TABLE OF CONTENTS

			Page
Part I — Financial Information			3

Item 1	Financial Statements:		3

	Condensed Consolidated Balance Sheets as of ~~September~~June 26, ~~2021~~2022 and December ~~27, 2020~~26, 2021		3

	Condensed Consolidated Statements of Operations for the Thirteen and ~~Thirty-nine~~Twenty-six Week Periods ended ~~September~~June 26, ~~2021~~2022 and ~~September~~June 27, ~~2020~~2021		4

	Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen and ~~Thirty-nine~~Twenty-six Week Periods ended ~~September~~June 26, ~~2021~~2022 and ~~September~~June 27, ~~2020~~2021		5

	Condensed Consolidated Statements of Cash Flows for the ~~Thirty-nine~~Twenty-six Week Periods ended ~~September~~June 26, ~~2021~~2022 and ~~September~~June 27, ~~2020~~2021		6

	Notes to Condensed Consolidated Financial Statements		7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17 16

Item 3	Quantitative and Qualitative Disclosures about Market Risk		24 20

Item 4	Controls and Procedures		25 20

Part II — Other Information			25 21

Item 1	Legal Proceedings		25 21

Item 1A	Risk Factors		26 21

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		26 21

Item 3	Defaults Upon Senior Securities		26 21

Item 4	Mine Safety Disclosures		26 21

Item 5	Other Information		26 22

Item 6	Exhibits		27 22

Signatures		23	28

PART I – FINANCIAL INFORMATION

ITEM1. FINANCIAL STATEMENTS

~~RUTH’S~~

RUTH’S HOSPITALITY GROUP, INC. AND SUBSIDIARIES

Condensed Consolidated Balance ~~Sheets—~~Sheets—Unaudited

(Amounts in thousands, except share and per share data)

	September 26,		December 27,		*June 26,*		*December 26,*
	2021		2020		*2022*		*2021*
Assets
Current assets:
Cash and cash equivalents	$	83,779	$	95,402	$	44,866	$	92,133
Accounts receivable, less allowance for doubtful accounts 2021 - $108; 2020 - $322		16,833		24,309
Accounts receivable, less allowance for doubtful accounts 2022 - $99; 2021 - $106						34,263		41,588
Inventory		7,541		6,930		8,199		8,554
Prepaid expenses and other		3,253		3,653		4,543		3,919
Total current assets		111,406		130,294		91,871		146,194
Property and equipment, net of accumulated depreciation 2021 - $190,345; 2020 - $177,277		118,162		119,887
Property and equipment, net of accumulated depreciation 2022 - $201,473; 2021 - $195,853						135,879		121,706
Operating lease right of use assets		170,217		188,386		192,461		173,754
Goodwill		45,549		45,549		45,549		45,549
Franchise rights, net of accumulated amortization 2021 - $8,218; 2020 - $6,534		42,800		44,484
Other intangibles, net of accumulated amortization 2021 - $1,666; 2020 - $1,569		5,022		4,114
Franchise rights, net of accumulated amortization 2022 - $9,902; 2021 - $8,779						41,116		42,239
Other intangibles, net of accumulated amortization 2022 - $1,763; 2021 - $1,698						5,062		4,990
Deferred income taxes		7,105		8,616		221		0
Other assets		1,077		1,344		1,653		1,547
Total assets	$	501,338	$	542,674	$	513,812	$	535,979

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	7,568	$	4,101	$	8,780	$	11,685
Accrued payroll		13,193		15,344		12,188		17,097
Accrued expenses		10,677		6,449		15,001		12,924
Deferred revenue		52,184		59,030		58,689		69,029
Current operating lease liabilities		18,852		20,854		17,168		17,006
Other current liabilities		4,174		2,543		3,105		7,674
Total current liabilities		106,648		108,321		114,931		135,415
Long-term debt		70,000		115,000		40,000		70,000
Operating lease liabilities		189,330		209,654		215,787		192,666
Unearned franchise fees		2,177		2,186		2,377		2,219
Deferred income taxes						0		399
Other liabilities		69		69		69		69
Total liabilities		368,224		435,230		373,164		400,768
Commitments and contingencies (Note 11)		—		—		—		—

Shareholders' equity:
Common stock, par value $.01 per share; 100,000,000 shares authorized, 34,260,713 shares issued and outstanding at September 26, 2021, 34,256,921 shares issued and outstanding at December 27, 2020		343		343
Common stock, par value $.01 per share; 100,000,000 shares authorized, 33,142,303 shares issued and outstanding at June 26, 2022, 33,575,337 shares issued and outstanding at December 26, 2021						331		336
Additional paid-in capital		80,619		83,424		62,406		68,923
Retained earnings		52,152		23,677		77,911		65,952
Treasury stock, at cost; 71,950 shares at September 26, 2021 and December 27, 2020		—		—
Treasury stock, at cost; 71,950 shares at June 26, 2022 and December 26, 2021						0		0
Total shareholders' equity		133,114		107,444		140,648		135,211
Total liabilities and shareholders' equity	$	501,338	$	542,674	$	513,812	$	535,979

Condensed Consolidated ~~Statements of Operations—~~Income Statement—Unaudited

	13 Weeks Ended						39 Weeks Ended
	September 26,			September 27,			September 26,			September 27,			*13 Weeks Ended*						*26 Weeks Ended*
	2021			2020			2021			2020			*June 26,*			*June 27,*			*June 26,*			*June 27,*
													*2022*			*2021*			*2022*			*2021*
Revenues:
Restaurant sales	$	97,537		$	58,594		$	283,339		$	188,611		$	120,758		$	104,165		$	239,472		$	185,801
Franchise income		4,742			3,511			13,062			8,094			5,129			4,528			9,860			8,320
Other operating income		1,908			1,318			5,980			3,671			2,760			2,217			5,447			4,072
Total revenues		104,187			63,423			302,381			200,376			128,647			110,910			254,779			198,193

Costs and expenses:
Food and beverage costs		33,401			15,908			87,929			54,563			35,962			31,607			74,573			54,528
Restaurant operating expenses		46,030			34,868			129,013			117,224			54,241			45,400			108,880			82,983
Marketing and advertising		2,436			889			7,661			5,285			4,747			3,232			9,662			5,225
General and administrative costs		7,721			7,572			23,691			22,668			9,327			8,774			18,568			15,970
Depreciation and amortization expenses		4,985			5,316			15,131			16,660			5,135			5,084			9,928			10,147
Pre-opening costs		581			403			1,185			1,185			743			159			1,625			604
Loss/(Gain) on lease modifications		—			310			—			(178	)
Loss on legal settlement														6,000			0			6,000			0
Loss on impairment		—			3,272			394			16,253			0			394			0			394
Total costs and expenses		95,154			68,538			265,004			233,660			116,155			94,650			229,236			169,851

Operating income (loss)		9,033			(5,115	)		37,377			(33,284	)
Operating income														12,492			16,260			25,543			28,342

Other income (expense):
Interest expense, net		(678	)		(1,422	)		(3,109	)		(3,341	)		(239	)		(1,128	)		(563	)		(2,431	)
Other		(18	)		(48	)		61			(12	)		34			36			62			80

Income (loss) before income taxes		8,337			(6,585	)		34,329			(36,637	)
Income tax expense (benefit)		1,398			(1,284	)		5,854			(9,920	)
Net income (loss)	$	6,939		$	(5,301	)	$	28,475		$	(26,717	)
Income before income taxes														12,287			15,168			25,042			25,991
Income tax expense														1,952			2,757			4,294			4,455
Net income													$	10,335		$	12,411		$	20,748		$	21,536

Basic earnings (loss) per common share	$	0.20		$	(0.15	)	$	0.83		$	(0.87	)
Basic earnings per common share													$	0.31		$	0.36		$	0.62		$	0.63

Diluted earnings (loss) per common share	$	0.20		$	(0.15	)	$	0.82		$	(0.87	)
Diluted earnings per common share													$	0.31		$	0.36		$	0.61		$	0.62

Shares used in computing earnings (loss) per common share:
Shares used in computing earnings per common share:
Basic		34,421,570			34,240,318			34,367,518			30,826,304			33,529,727			34,398,251			33,559,783			34,340,492
Diluted		34,592,930			34,240,318			34,606,611			30,826,304			33,866,977			34,652,869			33,868,651			34,620,626

Cash dividends declared per common share	$	—		$	—		$	—		$	0.15		$	0.14		$	0		$	0.26		$	0

Condensed Consolidated Statements of ~~Shareholders’ Equity—~~Shareholders’ Equity—Unaudited

							Additional																			*Additional*
	Common Stock						Paid-in			Retained			Treasury Stock				Shareholders'			*Common Stock*						*Paid-in*			*Retained*			*Treasury Stock*				*Shareholders'*
	Shares			Value			Capital			Earnings			Shares		Value		Equity			*Shares*			*Value*			*Capital*			*Earnings*			*Shares*		*Value*		*Equity*
Balance at December 27, 2020		34,257		$	343		$	83,424		$	23,677			72	$	—	$	107,444
Balance at December 26, 2021																					33,575		$	336		$	68,923		$	65,952			72	$	—	$	135,211
Net income		—			—			—			9,125			—		—		9,125			—			—			—			10,413			—		0		10,413
Cash dividends, $0.12 per common share																					—			0			0			(4,109	)		—		0		(4,109	)
Shares issued under stock compensation plan net of shares withheld for tax effects		128			1			(1,802	)		—			—		—		(1,801	)		84			1			(722	)		—			—		—		(721	)
Stock-based compensation		—			—			1,564			—			—		—		1,564			—			—			1,754			—			—		—		1,754
Balance at March 28, 2021		34,385		$	344		$	83,186		$	32,802			72	$	—	$	116,332
Balance at March 27, 2022																					33,659		$	337		$	69,955		$	72,256			72	$	—	$	142,548
Net income		—			—			—			12,411			—		—		12,411			—			0			0			10,335			—		0		10,335
Shares issued under stock compensation plan net of shares withheld for tax effects		42			—			(618	)		—			—		—		(618	)
Stock-based compensation		—			—			1,184			—			—		—		1,184
Balance at June 27, 2021		34,427		$	344		$	83,752		$	45,213			72	$	—	$	129,309
Net income		—			—			—			6,939			—		—		6,939
Shares issued under stock compensation plan net of shares withheld for tax effects		26			—			(334	)		—			—		—		(334	)
Stock-based compensation		—			—			1,028			—			—		—		1,028
Repurchase of common stock		(192	)		(1	)		(3,827	)		—			—		—		(3,828	)
Balance at September 26, 2021		34,261		$	343		$	80,619		$	52,152			72	$	—	$	133,114

							Additional
	Common Stock						Paid-in			Retained			Treasury Stock				Shareholders'
	Shares			Value			Capital			Earnings			Shares		Value		Equity
Balance at December 29, 2019		28,419		$	284		$	40,462		$	53,399			72	$	—	$	94,145
Net loss		—			—			—			(3,818	)		—		—		(3,818	)
Cash dividends, $0.15 per common share		—			—			—			(4,428	)		—		—		(4,428	)
Cash dividends, $0.14 per common share																					—			0			0			(4,680	)		—		0		(4,680	)
Repurchase of common stock		(902	)		(9	)		(13,217	)		—			—		—		(13,226	)		(530	)		(5	)		(9,537	)		—			—		—		(9,542	)
Shares issued under stock compensation plan net of shares withheld for tax effects		100			1			(659	)		—			—		—		(658	)		13			(1	)		(127	)		0			0		0		(128	)
Stock-based compensation		—			—			2,065			—			—		—		2,065			—			0			2,116			0			—		0		2,116
Balance at March 29, 2020		27,617		$	276		$	28,652		$	45,153			72	$	—	$	74,081
Net loss		—			—			—			(17,598	)						(17,598	)
Stock issuance		6,455			65			49,517			—			—		—		49,582
Shares issued under stock compensation plan net of shares withheld for tax effects		72			1			(395	)		—			—		—		(394	)
Stock-based compensation		—			—			1,958			—			—		—		1,958
Balance at June 28, 2020		34,144		$	341		$	79,732		$	27,555			72	$	—	$	107,628
Net loss										$	(5,301	)						(5,301	)
Stock issuance		—			—			(24	)		—			—		—		(24	)
Shares issued under stock compensation plan net of shares withheld for tax effects		112			1			(522	)		—			—		—		(521	)
Stock-based compensation		—			—			2,755			—			—		—		2,755
Balance at September 27, 2020		34,256		$	342		$	81,942		$	22,254			72	$	—	$	104,538
Balance at June 26, 2022																					33,142		$	331		$	62,406		$	77,911			72	$	0	$	140,648

39 Weeks Ended

September 26,

September 27,

2021

2020

Cash flows from operating activities:

Net income (loss)

$
28,475

$
(26,717
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

15,131

16,660

Deferred income taxes

1,511

(3,201
)
Non-cash interest expense

390

190

Loss on impairment

394

16,253

Stock-based compensation expense

3,776

6,778

Changes in operating assets and liabilities:

Accounts receivable

7,476

11,853

Inventories

(699
)

1,929

Prepaid expenses and other

401

(107
)
Other receivable

—

(5,245
)
Other assets

21

(25
)
Accounts payable and accrued expenses

1,810

(8,133
)
Deferred revenue

(6,847
)

(4,439
)
Operating lease liabilities and assets

(4,458
)

