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Item 1. Business

2021-03-03 compared with 2020-02-25 · 209 added, 168 removed, 164 unchanged (70% of the section changed)

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, primarily operates, franchises, and develops full-service restaurants in North America famous for serving more than two dozen craveable, high-quality burgers with Bottomless Steak Fries ® in a fun environment welcoming to Guests of all ages.

Red Robin Gourmet Burgers, Inc., together with its subsidiaries, primarily operates, franchises, and develops casual dining restaurants in North America famous for serving more than two dozen craveable, high-quality burgers with Bottomless Steak Fries® in a fun environment welcoming to Guests of all ages.

We opened the first Red Robin® restaurant in Seattle, Washington in September 1969.

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As of December 27, 2020, there were Red Robin restaurants in 44 states and one Canadian province.

Financial information for our single operating segment is included in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report.

The Company operates its business as one operating and one reportable segment.

Financial information for our operating segment is included in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K.

The Company's fiscal year is 52 or 53 weeks ending the last Sunday of the calendar year.

We refer to our fiscal years as 2020, 2019, and 2018 throughout this Annual Report on Form 10-K.

Our fiscal years, fiscal year end dates and the number of weeks in each period is summarized in the table below:

Year End Date

Number of Weeks in Fiscal Year

Our fiscal years, fiscal year end dates, and the number of weeks in each period are summarized in the table below:

Fiscal Year Year End Date Number of Weeks in Fiscal Year

Current and Prior Fiscal Years:

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2018 December 30, 2018 52

December 25, 2016

December 27, 2015

Upcoming Fiscal Year:

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Business Strategy

Red Robin is in a time of foundational change.

In 2019, we evaluated our strategic position in conjunction with the third quarter appointment of Paul J.B.

Murphy III as President and Chief Executive Officer and Board Director.

We also appointed three new independent Directors to our Board who all have significant restaurant and turnaround experience.

We commissioned comprehensive Guest-led studies during 2019 that provided data driven and actionable information on how to align the Red Robin brand to our Guest's expectations.

Looking forward, we identified clear opportunities to strengthen our brand, improve our service model, and clarify our messaging.

Based on the analysis of our findings, we developed a compelling plan to quickly drive improved Guest experiences, business performance, and stockholder value;

our plan includes the following four fundamental elements:

We entered 2020 with accelerating business momentum due to the implementation of our transformation strategy.

The strategy was developed based on comprehensive Guest-led studies that provided data driven and actionable information on how to align the Red Robin brand with our Guests.

Our Guests are every-day people seeking time with friends and family across a robust, diverse, and multi-generational demographic with a large majority falling into the Gen X, Millennial, and Centennial generations.

We believe our broad demographic appeal positions us well for future growth.

With the onset of the pandemic in early 2020, the Company entered an unprecedented time for our business and industry.

While the pandemic brought forth complex challenges, it also enabled us to intensely focus on improving our operating and financial model.

The material improvements made to our business enabled us to resume our transformation strategy in an even stronger position.

Our transformation strategy includes the following four fundamental elements:

• Recapture our Soul.

Our brand promise is to deliver memorable moments of connection for our Guests.

We engage with our Guests by delivering and amplifying the flavor of Americana through our Gourmet Burgers and other favorite menu items, including shareable foods like our all-you-can-eat Bottomless Steak Fries®.

A visit to our restaurant encourages our Guests to determine the pace of their experience based on their occasion (which we have historically and proudly referred to as “The Gift of Time”), while enjoying our family friendly and playful atmosphere.

A visit to Red Robin encourages Guests to connect with the people around the table, our Team Members, and our brand.

We believe that delivering on our brand promise will drive growth in Guest visits and brand advocacy.

Our differentiated brand promise is to deliver memorable moments connecting family, friends, and fun.

We engage with our Guests by delivering burgers and other mainstream favorites in a casual, playful atmosphere.

We feature the highest quality burgers with a creative take on traditional, shareable foods like Donatos® pizza and wings, milkshakes, beer, and our signature all-you-can-eat Bottomless Steak Fries®.

A visit to our restaurant encourages Guests to determine the pace of their experience based on their occasion and connect with the people around the table, providing them "The Gift of Time".

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• Deliver the Promise.

We are accountable for consistently delivering our brand promise to our Guests.

We are focused on implementing a new service model that enhances our Guest experience by increasing the functionality and hospitality levels at our restaurants.

To enable this, we are rationalizing our menu offerings to emphasize core product ingredient quality and product innovation, in conjunction with identifying key opportunities.

We are also investing in technology;

In 2019 we rolled out our server hand-held point-of-sale devices and headsets, improving both speed of service and order accuracy.

In 2020, we will introduce a new loyalty program and digital ordering experience, to drive incremental visits and additional off-premise sales.

Finally, we continue to emphasize and support Team Member engagement.

We strive to achieve best-in-class retention levels from General Manager to hourly Team Members and encourage our Team Members live our B.U.R.G.E.R.

values everyday:

Bottomless Fun, Unwavering Integrity, Relentless Focus on Improvement, Genuine Spirit of Service, Extraordinary People, and Recognized Burger Authority.

Our culture fosters improved Guest satisfaction and the development of great leaders.

We accelerated the implementation of our new hospitality model, Total Guest Experience ("TGX"), during 2020 as dining rooms reopened.

TGX combines technology and improved service coverage to deliver an elevated and more attentive Guest experience.

TGX improved speed of service (including decreased ticket and window times), increased cleanliness scores, and contributed to highest ever product quality and overall Guest satisfaction scores.

TGX enables our servers to stay in their section the majority of the time to engage with Guests while server partners deliver food, beverages, refills, and clear dishes.

Restructuring our restaurant management labor model has also created greater flexibility during peak times.

Our restructured labor model benefits both our Guests and our Team Members, as it supports our hospitality model improvements while also creating a structured and clear career path for Team Members.

