Red Robin (RRGB) swings to loss YTD and plans $96M refranchising deal
Red Robin Gourmet Burgers, Inc. reported softer results for Q2 2026 and year‑to‑date 2026 while preparing a major shift toward franchising. Q2 total revenues were $277.6 million, down 2.1% year over year, with restaurant revenue down 2.4% but comparable restaurant revenue up 1.3% on higher average check.
Q2 net income was $0.4 million versus $4.0 million a year earlier, and year‑to‑date the company posted a $1.8 million net loss versus prior‑year profit. Adjusted EBITDA declined to $18.9 million for Q2 and $46.2 million year‑to‑date. Restaurant‑level operating margin held at 14.7%, supported by labor efficiency and lower depreciation, though commodity inflation and higher marketing spend weighed on results.
The balance sheet shows $167.2 million of debt under a variable‑rate credit facility and negative equity of $105.6 million, with liquidity of about $47.8 million. Operating cash flow fell to $14.5 million year‑to‑date from $29.5 million. The company entered agreements to refranchise 116 restaurants for roughly $96 million in aggregate consideration, expecting to use net proceeds primarily to repay borrowings and to convert these locations to long‑term royalty streams.
Positive
- Agreements to refranchise 116 restaurants for ~$96 million in aggregate consideration are expected to generate cash to repay debt, enhance financial flexibility, and create ongoing royalty and advertising contribution streams under long‑term franchise agreements.
Negative
- Adjusted EBITDA declined to $18.9 million in Q2 (down 16%) and $46.2 million year‑to‑date (down 8%), indicating weaker underlying profitability despite stable restaurant‑level margins.
- Year‑to‑date swung to a $1.8 million net loss from a $5.2 million profit, reflecting lower revenues, higher marketing spend, impairments, and other charges.
- Operating cash flow dropped to $14.5 million from $29.5 million year‑to‑date, more than a 50% decline, reducing internally generated funding for capex and debt service.
Filing Explained
The 116-restaurant refranchising plan is signed but unclosed, so its roughly $96.0 million proceeds and debt repayment remain prospective.
As a Form 10-Q, this is an unaudited quarterly report covering interim financial statements and updates to risks and liquidity. The company reports three signed agreements to sell assets tied to
Each transaction remains subject to separate closing conditions, including possible landlord, lease, regulatory, licensing, lender and restaurant-specific approvals. Upon closing, the locations would continue operating under long-term franchise agreements, while the company may retain secondary lease or guarantee obligations.
The company classified
Separately, the company terminated its
The key unresolved items are the separate closing conditions and the amount of any retained lease or guarantee obligations, which the filing says has not yet been determined.
Key Figures
Q2 2026 Total Revenues: $277.6 million
Q2 2026 Net Income: $0.4 million
YTD 2026 Net Income (Loss): $(1.8) million
+5 more
8 metrics
Q2 2026 Total Revenues
$277.6 million
Twelve weeks ended July 12, 2026
Q2 2026 Net Income
$0.4 million
Twelve weeks ended July 12, 2026, down from $4.0 million
YTD 2026 Net Income (Loss)
$(1.8) million
Twenty-eight weeks ended July 12, 2026, versus $5.2 million income
Q2 2026 Adjusted EBITDA
$18.9 million
Down from $22.4 million in Q2 2025
YTD 2026 Adjusted EBITDA
$46.2 million
Twenty-eight weeks ended July 12, 2026
Debt Outstanding
$167.2 million
Credit Facility borrowings as of July 12, 2026
Liquidity
$47.8 million
Cash and cash equivalents plus available revolver capacity
Refranchising Consideration
$96.0 million
Aggregate consideration for 116 restaurants under pending APAs
Key Terms
refranchising, sale-leaseback, held for sale, Adjusted EBITDA, +1 more
5 terms
refranchising financial
"the Company entered into three asset purchase agreements to refranchise 116 Company-owned restaurants"
Refranchising is when a company sells or transfers its company-operated locations to independent franchisees who run the business and pay fees or royalties to the company. For investors this is important because it typically brings immediate cash from the sales, reduces the company’s day-to-day operating costs and capital spending, and shifts future profit from direct store sales to steadier fee income—while also reducing control and the potential upside from operating the business directly.
sale-leaseback financial
"the Company completed sale-leaseback transactions of two owned restaurant properties"
A sale-leaseback is a deal where an owner sells an asset—commonly real estate or equipment—to another party and immediately rents it back so they can keep using it. For investors, it matters because the seller converts a fixed asset into cash without disrupting operations, which can boost liquidity or pay down debt but also creates ongoing lease payments and long-term obligations that affect cash flow and the balance sheet.
held for sale financial
"management concluded that the restaurant disposal groups met the criteria for classification as held for sale"
An asset or a group of assets classified as 'held for sale' is one the company intends to sell rather than keep using, and management has committed to that plan with an active effort to find a buyer. Investors care because these items are removed from ongoing operating results and valued differently, offering a clearer view of the business’s continuing performance—think of it like marking a piece of furniture for the garage sale rather than counting it as part of your regular household setup.
Adjusted EBITDA financial
"Adjusted EBITDA was $18.9 million compared to $22.4 million last year"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
net total leverage ratio covenant financial
"we are subject to a net total leverage ratio covenant under our Credit Facility"
Earnings Snapshot
Total revenues (Q2 2026): $277.6 million
Twelve and twenty-eight weeks ended July 12, 2026
Total revenues (Q2 2026)
$277.6 million
-2.1% vs prior-year quarter
Net income (loss) (YTD 2026)
$(1.8) million
Down from $5.2 million income YTD 2025
Adjusted EBITDA (Q2 2026)
$18.9 million
Down from $22.4 million in Q2 2025
Restaurant level operating margin (Q2 2026)
14.7%
Up 20 basis points vs Q2 2025
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FAQ
How did Red Robin (RRGB) perform financially in Q2 2026?
Red Robin reported Q2 2026 revenues of $277.6 million, down 2.1% year over year, and net income of $0.4 million, compared with $4.0 million in Q2 2025. Adjusted EBITDA was $18.9 million, down from $22.4 million.
What were Red Robin (RRGB) results for the 28 weeks ended July 12, 2026?
For the year‑to‑date period, Red Robin generated $655.9 million in revenue, down 3.0% from 2025, and recorded a net loss of $1.8 million versus net income of $5.2 million last year. Adjusted EBITDA was $46.2 million.
What refranchising transactions did Red Robin (RRGB) announce in 2026?
Red Robin entered three asset purchase agreements to refranchise 116 company‑owned restaurants for total aggregate consideration of about $96.0 million, subject to customary adjustments. The company expects to close these deals in fiscal 2026 and continue earning royalties.
What is Red Robin’s (RRGB) current debt and liquidity position?
As of July 12, 2026, Red Robin had $167.2 million outstanding under its credit facility, including a $200 million term loan and undrawn $25 million revolver, and about $47.8 million of liquidity combining cash and available revolver capacity.
How are same‑restaurant sales trending for Red Robin (RRGB)?
Comparable restaurant revenue increased 1.3% in Q2 2026 and 0.2% year‑to‑date, excluding deferred loyalty revenue. Guest counts declined modestly, but average guest check rose, supporting stable restaurant‑level operating margins of 14.7%.
What are Red Robin’s (RRGB) major non‑cash or one‑time items in 2026?
Key items include $2.4 million of asset impairment and closure costs year‑to‑date, a $0.9 million gain on a restaurant property sale, $1.2 million of severance and executive transition costs, and $3.2 million of asset disposal and other non‑recurring charges.
What legal and purchase commitments does Red Robin (RRGB) disclose?
Red Robin reports $5.6 million in reserves for loss contingencies and $194.2 million of non‑cancellable purchase commitments, mainly for food, beverage, and supplies. It also notes potential contingent lease liabilities with a maximum $2.6 million future payment exposure.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the quarterly period ended July 12, 2026
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||
For the transition period from to
Commission File Number: 001-34851
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||||||||
| (Global Select Market) | ||||||||||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | ☐ | ☒ | ||||||||||||
| Non-accelerated Filer | ☐ | Smaller Reporting Company | ||||||||||||
| Emerging Growth Company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 5, 2026, there were 18,903,752 shares of the registrant's common stock, par value of $0.001 per share outstanding.
Table of Contents
RED ROBIN GOURMET BURGERS, INC.
TABLE OF CONTENTS
| Page | ||||||||
PART I - FINANCIAL INFORMATION | ||||||||
ITEM 1. | Financial Statements (unaudited) | 1 | ||||||
Condensed Consolidated Balance Sheets | 1 | |||||||
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | 2 | |||||||
Condensed Consolidated Statements of Stockholders' Equity (Deficit) | 3 | |||||||
Condensed Consolidated Statements of Cash Flows | 5 | |||||||
Notes to the Condensed Consolidated Financial Statements | 6 | |||||||
ITEM 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 17 | ||||||
ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk | 33 | ||||||
ITEM 4. | Controls and Procedures | 33 | ||||||
PART II - OTHER INFORMATION | ||||||||
ITEM 1. | Legal Proceedings | 34 | ||||||
ITEM 1A. | Risk Factors | 34 | ||||||
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 35 | ||||||
ITEM 5. | Other Information | 35 | ||||||
ITEM 6. | Exhibits | 36 | ||||||
Signature | 37 | |||||||
i
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PART I — FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (in thousands, except for per share amounts) | July 12, 2026 | December 28, 2025 | |||||||||
| Assets: | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Restricted cash | |||||||||||
| Current assets held for sale | |||||||||||
| Total current assets | $ | $ | |||||||||
| Property and equipment, net | |||||||||||
| Operating lease assets, net | |||||||||||
| Intangible assets, net | |||||||||||
| Noncurrent assets held for sale | |||||||||||
| Other assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
Liabilities and stockholders' equity (deficit): | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued payroll and payroll-related liabilities | |||||||||||
| Unearned revenue | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Accrued liabilities and other | |||||||||||
| Total current liabilities | $ | $ | |||||||||
| Long-term debt | |||||||||||
| Long-term portion of operating lease liabilities | |||||||||||
| Other non-current liabilities | |||||||||||
| Total liabilities | $ | $ | |||||||||
Commitments and contingencies (see Note 10.) | |||||||||||
| Stockholders' equity (deficit): | |||||||||||
Common stock, $ | $ | $ | |||||||||
Preferred stock, $ | |||||||||||
Treasury stock: | ( | ( | |||||||||
| Paid-in capital | |||||||||||
Accumulated other comprehensive income (loss), net of tax | ( | ( | |||||||||
Retained earnings (accumulated deficit) | ( | ( | |||||||||
| Total stockholders' equity (deficit) | $ | ( | $ | ( | |||||||
| Total liabilities and stockholders' equity (deficit) | $ | $ | |||||||||
See Notes to Condensed Consolidated Financial Statements
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RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| (in thousands, except for per share amounts) | July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | |||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Restaurant revenue | $ | $ | $ | $ | |||||||||||||||||||
| Franchise revenue | |||||||||||||||||||||||
| Other revenue | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Restaurant operating costs (excluding depreciation and amortization shown separately below): | |||||||||||||||||||||||
| Cost of sales | $ | $ | $ | $ | |||||||||||||||||||
| Labor | |||||||||||||||||||||||
| Other operating | |||||||||||||||||||||||
| Occupancy | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
General and administrative (includes $ | |||||||||||||||||||||||
| Selling | |||||||||||||||||||||||
Other (gains) charges, net (includes $ | ( | ||||||||||||||||||||||
| Total costs and expenses | $ | $ | $ | $ | |||||||||||||||||||
| Income (loss) from operations | $ | $ | $ | $ | |||||||||||||||||||
| Other (income) expense: | |||||||||||||||||||||||
| Interest expense | $ | $ | $ | $ | |||||||||||||||||||
| Interest (income) and other, net | ( | ||||||||||||||||||||||
Total other expenses, net | $ | $ | $ | $ | |||||||||||||||||||
Income (loss) before income taxes | $ | $ | $ | ( | $ | ||||||||||||||||||
Income tax (benefit) expense | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Net income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
Income (loss) per share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | ( | $ | ||||||||||||||||||
| Diluted | $ | $ | $ | ( | $ | ||||||||||||||||||
| Weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustment | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Other comprehensive income (loss), net of tax | $ | ( | $ | $ | ( | $ | |||||||||||||||||
| Total comprehensive income (loss) | $ | $ | $ | ( | $ | ||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
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RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited)
| Common Stock | Treasury Stock | Accumulated Other Comprehensive Income (Loss), net of tax | ||||||||||||||||||||||||||||||||||||||||||||||||
| Paid-in Capital | Retained Earnings (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Shares | Amount | Shares | Amount | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 28, 2025 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan | — | — | ( | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Non-cash stock compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Equity issuance costs (1) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, April 19, 2026 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan | — | — | ( | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Non-cash stock compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance, July 12, 2026 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
(1) Represents the reclassification of at-the-market equity offering issuance costs from equity to other (gains) charges upon termination of the offering. See Note 6. Other (Gains) Charges, net, for further information.
