to the matter. In addition, damage amounts claimed in litigation against us may be unsupported, exaggerated, or unrelated to possible outcomes, and as such are not meaningful indicators of our potential liability or financial exposure. 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 ~~condensed 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. These include employment related claims and claims from Guests or Team Members alleging illness, injury, food quality, health, or operational concerns. To date, none of these claims,~~contingencies, certain of which are covered by insurance ~~policies, have had a material effect on the Company.~~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 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. ~~However, a~~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 ~~2, 2022,~~1, 2023, we had a balance of ~~$4.5~~$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.~~amount for this and other matters.

As of October ~~2, 2022,~~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 ~~$128.4~~$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 assets	7,400
Operating lease liabilities	(8,250)
Operating lease assets, net	(850)

Other assets, net of liabilities(1)	299

Intangible assets, net	1,443

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's Discussion and Analysis of Financial Condition and Results of Operations

Management'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. All comparisons under this heading between ~~2022~~2023 and ~~2021~~2022 refer to the twelve and forty weeks ended October 1, 2023 and October 2, 2022, ~~and October 3, 2021,~~ 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," or the "Company"), primarily operates, franchises, and develops full-service restaurants with ~~525~~508 locations in North America. As of October ~~2, 2022,~~1, 2023, the Company owned ~~424~~417 restaurants located in 3839 states. The Company also had ~~101~~91 franchised full-service restaurants in 1614 states and one Canadian province. The Company operates its business as one operating and one reportable segment.

~~Financial and Operational~~ Highlights for the Third Quarter of Fiscal 2023, Compared to the Third Quarter of Fiscal 2022

~~The following summarizes the operational and financial highlights~~•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 a 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 ~~2, 2022:~~1, 2023 there were 409 and 408 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 same period in the prior year, is presented in the table below:

(millions)

Restaurant Revenue for the twelve weeks ended October ~~3, 2021~~2, 2022

~~270.2~~282.4

Increase/(decrease) in comparable restaurant revenue(1)

~~14.1~~ (9.6)

Increase/(decrease) ~~from~~in non-comparable ~~restaurants~~restaurant revenue

~~(1.9)~~0.3

Total increase/(decrease)

~~12.2~~ (9.3)

Restaurant Revenue for the twelve weeks ended October ~~2, 2022~~1, 2023

~~282.4~~273.1

~~The following summarizes~~

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Restaurant revenues and operating costs (GAAP measures), and restaurant level operating profit (a non-GAAP measure) for the ~~operational and financial highlights during~~period are detailed in the ~~forty weeks ended October 2, 2022:~~table below:

~~(millions)~~

~~Restaurant Revenue for the forty weeks ended October 3, 2021~~

~~861.0~~

~~Increase/(decrease) in comparable restaurant revenue(1)~~

~~93.6~~

~~Increase/(decrease) from non-comparable restaurants~~

~~(2.9)~~

~~Total increase/(decrease)~~

~~90.7~~

~~Restaurant Revenue for the forty weeks ended October 2, 2022~~

~~951.7~~


	Twelve Weeks Ended						Forty Weeks Ended
	October 1, 2023		October 2, 2022		Increase/ (Decrease)		October 1, 2023		October 2, 2022		Increase/ (Decrease)
Restaurant revenue (millions)	$	273.1	$	282.4	(3.3)	%	$	973.3	$	951.6	2.3	%
Restaurant operating costs:
Cost of sales	65.1		70.6		(7.8)	%	236.2		234.3		0.8	%
Labor	103.7		100.5		3.2	%	358.8		340.3		5.5	%
Other operating	50.4		52.9		(4.7)	%	174.2		172.7		0.9	%
Occupancy	23.5		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)~~Comparable restaurant revenue represents revenue~~ Restaurant Level Operating Profit is a non-GAAP measure. See below for a reconciliation of Restaurant Level Operating Profit to Income from ~~Company-owned restaurants that have operated five full quarters~~Operations and Income from Operations as a percentage of ~~the end of the period presented.~~total revenues.

Restaurant revenues and operating 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 Ended
October 2, 2022 October 3, 2021 Increase/(Decrease)
Restaurant revenue (millions) $ 282.4 $ 270.2 4.5 %
Restaurant operating costs: (Percentage of Restaurant Revenue) (Basis Points)
Cost of sales 25.0 % 23.2 % 180
Labor 35.6 36.9 (130)
Other operating 18.7 19.0 (30)
Occupancy 8.1 8.3 (20)
Total 87.4 % 87.5 % (10)

~~Table of Contents~~


		Forty Weeks Ended									Twelve Weeks Ended								Forty Weeks Ended
		October 2, 2022			October 3, 2021			Increase/(Decrease)			October 1, 2023			October 2, 2022			Increase/ (Decrease)		October 1, 2023			October 2, 2022			Increase/(Decrease)
Restaurant revenue (millions)	Restaurant revenue (millions)	$	951.7		$	861.0		10.5	%	Restaurant revenue (millions)	$	273.1		$	282.4		(3.3)	%	$	973.3		$	951.6		2.3	%
Restaurant operating costs:	Restaurant operating costs:	(Percentage of Restaurant Revenue)						(Basis Points)		Restaurant operating costs:	(Percentage of Restaurant Revenue)						(Basis Points)		(Percentage of Restaurant Revenue)						(Basis Points)
Cost of sales	Cost of sales	24.6		%	22.5		%	210		Cost of sales	23.8		%	25.0		%	(120)		24.3		%	24.6		%	(30)
Labor	Labor	35.8			36.0			(20)		Labor	38.0			35.6			240		36.9			35.8			110
Other operating	Other operating	18.1			18.1			—		Other operating	18.4			18.7			(30)		17.9			18.2			(30)
Occupancy	Occupancy	8.0			8.6			(60)		Occupancy	8.6			8.1			50		7.9			8.0			(10)
Total		86.5		%	85.3		%	120
Total Restaurant Operating Costs										Total Restaurant Operating Costs	88.8		%	87.4		%	140		86.8		%	86.6		%	20

Restaurant Level Operating Profit(1)										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 rounding 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,~~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 and October 3, 2021:~~2022:


		Twelve Weeks Ended				Forty Weeks Ended					Twelve Weeks Ended				Forty Weeks Ended
		October 2, 2022		October 3, 2021		October 2, 2022		October 3, 2021			October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Net loss as reported	Net loss as reported	$	(12,567)	$	(14,980)	$	(33,605)	$	(28,689)	Net loss as reported	$	(8,161)	$	(12,650)	$	(7,496)	$	(34,198)

Loss per share - diluted:	Loss per share - diluted:									Loss per share - diluted:
Net loss as reported	Net loss as reported	$	(0.79)	$	(0.95)	$	(2.12)	$	(1.83)	Net loss as reported	$	(0.52)	$	(0.80)	$	(0.47)	$	(2.16)
Gain on sale leaseback, net of expenses										Gain on sale leaseback, net of expenses	(0.94)		—		(1.84)		—
Gain on sale of restaurant property										Gain on sale of restaurant property	—		(0.58)		—		(0.58)
Litigation contingencies										Litigation contingencies	0.23		0.01		0.57		—
Restaurant closure costs, net										Restaurant closure costs, net	(0.01)		(0.10)		0.10		0.02
Severance and executive transition										Severance and executive transition	0.02		0.11		0.20		0.12
Asset impairment	Asset impairment	0.14		—		0.82		0.09		Asset impairment	0.30		0.14		0.45		0.82
Gain on sale of restaurant property		(0.58)		—		(0.58)		—
Change in accounting estimate, gift card breakage revenue, net of commissions(1)		—		—		(0.33)		—
Executive transition		0.11		—		0.12		—
Write-off of unamortized debt issuance costs(2)		—		—		0.11		—
Other financing costs(3)		0.06		—		0.09		—
Other(1)										Other(1)	0.02		—		0.09		—
Closed corporate office costs, net of sublease income										Closed corporate office costs, net of sublease income	—		0.02		0.02		0.02
Other financing costs(2)										Other financing costs(2)	—		0.06		—		0.09
COVID-19 related charges										COVID-19 related charges	—		0.01		—		0.03
Change in estimate, gift card breakage(3)										Change in estimate, gift card breakage(3)	—		—		—		(0.33)
Write-off of unamortized debt issuance costs(4)										Write-off of unamortized debt issuance costs(4)	—		—		—		0.11
Income tax expense	Income tax expense	0.09		(0.03)		(0.08)		(0.16)		Income tax expense	0.10		0.09		0.11		(0.08)
COVID-19 related charges		0.01		0.02		0.03		0.07
Restaurant closure costs (gains)		(0.10)		0.07		0.02		0.34
Closed corporate office, net of sublease income		0.02		—		0.02		—
Litigation contingencies		0.01		0.01		—		0.08
Board and stockholder matter costs		—		—		—		0.01

