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Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-02-28 · 230 added, 272 removed, 720 unchanged (41% of the section changed)

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Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders' (Deficit) Equity

Consolidated Statements of Stockholders' Equity (Deficit)

Consolidated Statements of Cash Flows

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The estimate of cash flows is based upon, among other things, certain assumptions about expected future operating performance, including assumptions of future revenue trends.

If the sum of the undiscounted cash flows is less than the carrying value of the asset, an impairment loss is recognized and measured as the amount by which the carrying value exceeds the fair value of the asset.

We identified the evaluation of long-lived asset impairment as a critical audit matter because of the significant judgments made by management to estimate the undiscounted cash flows, including assumptions about expected future operating performance, and the fair value of the lease assets.

This required a high degree of auditor judgment and an increased extent of effort, when performing audit procedures to evaluate whether management appropriately identified and evaluated potential impairment indicators, and when evaluating the reasonableness of management’s estimates and assumptions, particularly related to undiscounted cash flows and market rent.

If the sum of the cash flows is less than the carrying value of the asset, an impairment loss is recognized and measured as the amount by which the carrying value exceeds the fair value of the asset.

We identified the evaluation of long-lived asset impairment as a critical audit matter because of the significant judgments made by management to estimate the cash flows, including assumptions about expected future operating performance, and the fair value of the lease assets.

This required a significant degree of auditor judgment and an increased extent of effort, when performing audit procedures to evaluate whether management appropriately identified and evaluated potential impairment indicators, and when evaluating the reasonableness of management’s estimates and assumptions, particularly related to cash flows and market rent.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the impairment of long-lived assets included the following, among others:

• We tested the operating effectiveness of internal controls over the Company’s assessment and evaluation of potential impairment indicators for long-lived assets and over forecasted undiscounted cash flows and market rent used in their recoverability and impairment analyses.

• We tested the design and operating effectiveness of internal controls over the Company’s assessment and evaluation of potential impairment indicators for long-lived assets and over forecasted cash flows and market rent used in their recoverability and impairment analyses.

• We evaluated the reasonableness of the Company’s evaluation of impairment indicators by:

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• We tested the mathematical accuracy of management’s calculations and the underlying source of information for a selection of restaurant sites.

• We evaluated the reasonableness of the information in the Company’s forecasted undiscounted cash flows used in their recoverability and impairment analyses, by comparing the forecasts to

• We evaluated the reasonableness of the information in the Company’s forecasted cash flows used in their recoverability and impairment analyses, by comparing the forecasts to:

◦ Historical actual information,

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◦ Forecasted information included in analyst and industry reports for the Company.

• We evaluated the Company’s forecasted undiscounted and discounted cash flows for consistency with evidence obtained in other areas of the audit.

• We evaluated the Company’s forecasted cash flows for consistency with evidence obtained in other areas of the audit.

• With the assistance of our fair value specialists, we evaluated the market rent by developing a range of independent estimates and comparing those to the market rent used by management.

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Intangible assets, net 11,064 15,491

Assets held for sale

Other assets, net 13,662 11,795

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Current portion of operating lease liabilities 50,083 43,819

Current portion of long-term debt — 3,375

Accrued liabilities and other current liabilities 46,201 49,498

Accrued liabilities and other

42,931 46,201

Total current liabilities 189,552 186,337

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Total liabilities 725,583 762,376

Stockholders' (deficit) equity:

Commitments and contingencies (see Note 12.

Commitments and Contingencies)

Stockholders' equity (deficit):

Common stock;

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Accumulated deficit ( 152,959 ) ( 75,418 )

Total stockholders' (deficit) equity ( 20,442 ) 1,789

Total liabilities and stockholders' (deficit) equity $ 741,934 $ 832,145

Total stockholders' equity (deficit)

( 84,269 ) ( 20,442 )

Total liabilities and stockholders' equity (deficit)

$ 641,314 $ 741,934

See Notes to Consolidated Financial Statements.

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Pre-opening costs — 587 568

Other charges (gains), net (includes $ 128 , $( 3,299 ), and $ 0 of stock-based compensation)

Impairment and other charges (gains), net

33,848 ( 2,663 ) 38,961

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Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 456 ) 18,068 ( 16,063 ) — — 2,005

Acquisition of treasury stock — — 862 ( 9,960 ) — — — ( 9,960 )

Non-cash stock compensation — — — — 6,940 — — 6,940

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Balance, December 31, 2023 20,449 20 4,921 ( 174,702 ) 229,680 ( 22 ) ( 75,418 ) ( 20,442 )

Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 456 ) 18,068 ( 16,063 ) — — 2,005

Acquisition of treasury stock — — 862 ( 9,960 ) — — — ( 9,960 )

Issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 274 ) 9,765 ( 10,065 ) — — ( 300 )

Non-cash stock compensation — — — — 6,961 — — 6,961

Net loss — — — — — — ( 77,541 ) ( 77,541 )

Common stock issuance 1,601 2 — — 7,091 — — 7,093

Other comprehensive loss — — — — — ( 40 ) — ( 40 )

