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Item 1. Financial Statements

2024-08-22 compared with 2024-05-29 · 137 added, 90 removed, 286 unchanged (44% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except for per share amounts) April 21, 2024 December 31, 2023

(in thousands, except for per share amounts) July 14, 2024 December 31, 2023

Current assets:

29 unchanged sentences

20,449 shares issued;

15,612 and 15,528 shares outstanding as of April 21, 2024 and December 31, 2023

15,755 and 15,528 shares outstanding as of July 14, 2024 and December 31, 2023

Preferred stock, $ 0.001 par value:

3,000 shares authorized;

no shares issued and outstanding as of April 21, 2024 and December 31, 2023

Treasury stock 4,837 and 4,921 shares, at cost, as of April 21, 2024 and December 31, 2023

no shares issued and outstanding as of July 14, 2024 and December 31, 2023

Treasury stock 4,694 and 4,921 shares, at cost, as of July 14, 2024 and December 31, 2023

( 166,585 ) ( 174,702 )

6 unchanged sentences

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Quarter Ended

(in thousands, except for per share amounts) April 21, 2024 April 16, 2023

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Twelve Weeks Ended Twenty-Eight Weeks Ended

(in thousands, except for per share amounts) July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Restaurant revenue $ 294,457 $ 293,281 $ 673,025 $ 700,174

17 unchanged sentences

Interest income and other, net

Loss before income taxes ( 9,279 ) ( 3,236 )

Income tax provision 181 20

Net loss $ ( 9,460 ) $ ( 3,256 )

Loss per share:

( 139 ) ( 304 ) ( 451 ) ( 655 )

Income (loss) before income taxes

( 9,529 ) 4,078 ( 18,808 ) 840

Income tax provision (benefit)

( 40 ) 156 141 176

Net income (loss) $ ( 9,489 ) $ 3,922 $ ( 18,949 ) $ 664

Income (loss) per share:

Basic $ ( 0.61 ) $ 0.24 $ ( 1.21 ) $ 0.04

6 unchanged sentences

Other comprehensive income (loss), net of tax 4 4 ( 14 ) 11

Total comprehensive loss $ ( 9,478 ) $ ( 3,248 )

Total comprehensive income (loss) $ ( 9,485 ) $ 3,926 $ ( 18,963 ) $ 675

See Notes to Condensed Consolidated Financial Statements.

12 unchanged sentences

Balance, April 21, 2024 20,449 $ 20 4,837 $ ( 171,691 ) $ 227,488 $ ( 40 ) $ ( 84,878 ) $ ( 29,101 )

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 143 ) 5,106 ( 4,919 ) — — 187

Non-cash stock compensation — — — — 1,856 — — 1,856

Net loss — — — — — — ( 9,489 ) ( 9,489 )

Other comprehensive income (loss), net of tax — — — — — 4 — 4

Balance, July 14, 2024 20,449 $ 20 4,694 $ ( 166,585 ) $ 224,425 $ ( 36 ) $ ( 94,367 ) $ ( 36,543 )

Common Stock Treasury Stock Accumulated

6 unchanged sentences

Non-cash stock compensation — — — — 2,179 — — 2,179

Net loss — — — — — — ( 3,256 ) ( 3,256 )

Net income (loss) — — — — — — ( 3,256 ) ( 3,256 )

Other comprehensive income (loss), net of tax — — — — — 8 — 8

Balance, April 16, 2023 20,449 $ 20 4,386 $ ( 177,480 ) $ 235,876 $ ( 26 ) $ ( 57,445 ) $ 945

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 250 ) 9,933 ( 8,297 ) — — 1,636

Acquisition of treasury stock — — 382 ( 4,999 ) — — — ( 4,999 )

Non-cash stock compensation — — — — 1,519 — — 1,519

Net income (loss) — — — — — — 3,922 3,922

Other comprehensive income (loss), net of tax — — — — — 4 — 4

Balance, July 9, 2023 20,449 $ 20 4,518 $ ( 172,546 ) $ 229,098 $ ( 22 ) $ ( 53,524 ) $ 3,026

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Quarter Ended

(in thousands) April 21, 2024 April 16, 2023

Twenty-Eight Weeks Ended

(in thousands) July 14, 2024 July 9, 2023

Cash flows from operating activities:

Net loss $ ( 9,460 ) $ ( 3,256 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) $ ( 18,949 ) $ 664

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 31,556 37,581

Gift card breakage ( 4,162 ) ( 4,809 )

Asset impairment 1,128 2,387

1 unchanged sentence

Stock-based compensation expense 3,046 3,691

Gain on sale leaseback, net ( 7,425 ) —

Gain on sale of restaurant property

( 7,425 ) ( 14,803 )