Both TGX and the new restaurant management labor model are contributing to our highest ever Guest satisfaction scores.

Pivoting to off-premise only at the onset of the pandemic required our Team Members to focus on improving the execution of our off-premise channel.

We leveraged technology and process enhancements to provide a seamless and frictionless off-premise experience to our Guests.

We also implemented a triple check accuracy program, ensuring every order goes through three checks before being handed to the Guest.

Our improvements resulted in approximately a 40% increase in order accuracy, and a 50% increase in overall off-premise Guest satisfaction scores, even as off-premise sales more than doubled compared to the prior year.

We believe these technological and operational improvements in conjunction with additional enhancements underway in 2021 will enable Red Robin to generate and maintain off-premise sales levels well above those generated prior to the pandemic.

We believe that delivering on our brand promise will drive growth in Guests visits and brand advocacy.

• Tell Our Story.

We launched our "All the Fulls" omni-channel brand campaign in the third quarter of 2019, which emphasizes the emotional appeal of our brand promise of driving memorable moments of connection, and reinforces key aspects of our brand, including Americana, family friendly atmosphere, and shareable menu items.

This has transformed the emphasis of our messaging from price driven to highlighting the value our brand provides.

We expect this to drive improved engagement with our Guests and grow restaurant traffic.

We launched our "All the Fulls" brand campaign in the third quarter of 2019.

The campaign emphasizes the emotional appeal of our brand promise of driving memorable moments of connection, connecting Guests where and how they consume media, and reinforcing key aspects of our brand, including our quality burgers and shareable mainstream favorites, in a family friendly atmosphere.

This has transformed the emphasis of our messaging from price to highlighting the value our brand provides.

Our core Guest is generally younger than that of the casual dining category and more active in the digital space, which has allowed us to further leverage digital marketing strategies that are more effective and cost efficient.

We also enhanced segmentation and targeting in our over nine million member Red Robin Royalty TM program, bringing loyalty engagement to best-ever levels.

Our marketing strategy has driven improved engagement with our Guests, and we expect it to continue to drive engagement with our brand in the future.

• Accelerate Profitable Growth

We seek to accelerate profitable sales growth through selective focus on fewer and more impactful initiatives that will drive significant top and bottom-line results.

We intend to grow our off-premise and catering business, which has already proven to be a significant driver of sales.

We will also launch Red Robin last-mile delivery in 2020, which will provide Guests the ability to utilize our unique loyalty program, “Red Robin Royalty™" when ordering off-premise.

During the pandemic, Red Robin permanently reduced costs with the expectation to deliver more than 100 basis points of permanent incremental enterprise-level margin improvement once we return to pre-COVID-19 sales volumes.

Additionally, we launched Red Robin last-mile delivery in 2020 which provides Guests the ability to utilize our unique loyalty program when ordering off-premise.

Further, in 2020, we announced our partnership with Donatos®, a high-quality pizza brand "nested" inside of Red Robin restaurants, that we expect to drive incremental top-line sales and gross margin and give Guests another reason to choose Red Robin.

At the end of 2020, we resumed the implementation of Donatos® bringing the total of number of Company-owned restaurants that offer it to 79.

In 2021, we plan to add Donatos® to approximately 120 Company-owned restaurants, bringing the total number of Company-owned restaurants that offer Donatos® to approximately 200 by the end of the year.

We believe Donatos® will generate annual Company pizza sales of more than $60 million and profitability of more than $25 million by 2023, when we expect to have completed our rollout to approximately 400 Company-owned restaurants.

As the Company emerges from the novel coronavirus ("COVID-19") pandemic, and we adapt to operating in a post-pandemic environment within the casual dining space, we are preparing our Team Members with a prescriptive "Ready-Set-Reopen" playbook, guiding best practices for operating our indoor dining rooms at 100% capacity.

We believe pent up demand, coupled with our record high Guest satisfaction scores, positions us well to welcome our Guests back to Red Robin with frequency.

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Restaurant Concept

The Red Robin brand has many desirable attributes, including a range of high-quality menu items, a strong Guest-focused culture, and a value proposition designed to help our Guests experience memorable moments connecting family, friends, and fun.

We pride ourselves on our Gourmet Burgers and other American Favorites served in a casual, playful atmosphere.

Our menu features our signature product, a line of Gourmet Burgers which we make from premium quality, fresh ground beef.

The Red Robin brand has many desirable attributes, including a range of high-quality menu items, a strong Guest-focused culture, and a strong value proposition, where our Guests experience memorable moments of connection with family, friends, and fun.

We pride ourselves on our Gourmet Burgers and other mainstream favorites served in a casual, playful atmosphere.

Our menu features our signature product, a line of Gourmet Burgers made from premium quality, fresh ground beef.

To complement our best-selling Gourmet Burgers, we offer an everyday-value line of Red's Tavern Double® burgers, and Red Robin's Finest line made with premium toppings.

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We offer a selection of buns, including gluten free, sesame, whole grain, and lettuce wraps, with a variety of toppings, including house-made sauces, crispy onion straws, sautéed mushrooms, several cheese choices, and a fried egg.

All our burgers are served with our all-you-can-eat Bottomless Steak Fries® or Guests may choose from other side options.

All of our burgers are served with our all-you-can-eat Bottomless Steak Fries® or Guests may choose from other side options.

We specialize in customizing our menu items to meet our Guests' dietary needs and preferences and have received recognition from experts in the allergen community.

In addition to burgers, which accounted for 66% of our entrée sales in 2019, Red Robin serves an array of other American Favorites that appeal to a broad range of Guests.

These items include a variety of shareable appetizers, salads, soups, seafood, and other entrees.

In addition to burgers, which accounted for 59% of food sales in 2020, Red Robin serves an array of other mainstream favorites that appeal to our Guests.