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Depreciation and amortization 57,729 66,190 76,245

Gift card breakage ( 9,874 ) ( 13,807 ) ( 5,022 )

Asset impairment 32,838 9,130 38,534

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Gain on sale of property ( 7,425 ) ( 30,137 ) ( 9,204 )

Amortization of debt issuance costs 2,032 3,530 3,032

Other, net 2,353 1,238 3,817

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Cash Flows From Financing Activities:

Borrowings of long-term debt — 297,151 192,500

Payments of long-term debt and capital leases ( 25,755 ) ( 266,519 ) ( 188,845 )

Proceeds from borrowings on revolving credit facilities

84,500 — 97,151

Repayments of borrowings on revolving credit facilities

( 64,500 ) ( 15,000 ) ( 264,227 )

Proceeds from borrowings on term loan

Repayments of borrowings on term loan

( 21,232 ) ( 9,857 ) ( 1,000 )

Repayments of finance lease obligations

( 923 ) ( 898 ) ( 1,292 )

Proceeds from borrowings for insurance premium financing

Repayments of borrowings for insurance premium financing

( 3,619 ) — —

Purchase of treasury stock — ( 9,960 ) —

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Proceeds related to real estate sale

Proceeds from issuance of common stock, net of stock issuance costs 7,093 — —

(Uses) proceeds from other financing activities, net ( 299 ) 2,003 ( 86 )

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(b) Basis of Presentation and Principles of Consolidation

The consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States and include the accounts of Red Robin and its wholly owned subsidiaries after elimination of all intercompany accounts and transactions.

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

Year-end dates and the number of weeks in each fiscal year are shown in the table below for periods presented in the consolidated financial statements and for the upcoming fiscal year.

The accompanying Consolidated Financial Statements include the accounts of Red Robin and its wholly owned subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Fiscal Year Year End Date Number of Weeks in Fiscal Year

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2026 December 27, 2026 52

Subsequent to the issuance of the Company’s financial statements as of and for the year ended December 25, 2022, and as previously disclosed in our Form 10-Q, 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 $ 1.1 million for the year ended December 25, 2022 and $ 0.4 million for the year ended December 26, 2021.

The period (rollover) impact of the error correction on net income (loss) for the year ended December 25, 2022 and December 26, 2021 increased net loss by $ 1.1 million and $ 0.4 million, respectively, and the cumulative impact of the error correction on unearned revenue was an increase of $ 3.6 million.

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

However, correcting the cumulative effect of the error in the fifty-three weeks ended December 31, 2023 would have had a significant effect on the results of operations for such periods.

Therefore, the Company has corrected the Consolidated Financial Statements for the prior periods presented in the Form 10-K filing for the year ended December 31, 2023.

Additionally, comparative prior period amounts in the applicable Notes to the Consolidated Financial Statements have been restated.

The following tables reflect the effects of the correction on all affected line items of the Company's previously reported Consolidated Financial Statements presented in this Form 10-K:

CORRECTED CONSOLIDATED BALANCE SHEETS

December 25, 2022

(in thousands) As Previously Reported Adjustment As Corrected

Unearned revenue $ 43,358 $ 3,586 $ 46,944

Total current liabilities 216,627 3,586 220,213

Total liabilities 826,770 3,586 830,356

Accumulated deficit ( 50,604 ) ( 3,586 ) ( 54,190 )

Total stockholders' equity (deficit) 5,375 ( 3,586 ) 1,789

CORRECTED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Fifty-Two Weeks Ended December 25, 2022

(in thousands) As Previously Reported Adjustment As Corrected

Restaurant revenue $ 1,230,318 $ ( 129 ) $ 1,230,189

Franchise and other revenues 16,993 ( 954 ) 16,039

Total revenues 1,266,617 ( 1,083 ) 1,265,534

Loss before income taxes ( 77,053 ) ( 1,083 ) ( 78,136 )

Net loss ( 77,800 ) ( 1,083 ) ( 78,883 )

Net loss per share ( 4.91 ) ( 0.07 ) ( 4.98 )

Total comprehensive loss ( 77,835 ) ( 1,083 ) ( 78,918 )

OTHER NON-GAAP INFORMATION:

Adjusted EBITDA 52,789 ( 679 ) 52,110

CORRECTED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY

Fifty-Two Weeks Ended December 25, 2022

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

As Previously Reported

Balance, December 26, 2021 $ 27,196 $ 76,974

Net loss ( 77,800 ) ( 77,800 )

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

Balance, December 26, 2021 ( 2,503 ) ( 2,503 )

Net loss ( 1,083 ) ( 1,083 )

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

Balance, December 26, 2021 24,693 74,471

Net loss ( 78,883 ) ( 78,883 )

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

CORRECTED CONSOLIDATED STATEMENTS OF CASH FLOWS

Fifty-Two Weeks Ended December 25, 2022

(in thousands) As Previously Reported Adjustment As Corrected

Net loss $ ( 77,800 ) $ ( 1,083 ) $ ( 78,883 )

