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Item 1. Financial Statements

2023-05-24 compared with 2022-11-02 · 78 added, 167 removed, 265 unchanged (48% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for per share amounts) October 2, 2022 December 26, 2021

(in thousands, except for per share amounts) April 16, 2023 December 25, 2022

Current assets:

31 unchanged sentences

20,449 shares issued;

15,900 and 15,722 shares outstanding as of October 2, 2022 and December 26, 2021

16,063 and 15,934 shares outstanding as of April 16, 2023 and December 25, 2022

Preferred stock, $ 0.001 par value:

3,000 shares authorized;

no shares issued and outstanding as of October 2, 2022 and December 26, 2021

Treasury stock 4,549 and 4,727 shares, at cost, as of October 2, 2022 and December 26, 2021

no shares issued and outstanding as of April 16, 2023 and December 25, 2022

Treasury stock 4,386 and 4,515 shares, at cost, as of April 16, 2023 and December 25, 2022

( 177,480 ) ( 182,810 )

Paid-in capital 235,876 238,803

Accumulated other comprehensive income (loss), net of tax ( 51 ) 1

Retained earnings (deficit) ( 6,408 ) 27,196

Accumulated other comprehensive loss, net of tax ( 26 ) ( 34 )

Retained deficit ( 53,704 ) ( 50,604 )

Total stockholders' equity 4,686 5,375

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Twelve Weeks Ended Forty Weeks Ended

(in thousands, except for per share amounts) October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Sixteen Weeks Ended

(in thousands, except for per share amounts) April 16, 2023 April 17, 2022

Restaurant revenue $ 406,893 $ 380,612

12 unchanged sentences

Total costs and expenses 413,631 391,180

Loss from operations ( 8,020 ) ( 12,136 ) ( 17,001 ) ( 19,031 )

Income from operations 4,337 4,370

Other expense:

Interest expense, net and other 7,417 7,413

Loss on debt refinancing

Interest income and other, net

Total other expenses 4,590 2,870 16,151

Loss before income taxes ( 3,080 ) ( 3,043 )

18 unchanged sentences

Capital Retained

Earnings (Deficit)

(in thousands) Shares Amount Shares Amount Total

5 unchanged sentences

Balance, April 17, 2022 20,449 $ 20 4,663 $ ( 190,022 ) $ 242,756 $ 12 $ 24,091 $ 76,857

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 113 ) 5,817 ( 5,691 ) — — 126

Non-cash stock compensation — — — — 2,542 — — 2,542

Net loss — — — — — — ( 17,932 ) ( 17,932 )

Other comprehensive income (loss), net of tax — — — — — ( 18 ) — ( 18 )

Balance, July 10, 2022 20,449 $ 20 4,550 $ ( 184,205 ) $ 239,607 $ ( 6 ) $ 6,159 $ 61,575

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 1 ) 36 ( 40 ) — — ( 4 )

Non-cash stock compensation — — — — 2,668 — — 2,668

Net loss — — — — — — ( 12,567 ) ( 12,567 )

Other comprehensive income (loss), net of tax — — — — — ( 45 ) — ( 45 )

Balance, October 2, 2022 20,449 $ 20 4,549 $ ( 184,169 ) $ 242,235 $ ( 51 ) $ ( 6,408 ) $ 51,627

Common Stock Treasury Stock Accumulated

2 unchanged sentences

Capital Retained

Earnings (Deficit)

(in thousands) Shares Amount Shares Amount Total

5 unchanged sentences

Balance, April 16, 2023 20,449 $ 20 4,386 $ ( 177,480 ) $ 235,876 $ ( 26 ) $ ( 53,704 ) $ 4,686

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 95 ) 3,844 ( 3,547 ) — — 297

Non-cash stock compensation — — — — 1,577 — — 1,577

Net loss — — — — — — ( 4,996 ) ( 4,996 )

Other comprehensive income (loss), net of tax — — — — — ( 1 ) — ( 1 )

Balance, July 11, 2021 20,449 $ 20 4,732 $ ( 193,039 ) $ 238,677 $ 16 $ 63,489 $ 109,163