(415
)
Other liabilities

1,140

217

Net cash provided by operating activities

48,521

5,598

Cash flows from investing activities:

Acquisition of property and equipment

(8,418
)

(9,007
)
Net cash used in investing activities

(8,418
)

(9,007
)
Cash flows from financing activities:

Principal borrowings on long-term debt

—

105,000

Principal repayments on long-term debt

(45,000
)

(33,800
)
Principal borrowings on the CARES Act loan

—

20,000

Principal repayments on the CARES Act loan

—

(20,000
)
Net proceeds from sale of common stock

—

49,558

Repurchase of common stock

(3,828
)

(13,226
)
Cash dividend payments

—

(4,428
)
Tax payments from the vesting of restricted stock

(2,753
)

(1,573
)
Deferred financing costs

(145
)

(582
)
Net cash (used in) provided by financing activities

(51,726
)

100,949

Net (decrease) increase in cash and cash equivalents

(11,623
)

97,540

Cash and cash equivalents at beginning of period

95,402

5,567

Cash and cash equivalents at end of period

$
83,779

$
103,107

Supplemental disclosures of cash flow information:

Cash paid during the period for:

Interest, net of capitalized interest

$
2,745

$
1,764

Income taxes

$
2,256

$
(1,179
)
Noncash investing and financing activities:

Accrued acquisition of property and equipment

$
4,205

$
29

					*Additional*
	*Common Stock*				*Paid-in*			*Retained*		*Treasury Stock*				*Shareholders'*
	*Shares*		*Value*		*Capital*			*Earnings*		*Shares*		*Value*		*Equity*
Balance at December 27, 2020		34,257	$	343	$	83,424		$	23,677		72	$	—	$	107,444
Net income		—		0		0			9,125		—		0		9,125
Shares issued under stock compensation plan net of shares withheld for tax effects		128		1		(1,802	)		—		—		—		(1,801	)
Stock-based compensation		—		—		1,564			—		—		—		1,564
Balance at March 28, 2021		34,385	$	344	$	83,186		$	32,802		72	$	—	$	116,332
Net loss		—		0		0			12,411						12,411
Shares issued under stock compensation plan net of shares withheld for tax effects		42		0		(618	)		0		0		0		(618	)
Stock-based compensation		—		0		1,184			0		—		0		1,184
Balance at June 27, 2021		34,427	$	344	$	83,753		$	45,213		72	$	0	$	129,310

Notes to Condensed Consolidated Financial ~~Statements—~~Statements—Unaudited

The accompanying unaudited condensed consolidated financial statements of Ruth’s Hospitality Group, Inc. and its subsidiaries (collectively, the ~~Company)~~"Company") as of ~~September~~June 26, ~~2021~~ 2022 and December ~~27, 2020~~26, 2021 and for the thirteen and ~~thirty-nine~~twenty-six week periods ended ~~September~~June 26, ~~2021~~2022 and ~~September~~June 27, ~~2020~~2021 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the ~~SEC)~~"SEC"). The condensed consolidated financial statements include the financial statements of Ruth’s Hospitality Group, Inc. and its wholly owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation.

Ruth’s Hospitality Group, Inc. is a restaurant company focused on the upscale dining segment. Ruth’s Hospitality Group, Inc. operates Company-owned Ruth’s Chris Steak House restaurants and sells franchise rights to Ruth’s Chris Steak House franchisees giving the franchisees the exclusive right to operate similar restaurants in a particular area designated in the franchise agreement. As of ~~September~~June 26, ~~2021,~~2022, there were ~~149~~151 Ruth’s Chris Steak House restaurants, including 7374 Company-owned restaurants, 3three restaurants operating under contractual agreements and 7374 franchisee-owned restaurants, including 2223 international franchisee-owned restaurants in Aruba, Canada, China, Hong Kong, Indonesia, Japan, Mexico, Philippines, Singapore ~~Taiwan~~ and ~~the Philippines.~~Taiwan. All Company-owned restaurants are located in the United States. ~~A new franchisee-owned restaurant opened in September 2021 in Manila, Philippines.~~ Subsequent to the end of the ~~third fiscal~~ quarter, a2 new Company-owned ~~Ruth’s~~Ruth's Chris Steak House ~~restaurant was~~restaurants were opened in ~~Short Hills, NJ.~~Worcester, MA and Long Beach, CA.

The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments), which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. The interim results of operations for the periods ended ~~September~~June 26, ~~2021~~2022 and ~~September~~June 27, ~~2020~~2021 are not necessarily indicative of the results that may be achieved for the full fiscal year. Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to the SEC’s rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form ~~10-K~~10-K for the fiscal year ended December ~~27, 2020.~~26, 2021.

The Company operates on a ~~52-~~52- or ~~53-week~~53-week fiscal year ending on the last Sunday in December. The fiscal quarters ended ~~September~~June 26, ~~2021~~2022 and ~~September~~June 27, ~~2020~~2021 each contained thirteen weeks and are referred to herein as the ~~third~~second quarter of fiscal year ~~2021~~2022 and the ~~third~~second quarter of fiscal year ~~2020,~~2021, respectively. Fiscal years ~~2021~~2022 and ~~2020~~2021 are both ~~52-week~~52-week years.

In March 2020 the World Health Organization declared the novel coronavirus2019 ~~(COVID-19)~~ (COVID-19) a pandemic and the United States declared it a National Public Health Emergency, which has resulted in a significant reduction in revenue at the Company’s restaurants due to mandatory restaurant closures, capacity limitations, social distancing guidelines or other restrictions mandated by governments across the world, including federal, state and local governments in the United States. As a result of these developments, the Company has experienced a significant negative impact on its revenues, results of operations and cash flows compared to periods prior to the onset of the pandemic. ~~During the third quarter~~As of ~~fiscal year 2021, most~~June 26, 2022, all of the ~~Company’s restaurants were operating with open dining rooms. As of September 26, 2021, 75 of the 76~~ Company-owned and -managed restaurants were ~~open and 1 was closed.~~open. This iscontinues to be an unprecedented event in the Company’s history, and as the ~~COVID-19~~COVID-19 pandemic continues to evolve, it remains uncertain how the conditions surrounding ~~COVID-19~~COVID-19 will continue to change. The Company has and could continue to experience macroeconomic impacts arising from the long duration of the ~~COVID-19~~COVID-19 pandemic, including operating restrictions, labor shortages and supply chain disruptions. The extent to which ~~COVID-19~~COVID-19 will continue to impact the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration and severity of the ~~COVID-19~~COVID-19 pandemic, which may be impacted by new and evolving variants of the ~~COVID-19~~COVID-19 virus, ~~and~~ the adoption rate of the ~~COVID-19~~COVID-19 vaccines in the jurisdictions in which the Company operates, the actions taken to contain the impact of ~~COVID-19,~~COVID-19, and further actions that may be taken to limit the resulting public health and economic impact.

Following increases in the number of cases of ~~COVID-19~~COVID-19 throughout the United States and a spike in ~~COVID-19~~COVID-19 cases as a result of the ~~Delta variant,~~Omicron and subsequent variants, some of our restaurants ~~are~~may become subject to ~~COVID-19-related~~COVID-19-related restrictions such as mask ~~and/ or vaccine~~ requirements for team members, guests or both. We continue to monitor state, local, and federal government regulatory and public health responses to the ~~COVID-19 pandemic, including the anticipated federal Occupational Health and Safety Administration’s Emergency Temporary Standard implementing a nationwide vaccine requirement for employees~~COVID-19 pandemic.

Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reporting of revenue and expenses during the periods presented to prepare these condensed consolidated financial statements in conformity with GAAP. Significant items subject to such estimates and assumptions include the carrying amounts of property and equipment, goodwill, franchise rights, operating lease right of use assets and obligations related to gift cards, income taxes, operating lease liabilities, incentive compensation, workers’ compensation and medical insurance. Actual results could differ from those estimates.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740). This update modifies Topic 740 to simplify the accounting for income taxes. The Company adopted this new standard on December 28, 2020. The adoption of ASU 2019-12 did not have a significant impact on the Company’s financial reporting.

The carrying amounts of cash and cash equivalents, receivables, prepaid expenses, accounts payable and accrued expenses and other current liabilities are reasonable estimates of their fair values due to their short duration. Borrowings classified as long-term debt as of ~~September~~June 26, ~~2021~~2022 and December ~~27, 2020~~26, 2021 have variable interest rates that reflect currently available terms and conditions for similar debt. The carrying value, plus unpaid interest and deferred financing costs of ~~$575~~$938 thousand at ~~September~~June 26, ~~2021,~~2022, represents a reasonable estimate of FVfair value (Level 2)2).

The Company did not have any non-financial assets measured at fair value on a non-recurring basis as of ~~September~~June 26, ~~2021.~~2022.

The Company’s non-financial assets measured at fair value on a non-recurring basis as of December ~~27, 2020~~26, 2021 were as follows (in thousands):

The Company leases restaurant facilities and equipment. The Company determines whether an arrangement is or contains a lease at contract inception. The Company’s leases are all classified as operating leases, which are included as operating lease right of use assets (“ROU assets”) and operating lease liabilities in the Company’s condensed consolidated balance sheet. Operating lease liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. ROU assets are measured based on the operating lease liabilities adjusted for lease incentives, initial indirect costs and impairments of operating lease assets. Minimum lease payments include only the fixed lease components of the agreements, as well as any variable rate payments that depend on an index, which are measured initially using the index at the lease commencement dates. To determine the present value of future minimum lease payments, the Company estimates incremental borrowing rates based on the information available at the lease commencement dates, or amendment date for contract modifications. The Company estimates its incremental borrowing rates by determining the synthetic credit rating of the Company using quantitative and qualitative analysis and then adjusting the synthetic credit rating to a collateralized credit rating. A spread curve is then developed using the U.S. corporate bond yield curve of the same credit rating and the U.S. Treasury curve to determine the rate for different terms. The expected lease terms include options to extend when it is reasonably certain the Company will exercise the options up to a total term of 20 years. Total lease cost is expensed on a straight-line basis over the life of a lease. Additionally, incentives received from landlords used to fund leasehold improvements reduce the ROU assets related to those leases and are amortized as reductions to lease expense over the lives of the leases. Variable lease payments that do not depend on a rate or index, payments associated with non-lease components and short-term rentals (leases with terms less than 12 months) are expensed as incurred.

On April 10, 2020, the FASB issued a staff Q&A (the “Staff Q&A”) to provide guidance on its remarks at the April 8, 2020 Board meeting about accounting for rent concessions resulting from the ~~COVID-19~~COVID-19 pandemic. The Staff Q&A affirmed the discussion at the April 8, 2020 meeting by allowing entities to forgo performing the lease-by-lease legal analysis to determine whether contractual provisions in an existing lease agreement provide enforceable rights and obligations related to lease concessions as long as the

concessions are related to ~~COVID-19~~COVID-19 and the changes to the lease do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. In addition, the Staff Q&A affirmed that entities may make an election to account for eligible concessions, regardless of their form, either by ~~(1)~~(1) applying the modification framework for these concessions in accordance with Topic 842 or ~~(2)~~(2) accounting for the concessions as if they were made under the enforceable rights included in the original agreement.

Due to the impacts of the ~~COVID-19~~COVID-19 pandemic, the Company initiated negotiations with its landlords to modify its restaurant lease agreements. ~~During the third quarter of 2021, the Company amended 1 lease.~~ Where applicable, the Company has elected to account for eligible lease concessions as if they were made under the enforceable rights included in the original agreement pursuant to the Staff Q&A.

As of ~~September~~June 26, ~~2021,~~2022, all of the Company-owned Ruth’s Chris Steak House restaurants operated in leased premises, with the exception of the restaurant in Ft. Lauderdale, FL, which is an owned property, and the restaurants in Anaheim, CA, Lake Mary, FL, Princeton, NJ and South Barrington, IL, which operate on leased land. The leases generally provide for minimum annual rental payments with scheduled minimum rent payment increases during the terms of the leases. Certain leases also provide for rent deferral during the initial term, lease incentives in the form of tenant allowances to fund leasehold improvements, and/or contingent rent provisions based on the sales at the underlying restaurants. Most of the Company’s restaurant leases have remaining lease terms of 1 year to 20 years, some of which include options to extend the leases for 5 years or more. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. As of ~~September~~June 26, ~~2021,~~2022, the weighted average remaining lease term and discount rate for operating leases is ~~12.7~~13.7 years and ~~5.3%~~5.4%, respectively.