Gift card breakage ( 14,761 ) 954 ( 13,807 )

Unearned revenue 3,906 129 4,035

CORRECTED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Fifty-Two Weeks Ended December 26, 2021

(in thousands) As Previously Reported Adjustment As Corrected

Restaurant revenue $ 1,137,733 $ ( 90 ) $ 1,137,643

Franchise and other revenues 7,109 ( 351 ) 6,758

Total revenues 1,162,078 ( 441 ) 1,161,637

Loss before income taxes ( 50,154 ) ( 441 ) ( 50,595 )

Net loss ( 50,002 ) ( 441 ) ( 50,443 )

Net loss per share ( 3.19 ) ( 0.03 ) ( 3.22 )

Total comprehensive loss ( 49,997 ) ( 441 ) ( 50,438 )

OTHER NON-GAAP INFORMATION:

Adjusted EBITDA 63,526 ( 441 ) 63,085

CORRECTED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY

Fifty-Two Weeks Ended December 26, 2021

(in thousands) Retained Earnings Total Shareholders' Equity

As Previously Reported

Balance, December 27, 2020 $ 77,198 $ 120,713

Net loss ( 50,002 ) ( 50,002 )

Balance, December 26, 2021 27,196 76,974

Balance, December 27, 2020 ( 2,063 ) ( 2,063 )

Net loss ( 441 ) ( 441 )

Balance, December 26, 2021 ( 2,503 ) ( 2,503 )

Balance, December 27, 2020 75,135 118,650

Net loss ( 50,443 ) ( 50,443 )

Balance, December 26, 2021 $ 24,693 $ 74,471

CORRECTED CONSOLIDATED STATEMENTS OF CASH FLOWS

Fifty-Two Weeks Ended December 26, 2021

(in thousands) As Previously Reported Adjustment As Corrected

Net loss $ ( 50,002 ) $ ( 441 ) $ ( 50,443 )

Gift card breakage ( 5,373 ) 351 ( 5,022 )

Unearned revenue 9,449 90 9,539

(d) Reclassifications

Certain amounts presented have been reclassified within the December 25, 2022 Consolidated Balance Sheet, Note 7.

Accrued Payroll and Payroll-Related Liabilities, and Accrued Liabilities and Other Current Liabilities, and Note 11.

Income Taxes to conform with the current period presentation.

The reclassifications had no effect on the Company’s total balances.

Additionally, certain amounts have been reclassified in Note 4.

Other Charges (Gains), net for December 25, 2022 and December 26, 2021 to conform with the current period presentation, with no aggregate effect.

(e) Use of Estimates

Certain amounts presented have been reclassified within the current period presentation.

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

We made adjustments to the Consolidated Statements of Cash Flows to disaggregate borrowing and repayment activity on long term debt and finance lease obligations, to reclassify gift card breakage within unearned revenue, and to reclassify amortization of debt issuance costs within other, net.

(d) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Actual results could differ from those estimates.

(f) Summary of Significant Accounting Policies

(e) 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.

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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.

Red Robin Royalty™ deferred revenue primarily relates to a program in which registered members earn an award for a free entrée for every nine entrées purchased.

Registered members can also earn an award if they visit a Red Robin restaurant 5 separate times within 5 weeks of joining our Royalty™ program.

We recognize the current sale of an entrée and defer a portion of the revenue to reflect partial prepayment for the future entrée the member is entitled to receive.

We estimate the future value of the award based on the historical average value of redemptions.

We also estimate what portion of registered members are not likely to reach the ninth purchase or fifth visit based on historical activity and recognize the revenue related to those purchases from deferred revenue.

We recognize the deferred revenue in restaurant revenue on earned rewards when the Company satisfies its performance obligation at redemption, or upon expiration.

We compare the estimate of the value of future awards to historical redemptions to evaluate the reasonableness of the deferred amount.

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, area development fees, 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.

Red Robin franchisees are required t o remit 4.0 % to 5.0 % of their revenues as royalties to the Company and contribute up to 3.0 % of revenues to two national advertising funds.

The Com pany 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 Loss in accordance with ASC Topic 606, Revenue from Contracts with Customers .

The Company also provides its franchisees with management expertise, training, pre-opening assistance, and restaurant operating assistance in exchange for area development fees and franchise fees.

The Company capitalizes these fees upon collection from the franchisee, which then amortize over the contracted franchise term as the services comprising the performance obligation are satisfied.

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.

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Accounts Receivable, Net - Accounts receivable, net consists primarily of third-party gift card receivables, third party delivery partner receivables, trade receivables due from franchisees for royalties and advertising fund contributions, and tenant improvement allowances.

At the end of 2023, there was approximately $ 9.7 million of gift card receivables in accounts receivable related to gift cards that were sold by third party retailers compared to $ 11.6 million at the end of 2022.

At the end of 2023, there was also approximately $ 2.6 million related to third party delivery partners in accounts receivable compared to approximately $ 2.3 million at the end of 2022.