Adjusted loss per share - diluted	Adjusted loss per share - diluted	$	(1.03)	$	(0.88)	$	(1.90)	$	(1.40)	Adjusted loss per share - diluted	$	(0.79)	$	(1.04)	$	(0.78)	$	(1.94)

Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	15,892		15,709		15,816		15,647		Basic	15,799		15,892		15,949		15,816
Diluted		15,892		15,709		15,816		15,647
Diluted(5)										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 Prior 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. ~~See Note 1. Basis of Presentation and Recent Accounting Pronouncements~~The impact comprises $5.9 million included in ~~Part I. Financial Information~~Franchise royalties, fees, and other revenue partially offset by $0.6 million in ~~this Quarterly Report~~gift card commission costs included in Selling on ~~form 10-Q.~~the Condensed Consolidated Statements of Operations.

~~(2)~~(4) Write-off of unamortized debt issuance costs related to the remaining unamortized debt issuance costs related to our Prior Credit Agreement ~~(as defined below)~~ with the completion of the refinancing of our Prior Credit Agreement in the first quarter of fiscal year 2022.

~~(3)~~(5) ~~Other financing costs includes legal and other charges related~~For the twelve weeks ended October 1, 2023, the impact of dilutive shares is excluded in the calculations due to the ~~refinancing~~net loss position for the quarter. For diluted shares reported on the Condensed Consolidated Statement of ~~our Prior Credit Agreement in~~Operations, the ~~first quarter~~impact of ~~2022.~~dilutive shares is excluded due to the reported net loss for the quarter.

We believe the non-GAAP measure of adjusted loss per ~~diluted share~~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 ~~diluted share~~share-diluted excludes the effects of ~~changes~~change in ~~accounting estimates,~~estimate, gift card breakage, asset impairment, litigation contingencies, the write-off of unamortized debt issuance costs, restaurant ~~and office~~ closure costs, other financing costs, gain on sale leaseback, net of expenses, closed corporate office costs, net of sublease income, COVID-19 related ~~costs,~~charges, severance and executive transition costs, and ~~related~~ income tax ~~effects.~~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 ~~diluted share~~share-diluted differently, and as a result our measure of adjusted loss per ~~diluted share~~share-diluted may not be directly comparable to those of other companies. Adjusted loss per ~~diluted share~~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.

Table of Contents

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 Ended				Forty Weeks Ended
	October 1, 2023		October 2, 2022		October 1, 2023		October 2, 2022
Net loss as reported	$	(8,161)	$	(12,650)	$	(7,496)	$	(34,198)
Interest expense, net	5,885		4,419		19,766		15,137
Income tax provision (benefit)	278		(43)		453		453
Depreciation and amortization	14,672		17,368		52,253		58,924
EBITDA	12,674		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 contingencies	3,600		133		9,140		47
Restaurant closure costs, net	(91)		(1,570)		1,546		309
Severance and executive transition	341		1,825		3,195		1,954
Asset impairment	4,800		2,187		7,187		13,048
Other	277		—		1,366		—
Closed corporate office costs, net of sublease income	78		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.

Table of Contents

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 Ended						Forty Weeks Ended
	October 1, 2023			October 2, 2022			October 1, 2023			October 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 revenue	4,427		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		0.1	586		0.1	514		0.1
Selling	8,771		3.2	14,194		4.9	22,692		2.3	37,503		3.8
General and administrative expenses	19,190		6.9	21,498		7.5	66,656		6.7	64,665		6.6
Depreciation and amortization	14,672		5.3	17,368		6.1	52,253		5.3	58,924		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. The 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 the ongoing operations of 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 Ended		Forty Weeks Ended			Twelve Weeks Ended		Forty Weeks Ended
		October 2, 2022	October 3, 2021	October 2, 2022	October 3, 2021		October 1, 2023	October 2, 2022	October 1, 2023	October 2, 2022
Company-owned:	Company-owned:					Company-owned:
Beginning of period	Beginning of period	426	430	430	443	Beginning of period	418	426	414	430

Opened during the period						Opened during the period	—	—	1	—
Acquired from franchisees						Acquired from franchisees	—	—	5	—
Closed during the period	Closed during the period	(2)	—	(6)	(13)	Closed during the period	(1)	(2)	(3)	(6)
End of period	End of period	424	430	424	430	End of period	417	424	417	424
Franchised:	Franchised:					Franchised:
Beginning of period	Beginning of period	102	101	101	103	Beginning of period	91	102	97	101
Opened during the period	Opened during the period	—	—	1	—	Opened during the period	—		—	1
Closed during the period	Closed during the period	(1)	—	(1)	(2)	Closed during the period	—	(1)	(1)	(1)
Sold to Company during the period						Sold to Company during the period	—		(5)
End of period	End of period	101	101	101	101	End of period	91	101	91	101
Total number of restaurants	Total number of restaurants	525	531	525	531	Total number of restaurants	508	525	508	525

1620

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The following table presents total Company-owned and franchised restaurants by state or province as of October ~~2, 2022:~~1, 2023:


		Company-Owned Restaurants	Franchised Restaurants		Company-Owned Restaurants	Franchised Restaurants

State:	State:			State:
Arkansas	Arkansas	2	2	Arkansas	2	1
Alaska	Alaska		3	Alaska		3
Alabama	Alabama	4		Alabama	4
Arizona	Arizona	17	1	Arizona	18	1
California	California	57		California	57
Colorado	Colorado	22		Colorado	22
Connecticut	Connecticut		3	Connecticut	3
Delaware	Delaware		5	Delaware		5
Florida	Florida	18		Florida	17
Georgia	Georgia	6		Georgia	6
Iowa	Iowa	5		Iowa	5
Idaho	Idaho	8		Idaho	8
Illinois	Illinois	22		Illinois	20
Indiana	Indiana	13		Indiana	11
Kansas	Kansas		5	Kansas		5
Kentucky	Kentucky	4		Kentucky	4
Louisiana	Louisiana	2		Louisiana	1
Massachusetts	Massachusetts	4	2	Massachusetts	5
Maryland	Maryland	12		Maryland	12
Maine	Maine	2		Maine	2
Michigan	Michigan		20	Michigan		19
Minnesota	Minnesota	4		Minnesota	4
Missouri	Missouri	8	3	Missouri	8	3
Montana	Montana		2	Montana		1
North Carolina	North Carolina	17		North Carolina	17
Nebraska	Nebraska	4		Nebraska	4
New Hampshire	New Hampshire	3		New Hampshire	3
New Jersey	New Jersey	12	1	New Jersey	11	1
New Mexico	New Mexico	3		New Mexico	3
Nevada	Nevada	6		Nevada	6
New York	New York	14		New York	14
Ohio	Ohio	18	2	Ohio	17	2
Oklahoma	Oklahoma	5		Oklahoma	5
Oregon	Oregon	15	5	Oregon	15	5
Pennsylvania	Pennsylvania	11	21	Pennsylvania	11	20
Rhode Island	Rhode Island	1		Rhode Island	1
South Carolina	South Carolina	4		South Carolina	4
South Dakota	South Dakota	1		South Dakota	1
Tennessee	Tennessee	11		Tennessee	9
Texas	Texas	20	9	Texas	18	9
Utah	Utah	1	5	Utah	1	5
Virginia	Virginia	20		Virginia	20
Washington	Washington	37		Washington	37
Wisconsin	Wisconsin	11		Wisconsin	11