3
Table of Contents
| Common Stock | Treasury Stock | Accumulated Other Comprehensive Income (Loss), net of tax | ||||||||||||||||||||||||||||||||||||||||||||||||
| Paid-in Capital | Retained Earnings (Deficit) | |||||||||||||||||||||||||||||||||||||||||||||||||
| (in thousands) | Shares | Amount | Shares | Amount | Total | |||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 29, 2024 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan | — | — | ( | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Non-cash stock compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, April 20, 2025 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
| Issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan | — | — | ( | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Non-cash stock compensation | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Balance, July 13, 2025 | $ | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
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RED ROBIN GOURMET BURGERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Twenty-Eight Weeks Ended | |||||||||||
| (in thousands) | July 12, 2026 | July 13, 2025 | |||||||||
Cash Flows From Operating Activities: | |||||||||||
| Net income (loss) | $ | ( | $ | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Gift card breakage | ( | ( | |||||||||
| Asset impairment | |||||||||||
Non-cash other (gains) charges | ( | ( | |||||||||
| Stock-based compensation expense | ( | ||||||||||
Gain on sale of restaurant property | ( | ( | |||||||||
| Amortization of debt issuance cost | |||||||||||
| Other, net | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable and other, net | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Operating lease assets, net of liabilities | ( | ( | |||||||||
| Trade accounts payable and accrued liabilities | ( | ||||||||||
| Unearned revenue | ( | ( | |||||||||
| Other operating assets and liabilities, net | |||||||||||
Net cash provided by (used in) operating activities | $ | $ | |||||||||
Cash Flows From Investing Activities: | |||||||||||
| Purchases of property, equipment, and intangible assets | $ | ( | $ | ( | |||||||
| Proceeds from sale of property and equipment, and other | |||||||||||
Net cash provided by (used in) investing activities | $ | ( | $ | ( | |||||||
Cash Flows From Financing Activities: | |||||||||||
Net (repayments) borrowings on revolving credit facility | $ | ( | $ | ( | |||||||
Repayments of borrowings on term loan | ( | ||||||||||
Repayments of insurance premium financing | ( | ( | |||||||||
Proceeds (uses) from other financing activities, net | ( | ( | |||||||||
Net cash provided by (used in) financing activities | $ | ( | $ | ( | |||||||
| Net change in cash and cash equivalents, and restricted cash | $ | $ | ( | ||||||||
| Cash and cash equivalents, and restricted cash, beginning of period | $ | $ | |||||||||
| Cash and cash equivalents, and restricted cash, end of period | $ | $ | |||||||||
| Supplemental disclosure of cash flow information | |||||||||||
Interest paid | $ | $ | |||||||||
Accrued purchases of property, equipment, and intangible assets | |||||||||||
| Right of use assets obtained in exchange for operating lease obligations | |||||||||||
See Notes to Condensed Consolidated Financial Statements.
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RED ROBIN GOURMET BURGERS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation and Recent Accounting Pronouncements
Red Robin Gourmet Burgers, Inc., a Delaware corporation, 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 in North America. As of July 12, 2026, the Company owned and operated 375 restaurants located in 39 states. The Company also had 90 casual dining restaurants operated by franchisees in 13 states and one Canadian province. The Company operated its business as one operating and one reportable segment.
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Red Robin and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for any interim period are not necessarily indicative of results for the full year.
The accompanying Condensed Consolidated Financial Statements of Red Robin have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the Company's annual Consolidated Financial Statements on Form 10-K have been condensed or omitted. The Condensed Consolidated Balance Sheet as of December 28, 2025 has been derived from the audited Consolidated Financial Statements as of that date but does not include all disclosures required for audited annual financial statements. For further information, please refer to and read these interim Condensed Consolidated Financial Statements in conjunction with the Company's audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2025, filed with the SEC on February 25, 2026.
Our current, prior, and upcoming fiscal year periods, period end dates, and number of weeks included in each period are summarized in the table below:
| Periods | Period End Date | Number of Weeks in Period | ||||||||||||
| Current, Prior and Upcoming Fiscal Quarters: | ||||||||||||||
First Quarter 2026 | April 19, 2026 | 16 | ||||||||||||
First Quarter 2025 | April 20, 2025 | 16 | ||||||||||||
Second Quarter 2026 | July 12, 2026 | 12 | ||||||||||||
Second Quarter 2025 | July 13, 2025 | 12 | ||||||||||||
Third Quarter 2026 | October 4, 2026 | 12 | ||||||||||||
Third Quarter 2025 | October 5, 2025 | 12 | ||||||||||||
| Current and Prior Fiscal Years: | ||||||||||||||
Fiscal Year 2026 | December 27, 2026 | 52 | ||||||||||||
Fiscal Year 2025 | December 28, 2025 | 52 | ||||||||||||
| Upcoming fiscal year: | ||||||||||||||
Fiscal Year 2027 | December 26, 2027 | 52 | ||||||||||||
Reclassifications
Certain amounts presented have been reclassified to conform with the current period presentation. The reclassifications had no effect on the Company’s consolidated results. We made adjustments to the Condensed Consolidated Statements of Cash Flows to include repayments of finance lease obligations within proceeds (uses) from other financing activities, net, and to separately disclose the following captions: to disaggregate gift card breakage from the change in unearned revenue; and to disaggregate amortization of debt issuance costs from other, net.
Recently Issued and Recently Adopted Accounting Standards
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In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-12, Codification Improvements, which included amendments intended to clarify, improve, and correct various sections of the Accounting Standards Codification. The amendments addressed a variety of topics, including earnings per share, equity, leases, revenue recognition, credit losses, and other areas, and are primarily intended to improve the consistency and clarity of existing guidance without significantly changing current accounting practice. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2025-12 on the Consolidated Financial Statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements to clarify and improve the guidance in ASC 270 regarding interim reporting. ASU 2025-11 improved the navigability of the guidance, clarifying when the interim reporting guidance applies, and specifying the disclosures and form and content requirements for interim financial statements and accompanying notes under GAAP. The amendments are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2025-11 on the Consolidated Financial Statements.
In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40) to introduce a principles-based framework for capitalizing costs related to the development of internal-use software. ASU 2025-06 also incorporates website development costs into the internal-use software guidance and enhances related disclosure requirements. The amendments are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of the adoption of ASU 2025-06 to the Consolidated Financial Statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures (Subtopic 220-40), which expands disclosures about specific expense categories presented on the face of the income statement. ASU 2024-03 is effective for financial statements issued for annual periods beginning after December 15, 2026, with interim reporting requirements beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of the adoption of ASU 2024-03 on the Consolidated Financial Statements.
We reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a significant impact on the Company's Condensed Consolidated Financial Statements.
Recently Issued Tax Legislation
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and the restoration of favorable tax treatment for specific business provisions. The legislation has multiple effective dates, with some provisions taking effect in 2025 and others phased in through 2027. In accordance with ASC 740 - Income Taxes, the effects of changes in tax rates and laws are recognized in the period in which the legislation is enacted. The OBBBA did not have a material impact on the Consolidated Financial Statements.
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2. Revenue
Disaggregation of Revenue
In the following table, revenue is disaggregated by type of good or service (in thousands):
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | ||||||||||||||||||||
| Restaurant revenue | $ | $ | $ | $ | |||||||||||||||||||
| Franchise revenue | |||||||||||||||||||||||
| Gift card breakage | |||||||||||||||||||||||
| Other revenue | |||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Contract Liabilities
We recognize revenue from our customer loyalty program, Red Robin Royalty ("Royalty"), within restaurant revenue in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) when a customer redeems an earned reward. Unearned revenue associated with our Royalty program is included in unearned revenue in our Condensed Consolidated Balance Sheets.
Components of unearned revenue in the Condensed Consolidated Balance Sheets are as follows (in thousands):
| July 12, 2026 | December 28, 2025 | ||||||||||
| Unearned gift card revenue | $ | $ | |||||||||
Unearned Royalty revenue | |||||||||||
Unearned revenue | $ | $ | |||||||||
Revenue recognized in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the redemption and breakage of gift cards that were included in the liability balance at the beginning of the fiscal year was as follows (in thousands):
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | ||||||||||||||||||||
| Gift card revenue | $ | $ | $ | $ | |||||||||||||||||||
Changes in our unearned revenue balance related to our Royalty program (in thousands):
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | ||||||||||||||||||||
Unearned Royalty revenue, beginning balance | $ | $ | $ | $ | |||||||||||||||||||
| Revenue deferred | |||||||||||||||||||||||
Revenue recognized | ( | ( | ( | ( | |||||||||||||||||||
Unearned Royalty revenue, ending balance | $ | $ | $ | $ | |||||||||||||||||||
3. Significant Transactions
Pending Refranchising Transactions
During the second quarter of fiscal 2026, the Company entered into three separate asset purchase agreements ("APA") with unrelated franchisees for the sale of certain assets associated with 116 Company-owned restaurants.
On May 27, 2026, Red Robin International, Inc. ("RRI"), a wholly owned subsidiary of the Company, entered into an APA with Evergreen Dining LLC to sell certain restaurant assets associated with 30 Company-owned restaurants located in Washington and Western Idaho for aggregate consideration of $23.5 million.
On June 11, 2026, RRI entered into an APA with Op Burgers, LLC to sell certain restaurant assets associated with 69 Company-owned restaurants located in Indiana, Kentucky, Maryland, North Carolina, Ohio, Pennsylvania, South Carolina and Virginia for aggregate consideration of $62.5 million.
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Also on June 11, 2026, RRI entered into an APA with Kuber Oregon, LLC and Kuber Washington, LLC to sell certain restaurant assets associated with 17 Company-owned restaurants located in Oregon and Washington for aggregate consideration of $10.0 million.
