RRGB 10-K & 10-Q changes, risk factors and insider trading

These strategies and related initiatives may not result in increased traffic and sustained higher sales,sales or decreased debt and expenses, all of which are important to achievingdrive ourlong-term strategicstockholder objectives.value. Changes to our operationsoperations, structurecapital andstructure, compensation,debt servicestructure, model,restaurant menu, Guest experience and cooking platform, supply chain and vendors,portfolio, marketing and branding strategies, loyalty program, technology, and Guestrestaurants, engagementamong other initiatives, may not achieve the business growth and results we expect, which may negatively affect Guestguest satisfaction, Guestguest traffic, sales, profits, or liquidity. Our business and desired results depend upon our ability to continue to grow and evolve through various important strategic initiatives. There can be no assurance we will be able to develop or implement these or other important strategic initiatives in accordance with our expectations or on the expected timeline, or that we have, or will have, sufficient resources to fully and successfully implement, sustain results from, or achieve additional expected benefits from them in accordance with our expectations or on the expected timeline, which could in turn adversely affect our business, financial condition, and results of operations.

The global and domestic economic and geopolitical environment affects the restaurant industry and may negatively affect us directly and indirectly through our customers, distributors, and suppliers. These conditions include unemployment, weakness in the housing markets, downtrendan economic recession or delays in residential or commercial real estate development,slowdown, volatility in the U.S. stock market and in other financial markets, inflationary pressures, wage rates, tariffs imposed on commodities and other trade barriers, global disputes and tensions, interest rate fluctuations and reduced access to credit or other economic or geopolitical factors that may affect consumer confidence. Additionally, periods of federal government shutdown or significant slowdowns in government operations may affect consumer confidence and delay routine government functions on which we and our suppliers rely. As a result,result of these conditions, our Guestsguests may be apprehensive about the economy and reduce their level of discretionary spending.spending or our operations may be negatively affected. This could affect the frequency with which our Guestsguests choose to dine-out or the amount they spend on meals, thereby decreasing our revenues and potentially negatively affecting our operating results. We believe there is a risk that uncertain economic conditions might cause consumers to make long-lasting changes to their discretionary spending behavior, including dining out less frequently or at lower priced restaurants on a more permanent basis, which would have a negative effect on our profitability as we spread fixed costs across a lower level of sales.

Our ability to fund our operating plans and to implement our capital deployment strategies depends on sufficient cash flow from operations or other financing, including using funding under our revolving credit facility and from potential real property sales. We may also seek access to the debt or equity capital markets. Any additional capital raised through the sale of equity may dilute our shareholdersstockholders' ownership percentages and could also result in a decrease in the market value of our securities.

Our capital deployment strategies include but are not limited to, maintainingimproving existing restaurants and infrastructure, investing in new technology, paying down debt, investing in marketing to grow traffic, and executing on our long-term transformation strategy, and improving existing restaurants.strategy. If we experience decreased cash flow from operations, or an inability to access new capital on acceptable terms with acceptable interest rates if needed, our ability to fund our operations and planned initiatives, and to take advantage of growth opportunities, may be delayed or negatively affected. In addition, these disruptions and any resulting negative effect on our net income, cash flows, or other relevant financial performance metrics under our revolving credit facility could affect our ability to borrow or comply with our covenants under that facility.

We maintain a separate insurance policy covering cyber security risks and such insurance coverage may, subject to policy terms and conditions, cover certain aspects of cyber risks, but is subject to a retention amount and may not be applicable to a particular incident or otherwise may be insufficient to cover all our losses beyond any retention. Further, in light of recent court rulings and amendments to policy forms, there is uncertainty as to whether traditional commercial general liability policies will be construed to cover the expenses related to a cyber-attack and breaches if credit and debit card information is stolen.

Because of the number of credit card transactions we process, we are required to maintain the highest level of PCI Data Security Standard compliance at our Restaurant Support Center and Company-owned restaurants. If we do not maintain the required level of PCI compliance, we could be subject to costly fines or additional fees from the card brands that we accept or lose our ability to accept those payment cards. Our franchisees are separate businesses that have different levels of compliance required depending on the number of credit card transactions processed. If our franchisees fail to maintain the appropriate level of PCI compliance or they experience a security breach, it could negatively impact their business operations, and we could face a loss of or reduction in royalties or other payments they are required to remit to usus, and it could adversely affect our reputation and Guestguest confidence.

Maintaining and enhancing our brand image and reputation is critical to our success. Unfavorable events or rumors, poorly received advertising, negative publicity, and negative information disseminated through social and digital media could impact our brand image and reputation. As part of our marketing efforts, we use social media platforms to promote our concepts and attract and retain guests. Social media provides consumers, employees, and others with the ability to communicate approval or displeasure with a business, in near real time, and provides any individual with the ability to reach a broad audience and with comments that are often not filtered or checked for accuracy. If we are unable to quickly and effectively respond, any negative publicity could "go viral" causing nearly immediate and potentially significant harm to our brand and reputation, whether or not factually accurate. In addition, social media can facilitate the improper disclosure of proprietary information, exposure of personally identifiable information, fraud, or out-of-date information. The inappropriate use of social media by our guests or team members could increase our costs, lead to litigation, or result in negative publicity that could damage our reputation.