Province:	Province:			Province:
British Columbia	British Columbia		12	British Columbia		11
Total	Total	424	101	Total	417	91

~~Results of Operations~~

1721

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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 ~~2021~~2022 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 Ended				Forty Weeks Ended		Twelve Weeks Ended						Forty Weeks Ended
		October 2, 2022		October 3, 2021			October 2, 2022		October 3, 2021			October 1, 2023			October 2, 2022		October 1, 2023		October 2, 2022
Revenues:	Revenues:										Revenues:
Restaurant revenue	Restaurant revenue	98.5	%	98.1	%		97.5	%	98.0	%	Restaurant revenue	98.4	%		98.5	%	97.9	%	97.5	%
Franchise and other revenues	Franchise and other revenues	1.5		1.9			2.5		2.0		Franchise and other revenues	1.6			1.5		2.1		2.5
Total revenues	Total revenues	100.0		100.0			100.0		100.0		Total revenues	100.0			100.0		100.0		100.0

Costs and expenses:	Costs and expenses:										Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):	Restaurant operating costs (excluding depreciation and amortization shown separately below):										Restaurant operating costs (excluding depreciation and amortization shown separately below):
Cost of sales	Cost of sales	25.0		23.2			24.6		22.5		Cost of sales	23.8			25.0		24.3		24.6
Labor	Labor	35.6		36.9			35.8		36.0		Labor	38.0			35.6		36.9		35.8
Other operating	Other operating	18.7		19.0			18.1		18.1		Other operating	18.4			18.7		17.9		18.2
Occupancy	Occupancy	8.1		8.3			8.0		8.6		Occupancy	8.6			8.1		7.9		8.0
Total restaurant operating costs	Total restaurant operating costs	87.4		87.5			86.5		85.3		Total restaurant operating costs	88.8			87.4		86.8		86.6
Depreciation and amortization	Depreciation and amortization	6.1		6.9			6.0		7.3		Depreciation and amortization	5.3			6.1		5.3		6.0
Selling, general, and administrative expenses	Selling, general, and administrative expenses	12.4		11.0			10.5		10.2		Selling, general, and administrative expenses	10.1			12.4		9.0		10.5
Pre-opening costs		0.1		0.2			0.1		0.1
Pre-opening and acquisition costs											Pre-opening and acquisition costs	—			0.1		0.1		0.1
Other charges (gains), net	Other charges (gains), net	(1.8)		0.6			0.8		1.1		Other charges (gains), net	(2.1)			(1.8)		(0.7)		0.8
Loss from operations		(2.8)		(4.4)			(1.7)		(2.2)
Income (loss) from operations											Income (loss) from operations	(0.7)			(2.8)		1.3		(1.8)

Interest expense, net and other	Interest expense, net and other	1.6		1.0			1.7		1.1		Interest expense, net and other	2.1			1.6		2.0		1.7
Loss before income taxes	Loss before income taxes	(4.4)		(5.4)			(3.4)		(3.3)		Loss before income taxes	(2.8)			(4.4)		(0.7)		(3.5)
Income tax provision (benefit)	Income tax provision (benefit)	—		—			—		—		Income tax provision (benefit)	0.1			—		—		—
Net loss	Net loss	(4.4)	%	(5.4)	%		(3.4)	%	(3.3)	%	Net loss	(2.9)	%		(4.4)	%	(0.8)	%	(3.5)	%

Revenues


		Twelve Weeks Ended						Forty Weeks Ended							Twelve Weeks Ended						Forty Weeks Ended
(Revenues in thousands)	(Revenues in thousands)	October 2, 2022		October 3, 2021		Percent Change		October 2, 2022		October 3, 2021		Percent Change		(Revenues in thousands)	October 1, 2023		October 2, 2022		Percent Change		October 1, 2023		October 2, 2022		Percent Change
Restaurant revenue	Restaurant revenue	$	282,449	$	270,202	4.5	%	$	951,718	$	861,036	10.5	%	Restaurant revenue	$	273,133	$	282,415	(3.3)	%	$	973,307	$	951,633	2.3	%
Franchise and other revenues	Franchise and other revenues	4,439		5,242		(15.3)	%	24,810		17,658		40.5	%	Franchise and other revenues	4,427		4,390		0.8	%	20,713		24,302		(14.8)	%
Total revenues	Total revenues	$	286,888	$	275,444	4.2	%	$	976,528	$	878,694	11.1	%	Total revenues	$	277,560	$	286,805	(3.2)	%	$	994,020	$	975,935	1.9	%
Average weekly net sales volumes in Company-owned restaurants	Average weekly net sales volumes in Company-owned restaurants	$	55,469	$	52,599	5.5	%	$	55,927	$	50,324	11.1	%	Average weekly net sales volumes in Company-owned restaurants	$	54,572	$	55,469	(1.6)	%	$	58,446	$	55,927	4.5	%
Total operating weeks	Total operating weeks	5,092		5,137		(0.9)	%	17,017		17,110		(0.5)	%	Total operating weeks	5,005		5,092		(1.7)	%	16,653		17,017		(2.1)	%
Net sales per square foot		106		101		5.3	%	358		322		11.1	%

1822

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Restaurant revenue for the twelve weeks ended October ~~2, 2022,~~1, 2023, which comprises primarily food and beverage sales, ~~increased $12.2~~decreased $9.3 million, or ~~4.5%~~3.3%, as compared to the third quarter of ~~2021.~~2022. Restaurant revenue decreased primarily due to a 3.4% decrease in comparable restaurant revenue. The comparable restaurant revenue decrease was driven by a 10.4% decrease in Guest count, partially offset by a 7.0% increase in average Guest 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 Guest check resulted from a 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 ~~$14.1~~$26.4 million, or ~~5.3%~~2.9%, increase in comparable restaurant revenue, ~~and~~partially offset by a ~~$1.9~~$4.8 million decrease at non-comparable restaurants, including the impact of restaurant closures. The comparable restaurant revenue increase was driven by a ~~9.0%~~7.5% increase in average Guest check, ~~and~~partially offset by a ~~3.7%~~4.6% decrease in Guest count. The increase in average Guest check resulted from a ~~2.5%~~7.9% increase in menu ~~mix, a 7.7% increase in~~ pricing and ~~was~~a 0.9% decrease in discounts, partially offset by a ~~1.2%~~1.3% decrease ~~from higher discounts.~~in menu mix. The ~~increase~~decrease in menu mix was primarily driven by ~~our limited time~~Guests shifting visits from third party delivery platforms with elevated menu ~~offerings~~prices, to dine in visits at standard menu prices, and the removal of low Guest preference, but higher ~~dine-in sales volumes.~~priced burger options. Dine-in sales comprised ~~72.3% of total food and beverage sales during the third quarter of 2022, as compared to 69.2% in the same period in 2021.~~