These items include a variety of shareable foods like Donatos® pizza and wings, salads, soups, seafood, and other entrees.

We also offer a range of single-serve and shareable desserts as well as our milkshakes.

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We strive to give our Guests the choice of the pace of their experience based on their occasion, from accommodating time-pressured meals to offering a place to relax and connect with friends.

Red Robin also has an unparalleled and extraordinary approach to Guest service, and we have cataloged thousands of stories of Red Robin Team Members who live our values.

Red Robin also has an extraordinary approach to Guest service, and we have cataloged thousands of stories of Red Robin Team Members who live our values.

Many examples can be found on our website, www.redrobin.com.

We encourage our Team Members to execute on the aspects of service that we have identified to be the biggest drivers of our Guest loyalty.

Note that our website and the information contained on or connected to our website are not incorporated by reference herein, and our web address is included as an inactive textual reference only.

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In 2020, we had an average check per Guest of $13.26 including beverages.

We believe this price-to-value relationship, featuring our innovative array of burgers, differentiates us from our casual dining competitors and allows us to appeal to a broad base of middle income, multi-generational consumers.

Average Guest check decreased compared to 2019 due to the COVID-19 pandemic restricting indoor dining resulting in a higher off-premise sales mix.

We believe our price-to-value relationship, featuring our innovative array of quality burgers, differentiates us from our casual dining competitors and allows us to appeal to a broad base of middle income, multi-generational consumers.

Human Capital Management

We strive to ensure our employees, whom we refer to as Team Members, are Better for Being Here through our core B.U.R.G.E.R values:

Bottomless Fun, Unwavering Integrity, Relentless Focus on Improvement, Genuine Spirit of Service, Extraordinary People, and Recognized Burger Authority.

Each of these values work to empower and develop our Team Members and has created a Company culture that we collectively take pride in every day.

We reward and incentivize our Team Members with competitive pay, recognition and rewards, and benefit programs.

We also provide our Team Members the opportunity to grow and develop, promote health and safety, and value inclusion, diversity, and engagement.

As part of our human capital management strategy, we focus on the following areas:

Our Team Members

As of December 27, 2020, we had 21,374 Team Members consisting of 20,968 Team Members at Company-owned restaurants and 406 restaurant support center and field-based Team Members.

We are currently 99% staffed at the restaurant manager level, and our restaurant Team Member turnover rate is approaching industry best-in-class targets.

We focus on General Manager tenure in restaurants and its positive link to Guest traffic, overall Guest satisfaction, and Team Member turnover trends.

Our General Manager turnover during 2020 was 19.3%, and 74% of General Managers have been managing their current restaurant for a year or more.

None of our Team Members is covered by a collective bargaining agreement.

We consider our Team Member relations to be good, and we have not experienced any significant work stoppages during 2020.

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Competitive Compensation and Benefits

We support our Team Members by offering market-competitive wages and benefits for eligible Team Members.

We pay competitive, prevailing wages, and our only positions paid below minimum wage at the restaurant level are our tipped Team Members who are paid at the state tip credit rate or state minimum wage rate.

All other positions are paid at or above minimum wage, and we ensure tipped positions make more than minimum wage when including tips.

Our benefits programs include medical and other insurance, employee assistance programs, shift meals, Red Robin meal discounts, paid time off, 401(k) with employer match, tuition reimbursement, an employee stock purchase plan, and equity-based awards for eligible restaurant support center and operations Team Members, generally, at the director level and above.

The Red Robin Perks program also provides discounts on a wide range of products and services, including cell phone bills, technology purchases, movie tickets, gym memberships, and vacation packages.

Additionally, we motivate and support healthy work/life balance and flexible working arrangements for restaurant support center Team Members.

During the COVID-19 pandemic, we implemented an emergency sick pay policy for Team Members in all states.

While our restaurants were closed or on reduced capacity, we provided assistance to Team Members looking for additional hours.

We partnered with grocery stores, an online retailer, restaurant delivery drivers, and a technology partner in order to provide early visibility to available jobs, streamlined applications, and interviews.

Our compensation and performance evaluation systems are carefully designed to maintain pay equity by focusing pay decisions on experience and performance to ensure the Company retains a highly productive workforce to operate our business while providing a high level of service to our Guests.

Health and Safety

We have traditionally been a leader in health and safety and have implemented new practices during the COVID-19 pandemic consistent with that leadership position.

Due to the COVID-19 pandemic, we continue to navigate an unprecedented time for our business and industry.

We operate with the health, safety, and well-being of Red Robin's Team Members, Guests, and communities in mind with strict adherence to US Centers for Disease Control and Prevention, state, and local guidelines as our top priority.

In response to the COVID-19 pandemic, we require that Team Members take temperature checks prior to entering the restaurant and wear a face mask at all times while in the restaurant except when eating, and we provide personal protective equipment for our restaurant Team Members.

We also have implemented a six-foot distancing playbook that allows managers to maintain a six-foot distance from others while performing their daily tasks, one-on-one meetings, Team Member interactions, orientations, and interviews.

We provided COVID-19 testing coverage for our restaurant Team Members through our benefit plans before it was required, and we plan to continue offering testing.

During the COVID-19 pandemic, we immediately instituted telecommuting policies at the restaurant support center to support working from home and will not bring Team Members back to the office before it is deemed safe by public health officials.

Through the Leading from a Distance workshop, we taught skills to restaurant support center and restaurant Team Members in supervisor positions that helped to continue to drive performance during a time where face-to-face interaction was limited.

These workshops focused on creating engagement, communication, and accountability.

We began offering these workshops before the COVID-19 pandemic, so our Team Members in supervisor positions were able to use these skills to aid in a smooth transition into the COVID-19 operating environment.

We are assessing opportunities for a more permanent remote work force at the restaurant support center.