		13 Weeks Ended		13 Weeks Ended		39 Weeks Ended		39 Weeks Ended			*13 Weeks Ended*		*13 Weeks Ended*		*26 Weeks Ended*		*26 Weeks Ended*
	Classification	September 26, 2021		September 27, 2020		September 26, 2021		September 27, 2020		*Classification*	*June 26, 2022*		*June 27, 2021*		*June 26, 2022*		*June 27, 2021*
Operating lease cost	Restaurant operating expenses and general and administrative costs	$	6,259	$	6,695	$	19,201	$	21,177	Restaurant operating expenses and general and administrative costs	$	6,302	$	4,125	$	12,401	$	8,476
Variable lease cost	Restaurant operating expenses and general and administrative costs		3,200		2,063		10,460		6,733	Restaurant operating expenses and general and administrative costs		3,378		4,315		6,684		7,260
Total lease cost		$	9,459	$	8,758	$	29,661	$	27,910	Total lease cost	$	9,680	$	8,440	$	19,085	$	15,736

As of ~~September~~June 26, ~~2021,~~2022, maturities of lease liabilities are summarized as follows (in thousands):

	Operating Leases			*Operating Leases*
2021, excluding first thirty-nine weeks ended September 26, 2021	$	8,973
2022		25,931
2022, excluding the first twenty-six weeks ended June 26, 2022				$	18,326
2023		23,896			26,110
2024		23,421			25,900
2025		21,975			24,902
2026					23,657
Thereafter		186,864			220,812
Total future minimum rental commitments		291,060			339,707
Imputed interest		(82,878	)		(106,752	)
	$	208,182		$	232,955

Supplemental cash flow information related to operating leases was as follows (in thousands):

	39 Weeks Ended		39 Weeks Ended		*26 Weeks Ended*		*26 Weeks Ended*
	September 26, 2021		September 27, 2020		*June 26, 2022*		*June 27, 2021*
Cash paid for amounts included in the measurement of lease liabilities	$	19,128	$	19,870	$	12,532	$	10,760
Right-of-use assets obtained in exchange for lease obligations	$	2,776	$	16,432	$	29,997	$	1,096
Reduction of right-of-use assets and lease obligations from lease modifications and terminations	$	11,285	$	12,224	$	0	$	(8,572	)

Additionally, as of ~~September~~June 26, ~~2021,~~2022, the Company has executed 43 leases for new Ruth’s Chris Steak House Restaurant locations with undiscounted fixed payments over the initial term of ~~$21.7~~$13.2 million. These leases will commence when the landlords make the properties available to the Company. These leases are expected to commence during the next 12 months. These leases are expected to have an economic lease term of 20 years. The Company will assess the reasonably certain lease term at the lease commencement date.

In the following tables, the Company’s revenue is disaggregated by major component for each category on the consolidated statements of operations (in thousands).

13 Weeks Ended September 26, 2021:	Domestic		International		Total Revenue
Thirteen Weeks Ended June 26, 2022:							Domestic		International		Total Revenue
Restaurant sales	$	97,537	$	—	$	97,537	$	120,758	$	0	$	120,758
Franchise income		4,161		581		4,742		4,476		653		5,129
Other operating income		1,908		—		1,908		2,760		0		2,760
Total revenue	$	103,606	$	581	$	104,187	$	127,994	$	653	$	128,647


13 Weeks Ended September 27, 2020:	Domestic		International		Total Revenue
Restaurant sales	$	58,594	$	—	$	58,594
Franchise income		3,032		479		3,511
Other operating income		1,318		—		1,318
Total revenue	$	62,944	$	479	$	63,423

The following table provides information about receivables and deferred revenue liabilities from contracts with customers (in thousands).

	September 26,		December 27,		June 26,		December 26,
	2021		2020		2022		2021
Accounts receivable, less allowance for doubtful accounts 2021 - $108; 2020 - $322	$	12,634	$	16,578
Accounts receivable, less allowance for doubtful accounts 2022 - $99; 2021 - $106					$	12,757	$	24,179
Deferred revenue	$	52,184	$	59,030	$	58,689	$	69,029
Unearned franchise fees	$	2,177	$	2,186	$	2,377	$	2,219

Significant changes in the deferred revenue balance and the unearned franchise fees balance during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 are presented in the following table (in thousands).

	Deferred			Unearned			Deferred			Unearned
	Revenue			Franchise Fees			Revenue			Franchise Fees
Balance at December 27, 2020	$	59,030		$	2,186
Balance at December 26, 2021							$	69,029		$	2,219
Decreases in the beginning balance from gift card redemptions		(24,293	)		—			(22,729	)		—
Increases due to proceeds received, excluding amounts recognized during the period		17,440			—			12,494			—
Decreases due to recognition of franchise development and opening fees		—			(9	)		—			(142	)
Increases due to proceeds received for franchise development and opening fees		—			—			—			300
Other		7			—			(105	)		—
Balance at September 26, 2021	$	52,184		$	2,177
Balance at June 26, 2022							$	58,689		$	2,377

Significant changes in the deferred revenue balance and the unearned franchise fees balance during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020~~2021 are presented in the following table (in thousands).

	Deferred			Unearned			Deferred			Unearned
	Revenue			Franchise Fees			Revenue			Franchise Fees
Balance at December 29, 2019	$	52,856		$	2,489
Balance at December 27, 2020							$	59,030		$	2,186
Decreases in the beginning balance from gift card redemptions		(18,565	)		—			(18,380	)		—
Increases due to proceeds received, excluding amounts recognized during the period		14,206			—			13,065			—
Decreases due to recognition of franchise development and opening fees		—			(252	)		—			(116	)
Increases due to proceeds received for franchise development and opening fees		—			—			—			—
Other		(81	)		—			12			—
Balance at September 27, 2020	$	48,416		$	2,237
Balance at June 27, 2021							$	53,727		$	2,070

					*June 26,*		*December 26,*
	September 26,		December 27,		*2022*		*2021*
	2021		2020
Senior Credit Facility:
Revolving credit facility	$	70,000	$	115,000	$	40,000	$	70,000
Less current maturities		—		—		—		—
	$	70,000	$	115,000	$	40,000	$	70,000

As of ~~September~~June 26, ~~2021,~~2022, the Company had ~~$70.0~~$40.0 million of outstanding indebtedness under its senior credit facility with approximately ~~$35.3~~$95.3 million of borrowings available, net of outstanding letters of credit of approximately $4.7 million. As of ~~September~~June 26, ~~2021,~~2022, the weighted average interest rate on the Company’s outstanding debt was ~~3.5%~~3.7% and the weighted average interest rate on its outstanding letters of credit was 1.9%. In addition, the fee on the Company’s unused senior credit facility was 0.3%.

~~On October 18, 2021, subsequent to the third fiscal quarter of 2021, the Company entered into an~~

The amended and restated credit agreement ~~which amends and restates its prior credit agreement~~ the Company entered into on October 18, 2021 with Wells Fargo Bank, National Association as administrative agent, and certain other lenders (as amended, ~~and restated, the “Credit Agreement”~~"Credit Agreement")~~. The Credit Agreement~~ provides for a revolving credit facility of $140.0 million with a $10.0 million sub-facility of letters of credit and a $5.0 million sub-facility for swingline loans. Subject to the satisfaction of certain conditions and lender consent, the revolving credit facility may be increased up to a maximum of $200.0 million. The Credit Agreement has a maturity date of October 18, 2026. As of October 29, 2021, the Company had $70.0 million of outstanding indebtedness under its senior credit facility with approximately $65.3 million of borrowings available, net of outstanding letters of credit of approximately $4.7 million.2026.

The Credit Agreement contains customary representations and affirmative and negative covenants (including limitations on indebtedness and liens) as well as financial covenants, as described below, requiring a minimum fixed coverage charge ratio as defined in the Credit Agreement (“Fixed Charge Coverage Ratio”) limiting the Company’s actual leverage ratio as defined in the Credit Agreement (“Maximum Consolidated Leverage Ratio”). The October 2021 amendment and restatement of the Credit Agreement restored the Fixed Charge Coverage Ratio and Maximum Consolidated Leverage Ratio to a Fixed Charge Coverage Ratio equal to or greater than 1.25:1.00 and Maximum Consolidated Leverage Ratio no greater than 3.00:~~1.00, in each case effective for the quarter ended September 26, 2021.~~1.00. Effective with the October 2021 amendment and restatement of the Credit Agreement, ~~the Company is limited to $40.0 million of restricted junior payments per year, which include cash~~ dividends and share repurchases ~~of common stock,~~are not limited if the ~~Maximum~~Company's Consolidated Leverage Ratio is ~~greater~~less than ~~or equal to~~ 2.50:~~1.00.~~1.00 and holds a minimum liquidity of $25.0 million. The Credit Agreement also contains events of default customary for credit facilities of this type (with customary grace periods, as applicable), including nonpayment of principal or interest when due; material incorrectness of representations and warranties when made; breach of covenants; bankruptcy and insolvency; unsatisfied ERISA obligations; unstayed material judgment beyond specified periods; default under other material indebtedness; and certain changes of control of the Company. If any event of default occurs and is not cured within the applicable grace period or waived, the outstanding loans may be accelerated by lenders holding a majority of the commitments and the lenders’ commitments may be terminated. The obligations under the Credit Agreement are guaranteed by certain of the Company’s subsidiaries and are secured by a lien on substantially all of the Company’s personal property assets other than any equity interest in current and future subsidiaries of the Company.

Interest rate margins and the fee for the unused commitment ~~will be~~are calculated based on the Maximum Consolidated Leverage Ratio, and at the Company’s option, revolving loans may bear interest at either:

The applicable margin is based on the Company’s Maximum Consolidated Leverage Ratio, ranging from (a) ~~from~~ 1.50% to 2.25% above the applicable LIBOR rate or (b) 0.50% to 1.25% above the applicable Base Rate.

As of June 26, 2022, we were in compliance with all covenants pertaining to the Credit Agreement.

In October 2019, the Company’s Board of Directors approved a ~~new~~ share repurchase program under which the Company is authorized to repurchase up to $60 million of outstanding common stock from time to time. As a result of ~~September~~the impacts to our business arising from the COVID-19 pandemic, the Company suspended its share repurchase program. During the third quarter of fiscal year 2021 the Company resumed its share repurchase program and 887,515 shares were repurchased at an aggregate cost of $16.6 million, or an average cost of $18.69 per share, through December 27, 2021. During the firsttwenty-six weeks of fiscal year 2022, 529,734 shares were repurchased at an aggregate cost of $9.5 million, or an average cost of $18.01 per share. As of June 26, ~~2021, $37.8~~2022, $15.4 million remained available for future purchases under the share ~~new~~ repurchase program. Subsequent to the end of the second quarter our Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $60 million of outstanding common stock from time to time. This share repurchase plan replaced the previous share repurchase plan announced in October 2019, which has been retired.

As a result of the impacts to our business arising from the COVID-19 pandemic, the Company previously suspended its dividend payments. During the first quarter of fiscal year 2022, the Company resumed its dividend. The Company’s Board of Directors declared the following dividends during the periods presented (amounts in thousands, except per share amounts):

Subsequent to the end of the ~~impacts to our business arising from the COVID-19 pandemic, the Company suspended its share repurchase program and dividend payments.~~ ~~During the third~~second quarter of fiscal year ~~2021~~2022, the ~~Company resumed its~~Company's Board of Directors declared a regular quarterly cash dividend of $0.14 per common and restricted share, ~~repurchase program and repurchased 192,102~~or approximately $4.8 million in the aggregate based on the number of shares ~~totaling $3.8 million through~~ currently outstanding, payable on September ~~26, 2021.~~ 2, 2022 to stockholders of record as of the close of business on August 19, 2022.

Outstanding unvested restricted stock is not included in common stock outstanding amounts. Restricted stock awards outstanding as of ~~September~~June 26, ~~2021~~2022 totaled ~~451,649~~729,694 shares. Restricted stock units outstanding as of ~~September~~June 26, ~~2021~~2022 totaled ~~78,294~~79,143 shares. ~~Performance~~Performance-based stock awards (in the form of market stock units and performance stock units) outstanding as of ~~September~~June 26, ~~2021~~2022 totaled ~~31,108~~205,769 shares.

The Company has 2two reportable segments – the Company-owned steakhouse segment and the franchise operations segment. The Company does not rely on any major customers as a source of revenue. The Company-owned Ruth’s Chris Steak House restaurants, all of which are located in North America, operate within the full-service dining industry, providing similar products to similar customers. Revenues are derived principally from food and beverage sales. As of ~~September~~June 26, ~~2021,~~2022, (i) the Company-owned steakhouse restaurant segment included 7374 Ruth’s Chris Steak House restaurants and 3three Ruth’s Chris Steak House restaurants operating under contractual agreements and (ii) the franchise operations segment included 7374 franchisee-owned Ruth’s Chris Steak House restaurants. Segment profits for the Company-owned steakhouse restaurant segments equal segment revenues less segment expenses. Segment revenues for the Company-owned steakhouse restaurants include restaurant sales, management agreement income and other restaurant income. Gift card breakage revenue is not allocated to operating segments. Not all operating expenses are allocated to operating segments. Segment expenses for the Company-owned steakhouse segment include food and beverage costs and restaurant operating expenses. No other operating costs are allocated to the Company-owned steakhouse segment for the purpose of determining segment profits because such costs are not directly related to the operation of individual restaurants. The accounting policies applicable to each segment are consistent with the policies used to prepare the consolidated financial statements. The profit of the franchise operations segment equals franchise income, which consists of franchise royalty fees and franchise opening fees. No costs are allocated to the franchise operations segment.