Restaurant revenue for the forty weeks ended October 2, 2022, increased $90.7 million, or 10.5%, as compared to the forty weeks ended October 3, 2021. The increase was due to a $93.6 million, or 11.2%, increase in comparable restaurant revenue, and a $2.9 million decrease at non-comparable restaurants, including the impact of restaurant closures. The comparable restaurant revenue increase was driven by a 10.6% increase in average Guest check, and a 0.6% increase in Guest count. The increase in average Guest check resulted from a 4.2% increase in menu mix, a 6.3% increase in pricing, and a 0.1% decrease in discounts. The increase in menu mix was primarily driven by our limited time menu offerings and higher dine-in sales volumes. Dine-in sales comprised 70.9%74.8% of total food and beverage sales during the forty weeks ended October ~~2, 2022,~~1, 2023, as compared to ~~64.5%~~70.9% in the same period in ~~2021.~~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 ~~are comprised of Company-owned~~include those restaurants that have operated five full quarters as of the end of the period presented. ~~The Company-owned restaurants that were temporarily closed due to the COVID-19 pandemic were not included in the comparable base for the forty weeks ended October 2, 2022 or October 3, 2021.~~ 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 reopened and new restaurants during the period, the average square footage of our restaurants, as well as the impact of changing capacity limitations in response to COVID-19 levels in a given locality. Net sales per square foot represents the total restaurant revenue for Company-owned restaurants included in the comparable base divided by the total square feet of Company-owned restaurants included in the comparable base.period.

Franchise and other revenue ~~decreased $0.8~~increased by less than $0.1 million, or ~~15.3%~~0.8%, for the twelve weeks ended October 1, 2023 compared to the twelve weeks ended October 2, 2022, and decreased $3.6 million, or 14.8% for the forty weeks ended October 1, 2023 compared to the ~~twelve weeks ended October 3, 2021. Our franchisees~~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 ~~flat~~a decrease of 2.3% comparable restaurant revenue for the twelve weeks ended October ~~2, 2022~~1, 2023 compared to the same period in ~~2021.~~

~~Franchise~~2022, and ~~other~~an increase of 2.3% for the forty weeks ended October 1, 2023 compared to the same period in 2022. Other revenue increased ~~$7.2~~$0.9 million for the twelve weeks ended October 1, 2023 compared to the twelve weeks ended October 2, 2022 primarily due to higher gift card breakage and the reclassification of the year-to-date closed corporate office sublease income to other charges (gains) during the twelve weeks ended October 2, 2022. Other revenue decreased $0.9 million for the forty weeks ended October 2, 2022 compared to the forty weeks ended October 3, 2021, primarily due to the re-evaluation of the estimated redemption pattern related to gift cards resulting in a $5.9 million adjustment to gift card breakage from aligning our estimate to the updated estimated redemption pattern. Our franchisees reported a comparable restaurant revenue increase of 8.0% for the forty weeks ended October 2, 20221, 2023 compared to the same period in ~~2021.~~2022 primarily due to the change in estimate over gift card breakage in 2022.

Cost of Sales
Twelve Weeks Ended Forty Weeks Ended
(In thousands, except percentages) October 2, 2022 October 3, 2021 Percent Change October 2, 2022 October 3, 2021 Percent Change
Cost of sales $ 70,640 $ 62,671 12.7 % $ 234,283 $ 193,754 20.9 %
As a percent of restaurant revenue 25.0 % 23.2 % 1.8 % 24.6 % 22.5 % 2.1 %


	Twelve Weeks Ended								Forty Weeks Ended
(In thousands, except percentages)	October 1, 2023			October 2, 2022			Percent Change		October 1, 2023			October 2, 2022			Percent Change
Cost of sales	$	65,128		$	70,640		(7.8)	%	$	236,171		$	234,283		0.8	%
As a percent of restaurant revenue	23.8		%	25.0		%	(1.2)	%	24.3		%	24.6		%	(0.3)	%

Cost of sales, which comprises of food and beverage costs, is variable and generally fluctuates with sales volume. Cost of sales as a percentage of restaurant revenue ~~increased 180~~decreased 120 and 30 basis points for the twelve and forty weeks ended October ~~2, 2022~~1, 2023 as compared to the same ~~period~~periods in ~~2021.~~2022. The ~~increase was~~decreases were primarily driven by ~~commodity inflation,~~menu price increases and implementation of various cost savings initiatives, partially offset by ~~pricing and favorable mix shifts.~~

~~Cost of sales as a percentage of restaurant revenue increased 210 basis points for the forty weeks ended October 2, 2022 as compared to the same period in 2021. The increase was primarily driven by~~ commodity ~~inflation, partially offset by favorable mix shifts and pricing.~~inflation.

1923

Table of Contents

Labor


		Twelve Weeks Ended								Forty Weeks Ended									Twelve Weeks Ended								Forty Weeks Ended
(In thousands, except percentages)	(In thousands, except percentages)	October 2, 2022			October 3, 2021			Percent Change		October 2, 2022			October 3, 2021			Percent Change		(In thousands, except percentages)	October 1, 2023			October 2, 2022			Percent Change		October 1, 2023			October 2, 2022			Percent Change
Labor	Labor	$	100,522		$	99,725		0.8	%	$	340,273		$	310,333		9.6	%	Labor	$	103,741		$	100,522		3.2	%	$	358,841		$	340,273		5.5	%
As a percent of restaurant revenue	As a percent of restaurant revenue	35.6		%	36.9		%	(1.3)	%	35.8		%	36.0		%	(0.2)	%	As a percent of restaurant revenue	38.0		%	35.6		%	2.4	%	36.9		%	35.8		%	1.1	%

Labor costs include ~~restaurant-level~~restaurant level hourly wages and management salaries as well as related taxes and benefits. For the twelve and forty weeks ended October ~~2, 2022,~~1, 2023, labor as a percentage of restaurant revenue ~~decreased 130~~increased 240 and 110 basis points compared to the same period in ~~2021.~~2022. The ~~decrease~~increase was primarily driven by ~~sales leverage, lower hiring costs,~~investments in hourly and ~~lower~~ management labor, payroll taxes, and incentive compensation, ~~costs,~~ partially offset by ~~wage rate inflation.~~

~~For the forty weeks ended October 2, 2022,~~group insurance. In 2023, we made investments in management and hourly labor ~~as a percentage of~~to support an enhanced Guest experience, with an objective to drive increases in guest traffic count over time, resulting in an increase in restaurant revenue decreased 20 basis points compared to the same period in 2021. The decrease was primarily driven by sales leverage, lower group insurance, and lower management incentive compensation costs, partially offset by higher wage rate inflation.profitability.

Other Operating


		Twelve Weeks Ended								Forty Weeks Ended									Twelve Weeks Ended								Forty Weeks Ended
(In thousands, except percentages)	(In thousands, except percentages)	October 2, 2022			October 3, 2021			Percent Change		October 2, 2022			October 3, 2021			Percent Change		(In thousands, except percentages)	October 1, 2023			October 2, 2022			Percent Change		October 1, 2023			October 2, 2022			Percent Change
Other operating	Other operating	$	52,858		$	51,462		2.7	%	$	172,725		$	156,102		10.6	%	Other operating	$	50,351		$	52,858		(4.7)	%	$	174,243		$	172,725		0.9	%
As a percent of restaurant revenue	As a percent of restaurant revenue	18.7		%	19.0		%	(0.3)	%	18.1		%	18.1		%	—	%	As a percent of restaurant revenue	18.4		%	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, and other miscellaneous costs. For the twelve weeks ended October ~~2, 2022,~~1, 2023, other operating costs as a percentage of restaurant revenue decreased 30 basis points as compared to the same period in ~~2021.~~2022. The decrease was primarily driven by reduced third party commission expenses associated with lower ~~hiring advertisement~~off premise mix and lower commission rates, lower supplies costs driven by negotiated savings, and lower ~~off-premises supplies, and sales leverage,~~contract janitorial expenses, partially offset by ~~an increase in utilities~~higher repairs and ~~credit card fees.~~maintenance costs.