The transactions are subject to customary closing conditions, including, as applicable, required landlord consents, lease assignments, regulatory and licensing approvals, the receipt of any required lender consent, and other restaurant-specific closing requirements. Each transaction is subject to separate closing conditions and may close independently or in phases. The Company expects the transactions to close during fiscal 2026; however, there can be no assurance that any or all of the transactions will be completed on the anticipated terms or within the anticipated timeframe. The aggregate gross cash proceeds from each of the three transactions are subject to customary purchase-price and closing adjustments. The Company intends to use the net proceeds primarily to repay outstanding borrowings and for general corporate purposes. Upon closing, the restaurants will continue to operate as Red Robin restaurants pursuant to long-term franchise agreements with the respective purchasers, and the Company expects to receive ongoing royalty and advertising fund contributions under those franchise agreements. The Company may retain certain obligations associated with assigned or subleased restaurant leases, including potential secondary lease or guarantee obligations. The estimated amount of any liabilities to be recognized for such continuing obligations has not yet been determined. As of July 12, 2026, none of the transactions had closed.
In connection with the execution of the APAs described above, the Company evaluated the related restaurant disposal groups under the held-for-sale guidance in ASC 360, Property, Plant and Equipment. As of July 12, 2026, management concluded that the restaurant disposal groups met the criteria for classification as held for sale. Accordingly, $53.8 million of assets and $0.0 million of liabilities were classified as held for sale in the accompanying Condensed Consolidated Balance Sheet. The Company evaluated the restaurant disposal groups at the lower of carrying amount or fair value less costs to sell in accordance with ASC 360. Operating lease right-of-use assets and related lease liabilities were not classified as held for sale because the related lease assignment negotiations had not been completed as of July 12, 2026.
The Company continues to evaluate certain accounting effects of the transactions, including purchase price adjustments, transaction costs, lease-related balances and retained obligations. The Company does not expect the transactions to qualify for discontinued operations presentation because they are not expected to represent a strategic shift that qualifies for discontinued operations presentation.
Sale-Leaseback Transactions
During the second quarter of fiscal 2026, the Company completed sale-leaseback transactions of two owned restaurant properties as part of its ongoing real estate optimization strategy. Prior to closing, the Company evaluated the properties under the held-for-sale guidance in ASC 360, Property, Plant and Equipment, and measured each property at the lower of its carrying amount or fair value less costs to sell.
The Company determined that the transaction prices for both sales represented market value. The Company recognized an impairment charge of $1.1 million related to one of the properties prior to closing, which had a carrying value of $3.2 million and generated gross proceeds of $2.1 million. The second transaction had a carrying value of $2.3 million, generated gross proceeds of approximately $3.2 million, and resulted in a gain on sale, net of expenses, of $0.9 million.
Upon completion of the transactions, the Company derecognized the related assets and accounted for the resulting sale-leaseback transactions in accordance with ASC 842, Leases. The net proceeds were included within cash flows from investing activities in the Condensed Consolidated Statements of Cash Flows and were used primarily for general corporate purposes.
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4. Leases
The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and real estate taxes, are included in occupancy on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as follows (in thousands):
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | ||||||||||||||||||||
| Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
| Finance lease cost: | |||||||||||||||||||||||
Amortization of right of use assets(1) | |||||||||||||||||||||||
Interest on lease liabilities(2) | |||||||||||||||||||||||
| Total finance lease cost | $ | $ | $ | $ | |||||||||||||||||||
| Variable lease cost | |||||||||||||||||||||||
| Total lease costs | $ | $ | $ | $ | |||||||||||||||||||
(1) Amortization of finance lease right of use assets is recorded to depreciation and amortization in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
(2) Interest on finance lease liabilities is recorded to interest expense in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
Finance lease assets are recorded in other assets, net, and the net balances as of July 12, 2026 and July 13, 2025 were $4.0 million and $4.8 million, respectively.
5. Earnings (Loss) Per Share
Basic earnings (loss) per share amounts are calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share amounts are calculated based upon the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period. Potentially dilutive shares are excluded from the computation in periods in which they have an anti-dilutive effect. Diluted earnings per share amounts reflect the potential dilution that could occur if holders of unvested equity-classified awards vest and exercise their awards into common stock. As the Company was in a net loss position for the twenty-eight weeks ended July 12, 2026, all potentially dilutive common shares for the year to date period are considered anti-dilutive.
The Company uses the treasury stock method to calculate the effect of outstanding stock options and awards. Basic weighted-average shares outstanding are reconciled to diluted weighted-average shares outstanding as follows (in thousands):
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | ||||||||||||||||||||
| Basic weighted-average shares outstanding | |||||||||||||||||||||||
| Dilutive effect of stock options and awards | |||||||||||||||||||||||
| Diluted weighted-average shares outstanding | |||||||||||||||||||||||
| Awards excluded due to anti-dilutive effect on diluted income (loss) per share | |||||||||||||||||||||||
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6. Other (Gains) Charges, net
Other (gains) charges, net consisted of the following (in thousands):
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | ||||||||||||||||||||
| Asset impairment and restaurant closure costs, net | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Gain on sale of restaurant property | ( | ( | ( | ||||||||||||||||||||
Severance and executive transition(1) | |||||||||||||||||||||||
| Litigation contingencies | |||||||||||||||||||||||
| Asset disposal and other, net | |||||||||||||||||||||||
| Other (gains) charges, net | $ | $ | ( | $ | $ | ||||||||||||||||||
(1) Severance and executive transition included $0 and $(3,868 ) of stock-based compensation (benefit) expense in the twelve weeks ended July 12, 2026 and July 13, 2025, respectively, and $0 and $(4,093 ) of stock-based compensation (benefit) expense in the twenty-eight weeks ended July 12, 2026 and July 13, 2025, respectively.
Asset Impairment and Restaurant Closure Costs, net
Asset impairment and restaurant closure costs, net consisted of the following (in thousands, except for location data):
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | ||||||||||||||||||||
Number of non-operating locations | |||||||||||||||||||||||
Non-operating location rent, restaurant closure costs, and other | $ | $ | $ | $ | |||||||||||||||||||
Number of impaired locations | |||||||||||||||||||||||
Non-cash impairment | $ | $ | $ | $ | |||||||||||||||||||
Number of locations with lease remeasurement | |||||||||||||||||||||||
Net lease remeasurement (gain) loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Total asset impairment and restaurant closure costs, net | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Gain on Sale of Restaurant Property
During the second quarter and year to date period of fiscal 2026, the Company completed sale-leaseback transactions for two 1.1 0.9
During the second quarter of fiscal 2025, the Company did not sell any restaurant properties. During the year to date period of fiscal 2025, the Company sold three restaurant properties for total proceeds of $5.8 million that resulted in a gain, net of expenses, of $1.1 million. The net proceeds were included within cash flows from investing activities on the Condensed Consolidated Statements of Cash Flows for the year to date period of fiscal 2025 and were used to repay long-term debt.
Severance and Executive Transition
Severance and executive transition consisted of the following (in thousands):
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | ||||||||||||||||||||
Executive severance | $ | $ | $ | $ | |||||||||||||||||||
Stock-based compensation(1) | ( | — | ( | ||||||||||||||||||||
Team member severance(2) | |||||||||||||||||||||||
Total severance and executive transition | $ | $ | $ | $ | |||||||||||||||||||
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(1) For the twelve and twenty-eight weeks ended July 13, 2025, the Stock-based compensation benefit relates primarily to the forfeiture of unvested stock-based compensation by executive leadership.
(2) During the twenty-eight weeks ended July 12, 2026 and July 13, 2025, team member severance is primarily associated with a reduction in force, which occurred during the second quarter of fiscal 2026 and 2025.
For the twenty-eight weeks ended July 12, 2026 and July 13, 2025, $1.9 million and $4.3 million, respectively, were included in accrued payroll and payroll related liabilities in the Condensed Consolidated Balance Sheet related to the executive transition costs described above.
Litigation Contingencies
For the twenty-eight weeks ended July 12, 2026 and July 13, 2025, the Company recorded certain accruals associated with litigation contingencies. See Note 10. Commitments and Contingencies, for further discussion.
Asset Disposal and Other
Asset disposal and other primarily related to asset disposals, strategic projects and other non-recurring items.
On February 23, 2026, the Company voluntarily terminated its $40.0 million at-the-market equity offering program, which had been established on November 10, 2025. No shares were issued or sold under the program. The Company incurred $0.5 million of related stock issuance costs, which were initially recorded within paid-in capital on the December 28, 2025 Consolidated Balance Sheet, and subsequently reclassified to other (gains) charges, net within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) upon termination of the offering.
7. Borrowings
Borrowings as of July 12, 2026 and December 28, 2025 are summarized below (in thousands):
| July 12, 2026 | December 28, 2025 | ||||||||||||||||||||||
| Borrowings | Variable Interest Rates | Borrowings | Variable Interest Rates | ||||||||||||||||||||
| Revolving line of credit | $ | % | $ | % | |||||||||||||||||||
| Term loan | $ | % | $ | % | |||||||||||||||||||
| Total borrowings | $ | $ | |||||||||||||||||||||
Less: unamortized debt issuance costs(1) | $ | $ | |||||||||||||||||||||
| Long-term debt | $ | $ | |||||||||||||||||||||
Revolving line of credit unamortized debt issuance costs(1) | $ | $ | |||||||||||||||||||||
(1) Unamortized debt issuance costs associated with the Company's Credit Facility were included as deferred costs in other assets, net for financing charges allocated to the revolving line of credit, and long-term debt for financing charges associated with the term loan in the accompanying Condensed Consolidated Balance Sheets.
Credit Facility
As of July 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 July 12, 2026 and December 28, 2025, the Company had outstanding borrowings of $167.2 million and $170.2 million, respectively, inclusive of $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 July 12, 2026 and December 28, 2025, respectively.
The Credit Facility will mature on September 3, 2027. The term loan requires quarterly principal payments in an aggregate annual amount equal to 1.0 % of its original principal amount. As of July 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) the Federal Funds Rate plus 0.5 % per annum, or (c) one-month term SOFR plus 1.0 % per annum.
On March 4, 2022, the Company replaced its prior amended and restated credit agreement (the "Prior Credit Agreement") with a new credit agreement (the "Credit Agreement") by and among the Company, Red Robin International, Inc., as the borrower, the lenders from time to time party thereto, the issuing banks from time to time party thereto, Fortress Credit Corp., as administrative agent (the "Administrative Agent") and as collateral agent and JPMorgan Chase Bank, N.A., as Sole Lead Arranger and Sole Bookrunner.
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Red Robin International, Inc., is the borrower under the Credit Agreement, and certain of its subsidiaries and the Company are guarantors of the borrower’s obligations under the Credit Agreement. Borrowings under the Credit Agreement are secured by substantially all of the assets of the borrower and the guarantors, including the Company, and are available to: (i) refinance certain existing indebtedness of the borrower and its subsidiaries, (ii) pay any fees and expenses in connection with the Credit Agreement, and (iii) provide for the working capital and general corporate requirements of the Company, the borrower and its subsidiaries, including permitted acquisitions and capital expenditures, but excluding restricted payments.
On March 4, 2022, Red Robin International, Inc., the Company, and the guarantors also entered into a Pledge and Security Agreement (the "Security Agreement") granting to the Administrative Agent a first priority security interest in substantially all of the assets of the borrower and the guarantors to secure the obligations under the Credit Agreement.
Red Robin International, Inc. as the borrower is obligated to pay customary fees to the agents, lenders and issuing banks under the Credit Agreement with respect to providing, maintaining, or administering, as applicable, the credit facilities.
On July 17, 2023, the Company amended the Credit Agreement (the "First Amendment") to, among other things, remove the previously included $50.0 million aggregate cap on sale-leasebacks of Company-owned real property that are permitted under the Credit Agreement, subject to certain conditions set forth in the Credit Agreement.