Further, changing health or dietary preferences and current and new medical advancements, such as weight loss medications, may cause consumers to avoid our products in favor of alternative foods.foods or consume less of our products. Consumer preference could be affected by health concerns related to the consumption of beef, chicken, or other food products on our menu, or negative publicity concerning food quality, nutrition, illness, or injury, even if not valid, may negatively affect demand for our food and could result in decreased guest traffic in our restaurants. The food service industry as a whole rests on consumer preferences and demographic trends at the local, regional, and national levels. New information or changes in dietary, nutritional or health guidelines,guidelines and preferences, among other things, may affect consumer choice and cause consumers to significantly alter their dining choices in ways that adversely affect our sales and profitability.

As of December 29,28, 2024,2025, 400381 of our 407385 Company-owned restaurants are located on leased premises. We have in the pastpast, and may in the futurefuture, engage in sale-leaseback transactions, which havecould and may in the futurefurther increase the number of our leased properties. During fiscal 2023 and 2024, we completed three such transactions, selling and simultaneously leasing back an aggregate of 28 previously owned properties. Payments under our operating leases account for a significant portion of our operating expenses. We cannot be certain that we will maintain a level of cash flow from operating activities sufficient for us to pay our operating lease expenses. Additional sites that we lease are likely to be subject to similar long-term non-cancelable leases. We have in the past and may in the future close restaurants, including as we continue to evaluate certain underperforming restaurants. In connection with closing restaurants, we may nonetheless be committed to performperforming our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term.term, incurring termination fees, and other significant one-time cash expenditures. Additionally, closing restaurants has in the past and may in the future result in other significant non-cash charges, including impairments. The Company has a potential contingent lease liability for lease payments related to certain franchisees' lease arrangements. This potential contingent lease liability could increase if the Company sells restaurants to franchisees, as we may be required to remain responsible for lease payments for certain restaurants to the extent the purchasing franchisee defaults on the lease. Upon such default, we may be required to make lease payments and seek recourse against the franchisee or agree to repayment terms.

In addition, as each of our leases expires,expire, there can be no assurance we will be able to renew our expiring leases after the expiration of all remaining renewal options, either on commercially acceptable terms or at all. As a result, we may incur additional costs to operate our restaurants, including increased rent and other costs related to the negotiation of terms of occupancy of an existing leased premise. If we are unable to renew a lease or determine not to renew a lease, there may be costs related to the relocation and development of a replacement restaurant or, if we are unable to relocate, reduced revenue.

The success of our restaurants depends in large part on the performance of our leased locations.locations, Our restaurantswhich are primarilygenerally locatedsituated nearin high densityhigh-traffic retail and entertainment areas such as regional malls, lifestyle centers, big boxand shopping centers, and entertainment centers. WeOur dependrestaurants rely on acustomer hightraffic volumegenerated of visitors atby these centerssurrounding tolocations. attractChanges Guestsin todemographic, oureconomic, restaurants.or Asconsumer demographicbehavior andpatterns, economicincluding patternsreduced change,foot currenttraffic or business closures in these areas, may make certain locations may or may not continue to beless attractive or profitable. OnlineIn salesaddition, continuethe tocontinued increasegrowth andof online shopping has negatively impact consumeraffected traffic at many traditional "brick and mortar" retail sites located in regional malls, lifestyle centers, bigwhich boxcould shoppingreduce centersguest and entertainment centers. A decline in development or closures of businesses in these settings or a decline in visitorsvisits to retail areas near our restaurantsrestaurants. couldOur negativelyability affectto ourrelocate restaurant sales. In addition, we compete with other restaurants and retail establishments for prime real estate locations. Desirable locations for the relocation of existingunderperforming restaurants may notalso be availablelimited at an acceptable cost, due in part toby the availability and cost of suitable alternative sites and by our inability to easily terminate aour long-term lease.lease commitments.

InWe recenthave years, we’ve made investmentsinvested in off-premises sales, including delivery, pickup options, and catering, to attract Guestsguests who are looking for convenience or want to enjoy our food off-premises. While we plan to continue to invest in the growth of our off-premises sales, there can be no guarantee we will maintain or increase such sales. Off-premises sales could also cannibalize dine-in sales, or our systems and procedures may not be sufficient to handle off-premises sales, which may require additional investments in technology or people. Additionally,A asignificant large percentageportion of delivery from our restaurants is through third party delivery companies.orders Theseare fulfilled through third-party delivery companies require us to pay them a commission,providers, which lowerscharge our profit margin on those sales,commissions and deliveryover whom we have limited control. Delivery drivers may make errors, fail to make timely deliveries, damage our food or poorly represent our brand, which may lead to customerguest disappointment, reputational harm andor unmet sales expectations. Any bad press, whether true or not, regarding third party delivery companies or their business model may negatively impact our sales. While we have introduced an alternative to third party delivery by offering an online Company platform to collect orders and outsource the "last mile" of delivery, we may not be able to convert Guestsguests to our platform and that model remains subject to some of the same risks.