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 5 ) 220 ( 280 ) — — ( 60 )

Non-cash stock compensation — — — — 2,048 — — 2,048

Net loss — — — — — — ( 14,980 ) ( 14,980 )

Other comprehensive income (loss), net of tax — — — — — ( 6 ) — ( 6 )

Balance, October 3, 2021 20,449 $ 20 4,727 $ ( 192,819 ) $ 240,445 $ 10 $ 48,509 $ 96,165

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Forty Weeks Ended

(in thousands) October 2, 2022 October 3, 2021

Sixteen Weeks Ended

(in thousands) April 16, 2023 April 17, 2022

Cash flows from operating activities:

3 unchanged sentences

Gift card breakage ( 4,965 ) ( 7,819 )

Restaurant asset impairment 13,048 1,357

Asset impairment 694 2,122

Non-cash other charges, net 770 ( 191 )

Stock-based compensation expense 2,172 3,042

(Gain) loss on sale of property, plant, and equipment ( 9,204 ) —

Other, net 606 2,266

17 unchanged sentences

Debt issuance costs — ( 4,869 )

Proceeds related to real estate sale 3,856 —

Proceeds from other financing activities, net 224 ( 65 )

5 unchanged sentences

Supplemental disclosure of cash flow information

Income tax refunds received, net $ ( 14,729 ) $ ( 840 )

Income tax paid (refund received), net $ 88 $ ( 2,519 )

Interest paid, net of amounts capitalized $ 5,475 $ 3,374

Right of use assets obtained in exchange for operating lease obligations $ 7,465 $ 3,382

Right of use assets obtained in exchange for finance lease obligations $ — $ 746

See Notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

Red Robin Gourmet Burgers, Inc., a Delaware corporation, together with its subsidiaries ("Red Robin" or the "Company"), primarily operates, franchises, and develops full-service restaurants in North America.

As of October 2, 2022, the Company owned and operated 424 restaurants located in 38 states.

As of April 16, 2023, the Company owned and operated 415 restaurants located in 38 states.

The Company also had 96 franchised full-service restaurants in 16 states and one Canadian province.

10 unchanged sentences

The Condensed Consolidated Balance Sheet as of December 25, 2022 has been derived from the audited consolidated financial statements as of that date, but does not include all disclosures required for audited annual financial statements.

For further information, please refer to and read these interim Condensed Consolidated Financial Statements in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 26, 2021 filed with the SEC on March 10, 2022.

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

5 unchanged sentences

April 17, 2022 16

Second Quarter 2022

July 10, 2022 12

Second Quarter 2021

July 11, 2021 12

Third Quarter 2022

October 2, 2022 12

Third Quarter 2021

October 3, 2021 12

Current and Prior Fiscal Years:

6 unchanged sentences

December 29, 2024 52

Reclassifications

Certain amounts presented have been reclassified within the October 3, 2021 Condensed Consolidated Statement of Cash Flows to conform with the current period presentation, including prior year reclassifications from Lease assets, net of liabilities to Other operating assets and liabilities.

The reclassifications had no effect on the Company’s cash flows from operations.

Change in Accounting Estimate - Gift Card Breakage

As part of its annual assessment of gift card breakage and during the forty weeks ended October 2, 2022, the Company re-evaluated the estimated redemption pattern related to gift cards and aligned the recognition of gift card breakage to the updated estimated redemption pattern.

As a result, the Company recognized $ 5.9 million of additional gift card breakage in Franchise and other revenues, partially offset by $ 0.6 million of associated commissions costs recognized in Selling, general and administrative expenses, in the first quarter of 2022.

This change in accounting estimate decreased net loss by $ 5.2 million, or $ 0.33 per basic and diluted share for the forty weeks ended October 2, 2022.

The Company does not expect the impact of this change in estimate to be material to its future financial statements.

Recent Tax Legislation

The CHIPS and Science Act of 2022 (CHIPS) and the Inflation Reduction Act (IRA) of 2022 were signed into law by President Biden on August 9, 2022 and August 16, 2022, respectively.