On August 21, 2024, the Company entered into the second amendment to the Credit Agreement (the "Second Amendment"). The Second Amendment, among other things, provided certain relief from the financial covenant by increasing the required maximum net total leverage ratio beginning in the third quarter of 2024 through the end of the third quarter of 2025; increased the aggregate revolving commitments by $15.0 million to $40.0 million through the end of the third quarter of 2025; removed the variable pricing grid and increased the applicable margin on all term loans and revolving loans that are SOFR-based loans to 7.50 % per annum and that are ABR-based loans to 6.50 % per annum; and added certain additional reporting requirements.
On November 4, 2024, the Company entered into the third amendment to the Credit Agreement (the "Third Amendment"). The Third Amendment extended the provisions of the Second Amendment through the end of the first fiscal quarter of 2026.
On November 7, 2025, the Company entered into the fourth amendment to our Credit Agreement (the "Fourth Amendment"). The Fourth Amendment extended the maturity date of the Credit Agreement by six months to September 3, 2027.
The summary descriptions of the Credit Agreement, the Security Agreement, the First Amendment, the Second Amendment, the Third Amendment, and the Fourth Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of each agreement, which are listed as exhibits to the Annual Report on Form 10-K filed February 25, 2026.
8. Stock Incentive Plans
The Company maintains the 2024 Performance Incentive Plan (the "2024 Stock Plan"), under which it may grant restricted stock units ("RSUs"), performance stock units ("PSUs"), phantom restricted stock units ("PRSUs"), phantom performance stock units ("PPSUs"), stock appreciation rights ("SARs"), and other stock-based awards to employees, non-employee directors and consultants. Additional information regarding the Company's stock incentive plans is included in Note 14. Stock Incentive Plans, in the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2025.
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Awards Granted
The following table summarizes stock-based awards granted during the first and second quarters of fiscal 2026:
Sixteen Weeks Ended April 19, 2026 | Twelve Weeks Ended July 12, 2026 | ||||||||||||||||||||||
| Award Type | Awards Granted | Weighted-Average Grant-Date Fair Value | Awards Granted | Weighted-Average Grant-Date Fair Value | |||||||||||||||||||
| Equity-classified awards | |||||||||||||||||||||||
| Restricted stock units (RSUs) | $ | $ | |||||||||||||||||||||
| Performance stock units (PSUs) | $ | $ | |||||||||||||||||||||
| Liability-classified awards | |||||||||||||||||||||||
| Phantom restricted stock units (PRSUs) | $ | $ | |||||||||||||||||||||
| Phantom performance stock units (PPSUs) | $ | $ | |||||||||||||||||||||
| Cash-settled stock appreciation rights (SARs) | $ | $ | |||||||||||||||||||||
During the first and second quarters of fiscal 2026, the Company granted equity-classified awards under the 2024 Stock Plan. The RSUs vest over one to three years three years
During the first and second quarters of fiscal 2026, the Company also granted liability-classified awards under the 2024 Stock Plan. The PRSUs vest over two to three years three years one year
9. Fair Value Measurements
Fair value measurements are made under a three-tier fair value hierarchy, which prioritizes the inputs used in the measuring of fair value:
Level 1: Observable inputs that reflect unadjusted quote prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management's best estimate of fair value.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The carrying amounts of the Company's cash and cash equivalents, accounts receivable, restricted cash, accounts payable, and current accrued expenses and other liabilities approximate fair value due to the short-term nature or maturity of the instruments.
The Company maintains a rabbi trust to fund obligations under a deferred compensation plan, which are designated as trading securities and carried at fair value. The Company terminated its deferred compensation plan effective October 23, 2025, with no new deferral elections allowed. All assets will be fully distributed by the end of fiscal 2026. Given the termination of the deferred compensation plan and scheduled distribution within this current fiscal year, the plan's assets and liabilities have been classified as current in the July 12, 2026 Condensed Consolidated Balance Sheets within prepaid expenses and other current assets and accrued liabilities and other, respectively. The fair market value of the mutual funds is measured using Level 1 inputs (quoted prices for identical assets in active markets) and was $1.8 million and $1.9 million as of the second quarter of fiscal 2026 and the fourth quarter of fiscal 2025, respectively.
The Company also has liability-classified stock compensation awards that are measured at fair value on a recurring basis and are included in accrued liabilities and other and other non-current liabilities in the Condensed Consolidated Balance Sheets. PRSUs are measured using Level 1 inputs, and PPSUs and SARs are measured using Level 3 inputs. The aggregate fair value of these liabilities was approximately $2.1 million and $0.3 million as of July 12, 2026 and December 28, 2025, respectively. Refer to Note 8. Stock Incentive Plans, for additional information regarding these awards and the related fair value measurements.
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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Assets and liabilities recognized or disclosed at fair value in the Condensed Consolidated Financial Statements on a nonrecurring basis include items such as property, plant and equipment, right of use assets, and other intangible assets. These assets are measured at fair value if determined to be impaired.
During fiscal 2026 and fiscal 2025, the Company measured non-financial assets for impairment using either (i) projected future cash flows for assets held and used or (ii) the negotiated purchase price in executed asset purchase agreements with unrelated market participants, adjusted for estimated costs to sell, for assets classified as held for sale. These valuation techniques incorporated significant unobservable inputs and therefore represented Level 3 fair value measurements.
During the second quarter of fiscal 2026, the Company recorded an impairment charge related to the sale of one restaurant location. The carrying value of the restaurant's long-lived assets was approximately $3.2 million. The net proceeds for this transaction were $2.1 million, resulting in a $1.1 million impairment charge.
During the second quarter of fiscal 2025, the Company impaired long-lived assets at one restaurant location with a carrying value of approximately $0.7 million. The fair value of these long-lived assets was determined to be $0.0 million, resulting in a $0.7 million impairment charge.
Disclosures of Fair Value of Other Assets and Liabilities
The carrying value of our variable rate Credit Facility, which utilizes Level 2 fair value inputs, approximated fair value as of July 12, 2026 and December 28, 2025, as such debt bears interest at floating rates which approximate market rates.
10. Commitments and Contingencies
Because litigation is inherently unpredictable, assessing contingencies related to litigation is a complex process involving highly subjective judgment about potential outcomes of future events. When evaluating litigation contingencies, we may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, the availability of appellate remedies, insurance coverage related to the claim or claims in question, the presence of complex or novel legal theories, and the ongoing discovery and development of information important to the matter. In addition, damage amounts claimed in litigation against us may be unsupported, exaggerated, or unrelated to possible outcomes, and as such are not meaningful indicators of our potential liability or financial exposure. Accordingly, we review the adequacy of accruals and disclosures each quarter in consultation with legal counsel, and we assess the probability and range of possible losses associated with contingencies for potential accrual in the Condensed Consolidated Financial Statements. However, the ultimate resolution of litigated claims may differ from our current estimates.
As of July 12, 2026, we had reserves of $5.6 million for loss contingencies included within Accrued liabilities and other on our Condensed Consolidated Balance Sheet. We increased our estimate of loss contingency liabilities by approximately $0.1 million in the year to date period of fiscal 2026 related to ongoing legal matters. In the normal course of business, there are various claims in process, matters in litigation, administrative proceedings, and other contingencies. These include employment related claims and class action lawsuits, claims from guests or team members alleging illness, injury, food quality, health, or operational concerns, and lease and other commercial disputes. While it is not possible to predict the outcome of these suits, legal proceedings, and claims with certainty, management is of the opinion that adequate provision for potential losses associated with these matters has been made in the financial statements and that the ultimate resolution of pending or threatened matters will not have a material adverse effect on our financial position and results of operations. However, a significant increase in the number of these claims, or one or more successful claims resulting in greater liabilities than we currently anticipate, could materially and adversely impact our business, financial condition, results of operations, and cash flows. We ultimately may be subject to greater or less than the accrued amount for this and other matters.
As of July 12, 2026, we had non-cancellable purchase commitments primarily related to certain vendors who provide food and beverage and other supplies to our restaurants, for an aggregate of $194.2 million. We expect to fulfill our commitments under these agreements in the normal course of business, and as such, no liability has been recorded.
The Company has a potential contingent lease liability for lease payments related to certain current franchisees’ lease arrangements. The maximum amount of potential future payments under the potential contingent lease liability was $2.6 million and $3.0 million as of July 12, 2026 and December 28, 2025, respectively. The Company does not believe these arrangements have or are likely to have a material effect on its results of operations, financial condition, revenues or expenses, capital expenditures or liquidity.
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11. Segment Reporting
In accordance with ASC 280 - Segment Reporting, the Company uses the management approach for determining its reportable segments. The management approach is based upon the way that management reviews performance and allocates resources.
The Company has one operating and one reportable segment: restaurants. We manage our business activities on a consolidated basis, as Red Robin restaurants all have similar customers, sell similar products, and have a similar process to sell those products. We primarily derive our revenue in the United States through the sale of food and beverage through our Company-owned locations as well as earn royalties and fees from franchise restaurants. There have been no material changes to the accounting policies of the restaurant segment, which can be found in the filing of the Annual Report on Form 10-K for the fiscal year ended December 28, 2025.
Our Chief Operating Decision Maker ("CODM") is our Chief Executive Officer. The Company measures segment profit using consolidated net income (loss). The CODM uses consolidated net income (loss), as reported on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), in deciding whether to reinvest excess cash flow into the restaurant segment or into other parts of the Company. The CODM does not review assets in evaluating the results of the restaurant segment, and therefore, such information is not presented.
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ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain information and statements contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 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.
Although we believe the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risks and uncertainties. In some cases, information regarding certain important factors that could cause actual results to differ materially from a forward-looking statement appears together with such statement. In addition, the factors described under Item 1A, Risk Factors, as well as other possible factors not listed, could cause actual results to differ materially from those expressed in forward-looking statements, including, without limitation, the effectiveness of the Company's strategic initiatives, including our First Choice plan, labor and service models, and operational improvement initiatives and our ability to execute on such strategic initiatives; the global and domestic economic and geopolitical environment; our ability to effectively compete in the industry and attract and retain guests; our ability to extend or refinance our maturing indebtedness; the adequacy of cash flows and the cost and availability of capital or credit facility borrowings; our ability to service our debt and comply with the covenants in our credit facility; a privacy or security breach or a failure of our information technology systems; the effectiveness and timing of the Company's marketing and branding strategies and impact on reputation, including the loyalty program and social media platforms; changes in consumer preferences; costs associated with our lease obligations, including those incurred through closures and sale-leaseback transactions, as well as potential contingent lease liability; changes in cost and availability of commodities and the uncertain impact of tariffs or other potential disruptions in the supply chain; interruptions in the delivery of food and other products from third parties; pricing increases and labor costs; changes in consumer behavior or preference; aging technology infrastructure; our ability to successfully complete tactical refranchising initiatives and on favorable terms; maintaining and improving our existing restaurants; potential acquisitions, dispositions, or refranchising of our restaurants; our geographic concentration in the Western United States; the retention of our management team; our compensation strategy including availability of equity-based compensation for our management team; our ability to recruit, staff, train, and retain our workforce; operating conditions, including adverse weather conditions, natural disasters, pandemics, and other events affecting the regions where our restaurants are operated; actions taken by our franchisees that could harm our business or reputation; negative publicity regarding food safety or health concerns; protection of our intellectual property rights; changes in laws and regulations affecting the operation of our restaurants; volatility in our stock price; and an increase in litigation or legal claims by team members, franchisees, customers, vendors, stockholders, and others; and the other Risk Factors described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 28, 2025.
All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
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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 second quarter of fiscal 2026 and fiscal 2025 refer to the twelve weeks ended July 12, 2026 and July 13, 2025, respectively.
Description of Business
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 465 locations in North America. As of July 12, 2026, the Company operated 375 Company-owned restaurants located in 39 states. The Company also had 90 franchised restaurants in 13 states and one Canadian province as of July 12, 2026. The Company operated its business as one operating and one reportable segment.