Our profitability depends in part on our ability to anticipate and react to changes in commodity costs. Various factors beyond our control, including adverse weather conditions, governmental regulation and monetary policy, new or increased trade barriers and import tariffs (including retaliatory trade actions), product availability, recalls of food products, and seasonality, as well as the effects of the current macroeconomic environment on our suppliers, may affect our commodity costs or cause a disruption in our supply chain. InWe an effortseek to mitigate somecommodity price risk through a combination of thispurchasing risk,strategies, weincluding enterfixed-price intocontracts fixedfor price agreements on some of ourcertain food and beverage products,items. includingHowever, certainthese proteins,arrangements producemay not fully offset future cost increases and cookingtypically oil.cover Asonly ofa the end of fiscal 2024, approximately 42%portion of our estimatedtotal fiscalcommodity 2025 annual food and beverage purchases will be covered by fixed price contracts, most of which are scheduled to expire at various times through 2025. Changes in the price or availability of commoditiesneeds for whichlimited wetime doperiods. not have fixed priceAs contracts couldexpire, have a material adverse effect on our profitability. Expiring contracts with our food suppliers could also result in disruptions in relationships or unfavorable renewal terms and therefore increase costs associated with these suppliers or may necessitate negotiations with alternate suppliers. Wewe may be unable to obtainrenew them on favorable contractterms, termswhich withcould suppliersresult in higher costs, changes in supplier relationships, or adjustthe need to source products from alternative suppliers. In addition, we may not be able to fully pass increased commodity costs on to guests through menu pricing or other actions without adversely affecting guest traffic. If we are unable to effectively manage commodity cost increases or supply disruptions, our purchasingresults practicesof operations and menu prices to respond to changing food costs, and a failure to do soprofitability could negativelybe affectadversely our operating results.affected.

Our restaurants depend on frequent deliveries of fresh produce, food, beverage,beverages, and other products. This subjects us to the risk of interruptions in food and beverage supplies that may result from a variety of causes including, but not limited to, outbreaks of food-borne illness, disruption of operation of production facilities, transportation disruptions or delays, financial difficulties, including bankruptcy of our suppliers or other unforeseen circumstances, especially where a product comes from a single or small number of suppliers. Such shortages could adversely affect our revenue and profits. Our restaurants bear risks associated with the timeliness of deliveries by suppliers and distributors as well as the solvency, reputation, labor relationships, freight rates, and health and safety standards of each supplier and distributor. We strive to have multiple approved suppliers on key items; however, the Company is undertaking initiatives to consolidate suppliers and there are situations where we only have one approved supplier, which increases the risk to our supply chain if something were to happen to interrupt the supplier's ability to continue supplying the Company. Other significant risks associated with our suppliers and distributors include improper handling of food and beverage products, and/or the adulteration or contamination of such food and beverage products.

Consumer behavior continues to evolve regarding restaurant technology expectations, and we may not be able to meet those changing demands. Our competitors, some with greater resources, may capitalize on emerging technologies or shifts in consumer preferences, potentially weakening our competitive position. Certain technology initiatives require significant capital investment, including addressing aging hardware and software infrastructure and components nearing end-of-life, necessitating careful evaluation against other business priorities. Aging hardware and outdated systems, as well as the process to upgrade or replace hardware and systems, increases the risk of system failures, business disruptions, and degraded Guestguest experiences. Additionally, we are closely monitoring advancements in artificial intelligence (AI) and its potential applications within our organization and business strategy. Key risks include ethical concerns in AI and Machine Learning models and liability associated with AI-driven decisions impacting customers and operations.

Our resources are currently allocated to increasing performance in our existing base of restaurants, but we may expand our restaurant base as a component of our long-term growth. The expansion of our restaurant base depends upon numerous factors, some of which are out of our control, including the cost and availability of capital, the ability to attract qualified operating Teamteam Membersmembers to staff new restaurants, the ability to secure available and suitable restaurant sites on favorable lease and construction terms, timely adherence to development schedules, and competition that may affect consumer spending. New or less mature restaurants, once opened, may vary in profitability and levels of operating revenue for six months or more, and there isare no assurance new restaurants will attain operating results similar to those of existing restaurants. Delays or failures in opening new restaurants, or the inability to profitably operate them once opened, could materially and adversely affect our planned growth.

Many of our existing restaurants are mature and require capital expenditures for maintenance and improvement to remain competitive and maintain our brand standard. Under our First Choice plan, we have begun, and plan to continue, investing in our restaurants by addressing critical deferred maintenance needs, such as flooring updates, internal finishings, furniture repairs, and exterior improvements that directly impact guest perceptions and experience, as well as in new technology. Additionally, we have evaluated and may undertake in the future a more substantial restaurant renovation program, including upgrading interior ambience and exterior appeal of our restaurants.program. These initiatives involve significant capital expenditures. If we do not make these capital investments or do not achieve a return on the investment, our business, profitability,financial condition, and our ability to compete effectively could be harmed.

We are subject to the risks presented by acquisitions or refranchising.dispositions of restaurants.

AsIn partthe of our expansion efforts,past, we have acquired some of our franchised restaurants inand thedisposed past.of restaurants. In the future, we may, from time to time, consider opportunistic acquisitions or dispositions of restaurants.restaurants We may inbeyond the future pursuetactical refranchising withinitiatives qualitydescribed operators in certain identified markets.above. Any future acquisitions or dispositions will be accompanied by the risks commonly encountered in acquisitions.such Thesetransactions, risksincluding includedifficulty amongintegrating otheroperations things:and team members, potential disruption to our ongoing business, potential distraction of management, impact on the Company's financial condition, and the impairment of relationships with team members and guests as a result in changes in ownership and management.