The legislation introduces new options for monetizing certain credits, a corporate alternative minimum tax, and a stock repurchase excise tax.

The Company is currently evaluating the impact of CHIPS and IRA, but at present does not expect that any of the provisions included in these acts would result in a material impact to our deferred tax assets, liabilities, or income taxes payable.

Disaggregation of revenue

In the following table, revenue is disaggregated by type of good or service (in thousands):

Twelve Weeks Ended Forty Weeks Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Sixteen Weeks Ended

April 16, 2023 April 17, 2022

Restaurant revenue $ 406,893 $ 380,612

1 unchanged sentence

Gift card breakage 4,965 7,819

190 438 8,290 3,231

Other revenue 827 839

Total revenues $ 417,968 $ 395,550

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

Basis of Presentation and Recent Accounting Pronouncements.

Contract Liabilities

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

October 2, 2022 December 26, 2021

April 16, 2023 December 25, 2022

Unearned gift card revenue $ 19,088 $ 32,251

1 unchanged sentence

Revenue recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss for the redemption and breakage of gift cards that were included in the liability balance at the beginning of the fiscal year was as follows (in thousands):

Forty Weeks Ended

October 2, 2022 October 3, 2021

Sixteen Weeks Ended

April 16, 2023 April 17, 2022

Gift card revenue $ 14,574 $ 16,859

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

October 2, 2022 Finance (1)

Operating (2)

Lease assets, net (3)

$ 7,233 $ 375,747

Current portion of lease obligations 1,015 47,726

Long-term portion of lease obligations 8,630 401,274

Total $ 9,645 $ 449,000

December 26, 2021 Finance (1)

Operating (2)

Lease assets, net (3)

$ 9,664 $ 400,825

Current portion of lease obligations 1,194 48,842

Long-term portion of lease obligations 10,765 435,136

Total $ 11,959 $ 483,978

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

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

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

The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and real estate taxes, are included in Occupancy on our Condensed Consolidated Statement of Operations and Comprehensive Loss as follows (in thousands):

Twelve Weeks Ended Forty Weeks Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Sixteen Weeks Ended

April 16, 2023 April 17, 2022

Operating lease cost $ 20,895 $ 21,689

5 unchanged sentences

Total $ 27,187 $ 28,501

Maturities of our lease liabilities as of October 2, 2022 were as follows (in thousands):

Finance Leases Operating Leases

Remainder of 2022 $ 260 $ 13,829

2023 1,386 76,978

2024 1,479 76,047

2025 1,189 71,921

2026 1,245 66,078

Thereafter 6,454 323,647

Total future lease payments $ 12,013 $ 628,500

Less imputed interest 2,368 179,500

Total lease liability $ 9,645 $ 449,000

Supplemental cash flow and other information related to leases is as follows (in thousands, except other information):

Forty Weeks Ended

October 2, 2022 October 3, 2021

Cash flows from operating activities

Cash paid related to lease liabilities

Operating leases $ 65,943 $ 68,036

Finance leases 408 406

Cash flows from financing activities

Cash paid related to lease liabilities

Finance leases 1,048 1,447

Cash paid for amounts included in the measurement of lease liabilities:

$ 67,399 $ 69,889

Right of use assets obtained in exchange for operating lease obligations $ 11,604 $ 27,483

Right of use assets obtained in exchange for finance lease obligations $ 541 $ 988

Other information related to operating leases as follows:

Weighted average remaining lease term (years) 9.21 9.86

Weighted average discount rate 7.24 % 7.01 %

Other information related to finance leases as follows:

Weighted average remaining lease term (years) 10.49 11.04

Weighted average discount rate 4.89 % 4.56 %

Loss Per Share

3 unchanged sentences

Diluted loss per share reflects the potential dilution that could occur if holders of options exercised their options into common stock.

As the Company was in a net loss position for each of the twelve and forty weeks ended October 2, 2022 and October 3, 2021, all potentially dilutive common shares are considered anti-dilutive.