Segment information related to the Company’s two reportable business segments follows (in thousands):

													*13 Weeks Ended*						*26 Weeks Ended*
	13 Weeks Ended						39 Weeks Ended						*June 26,*			*June 27,*			*June 26,*			*June 27,*
	September 26,			September 27,			September 26,			September 27,			*2022*			*2021*			*2022*			*2021*
	2021			2020			2021			2020
Revenues:
Company-owned steakhouse restaurants	$	98,713		$	59,447		$	286,880		$	190,664		$	122,417		$	105,474		$	242,409		$	188,167
Franchise operations		4,742			3,511			13,062			8,094			5,129			4,528			9,860			8,320
Unallocated other revenue and revenue discounts		732			465			2,439			1,618			1,101			908			2,510			1,706
Total revenues	$	104,187		$	63,423		$	302,381		$	200,376		$	128,647		$	110,910		$	254,779		$	198,193

Segment profits:
Company-owned steakhouse restaurants	$	19,282		$	8,671		$	69,938		$	18,877		$	32,214		$	28,467		$	58,956		$	50,656
Franchise operations		4,742			3,511			13,062			8,094			5,129			4,528			9,860			8,320
Total segment profit (loss)		24,024			12,182			83,000			26,971
Total segment profit														37,343			32,995			68,816			58,976

Unallocated operating income		732			465			2,439			1,618			1,101			908			2,510			1,706
Marketing and advertising expenses		(2,436	)		(889	)		(7,661	)		(5,285	)		(4,747	)		(3,232	)		(9,662	)		(5,225	)
General and administrative costs		(7,721	)		(7,572	)		(23,691	)		(22,668	)		(9,327	)		(8,774	)		(18,568	)		(15,970	)
Depreciation and amortization expenses		(4,985	)		(5,316	)		(15,131	)		(16,660	)		(5,135	)		(5,084	)		(9,928	)		(10,147	)
Pre-opening costs		(581	)		(403	)		(1,185	)		(1,185	)		(743	)		(159	)		(1,625	)		(604	)
Loss (gain) on lease modifications		—			(310	)		—			178
Loss on settlement														(6,000	)		0			(6,000	)		0
Loss on impairment		—			(3,272	)		(394	)		(16,253	)		0			(394	)		0			(394	)
Interest expense, net		(678	)		(1,422	)		(3,109	)		(3,341	)		(239	)		(1,128	)		(563	)		(2,431	)
Other (income)/expense		(18	)		(48	)		61			(12	)
Income (loss) before income tax expense	$	8,337		$	(6,585	)	$	34,329		$	(36,637	)
Other income														34			36			62			80
Income before income tax expense													$	12,287		$	15,168		$	25,042		$	25,991

Capital expenditures:
Company-owned steakhouse restaurants	$	3,759		$	735		$	6,172		$	8,687		$	9,634		$	2,054		$	16,541		$	2,413
Corporate assets		2,155			70			2,246			320			3,409			91			6,552			91
Total capital expenditures	$	5,914		$	805		$	8,418		$	9,007		$	13,043		$	2,145		$	23,093		$	2,504

On May 15, 2018, the Company’s stockholders approved a new 2018 Omnibus Incentive Plan ~~(2018 Plan)~~(the "2018 Plan") which replaced the Amended and Restated 2005 Equity Incentive Plan ~~(2005 Plan)~~(the "2005 Plan"), which expired on May 30, ~~2018.~~ 2018. The 2018 Plan authorizes 2.5 million shares reserved for future grants. Awards that were previously awarded under the 2005 Plan that are forfeited or cancelled in the future ~~will be~~are made available for grant or issuance under the 2018 Plan. The 1,649,394 shares that were authorized but unissued under the 2005 Plan as of May 15, 2018 were cancelled. As of ~~September~~June 26, ~~2021,~~2022, there were 0 shares of common stock issuable upon exercise of currently outstanding options, and ~~40,920~~33,420 currently outstanding unvested restricted stock awards under the 2005 Plan. As of ~~September~~June 26, ~~2021,~~2022, there were ~~520,131~~981,185 currently outstanding unvested restricted stock awards, restricted stock units, and performance stock awards under the 2018 Plan. As of ~~September~~June 26, ~~2021,~~2022, the 2018 Plan has ~~2,206,038~~1,643,633 shares available for future grants. During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021,~~2022, the Company issued ~~136,410~~250,704 restricted stock awards and units and 174,661performance-based stock units to directors, officers and other employees of the Company. Of the ~~136,410~~425,365 restricted stock ~~awards~~units, restricted stock units and ~~units~~performance stock awards issued during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021, 39,397~~2022, 94,341 shares will vest in fiscal year ~~2022, 39,397~~2023, 94,341 shares will vest in fiscal year ~~2023, 51,076~~2024, 229,463 shares will vest in fiscal year ~~2024~~2025 and ~~6,540~~7,220 shares will vest in fiscal year ~~2026. Additionally, 2,470~~2027. Of the 229,463 shares ~~of restricted stock granted during~~that will vest in fiscal year ~~2019~~2025, 174,661 shares are variable, based on performance targets, and ~~7,802 shares~~are reflected assuming they will be earned at 100% of ~~restricted stock granted during fiscal year 2020 were also fully vested in the first fiscal~~

~~quarter of 2021 in accordance with the termination of an employment agreement.~~ target. Total stock compensation expense recognized during the first ~~thirty-nine~~twenty-six weeks of fiscal years ~~2021~~2022 and ~~2020~~2021 was $~~3.8~~$3.9 million and $~~6.8~~$2.7 million, respectively.

Income tax expense differs from amounts computed by applying the federal statutory income tax rate to income from continuing operations before income taxes as follows:

	39 Weeks Ended						*26 Weeks Ended*
	September 26,			September 27,			*June 26,*			*June 27,*
	2021			2020			*2022*			*2021*
Income tax expense (benefit) at statutory rates		21.0	%		(21.0	%)
Income tax expense at statutory rates								21.0	%		21.0	%
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal benefit		4.6	%		(3.3	%)		4.0	%		4.5	%
Federal employment tax credits		(10.1	%)		(7.8	%)		(10.0	%)		(9.7	%)
Non-deductible executive compensation		2.1	%		2.6	%		2.2	%		2.0	%
Stock-based compensation		(0.4	%)		1.2	%		(0.0	%)		(0.6	%)
Other		(0.2	%)		1.2	%		(0.0	%)		(0.1	%)
Effective tax rate		17.0	%		(27.1	%)		17.2	%		17.1	%

The ~~Employment-related~~employment-related tax credits line in the effective tax rate schedule above is comprised mainly of federal FICA tip credits which the Company utilizes to reduce its periodic federal income tax expense. A restaurant company employer may claim a credit against its federal income taxes for FICA taxes paid on certain wages (the FICA tip credit). The credit against income tax liability is for the full amount of eligible FICA taxes. Employers cannot deduct from taxable income the amount of FICA taxes taken into account in determining the credit.

~~Reflected~~The Company files consolidated and separate income tax returns in the ~~Other line in~~United States federal jurisdiction and many state jurisdictions, respectively. With few exceptions, the ~~effective~~Company is no longer subject to U.S. federal or state income tax ~~rate schedule above~~examinations for the quarter ended September 27, 2020 is a tax benefit of $2.0 million related to the carryback of federal NOLs under the CARES Act, and a tax expense of $2.3 million related to changes in valuation allowances against deferred tax assets for certain state NOL carryforwards.years before 2017.

The following table sets forth the computation of earnings per share (amounts in thousands, except share and per share amounts):

Diluted earnings per share for the ~~third~~second quarter of fiscal ~~years 2021 and 2020~~year 2022 excludes restricted shares of ~~3,546~~45,683 which were outstanding during the period but were anti-dilutive and ~~525,953,~~had no exercise price. There were 0 anti-dilutive shares during the second quarter of fiscal year 2021. Diluted earnings per share for the firsttwenty-six weeks of fiscal year 2022 and 2021 excludes restricted shares of 22,714 and 347, respectively, which were outstanding during the period but were anti-dilutive and had no exercise price. Diluted earnings per share for the first thirty-nine weeks of fiscal year 2021 and 2020 excludes restricted shares of 1,244 and 333,961, respectively, which were outstanding during the period but were anti-dilutive and had no exercise price.

The Company is subject to various claims, possible legal actions and other matters arising in the normal course of business. Management does not expect disposition of these other matters to have a material adverse effect on the financial position, results of operations or liquidity of the Company. The Company expenses legal fees as incurred.

The legislation and regulations related to tax and unclaimed property matters are complex and subject to varying interpretations by both government authorities and taxpayers. The Company remits a variety of taxes and fees to various governmental authorities, including excise taxes, property taxes, sales and use taxes, and payroll taxes. The taxes and fees remitted by the Company are subject to review and audit by the applicable governmental authorities which could assert claims for additional assessments. Although management believes that ~~the~~its tax positions are reasonable, ~~and consequently there are no accrued liabilities for claims which may be asserted,~~ various taxing authorities may challenge certain of the positions taken by the Company which may result in additional liability for taxes and interest. These tax positions are reviewed periodically based on the availability of new information, the lapsing of applicable statutes of limitations, the conclusion of tax audits, the identification of new tax contingencies, or the rendering of relevant court decisions. An unfavorable resolution of assessments by a governmental authority could negatively impact the Company’s results of operations and cash flows in future periods.

The Company is subject to unclaimed or abandoned property (escheat) laws which require the Company to turn over to certain state governmental authorities the property of others held by the Company that has been unclaimed for specified periods of time. The Company is subject to audit of its escheatment practices by individual U.S. ~~states with regard to its escheatment practices.~~states.

On February 26, 2018, a former restaurant hourly employee filed a class action lawsuit in the Superior Court of the State of California for the County of Riverside, alleging that the Company violated the California Labor Code and California Business and Professions Code, by failing to pay minimum wages, ~~pay overtime wages,~~ permit required meal and rest breaks and provide accurate wage statements, among other claims. On September 2, 2020, the class action lawsuit was amended to include two additional proposed class representatives. This lawsuit seeks unspecified penalties under ~~the California’s~~California's Private ~~Attorney’s~~Attorney's General Act in addition to other monetary payments (Quiroz Guerrero, et al. v. ~~Ruth’s~~Ruth's Hospitality Group, ~~Inc.,~~Inc, et al.; Case No ~~RIC1804127)~~RIC1804127) (the "Quiroz Guerroro Action"). The parties are currently engaged in discovery and the court has set a briefing schedule on class certification for mid-2022. Although the ultimate outcome of this matter, including any possible loss, cannot be predicted or reasonably estimated at this time, we have vigorously defended this matter and intend to continue doing so. Additionally, on July 29, 2021, ~~and~~ September 17, 2021, ~~another~~and October 19, 2021, other former restaurant hourly ~~employee~~employees filed complaints in the Superior Court of the State of California for the County of San Francisco, the County of Los Angeles, and the County of ~~Los~~

~~Angeles,~~Contra Costa alleging causes of action substantially similar to the allegations made in the Quiroz Guerrero ~~action,~~Action (collectively, with the Quiroz Guerroro Action, the "Class Action Litigations"), which cases may be consolidated with the Quiroz Guerrero ~~action.~~Action. On May 11, 2022 a Memorandum of Understanding was signed with the plaintiffs in the Class Action Litigations agreeing to a $6.0 million legal settlement. On June 8, 2022, the plaintiffs submitted a Petition for Coordination and Motion for Stay to the Chairperson of the Judicial Council, requesting assignment of a judge to determine whether it is appropriate to coordinate the Class Action Litigations to effectuate settlement approval in one venue.

The Company currently buys a majority of its beef from 2 suppliers. Although there are a limited number of beef suppliers, management believes that other suppliers could provide similar product on comparable terms. A change in suppliers, however, could cause supply shortages and a possible loss of sales, which would affect operating results adversely. The COVID-19 pandemic has affected and may again in the future adversely affect our revenue and operating costs, and we cannot predict how long the pandemic will last or what other government responses may occur.

Our restaurant operations could be further disrupted if large numbers of our employees are diagnosed with COVID-19. If a significant portion of our workforce is unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, our operations may be negatively impacted, potentially materially adversely affecting our liquidity, financial condition, or results of operations.

Our suppliers could be adversely impacted by the COVID-19 pandemic. If our suppliers' employees are unable to work, whether because of illness, quarantine, limitations on travel or other government restrictions in connection with COVID-19, we could face shortages of food items or other supplies at our restaurants, and our operations and sales could be adversely impacted by such supply interruptions.

Additional government regulations or legislation as a result of COVID-19 in addition to decisions we have made and may make in the future relating to the compensation of and benefit offerings for our restaurant Team Members could also have an adverse effect on our business. We cannot predict the types of additional government regulations or legislation that may be passed relating to employee compensation or benefits as a result of the COVID-19 pandemic.

The Company could experience other potential impacts as a result of the COVID-19 pandemic that are not completely known at this time, including, but not limited to, charges from potential adjustments to the carrying amount of goodwill, indefinite-lived intangibles and long-lived impairment charges. Our actual results may differ materially from the Company's current estimates as the scope of the COVID-19 pandemic evolves, depending largely though not exclusively on the duration of the disruption to our business.