Our primary source of revenue is from the sale of food and beverages at Company-owned restaurants. We also earn revenue from royalties and fees from franchised restaurants.
Results for the Fiscal Second Quarter of 2026, Compared to the Fiscal Second Quarter of 2025:
•Total revenues were $277.6 million, a decrease of $6.1 million.
•Comparable restaurant revenue(1) increased 1.3%, excluding the impact of deferred loyalty revenue.
•Net income was $0.4 million, compared to net income of $4.0 million last year, a $3.6 million decrease.
•Adjusted EBITDA(2) was $18.9 million compared to $22.4 million last year, a 16% decrease.
Results for the Year to Date Period of Fiscal 2026, Compared to the Year to Date Period of Fiscal 2025:
•Total revenues were $655.9 million, a decrease of $20.2 million.
•Comparable restaurant revenue(1) increased 0.2%, excluding the impact of deferred loyalty revenue.
•Net loss was $1.8 million, compared to net income of $5.2 million last year, a $7.0 million decrease.
•Adjusted EBITDA(2) was $46.2 million compared to $50.3 million last year, an 8% decrease.
(1) Comparable restaurant revenue represents revenue from Company-owned restaurants that have operated for at least 18 months as of the beginning of the period presented, excluding the impact of deferred loyalty revenue. See below for reconciliation to restaurant revenues.
(2) Adjusted EBITDA is a Non-GAAP measure. See "Non-GAAP Financial Measures" for more details and a reconciliation of Net Income (loss) to Adjusted EBITDA.
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Key Performance Indicators
Restaurant revenue, compared to the same quarter in the prior year, is presented in the table below:
| (Dollars in millions) | Twelve Weeks Ended | Twenty-Eight Weeks Ended | |||||||||
Restaurant revenue for the period ended July 13, 2025 | $ | 279.3 | $ | 665.1 | |||||||
Change in comparable restaurant revenue | 3.6 | 1.6 | |||||||||
Change in non-comparable restaurant revenue | (9.8) | (23.2) | |||||||||
Change in deferred loyalty revenue | (0.5) | 0.2 | |||||||||
Total change | $ | (6.7) | (21.4) | ||||||||
Restaurant revenue for the period ended July 12, 2026 | $ | 272.6 | $ | 643.7 | |||||||
Restaurant Data
The following table details restaurant unit data for our Company-owned and franchised locations for the periods presented:
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | ||||||||||||||||||||
| Company-owned: | |||||||||||||||||||||||
| Beginning of period | 379 | 401 | 385 | 407 | |||||||||||||||||||
Closed | (4) | (4) | (10) | (10) | |||||||||||||||||||
| End of period | 375 | 397 | 375 | 397 | |||||||||||||||||||
| Franchised: | |||||||||||||||||||||||
| Beginning of period | 90 | 90 | 90 | 91 | |||||||||||||||||||
Closed | — | — | — | (1) | |||||||||||||||||||
| End of period | 90 | 90 | 90 | 90 | |||||||||||||||||||
Total number of restaurants, end of period | 465 | 487 | 465 | 487 | |||||||||||||||||||
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The following table presents total Company-owned and franchised restaurants by state or province as of July 12, 2026:
| Company-Owned Restaurants | Franchised Restaurants | ||||||||||
State: | |||||||||||
Alabama | 3 | ||||||||||
Alaska | 3 | ||||||||||
| Arizona | 17 | 1 | |||||||||
Arkansas | 2 | ||||||||||
| California | 54 | ||||||||||
| Colorado | 21 | ||||||||||
| Connecticut | 3 | ||||||||||
| Delaware | 4 | ||||||||||
| Florida | 16 | ||||||||||
| Georgia | 6 | ||||||||||
| Idaho | 8 | ||||||||||
| Illinois | 11 | ||||||||||
| Indiana | 10 | ||||||||||
| Iowa | 5 | ||||||||||
| Kansas | 5 | ||||||||||
| Kentucky | 3 | ||||||||||
| Louisiana | 1 | ||||||||||
| Maine | 2 | ||||||||||
| Maryland | 9 | ||||||||||
| Massachusetts | 5 | ||||||||||
| Michigan | 19 | ||||||||||
| Minnesota | 3 | ||||||||||
| Missouri | 7 | 3 | |||||||||
| Montana | 1 | ||||||||||
| Nebraska | 4 | ||||||||||
| Nevada | 6 | ||||||||||
| New Hampshire | 3 | ||||||||||
| New Jersey | 6 | 1 | |||||||||
| New Mexico | 3 | ||||||||||
| New York | 14 | ||||||||||
| North Carolina | 16 | ||||||||||
| Ohio | 14 | 3 | |||||||||
| Oklahoma | 4 | ||||||||||
| Oregon | 15 | 5 | |||||||||
| Pennsylvania | 11 | 20 | |||||||||
| Rhode Island | 1 | ||||||||||
| South Carolina | 4 | ||||||||||
| South Dakota | 1 | ||||||||||
| Tennessee | 7 | ||||||||||
| Texas | 16 | 9 | |||||||||
| Utah | 1 | 5 | |||||||||
| Virginia | 17 | ||||||||||
| Washington | 35 | ||||||||||
| Wisconsin | 11 | ||||||||||
| Province: | |||||||||||
| British Columbia | 11 | ||||||||||
| Total | 375 | 90 | |||||||||
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Results of Operations
Operating results for each fiscal period presented below are expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenue. Certain percentage amounts in the table below do not total due to rounding as well as restaurant operating costs being expressed as a percentage of restaurant revenue and not total revenues.
This information has been prepared on a basis consistent with our audited fiscal 2025 annual financial statements, and, in the opinion of management, includes all adjustments necessary for a fair presentation of the information for the periods presented. Our operating results may fluctuate significantly as a result of a variety of factors, and operating results for any period presented are not necessarily indicative of results for a full fiscal year.
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Restaurant revenue | 98.2 | % | 98.5 | % | 98.1 | % | 98.4 | % | |||||||||||||||
| Franchise revenue | 1.3 | 1.1 | 1.3 | 1.1 | |||||||||||||||||||
| Other revenue | 0.5 | 0.4 | 0.6 | 0.5 | |||||||||||||||||||
| Total revenues | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
Restaurant operating costs(1) (excluding depreciation and amortization shown separately below): | |||||||||||||||||||||||
| Cost of sales | 23.5 | % | 23.3 | % | 23.4 | % | 23.0 | % | |||||||||||||||
| Labor | 35.6 | 35.7 | 35.6 | 36.5 | |||||||||||||||||||
| Other operating | 17.8 | 17.8 | 17.7 | 17.6 | |||||||||||||||||||
| Occupancy | 8.5 | 8.7 | 8.5 | 8.5 | |||||||||||||||||||
| Total restaurant operating costs | 85.3 | % | 85.5 | % | 85.3 | % | 85.6 | % | |||||||||||||||
| Depreciation and amortization | 3.5 | 4.1 | 3.8 | 4.0 | |||||||||||||||||||
| General and administrative | 6.3 | 6.1 | 6.2 | 6.6 | |||||||||||||||||||
| Selling | 3.7 | 2.2 | 3.6 | 2.3 | |||||||||||||||||||
| Other (gains) charges, net | 0.4 | (0.1) | 0.9 | 0.1 | |||||||||||||||||||
| Income (loss) from operations | 2.2 | % | 3.5 | % | 1.8 | % | 2.8 | % | |||||||||||||||
| Other (income) expense: | |||||||||||||||||||||||
| Interest expense | 2.1 | % | 2.1 | % | 2.1 | % | 2.1 | % | |||||||||||||||
| Interest (income) and other, net | 0.1 | — | — | — | |||||||||||||||||||
Income (loss) before income taxes | 0.1 | % | 1.4 | % | (0.3) | % | 0.8 | % | |||||||||||||||
Income tax (benefit) expense | — | — | — | — | |||||||||||||||||||
| Net income (loss) | 0.1 | % | 1.4 | % | (0.3) | % | 0.8 | % | |||||||||||||||
(1) Expressed as a percentage of restaurant revenue.
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Revenues
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||
(Dollars in thousands, excluding average weekly net sales) | July 12, 2026 | July 13, 2025 | Percent Change | July 12, 2026 | July 13, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Restaurant revenue | $ | 272,620 | $ | 279,305 | (2.4) | % | $ | 643,720 | $ | 665,115 | (3.2) | % | |||||||||||||||||||||||
| Franchise revenue | 3,638 | 3,186 | 14.2 | % | 8,570 | 7,675 | 11.7 | % | |||||||||||||||||||||||||||
| Other revenue | 1,383 | 1,212 | 14.1 | % | 3,611 | 3,265 | 10.6 | % | |||||||||||||||||||||||||||
| Total revenues | $ | 277,641 | $ | 283,703 | (2.1) | % | $ | 655,901 | $ | 676,055 | (3.0) | % | |||||||||||||||||||||||
Average weekly net sales volumes in Company-owned restaurants(1) | $ | 60,315 | $ | 60,856 | (0.9) | % | $ | 60,540 | $ | 61,402 | (1.4) | % | |||||||||||||||||||||||
| Total operating weeks | 4,520 | 4,764 | (5.1) | % | 10,633 | 11,281 | (5.7) | % | |||||||||||||||||||||||||||
(1) Average weekly net sales volumes represent the total restaurant revenue for all Company-owned Red Robin restaurants for each time period presented, divided by the number of operating weeks in the period.
Restaurant revenue, which was comprised primarily of food and beverage sales, decreased $6.7 million, or 2.4%, in the second quarter of fiscal 2026, as compared to the comparable period of fiscal 2025. Comparable restaurant revenue increased $3.6 million, or 1.3%, inclusive of a 0.2% decrease in guest count, offset in part by a 1.5% increase in average guest check. The non-comparable portion of the decrease in restaurant revenue was $9.8 million, due to the closure of 22 locations since the second quarter of fiscal 2025. The impact of deferred loyalty revenue was a decrease of $0.5 million.
Restaurant revenue decreased $21.4 million, or 3.2%, in the year to date period of fiscal 2026, as compared to the comparable period of fiscal 2025. Comparable restaurant revenue increased $1.6 million, or 0.2%, inclusive of a 1.0% decrease in guest count, offset by a 1.2% increase in average guest check. The non-comparable portion of the decrease in restaurant revenue was $23.2 million, due to the closure of 22 locations since the second quarter of fiscal 2025. The impact of deferred loyalty revenue was an increase of $0.2 million.
Franchise revenue primarily included royalty income and advertising fund contributions. Franchise revenue increased by $0.5 million, or 14.2%, in the second 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 in comparable restaurant revenue in the second quarter of fiscal 2026 compared to the same period in fiscal 2025.
Franchise revenue increased by $0.9 million, or 11.7%, in the year to date period of fiscal 2026 compared to the year to date period of fiscal 2025, primarily due to an increase in the franchisee contribution rate for marketing programs. Franchise restaurants reported an increase in comparable restaurant revenue in the year to date of fiscal 2026 compared to the same period in fiscal 2025.
Other revenue increased $0.2 million and $0.3 million in the second quarter and in the year to date period, respectively, of fiscal 2026 compared to the same periods of fiscal 2025. The increase for both periods was primarily related to higher gift card breakage in the current year.