Diversity, Equity, and Inclusion

At Red Robin, we value diversity and inclusion.

We have a successful Women's Excellence program, a Company-wide resource group to support and inspire Team Members through development, networking, leadership, and other resources while fueling a culture of opportunity and diversity, and we continue to partner with the Women's Foodservice Forum, which has been instrumental in providing valuable resources and insights to help the advancement of our female leaders.

During 2020, we also began holding focus groups on the topics of social and economic inequality.

These informal focus groups include Team Members from all levels of the Company led by a key leader trained as a moderator to facilitate a discussion about social and economic inequality and how we as a Company can work together towards building a more equitable and just society.

We recently launched an initiative with the assistance of a diversity consultant to identify areas of opportunity for expanded diversity and inclusion practices in our Company and to support the development and execution of a comprehensive long-term diversity, equity, and inclusion strategy for Red Robin.

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Restaurant Management

Our typical restaurant management team consists of a general manager, an assistant general manager, and two or three assistant managers depending on restaurant sales volumes.

Our typical restaurant management team consists of a general manager, an assistant general manager, one to two associate managers, and additional shift supervisors depending on restaurant sales volumes.

With our restaurant management restructuring completed in 2020, we will be able to fluctuate supervision needs more easily to better adjust to sales volumes in our restaurants.

This improves our ability to manage effectively by placing more management and supervision in the restaurants during peak times.

It also expanded our talent pipeline with additional capacity for entry-level restaurant managers.

This provides a structured and clear career path for our Team Members and allows us to broaden our external candidate pool beyond individuals with full service dining experience.

The management team of each restaurant is responsible for the day-to-day operation of that restaurant, including hiring, training, and coaching of Team Members, as well as operating results.

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Learning and Development

We strive to maintain quality and consistency in each of our restaurants through the training and supervision of Team Members and the establishment of, and adherence to, high standards relating to Team Member performance, food and beverage preparation, and the maintenance of our restaurants.

We strive to maintain quality and consistency in each of our restaurants through the training and development of Team Members and the establishment of, and adherence to, high standards relating to Team Member performance, Guest satisfaction, food and beverage preparation, and the maintenance of our restaurants.

Each restaurant maintains a group of certified learning coaches, including a head learning coach, who collectively are tasked with preparing new Team Members for success by providing on-the-job training leading up to a final skills certification for their position.

Team Members seeking advancement have the opportunity to join our management development program as a Shift Supervisor.

One of our main priorities will continue to be hire, train, and retain Team Members as we believe this is key to maintaining quality and consistency in each of our restaurants.

Shift Supervisors complete an in-depth training curriculum that develops their ability to supervise all aspects of shift execution, including, but not limited to, food safety, food production, coaching, and financial aspects of the business.

We continue to focus on hiring, training, and retaining our Team Members as we believe this is key to maintaining quality and consistency in each of our restaurants.

The Shift Supervisor program is an important steppingstone for hourly Team Members who desire a career in restaurant management.

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flawless shift execution and effective coaching of Team Members.

Through these learning and development practices at the restaurants, the majority of current restaurant management Team Members have been promoted from within.

Providing our restaurant teams the support and resources they need to be successful requires dedication, an of-service attitude, and the utmost professionalism on the part of our restaurant support center team.

We ensure the restaurant support center Team Members have what they need to meet these demands by offering several avenues to enhance their professional development, including but not limited to an in-house leadership library of over 400 titles, more than 40 on-site and 12 off-site development workshop opportunities, as well as one-on-one coaching.

We ensure the restaurant support center Team Members have what they need to meet these demands by offering several avenues to enhance their professional development, including but not limited to, an in-house leadership library of over 400 titles, more than 40 remote learning development opportunities, one-on-one career coaching, and the opportunity to attend conferences in their field.

Team Member Engagement

We regularly collect feedback to better understand and improve Team Member experience and identify opportunities to strengthen our culture.

We welcome open, candid feedback to ensure Team Members feel heard and engaged and to better support the values important to each of our Team Members.

We accomplish this through a variety of programs and forums, including town halls, virtual open forums, Heart Checks, one-on-one coaching meetings, Discovery cards, Quality Circles, and Team Member Voice.

Heart Checks are performed at the beginning of restaurant team monthly performance meetings and allow for restaurant Team Members to candidly share their thoughts and feelings about Red Robin with members of the restaurant's leadership team.

During Discovery card sessions, a Team Member reviews a set of theme cards with statements such as, "I feel valued at my company and my opinions matter".

The Team Member then interprets each card and places the cards in one of three columns, strengths, opportunities, and neutral, based on their opinion of each Discovery card statement.

The session leader then asks the Team Member in a one-on-one setting to elaborate on why they placed each card in the respective columns.

Quality Circles are informal meetings including Team Members from all levels of the Company led by a key leader who facilitates a discussion about current events and issues affecting the Company and our Team Members.

Team Member Voice is an annual anonymous survey taken by every Team Member in the Company where they can respond to statements on a scale from strongly agree to strongly disagree.

The statements included on the survey cover topics such as satisfaction with their supervisor, direction of the Company, intention to remain at Red Robin, and receiving the tools necessary to succeed in their position.

Results are separated between restaurant support center Team Members and restaurant Team Members, and then results are shared with Team Members in a supervisor position.

In addition to these structured programs and forums, we maintain an open-door policy at all levels of the Company.

Our Company remains committed to offering Team Members numerous opportunities to have their voices heard because we believe our Team Members are our most valuable resource.

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Food Safety and Purchasing

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Our systems are designed to protect our food supply from product receipt through preparation and service.

We provide detailed specifications for our food ingredients, products, and supplies to our suppliers.

We qualify and audit our key manufacturers and growers and require their certification under the Global Food Safety Initiative.

We provide detailed specifications for our proprietary food ingredients, products, and supplies to our suppliers.