Other, net 1,074 251

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Net proceeds from sale-leaseback 23,271 28,451

Proceeds from sales of property and equipment and other investing activities — 794

Acquisition of franchised restaurants — ( 3,529 )

Net cash provided by (used in) investing activities 9,415 ( 98 )

4 unchanged sentences

Repayments of finance lease obligations ( 619 ) ( 448 )

Purchase of treasury stock — ( 4,999 )

(Uses) Proceeds from other financing activities, net ( 2,246 ) 1,861

8 unchanged sentences

Right of use assets obtained in exchange for operating lease obligations $ 17,832 $ 34,928

Right of use assets obtained in exchange for finance lease obligations $ — $ 82

See Notes to Condensed Consolidated Financial Statements.

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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 April 21, 2024, the Company owned and operated 413 restaurants located in 39 states.

As of July 14, 2024, the Company owned and operated 411 restaurants located in 39 states.

The Company also had 92 franchised full-service restaurants in 14 states and one Canadian province.

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The accompanying Condensed Consolidated Financial Statements of Red Robin have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), including the instructions to Form 10-Q and Article 10 of Regulation S-X.

Certain information and footnote disclosures normally included in the Company's annual Condensed Consolidated Financial Statements on Form 10-K have been or omitted.

Certain information and footnote disclosures normally included in the Company's annual Condensed Consolidated Financial Statements on Form 10-K have been condensed or omitted.

The Condensed Consolidated Balance Sheet as of December 31, 2023 has been derived from the audited Condensed Consolidated Financial Statements as of that date but does not include all disclosures required for audited annual financial statements.

2 unchanged sentences

Periods Period End Date Number of Weeks in Period

Current and Prior Fiscal Quarters:

Current, Prior and Upcoming Fiscal Quarters:

First Quarter 2024

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December 31, 2023 53

Immaterial Restatement of Prior Period Financial Statements

As previously disclosed in our Form 10-Q for the period ended July 9, 2023, the Company discovered a multi-year error in its calculation and recognition of revenue related to gift cards, primarily related to breakage revenue that had been recognized for bonus and discounted gift cards for which no or discounted monetary consideration was received, which resulted in the Company overstating total revenues by $ 0.2 million first quarter ended April 16, 2023.

Management has evaluated this misstatement and concluded it was not material to prior periods, individually or in the aggregate.

However, as previously disclosed, correcting the cumulative effect of the error in the first quarter ended April 16, 2023 would have had a significant effect on the results of operations for such periods.

Therefore, the Company is correcting the relevant prior period Condensed Consolidated Financial Statements and related footnotes for this error for comparative purposes.

The following tables reflect the effects of the correction on all affected line items of the Company's previously reported Condensed Consolidated Financial Statements for the quarter ended April 16, 2023 presented in this Form 10-Q:

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)

Quarter Ended April 16, 2023

(in thousands) As Previously Reported Adjustment As Corrected

Other revenues $ 5,792 $ ( 156 ) $ 5,636

Total revenues 417,968 ( 156 ) 417,812

Loss before income taxes ( 3,080 ) ( 156 ) ( 3,236 )

Net loss ( 3,100 ) ( 156 ) ( 3,256 )

Net loss per share ( 0.19 ) ( 0.01 ) ( 0.20 )

Total comprehensive loss ( 3,092 ) ( 156 ) ( 3,248 )

OTHER NON-GAAP INFORMATION:

Adjusted EBITDA 36,080 ( 156 ) 35,924

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY (DEFICIT) (unaudited)

Quarter Ended April 16, 2023

(in thousands) Retained Earnings/(Accumulated Deficit) Total Shareholders' Equity

As Previously Reported

Balance, December 25, 2022 $ ( 50,604 ) $ 5,375

Net loss ( 3,100 ) ( 3,100 )

Balance, April 16, 2023 ( 53,704 ) 4,686

Balance, December 25, 2022 ( 3,586 ) ( 3,586 )

Net loss ( 156 ) ( 156 )

Balance, April 16, 2023 ( 3,741 ) ( 3,741 )

Balance, December 25, 2022 ( 54,190 ) 1,789

Net loss ( 3,256 ) ( 3,256 )

Balance, April 16, 2023 ( 57,445 ) 945

CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Quarter Ended April 16, 2023

(in thousands) As Previously Reported Adjustment As Corrected

Net loss $ ( 3,100 ) $ ( 156 ) $ ( 3,256 )

Gift card breakage ( 4,965 ) 156 ( 4,809 )

Reclassifications

1 unchanged sentence

The reclassifications had no effect on the Company’s consolidated results.