As of December 29,28, 2024,2025, a total of 166162 or 41%42% of our 407385 Company-owned restaurants, representing 51%50% of restaurant revenues, were located in the Western United States (i.e., Arizona, California, Colorado, Idaho, Nevada, Oregon, Idaho, New Mexico, Oregon, Utah, and Washington state). As a result of our geographic concentration, negative publicity regarding any of our restaurants in the Western United States, as well as regional differences in the legal, regulatory, and litigation environment, could have a material adverse effect on our business and operations, as could other regional occurrences such as local strikes, regional cost-of-living increases, energy shortages, or increases in energy prices, droughts, earthquakes, fires, or other natural disasters.

If we are unable to successfully recruit,attract, retain, and motivate qualified restaurant management and operations Teamteam Membersmembers in an increasinglya competitive market, we may be unable to effectively operate and grow our business and revenues, which could materially adversely affect our financial performance.

Management's Discussiondiscussion and Analysisanalysis of Financialfinancial Conditioncondition and Resultsresults of Operationsoperations provides a narrative of our financial performance and condition that should be read in conjunction with the accompanying consolidatedConsolidated financialFinancial statements.Statements and Notes to Consolidated Financial Statements included in Part II, Item 8 - Financial Statements and Supplementary Data of this report.

The Company's fiscal year ends on the last Sunday of each calendar year. Most of our fiscal years have 52 weeks; however, we experience a 53rd week once every five to six years. Our discussion for fiscal 2024,2025, which ended on December 29,28, 2024,2025, refersreferred to a 52-week period. Our discussion for fiscal 2023,2024, which ended December 31,29, 2023,2024, refersalso to a 53-week period, with the fifty-third week occurring in the fourth quarter. Our discussion for fiscal 2022, which ended on December 25, 2022, refersreferred to a 52-week period. The following discussion comparing our results in fiscal 2024years 2025 and fiscal2024 2023 refersreferred to the fifty-two weeks ended,ended December 28, 2025 and fifty-three weeks ended, December 29, 2024 and December 31, 2023,2024, respectively. For a discussion comparing our results from fiscal 20232024 to fiscal 2022,2023, refer to “"Management’s Discussion and Analysis of Financial Condition and Results of Operations”" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31,29, 2023,2024, filed with the SEC on February 28,26, 2024.2025.

Red Robin Gourmet Burgers, Inc., a Delaware corporation, is the parent company for Red Robin International, Inc., a Nevada corporation that, together with its subsidiaries ("Red Robin," "we," "us," "our" or the "Company"), primarily operates, franchises, and develops casual dining restaurants with 498475 locations in North America. As of December 29,28, 2024,2025, the Company operated 407385 Company-owned restaurants located in 39 states. The Company also had 9190 franchised restaurants in 13 states and one Canadian province as of December 29,28, 2024.2025. The Company operatesoperated its business as one (1) operating and one (1) reportable segment.

•Total revenues arewere $1.25$1.21 billion, a decrease of $54.5$38.3 million due in part to the 53rd week infrom fiscal 2023.2024.

•Comparable restaurant revenue(1) decreased 1.2%0.3% from fiscal 2024, excluding a 0.4% unfavorable impact of deferred loyalty revenue.

•Net loss iswas $77.5$23.3 million, as compared to a net loss of $21.2$77.5 million duringin 2023.fiscal 2024.

•Adjusted EBITDA(2) iswas $38.8$69.7 million, a 43.7%52.8% decrease.increase from fiscal 2024.

(2) See below for a reconciliation of adjusted EBITDA, a non-GAAP measure, to Netnet loss.income (loss).

(1) Average weekly net sales volumes representrepresents the total restaurant revenue for all Company-owned Red Robin restaurants for each time period presented, divided by the number of operating weeks in the period.

Franchise revenue primarily includesincluded royalty income and advertising fund contributions. Franchise revenue decreased $0.9 million, or 5.8%, in fiscal 20242025 compared to fiscal 2023.2024, Franchisedriven revenue declined primarily due toby a reductiondecrease in the percentagefranchisee ofcontribution salesrate eachfor marketing programs and lower franchise royalties, offset partially by transfer fee revenue earned in conjunction with a franchisee is required to contributefranchisee to support selling activities in the second half of fiscal 2024 in line with the reduction in overall selling expense.sale. The percentage of sales each franchisee is required to contribute could change in the future, as we expect to align contributions with spending levels, subject to compliance with the respective franchise agreement. Franchise restaurants reported ana increasedecrease of 2.6%2.4% in comparable restaurant revenue in fiscal 20242025 compared to aan decreaseincrease of 2.3%2.6% in fiscal 2023.2024.

Other revenue primarilydecreased comprisesby gift$3.0 cardmillion, breakage,or which32.0% representsin thefiscal value2025 associated with the portion of gift cards sold that are unlikelycompared to befiscal redeemed, licensing income, and recycling income.2024. The reduction in other revenue in fiscal 20242025 compared to fiscal 20232024 was primarily relatesrelated to a reduction inlower gift card breakage revenuein andthe recyclingcurrent income.year.