We qualify and audit on an annual basis all of our food and beverage suppliers, as well as growers.

Their certifications must comply with the Global Food Safety Initiative, if applicable.

Our restaurant managers are certified in a comprehensive safety and sanitation course by the National Restaurant Association's ServSafe program.

Minimum cooking requirements, specifically safe handling, cooling procedures, and frequent temperature and quality checks, ensure the safety and quality of the food we serve in our restaurants.

Strict food safety protocols, including safe cooking temperature requirements, food handling procedures, cooling procedures, and frequent temperature and quality checks, ensure the safety and quality of the food we serve in our restaurants.

In order to provide the freshest ingredients and products and to maximize operating efficiencies between purchase and usage, each restaurant's management team determines the restaurant's daily usage requirements for food ingredients, products, and supplies, and accordingly, orders from approved suppliers, and distributors.

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We monitor the market for the primary commodities we purchase and extend contract positions when applicable in order to minimize the impact of fluctuations in price and availability.

However, certain commodities, primarily cheese, potatoes, and ground beef remain subject to market price fluctuations.

However, certain commodities, primarily cheese and ground beef, have historically been subject to market price fluctuations.

We continue to identify competitively priced, high quality alternative manufacturers, suppliers, growers, and distributors that are available should the need arise;

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Our site selection criteria focuses on identifying markets, trade areas, and specific sites that are likely to yield the greatest density of desirable demographic characteristics, retail traffic, and visibility.

Based on these factors, we paused on new corporate growth in 2019.

Over the past three years, we have opened a total of 26 new restaurants, including one relocated restaurant.

Based on these factors and the effects of COVID-19 on our business, we did not have new corporate unit growth in 2020.

In 2020, we announced our partnership with Donatos®, a high-quality pizza brand "nested" inside of Red Robin restaurants.

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Pursuant to a licensing arrangement, we will pay royalties on sales of Donatos® pizza products to Donatos®.

We plan to introduce Donatos® pizzas to approximately 100 restaurants in 2020 and 150 restaurants in both 2021 and 2022.

As of December 27, 2020, we have introduced Donatos® pizzas to 79 restaurants.

We plan to introduce Donatos® to approximately 120 restaurants in 2021 and expect to complete our rollout to approximately 400 Company-owned restaurants by 2023.

During 2021, we will continue to execute our long-term growth strategy which includes opportunities to broaden our reach and execute sustainable growth initiatives that deliver value to our stockholders.

The Company is not expecting to open any new restaurants during 2020, but we will continue to invest money in restaurant refreshes and remodels under a new restaurant prototype to better meet the dine-in and off-premise needs of our Guests.

The Company is expecting to open one new restaurant during 2021 .

Beyond 2021, we plan to resume investing in restaurant refreshes and remodels that we suspended in 2020 due to the COVID-19 pandemic.

Restaurant Franchise and Licensing Arrangements

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Our two largest franchisees own 43 restaurants located in Michigan, Ohio, and Eastern and Central Pennsylvania.

In 2019, franchisees opened one new restaurant based on new area development agreements executed in 2017 and acquired 12 restaurants from corporate.

We expect our franchisees will open one new restaurant in 2020.

We are identifying additional franchise opportunities to grow our franchise base through existing franchisees based on markets of interest.

In 2020, we opened one new franchise restaurant.

We do not expect our franchisees to open any new restaurants in 2021.

Franchise Compliance Assurance

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We also exchange best operating practices with our franchisees as we strive to improve our operating systems while attaining a high level of franchisee participation.

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In response to COVID-19's effect on our franchise operations, we temporarily abated franchise royalty payments and advertising contributions during 2020.

During periods of abated payments, franchise revenue was not recognized or collected from our franchisees.

Abated royalty payments and advertising contributions will not be collected by the Company.

Additionally, we provided assistance to our franchisees to onboard their restaurants onto our online ordering platforms, enabling them to more effectively capture off-premise sales during the pandemic.

Information Technology

We rely on information systems in all aspects of our operations, including, but not limited to, point-of-sale transaction processing in our restaurants;

operation of our restaurants;

management of our inventories;

collection of cash;

payment of payroll and other obligations;

and various other processes and procedures.

We rely on information systems in all aspects of our operations, including, but not limited to, point-of-sale transaction processing in our restaurants, operation of our restaurants, management of our inventories, collection of cash, payment of payroll and other obligations, and various other processes and procedures.

Our restaurant support center and Company-owned restaurants are enabled with information technology and decision support systems.

In our restaurants, these systems are designed to provide operational tools for sales, inventory, and labor management.

This technology includes industry-specific, off-the-shelf systems, as well as proprietary software such as tools designed to optimize food and beverage costs and labor costs.

This technology includes industry-specific, off-the-shelf systems such as tools designed to optimize food, beverage, and labor costs.

These systems are integrated with our point-of-sale systems to provide daily, weekly, and period-to-date information that is important for managers to run an efficient and effective restaurant.

We also use other systems to interact with our Guests.

These include online and in-restaurant Guest feedback systems, which provide real-time results on Guest service, food quality, and atmosphere to each of our restaurants.

We utilize centralized financial, accounting, and human resources management systems to support our Company-owned restaurants.

We also use technology to interact with our Guests.

This includes our website, loyalty platform, online ordering tools, and Guest feedback systems, which provide actionable insights on Guest service, food quality, and atmosphere to each of our restaurants.

We utilize centralized financial, accounting, and human resource management systems to support our restaurant support center and Company-owned restaurants.

In addition, we use an operations scorecard that integrates data from our centralized systems and distributes information to assist in managing our restaurants.

We believe these combined tools are important in analyzing and improving our operations, profit margins, and other results.