ITEM2. ~~MANAGEMENT’S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains “forward-looking statements” that reflect, when made, the Company’s expectations or beliefs concerning future events that involve risks and uncertainties. Forward-looking statements frequently are identified by the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “intend,” “likely result,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “seek”, “should,” “target,” “will be,” “will continue,” “will likely result,” “would” and other similar words and phrases. Similarly, statements herein that describe the Company’s objectives, plans or goals, including with respect to restaurant openings/re-openings and acquisitions or closures, capital expenditures, strategy, financial outlook, ~~cash flows,~~liquidity outlook, our effective tax rate, and the impact of inflation and recent accounting pronouncements, also are forward-looking statements. Actual results could differ materially from those projected, implied or anticipated by the Company’s forward-looking statements. Some of the factors that could cause actual results to differ include: the negative impact the COVID-19 pandemic has had and will continue to have on our business, financial condition, results of operations and cash flows; reductions in the availability of, or increases in the cost of, USDA Prime grade beef, fish and other food items; impacts from the conflict in Ukraine, including potential supply disruptions, and changes in economic conditions and general trends; the loss of key management personnel; the effect of market volatility on the Company’s stock price; health concerns about beef or other food products; the effect of competition in the restaurant industry; changes in consumer ~~preferences~~preferences; the ability to respond to anticipated inflationary pressures, including reductions in consumer discretionary income and our ability to pass along rising costs through increased selling prices, and unfavorable global or ~~discretionary spending;~~regional economic conditions, including economic slowdown or recession; labor shortages or increases in labor costs; the impact of federal, state or local government regulations relating to income taxes, unclaimed property, Company employees, the sale or preparation of food, the sale of alcoholic beverages and the opening of new restaurants; political conditions, civil unrest or other developments and risks in the markets where the Company’s restaurants are located; harmful actions taken by the Company’s franchisees; the inability to successfully integrate franchisee acquisitions into the Company’s business operations; economic, regulatory and other limitations on the Company’s ability to pursue new restaurant openings and other organic growth opportunities; a material failure, interruption or security breach of the Company’s information technology network; the Company’s indemnification obligations in connection with its sale of the Mitchell’s Restaurants; the Company’s ability to protect its name and logo and other proprietary information; an impairment in the financial statement carrying value of our goodwill, other intangible assets or property; gains or losses on lease modifications; the impact of litigation; the restrictions imposed by the Company’s credit agreement; changes in, or the suspension or discontinuation of the Company’s quarterly cash dividend payments or share repurchase program; and the inability to secure additional financing on terms acceptable to the Company. For a discussion of these and other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in Part II Item 1A of this Form 10-Q and the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~7, 2020,~~26, 2021, which is available on the SEC’s website at www.sec.gov. All forward-looking statements are qualified in their entirety by this cautionary statement, and the Company undertakes no obligation to revise or update this Quarterly Report on Form 10-Q to reflect events or circumstances after the date hereof. You should not assume that material events subsequent to the date of this Quarterly Report on Form 10-Q have not occurred.

Ruth’s Hospitality Group, Inc. is a restaurant company focused on the upscale dining segment. Ruth’s Hospitality Group, Inc. operates Company-owned Ruth’s Chris Steak House restaurants and sells franchise rights to Ruth’s Chris Steak House franchisees giving the franchisees the exclusive right to operate similar restaurants in a particular area designated in the franchise agreement. As of ~~September~~June 26, ~~2021,~~2022, there were ~~149~~151 Ruth’s Chris Steak House restaurants, including 7374 Company-owned restaurants, three restaurants operating under contractual agreements and 7374 franchisee-owned restaurants. ~~A new franchisee-owned restaurant opened in September 2021 in Manila, Philippines.~~ Subsequent to the ~~third~~end of the quarter atwo new Company-owned ~~Ruth’s~~Ruth's Chris Steak House ~~restaurant was~~restaurants were opened in ~~Short Hills, NJ.~~Worcester, MA and Long Beach, CA.

The Ruth’s Chris menu features a broad selection of USDA Prime and other ~~high quality~~high-quality steaks and other premium offerings served in Ruth’s Chris’ signature fashion – “sizzling” and topped with butter – complemented by other traditional menu items inspired by our New Orleans heritage. The Ruth’s Chris restaurants reflect over 5055 years ~~committed~~of commitment to the core values instilled by our founder, Ruth Fertel, of caring for our guests by delivering the highest quality food, beverages and service in a warm and inviting atmosphere.

All Company-owned Ruth’s Chris Steak House restaurants are located in the United States. The franchisee-owned Ruth’s Chris Steak House restaurants include 2223 international franchisee-owned restaurants in Aruba, Canada, China, Hong Kong, Indonesia, Japan, Mexico, Philippines, Singapore ~~Taiwan~~ and ~~the Philippines.~~ Taiwan.

In March 2020 the World Health Organization declared the novel coronavirus2019 (COVID-19) a pandemic and the United States declared it a National Public Health Emergency, which has resulted in a significant reduction in revenue at the Company’s restaurants due to mandatory restaurant closures, capacity limitations, social distancing guidelines or other restrictions mandated by governments across the world, including federal, state, and local governments in the United ~~States~~.States. As a result of these developments, the Company has experienced a significant negative impact on its revenues, results of operations and cash flows compared to periods prior to the onset of the pandemic.As of ~~September~~June 26, ~~2021, 75~~2022, all of the 76 Company-owned and -managed restaurants were ~~open and one was closed, and 73 franchisee-owned restaurants were offering dining service.~~open. This iscontinues to be an unprecedented event in the Company’s history, and as the COVID-19 pandemic continues to evolve, it remains uncertain how the conditions surrounding COVID-19 will continue to change. The Company has had and could continue to experience macroeconomic impacts arising from the long duration of the COVID-19 pandemic, including labor shortages and supply chain disruptions. The extent to which COVID-19 will continue to impact the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the unknown duration and severity of the COVID-19 pandemic, which may be impacted by new and evolving variants of the COVID-19 virus, ~~and~~ the adoption rate of the COVID-19 vaccines and boosters in the jurisdictions in which the Company operates, ~~the~~ actions taken to contain the impact of COVID-19, and further actions that may be taken to limit the resulting public health and economic impact.

Following increases in the number of cases of COVID-19 throughout the United States and a spike in COVID-19 cases as a result of the ~~Delta variant,~~Omicron and subsequent variants, some of our restaurants are subject to COVID-19-related restrictions such as mask ~~and/ or vaccine~~ requirements for team members, guests or both. We continue to monitor state, local, and federal government regulatory and public health responses to the COVID-19 pandemic, including the anticipated federal Occupational Health and Safety Administration’s Emergency Temporary Standard implementing a nationwide vaccine requirement for employees of businesses with 100 or more employees.pandemic.

Our business is subject to seasonal fluctuations. Historically, our first and fourth quarters have tended to be the strongest revenue quarters due largely to the year-end holiday season and the popularity of dining out during the fall and winter months. Due to the impacts of COVID-19, it is uncertain whether future quarters will be stronger or weaker than the ~~third~~second fiscal quarter fiscal year 2022 or the first twenty-six weeks of ~~2021.~~fiscal year 2022. Consequently, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year, and comparable restaurant sales for any ~~particular~~ period may decrease.

Our Annual Report on Form 10-K for the fiscal year ended December ~~27, 2020~~26, 2021 provides additional information about our business, operations and financial condition.

The table below sets forth certain operating data expressed as a percentage of total revenues for the periods indicated, except as otherwise noted. Our historical results are not necessarily indicative of the operating results that may be expected in the future.

13 Weeks Ended

39 Weeks Ended

September 26,

September 27,

September 26,

September 27,

2021

2020

2021

2020

Revenues:

Restaurant sales

93.6
%

92.4
%

93.7
%

94.1
%
Franchise income

4.6
%

5.5
%

4.3
%

4.0
%
Other operating income

1.8
%

2.1
%

2.0
%

1.9
%
Total revenues

100.0
%

100.0
%

100.0
%

100.0
%

Costs and expenses:

Food and beverage costs (percentage of
restaurant sales)

34.2
%

27.1
%

31.0
%

28.9
%
Restaurant operating expenses (percentage
of restaurant sales)

47.2
%

59.5
%

45.5
%

62.2
%
Marketing and advertising

2.3
%

1.4
%

2.5
%

2.6
%
General and administrative costs

7.4
%

11.9
%

7.8
%

11.3
%
Depreciation and amortization expenses

4.8
%

8.4
%

5.0
%

8.3
%
Pre-opening costs

0.6
%

0.6
%

0.4
%

0.6
%
Loss/(Gain) on lease modifications

—

0.5
%

—

(0.1
%)
Loss on impairment

—

5.2
%

0.1
%

8.1
%
Total costs and expenses

91.3
%

108.1
%

87.6
%

116.6
%

Operating income (loss)

8.7
%

(8.1
%)

12.4
%

(16.6
%)

Other income (expense):

Interest expense, net

(0.7
%)

(2.2
%)

(1.0
%)

(1.7
%)
Other

(0.0
%)

(0.1
%)

0.0
%

(0.0
%)
Income (loss) before income taxes

8.0
%

(10.4
%)

11.4
%

(18.3
%)
Income tax expense (benefit)

1.3
%

(2.0
%)

1.9
%

(5.0
%)
Net income (loss)

6.7
%

(8.4
%)

9.5
%

(13.3
%)

~~Third~~Second Quarter Ended ~~September~~June 26, ~~2021~~2022 (13 Weeks) Compared to ~~Third~~Second Quarter Ended ~~September~~June 27, ~~2020~~2021 (13 Weeks)

Overview. Operating income ~~(loss) increased~~decreased by ~~$14.1~~$3.8 million to ~~$9.0~~$12.5 million for the ~~third~~second quarter of fiscal year ~~2021~~2022 from the ~~loss~~operating income reported for the ~~third~~second quarter of fiscal year ~~2020.~~2021. Operating income for the ~~third~~second quarter of fiscal year ~~2021~~2022 was favorably impacted by a ~~$38.9~~$16.6 million increase in restaurant sales, a ~~$3.3 million decrease in loss on impairment, a $1.2 million~~$601 thousand increase in franchise income and a ~~$590~~$543 thousand increase in other operating income, offset by an $8.8 million increase in restaurant operating expenses, a ~~$17.5~~$6.0 million increase in settlement losses, a $4.4 million increase in food and beverage costs, a ~~$11.2 million increase in restaurant operating expenses, and a~~ $1.5 million increase in marketing and advertising costs, a $584 thousand increase in pre-opening costs and a $553 thousand increase in general and administrative costs. Net income ~~(loss) increased~~decreased from the ~~third~~second quarter of fiscal year ~~2020~~2021 by ~~$12.2~~$2.1 million to ~~$6.9~~$10.3 million.

Segment Profits. Segment profitability information is presented in Note 7 in the notes to the condensed consolidated financial statements included in Item 1. “Financial Statements”. Segment profit for the ~~third~~second quarter of fiscal year ~~2021~~2022 for the Company-owned steakhouse restaurant segment increased by ~~$10.6~~$3.7 million to a ~~$19.3~~$32.2 million profit compared to the ~~third~~second quarter of fiscal year ~~2020.~~2021. The increase was driven primarily by a ~~$39.3~~$16.9 million increase in restaurant sales offset by an ~~increase of $17.5 million in food and beverage costs and a $11.2~~$8.8 million increase in restaurant operating ~~expenses.~~expenses and a $4.4 million increase in food and beverage costs. Franchise income increased ~~$1.2 million~~$601 thousand in the ~~third~~second quarter of fiscal year ~~2021~~2022 compared to the ~~third~~second quarter of fiscal year ~~2020.~~2021.

Restaurant Sales. Restaurant sales increased by ~~$38.9~~$16.6 million, or ~~66.5%~~15.9%, to ~~$97.5~~$120.8 million in the ~~third~~second quarter of fiscal year ~~2021~~2022 from the ~~third~~second quarter of fiscal year ~~2020.~~2021. Company-owned comparable restaurant sales in the ~~third~~second quarter of fiscal year ~~2021~~2022 were ~~$91.9~~$116.5 million, which represented an increase of ~~$36.8~~$13.0 million, or 12.6%, compared to the ~~third~~second quarter of fiscal year ~~2020. Company-owned comparable restaurant sales increased by 66.8%, which consisted of a 37.4% increase in traffic and a 21.5% increase in average check.~~2021.

Franchise Income. Franchise income in the ~~third~~second quarter of fiscal year ~~2021~~2022 increased by ~~$1.2 million,~~$601 thousand, or ~~35.1%~~13.3%, to ~~$4.7~~$5.1 million compared to the ~~third~~second quarter of fiscal year ~~2020.~~2021. The increase in franchise income compared to the ~~third~~second quarter of fiscal year ~~2020~~2021 was due to an increase in franchisee-owned restaurant sales.

Other Operating Income. Other operating income increased by ~~$590~~$543 thousand in the ~~third~~second quarter of fiscal year ~~2021~~2022 compared to the ~~third~~second quarter of fiscal year ~~2020.~~2021. The increase was primarily due to an increase in breakage income of ~~$267~~$192 thousand resulting from an increase in gift card redemptions and a ~~$166~~$395 thousand increase in income from ~~restaurants operating under contractual agreements.~~miscellaneous charges generated in the restaurants. The increase in these items ~~were~~was primarily due to increases in restaurant ~~sales.~~sales and gift card redemptions.

Food and Beverage Costs. Food and beverage costs increased by ~~$17.5~~$4.4 million, or ~~110.0%~~13.8%, to ~~$33.4~~$36.0 million in the ~~third~~second quarter of fiscal year ~~2021~~2022 compared to the ~~third~~second quarter of fiscal year ~~2020~~2021 primarily due to increased restaurant sales. As a percentage of restaurant sales, food and beverage costs ~~increased~~decreased to ~~34.2%~~29.8% in the ~~third~~second quarter of fiscal year 2022 from 30.3% in the second quarter of fiscal year 2021, ~~from 27.1% in the third quarter of fiscal year 2020,~~ primarily driven by a ~~65% increase~~6.5% decrease in beef costs.