As the Company was in a net loss position for both the sixteen weeks ended April 16, 2023 and April 17, 2022, all potentially dilutive common shares 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 is reconciled to diluted weighted average shares outstanding as follows (in thousands):

Twelve Weeks Ended Forty Weeks Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Sixteen Weeks Ended

April 16, 2023 April 17, 2022

Basic weighted average shares outstanding 15,996 15,748

4 unchanged sentences

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

Twelve Weeks Ended Forty Weeks Ended

October 2, 2022 October 3, 2021 October 2, 2022 October 3, 2021

Sixteen Weeks Ended

April 16, 2023 April 17, 2022

Litigation contingencies

$ 4,300 $ 1,720

Severance and executive transition

Restaurant closure costs, net

Asset impairment

Gain on sale of restaurant property ( 9,204 ) — ( 9,204 ) —

Executive transition 1,825 — 1,954 —

Closed corporate office costs, net of sublease income

Other financing costs

COVID-19 related charges

Restaurant closure costs (gains) ( 1,570 ) 1,102 309 5,301

Closed corporate office, net of sublease income 267 — 267 —

Litigation contingencies 133 160 47 1,330

Board and stockholder matter costs — — — 128

Other charges (gains), net $ 9,759 $ 5,307

The Company recognized non-cash impairment charges primarily related to restaurant assets at one and ten Company-owned restaurants during the twelve and forty weeks ended October 2, 2022, respectively, and one Company-owned restaurant for the forty weeks ended October 3, 2021.

During the second quarter of 2022 the Company closed on an agreement to sell a restaurant property that the Company owned and leased back on a short-term basis.

The Company collected initial net proceeds from the purchaser-lessor of $ 3.9 million, which represented a portion of the total consideration received from the sale.

The Company did not recognize a sale in the second quarter of 2022 as certain criteria to recognize a sale in accordance with ASC Topic 842, Leases , and ASC Topic 606, Revenue from Contracts with Customers , were not met.

During third quarter of 2022, the Company received the remaining proceeds, upon which the lease terminated and the sale transaction was completed, and recognized a $ 9.2 million gain on the sale of the restaurant property .

The initial net proceeds of $ 3.9 million are included within cash flows from financing activities and the final proceeds received of $ 8.5 million are included within cash flows from investing activities on the Condensed Consolidated Statements of Cash Flows for the forty weeks ended October 2, 2022.

Executive transition costs include costs associated with transitioning to a new Chief Executive Officer.

Litigation contingencies during the sixteen weeks ended April 16, 2023 and April 17, 2022 represent reserves for various in progress legal matters.

Severance and executive transition costs include one-time termination benefits related to a reduction in force of Team Members and costs associated with changes in leadership positions as a result of our strategic pivot and are accounted for in accordance with ASC Topic 420, Exit or Disposal Cost Obligations .

The Company expects to make the remaining payments related to these benefits in 2023.

The Company expects to incur a total of approximately $ 5.0 million in termination benefits, of which it has incurred a cumulative total of $ 4.4 million through April 16, 2023.

Approximately $ 1.5 million in one-time termination benefits was incurred and recorded in Other charges in the Consolidated Statements of Operations and Comprehensive Loss during the sixteen weeks ended April 16, 2023.

A reconciliation of our termination benefits liability, which is included in Accrued liabilities and other current liabilities in our Condensed Consolidated Balance Sheets is as follows:

Termination Benefits

Balance as of December 25, 2022

Charges 1,476

Cash Payments ( 2,788 )

Balance as of April 16, 2023

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

Other includes non-cash charges primarily related to terminated capital projects, disposals, and lease terminations.

The Company recognized non-cash impairment charges related to subleasing additional space at the Company's closed corporate office during the sixteen weeks ended April 16, 2023.

The Company recognized non-cash impairment charges related to restaurant assets at three Company-owned restaurants for the sixteen weeks ended April 17, 2022.

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

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

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

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

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

Litigation contingencies during the twelve and forty weeks ended October 2, 2022 include the impact of cash proceeds received by the Company related to certain legal claims.