In 2019, we invested in connectivity and data infrastructure that modernized and upgraded the capacity of our restaurant systems, deployed hand-held point-of-sale devices systemwide, and continued work on new, Guest facing digital experiences that support in-restaurant and off-premise dining.

In 2020 we plan to continue our investments in building innovative digital experiences for our Guests and to improve our ability to manage our technology infrastructure through investments in automation, and advanced monitoring.

In 2020, we invested in infrastructure that modernized and upgraded the capacity of our restaurant systems, stabilized the hand-held point-of-sale devices system wide to prepare for the launch of our new Total Guest Experience service model, and continued work on new, Guest facing digital experiences that support in-restaurant and off-premise dining.

In 2021, we plan to continue our investments in building innovative digital experiences for our Guests and to improve our ability to manage our technology infrastructure through investments in infrastructure, automation, and advanced monitoring.

We accept electronic payment cards from our Guests for payment in our restaurants.

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Our systems have been carefully designed and configured to protect against data loss or compromise.

For example, because of the number of credit card transactions processed in our Company-owned restaurants, we are required to maintain the highest level of Payment Card Industry (“PCI”) Data Security Standard compliance at our restaurant support center and Company-owned restaurants.

These standards, set by a consortium of the major credit card companies, require certain levels of system security and procedures to protect our customers’ credit card and other personal information.

For example, because of the number of credit card transactions processed in our Company-owned restaurants, Red Robin is required to maintain compliance per the Payment Card Industry Data Security Standard (PCI-DSS) for our networks and systems both at our restaurant support center and Company-owned restaurants.

Red Robin not only meets the requirements but also maintains a higher-level designation as a Merchant and Service Provider.

These PCI compliance standards, set by a consortium of the major credit card companies, require annual assessment to ensure certain levels of system security and procedures are in place to protect our Guests' credit card and other personal information.

We also engage security assessors and consultants to review and advise us on our other data security practices with respect to protection of other sensitive personal information that we obtain from Guests and Team Members.

Marketing and Advertising

We build brand equity and awareness through an omni-channel media strategy with tailored content by channel.

We leverage national television, digital media (including search, website and paid digital), social media, email, loyalty, and public relations initiatives.

We build brand equity and awareness through a media strategy with tailored content by channel and target.

We leverage digital media (including search, website, paid digital, over-the-top, online video, and social media), email, SMS, and public relations initiatives.

These programs are funded primarily through cooperative creative development and national media advertising funds.

In recent years, we have undertaken significant market research initiatives to gain feedback and perceptions in order to inform our business decisions.

In addition, we supplement national media with targeted local media across offline and online channels.

In recent years, we have undertaken significant market research initiatives to gain a deep understanding of our Guests, our brand promise, and what we must do to deliver that promise.

Additionally, we gain feedback and perceptions in order to inform our business decisions.

Among other things, we use a Guest satisfaction tool in all restaurants that provides feedback from Guests on their experiences.

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We also continually monitor our performance relative to peers and test potential business drivers among both current and potential Guests.

We track the frequency and purchase behavior of Guests who are members of our Red Robin Royalty TM loyalty program.

In 2019, we launched our new brand campaign, “All the Fulls”, which is rooted in consumer insights and highlights our distinctive positioning and emotional connection with Guests.

We plan to continue featuring this new campaign across multiple media channels in 2020.

We will also continue marketing support for our growing off-premise business which includes catering, carryout and delivery.

As of December 29, 2019 , we had 24,586 employees, whom we refer to as Team Members, consisting of 24,228 Team Members at Company-owned restaurants and 358 Team Members at our corporate headquarters and field offices.

We are currently 98% staffed at the restaurant manager level, and our restaurant Team Member turnover rate is approaching industry best-in-class targets.

None of our Team Members are covered by a collective bargaining agreement.

We consider our Team Member relations to be good.

We support our Team Members by offering competitive wages and benefits for eligible Team Members, including medical and other insurance, an employee stock purchase plan, and equity-based awards for eligible corporate and operations employees at the director level and above.

We motivate and develop our Team Members by providing them with opportunities for increased responsibilities and advancement.

At certain levels, we also offer performance-based incentives tied to sales, profitability, and/or certain qualitative measures.

We leverage our over nine million member Red Robin Royalty TM database to gain insights and track the frequency and purchase behavior of our Guests.

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Our "All the Fulls" brand campaign, which highlights our distinctive positioning and emotional connection with Guests, will feature new creative content in 2021.

We will also continue marketing support for our growing off-premise business which includes carryout, catering, and delivery.

In 2020, we began increasing our focus on digital marketing, which has proven effective in reaching our core Guests where and how they consume media, and more cost effectively.

This digital marketing strategy has led to increased Guest engagement with our brand.

Executive Officers

The following table sets forth information about our executive officers and other key employees:

President and Chief Executive Officer (1)

Jonathan Muhtar

Executive Vice President and Chief Concept Officer

Executive Vice President and Chief Financial Officer

Michael Buchmeier

Senior Vice President, Chief People Officer, and Interim Chief Operating Officer

Senior Vice President and Chief Information Officer

Senior Vice President and Chief Legal Officer

(1) Also a member of the Company’s board of directors.

The following table sets forth information about our executive officers:

Name Age Position

Paul Murphy 66 President, Chief Executive Officer, and Member of the Board of Directors

Jonathan Muhtar 49 Executive Vice President and Chief Concept Officer

Schweinfurth 53 Executive Vice President, Chief Financial Officer, and Interim Chief Information Officer

Michael Buchmeier 57 Senior Vice President, Chief People Officer, and Interim Chief Operating Officer

Kaplan 52 Executive Vice President and Chief Legal Officer

Murphy joined Red Robin as President and Chief Executive Officer in October 2019.

Murphy has served as Executive Chairman of Noodles & Company from July 2017.

Before joining Red Robin, Mr.