At the end of fiscal 2024, there was approximately $ 9.2 million of gift card receivables in accounts receivable related to gift cards that were sold by third party retailers compared to $ 9.7 million at the end of fiscal 2023.

At the end of 2024, there was also approximately $ 2.2 million related to third party delivery partners in accounts receivable compared to approximately $ 2.6 million at the end of fiscal 2023.

Inventories - Inventories consist of food, beverages, and supplies valued at the lower of cost (first-in, first-out method) or net realizable value.

At the end of 2023 and 2022, food and beverage inventories were $ 9.4 million and $ 10.1 million, respectively, and supplies inventories were $ 17.4 million and $ 16.3 million, respectively.

At the end of fiscal 2024 and 2023, food and beverage inventories were $ 9.2 million and $ 9.4 million, respectively, and supplies inventories were $ 17.5 million and $ 17.4 million, respectively.

Property and Equipment, Net - Property and equipment are recorded at cost.

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Computer equipment 2 years to 5 years

The Company capitalizes certain overhead related to the development and construction of its new restaurants as well as certain information technology infrastructure upgrades.

The Company capitalizes certain overhead related to the development and construction of its new restaurants as well as certain information technology capital investments.

Costs incurred for the potential development of restaurants that are subsequently terminated are expensed.

Cloud Computing Arrangements - The Company capitalizes cloud computing implementation costs and amortizes these costs on a straight-line basis over the term of the related service agreement, including renewal periods that are reasonably certain to be exercised.

Capitalized cloud computing implementation costs were $ 1.2 million and $ 0.7 million, net of accumulated amortization, as of December 29, 2024 and December 31, 2023, respectively.

These costs are included in prepaid expenses and other current assets and other assets in our consolidated balance sheets.

Related amortization expense was $ 0.5 million, $ 0.4 million, and $ 0.1 million for the years ended December 29, 2024, December 31, 2023, and December 25, 2022, respectively, and is included in selling, general and administrative expenses in our consolidated statements of operations and comprehensive loss.

Leases - The Company leases land, buildings, and equipment used in its operations under operating and finance leases.

Our leases generally have remaining terms of 1 - 15 years, most of which include options to extend the leases for additional 5 -year periods.

Our leases generally have remaining terms of 1 - 15 years, most of which include options to extend the leases for additional five -year periods.

Generally, the lease term is the minimum of the non-cancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years.

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The costs of purchasing transferable liquor licenses through open markets in jurisdictions with a limited number of authorized liquor licenses are capitalized as indefinite-lived intangible assets.

Impairment of Long-Lived Assets - The Company reviews its long-lived assets, including restaurant sites, leasehold improvements, other fixed assets, information technology systems, right of use assets, and amortizable intangible assets for

impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets.

Impairment of Long-Lived Assets - The Company reviews its long-lived assets, including restaurant sites, leasehold improvements, information technology systems, right of use assets, and amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Recoverability of

assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the assets.

Identifiable cash flows are measured at the lowest level for which they are largely independent of the cash flows of other groups of assets and liabilities, generally at the restaurant-level.

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Information technology systems, such as internal-use computer software, are reviewed and tested for recoverability if the internal-use computer software is not expected to provide substantive service potential, a significant change occurs in the extent or manner in which the software is used or is expected to be used, a significant change is made or will be made to the software program, or costs of developing or modifying internal-use software significantly exceed the amount originally expected to develop or modify the software.

Other Assets, net - Other assets, net consist primarily of assets related to various deposits, the employee deferred compensation plan, and unamortized debt issuance costs on the revolving Credit Facility.

Debt issuance costs on the revolving Credit Facility are capitalized and amortized to interest expense on a straight-line basis which approximates the effective interest rate method over the term of the Company's long-term debt.

Advertising - Under the Company's franchise agreements, both the Company and the franchisees must contribute up to 3.0 % of revenues to two national media advertising funds (the "Advertising Funds").

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Primary advertising channels include television advertising, digital media, social media programs, email, loyalty, and public relations initiatives.

Total advertising costs of $ 21.6 million, $ 35.7 million, and $ 34.3 million in 2023, 2022, and 2021 and were included in Selling, general, and administrative expenses.

Total advertising costs of $ 23.5 million, $ 21.6 million, and $ 35.7 million in fiscal 2024, 2023, and 2022 and were included in Selling, general, and administrative expenses.

Advertising production costs are expensed in the period when the advertising first takes place.

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The Company records interest and penalties associated with audits as a component of income before taxes.

Penalties are recorded in Selling, general, and administrative expenses, interest received is recorded in Interest income and other, net, and interest paid is recorded in Interest expense on the consolidated statements of operations and comprehensive loss.

The Company recorded immaterial penalty and interest expense on the identified tax liabilities in 2023, 2022, and 2021.

The Company recorded immaterial penalty and interest expense on the identified tax liabilities in fiscal 2024, 2023, and 2022.

Loss Per Share - Basic loss per share amounts are calculated by dividing net loss by the weighted average number of common shares outstanding during the year.

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GAAP, are excluded from net income.