Cost of Sales
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | July 12, 2026 | July 13, 2025 | Percent Change | July 12, 2026 | July 13, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Cost of sales | $ | 64,086 | $ | 65,159 | (1.6) | % | $ | 150,686 | $ | 153,186 | (1.6) | % | |||||||||||||||||||||||
| As a percent of restaurant revenue | 23.5 | % | 23.3 | % | 0.2 | % | 23.4 | % | 23.0 | % | 0.4 | % | |||||||||||||||||||||||
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 20 basis points in the second quarter of fiscal 2026 as compared to the corresponding period of fiscal 2025. The increase was primarily driven by commodity price inflation, partially offset by menu pricing, supply 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.
Cost of sales as a percentage of restaurant revenue increased 40 basis points in the year to date period of fiscal 2026 as compared to the year to date period of fiscal 2025. The increase was primarily driven by commodity price inflation, partially offset by menu pricing and supply chain cost savings.
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Labor
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | July 12, 2026 | July 13, 2025 | Percent Change | July 12, 2026 | July 13, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Labor | $ | 96,972 | $ | 99,709 | (2.7) | % | $ | 229,365 | $ | 242,767 | (5.5) | % | |||||||||||||||||||||||
| As a percent of restaurant revenue | 35.6 | % | 35.7 | % | (0.1) | % | 35.6 | % | 36.5 | % | (0.9) | % | |||||||||||||||||||||||
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 ten basis points in the second quarter of fiscal 2026 compared to the same period in fiscal 2025. The decrease was primarily driven by improved hourly labor efficiency and the increase in average guest check, partially offset by wage inflation.
Labor as a percentage of restaurant revenue decreased 90 basis points in the year to date period of fiscal 2026 compared to the year to date period of fiscal 2025. The decrease was primarily driven by improved hourly and management labor efficiency and the increase in average guest check, partially offset by wage inflation and deleverage from reduced guest counts.
Other Operating
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | July 12, 2026 | July 13, 2025 | Percent Change | July 12, 2026 | July 13, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Other operating | $ | 48,403 | $ | 49,600 | (2.4) | % | $ | 114,107 | $ | 117,132 | (2.6) | % | |||||||||||||||||||||||
| As a percent of restaurant revenue | 17.8 | % | 17.8 | % | — | % | 17.7 | % | 17.6 | % | 0.1 | % | |||||||||||||||||||||||
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 remained flat in the second quarter of fiscal 2026 compared to the same period in fiscal 2025. This was primarily driven by an increase in average guest check, offset by higher restaurant supplies costs and increased utilities costs.
Other operating costs as a percentage of restaurant revenue increased ten basis points in the year to date period of fiscal 2026 compared to the same period in fiscal 2025. The increase was primarily driven by higher restaurant supplies costs, increased utilities costs, and higher third-party commission expenses, partially offset by an increase in average guest check and cost savings initiatives.
Occupancy
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | July 12, 2026 | July 13, 2025 | Percent Change | July 12, 2026 | July 13, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Occupancy | $ | 23,077 | $ | 24,329 | (5.1) | % | $ | 54,723 | $ | 56,526 | (3.2) | % | |||||||||||||||||||||||
| As a percent of restaurant revenue | 8.5 | % | 8.7 | % | (0.2) | % | 8.5 | % | 8.5 | % | — | % | |||||||||||||||||||||||
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 second quarter of fiscal 2026 decreased 20 basis points compared to the same period in fiscal 2025. The decrease was primarily driven by reduced rent associated with the closure of 22 locations since the second quarter of fiscal 2025 and an increase in average guest check, offset by higher general liability insurance claim activity.
Occupancy costs as a percentage of restaurant revenue in the year to date period of fiscal 2026 remained flat compared to the same period in fiscal 2025. This was primarily driven by reduced rent associated with the closure of 22 locations since the year to date period of fiscal 2025 and an increase in average guest check, offset by higher general liability insurance claims activity.
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Depreciation and Amortization
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | July 12, 2026 | July 13, 2025 | Percent Change | July 12, 2026 | July 13, 2025 | Percent Change | |||||||||||||||||||||||||||||
| Depreciation and amortization | $ | 9,747 | $ | 11,579 | (15.8) | % | $ | 25,010 | $ | 27,013 | (7.4) | % | |||||||||||||||||||||||
| As a percent of total revenues | 3.5 | % | 4.1 | % | (0.6) | % | 3.8 | % | 4.0 | % | (0.2) | % | |||||||||||||||||||||||
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. Depreciation and amortization expense as a percentage of revenue decreased 60 basis points and 20 basis points in the second quarter and year to date periods of fiscal 2026, respectively, compared to the corresponding periods in fiscal 2025. The decrease was primarily driven by the suspension of depreciation on assets classified as held for sale, as well as restaurant closures and asset impairments.
General and Administrative Expenses
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | July 12, 2026 | July 13, 2025 | Percent Change | July 12, 2026 | July 13, 2025 | Percent Change | |||||||||||||||||||||||||||||
General and administrative | $ | 17,627 | $ | 17,418 | 1.2 | % | $ | 40,719 | $ | 44,408 | (8.3) | % | |||||||||||||||||||||||
| As a percent of total revenues | 6.3 | % | 6.1 | % | 0.2 | % | 6.2 | % | 6.6 | % | (0.4) | % | |||||||||||||||||||||||
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 second quarter of fiscal 2026 were $17.6 million, an increase of $0.2 million compared to the comparable period in fiscal 2025. The increase was primarily driven by 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.
General and administrative costs in the year to date period of fiscal 2026 were $40.7 million, a decrease of $3.7 million compared to the comparable period in fiscal 2025. The decrease was primarily driven by a reduction in corporate expenses and a reduction in team member costs associated with lower headcount.
Selling Expenses
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||
| (In thousands, except percentages) | July 12, 2026 | July 13, 2025 | Percent Change | July 12, 2026 | July 13, 2025 | Percent Change | |||||||||||||||||||||||||||||
Selling | $ | 10,366 | $ | 6,350 | 63.2 | % | $ | 23,613 | $ | 15,726 | 50.2 | % | |||||||||||||||||||||||
| As a percent of total revenues | 3.7 | % | 2.2 | % | 1.5 | % | 3.6 | % | 2.3 | % | 1.3 | % | |||||||||||||||||||||||
Selling costs were comprised of all marketing and advertising costs. Selling costs in the second quarter and year to date periods of fiscal 2026 were $10.4 million and $23.6 million, respectively, representing an increase of $4.0 million and $7.9 million compared to the corresponding periods 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, partially offset by lower production costs.
Other (Gains) Charges, net
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
(In thousands) | July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | |||||||||||||||||||
| Asset impairment and restaurant closure costs, net | $ | 641 | $ | (1,615) | $ | 2,394 | $ | (1,405) | |||||||||||||||
Gain on sale of restaurant property | (900) | — | (900) | (1,137) | |||||||||||||||||||
Severance and executive transition | 1,112 | 459 | 1,182 | 1,339 | |||||||||||||||||||
| Litigation contingencies | 33 | 11 | 120 | 23 | |||||||||||||||||||
Asset disposal and other, net | 233 | 889 | 3,153 | 1,600 | |||||||||||||||||||
| Other (gains) charges, net | $ | 1,119 | $ | (256) | $ | 5,949 | $ | 420 | |||||||||||||||
For further information on other (gains) charges line items, refer to Note 6. Other (Gains) Charges, net and Note 9. Fair Value Measurements of the Notes to the Condensed Consolidated Financial Statements.
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Interest Expense
Interest expense for the second quarter of fiscal 2026 and fiscal 2025 was $5.7 million and $5.8 million, respectively. The $0.1 million decrease was primarily due to a decrease in the weighted-average effective interest rate to 13.5% in the second quarter of fiscal 2026 compared to 14.3% in the second quarter of fiscal 2025. Average outstanding debt was $178.4 million and $176.2 million for the second quarter of fiscal 2026 and fiscal 2025, respectively.
Interest expense for the year to date period of fiscal 2026 and fiscal 2025 was $13.5 million and $13.9 million, respectively. The $0.4 million decrease was primarily due to lower outstanding debt, which was $179.8 million in the year to date period of fiscal 2026 compared to $182.8 million in the year to date period of fiscal 2025. Additionally, the weighted-average effective interest rate decreased to 13.5% in the year to date period of 2026 from 14.2% in the year to date period of fiscal 2025.
Income Tax (Benefit) Expense
The taxes recognized in the second 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.
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Non-GAAP Financial Measures
In addition to the results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP"), we provide certain non-GAAP measures, which present operating results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with GAAP and include the following: (i) Restaurant level operating profit, (ii) net income (loss) before interest expense, income taxes, and depreciation and amortization ("EBITDA"), (iii) adjusted EBITDA, and (iv) adjusted net income (loss) per diluted share.
We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation to core operating performance or that vary widely among similar companies. We believe that the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and our Board of Directors evaluate our operating performance, allocate resources and establish employee incentive plans. Determination of these adjustments involves the application of judgment, therefore these non-GAAP financial measures are not intended to replace GAAP financial measures, and they are not necessarily standardized or comparable to similarly titled measures used by other companies. Refer to the reconciliations of non-GAAP measures for descriptions of the actual adjustments made in the current period and the corresponding prior period.
Restaurant Level Operating Profit
The Company believes restaurant level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant level operating efficiency and performance. The Company defines restaurant level operating profit to be income from operations less franchise revenue and other revenue, plus other (gains) charges, net, selling, general and administrative, and depreciation and amortization. The measure includes restaurant level occupancy costs that include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance, and other property costs, but excludes depreciation and amortization expense, substantially all of which is related to restaurant level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. The measure also excludes costs associated with selling, general and administrative functions, as well as other (gains) charges, net because these costs are non-operating and therefore not related to the ongoing operations of its restaurants. Restaurant level operating profit is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to income (loss) from operations as an indicator of financial performance. Restaurant level operating profit as presented may not be comparable to other similarly titled measures of other companies in the Company's industry.