Murphy served as Executive Chairman of Noodles & Company from July 2017 to September 2019.

Prior to that, Mr.

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He was promoted to Executive Vice President, Operations in 1998, and to Chief Operating Officer in 2002.

In 2003, he was appointed President and

CEO and a member of the board of directors.

In 2003, he was appointed President and CEO and a member of the board of directors.

Murphy has significant experience in both operational and executive leadership in the restaurant industry, including leading companies through successful business transformations.

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Schweinfurth joined Red Robin as Executive Vice President and Chief Financial Officer in January 2019.

She is also currently serving as our interim Chief Information Officer beginning in August 2020.

Schweinfurth previously served as Vice President, Chief Financial Officer and Treasurer of Fiesta Restaurant Group since 2012 and was appointed Senior Vice President of Fiesta Restaurant Group in February 2015.

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Michael Buchmeier .

Buchmeier rejoined Red Robin in 2008 as a Regional Operations Director.

He had been promoted to positions of increasing responsibility in restaurant operations, including VP, Operations Standards and Talent, and eventually to Red Robin’s interim Chief People Officer before being appointed to the Senior Vice President and Chief People Officer position permanently in 2019.

He had previously been a member of the Red Robin team from 1986 to 1996 as a Director of Operations prior to branching out to serve in leadership positions at other companies and to own and operate another restaurant concept.

Upon the departure of Guy Constant, former Chief Operating Officer, in January 2020, Mr.

Buchmeier assumed the role of interim Chief Operating Officer until the Company finds a permanent Team Member for the position.

Dean Cookson .

Cookson joined Red Robin as Senior Vice President and Chief Information Officer in September 2017.

Prior to joining Red Robin, Mr.

Cookson served as Vice President and Chief Technology Officer of Virgin America Inc.

from February 2011 to January 2017.

He served as Vice President of Business Development at Basho Technologies, Inc.

from April 2010 to February 2011.

Prior to joining Basho, he served as Chief of Operations for Snapfish from June 2009 to April 2010.

He also served as VP of Systems and Support Operations at Snapfish from February 2007 to June 2009.

Prior to joining Snapfish, he served as Director of Production Operations at LookSmart Group, Inc.

from 2002 to 2007.

Kaplan joined Red Robin as Senior Vice President, Chief Legal Officer and Secretary in October 2013.

Buchmeier has served as our Senior Vice President and Chief People Officer since August 2019.

He is also currently serving as our interim Chief Operating Officer, beginning January 2020.

Prior to his appointment to the Senior Vice President and Chief People Officer position, Mr.

Buchmeier served as the Company's interim Chief People Officer from April 2019 to August 2020.

He previously served in restaurant operations and various leadership roles for the Company from April 2018 to April 2019, including Vice President, Operations Standards and Talent Optimization from August 2018 to April 2019, Vice President of Operations from January 2018 to August 2018, Vice President, Operations Excellence from October 2016 to January 2018, and Director, New Restaurant Operations from August 2012 to October 2016.

Kaplan joined Red Robin as Senior Vice President, Chief Legal Officer, and Secretary in October 2013 and was promoted to Executive Vice President and Chief Legal Officer in February 2020.

Prior to joining the Company, he served as Senior Vice President, General Counsel, Chief Security Officer and Corporate Secretary of DAE Aviation Holdings, Inc.

(d/b/a Standard Aero), a privately held global aviation maintenance company, from January 2010 to September 2013, and as a Shareholder at Greenberg Traurig, LLP, an international law firm, from January 2002 to January 2010.

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The restaurant industry is highly competitive, and our Guests may choose to purchase food at supermarkets or other food retailers.

Although, for some occasions, we compete against other segments of the restaurant industry, including quick-service and fast-casual restaurants, our primary competition is with other sit-down, casual dining restaurants within the casual dining segment.

In addition, we compete to attract Guests for off-premise dining occasions, including online ordering, delivery, to-go, and catering.

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We compete on the basis of taste, quality, price of food and related Guest value, Guest service, ambiance, location, and overall dining experience.

We believe our Guest demographics, strong brand recognition, gourmet burger concept, family friendly atmosphere, attractive price-value relationship, and the quality of our food and service enable us to differentiate ourselves from our full-service competitors.

We believe we compete favorably with respect to each of these factors.

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Our business is subject to seasonal fluctuations.

Historically, sales in most of our restaurants have been higher during the summer months and winter holiday season due to factors including our retail-oriented locations and family appeal.

Prior to the onset of the COVID-19 pandemic, sales in most of our restaurants have been higher during the summer months and winter holiday season due to factors including our retail-oriented locations and family appeal.

As a result, our quarterly operating results and comparable restaurant sales may fluctuate significantly as a result of seasonality.

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Government Regulation

Our restaurants are subject to licensing and regulation by state, province, and local health, safety, fire, and other authorities, including licensing requirements, and regulations for the sale of alcoholic beverages and food.

Our restaurants are subject to licensing and regulation by state, province, and local health, safety, fire, and other authorities, including licensing requirements, regulations for the sale of alcoholic beverages and food, and public health related indoor capacity restrictions.

To date, we have been able to obtain and maintain all necessary licenses, permits, and approvals.

The development and construction of new restaurants is subject also to compliance with applicable zoning, land use, and environmental regulations.

The development and construction of new restaurants is also subject to compliance with applicable zoning, land use, and environmental regulations.

We are also subject to federal regulation and state laws that regulate the offer and sale of franchises and substantive aspects of the franchisor-franchisee relationship.

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Our website and the information contained on or connected to our website are not incorporated by reference herein, and our web address is included as an inactive textual reference only.

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Forward-Looking Statements

Certain information and statements contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "PSLRA") codified at Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act.

This statement is included for purposes of complying with the safe harbor provisions of the PSLRA.

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.