Other comprehensive (loss) income as presented in the consolidated statements of operations and comprehensive loss for 2023, 2022, and 2021 consisted of the foreign currency translation adjustment resulting from the Company's Canadian franchise operations.

Other comprehensive (loss) income as presented in the consolidated statements of operations and comprehensive loss for fiscal 2024, 2023, and 2022 consisted of the foreign currency translation adjustment resulting from the Company's Canadian franchise operations.

Stock-Based Compensation - The Company maintains several equity incentive plans under which it may grant stock options, stock appreciation rights, restricted stock, stock variable compensation, or other forms of awards granted or denominated in the Company's common stock or units of the Company's common stock, as well as cash variable compensation awards to employees, non-employees, directors, and consultants.

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Fluctuations in the market value of the investments held in the trust result in the recognition of deferred compensation expense or income reported in Selling, general, and administrative expenses and recognition of investment gain or loss reported in Interest income and other, net, in the consolidated statements of operations and comprehensive loss.

Foreign Currency Translation - The Canadian Dollar is the functional currency for our Canadian entity operations.

Assets and liabilities denominated in Canadian Dollars are translated into U.S.

Dollars at exchange rates in effect as of the balance sheet date.

Income and expense accounts are translated using the average exchange rates prevailing throughout the period.

The resulting translation adjustment is recorded as a separate component of Other comprehensive (loss) income.

Recent Accounting Pronouncements

In December 2023, FASB issued Update 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

This update amends disclosure requirements to 1) improve the effectiveness and comparability of disclosures by aligning with U.S.

Securities and Exchange Commission (SEC) Regulation S-X 210.4-08(h), Rules of General Application—General Notes to Financial Statements:

Income Tax Expense, and removing disclosures that no longer are considered cost beneficial or relevant;

and 2) improve the transparency of income tax disclosures related to the rate reconciliation and income taxes paid disclosures by requiring (a) consistent categories and greater disaggregation of information in the rate reconciliation and (b) income taxes paid disaggregated by jurisdiction.

These amendments apply to all entities that are subject to Topic 740, Income Taxes, and will become effective for public business entities for annual periods beginning after December 15, 2024.

expect these amended disclosures will have a material impact to the Company's Consolidated Financial Statements or Notes to the Consolidated Financial Statements upon adoption.

In November 2024, the FASB issued Update 2024-03 which expands disclosures about specific expense categories presented on the face of the income statement.

Update 2024-03 is effective for financial statements issued for annual periods beginning after December 15, 2026, with early adoption permitted.

The Company is evaluating the impact of the adoption of Update 2024-03 to the consolidated financial statements.

In December 2023, the FASB issued Update 2023-09 to improve income tax disclosure requirements, primarily related to rate reconciliations and income taxes paid.

Update 2023-09 is effective for financial statements issued for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company is evaluating the impact of the adoption of Update 2023-09 to the consolidated financial statements.

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

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Gift card revenue $ 16,782 $ 19,224 $ 24,109

Other Charges (Gains), net

Other charges consist of the following (in thousands):

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):

December 29, 2024 December 31, 2023

Unearned Royalty Revenue, beginning balance $ 7,509 $ 11,107

Revenue deferred 4,817 6,870

Revenue recognized (1)

( 9,576 ) ( 10,468 )

Unearned Royalty revenue, ending balance $ 2,750 $ 7,509

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

Impairment and Other Charges (Gains), net

Impairment and other charges consist of the following (in thousands):

December 29, 2024 December 31, 2023 December 25, 2022

Asset impairment $ 9,130 $ 38,534 $ 7,052

Gain on sale of restaurant property, net of expenses ( 29,543 ) ( 9,204 ) —

Severance and executive transition, net of $ 128 and $( 3,299 ) in stock-based compensation

Asset impairment and restaurant closure costs, net $ 34,080 $ 12,192 $ 39,362

Gain on sale of restaurant property ( 7,425 ) ( 29,543 ) ( 9,204 )

Severance and executive transition

1,181 3,419 2,280

Other financing costs — — 1,462

Restaurant closure costs, net 3,062 828 6,276

Closed corporate office costs, net of sublease income 416 475 —

Litigation contingencies 1,037 9,140 4,148

Asset disposal and other 1,713 438 1,416

Other charges (gains), net $ ( 2,663 ) $ 38,961 $ 16,074

Asset Impairment

During 2023, the Company recognized non-cash impairment charges of $ 9.1 million, primarily related to the impairment of the long-lived assets at 19 underperforming locations and quota state liquor licenses at three locations.

During 2022, the Company recognized non-cash impairment charges of $ 38.5 million, primarily related to impairments of long-lived assets at 46 underperforming locations and quota state liquor licenses at six locations.

During 2021, the Company recognized non-cash impairment charges of $ 7.1 million, primarily related to impairments of long-lived assets at 10 underperforming locations and quota state liquor licenses at seven locations.