For the forty weeks ended October ~~2, 2022,~~1, 2023, other operating costs as a percentage of restaurant revenue ~~was flat~~decreased 30 basis points compared to the same period in ~~2021.~~2022. The decrease was primarily driven by reduced third party commission expenses associated with lower off premise mix and lower commission rates, lower contract janitorial expenses which were partially offset by higher repairs and maintenance costs.

Occupancy


		Twelve Weeks Ended								Forty Weeks Ended									Twelve Weeks Ended								Forty Weeks Ended
(In thousands, except percentages)	(In thousands, except percentages)	October 2, 2022			October 3, 2021			Percent Change		October 2, 2022			October 3, 2021			Percent Change		(In thousands, except percentages)	October 1, 2023			October 2, 2022			Percent Change		October 1, 2023			October 2, 2022			Percent Change
Occupancy	Occupancy	$	22,828		$	22,519		1.4	%	$	76,406		$	74,233		2.9	%	Occupancy	$	23,523		$	22,828		3.0	%	$	76,806		$	76,406		0.5	%
As a percent of restaurant revenue	As a percent of restaurant revenue	8.1		%	8.3		%	(0.2)	%	8.0		%	8.6		%	(0.6)	%	As a percent of restaurant revenue	8.6		%	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. ~~For the twelve weeks ended October 2, 2022, occupancy~~Occupancy costs as a percentage of restaurant revenue ~~decreased 20~~increased 50 basis points for the twelve weeks ended October 1, 2023 compared to the same period in ~~2021 primarily driven by sales leverage.~~

~~For~~2022. The increase is due to the ~~forty weeks ended October 2, 2022, occupancy costs as a percentage~~impact of an increase in fixed rents, deleveraging from reduced restaurant revenue, ~~decreased 60 basis points compared to~~and the ~~same period~~sale-leaseback of 18 restaurant properties in ~~2021 primarily driven by sales leverage, partially offset by higher insurance costs.~~2023.

Our fixed rents for the twelve weeks ended October 1, 2023 and October 2, 2022 ~~and October 3, 2021~~ were ~~$16.1~~$16.6 million and ~~$15.8~~$16.1 million, an increase of ~~$0.3 million.~~ $0.5 million, primarily due to increased expenses related to the sale-leaseback of 18 locations and the acquisition of five restaurants from a franchisee, partially offset by net Company-owned restaurant closures.

For the forty weeks ended October 1, 2023, occupancy costs as a percentage of restaurant revenue decreased 10 basis points compared to the same period in 2022 primarily due to the sale-leaseback of 18 restaurant properties in 2023.

Our fixed rents for the forty weeks ended October 1, 2023 and October 2, 2022 ~~and October 3, 2021~~ were ~~$53.5~~$53.6 million and ~~$52.8~~$53.5 million, an increase of ~~$0.6 million.~~$0.1 million, due to increased 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 Company-owned restaurant closures.

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Depreciation and Amortization
Twelve Weeks Ended Forty Weeks Ended
(In thousands, except percentages) October 2, 2022 October 3, 2021 Percent Change October 2, 2022 October 3, 2021 Percent Change
Depreciation and amortization $ 17,368 $ 18,881 (8.0) % $ 58,924 $ 63,984 (7.9) %
As a percent of total revenues 6.1 % 6.9 % (0.8) % 6.0 % 7.3 % (1.3) %


	Twelve Weeks Ended								Forty Weeks Ended
(In thousands, except percentages)	October 1, 2023			October 2, 2022			Percent Change		October 1, 2023			October 2, 2022			Percent Change
Depreciation and amortization	$	14,672		$	17,368		(15.5)	%	$	52,253		$	58,924		(11.3)	%
As a percent of total revenues	5.3		%	6.1		%	(0.8)	%	5.3		%	6.0		%	(0.7)	%

Depreciation and amortization ~~includes~~include depreciation on capital expenditures for restaurants and corporate assets as well as amortization of ~~acquired~~reacquired franchise rights, leasehold interests, and certain liquor licenses. For the twelve and forty weeks ended October ~~2, 2022,~~1, 2023, depreciation and amortization expense as a percentage of revenue decreased 80 and 70 basis points ~~over~~compared to the same period in ~~2021~~2022 primarily due to ~~net closed Company-owned restaurants,~~asset impairments and ~~sales leverage.~~

For the forty weeks ended October 2, 2022, depreciation and amortization expense as a percentage of revenue decreased 130 basis points over the same period in 2021 primarily due to net closed Company-owned restaurants and sales leverage.disposals.

Selling, General, and Administrative


		Twelve Weeks Ended								Forty Weeks Ended									Twelve Weeks Ended								Forty Weeks Ended
(In thousands, except percentages)	(In thousands, except percentages)	October 2, 2022			October 3, 2021			Percent Change		October 2, 2022			October 3, 2021			Percent Change		(In thousands, except percentages)	October 1, 2023			October 2, 2022			Percent Change		October 1, 2023			October 2, 2022			Percent Change
Selling, general, and administrative	Selling, general, and administrative	$	35,692		$	30,343		17.6	%	$	102,168		$	89,299		14.4	%	Selling, general, and administrative	$	27,961		$	35,692		(21.7)	%	$	89,348		$	102,168		(12.5)	%
As a percent of total revenues	As a percent of total revenues	12.4		%	11.0		%	1.4	%	10.5		%	10.2		%	0.3	%	As a percent of total revenues	10.1		%	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 marketing and advertising costs; restaurant support center, regional, and franchise support salaries and benefits; travel; professional and consulting fees; corporate information systems; legal expenses; office rent; training; and board of ~~directors~~directors' expenses.

General and administrative costs in the twelve weeks ended October ~~2, 2022 increased $3.8~~1, 2023 decreased $2.3 million, or ~~21.5%~~10.7%, as compared to the same period in ~~2021.~~2022. The ~~increase~~decrease was primarily driven by a ~~timing shift of our annual~~decrease in salaries and stock compensation due to a reduction in force and executive transition, and decreased travel due to holding a 2022 leadership conference ~~increased stock based compensation expense,~~ and ~~merit increases,~~no leadership conference in 2023, partially offset by higher incentive compensation and lower ~~corporate office costs.~~capitalized wages due to fewer eligible capital projects.

General and administrative costs in the forty weeks ended October ~~2, 2022~~1, 2023 increased ~~$7.0~~$2.0 million, or ~~12.1%~~3.1%, as compared to the same period in ~~2021.~~2022. The increase was primarily driven by ~~the 2022 leadership conference,~~higher incentive compensation, increased ~~stock based compensation expense, merit increases,~~travel, and ~~increased manager-in-training~~lower capitalized costs due to fewer eligible capital projects, partially offset by ~~lower corporate office costs.~~a decrease in wages and stock compensation due to the reduction in force and executive transition.

Selling costs in the twelve and forty weeks ended October ~~2, 2022 increased $1.5~~1, 2023 decreased $5.4 million, or ~~12.2%~~38.2%, and $14.8 million, or 39.5%, as compared to the same ~~period~~periods in ~~2021.~~2022. The ~~increase~~decrease was primarily driven by ~~increased~~decreased marketing ~~spend.~~spend in internet and local media.