Certain forward-looking statements are included in this Annual Report on Form 10-K, principally in the sections captioned “Business,” “Legal Proceedings,” “Consolidated Financial Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements relate to, among other things:

our business objectives and strategic plans, including growth in Guest traffic and revenue, improvements in operational efficiencies, gross margins, and expense management, enhancing our restaurant environments and Guest engagement;

our ability to grow our average check and increase sales of incremental items;

our ability to hire, train and retain Team Members, especially General Managers;

our ability to grow sales through menu rationalization and service enhancement;

our pricing strategy and any future price increases and their effect on Guest traffic and ordering choices, and, as a result, our revenue and profit;

the timing and cost of our investment and implementation of improvements in our information technology systems and data infrastructure to support Guest service and engagement and the digital Guest experience, and anticipated related benefits;

anticipated Company growth and the development of a new restaurant prototype;

anticipated restaurant operating costs, including commodity and food prices, labor and energy costs, and selling, general, and administrative expenses, as well as the effect of inflation on such costs and our ability to reduce overhead costs and improve efficiencies;

anticipated legislation and other regulation of our business, including minimum wage standards;

developing, testing, and implementing more recent initiatives, such as changes to our service model, our partnership with Donato's®, online ordering services, third-party and last mile delivery services, catering services, and addressing operational challenges associated with these initiatives;

the amount of future capital expenditures;

our expectation that we will have adequate cash from operations and credit facility borrowings to meet all future debt service, capital expenditures, and working capital requirements;

anticipated retention of future cash flows to fund our operations and expansion of our business, to fund growth opportunities, to pay down debt, or to repurchase stock;

the sufficiency of the supply of our food, supplies, and labor pool to carry on our business;

our franchise program, franchisee new restaurant openings, refreshes, remodels, potential expansion and other changes to our franchise program;

the continuation of our share repurchase program, and other capital deployment opportunities;

expectations about any future interest rate swap;

the effect of the adoption of new accounting standards on our financial and accounting systems and analysis programs;

expectations regarding our taxes, including anticipated tax credits and net operating loss carryforwards;

expectations regarding the discontinuance of LIBOR and its effect on our credit facility;

expectations regarding competition and our competitive advantages against our casual dining peers;

expectations regarding consumer preferences and consumer discretionary spending;

statements under the heading "2020 Outlook and Beyond"

Forward-looking statements may relate to, among other things:

(i) our business objectives and strategic plans, including projected growth in Guest traffic and revenue, planned improvements in operational efficiencies, gross margins, and expense management and enhancements to our restaurant environments and Guest engagement;

(ii) our expectations about pricing strategy and average check size;

(iii) our ability to hire, train, and retain Team Members;

(iv) investments in information technology systems and anticipated related benefits;

(v) our expectations about restaurant operating costs, including commodity and food prices and labor and energy costs;

(vi) anticipated legislation and other regulation of our business;

(vii) recent initiatives such as changes to our service model and our partnership with Donato's®;

(viii) our expectations about future cash flows, liquidity, future capital expenditures and other capital deployment opportunities, and taxes;

(ix) our expectations regarding competition;

and (x) our expectations regarding demand and business recovery, consumer preferences, and consumer discretionary spending.

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 Critical Accounting Policies and Estimates and Risk Factors, as well as other possible factors not listed, could cause actual results to differ materially from those expressed in forward-looking statements, including, without limitation, the following:

In addition, the factors described under Risk Factors, as well as other possible factors not listed, could cause actual results to differ materially from those expressed in forward-looking statements, including, without limitation, the following:

• the impact of COVID-19 on our results of operations, supply chain, and liquidity;

• the effectiveness of the Company's strategic initiatives, including alternative labor models, service, and operational improvement initiatives;

the ability to train and retain the Company’s workforce for service execution, including the complexities related to growth of multiple revenue streams within the restaurants;

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

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

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

the implementation and rollout of new technology solutions in the restaurants and timing thereof;

the ability to increase off-premise sales;

the ability to achieve revenue and cost savings from these and other initiatives;

the Company’s franchise strategy;

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

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

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

the cost and availability of key food products, distribution, labor, and energy;

general economic conditions;

the cost and availability of capital or credit facility borrowings;

the adequacy of cash flows or available debt resources to fund operations and growth opportunities;

limitations on our ability to execute stock repurchases at all or at the times or in the amounts we currently anticipate or to achieve anticipated benefits of a share repurchase program;

the impact of the Company’s adoption of a shareholder rights plan;

• changes in consumer spending trends and habits;

• changes in the cost and availability of key food products, distribution, labor, and energy;

• general economic conditions, including changes in consumer disposable income, weather conditions, and related events in regions where our restaurants are operated;

• the adequacy of cash flows and the cost and availability of capital or credit facility borrowings;

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

concentration of restaurants in certain markets;

changes in consumer disposable income;

consumer spending trends and habits;

regional mall and lifestyle center traffic trends or other trends affecting traffic at our restaurants;

changes in federal, state, or local laws and regulations affecting the operation of our restaurants, including but not limited to, minimum wages, consumer health and safety, health insurance coverage, nutritional disclosures, and employment eligibility-related documentation requirements;

costs and other effects of legal claims by Team Members, franchisees, customers, vendors, stockholders, and others, including settlement of those claims or negative publicity regarding food safety or cyber security;

weather conditions, and related events in regions where our restaurants are operated;

and changes in accounting standards policies, and practices or related interpretations by auditors or regulatory entities.

• changes in federal, state, or local laws and regulations affecting the operation of our restaurants, including minimum wages, consumer health and safety, health insurance coverage, nutritional disclosures, and employment eligibility-related documentation requirements;

• costs and other effects of legal claims by Team Members, franchisees, customers, vendors, stockholders, and others, including negative publicity regarding food safety or cyber security.

All forward-looking statements speak only as of the date made.

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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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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business