The following table reconciles income (loss) from operations to restaurant level operating profit in thousands and, except as noted, in percent of total revenue for the periods presented:
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | |||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | $ | 6,244 | 2.2% | $ | 9,815 | 3.5% | $ | 11,729 | 1.8% | $ | 18,877 | 2.8% | |||||||||||||||||||||||||||||||||||
| Less: | |||||||||||||||||||||||||||||||||||||||||||||||
| Franchise revenue | $ | 3,638 | 1.3% | $ | 3,186 | 1.1% | $ | 8,570 | 1.3% | $ | 7,675 | 1.1% | |||||||||||||||||||||||||||||||||||
| Other revenue | 1,383 | 0.5 | 1,212 | 0.4 | 3,611 | 0.6 | 3,265 | 0.5 | |||||||||||||||||||||||||||||||||||||||
| Add: | |||||||||||||||||||||||||||||||||||||||||||||||
Other (gains) charges, net | $ | 1,119 | 0.4% | $ | (256) | (0.1)% | $ | 5,949 | 0.9% | $ | 420 | 0.1% | |||||||||||||||||||||||||||||||||||
General and administrative | 17,627 | 6.3 | 17,418 | 6.1 | 40,719 | 6.2 | 44,408 | 6.6 | |||||||||||||||||||||||||||||||||||||||
| Selling | 10,366 | 3.7 | 6,350 | 2.2 | 23,613 | 3.6 | 15,726 | 2.3 | |||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 9,747 | 3.5 | 11,579 | 4.1 | 25,010 | 3.8 | 27,013 | 4.0 | |||||||||||||||||||||||||||||||||||||||
| Restaurant level operating profit | $ | 40,082 | 14.7% | $ | 40,508 | 14.5% | $ | 94,839 | 14.7% | $ | 95,504 | 14.4% | |||||||||||||||||||||||||||||||||||
| Income (loss) from operations as a percentage of total revenues | 2.2% | 3.5% | 1.8% | 2.8% | |||||||||||||||||||||||||||||||||||||||||||
| Restaurant level operating profit margin (as a percentage of restaurant revenue) | 14.7% | 14.5% | 14.7% | 14.4% | |||||||||||||||||||||||||||||||||||||||||||
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A summary view of restaurant level operating profit by financial statement line item and related restaurant level operating expenses as a percentage of restaurant revenue are presented in the tables below:
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) | July 12, 2026 | July 13, 2025 | Increase (Decrease) | July 12, 2026 | July 13, 2025 | Increase (Decrease) | |||||||||||||||||||||||||||||
| Restaurant revenue | $ | 272,620 | $ | 279,305 | (2.4) | % | $ | 643,720 | $ | 665,115 | (3.2) | % | |||||||||||||||||||||||
| Restaurant operating costs: | |||||||||||||||||||||||||||||||||||
| Cost of sales | $ | 64,086 | $ | 65,159 | (1.6) | % | $ | 150,686 | $ | 153,186 | (1.6) | % | |||||||||||||||||||||||
| Labor | 96,972 | 99,709 | (2.7) | 229,365 | 242,767 | (5.5) | |||||||||||||||||||||||||||||
| Other operating | 48,403 | 49,600 | (2.4) | 114,107 | 117,132 | (2.6) | |||||||||||||||||||||||||||||
| Occupancy | 23,077 | 24,329 | (5.1) | 54,723 | 56,526 | (3.2) | |||||||||||||||||||||||||||||
Total restaurant operating costs | $ | 232,538 | $ | 238,797 | (2.6) | % | $ | 548,881 | $ | 569,611 | (3.6) | % | |||||||||||||||||||||||
Restaurant level operating profit | $ | 40,082 | $ | 40,508 | (1.1) | % | $ | 94,839 | $ | 95,504 | (0.7) | % | |||||||||||||||||||||||
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) | July 12, 2026 | July 13, 2025 | Increase (Decrease) | July 12, 2026 | July 13, 2025 | Increase (Decrease) | |||||||||||||||||||||||||||||
| Restaurant revenue | $ | 272,620 | $ | 279,305 | (2.4) | % | $ | 643,720 | $ | 665,115 | (3.2) | % | |||||||||||||||||||||||
| Restaurant operating costs: | (Percentage of Restaurant Revenue) | (Basis Points) | (Percentage of Restaurant Revenue) | (Basis Points) | |||||||||||||||||||||||||||||||
| Cost of sales | 23.5 | % | 23.3 | % | 20 | 23.4 | % | 23.0 | % | 40 | |||||||||||||||||||||||||
| Labor | 35.6 | 35.7 | (10) | 35.6 | 36.5 | (90) | |||||||||||||||||||||||||||||
| Other operating | 17.8 | 17.8 | — | 17.7 | 17.6 | 10 | |||||||||||||||||||||||||||||
| Occupancy | 8.5 | 8.7 | (20) | 8.5 | 8.5 | — | |||||||||||||||||||||||||||||
Total restaurant operating costs | 85.3 | % | 85.5 | % | (20) | 85.3 | % | 85.6 | % | (30) | |||||||||||||||||||||||||
Restaurant level operating profit | 14.7 | % | 14.5 | % | 20 | 14.7 | % | 14.4 | % | 30 | |||||||||||||||||||||||||
Certain percentage and basis point amounts in the table above do not total due to rounding as well as restaurant operating costs being expressed as a percentage of restaurant revenue and not total revenues.
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EBITDA and Adjusted EBITDA
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 give 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 periods presented:
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
| (Dollars in thousands) | July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | |||||||||||||||||||
| Net income (loss) as reported | $ | 386 | $ | 3,993 | $ | (1,792) | $ | 5,242 | |||||||||||||||
Interest expense, net(1) | 5,644 | 5,721 | 13,348 | 13,685 | |||||||||||||||||||
| Income tax (benefit) expense | (9) | (97) | 20 | (99) | |||||||||||||||||||
| Depreciation and amortization | 9,747 | 11,579 | 25,010 | 27,013 | |||||||||||||||||||
| EBITDA | $ | 15,768 | $ | 21,196 | $ | 36,586 | $ | 45,841 | |||||||||||||||
Stock-based compensation expense(2) | $ | 2,035 | $ | 1,489 | $ | 3,699 | $ | 4,078 | |||||||||||||||
Other (gains) charges, net: | |||||||||||||||||||||||
| Asset impairment and restaurant closure costs, net | $ | 641 | $ | (1,615) | $ | 2,394 | $ | (1,405) | |||||||||||||||
| Gain on sale of restaurant property | (900) | — | (900) | (1,137) | |||||||||||||||||||
| Severance and executive transition | 1,112 | 459 | 1,182 | 1,339 | |||||||||||||||||||
| Litigation contingencies | 33 | 11 | 120 | 23 | |||||||||||||||||||
| Asset disposal and other, net | 233 | 889 | 3,153 | 1,600 | |||||||||||||||||||
Adjusted EBITDA | $ | 18,922 | $ | 22,429 | $ | 46,234 | $ | 50,339 | |||||||||||||||
(1) Interest expense, net was comprised of interest expense and interest income, the latter of which was included in interest (income) and other, net on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
(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 SARs, which are settled in cash.
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Adjusted Net Income (loss) Per Diluted Share
We define adjusted net income (loss) per diluted share as net income (loss) excluding 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; net of income tax impacts. Adjusted net income (loss) per share - diluted is a supplemental measure of our performance that we believe gives the reader additional insight into the ongoing operational results of the Company.
The following table reconciles net income (loss) per share - diluted to adjusted net income (loss) per share - diluted:
| Twelve Weeks Ended | Twenty-Eight Weeks Ended | ||||||||||||||||||||||
(Dollars and shares in thousands, except per share amounts) | July 12, 2026 | July 13, 2025 | July 12, 2026 | July 13, 2025 | |||||||||||||||||||
| Net income (loss) as reported | $ | 386 | $ | 3,993 | $ | (1,792) | $ | 5,242 | |||||||||||||||
| Adjusted net income (loss) per diluted share: | |||||||||||||||||||||||
| Net income (loss) as reported | $ | 0.02 | $ | 0.21 | $ | (0.10) | $ | 0.28 | |||||||||||||||
Effect of dilutive securities excluded under GAAP(1) | — | — | 0.02 | — | |||||||||||||||||||
Stock-based compensation expense(2) | 0.09 | 0.08 | 0.17 | 0.22 | |||||||||||||||||||
Other (gains) charges, net: | |||||||||||||||||||||||
| Asset impairment and restaurant closure costs, net | 0.03 | (0.09) | 0.11 | (0.08) | |||||||||||||||||||
| Gain on sale of restaurant property | (0.04) | — | (0.04) | (0.06) | |||||||||||||||||||
| Severance and executive transition | 0.05 | 0.02 | 0.05 | 0.07 | |||||||||||||||||||
| Litigation contingencies | — | — | 0.01 | — | |||||||||||||||||||
| Asset disposal and other, net | 0.01 | 0.06 | 0.15 | 0.09 | |||||||||||||||||||
Income tax effect(3) | (0.04) | (0.02) | (0.12) | (0.06) | |||||||||||||||||||
Adjusted net income (loss) per share - diluted | $ | 0.12 | $ | 0.26 | $ | 0.25 | $ | 0.46 | |||||||||||||||
| Weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | 18,727 | 17,799 | 18,380 | 17,655 | |||||||||||||||||||
Adjusted diluted(1) | 21,870 | 18,925 | 21,679 | 18,598 | |||||||||||||||||||
(1) Dilutive securities were included in the computation of adjusted net income (loss) per share - diluted for the twenty-eight weeks ended July 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 twenty-eight weeks ended July 12, 2026.
(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 SARs, which are settled in cash.
(3) Assumed a 26% income tax rate, representing a blended average of federal and state statutory rates.
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Liquidity and Capital Resources
Cash and cash equivalents, and restricted cash increased $3.0 million to $32.5 million as of July 12, 2026, from $29.5 million at the beginning of the fiscal year. As of July 12, 2026, the Company had approximately $47.8 million in liquidity, including cash and cash equivalents and $25.0 million available borrowing capacity under our credit facility.
Our primary sources of liquidity were cash flows generated from operating activities, 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.
From time to time, the Company considers and evaluates financial and capital raising transactions related to its portfolio, including debt refinancing or new debt issuances, equity issuances, sales of owned properties and tactical refranchising, and other transactions.
During the second quarter of fiscal 2026, the Company entered into three asset purchase agreements to refranchise 116 Company-owned restaurants for aggregate consideration of approximately $96.0 million, subject to customary closing adjustments and conditions. The transactions are expected to close during fiscal 2026. Upon closing, the restaurants will continue operating as Red Robin restaurants under franchise agreements. The Company expects to use the net proceeds primarily to repay outstanding borrowings under its Credit Facility and enhance financial flexibility.
We believe that our current cash and cash equivalents, our future cash flows generated from restaurant operations and gift card sales, and our borrowing capacity under the credit facility, will be sufficient to meet our anticipated working capital and capital expenditure needs for the next 12 months.
Cash Flows
The table below summarizes our cash flows from operating, investing, and financing activities for each period presented (in thousands):
| Twenty-Eight Weeks Ended | |||||||||||
| July 12, 2026 | July 13, 2025 | ||||||||||
| Net cash provided by (used in) operating activities | $ | 14,501 | $ | 29,511 | |||||||
| Net cash provided by (used in) investing activities | (6,082) | (12,382) | |||||||||
| Net cash provided by (used in) financing activities | (5,434) | (22,987) | |||||||||
| Net change in cash and cash equivalents, and restricted cash | $ | 2,985 | $ | (5,858) | |||||||
Operating Cash Flows
Net cash flows provided by operating activities decreased $15.0 million to $14.5 million for the year to date period of fiscal 2026 compared to $29.5 million for the comparable period in fiscal 2025. The decrease in net cash provided by operating activities is primarily attributable to the decrease in working capital.
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Investing Cash Flows
Net cash flows used in investing activities was $6.1 million for the year to date period of fiscal 2026, as compared to net cash flows used in investing activities of $12.4 million for the comparable period in fiscal 2025. The $6.3 million decrease in cash flows used in investing activities is primarily due to lower capital expenditures in fiscal 2026 compared to the year to date period of fiscal 2025.
The following table lists the components of our capital expenditures for the periods presented (in thousands):
| Twenty-Eight Weeks Ended | |||||||||||
| July 12, 2026 | July 13, 2025 | ||||||||||
Restaurant improvement capital and other(1) | $ | 8,621 | $ | 9,648 | |||||||
Technology, infrastructure, and other(2) | 2,482 | 8,815 | |||||||||
| Restaurant refreshes and remodels | 403 | 37 | |||||||||
| Total capital expenditures | $ | 11,506 | $ | 18,500 | |||||||
(1) Restaurant improvement capital and other consisted of capital equipment for our restaurants.
(2) Technology, infrastructure and other consisted of capital costs related to restaurant technology assets, capital overhead, and other centrally developed assets.
Financing Cash Flows
Net cash flows used in financing activities was $5.4 million for the year to date period of fiscal 2026, as compared to net cash flows used in financing activities of $23.0 million for the comparable period in fiscal 2025. Cash flows used in financing activities in the year to date period of fiscal 2026 primarily relate to the net repayments of debt under our revolving credit facility. Cash flows used in financing activities in the comparable period in fiscal 2025 primarily relate to the net repayments of debt under our credit facility with cash flow from operations and the net proceeds from the sale of three restaurant locations.
Credit Facility
As of July 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 July 12, 2026 and December 28, 2025, the Company had outstanding borrowings of $167.2 million and $170.2 million, respectively, inclusive of $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 July 12, 2026 and December 28, 2025, respectively.