Asset disposal and other, net

4,975 2,129 913

Impairment and other charges (gains), net $ 33,848 $ ( 2,663 ) $ 38,961

Asset Impairment and Restaurant Closure Costs

During fiscal 2024, the Company closed eight locations and is evaluating alternatives for approximately 70 underperforming restaurant locations, including closure upon expiration of the current lease term.

The Company recognized non-cash impairment charges of $ 32.8 million, primarily associated with this review of underperforming locations as well as impairment of quota state liquor licenses at three locations.

In addition, the Company recorded $ 1.2 million in charges associated with the eight store closures in fiscal 2024.

During fiscal 2023, the Company recognized non-cash impairment charges of $ 9.1 million, primarily related to the impairment of long-lived assets at 19 underperforming locations and quota state liquor licenses at three locations.

In addition, the Company recorded $ 3.1 million in charges associated with five closed locations.

During fiscal 2022, the Company recognized non-cash impairment charges of $ 38.5 million, primarily related to impairments of long-lived assets at 46 underperforming locations and quota state liquor licenses at six locations.

In addition, the Company recorded $ 0.8 million in costs associated with 16 closed locations during fiscal 2022.

Severance and Executive Transition

During fiscal 2024, 2023, and 2022, the Company incurred severance and executive transition costs primarily related to a reduction in force of Team Members and costs associated with changes in leadership positions.

Gain on Sale of Restaurant Property

During 2023, the Company sold 18 restaurant properties for aggregate net proceeds of $ 58.8 million in sale-leaseback transactions that resulted in a gain, net of expenses of $ 29.4 million.

In addition, during 2023, the Company sold one restaurant property for total proceeds of $ 1.6 million which resulted in a gain, net of expenses of $ 0.1 million.

During fiscal 2024, the Company sold ten restaurant properties for aggregate net proceeds of $ 23.3 million in a sale-leaseback transaction that resulted in a gain, net of expenses of $ 7.4 million.

The net proceeds are included within cash flows from investing activities on the Consolidated Statements of Cash Flows for the year ended December 29, 2024.

During 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 in the second quarter of 2022, which represented a portion of the total consideration received from the sale.

During the 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 Consolidated Statements of Cash Flows for the year ended December 25, 2022.

Severance and Executive Transition

During 2023 and 2022, the Company incurred severance and executive transition costs primarily related to a reduction in force of Team Members and costs associated with changes in leadership positions.

Accrued Payroll and Payroll-Related Liabilities, and Accrued Liabilities and Other Current Liabilities.

Other Financing Costs

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.

Restaurant Closure Costs, net

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

Closed Corporate Office Costs, Net of Sublease Income

Closed corporate office, net of sublease income relates to a corporate office facility that was vacated in 2022, and subleased in 2023.

During fiscal 2023, the Company sold 18 restaurant properties for aggregate net proceeds of $ 58.8 million in sale-leaseback transactions that resulted in a gain, net of expenses of $ 29.4 million.

In addition, during 2023, the Company sold one restaurant property for net proceeds of $ 1.5 million which resulted in a gain, net of expenses of $ 0.1 million.

The net proceeds are included within cash flows from investing activities on the Consolidated Statements of Cash Flows for the year ended December 31, 2023.

During fiscal 2022, the Company sold one restaurant property for aggregate net proceeds of $ 12.4 million in a short-term sale-leaseback transaction that resulted in a gain, net of expenses of $ 9.2 million.

The net proceeds are included within cash flows from investing and financing activities on the Consolidated Statements of Cash Flows for the year ended December 25, 2022.

Litigation Contingencies

In 2023, 2022 and 2021, the Company recorded reserves associated with litigation contingencies.

In fiscal 2024, 2023, and 2022, the Company recorded reserves associated with litigation contingencies.

Commitments and Contingencies, for further discussion.

Asset Disposal and Other

Asset disposals and other relate primarily to lease terminations and closures at Company-owned restaurants in 2023.

The costs in 2022 and 2021 primarily relate to COVID-19 costs, including the cost of personal protective equipment for restaurant Team Members and Guests and providing emergency sick pay to restaurant Team Members during the pandemic.

Asset disposal and other primarily relates to lease terminations and closures of restaurants and corporate office locations, asset disposals, strategic projects and other non-recurring items.

Property and Equipment, Net

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Property and equipment, net $ 181,224 $ 261,258

Depreciation and amortization expense on property and equipment was $ 63.8 million in 2023, $ 73.7 million in 2022, and $ 80.5 million in 2021.

Depreciation and amortization expense on property and equipment was $ 55.4 million in 2024, $ 63.8 million in fiscal 2023, and $ 73.7 million in fiscal 2022.

Intangible Assets

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Intangible assets, net $ 73,036 $ ( 61,972 ) $ 11,064 $ 75,163 $ ( 59,673 ) $ 15,491

The aggregate amortization expense related to intangible assets subject to amortization for 2023, 2022, and 2021 was $ 2.4 million, $ 2.5 million, and $ 2.9 million.

The aggregate amortization expense related to intangible assets subject to amortization for fiscal 2024, 2023, and 2022 was $ 2.3 million, $ 2.4 million, and $ 2.5 million.