Cost of sales, which compriseswas comprised of food and beverage costs, iswas variable and generally fluctuatesfluctuated with sales volume. Cost of sales as a percentage of restaurant revenue decreasedwas 30unchanged basiscompared pointsto the same period in fiscal 20242024, asprimarily compareddue to fiscalbenefits 2023.from The decrease was primarily driven by menu price increasespricing and implementation of various cost savingssaving initiatives,implementations partiallythat were offset by commodity inflation.

Labor costs includeincluded restaurant-level hourly wages and management salaries as well as related taxes and benefits. Labor as a percentage of restaurant revenue increaseddecreased 200250 basis points in fiscal 20242025 as compared to fiscal 2023.2024. The increasedecrease was primarily driven by additionalongoing costsefforts into increase hourly and management labor,labor increasedefficiency, incentivereduced compensation related to the new Managing Partner bonus planturnover, and higherbenefit workersfrom compensationmenu price increases, partially offset by wage inflation and groupdeleverage healthfrom insurancereduced expense.guest counts.

Other operating costs includeincluded costs such as equipment repairs and maintenance costs, restaurant supplies, utilities, restaurant technology, and other miscellaneous costs. Other operating costs as a percentage of restaurant revenue isincreased unchanged20 basis points in fiscal 2025 as compared to fiscal 2024. The increase was primarily driven by higher third party commission expenses associated with the same periodincrease in fiscalthird 2023.party delivery sales and deleverage from reduced guest counts, partially offset by the benefit of menu price increases.

Occupancy costs includeincluded fixed rents, property taxes, common area maintenance charges, general liability insurance, contingent rents, and other property costs. In fiscal 2024, occupancyOccupancy costs as a percentage of restaurant revenuerevenues increased 30 basis points in fiscal 2025 compared to fiscal 2023.2024, primarily due to increased general liability insurance reserves. The increase isalso duereflected primarilydeleverage to the impact of fixed rents associated with the sale-leaseback of 18 locations and the acquisition of five restaurantsresulting from alower franchiseerestaurant insales thedriven secondby quarterreduced ofguest fiscalcounts, 2023,partially offset in part by menu price increases and reduced generalcosts liabilityassociated insurancewith expense.the closure of 22 locations in fiscal 2025.

Depreciation and amortization includesincluded depreciation on capital expenditures for restaurants and corporate assets as well as amortization of reacquired franchise rights, leasehold interests, and certain liquor licenses. In fiscal 2024, depreciationDepreciation and amortization expense as a percentage of revenue decreased 5030 basis points asin fiscal 2025 compared to fiscal 2023.2024. The decrease iswas primarily due to asset impairments,impairments and restaurant closuresclosures, andboth sale-leasebackof transactionswhich reducingreduced the depreciable asset base.

Selling, General,General and Administrative expensesExpenses

Selling, general,General and administrative costs include all corporate and administrative functions. Components of this category include marketing and advertising costs,included our Restaurantrestaurant Supportsupport Center,center, regional, and franchise support salaries and benefits;benefits, travel; and meetings, professional and consulting fees;fees, corporate information systems;systems, legal expenses;expenses, and office rent; training; and Board of Directors' expenses. Selling, general, and administrative expense decreased $5.7 million, or 4.6% in fiscal 2024 as compared to fiscal 2023.rent.

General and administrative expenses decreased $7.6$5.5 million or 8.5%6.7% in fiscal 20242025 as compared to fiscal 2023.2024. The decrease in fiscal 20242025 as compared to fiscal 20232024 was primarily drivenrelated byto a reduction in compensationteam member costs dueassociated towith reducedlower incentive compensation accrualsheadcount and headcountcost reductionsincurred andfor lowerannual legalpartner fees,recognition events in the prior year. This decrease was partially offset by costshigher associatedaccrued withincentive compensation expense due to the 2024Company's Managingimproved Partnerfinancial conference.performance.

Impairment and Other Charges (Gains), Charges, net

During fiscal 2024,2025, the Company closed eight22 locations and is evaluatingcontinuing to evaluate alternatives for approximatelyour 70remaining underperforming restaurant locations, including closure upon expiration of the current lease term. The Company recognized non-cash impairment charges of $32.8$2.7 million, which were primarily associated with this review of underperforming locations as well as impairment of quota state liquor licenses at three locations.

During fiscal 2023,2024, the Company closed eight underperforming locations. The Company recognized non-cash impairment charges of $9.1$32.8 million, primarily relatedassociated towith the impairmentreview of long-lived assets at 19 underperforming locations and quota state liquor licenses at three locations.

For further information on Impairment and other charges (gains) charges line items, refer to Note 4. Impairment and Other Charges (Gains), net,Charges, net and Note 9. Fair Value Measurements of the Notes to the Consolidated Financial Statements in Part II, Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

Interest Expense and Interest Income

Interest expense in fiscal 2024years 2025 and 20232024 waswere $25.3$26.0 million and $26.6$25.3 million, respectively. The $1.3$0.7 million decreaseincrease was primarily due to the net paydown of debt with the proceeds from the sale-leaseback transactions, partially offset by an increase in the weighted average interest rate to 14.2% in fiscal 2025 compared to 13.6% in fiscal 2024 compared to 12.7% in fiscal 2023.2024. Average outstanding debt in fiscal 2024years 2025 and 20232024 was $187.8$180.9 million and $205.6$187.8 million, respectively.