An adjustment has been made to the Condensed Consolidated Statement of Operations and Comprehensive Loss to disaggregate franchise and other revenue.

Also, a reclassification was made within the Condensed Consolidated Balance Sheet between Current portion of long-term debt and Accrued liabilities and other.

We made adjustments to the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) to disaggregate franchise and other revenue and to disaggregate interest expense and interest income and other, net.

Additionally, we made adjustments to the Condensed Consolidated Statements of Cash Flows to disaggregate borrowings and repayments on revolving credit facilities, repayments on the term loan and finance lease obligations and to reclassify gift card breakage within unearned revenue.

Recently Issued and Recently Adopted Accounting Standards

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We reviewed all other recently issued accounting pronouncements and concluded they were either not applicable or not expected to have a significant impact on the Company's Condensed Consolidated Financial Statements.

Summary of Significant Accounting Policies

Revenue Recognition - Revenues consist of sales from restaurant operations (including third party delivery), franchise revenue, and other revenue including gift card breakage and miscellaneous revenue.

The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a restaurant Guest, franchisee, or other customer.

The Company recognizes revenues from restaurant operations when payment is tendered at the point of sale, as the Company's performance obligation to provide food and beverage to the customer has been satisfied.

The Company sells gift cards which do not have an expiration date, and it does not deduct dormancy fees from outstanding gift card balances.

We recognize revenue from gift cards as either:

(i) Restaurant revenue, when the Company's performance obligation to provide food and beverage to the customer is satisfied upon redemption of the gift card, or (ii) gift card breakage, as discussed below.

Gift card breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote and the Company determines there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction.

The determination of the gift card breakage rate is based upon the Company's specific historical redemption patterns.

The Company recognizes gift card breakage by applying its estimate of the rate of gift card breakage on a pro rata basis over the period of estimated redemption.

During the second quarter of fiscal 2024, we re-launched our Red Robin Royalty TM program ("Royalty").

Under the re-launched program, Royalty members generally earn points for every dollar spent.

We may also periodically offer promotions, which typically provide the customer with the opportunity to earn bonus points or other rewards.

Upon reaching certain point thresholds, Royalty members earn rewards that may be redeemed for food and beverage items.

Earned rewards generally expire 90 days after they are issued, and points generally expire if a qualifying purchase is not made within 365 days of the last purchase.

We defer revenue based on the estimated stand-alone selling price of points or rewards earned by customers as each point or reward is earned, net of points or rewards we do not expect to be redeemed.

Our estimate of points and rewards expected to be redeemed is based on historical Company-specific data.

We evaluate Royalty redemption rates annually, or more frequently as circumstances warrant.

Estimating future redemption rates requires judgment based on current and historical trends, and actual redemption rates may vary from our estimates.

Revenues we receive from our franchise arrangements include sales-based royalties, advertising fund contributions, and franchise fees.

Red Robin franchisees are required to remit 4.0 % to 5.0 % of their revenues as royalties to the Company and contribute up to 3 % of revenues to two national advertising funds.

The Company recognizes these sales-based royalties and advertising fund contributions as the underlying franchisee sales occur.

Contributions to these Advertising Funds from franchisees are recorded as revenue under Franchise revenue in the Consolidated Statements of Operations and Comprehensive Income (Loss) in accordance with ASC Topic 606, Revenue from Contracts with Customers .

The Company typically grants franchise rights to franchisees for a term of 20 years, with the right to extend the term for an additional 10 years if various conditions are satisfied by the franchisee.

Other revenue consists of gift card breakage, licensing income, and recycling income.

Disaggregation of revenue

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

Quarter Ended

April 21, 2024 April 16, 2023

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Restaurant revenue $ 294,457 $ 293,281 $ 673,025 $ 700,174

5 unchanged sentences

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

April 21, 2024 December 31, 2023

July 14, 2024 December 31, 2023

Unearned gift card revenue $ 14,899 $ 28,558

Deferred loyalty revenue 8,032 7,509

Unearned Royalty revenue

Unearned revenue

$ 16,703 $ 36,067

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

Quarter Ended

April 21, 2024 April 16, 2023

Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023

Gift card revenue $ 14,539 $ 16,038

We recognize Royalty revenue within Restaurant revenue in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) when a customer redeems an earned reward.

Unearned revenue associated with Royalty is included in Unearned revenue in our Condensed Consolidated Balance Sheets.