The estimated aggregate future amortization expense as of December 29, 2024 is as follows (in thousands):

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December 29, 2024 December 31, 2023

CARES Act deferred payroll tax $ — $ 8,780

State and city sales tax payable $ 6,224 $ 7,830

Real estate, personal property, state income, and other taxes payable 6,933 7,067

General liability insurance 6,204 5,815

Utilities 3,016 2,929

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Current portion of finance lease liabilities 1,019 939

Accrued severance 184 2,505

Accrued termination benefits

Other 6,237 7,001

Accrued liabilities and other current liabilities $ 42,931 $ 46,201

Accrued severance represents one-time termination benefits primarily related to changes in leadership positions as a result of our strategic pivot under the North Star plan and a related reduction in force and are accounted for in accordance with ASC Topic 420, Exit or Disposal Cost Obligations .

The Company incurred a cumulative total of $ 5.1 million in one-time termination benefits in Other charges in the Consolidated Statements of Operations and Comprehensive Loss, which is comprised of $ 2.1 million and $ 3.0 million recognized during 2023 and 2022, respectively.

Accrued termination benefits represents one-time termination benefits primarily related to changes in leadership positions as a result of our strategic pivot under the North Star plan and a related reduction in force and are accounted for in accordance with ASC Topic 420, Exit or Disposal Cost Obligations .

The Company incurred a cumulative total of $ 5.1 million in one-time termination benefits, which is comprised of $ 0 , $ 2.1 million, and $ 3.0 million recognized during fiscal 2024, 2023, and 2022, respectively, and included in Impairment and other charges (gains) in the Consolidated Statements of Operations and Comprehensive Loss.

One-time termination benefits activity for the years ended December 31, 2023 and December 29, 2024, respectively is as follows:

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Balance as of December 31, 2023

Charges 2,077

Cash Payments ( 184 )

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Term loan 169,470 12.21 % 189,143 11.62 %

Notes payable — 875

Total borrowings 189,470 189,143

unamortized debt issuance costs and discounts (1)

current portion of long-term debt — 3,375

Long-term debt $ 181,641 $ 182,594

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

$ 1,298 $ 752

(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 Consolidated Balance Sheets.

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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.

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.

As of December 25, 2022, the Company had outstanding borrowings under the Credit Facility of $ 205.7 million, in addition to amounts issued under letters of credit of $ 9.1 million.

As of December 29, 2024, the Company had outstanding borrowings under the Credit Facility of $ 181.6 million, including $ 20.0 million drawn on its revolving line of credit.

As of December 31, 2023, the Company had outstanding borrowings under the Credit Facility of $ 182.6 million, with no amounts drawn on its revolving line of credit.

In addition, the Company had amounts issued under letters of credit of $ 8.5 million and $ 7.7 million as of December 29, 2024 and December 31, 2023, respectively.

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.

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On March 4, 2022, Red Robin International, Inc., the Company, and the guarantors also entered into a Pledge and Security Agreement (the “Security Agreement”) granting to the Administrative Agent a first priority security interest in substantially all of the assets of the borrower and the guarantors to secure the obligations under the Credit Agreement.

This new Security Agreement replaced the existing security agreement, dated January 10, 2020, which was entered into in connection with the Prior Credit Agreement.

Red Robin International, Inc., as the borrower is obligated to pay customary fees to the agents, lenders and issuing banks under the Credit Agreement with respect to providing, maintaining, or administering, as applicable, the credit facilities.

In connection with entry into the new Credit Agreement, the Company’s Prior Credit Agreement was terminated.

In connection with such termination and new borrowings under the new Credit Agreement, the Company paid off all outstanding borrowings, accrued interest, and fees under the Prior Credit Agreement.

On July 17, 2023, the Company amended the Credit Agreement (the “Credit Agreement Amendment”) to remove the previously included $ 50.0 million aggregate cap (the “Prior Cap”) on sale-leasebacks of Company-owned real property.

Pursuant to the Credit Agreement Amendment, it also was agreed that (i) the Company may reinvest in the business within 360 days of receipt the net proceeds of sale-leasebacks to the extent that such proceeds are equal to or less than the amount of the Prior Cap and (ii) the Company shall make a mandatory prepayment with the net proceeds of sale-leasebacks to the extent that such proceeds exceed the amount of the Prior Cap.

Additionally, the prepayment premium associated with any mandatory prepayments derived from the net proceeds of sale-leasebacks that exceed the Prior Cap was reduced by the Credit Agreement Amendment to a premium equal to 50 % of the prepayment premium otherwise applicable.

The Amendment also made certain other conforming changes to the Existing Credit Agreement to effect the foregoing.

The summary descriptions of the Credit Agreement, the Security Agreement, and the Credit Agreement Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of each agreement, each of which is filed as an exhibit to this Annual Report on Form 10-K.

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.

On July 17, 2023, the Company amended the Credit Agreement (the “First Amendment”) to, among other things, remove the previously included $ 50.0 million aggregate cap on sale-leasebacks of Company-owned real property that are permitted under the Credit Agreement, subject to certain conditions set forth in the Credit Agreement.