Income TaxesTax (Benefit) Provision

AThe reconciliationfollowing oftable Restaurantreconciles revenueincome (loss) from operations to restaurant level operating profit isin detailedthousands and in percent of total revenue for the tableperiod belowpresented:

The following table summarizesreconciles net loss,income and(loss) EBITDA andto adjusted EBITDA in thousands for the periodsperiod presented:

Risk factors associated with our business are contained in Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended December 28, 2025, filed with the SEC on February 25, 2026. ThereExcept as set forth below, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K. The risk factors set forth below amend and restate in their entirety the corresponding risk factors disclosed in our Annual Report on Form 10-K.

Certain information and statements contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 codified at Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as "anticipate," "assume," "believe," "could," "estimate," "expect," "future," "intend," "may," "plan," "project," "will," "would," and similar expressions. Forward-looking statements in this report relate to, among other things: our business objectives and strategic plans; strategies with respect to financial flexibility and potential capital raising transactions; our refranchising transactions and initiatives; our refinancing efforts; our financial condition, including working capital, and the ability of our future cash flows from restaurant operations and our borrowing capacity to satisfy our anticipated cash requirements and fund capital expenditures; our expectations about pricing and restaurant operating costs, including labor, food, supplies, and other commodities, as well as interest rates, and our ability to mitigate potential increases in such costs; our expectations about anticipated uses of, and risks associated with, future cash flows, liquidity, capital expenditures, other capital deployment opportunities, and taxes; the seasonality of our business; and our purchase commitments and lease and litigation contingencies and the adequacy of our reserves for legal matters.

Management's Discussion and Analysis of Financial Condition and Results of Operations provides a narrative of our financial performance and condition that should be read in conjunction with the accompanying Condensed Consolidated Financial Statements. References to the firstsecond quarter of fiscal 2026 and fiscal 2025 refer to the sixteentwelve weeks ended AprilJuly 19,12, 2026 and AprilJuly 20,13, 2025, respectively.

Red Robin Gourmet Burgers, Inc., a Delaware corporation, is the parent company for Red Robin International, Inc., a Nevada corporation, that together with its subsidiaries ("Red Robin," "we," "us," "our," or the "Company"), primarily operates, franchises, and develops casual dining restaurants with 469465 locations in North America. As of AprilJuly 19,12, 2026, the Company operated 379375 Company-owned restaurants located in 39 states. The Company also had 90 franchised restaurants in 13 states and one Canadian province as of AprilJuly 19,12, 2026. The Company operated its business as one operating and one reportable segment.

HighlightsResults for the Fiscal FirstSecond Quarter of 2026, Compared to the Fiscal FirstSecond Quarter of 2025:

•Comparable restaurant revenue(1) decreasedincreased 0.6%,1.3%, excluding the impact of deferred loyalty revenue.

•Net lossincome was $2.2$0.4 million, compared to net income of $1.2$4.0 million last year, a $3.4$3.6 million decrease.

The following table presents total Company-owned and franchised restaurants by state or province as of AprilJuly 19,12, 2026:

(1) Average weekly net sales volumes representsrepresent the total restaurant revenue for all Company-owned Red Robin restaurants for each time period presented, divided by the number of operating weeks in the period.

Restaurant revenue, which was comprised primarily of food and beverage sales, decreased $14.7$6.7 million, or 3.8%,2.4%, in the firstsecond quarter of fiscal 2026, as compared to the comparable period of fiscal 2025. Comparable restaurant revenue decreasedincreased $2.1$3.6 million, or 0.6%,1.3%, inclusive of a 1.6%0.2% decrease in guest count, offset in part by a 1.0%1.5% increase in average guest check. The non-comparable portion of the decrease in restaurant revenue was $13.4$9.8 million, due to the closure of 22 locations since the firstsecond quarter of fiscal 2025. The impact of deferred loyalty revenue was ana increasedecrease of $0.8$0.5 million due to increased loyalty program usage.million.

Franchise revenue primarily included royalty income and advertising fund contributions. Franchise revenue increased by $0.4$0.5 million, or 9.9%,14.2%, in the firstsecond quarter of fiscal 2026 compared to the same period of fiscal 2025, primarily due to an increase in the franchisee contribution rate for marketing programs. Franchise restaurants reported an increase of 2.4% in comparable restaurant revenue in the firstsecond quarter of fiscal 2026 compared to the same period in fiscal 2025.

Other revenue increased $0.2 million and $0.3 million in the firstsecond quarter and in the year to date period, respectively, of fiscal 2026 compared to the same periodperiods of fiscal 2025. The increase for both periods was primarily related to higher gift card breakage in the current year.