Restaurant Operating Expenses. Restaurant operating expenses increased by ~~$11.2~~$8.8 million, or ~~32.0%~~19.5%, to ~~$46.0~~$54.2 million in the ~~third~~second quarter of fiscal year ~~2021~~2022 from the ~~third~~second quarter of fiscal year ~~2020.~~2021. Restaurant operating expenses, as a percentage of restaurant sales, ~~decreased to 47.2%~~were 44.9% in the ~~third~~second quarter of fiscal year 2022 compared to 43.6% in the second quarter of fiscal year 2021 primarily driven by higher labor costs from ~~59.5% in the third quarter of fiscal year 2020. The decrease in restaurant operating expenses as a percentage of restaurant sales compared~~adding staff to ~~the third quarter of fiscal year 2020 were primarily due to the impact of higher sales and leveraging of fixed costs.~~our restaurants.

Marketing and Advertising. Marketing and advertising expenses increased by $1.5 million, or ~~174.0%~~46.9%, to ~~$2.4~~$4.7 million in the ~~third~~second quarter of fiscal year ~~2021~~2022 from the ~~third~~second quarter of fiscal year ~~2020.~~2021. The increase in marketing and advertising expenses in the ~~third~~second quarter of fiscal year ~~2021~~2022 was primarily attributable to a ~~partial return~~$1.0 million increase in ~~spending following our earlier response to the COVID-19 pandemic in line with our anticipated level of operations.~~digital and data transformation expenses.

General and Administrative Costs. General and administrative costs increased by ~~$149~~$553 thousand, or ~~2.0%~~6.3%, to ~~$7.7~~$9.3 million in the ~~third~~second quarter of fiscal year ~~2021~~2022 from the ~~third~~second quarter of fiscal year ~~2020.~~2021. As a percentage of revenue, general and administrative costs decreased from ~~11.9%~~7.9% in the second quarter of fiscal year 2021 to 7.3% in the second quarter of fiscal year 2022 primarily due to increased sales.

Depreciation and Amortization Expenses. Depreciation and amortization expense increased by $51 thousand to $5.1 million in the second quarter of fiscal year 2022 from the second quarter of fiscal year 2021.

Pre-opening Costs. Pre-opening costs were $743 thousand in the second quarter of fiscal year 2022. These expenses are primarily due to the anticipated openings of three Ruth’s Chris Steak House restaurants in the third quarter of fiscal year ~~2020 to 7.4% in the third quarter of fiscal year 2021 primarily due to sales increasing.~~

~~Depreciation and Amortization Expenses. Depreciation and amortization expense decreased by $331 thousand to $5.0 million in the third quarter of fiscal year 2021 from the third quarter of fiscal year 2020.~~

~~Pre-opening Costs. Pre-opening costs were $581 thousand in the third quarter of fiscal year 2021. These expenses are primarily due to the planned opening of the Ruth’s Chris Steak House restaurant in Short Hills, NJ~~2022 and recognition of rent expense at unopened Ruth’s Chris Steak House restaurants where the Company has taken possession of the property. Pre-opening costs were ~~$403~~$159 thousand in the ~~third~~second quarter of ~~the~~ fiscal year ~~2020~~2021 primarily due to the recognition of rent expense at unopened Ruth’s Chris Steak House restaurants where the Company ~~took~~had taken possession of the ~~property.~~properties.

Loss on ~~Lease Modifications.~~ Settlement.During the ~~third~~second quarter of fiscal year ~~2020,~~2022, the Company recorded a ~~$310 thousand~~$6.0 million loss on ~~lease modifications primarily due~~settlement. This expense relates to the ~~write off of capitalized expenses incurred related to the termination~~signing of a ~~lease related~~Memorandum of Understanding to ~~a planned Ruth’s Chris Steak House restaurant. No loss~~settle certain class action litigations. Further information can be found in Note 11 in the condensed consolidated financial statements included in Item 1. "Financial Statements".

Loss on ~~lease modification was recorded during~~Impairment. During the ~~third~~second quarter of fiscal year ~~2021.~~

~~Loss on Impairment.~~ ~~During the third quarter of fiscal year 2020,~~2021, the Company recorded a ~~$3.3 million~~$394 thousand loss on impairment of which ~~$3.2 million~~$306 thousand related to long-lived assets as described ~~further~~ in Note 2 in the notes to the condensed consolidated financial statements included in Item 1. ~~“Financial Statements”~~"Financial Statements". No loss on impairment was ~~recorded during~~reported for the ~~third~~second quarter of fiscal year ~~2021.~~2022.

Interest Expense. Interest expense decreased ~~$744~~$889 thousand to ~~$678~~$239 thousand in the ~~third~~second quarter of fiscal year ~~2021~~2022 compared to ~~$1.4~~$1.1 million in the ~~third~~second quarter of fiscal year ~~2020.~~2021. The decrease is primarily ~~relates~~due to a lower average debt balance ~~during~~in the ~~third~~second quarter of fiscal year ~~2021 compared to the third quarter of fiscal year 2020.~~2022, partially offset by a higher interest rate.

Other Income and Expense. During the ~~third~~second quarter of fiscal year 2021, we recognized other ~~expense~~income of ~~$18~~$34 thousand. During the ~~third quarter of fiscal year 2020, we recognized other expense of $48 thousand.~~

~~Income Tax Expense (Benefit). During the third~~second quarter of fiscal year 2021, we recognized other income of $36 thousand.

Income Tax Expense. During the second quarter of fiscal year 2022, we recognized income tax expense of ~~$1.4 million. During~~$2.0 million compared to $2.8 million during the ~~third~~second quarter of fiscal year ~~2020, we recognized an income tax benefit of $1.3 million.~~2021. The effective tax rate, including the impact of discrete items, decreased to ~~a 16.8% expense~~15.9% for the ~~third~~second quarter of fiscal year ~~2021~~2022 compared to ~~a 19.5% benefit~~18.2% for the ~~third~~second quarter of fiscal year ~~2020, primarily due to the generation of pretax income for the third quarter of fiscal year 2021 compared to a pretax loss in the third quarter of fiscal year 2020.~~2021. Fiscal year ~~2021~~2022 discrete items and other unexpected changes impacting the annual

tax expense may cause the effective tax rate for fiscal year ~~2021~~2022 to differ from the effective tax rate for the ~~third~~second quarter of fiscal year ~~2021.~~2022.

Net ~~Income (Loss).~~ Income. Net income was ~~$6.9~~$10.3 million in the ~~third~~second quarter of fiscal year ~~2021,~~2022, which reflected ~~an increase~~a decrease of ~~$12.2~~$2.1 million compared to ~~a net loss of $5.3~~$12.4 million in the ~~third~~second quarter of fiscal year ~~2020.~~2021. The ~~increase~~decrease was attributable to the factors noted above.

Twenty-Six Weeks Ended ~~September~~June 26, ~~2021~~2022 (26 Weeks) Compared to ~~Thirty-nine~~Twenty-Six Weeks Ended ~~September~~June 27, ~~2020~~2021 (26 Weeks)

Overview. Operating income ~~(loss) increased~~decreased by ~~$70.7~~$2.8 million to ~~$37.4~~$25.5 million for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 from the ~~loss~~income reported for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. Operating income for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 was favorably impacted by a ~~$94.7~~$53.7 million increase in restaurant sales, ~~$15.9 million decrease in loss on impairment and~~ a ~~$5.0~~$1.5 million increase in franchise income ~~which was partially~~and a $1.4 million increase in other operating income, offset by a ~~$33.4~~$25.9 million increase in restaurant operating expenses, a $20.0 million increase in food and beverage costs, ~~and an $11.8~~a $6.0 million increase in ~~restaurant operating expenses.~~settlement losses, a $4.4 million increase in marketing and advertising costs, a $2.6 million increase in general and administrative costs and a $1.0 million increase in pre-opening costs. Net income ~~(loss) increased~~decreased from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020~~2021 by ~~$55.2 million~~$788 thousand to ~~$28.5~~$20.7 million.

Segment Profits. Segment profitability information is presented in Note 7 in the notes to the condensed consolidated financial statements included in Item 1. “Financial Statements”. Segment profit for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 for the Company-owned steakhouse restaurant segment increased by ~~$51.1~~$8.3 million to a ~~$69.9~~$59.0 million profit compared to the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. The increase was driven primarily by a ~~$96.2~~$54.2 million increase in restaurant sales offset by a ~~$33.4~~$25.9 million increase in restaurant operating expenses and a $20.0 million increase in food and beverage ~~costs and a $11.8 million increase in restaurant operating expenses.~~costs. Franchise income increased ~~$5.0~~$1.5 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 compared to the ~~fist thirty-nine~~first twenty-six weeks of fiscal year ~~2020.~~2021.

Restaurant Sales. Restaurant sales increased by ~~$94.7~~$53.7 million, or ~~50.2%~~28.9%, to ~~$283.3~~$239.5 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. Company-owned comparable restaurant sales ~~during~~in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 were ~~$266.8~~$231.6 million, which represented an increase of ~~$98.5~~$46.8 million, or 25.3%, compared to the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020. Company-owned comparable restaurant sales increased by 58.6%, which consisted of a 40.6% increase in traffic and a 12.8% increase in average check.~~2021.

Franchise Income. Franchise income in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 increased by ~~$5.0~~$1.5 million, or ~~61.4%~~18.5%, to ~~$13.1~~$9.9 million incompared to the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021 compared to the first thirty-nine weeks of fiscal year 2020.~~2021. The increase in franchise income compared to the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020~~2021 was due to an increase in franchisee-owned restaurant ~~sales primarily due to the lessening of COVID-19 restrictions.~~sales.

Other Operating Income. Other operating income increased by ~~$2.3~~$1.4 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 compared to the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. The increase was primarily due to ~~a $1.5 million increase in income from restaurants operating under contractual agreements and~~ an increase in breakage income of ~~$821~~$804 thousand resulting from an increase in gift card ~~redemptions.~~redemptions and a $622 thousand increase in income from miscellaneous charges generated in the restaurants. The increase in these items ~~were~~was primarily due to increases in restaurant ~~sales.~~sales and gift card redemptions.

Food and Beverage Costs. Food and beverage costs increased by ~~$33.4~~$20.0 million, or ~~61.2%~~36.8%, to ~~$87.9~~$74.6 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 compared to the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020~~2021 primarily due to increased restaurant sales. As a percentage of restaurant sales, food and beverage costs increased to ~~31.0%~~31.1% in the first ~~thirty-nine~~twenty-six weeks of fiscal year 2022 from 29.3% in the first twenty-six weeks of fiscal year 2021, ~~from 28.9% in the first thirty-nine weeks of fiscal year 2020,~~ primarily driven by a ~~34%~~10.3% increase in beef costs.

Restaurant Operating Expenses. Restaurant operating expenses increased by ~~$11.8~~$25.9 million, or ~~10.1%~~31.2%, to ~~$129.0~~$108.9 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. Restaurant operating expenses, as a percentage of restaurant sales, ~~decreased to~~were 45.5% in the first ~~thirty-nine~~twenty-six weeks of fiscal year 2022 compared to 44.7% in the first twenty-six weeks of fiscal year 2021 primarily driven by higher labor costs from ~~62.2% in the first thirty-nine weeks of fiscal year 2020. The decrease in restaurant operating expenses as a percentage of restaurant sales was primarily due~~adding staff to ~~the impact of higher sales and leveraging of fixed costs.~~our restaurants.

Marketing and Advertising. Marketing and advertising expenses increased by ~~$2.4~~$4.4 million, or ~~45.0%~~84.9%, to ~~$7.7~~$9.7 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. The increase in marketing and advertising expenses in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 was attributable to a ~~partial return~~$2.5 million increase in ~~spending following our~~digital and data transformation expenses and increasing expenses as the Company resumes its marketing programs that were suspended as a result of its response to the COVID-19 ~~pandemic in line with our anticipated level of operations.~~pandemic.

General and Administrative Costs. General and administrative costs increased ~~$1.0~~by $2.6 million, or ~~4.5%~~16.3%, to ~~$23.7~~$18.6 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. The increase in general and administrative costs in the first twenty-six weeks of fiscal year 2022 was primarily attributable to ~~an increase~~a $1.6 million in compensation related ~~expenses.~~expenses, a $684 thousand increase in professional fees and a $308 thousand increase in travel related expenses over the first twenty-six weeks of 2021. As a percentage of revenue, general and administrative costs decreased from ~~11.3%~~8.1% in the first ~~thirty-nine weeks of fiscal year 2020 to 7.8% in the first thirty-nine~~twenty-six weeks of fiscal year 2021 to 7.3% in the first twenty-six weeks of fiscal year 2022 primarily due to ~~sales increasing.~~increased sales.

Depreciation and Amortization Expenses. Depreciation and amortization expense decreased by ~~$1.5 million~~$219 thousand to ~~$15.1~~$9.9 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 from the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020~~2021.