Changes in our unearned revenue balance related to our Royalty program (in thousands):

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Unearned Royalty revenue, beginning balance

$ 8,032 $ 11,356 $ 7,509 $ 11,107

Revenue deferred 715 2,247 3,039 4,763

Revenue recognized (1)

( 6,943 ) ( 1,980 ) ( 8,744 ) ( 4,247 )

Unearned Royalty revenue, ending balance

$ 1,804 $ 11,623 $ 1,804 $ 11,623

(1) Restaurant revenue includes an approximately $ 6.4 million credit related to the transition to the new Royalty program in the second quarter of 2024, primarily due to the cancellation of unused points that were earned more than 365 days prior to the launch of the new program.

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 Income (Loss) as follows (in thousands):

Quarter Ended

April 21, 2024 April 16, 2023

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Operating lease cost $ 17,412 $ 16,279 $ 40,418 $ 37,174

5 unchanged sentences

Total $ 22,272 $ 21,088 $ 51,606 $ 48,276

Refer to Footnote 5, Other Charges (Gains), net , for information regarding the sale-leaseback transaction during the first quarter ended April 21, 2024.

Refer to Footnote 5, Other Charges (Gains), net , for information regarding the sale-leaseback transactions completed during the year to date periods ended July 14, 2024 and July 9, 2023, respectively.

Earnings (Loss) Per Share

3 unchanged sentences

Diluted earnings 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 both the first quarter ended April 21, 2024 and April 16, 2023, all potentially dilutive common shares are considered anti-dilutive.

As the Company was in a net loss position for both the quarter to date and year to date periods ended July 14, 2024, 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):

Quarter Ended

April 21, 2024 April 16, 2023

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Basic weighted average shares outstanding 15,680 16,037 15,608 16,014

4 unchanged sentences

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

Quarter Ended

April 21, 2024 April 16, 2023

Gain on sale leaseback, net

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 14, 2024 July 9, 2023 July 14, 2024 July 9, 2023

Gain on sale of restaurant property

$ — $ ( 14,586 ) $ ( 7,425 ) $ ( 14,586 )

Litigation contingencies

356 1,240 776 5,540

Restaurant closure costs, net

423 ( 112 ) 597 1,638

Severance and executive transition

137 962 1,082 2,854

Asset impairment

1,128 1,693 1,128 2,387

Asset disposal and other, net

825 83 2,620 1,144

Closed corporate office costs, net of sublease income 62 113 177 175

Other charges (gains), net $ 2,931 $ ( 10,607 ) $ ( 1,045 ) $ ( 848 )

During the first quarter of 2024, the Company sold ten restaurant properties for total proceeds of $ 23.9 million in a sale-leaseback transaction that resulted in a gain, net of expenses of $ 7.4 million.

The net proceeds of $ 23.4 million from the sale of 10 restaurant properties are included within cash flows from investing activities in the Condensed Consolidated Statements of Cash Flows for the first quarter ended April 21, 2024.

Borrowings as of April 21, 2024 and December 31, 2023 are summarized below (in thousands):

April 21, 2024 Variable

Gain on Sale of Restaurant Property

During the first quarter of fiscal 2024, the Company sold ten restaurant properties for total proceeds of $ 23.9 million in a sale-leaseback transaction that resulted in a gain, net of expenses of $ 7.4 million.

During the second quarter of fiscal 2023, the Company sold nine restaurant properties for total proceeds of $ 28.5 million in a sale-leaseback transaction that resulted in a gain, net of expenses of $ 14.6 million.

Severance and Executive Transition

During the quarter and year to date periods of fiscal 2024, the Company incurred costs primarily related to a reduction in force of Team Members.

During the second quarter and year to date periods of fiscal 2023, the Company incurred severance and executive transition costs associated with changes in leadership positions.

Asset Impairment

During the second quarter of fiscal 2024, the Company recognized non-cash impairment charges primarily related to the closure of two locations.

During the second quarter and year to date periods of fiscal 2023, the Company recognized non-cash impairment charges primarily related to impairments of long-lived assets at four underperforming locations and the closed corporate office.

Fair Value Measurements.

Asset Disposal and Other

Asset disposals and other relate primarily to terminated capital projects.

Borrowings as of July 14, 2024 and December 31, 2023 are summarized below (in thousands):

July 14, 2024 Variable

Interest Rate December 31, 2023 Variable

Interest Rate

Revolving line of credit $ — $ — — %

Term loan $ 167,911 12.10 % $ 189,143 11.62 %

10 unchanged sentences

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.

As of July 14, 2024, quarterly principal payments are no longer required as a result of the debt repayments from the proceeds of the recent sale-leaseback transactions.

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.

Treasury securities, or the Alternate Base Rate, 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.