Cost of sales, which was comprised of food and beverage costs, was variable and generally fluctuated with sales volume. Cost of sales as a percentage of restaurant revenue increased 5020 basis points in the firstsecond quarter of fiscal 2026 as compared to the comparablecorresponding period inof fiscal 2025. The increase was primarily driven by an increase in commodity pricesprice in the current year and wasinflation, partially offset by highermenu averagepricing, guestsupply check.chain cost savings, and timing of vendor contributions to support our annual Partner recognition events, which are recorded as a reduction to cost of sales.

Labor costs included restaurant-level hourly wages and management salaries as well as related taxes and benefits. Labor as a percentage of restaurant revenue decreased 140ten basis points in the firstsecond quarter of fiscal 2026 compared to the same period in fiscal 2025. The decrease was primarily driven by ongoingimproved effortshourly tolabor efficiency and the increase hourlyin andaverage managementguest labor efficiency, benefit from menu price increases, and reduced group health insurance claims,check, partially offset by wage inflation and deleverage from reduced guest counts.inflation.

Other operating costs included costs such as repair and maintenance costs, restaurant supplies, utilities, restaurant technology, and other miscellaneous costs. Other operating costs as a percentage of restaurant revenue increasedremained 20 basis pointsflat in the firstsecond quarter of fiscal 2026 compared to the same period in fiscal 2025. The increaseThis was primarily driven by an increase in average guest check, offset by higher restaurant supplies costs and increased utilities costs.

Occupancy costs included fixed rents, property taxes, common area maintenance charges, general liability insurance, contingent rents, and other property costs. Occupancy costs as a percentage of restaurant revenue in the firstsecond quarter of fiscal 2026 increaseddecreased 20 basis points compared to the same period in fiscal 2025. The increasedecrease was primarily due to an increase in general liability insurance claims activity, offset in partdriven by reduced rent associated with the closure of 22 locations since the firstsecond quarter of fiscal 2025.2025 and an increase in average guest check, offset by higher general liability insurance claim activity.

Depreciation and amortization included depreciation on capital expenditures for restaurants and corporate assets as well as amortization of reacquired franchise rights, leasehold interests, and certain liquor licenses. In the first quarter of fiscal 2026, depreciationDepreciation and amortization expense as a percentage of revenue increaseddecreased 1060 basis points and 20 basis points in the second quarter and year to date periods of fiscal 2026, respectively, compared to the comparablecorresponding periodperiods in fiscal 2025. The increasedecrease was primarily duedriven toby decreasedthe revenuessuspension fromof depreciation on assets classified as held for sale, as well as restaurant closures.closures and asset impairments.

General and administrative costs included all corporate and administrative functions. Components of this category include restaurant support center, regional, and franchise support salaries and benefits, travel and meetings, professional and consulting fees, corporate information systems, legal expenses, and office rent. General and administrative costs in the firstsecond quarter of fiscal 2026 were $23.1$17.6 million, aan decreaseincrease of $3.9$0.2 million compared to the comparable period in fiscal 2025. The decreaseincrease was primarily relateddriven toby liability classified award stock-based compensation expense and the timing of corporate events, partially offset by a reduction in team member costs associated with lower headcount and timing of corporate events.headcount.

Selling costs were comprised of all marketing and advertising costs. Selling costs in the firstsecond quarter and year to date periods of fiscal 2026 were $13.2$10.4 million and $23.6 million, respectively, representing an increase of $3.9$4.0 million and $7.9 million compared to the comparablecorresponding periodperiods in fiscal 2025. The increase in both periods was primarily driven by paid media spend in the current fiscal quarter as we continue to support our ongoing marketing strategy.strategy, partially offset by lower production costs.

Interest expense for the firstsecond quarter of fiscal 2026 and fiscal 2025 was $7.8$5.7 million and $8.1$5.8 million, respectively. The $0.3$0.1 million decrease was primarily due to lessa debtdecrease in the firstweighted-average effective interest rate to 13.5% in the second quarter of fiscal 2026 compared to the first quarter of fiscal 2025, and partially due to a decrease14.3% in the weighted average effective interest rate to 13.4% in the first quarter of fiscal 2026 compared to 14.1% in the firstsecond quarter of fiscal 2025. Average outstanding debt was $180.8$178.4 million and $187.7$176.2 million for the firstsecond quarter of fiscal 2026 and fiscal 2025, respectively.

The taxes recognized in the firstsecond quarter and year to date periods of fiscal 2026 and fiscal 2025 were immaterial as the Company has net operating losses and tax credits to reduce current taxes and a full valuation allowance against all deferred taxes, which collectively minimize the taxes paid and recognized.

The following table reconciles income (loss) from operations to restaurant level operating profit in thousands andand, except as noted, in percent of total revenue for the periodperiods presented:

We define EBITDA as net income (loss) before interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA, further adjusted to exclude the impact of non-operating items including changes in estimates, asset impairments, litigation contingencies, gains (losses) on debt extinguishment, restaurant and office closure costs, gains (losses) on restaurant sales, severance and executive transition costs, stock-based compensation expense and other non-cash or discrete items. EBITDA and adjusted EBITDA are supplemental measures of our performance that we believe givesgive the reader additional insight into the ongoing operational results of the Company.

The following table reconciles net income (loss) to adjusted EBITDA in thousands for the periodperiods presented:

(2) Consists of compensation expense associated with stock-based awards including phantom awards that may be settled in stock or cash at the Company’s option and stock appreciation rights,SARs, which are settled in cash.