Pre-opening Costs. Pre-opening costs were $1.6 million in the first twenty-six weeks of fiscal year 2022. These expenses are primarily due to the ~~permanent closure~~to the anticipated openings of ~~nine~~three Ruth’s Chris Steak House restaurants ~~during fiscal year 2020.~~

~~Pre-opening Costs. Pre-opening costs were $1.2 million~~ in ~~both~~ the ~~first thirty-nine weeks~~third quarter of fiscal year ~~2021 and~~2022, the ~~first thirty-nine weeks of fiscal year 2020. The expenses during the first thirty-nine weeks of fiscal year 2021 are primarily due to the planned~~ opening of the Ruth’s Chris Steak House restaurant in ~~Short Hills, NJ~~Aventura, Florida in March 2022 and recognition of rent expense at unopened Ruth’s Chris Steak House restaurants where the Company has taken possession of the property. ~~During~~Pre-opening costs were $604 thousand in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020 pre-opening expenses were~~2021 primarily due to the recognition of rent expense at four unopened Ruth’s Chris Steak House restaurants where the Company ~~took~~had taken possession of the properties.

Loss on ~~Lease Modifications.~~ Settlement.During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020,~~2022, the Company recorded a ~~$178 thousand gain~~$6.0 million loss on ~~lease modifications primarily related~~settlement. This expense relates to ~~a gain on~~ the ~~modification~~signing of a ~~lease~~Memorandum of ~~$663 thousand, partially offset by~~Understanding to settle certain class action litigations. Further information can be found in Note 11 in the write off of capitalized expenses incurred related to the termination of a lease on a planned Ruth’s Chris Steak House restaurant of $422 thousand. There was no gain on lease modifications recorded during the first thirty-nine weeks of fiscal year 2021.condensed consolidated financial statements included in Item 1. "Financial Statements".

Loss on Impairment.During the first ~~thirty-nine~~twenty-six weeks of fiscal year 2021, the Company recorded a $394 thousand loss on impairment ~~loss~~ of which $306 thousand related to long-lived ~~assets. During the first thirty-nine weeks of fiscal year 2020, the Company recorded a $16.3 million loss consisting of a $12.7 million impairment of long-lived~~ assets ~~a $3.1 million impairment of territory rights and a $416 thousand impairment of inventory~~ as described ~~further~~ in Note 2 in the notes to the condensed consolidated financial statements included in Item 1. ~~“Financial Statements”~~"Financial Statements". No loss on impairment was reported for the first twenty-six weeks of fiscal year 2022.

Interest Expense. Interest expense decreased ~~$232~~$1.9 million to $563 thousand in the first twenty-six weeks of fiscal year 2022 compared to ~~$3.1~~$2.4 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021 compared to $3.3 million in the first thirty-nine weeks of fiscal year 2020.~~2021. The decrease is primarily ~~relates~~due to a lower average debt balance ~~during~~in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021 compared to the first thirty-nine weeks of fiscal year 2020.~~2022.

Other Income and Expense. During the first ~~thirty-nine~~twenty-six weeks of fiscal year 2021, we recognized other income of ~~$61~~$62 thousand. During the first ~~thirty-nine weeks of fiscal year 2020, we recognized other expense of $12 thousand.~~

~~Income Tax Expense (Benefit). During the first thirty-nine~~twenty-six weeks of fiscal year 2021, we recognized other income of $80 thousand.

Income Tax Expense. During the first twenty-six weeks of fiscal year 2022, we recognized income tax expense of ~~$5.9 million. During~~$4.3 million compared to $4.5 million during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020, we recognized an income tax benefit of $9.9 million.~~2021. The effective tax rate, including the impact of discrete items, ~~decreased~~increased to ~~a 17.0% expense~~17.2% for the first ~~thirty-nine weeks quarter of fiscal year 2021 compared to an 27.1% benefit for the first thirty-nine~~twenty-six weeks of fiscal year ~~2020, primarily due~~2022 compared to ~~the generation of pretax income~~17.1% for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021 compared to a pretax loss in the first thirty-nine weeks of fiscal year 2020.~~2021. Fiscal year ~~2021~~2022 discrete items and other unexpected changes impacting the annual tax expense may cause the effective tax rate for fiscal year ~~2021~~2022 to differ from the effective tax rate for the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021.~~2022.

Net ~~Income (Loss).~~ Income. Net income was ~~$28.5~~$20.7 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021,~~2022, which reflected ~~an increase~~a decrease of ~~$55.2 million~~$788 thousand compared to ~~a net loss of $26.7~~$21.5 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. The ~~increase~~decrease was attributable to the factors noted above.

Our principal sources of cash have been historically provided by our operating activities as well as periodic borrowings from our senior credit facility. During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 our principal uses of cash flow were debt repayments, capital expenditures, ~~and~~ repurchase of common ~~stock.~~stock and dividend payments.

During the fourth quarter of fiscal year 2019, our Board of Directors approved a ~~new~~ share repurchase program authorizing us to repurchase up to $60 million of outstanding common stock from time to time. ~~During the fiscal year 2020, as~~As a result of the impacts to our business arising from the COVID-19 pandemic, the Company suspended its share repurchase ~~program and dividend payments.~~program. During the third quarter of fiscal year 2021, the Company resumed its share repurchase program and repurchased ~~192,102~~887,515 shares at an aggregate cost of ~~$3.8~~$16.6 million or an average cost of ~~$19.93~~$18.69 per ~~share.~~share through December 27, 2021. All repurchased shares were retired and cancelled. During the first twenty-six weeks of fiscal year 2022 the Company repurchased 529,734 shares at an aggregate cost of $9.5 million or an average cost of $18.01 per share.

The Company also resumed payments of dividends in the first quarter of fiscal year 2022 with a $0.12 per share dividend paid on February 17, 2022, and a $0.14 per share dividend paid on June 2, 2022. Subsequent to the end of the second quarter of fiscal year 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.14 per share payable on September 2, 2022, to shareholders of record as of the close of business on August 19, 2022.

We believe that our current cash position, coupled with our anticipated cash flow from operations, should provide us with adequate liquidity for the next twelve months and, when combined with our access to additional capital, should provide us with adequate liquidity for the foreseeable future. As of June 26, 2022, we were in compliance with all covenants pertaining to the Credit Agreement.

As of ~~September~~June 26, ~~2021,~~2022, we had ~~$70.0~~$40.0 million of outstanding indebtedness under our senior credit facility and approximately $4.7 million of outstanding letters of credit, pursuant to a credit agreement entered into with Wells Fargo Bank, National Association as

administrative agent, and certain other lenders (as amended, ~~as of the end of the fiscal year 2020,~~ the “Credit ~~Agreement ”)~~Agreement”). As of ~~September~~June 26, ~~2021,~~2022, the weighted average interest rate on our outstanding debt was ~~3.5%~~3.7% and the weighted average interest rate on our outstanding letters of credit was ~~2.6%~~1.9%. In addition, the fee on the unused portion of our senior credit facility was 0.3%.

On October 18, 2021, subsequent to the third fiscal quarter of 2021, the Company entered into an amended and restated credit agreement, which amends and restates its prior credit agreement with Wells Fargo Bank, National Association as administrative agent, and certain other lenders (as amended and restated, the “Credit Agreement”).

The Credit Agreement provides for a revolving credit facility of $140.0 million with a $10.0 million sub-facility of letters of credit and a $5.0 million sub-facility for swingline loans. Subject to the satisfaction of certain conditions and lender consent, the revolving credit facility may be increased up to a maximum of $200.0 million. The Credit Agreement has a maturity date of October 18, 2026. As of October 29, 2021, the Company had $70.0 million of outstanding indebtedness under its senior credit facility with approximately $65.3 million of borrowings available, net of outstanding letters of credit of approximately $4.7 million.

The Credit Agreement contains customary representations and affirmative and negative covenants (including limitations on indebtedness and liens) as well as financial covenants, as described below, requiring a minimum fixed coverage charge ratio as defined in the Credit Agreement (“Fixed Charge Coverage Ratio”) limiting the Company’s actual leverage ratio as defined in the Credit Agreement (“Maximum Consolidated Leverage Ratio”). The October 2021 amendment and restatement of the Credit Agreement restored the Fixed Charge Coverage Ratio and Maximum Consolidated Leverage Ratio to a Fixed Charge Coverage Ratio equal to or greater than 1.25:1.00 and Maximum Consolidated Leverage Ratio no greater than 3.00:1.00. Effective with the October 2021 amendment and restatement of the Credit Agreement, the Company is limited to $40.0 million of restricted junior payments per year, which include cash dividends and repurchases of common stock, if the Maximum Consolidated Leverage Ratio is greater than or equal to 2.50:1.00. The Credit Agreement also contains events of default customary for credit facilities of this type (with customary grace periods, as applicable), including nonpayment of principal or interest when due; material incorrectness of representations and warranties when made; breach of covenants; bankruptcy and insolvency; unsatisfied ERISA obligations; unstayed material judgment beyond specified periods; default under other material indebtedness; and certain changes of control of the Company. If any event of default occurs and is not cured within the applicable grace period or waived, the outstanding loans may be accelerated by lenders holding a majority of the commitments and the lenders’ commitments may be terminated. The obligations under the Credit Agreement are guaranteed by certain of the Company’s subsidiaries and are secured by a lien on substantially all of the Company’s personal property assets other than any equity interest in current and future subsidiaries of the Company.

Interest rate margins and the fee for the unused commitment will be calculated based on the Maximum Consolidated Leverage Ratio, and at the Company’s option, revolving loans may bear interest at either:

The applicable margin is based on the Company’s Maximum Consolidated Leverage Ratio, ranging (a) from 1.50% to 2.25% above the applicable LIBOR rate or (b) 0.50% to 1.25% above the applicable Base Rate.

For more information about our long-term debt, see Note 5 in the notes to the condensed consolidated financial statements included in Item 1. “Financial Statements”.

The following table presents a summary of our net cash provided by (used in) operating, investing and financing activities (in thousands):

	39 Weeks Ended						26 Weeks Ended
	September 26,			September 27,			June 26,			June 27,
	2021			2020			2022			2021
Net cash provided by (used in):
Operating activities	$	48,521		$	5,598		$	25,006		$	42,004
Investing activities		(8,418	)		(9,007	)		(23,093	)		(2,504	)
Financing activities		(51,726	)		100,949			(49,180	)		(47,563	)
Net (decrease) increase in cash and cash equivalents	$	(11,623	)	$	97,540
Net decrease in cash and cash equivalents							$	(47,267	)	$	(8,063	)

Operating Activities. Operating activities provided cash of $25.0 million during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 and $42.0 million during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. Operating cash outflows pertain primarily to expenditures for food and beverages, restaurant operating expenses, marketing and advertising, general and administrative costs, and income taxes. Operating activities provided cash flows primarily because operating revenues have exceeded cash-based expenses.

Investing Activities. Cash used in investing activities totaled ~~$8.4~~$23.1 million in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 compared with ~~$9.0~~$2.5 million used in the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. Cash used in investing projects during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 primarily pertained to ~~$4.3~~$14.0 million for new restaurants, ~~$2.1~~$6.6 million for technology investments and ~~$2.0~~upgrades, and $2.3 million for restaurant remodel and capital replacement projects. Cash used in investing activities during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020~~2021 primarily pertained to ~~$5.6~~$1.4 million for new restaurants and ~~$2.9 million~~$981 thousand for ~~restaurant remodel and~~ capital replacement projects.

Financing Activities. Financing activities used cash during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021~~2022 and ~~provided cash during~~ the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020.~~2021. During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021,~~2022, we ~~reduced~~repaid debt byin the amount of $45.0 million, ~~repurchased $3.8~~paid $9.5 million infor the repurchase of common stock, paid ~~$2.8~~$8.8 million in dividends and paid $849 thousand in employee withholding taxes in connection with the vesting of restricted ~~stock and paid $145 thousand in deferred financing costs.~~stock. We paid the ~~$2.8 million~~$849 thousand in taxes in connection with the vesting of restricted stock for recipients who elected to satisfy their individual tax withholding obligations by having us withhold a number of vested shares of restricted stock. These cash payments were partially offset by $15.0 million in proceeds from long-term debt. During the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2020,~~2021, we ~~increased~~reduced debt by ~~$71.2~~$45 million, ~~to secure additional liquidity~~paid $2.4 million in ~~response to COVID-19; sold common stock for $49.6 million; used $13.2 million to repurchase common stock; paid dividends of $4.4 million; paid $1.6 million in~~employee withholding taxes in connection the with ~~the~~ vesting of restricted ~~stock;~~stock and paid ~~$582~~$145 thousand in deferred financing costs.

~~As of September 26, 2021, we did not have any off-balance sheet arrangements.~~

The preparation of our financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the periods presented. Our Annual Report on Form 10-K for the fiscal year ended December ~~27, 2020~~26, 2021 includes a summary of the critical accounting policies and estimates that we believe are the most important to aid in the understanding our financial results. There have been no material changes to these critical accounting policies and estimates that impacted our reported amounts of assets, liabilities, revenues or expenses during the first ~~thirty-nine~~twenty-six weeks of fiscal year ~~2021.~~2022.

The Company is exposed to market risk from fluctuations in interest rates. For fixed rate debt, interest rate changes affect the fair market value of such debt but do not impact earnings or cash flows. Conversely, for variable rate debt, including borrowings under the Company’s senior credit facility, interest rate changes generally do not affect the fair market value of such debt, but do impact future earnings and cash flows, assuming other factors are held constant. At ~~September~~June 26, ~~2021,~~2022, the Company had ~~$70.0~~$40.0 million in variable rate debt outstanding. The Company currently does not use financial instruments to hedge its risk to market fluctuations in interest rates.Holding other variables constant (such as debt levels), a hypothetical immediate one percentage point change in interest rates would be expected to have an impact on pre-tax earnings and cash flows for fiscal year ~~2021~~2022 of approximately ~~$700~~$400 thousand.