Litigation contingencies during the twelve and forty weeks ended October 2, 2022 and October 3, 2021 include legal settlement costs accrued related to pending or threatened litigation.

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

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

October 2, 2022 Weighted

Interest Rate December 26, 2021 Weighted

Borrowings as of April 16, 2023 and December 25, 2022 are summarized below (in thousands):

April 16, 2023 Variable

Interest Rate December 25, 2022 Variable

Interest Rate

1 unchanged sentence

Term loan 198,000 12.12 % 199,000 9.81 %

Notes payable, non-current 875 875

Notes payable 875 875

Total borrowings 213,875 214,875

3 unchanged sentences

Revolving line of credit unamortized deferred financing charges (1) :

$ 1,042 $ 2,015

(1) Loan origination costs associated with the Company's credit facility are included as deferred costs in Other assets, net for financing charges allocated to the Revolving line of credit, and Long-term debt for financing charges associated with the term loan in the accompanying Condensed Consolidated Balance Sheets.

2 unchanged sentences

The five-year $ 225.0 million Credit Agreement provides for a $ 25.0 million revolving line of credit and a $ 200.0 million term loan (collectively, the "Credit Facility").

The borrower maintains the option to increase the Credit Agreement in the future, subject to lenders’ participation, by up to an additional $ 40.0 million in the aggregate on the terms and conditions set forth in the Credit Agreement.

The borrower maintains the option to increase the amount of borrowings available under the Credit Agreement in the future, subject to lenders’ participation, by up to an additional $ 40.0 million in the aggregate on the terms and conditions set forth in the Credit Agreement.

The Credit Facility will mature on March 4, 2027.

1 unchanged sentence

The term loans require quarterly principal payments in an aggregate annual amount equal to 1.0 % of the original principal amount of the term loan.

The Credit Agreement's interest rate references the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements and backed by U.S.

The Credit Facility's interest rate references the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements and backed by U.S.

Treasury securities, or the Alternate Base Rate ("ABR"), which represents the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.5 % per annum, or (c) one-month term SOFR plus 1.0 % per annum.

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

Red Robin International, Inc.

10 unchanged sentences

During the first quarter of 2022, the Company expensed approximately $ 1.7 million of deferred financing charges related to the extinguishment of the Prior Credit Agreement on March 4, 2022.

These charges were recorded to interest expense, net and other on the Condensed Consolidated Statements of Operations and Comprehensive Loss for the forty weeks ended October 2, 2022.

These charges were recorded to interest expense, net and other on the Condensed Consolidated Statements of Operations and Comprehensive Loss for the sixteen weeks ended April 17, 2022.

In association with the execution of the new Credit Agreement, the Company recognized $ 4.8 million of deferred financing charges, and $ 6.1 million of original issuance discount.

5 unchanged sentences

Fair market value of mutual funds is measured using level 1 inputs (quoted prices for identical assets in active markets).

The following tables present the Company's assets measured at fair value on a recurring basis included in Other assets, net on the accompanying Condensed Consolidated Balance Sheets as of October 2, 2022 and December 26, 2021 (in thousands):

October 2, 2022 Level 1 Level 2 Level 3

The following tables present the Company's assets measured at fair value on a recurring basis included in Other assets, net on the accompanying Condensed Consolidated Balance Sheets as of April 16, 2023 and December 25, 2022 (in thousands):

April 16, 2023 Level 1 Level 2 Level 3

Investments in rabbi trust $ 3,165 $ 3,165 $ — $ —

8 unchanged sentences

Other Charges (Gains), net.

We impaired long-lived restaurant assets with a carrying value (including right of use lease assets) of $ 5.8 million and $ 27.3 million, recognizing an impairment expense of $ 2.2 million and $ 13.0 million during the twelve and forty weeks ended October 2, 2022, respectively, related to the net book value of these long-lived restaurant assets.

We determined the fair value of these long-lived assets to be $ 3.6 million and $ 14.3 million in the twelve and forty weeks ended October 2, 2022, respectively.