(31) Dilutive securities were included in the computation of adjusted net income (loss) per share - diluted for the sixteentwenty-eight weeks ended AprilJuly 19,12, 2026, because the Company reported an adjusted net income for the period. This differs from the GAAP net income (loss) per share - diluted calculation seen on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as the Company reported a net loss for the sixteentwenty-eight weeks ended AprilJuly 19,12, 2026.

Cash and cash equivalents, and restricted cash increased $4.4$3.0 million to $33.9$32.5 million as of AprilJuly 19,12, 2026, from $29.5 million at the beginning of the fiscal year. As of AprilJuly 19,12, 2026, the Company had approximately $40.8$47.8 million in liquidity, including cash and cash equivalents and $16.5$25.0 million available borrowing capacity under our credit facility.

Our primary sources of liquidity were cash flows generated from operating activities andactivities, availability under our revolving credit facility, and proceeds from restaurant sales, as discussed further below. Our main requirements for liquidity included operating expenses, capital expenditures for restaurant investment, investments in technology, and interest payments on our debt. We have, and in the future may continue to have, negative working capital balances, which is common for many restaurant companies. We can operate with a working capital deficit because cash from restaurant sales is usually received before the related payables for food inventory, supplies, and labor become due.

Net cash flows used in investing activities was $6.7$6.1 million for the year to date period of fiscal 2026, as compared to net cash flows used in investing activities of $6.4$12.4 million for the comparable period in fiscal 2025. The $0.3$6.3 million increasedecrease in cash flows used in investing activities is primarily due to the sale of restaurant property in the year to date period of fiscal 2025, partially offset by lower capital expenditures in fiscal 2026 compared to the year to date period of fiscal 2025.

(1) Restaurant improvement capital and other consisted of capital equipment for our restaurants.

(2)Investment in technology,Technology, infrastructure and other consisted of capital costs related to restaurant technology assets, capital overhead, and other centrally developed assets.

Net cash flows providedused byin financing activities was $4.1$5.4 million for the year to date period of fiscal 2026, as compared to net cash flows used in financing activities of $19.3$23.0 million for the comparable period in fiscal 2025. Cash flows providedused byin financing activities in the year to date period of fiscal 2026 primarily relate to the net borrowingsrepayments of debt under our revolving credit facility. Cash flows used in financing activities in the comparable period in fiscal 2025 primarily relate to the paydownnet repayments of debt under our credit facility with cash flow from operations and the net proceeds from the sale of three restaurant locations.

As of AprilJuly 19,12, 2026, the Company's credit facility allowed for up to $225.0 million of borrowings and is comprised of a $25.0 million revolving line of credit and a $200.0 million term loan (collectively, the "Credit Facility"). As of AprilJuly 19,12, 2026 and December 28, 2025, the Company had outstanding borrowings of $175.7$167.2 million and $170.2 million, respectively, inclusive of $8.5$0.0 million and $3.0 million drawn on its revolving line of credit, respectively, under its Credit Facility. In addition, the Company had amounts issued under letters of credit of $9.3 million and $9.3 million as of AprilJuly 19,12, 2026 and December 28, 2025, respectively.

The Credit Facility will mature on September 3, 2027. The term loansloan requirerequires quarterly principal payments in an aggregate annual amount equal to 1.0% of theits original principal amount of the term loan.amount. As of AprilJuly 19,12, 2026, the Company has fulfilled this obligation for the duration of the Credit Facility via previous principal payments. The Credit Facility's interest rate references the Secured Overnight Financing Rate ("SOFR"), which is an index calculated by short-term repurchase agreements and backed by U.S. Treasury securities, or the Alternate Base Rate ("ABR"), which represents the highest of (a) the Prime Rate, (b) Thethe Federal Funds Rate plus 0.5% per annum, or (c) one-month term SOFR plus 1.0% per annum.

We are subject to a number of customary covenants under our Credit Facility, including limitations on additional borrowings, acquisitions, stock repurchases, sales of assets, and dividend payments, as well as a net total leverage ratio covenant. As of AprilJuly 19,12, 2026, we were in compliance with all debt covenants.

On November 10, 2025, Thethe Company entered into the Distribution Agreement with Evercore,Evercore to establish an at-the-market equity offering program. The Company voluntarily terminated the program on February 23, 2026, without any issuances or sales.

On August 9, 2018, the Company's board of directors authorized the Company's current share repurchase program of up to a total of $75 million of the Company's common stock. The share repurchase authorization will terminate upon completing repurchases of $75 million of common stock unless otherwise terminated by the board. Pursuant to the repurchase program, purchases may be made from time to time at the Company's discretion and the Company is not obligated to acquire any particular amount of common stock. From the date of the current program approval through AprilJuly 19,12, 2026, we have repurchased a total of 1,088,588 shares at an average price of $15.18 per share for an aggregate amount of $16.5 million. The Company completed no share repurchases during the periods presented. Accordingly, as of AprilJuly 19,12, 2026, we had $58.5 million of availability under the current share repurchase program. Our Credit Agreement limits our ability to repurchase shares to certain conditions set forth by the lenders in the Credit Facility.