The Credit Facility will mature on September 3, 2027. The term loan requires quarterly principal payments in an aggregate annual amount equal to 1.0% of its original principal amount. As of July 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) the Federal Funds Rate plus 0.5% per annum, or (c) one-month term SOFR plus 1.0% per annum.
For additional information regarding our Credit Facility, see Note 7. Borrowings included within the Notes to the Condensed Consolidated Financial Statements.
Debt Covenants
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 July 12, 2026, we were in compliance with all debt covenants.
Sale and Purchases of Equity Securities
On November 10, 2025, the Company entered into the Distribution Agreement with 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.
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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 July 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 July 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.
Seasonality
Our business is subject to seasonal fluctuations. Sales in most of our restaurants have historically been higher during the spring and summer months and winter holiday season. The timing of holidays and school vacations, as well as severe storms, extended periods of inclement weather, or climate extremes, may affect the seasonal operating results in the areas impacted. As a result, our quarterly operating results may fluctuate significantly due to seasonality, and the seasonal patterns of sales may shift over time. Accordingly, results for any one quarter or year are not necessarily indicative of results to be expected for any other quarter or year.
Contractual Obligations
There were no other material changes outside the ordinary course of business to our contractual obligations since the filing of the Annual Report on Form 10-K for the fiscal year ended December 28, 2025. See Note 10. Commitments and Contingencies for further information.
Critical Accounting Estimates
Critical accounting estimates are those we believe are both significant and that require us to make difficult, subjective, or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors we believe to be appropriate under the circumstances. Actual results may differ from these estimates, including our estimates of future restaurant level cash flows, which are subject to the current economic environment and potentially unknown future events, and we might obtain different results if we use different assumptions or conditions. We had no significant changes in our critical accounting estimates which were disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025.
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Under our Credit Facility, we are exposed to market risk from changes in interest rates on borrowings. Borrowings under the Credit Facility are subject to rates based on SOFR plus a spread based on leverage or a base rate plus a spread based on leverage. The base rate is the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.5% per annum, or (c) one-month term SOFR plus 1.0% per annum. As of July 12, 2026, we had $167.2 million of borrowings subject to variable interest rates. A 1.0% change in the effective interest rate applied to these loans would have resulted in a pre-tax interest expense fluctuation of $1.7 million on an annualized basis.
We continue to monitor our interest rate risk on an ongoing basis and may use interest rate swaps or similar instruments in the future to manage our exposure to interest rate changes related to our borrowings as the Company deems appropriate.
Commodity Price Risks
We purchase food, supplies and other commodities for use in our operations based on prices established with our suppliers. Many of the commodities purchased by us are subject to volatility due to market supply and demand factors outside of our control, including the price of other commodities, weather, seasonality, production, trade policy, and other factors. To manage this risk in part, we enter into fixed-price purchase commitments for certain commodities. We believe that substantially all of our food and supplies meeting our specifications are available from alternate sources, which we have identified to diversify our supply chain to mitigate our overall commodity risk. We may or may not have the ability to increase menu prices, or vary menu items, in response to commodity price increases.
There has been no material change in the interest rate risk or commodity price risk since the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2025.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the management of the Company ("Management"), including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, Management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives. The Company's CEO and CFO have concluded that, based upon the evaluation of disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act), the Company's disclosure controls and procedures were effective, as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. Legal Proceedings
Evaluating contingencies related to litigation is a complex process involving subjective judgment on the potential outcome of future events, and the ultimate resolution of litigated claims may differ from our current analysis. Accordingly, we review the adequacy of accruals and disclosures each quarter in consultation with legal counsel and we assess the probability and range of possible losses associated with contingencies for potential accrual in the Condensed Consolidated Financial Statements.
For further information related to our litigation contingencies, see Note 10. Commitments and Contingencies included within Item 1. Financial Statements (unaudited) of Part I of this Quarterly Report on Form 10-Q for the period ended July 12, 2026.
ITEM 1A. Risk Factors
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. Except 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.
Our tactical refranchising initiatives, including our pending refranchising transactions, may not be completed on favorable terms or completed at all and may not result in the anticipated financial benefits.
As part of our First Choice plan, we are pursuing tactical refranchising opportunities to optimize our overall financing structure and strengthen our balance sheet. During the second quarter of fiscal 2026, we entered into three asset purchase agreements to sell restaurant assets associated with 116 of our 375 Company-owned restaurants for aggregate consideration of approximately $96.0 million in cash. None of the transactions had closed as of July 12, 2026, and each is subject to separate closing conditions, including required landlord consents, liquor license transfers, any required lender consent, and each purchaser obtaining financing. See Note 3. Significant Transactions. Tactical refranchising initiatives require significant management time and resources and may divert attention from day-to-day operations and other strategic priorities. The timing, pricing, and structure of any tactical refranchising transactions depend on market conditions.
There are a number of risks associated with these transactions, including the difficulty of predicting the ultimate costs and net proceeds of the sales, employee termination costs, the retention of restaurant team members through the transition to franchisee management, the results of negotiations with landlords, the effect of the sales on our ongoing operations, the tax consequences of the sales, and the future effect on our revenues, operating income, cash flows, and depreciation. If a transaction is delayed or terminated, we would continue to operate the affected restaurants and bear the related costs and lease obligations, and assets classified as held for sale would be reclassified. We may also remain primarily or secondarily liable on restaurant leases assigned or subleased to the purchasers, including where a purchaser is unable to obtain a full release from the landlord, and the amount of any liabilities to be recognized for those continuing obligations has not yet been determined.
Substantially all of our revenues are currently derived from sales at Company-owned restaurants. Any such transactions are expected to result in a shift from Company-owned restaurant revenues to franchise royalty income and advertising fund contributions, and we expect our total revenues to decrease as a result. Because the royalty and advertising fund contributions we will receive will represent a percentage of franchisee sales rather than the restaurant-level operating profit those restaurants previously generated, and because a substantial portion of our general and administrative expenses may not decline in proportion to the reduction in the number of restaurants we operate, the effect of the transactions on our operating income may be greater than their effect on our revenues. If our tactical refranchising initiatives are unsuccessful or do not achieve intended objectives, including improvements in liquidity and reductions in general and administrative expenses and long term debt, our business, financial condition, and results of operations could be materially adversely affected.
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Our franchisees could take actions that could harm our business, expose us to liability, or damage our reputation.
Franchisees are independent entities and are not our employees, partners, or affiliates. If our pending refranchising transactions are completed, our franchised restaurant base will increase from 90 to 206 restaurants and we will rely more on franchisees to operate restaurants in compliance with our brand standards, operating procedures, and applicable law. If our franchisees are not successful, then our business, results of operations, and reputation could be disproportionately adversely affected by the relative scale of such franchise operations. We share with our franchisees what we believe to be best practices in the restaurant industry; however, franchisees operate their restaurants as independent businesses. Consequently, the quality of franchised restaurant operations may be diminished by any number of factors beyond our control. Moreover, franchisees may not successfully operate restaurants in a manner consistent with our standards and requirements or may not hire and train qualified managers and other restaurant team members. In addition, as independent businesses, franchisees may not be required to comply with the same levels of business or regulatory compliance we are. While we try to ensure the quality of our brand and compliance with our operating standards, and the confidentiality thereof, are maintained by all of our franchisees, we cannot provide assurance our franchisees will avoid actions that negatively affect the reputation of Red Robin or the value of our proprietary information. Our image and reputation and the image and reputation of other franchisees may suffer materially, and system-wide sales could significantly decline if our franchisees do not operate restaurants according to our standards.
Following the refranchising transactions we will receive a greater portion of our revenues in the form of royalties and advertising fund contributions based on a percentage of sales at franchised restaurants, and a majority of our franchised restaurants would be operated by a small number of franchisees, several of which would each operate a significant number of our franchised restaurants. Accordingly, our financial results will to a greater extent depend upon the operational and financial success of our franchisees. If a significant franchisee, or a number of our franchisees in the aggregate, becomes financially distressed, our royalty and other revenues may decline, our receivables from franchisees and the related allowance for credit losses may increase, and advertising fund contributions supporting the Red Robin brand may be reduced. Our ability to enforce our rights under the franchise agreements may also be limited in the event of a franchisee bankruptcy or insolvency proceeding.
We are subject to federal and state laws that regulate the offer and sale of franchises and aspects of the licensor-licensee relationship. Further, there have been historical actions before the National Labor Relations Board ("NLRB") where it was alleged that a parent company could be held liable for the actions of its franchisees, including potentially jointly liable for labor and wage violations by its franchisees. Failure to comply with the laws and regulations governing our franchisee relationships or adverse decisions similar to the above-described NLRB actions could subject us to liability for actions of the franchisees, or expose us to liability to franchisees, or fines and penalties for non-compliance.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the second quarter of fiscal 2026, the Company did not have any sales of securities in transactions that were not registered under the Securities Act that have not been reported in a Current Report on Form 8-K, nor were any share repurchases made by the Company.
ITEM 5. Other Information
Securities Trading Plans of Directors and Executive Officers
During the second quarter ended July 12, 2026, none of our directors or officers adopted terminated
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ITEM 6. Exhibits
( ) Exhibits previously filed in the Company's periodic filings as specifically noted.
| Exhibit Number | Description | |||||||
(3.1) | Restated Certificate of Incorporation of Red Robin Gourmet Burgers, Inc., dated as of May 28, 2015. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on May 29, 2015. | |||||||
(3.2) | Fifth Amended and Restated Bylaws, dated March 20, 2023. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on March 24, 2023. | |||||||
(10.1) | Asset Purchase Agreement, dated as of May 27, 2026, by and between Red Robin International, Inc. and Evergreen Dining LLC. Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on May 28, 2026. | |||||||
(10.2) | Asset Purchase Agreement, dated as of June 11, 2026, by and between Red Robin International, Inc. and Op Burgers, LLC. Incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed on June 15, 2026. | |||||||
(10.3) | Asset Purchase Agreement, dated as of June 11, 2026, by and between Red Robin International, Inc. and Kuber Oregon, LLC and Kuber Washington, LLC. Incorporated by reference to Exhibit 2.2 to our Current Report on Form 8-K filed on June 15, 2026. | |||||||
(10.4)* | Employment Agreement, dated April 29, 2026, by and between Red Robin Gourmet Burgers, Inc. and Mark Graff. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 30, 2026. | |||||||
10.5* | Employment Agreement, dated June 1, 2026, by and between Red Robin Gourmet Burgers, Inc. and John McLaughlin. | |||||||
31.1 | Rule 13a-14(a) Certification of Chief Executive Officer | |||||||
31.2 | Rule 13a-14(a) Certification of Chief Financial Officer | |||||||
32.1 | Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer | |||||||
| 101 | The following financial information from the Quarterly Report on Form 10-Q of Red Robin Gourmet Burgers, Inc. for the quarter ended July 12, 2026 formatted as Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of July 12, 2026 and December 28, 2025; (ii) Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the twelve and twenty-eight weeks ended July 12, 2026 and July 13, 2025; (iii) Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the twelve and twenty-eight weeks ended July 12, 2026 and July 13, 2025; (iv) Condensed Consolidated Statements of Cash Flows for the twenty-eight weeks ended July 12, 2026 and July 13, 2025; and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | |||||||
* Executive compensation plans and arrangements.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RED ROBIN GOURMET BURGERS, INC. (Registrant) | ||||||||||||||
| August 12, 2026 | By: | /s/ Mark Graff | ||||||||||||
Date | Mark Graff Chief Financial Officer and Principal Accounting Officer | |||||||||||||
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