The Company is exposed to market price fluctuations related to the cost of providing healthcare to its employees. Claim trends are predicted to outpace inflation throughout the upcoming year. Pharmacy costs are also rising in excess of general and medical cost inflation. If prices increase, or the Company experiences significantly more claims, operating margins could be materially adversely affected. Holding other variables constant, a hypothetical 10% fluctuation in healthcare costs would have an approximate impact on pre-tax earnings of approximately $1.0 million for the 2022 fiscal year.

The Company believes that fluctuations in foreign exchange rates do not present a material risk to its operations due to the relatively small amount of franchise income it receives from outside the U.S. During the first ~~thirty-nine~~twenty-six weeks of fiscal years ~~2021~~2022 and ~~2020,~~2021, franchise income attributable to international locations was approximately ~~$1.5~~$1.3 million and ~~$1.3 million,~~$886 thousand, respectively, which is less than 1% of total annual revenue.

The Company is exposed to market price fluctuations in beef and other food product prices. Given the historical volatility of beef and other food prices, ~~which in~~this exposure can impact the ~~past have been volatile and have impacted the Company’s~~Company's food and beverage costs. As the Company typically sets its menu prices in advance of its beef and other food product purchases, the Company cannot quickly react to changing costs of beef and other food items. To the extent that the

Company is unable to pass the increased costs on to its guests through price increases, the Company’s results of operations would be adversely affected. The Company has experienced 10.3% inflation in beef pricing during the first twenty-six weeks of fiscal year 2022 compared to the first twenty-six weeks of fiscal year 2021. The Company has seen a reduction in beef prices during the second quarter of fiscal year 2022 of 6.5% compared to the second quarter of fiscal year 2021. During the third quarter of fiscal year 2021, we negotiated set pricing on approximately 10% of our beef supply from mid-September 2021 into mid-March 2022. During the first quarter of fiscal year 2022, we negotiated set pricing on approximately 20% of our beef supply from mid-March 2022 through mid-August 2022. This pricing agreement was extended from mid-August 2022 through mid-November 2022. The market for USDA Prime grade beef is particularly volatile. If prices increase, or the supply of beef is reduced, operating margin could be materially adversely affected. Holding other variables constant, a hypothetical 10% fluctuation in beef prices would have an approximate impact on pre-tax earnings ~~between $5.0~~ranging from $6.0 million to ~~$6.0~~$7.0 million for fiscal year ~~2021.~~2022.

The Company is exposed to market price fluctuations related to the cost of providing healthcare to its employees. Claim trends are predicted to outpace inflation throughout the year. Pharmacy costs are also rising in excess of general and medical cost inflation. If prices increase, or the Company experiences significantly more claims, operating margin could be materially adversely affected.~~Holding other variables constant, a hypothetical 10% fluctuation in healthcare costs would have an approximate impact on pre-tax earnings of approximately $1.0 million for fiscal year 2021.~~

Components of the Company's operations subject to inflation include food, beverage, lease and labor costs. The Company's leases require it to pay taxes, maintenance, repairs, insurance and utilities, all of which are subject to inflationary increases. The Company believes that general inflation, excluding increases in food, employee wages and employee health plan costs, has not had a material impact on its results of operations in recent years. ~~Additionally, increases in statutory minimum wage rates may increase our operating costs. Recently,~~Routinely, governmental entities acted to increase minimum wage rates in ~~states~~jurisdictions where Company-owned restaurants are ~~located.~~located, which increases our operating costs. Also, the U.S. government may act to further increase the federal minimum wage rate and/or decrease or eliminate the tip credit which could further increase employee compensation costs and related taxes in 2022 if adopted. The increased minimum wage rates are not expected to materially increase employee compensation and related taxes ~~by approximately $1.0 to $2.0 million~~ in fiscal year ~~2021~~2022 compared to fiscal year ~~2020. Also, the U.S. government may consider legislation~~2021. If prices increase, operating margins could be materially adversely affected. Holding other variables constant, a hypothetical 10% increase in other operating costs would have an approximate impact on pre-tax earnings ranging from $5.0 million to ~~increase the federal minimum wage rate, which, if enacted, would further increase employee compensation and related taxes.~~$6.0 million for fiscal year 2022.

Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of ~~September~~June 26, ~~2021.~~2022. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of ~~September~~June 26, ~~2021~~2022 to ensure that information required to be disclosed in reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that information required to be disclosed by the Company is accumulated and communicated to the Company’s management to allow timely decisions regarding the required disclosure.

During the fiscal quarter ended ~~September~~June 26, ~~2021~~2022, there was no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that in the Company’s judgment has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. ~~We have transitioned some~~

See Note 11 in the notes to the condensed consolidated financial statements included in Item 1. “Financial Statements” for a summary of legal proceedings.

See our risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~27, 2020.~~26, 2021. Circumstances and events described in such risk factors could result in significant adverse effects on our financial position, results of operations and cash flows.

Stock repurchase activity during the ~~third~~second quarter ended ~~September~~June 26, ~~2021~~2022 was as follows:

Subsequent to the ~~Company’s~~end of the second quarter, the Company's Board of Directors approved a new share repurchase program ~~authorizing us~~under which the Company is authorized to repurchase up to ~~$60~~$60.0 million of outstanding common stock from time to time in the open market, through negotiated transactions or otherwise (including, without limitation, the use of Rule 10b5-1 plans), depending on share price, market conditions and other factors. The new share repurchase program ~~replaced~~replaces, as of August 9, 2022, the ~~Company’s~~Company's previous share repurchase program announced in ~~November 2017, which has been terminated. During the first thirty-nine weeks of the fiscal year 2021, the Company repurchased 192,102 of shares as part of the new~~October 2019. The previous share repurchase program ~~with an average price~~had permitted the repurchase of ~~$19.93 paid per share.~~ up to $60 million of outstanding common stock, of which approximately $15.4 million remains unused. The ~~new~~ share repurchase program does not obligate the Company to repurchase any dollar amount or number of its shares, and the program has no termination date. The ~~Company’s ability~~Company intends to ~~make future stock purchases under~~conduct any open market share repurchase activities in compliance with the ~~program has been limited by our Amended~~safe harbor provisions of Rule 10b-18 of the Exchange Act. The Company's Credit Agreement ~~in recent quarters. Effective with the October 2021 amendment and restatement of our Credit Agreement, we are limited to $40.0 million of restricted junior payments per year, which include cash~~currently does not limit dividends and share repurchases ~~of common stock,~~ if ~~our Maximum~~the Company's Consolidated Leverage Ratio is ~~greater~~less than ~~or equal to~~ 2.50:~~1.00.~~1.00 and holds a minimum liquidity of $25.0 million. As of ~~September~~June 26, ~~2021, $130.2 million of restricted junior payments had been made and~~2022 our ~~Maximum~~ Consolidated Leverage Ratio ~~no longer exceeded the threshold.~~ As a result of the impacts to our business arising from the COVID-19 pandemic, share repurchases and dividend payments were indefinitely suspended during fiscal year 2020. During the third quarter of fiscal year 2021, the Company resumed the share repurchase program.was less than 2.50:1.00.

On August 4, 2022, the Board of Directors (the "Board") of the Company approved amendments to the Company’s bylaws (as amended, the “Amended and Restated Bylaws”), effective as of that date.

The amendments add a new Section 10 of Article VI to specify the forum in which certain state law-based claims may be brought against or on behalf of the Company. With respect to the advance notice provisions concerning stockholder nominations of directors and stockholder proposals (other than pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended) to be brought before a meeting of stockholders, the amendments clarify Sections 11 and 12 of Article II, respectively, with regard to eligibility requirements and expand the information and representations that a stockholder proponent must include in a written notice to the Company for purposes of making such nominations or proposing such matters. In particular, Article II, Sections 11 and 12 of the Amended and Restated Bylaws were revised to require, among others, a signed questionnaire and written representation agreement from each person a stockholder proposes to nominate for election as a director and additional information about a stockholder proponent’s financial interests and intentions.

The foregoing description of the bylaw amendments is only a summary and is qualified in its entirety by reference to the complete text of the Amended and Restated Bylaws, a copy of which is attached hereto as Exhibit 3.1 and is incorporated herein by reference.

On August 4, 2022, the Board, at the recommendation of the Compensation Committee of the Board (the “Committee”), authorized and approved revised employment agreements by and between the Company and each of Cheryl J. Henry (the “Henry Employment Agreement”), Kristy Chipman (the “Chipman Employment Agreement”), Marcy Lynch (the “Lynch Employment Agreement”), and David Hyatt (the “Hyatt Employment Agreement”). These employment agreements were executed on August 4, 2022 and were effective as of August 1, 2022.

The principal changes in the Henry Employment Agreement were to clarify the circumstances under which Ms. Henry may terminate her employment for “Good Reason” and to clarify the Severance Benefits and Change in Control payments to be paid to Ms. Henry in the event of a termination and/or a Change in Control. The Henry Employment Agreement also reflects Ms. Henry’s current salary amount, which was approved by the Board earlier this year.

The principal changes in each of the Chipman Employment Agreement, Lynch Employment Agreement, and Hyatt Employment Agreement were to clarify the circumstances under which Ms. Chipman, Ms. Lynch, and Mr. Hyatt may terminate their respective employment for “Good Reason” and to provide for accelerated vesting of all granted equity incentives in the event their respective employment is terminated by the Company without “Cause” or by the employee for “Good Reason” within 18 months following a Change in Control. In addition to other conforming changes, these agreements also reflect current salary amounts for Ms. Chipman, Ms. Lynch, and Mr. Hyatt, which were approved by the Board earlier this year.

The foregoing descriptions of the Henry Employment Agreement, Chipman Employment Agreement, Lynch Employment Agreement, and Hyatt Employment Agreement are qualified in their entirety by reference to such agreements, which are attached hereto as exhibits 10.1 – 10.4, respectively, and are incorporated herein by reference.

Delaware	72-1060618
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1030 W. Canton Avenue, Suite 100, Winter Park, FL	32789
~~1030 W. Canton Avenue, Suite 100,~~ ~~Winter Park, FL~~(Address of principal executive offices)	~~32789~~(Zip code)
~~(Address of principal executive offices)~~

Title of each class	Trading symbol(s)	Name of each ~~class~~exchange on which registered
Common Stock, par value $0.01 per share	~~Trading symbol(s)~~RUTH	~~Name of each exchange on which registered~~Nasdaq
~~Common Stock, par value $0.01 per share~~

Large accelerated filer	☐☒	Accelerated Filer	☒☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company		☐
		~~Emerging growth company~~	☐

	Fair Value as of December 27, 2020		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses on Impairment
Long-lived assets	$	1,708	$	1,708	$	—	$	12,736
Territory rights	$	—	$	—	$	—	$	3,101

		*Fair Value as of December 26, 2021*				*Significant Other Observable Inputs (Level 2)*				*Significant Unobservable Inputs (Level 3)*				*Total Losses on Impairment*
Long-lived assets		$	0			$	0			$	0			$	1,766

Thirteen Weeks Ended June 27, 2021:	Domestic		International		Total Revenue
Restaurant sales	$	104,165	$	0	$	104,165
Franchise income		4,106		422		4,528
Other operating income		2,217		0		2,217
Total revenue	$	110,488	$	422	$	110,910

Twenty-Six Weeks Ended June 26, 2022:	Domestic		International		Total Revenue
Restaurant sales	$	239,472	$	0	$	239,472
Franchise income		8,578		1,282		9,860
Other operating income		5,447		0		5,447
Total revenue	$	253,497	$	1,282	$	254,779

Twenty-Six Weeks Ended June 27, 2021:	Domestic		International		Total Revenue
Restaurant sales	$	185,801	$	0	$	185,801
Franchise income		7,434		886		8,320
Other operating income		4,072		0		4,072
Total revenue	$	197,307	$	886	$	198,193

39 Weeks Ended September 26, 2021:	Domestic		International		Total Revenue
Restaurant sales	$	283,339	$	—	$	283,339
Franchise income		11,595		1,467		13,062
Other operating income		5,980		—		5,980
Total revenue	$	300,914	$	1,467	$	302,381


39 Weeks Ended September 27, 2020:	Domestic		International		Total Revenue
Restaurant sales	$	188,611	$	—	$	188,611
Franchise income		6,786		1,308		8,094
Other operating income		3,671		—		3,671
Total revenue	$	199,068	$	1,308	$	200,376

Declaration Date	*Dividend per Share*		*Record Date*	*Total Amount*		*Payment Date*
Fiscal Year 2022
January 6, 2022	$	0.12	February 3, 2022	$	4,109	February 17, 2022
May 6, 2022	$	0.14	May 19, 2022	$	4,680	June 2, 2022

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program		Maximum Approximate Dollar Value that May Yet be Purchased under the Program – Amounts in thousands

June 28, 2021 to August 1, 2021		—		—		—	$	41,552
August 2, 2021 to August 29, 2021		—		—		—	$	41,552
August 30, 2021 to September 26, 2021		192,102	$	19.93		192,102	$	37,723
Totals for the fiscal quarter		192,102	$	19.93		192,102	$	37,723