As of April 21, 2024, the Company had outstanding borrowings under the Credit Facility of $ 162.0 million, in addition to amounts issued under letters of credit of $ 7.7 million.

As of July 14, 2024, the Company had outstanding borrowings under the Credit Facility of $ 162.3 million, in addition to amounts issued under letters of credit of $ 7.7 million.

As of December 31, 2023, the Company had outstanding borrowings under the Credit Facility of $ 182.6 million, in addition to amounts issued under letters of credit of $ 7.7 million.

Red Robin International, Inc., is the borrower under the Credit Agreement, and certain of its subsidiaries and the Company are guarantors of borrower’s obligations under the Credit Agreement.

Red Robin International, Inc., is the borrower under the Credit Agreement, and certain of its subsidiaries and the Company are guarantors of the borrower’s obligations under the Credit Agreement.

Borrowings under the Credit Agreement are secured by substantially all of the assets of the borrower and the guarantors, including the Company, and are available to:

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The following tables present the Company's assets measured at fair value on a recurring basis (in thousands):

April 21, 2024 Level 1 Level 2 Level 3

July 14, 2024 Level 1 Level 2 Level 3

Investments in rabbi trust $ 2,055 $ 2,055 $ — $ —

7 unchanged sentences

During 2024 and 2023, the Company measured non-financial assets for impairment using continuing and projected future cash flows, which were based on significant inputs not observable in the market and thus represented a level 3 fair value measurement.

The Company did not recognize any impairment charges in the first quarter of fiscal 2024, compared to $ 0.7 million recognized in the first quarter of fiscal 2023.

During the second quarter of fiscal 2024, we impaired long-lived assets at two restaurant locations that we closed during the quarter with a carrying value of approximately $ 3.1 million.

We determined the fair value of these long-lived assets to be $ 0.9 million as a result of the closures, resulting in a $ 1.1 million impairment charge and a $ 1.1 million decrease in right of use assets due to remeasurement.

During the first half of fiscal 2023, we impaired long-lived assets at four restaurant locations and the closed corporate office with carrying values of $ 12.4 million.

We determined the fair value of these long-lived assets to be $ 10.0 million, resulting in impairment charges of $ 2.4 million during the quarter and year to date periods ended July 9, 2023.

Disclosures of Fair Value of Other Assets and Liabilities

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

As of April 21, 2024, the fair value of the credit facility was approximately $ 165.4 million and the principal amount carrying value was $ 167.9 million.

The credit facility term loan is reported net of $ 6.0 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of April 21, 2024.

As of July 14, 2024, the fair value of the credit facility was approximately $ 168.3 million and the principal amount carrying value was $ 167.9 million.

The credit facility term loan is reported net of $ 5.6 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of July 14, 2024.

The carrying value of the credit facility was $ 189.1 million and the fair value of the credit facility was $ 186.9 million as of December 31, 2023.

6 unchanged sentences

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

As of July 14, 2024, we had reserves of $ 8.1 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.

3 unchanged sentences

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 April 21, 2024, we had reserves of $ 9.2 million for loss contingencies include 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 ultimately may be subject to greater or less than the accrued amount for this and other matters.

As of April 21, 2024, we had non-cancellable purchase commitments primarily related to certain vendors who provide food and beverages and other supplies to our restaurants, for an aggregate of $ 215.6 million.

As of July 14, 2024, we had non-cancellable purchase commitments primarily related to certain vendors who provide food and beverage and other supplies to our restaurants, for an aggregate of $ 202.2 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

Subsequent to the second quarter of fiscal 2024, the Company entered into the Second Amendment to our Credit Agreement (the “Second Amendment”).

The Second Amendment amends the Credit Agreement to, among other things:

• increase the required Maximum Net Total Leverage Ratio beginning in the third fiscal quarter of 2024 through the third fiscal quarter of 2025;

• increase the aggregate revolving commitments by $ 15.0 million to $ 40.0 million on the Second Amendment effective date through the third fiscal quarter of 2025;

• remove the variable Pricing Grid and increase the Applicable Margin on all Term Loans and Revolving Facility Loans that are SOFR Loans to 7.50 % per annum and that are ABR Loans to 6.50 % per annum;

• add certain additional reporting requirements.

In conjunction with the Second Amendment, the Company paid certain customary amendment fees to the lenders under the credit facility totaling approximately $ 2.9 million.

Terms in this section that are capitalized but not defined have the meanings given to them in the Second Amendment.

The summary description of the Second Amendment does not purport to be complete and is qualified in its entirety to the full text of the Second Amendment, which is attached hereto as Exhibit 10.6 and is incorporated by reference herein.

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