~~Selling costs in the forty weeks ended October 2, 2022 increased $5.9 million, or 18.5%, as compared to the same period in 2021. The increase was primarily driven by increased marketing spend.~~Pre-opening Costs


	Twelve Weeks Ended								Forty Weeks Ended
(In thousands, except percentages)	October 1, 2023			October 2, 2022			Percent Change		October 1, 2023			October 2, 2022			Percent 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		%	—	%

~~Pre-opening Costs~~
Twelve Weeks Ended Forty Weeks Ended
(In thousands, except percentages) October 2, 2022 October 3, 2021 Percent Change October 2, 2022 October 3, 2021 Percent Change
Pre-opening costs $ 217 $ 418 (48.1) % $ 514 $ 792 (35.1) %
As a percent of total revenues 0.1 % 0.2 % (0.1) % 0.1 % 0.1 % — %
* Percentage increases and decreases over 100 percent were not considered meaningful

Pre-opening costs, which are expensed as incurred, comprise the costs related to preparing restaurants to introduce ~~Donatos®~~Donatos® and other initiatives, as well as direct costs, including labor, occupancy, training, and marketing, incurred related to opening new restaurants and hiring the initial work force. Our pre-opening costs fluctuate from period to period, depending upon, but not limited to, the number of restaurants where ~~Donatos®~~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.

~~We incurred~~For the twelve weeks ended October 1, 2023, pre-opening costs decreased by $0.2 million due to no new restaurant openings or rollouts of Donatos®. Pre-opening costs increased by $0.1 million during the~~twelve~~ ~~and~~ forty weeks ended October ~~2, 2022~~1, 2023 related to one additional new restaurant opening in Glendale, AZ partially offset by the rollout of ~~Donatos®. As of October 2, 2022, the Company had completed its rollout of Donatos® at approximately 50 restaurants for 2022.~~25 less Donatos® locations.

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Interest Expense, Net and Other

Interest expense, net and other was $5.9 million for the twelve weeks ended October 1, 2023 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 ~~an increase of $1.7~~was $6.1 million ~~or 59.9%, compared to the same period in 2021.~~and $4.5 million, respectively. The $1.6 million increase was primarily ~~related~~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 ~~increased $50.5~~decreased $5.0 million compared to the same period in ~~2021, and a higher weighted average interest rate for the quarter. Our weighted average interest rate on our credit facility debt was 9.7% for the twelve weeks ended October 2,~~ 2022, ~~as compared to 6.8% for the same period in 2021.~~also contributed.

Interest expense, net and other was $19.5 million for the forty weeks ended October 1, 2023 and $16.2 million for the forty weeks ended October 2, 2022, an increase of ~~$6.2~~$3.4 million, or ~~61.7%, compared to~~21.0%. Interest expense for the ~~same period in 2021.~~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 a higher weighted average interest rate, higher average outstanding debt, which increased ~~$37.2~~$5.0 million compared to the same period in ~~2021,~~2022, and ~~a higher weighted average interest rate as well as~~ 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 ~~8.7%~~12.6% for the forty weeks ended October ~~2, 2022~~1, 2023 as compared to ~~6.6%~~8.7% for the same period in ~~2021.~~2022.

Interest income and other decreased by $0.2 million and $1.1 million for the twelve and forty weeks ended October 1, 2023, respectively. The decreases were due to 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 forty-week period.

Income Tax Provision

The effective tax rate for the twelve weeks ended October ~~2, 2022~~1, 2023 was a ~~0.3%~~3.5% benefit, compared to a ~~0.2%~~0.3% benefit for the twelve weeks ended October ~~3, 2021.~~2, 2022. The effective tax rate for both periods include changes in the valuation allowance as a result of originating temporary differences during the year and varies from statutory rates primarily as a result of the valuation allowance as discussed in 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 ~~2, 2022~~1, 2023 was a ~~1.4%~~6.4% expense, compared to a ~~1.1% benefit~~1.3% expense for the forty weeks ended October ~~3, 2021.~~

~~During~~2, 2022. The effective tax rate for both periods include changes in the ~~forty weeks~~valuation allowance as a result of originating temporary differences during the year and varies from statutory rates primarily as a result of the valuation allowance as discussed in the Company's Annual Report on Form 10-K for the fiscal year ended October 2, 2022, the Company received $14.8 million of federal and state refund claims, respectively, and expects to receive an additional $0.7 million over the next 12-15 months due to processing delays at the IRS and state authorities.December 25, 2022.

Liquidity and Capital Resources

Cash and cash equivalents, and restricted cash increased ~~$35.4~~$2.6 million to ~~$58.1~~$60.8 million as of October ~~2, 2022,~~1, 2023, from ~~$22.8~~$58.2 million at the beginning of the fiscal year. ~~As the Company continues to recover from the COVID-19 pandemic and generates operating cash flow, the~~The Company is using available cash flow from operations to maintain existing restaurants and infrastructure, and execute on its long-term strategic ~~initiatives, and pay down debt.~~initiatives. As of October ~~2, 2022,~~1, 2023, the Company had approximately ~~$75.0~~$73.6 million in liquidity, including cash ~~on hand~~and cash equivalents and available borrowing capacity under ~~its credit facility.~~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					Forty Weeks Ended
		October 2, 2022		October 3, 2021			October 1, 2023		October 2, 2022
Net cash provided by operating activities	Net cash provided by operating activities	$	38,800	$	37,617	Net cash provided by operating activities	$	17,361	$	38,800
Net cash used in investing activities		(18,297)		(19,967)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	18,992		(18,297)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	14,921		(16,037)		Net cash provided by (used in) financing activities	(33,741)		14,921
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(44)		28		Effect of exchange rate changes on cash	—		(44)
Net change in cash and cash equivalents, and restricted cash	Net change in cash and cash equivalents, and restricted cash	$	35,380	$	1,641	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 $1.2~~decreased $21.4 million to ~~$38.8~~$17.4 million for the forty weeks ended October ~~2, 2022.~~1, 2023. The ~~change~~decrease in net cash provided by operating activities is primarily attributable to ~~changes in working capital, including~~ the receipt of an income tax ~~refunds received~~refund of $14.7 million in 2022, ~~partially offset by decreased cash from earnings after non-cash items, as presented~~and severance payments and higher interest payments in ~~the Condensed Consolidated Statements of Cash Flows.~~

~~Investing Cash Flows~~

Net cash flows used in investing activities decreased $1.7 million to $18.3 million for the forty weeks ended October 2, 2022, as compared to $20.0 million for the same period in 2021. The decrease is primarily due to proceeds received in connection with the sale of a restaurant property, partially offset by increased spending on restaurant improvements, and investments in technology.2023.

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Investing Cash Flows

Net cash flows provided by investing activities were $19.0 million for the forty weeks ended October 1, 2023, as compared to net cash flows used of $18.3 million for the same period in 2022. The increase 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.

The following table lists the components of our capital expenditures, net of currency translation, for the forty weeks ended October ~~2, 2022~~1, 2023 and October ~~3, 2021~~2, 2022 (in thousands):


		Forty Weeks Ended					Forty Weeks Ended
		October 2, 2022		October 3, 2021			October 1, 2023		October 2, 2022
Restaurant improvement capital and other	Restaurant improvement capital and other	$	12,376	$	6,467	Restaurant improvement capital and other	$	16,715	$	12,376
Investment in technology, infrastructure, and other		8,274		5,355
Donatos® expansion		4,396		7,687
Donatos® expansion						Donatos® expansion	8,602		4,396
Technology, infrastructure, and other						Technology, infrastructure, and other	10,336		8,274
New restaurants and restaurant refreshes	New restaurants and restaurant refreshes	1,989		478		New restaurants and restaurant refreshes	1,421		1,989
Total capital expenditures	Total capital expenditures	$	27,036	$	19,987	Total capital expenditures	$	37,074	$	27,035

Financing Cash Flows

Net cash flows ~~provided by~~used in financing activities ~~increased $31.0 million to $14.9~~were $33.7 million for the forty weeks ended October ~~2, 2022,~~1, 2023, as compared to net cash flows ~~used in~~provided by financing activities of ~~$16.0~~$14.9 million in the same period in ~~2021. The increase is primarily~~2022.