We impaired long-lived assets with a carrying value (including right of use lease assets) of $ 1.0 million, recognizing an impairment expense of $ 0.7 million during the sixteen weeks ended April 16, 2023, related to the net book value of these long-lived restaurant assets.

We determined the fair value of these long-lived assets to be $ 0.3 million in the sixteen weeks ended April 16, 2023.

The impairment was recorded as a result of quantitative impairment analyses.

1 unchanged sentence

The Company's liability under its credit facility is carried at historical cost in the accompanying Condensed Consolidated Balance Sheets.

As of October 2, 2022, the fair value of the credit facility was approximately $ 194.8 million and the principal amount carrying value was $ 199.0 million.

The credit facility term loan is reported net of $ 8.6 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of October 2, 2022.

The carrying value approximated the fair value of the credit facility as of December 26, 2021, as the interest rate on the instrument approximated current market rates.

As of April 16, 2023, the fair value of the credit facility was approximately $ 214.4 million and the principal amount carrying value was $ 213.0 million.

The credit facility term loan is reported net of $ 7.8 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of April 16, 2023.

The carrying value of the credit facility was $ 214.0 million and the fair value of the credit facility was $ 205.1 million as of December 25, 2022.

The interest rate on the credit facility represents a level 2 fair value input.

5 unchanged sentences

However, the ultimate resolution of litigated claims may differ from our current estimates.

In the normal course of business, there are various claims in process, matters in litigation, and other contingencies.

These include employment related claims and claims from Guests or Team Members alleging illness, injury, food quality, health, or operational concerns.

To date, none of these claims, certain of which are covered by insurance policies, have had a material effect on the Company.

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 these 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 affect our business, financial condition, results of operations, and cash flows.

As of October 2, 2022, we had a balance of $ 4.5 million for loss contingencies included within Accrued liabilities and other on our Condensed Consolidated Balance Sheet.

We ultimately may be subject to greater or less than the accrued amount.

As of October 2, 2022, we had non-cancellable purchase commitments to certain vendors who provide food and beverages and other supplies to our restaurants, for an aggregate of $ 128.4 million.

In the normal course of business, there are various claims in process, matters in litigation, and other contingencies, certain of which are covered by insurance policies.

While it is not possible to predict the outcome of these suits, legal proceedings, and claims with certainty, management is of the opinion that adequate provision for potential losses associated with these matters has been made in the financial statements and that the ultimate resolution of any one of these matters will not have a material adverse effect on our financial position and results of operations.

A significant increase in the number of these claims, or one or more successful claims resulting in greater liabilities than we currently anticipate, could materially and adversely affect our business, financial condition, results of operations, and cash flows.

As of April 16, 2023, we had a balance of $ 8.9 million for loss contingencies included within Accrued liabilities and other on our Condensed Consolidated Balance Sheet.

In the normal course of business, there are various claims in process, matters in litigation, administrative proceedings, and other contingencies.

These include employment related claims and class action lawsuits, claims from Guests or Team Members alleging illness, injury, food quality, health, or operational concerns, and lease and other commercial disputes.

We increased our estimate of loss contingency liabilities by approximately $ 4.3 million in the first quarter of 2023 related to changes during the first quarter in the status of ongoing litigation matters.

We ultimately may be subject to greater or less than the accrued amount for this and other matters.

As of April 16, 2023, we had non-cancellable purchase commitments to certain vendors who provide food and beverages and other supplies to our restaurants, for an aggregate of $ 133.2 million.

We expect to fulfill our commitments under these agreements in the normal course of business, and as such, no liability has been recorded.

Subsequent Events

On April 17, 2023 and subsequent to first quarter 2023, the Company acquired five Red Robin restaurants in the northeastern United States from a long-term franchisee who retired for approximately $ 3.3 million plus standard closing adjustments.

The Company expects the transaction to result in a business combination;

however, determination of the purchase price allocation is not considered practical as of the filing date of the first quarter 2023 Form 10-Q.

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-Q

Item 1. Financial Statements