In 2022, financing activities were a source of cash, due to ~~$15.9 million in~~ net ~~borrowings in 2022 compared to a net paydown of~~draws made on long-term debt ~~of $15.7 million in 2021~~ as a result of the Company's refinancing of debt on March 4, ~~2022~~2022. In 2023, the use of cash results primarily from the Company’s repayment of outstanding debt with proceeds from the sale-leaseback transaction, $10.0 million of share repurchases, and ~~$3.9 million in initial deposit proceeds received related to~~standard principal payments due under the ~~sale~~terms of ~~a restaurant property in~~ the ~~second quarter of 2022, partially offset by an increase in cash used for debt issuance costs.~~Company’s Credit Agreement.

~~New~~ Credit ~~Agreement~~Facility

On March 4, 2022, the Company ~~entered into a new Credit Agreement (the "Credit Agreement"), which~~ replaced its prior amended and restated ~~credit agreement~~Credit Agreement (the "Prior Credit Agreement")~~. The five-year $225.0 million~~ with a new Credit Agreement (as amended to the date hereof, the "Credit Agreement"), which provides for a ~~$25.0 million revolving line of credit~~new Senior Secured Term Loan and ~~a $200.0 million term loan (collectively, the “Credit Facility”~~Revolving Credit Facility (the "Credit Facility"). The ~~new~~ Credit ~~Agreement~~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 (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.

As of October ~~2, 2022,~~1, 2023, the Company had outstanding borrowings under the Credit ~~Agreement~~Facility of ~~$190.4~~$182.1 million net of ~~$8.6~~$7.0 million of unamortized deferred financing charges and discounts, of which ~~$2.0~~$0.9 million was classified as current. As of October ~~2, 2022,~~1, 2023, the Company had $25.0 million of available borrowing capacity under its Credit ~~Agreement.~~Facility.

As of October ~~2, 2022,~~1, 2023, the Company had ~~$7.8~~$11.7 million of letters of credit issued against cash collateral, compared to ~~$8.6~~$7.8 million as of the prior comparable period. The Company's cash collateral is recorded in Restricted cash on our Condensed Consolidated Balance Sheets as of the quarter ended October ~~2, 2022.~~1, 2023.

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, as well as a Total Net Leverage ratio covenant. As of October ~~2, 2022,~~1, 2023, we were in compliance with all debt covenants.

Debt Outstanding

Total debt outstanding ~~increased $22.9~~decreased $24.9 million to ~~$199.9~~$190.0 million at October ~~2, 2022,~~1, 2023, from ~~$177.0~~$214.9 million at December ~~26, 2021,~~25, 2022, primarily driven by ~~net proceeds from the execution~~payments of ~~the new Credit Facility~~long-term debt during the forty weeks ended October ~~2, 2022.~~1, 2023.

Table of Contents

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-maturing~~currently maturing liabilities to pay for capital expenditures, debt repayment, or to repurchase stock as allowed. When necessary, we utilize our 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 credit facility will be sufficient to satisfy any working capital deficits and our planned capital expenditures.

~~Table of Contents~~

Share 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~~$75.0 million of the Company's common stock. The share repurchase authorization was effective as of August 9, 2018, and will terminate upon completing repurchases of ~~$75~~$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. From the date of the current program approval through October 2, 2022, we have repurchased a total of 226,500 shares at an average price of $29.14 per share for an aggregate amount of $6.6 million. Accordingly, as of October 2, 2022, we had $68.4 million of availability under the current share repurchase program.

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 ability to repurchase shares ~~is limited~~ to certain conditions set forth by ~~our~~the lenders in the Credit ~~Agreement; repurchases shall not exceed (in any fiscal year) the greater of $2,500,000 and 4% of Consolidated EBITDA calculated on a Pro Forma Basis for the then most recently ended period.~~

~~Inflation~~

The primary inflationary factors affecting our operations are food, labor costs, energy costs, and materials used in the construction of new restaurants. Increases in wage rates have directly affected our labor costs in recent years. Additionally, many of our leases require us to pay taxes, maintenance, repairs, insurance, and utilities, all of which are generally subject to inflationary increases. Labor cost and commodity cost inflation had a negative impact on our financial condition and results of operations during the twelve and forty weeks ended October 2, 2022. Uncertainties related to fluctuations in costs, including energy costs, commodity prices, annual indexed and other 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 2022.Facility.

Seasonality

Our business is subject to seasonal fluctuations. ~~Prior to the COVID-19 pandemic,~~Historically, sales in most of our restaurants ~~have been higher~~were greater during the summer months and winter holiday season and ~~lower~~lesser during the fall season. As a result, our quarterly operating results ~~and comparable restaurant revenue~~ may fluctuate ~~significantly as a result of seasonality.~~significantly. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other ~~quarter, and comparable restaurant sales for any particular future period may decrease.~~quarter.

Contractual Obligations

There were no other material changes outside the ordinary course of business to our contractual obligations since the filing of the ~~Company's Annual Report on~~2022 Form 10-K for the fiscal year ended December ~~26, 2021, except~~25, 2022. Our current purchase obligations for long-term debt obligations resulting from the refinancing of our Credit Agreement in March 2022 as previously discussed above and in Note 6. Borrowings, of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, Contractual long-term debt payments as of October 2, 2022 are as follows (in thousands):

Payments Due by Period
Total 2022 2023-2024 2025-2026 2027 and Thereafter
Long-term debt obligations(1)
$ 291,775 $ 5,707 $ 45,187 $ 44,351 $ 196,530
Purchase obligations(2)
$ 171,974 $ 18,335 $ 68,287 $ 38,848 $ 46,504

~~(1)~~ Long-term debt obligations primarily represent minimum required principal payments under our Credit Facility including estimated interest of $91.9 million based on a 10.31% average borrowing interest rate.

~~(2)Purchase obligations includes the Company's share of expected~~ system-wide fixed price commitments for food, beverage, equipment, and restaurant supply ~~items. These amounts~~items are ~~estimates based on both purchase commitments for contracts,~~$223.7 million as ~~well as anticipated inventory needed for the Company's restaurants, and could vary~~of October 1, 2023 of which $43.3 million are due ~~to the timing of anticipated volumes.~~

~~See the maturity of lease liabilities table~~ in ~~Note 3. Leases, in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.~~

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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 ~~impact from the COVID-19 pandemic,~~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 ~~26, 2021.~~25, 2022.

Recently Issued and Recently Adopted Accounting Standards

None noted.

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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") 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 (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," "could," "estimate," "expect," "future," "intend," "may," "plan," "project," "will," ~~"continue,~~"would," and similar expressions. Forward-looking statements ~~may~~in this report relate to, among other things: (i) ~~anticipated impacts of litigation, including employment-related claims, on our financial position and results of operations, (ii) anticipated impacts of COVID-19 on~~ our business objectives and strategic plans; (ii) working capital, and the ability of our ~~financial position~~future cash flows from restaurant operations and ~~results~~our borrowing capacity to satisfy future working capital deficits and capital expenditures; (iii) our share repurchase program; (iv) our expectations about restaurant operating costs, including commodity and food prices and labor and energy costs, and our ability to mitigate 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, ~~operations, (iii)~~and risks associated with, future cash flows, liquidity, capital expenditures, other capital deployment opportunities and taxes; (vii) the seasonality of our business; (viii) our ability to successfully implement, and our expectations regarding, our ~~ability~~North Star five-point plan to ~~attract~~enhance the Company’s competitive positioning, including the timing of our expected payments in connection with severance and ~~retain Team Members, (iv)~~executive transition costs; (ix) litigation contingencies and the adequacy of our ~~business focus~~reserves for legal matters; (x) our expectations regarding, and ~~strategy, (v)~~ our ability to ~~maintain our working capital position, (vi) our ability to use our credit facility to satisfy our working capital deficit, short-term liquidity requirements~~mitigate changes in, interest rates, commodity prices and ~~capital expenditures, (vii) anticipated impacts~~other factors; and (xi) transactions including sale-leaseback transactions and acquisitions of ~~inflation, and (viii) availability of food and supplies meeting our specifications~~certain restaurants from ~~alternate sources.~~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:

•~~the impact of COVID-19 on~~ our ~~results of operations, supply chain,~~ability to implement, and ~~liquidity;~~ the effectiveness of, the Company's strategic initiatives, including ~~alternative~~our North Star plan, labor models, service and operational improvement initiatives;

•~~our ability to recruit staff, train, and retain our workforce for service execution;~~

•~~the effectiveness of the Company's marketing strategies and promotions;~~

•~~menu changes, including the anticipated sales growth, costs, and timing of the Donatos® expansion;~~

•~~the implementation, rollout, and timing of technology solutions in our restaurants and at our restaurant support center, in addition to digital platforms that are accessed by our Guests;~~

•~~our ability to achieve and sustain revenue and cost savings from off-premise sales and other initiatives;~~

•~~competition in the casual dining market and discounting by competitors;~~

•~~changes in consumer spending trends and habits;~~

•changes in the cost and availability of key food products and distribution, restaurant equipment, construction materials, labor, and energy, including the existence of alternate suppliers and the availability of supplies meeting our specification;

•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~~Credit Facility borrowings ~~including~~and our ~~ability to refinance our credit facility, on terms we expect or at all~~

•~~the level and impacts of inflation;~~

•~~the impacts of interest rate increases;~~potential sale-leaseback transactions;

•the impact of, ~~federal, state,~~ and ~~local regulation of the Company's business;~~

•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; ~~and~~

25•changes in interest rates and commodity prices, and our ability to mitigate the impacts of such changes;

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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.~~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 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's Annual Report on Form 10-K for the fiscal year ended December ~~26, 2021.~~25, 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 ~~2, 2022,~~1, 2023, we had ~~$199.0~~$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 ~~$2.0~~$1.9 million on an annualized basis.

The Company'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 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's reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the management of the Company ("Management"), including the Company'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'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'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's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company'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 further information related to our litigation contingencies, see Note 8. Commitments and Contingencies, in the Notes to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 1A. Risk Factors

Risk factors associated with our business are contained in Item ~~1A,~~1, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December ~~26, 2021~~25, 2022 filed with the SEC on ~~March 10, 2022.~~February 28, 2023. There have been no material changes from the risk factors disclosed in the fiscal year ~~2021~~2022 Annual Report on Form 10-K.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the twelve weeks ended October ~~2, 2022,~~1, 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 ~~nor were~~or that are reported in this Item. 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 million of the Company’s common stock. The share repurchase authorization became effective on August 9, 2018 and will terminate upon completing repurchases of $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 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 ~~made by~~will be determined based on share price, market conditions, legal requirements, and other factors. The repurchase program does not obligate the ~~Company. Our ability~~Company to acquire any particular amount of common stock, and the Company may suspend or discontinue the repurchase ~~shares is limited~~program at any time. The table below provides a summary of the Company’s purchases of its own common stock during the third quarter of 2023. In response to ~~conditions set forth by our lenders in~~ the ~~Credit Agreement;~~COVID-19 pandemic, the Company temporarily suspended share repurchases ~~shall not exceed (in any~~effective March 14, 2020. In May 2023, the Company resumed share repurchases.


Period (1)	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly announced Plans or Programs	Maximum Dollar Value of Shares (or Units) that May yet be Purchased Under the Plan (in thousands)










7/10/2023 - 8/6/2023	0	$0.00
8/7/2023 - 9/3/2023	0	$0.00
9/4/2023 - 10/1/2023	480,071	$10.33	1,088,588	58,480

(1) The reported periods conform to the Company's fiscal ~~year) the greater~~calendar composed of ~~$2,500,000 and 4% of Consolidated EBITDA calculated on a Pro Forma Basis for the then most recently ended period (as each term is defined in the Credit Agreement).~~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, 2023, none of our directors or officers adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement” as such terms are defined under Item 408 of Regulation S-K.

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ITEM 6. Exhibits


Exhibit Number						Description
(3.1)						Restated Certificate of Incorporation of Red Robin Gourmet Burgers, Inc., dated as of May 28, 2015. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on May 29, 2015.

(3.2)						Fifth Amended and Restated Bylaws dated March 20, 2023. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on March 24, 2023.

(10.1)						~~Offer Letter~~Amendment No. 1 dated July 17, 2023 by and ~~between~~among Red Robin Gourmet Burgers, Inc., Red Robin International, Inc., Fortress Credit Corp. and ~~G.J. Hart,~~the lenders party thereto, to Credit Agreement, dated ~~July 13,~~March 4, 2022. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on July ~~14, 2022.~~19, 2023.

(10.2)*						Red Robin Gourmet Burgers, Inc. Executive Severance Plan. Incorporated by reference to Exhibit 10.1 to our amended Current Report on Form 8-K filed on August 29, 2023.

31.1						Rule 13a-14(a) Certification of Chief Executive Officer

31.2						Rule 13a-14(a) Certification of Chief Financial Officer

32.1						Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

101						The following financial information from the Quarterly Report on Form 10-Q of Red Robin Gourmet Burgers, Inc. for the quarter ended October ~~2, 2022~~1, 2023 formatted in XBRL ~~(eXtensible~~(extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at October ~~2, 2022~~1, 2023 and December ~~26, 2021;~~25, 2022; (ii) Condensed Consolidated Statements of Operations and Comprehensive Loss for the ~~twelve and~~ forty weeks ended October ~~2, 2022~~1, 2023 and October ~~3, 2021;~~2, 2022; (iii) Condensed Consolidated Statements of Stockholders' Equity at October ~~2, 2022~~1, 2023 and October ~~3, 2021;~~2, 2022; (iv) Condensed Consolidated Statements of Cash Flows for the forty weeks ended October ~~2, 2022~~1, 2023 and October ~~3, 2021;~~2, 2022; and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

104						Cover 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 ~~2, 2022~~3, 2023

By:

/s/ ~~Lynn S. Schweinfurth~~Todd Wilson

(Date)

~~Lynn S. Schweinfurth~~Todd Wilson

(Chief Financial Officer)

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		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders' Equity (Deficit)	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1415
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2730
Item 4.	Controls and Procedures	2730
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	2831
Item 1A.	Risk Factors	2831
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2831
Item 5.	Other Information	35
Item 6.	Exhibits	2933
	Signature	3034


October 2, 2022	Finance(1)		Operating(2)
Lease assets, net(3)	$	7,233	$	375,747

Current portion of lease obligations	1,015		47,726
Long-term portion of lease obligations	8,630		401,274
Total	$	9,645	$	449,000

December 26, 2021	Finance(1)		Operating(2)
Lease assets, net(3)	$	9,664	$	400,825

Current portion of lease obligations	1,194		48,842
Long-term portion of lease obligations	10,765		435,136
Total	$	11,959	$	483,978


	Finance Leases		Operating Leases
Remainder of 2022	$	260	$	13,829
2023	1,386		76,978
2024	1,479		76,047
2025	1,189		71,921
2026	1,245		66,078
Thereafter	6,454		323,647
Total future lease payments	$	12,013	$	628,500
Less imputed interest	2,368		179,500
Total lease liability	$	9,645	$	449,000


	Payments Due by Period
	Total		2022		2023-2024		2025-2026		2027 and Thereafter
Long-term debt obligations(1)	$	291,775	$	5,707	$	45,187	$	44,351	$	196,530
Purchase obligations(2)	$	171,974	$	18,335	$	68,287	$	38,848	$	46,504