On August 21, 2024, the Company entered into the second amendment to the Credit Agreement (the “Second Amendment”).

The Second Amendment, among other things, provides certain relief from the financial covenant by increasing the required maximum net total leverage ratio beginning in the third quarter of 2024 through the end of the third quarter of 2025;

increases the aggregate revolving commitments by $ 15.0 million to $ 40.0 million through the end of the third quarter of 2025;

removes the variable pricing grid and increases the applicable margin on all term loans and revolving loans that are SOFR-based loans to 7.50 % per annum and that are ABR-based loans to 6.50 % per annum;

and adds certain additional reporting requirements.

On November 4, 2024, the Company entered into the third amendment to the Credit Agreement (the "Third Amendment").

The Third Amendment extended the provisions of the Second Amendment through the end of the first fiscal quarter of 2026.

In conjunction with the execution of the Second Amendment and Third Amendment (collectively the "2024 Amendments"), the Company paid certain customary amendment fees to the lenders under the Credit Facility totaling approximately $ 4.5 million.

The Company performed an analysis of the 2024 Amendments under ASC Topic 470, Debt, and determined that debt modification accounting was appropriate for our term loan and revolving line of credit due to the change in total capacity and the increase in applicable margin interest rates under the new amendments.

As a result, the Company capitalized $ 4.3 million of the amendment fees as deferred loan fees which will be amortized over the remaining term of the Credit Facility and expensed the remaining $ 0.2 million of fees.

The summary descriptions of the Credit Agreement, the Security Agreement, the First Amendment, the Second Amendment and the Third Amendment do not purport to be complete and are qualified in their entirety by reference to the full text of each agreement, which are listed as exhibits to this Annual Report on Form 10-K.

During fiscal 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 Consolidated Statements of Operations and Comprehensive Loss for the year ended December 25, 2022.

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These assets are measured at fair value if determined to be impaired.

During 2023, 2022, and 2021, the Company measured non-financial assets for impairment using continuing and projected future cash flows, as discussed in Note 4.

Other Charges (Gains), net, which were based on significant inputs not observable in the market and thus represented a level 3 fair value measurement.

Based on our 2023, 2022, and 2021 impairment analyses, we impaired long-lived assets at 19 , 46 and 10 locations with carrying values of $ 36.5 million, $ 80.4 million, and $ 13.7 million, respectively.

We determined the fair value of these long-lived assets in 2023, 2022, and 2021 to be $ 27.4 million, $ 42.4 million and $ 7.2 million, respectively, based on level 3 fair value measurements.

During fiscal 2024, 2023, and 2022, the Company measured non-financial assets for impairment using continuing and projected future cash flows, as discussed in Note 4.

Impairment and Other Charges (Gains), net, which were based on significant inputs not observable in the market and thus represented a Level 3 fair value measurement.

Based on our fiscal 2024, 2023, and 2022 impairment analyses, we impaired long-lived assets at 58 , 19 and 46 locations with carrying values of $ 71.3 million, $ 36.5 million, and $ 80.4 million, respectively.

We determined the fair value of these long-lived assets in fiscal 2024, 2023, and 2022 to be $ 39.4 million, $ 27.4 million and $ 42.4 million, respectively, based on Level 3 fair value measurements.

Liquor licenses with indefinite lives are reviewed for impairment annually or whenever events or changes in circumstances indicate the carrying amount may not be recoverable.

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We determine fair value based on quoted prices in the active market for the license in the same or similar jurisdictions, representing a Level 1 fair value measurement.

During the fourth quarter of 2023, the Company performed its annual review of its indefinite lived liquor licenses that had a carrying value of $ 6.2 million, and recorded impairment charges of $ 0.2 million to indefinite-lived intangibles in 2023.

Impairment charges of $ 0.5 million were recorded to liquor licenses with indefinite lives in 2022 and $ 0.5 million impairment charges were recorded in 2021.

During the fourth quarter of fiscal 2024, the Company performed its annual review of its indefinite lived liquor licenses that had a carrying value of $ 5.2 million, and recorded impairment charges of $ 1.1 million to indefinite-lived intangibles in fiscal 2024.

Impairment charges of $ 0.2 million were recorded to liquor licenses with indefinite lives in fiscal 2023 and $ 0.5 million impairment charges were recorded in fiscal 2022.

Disclosures of Fair Value of Other Assets and Liabilities

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Loss before income taxes $ ( 77,631 ) $ ( 20,918 ) $ ( 78,136 )

The expense (benefit) for income taxes for the fiscal years ended December 31, 2023, December 25, 2022, and December 26, 2021 consist of the following (in thousands):

Income tax expense (benefit) for the fiscal years ended December 29, 2024, December 31, 2023, and December 25, 2022 consist of the following (in thousands):

2024 2023 2022

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State income taxes 3.8 4.2 4.0

FICA tip tax credits — — —

Foreign taxes versus U.S statutory rate — — —

Valuation allowance on deferred income tax assets ( 25.6 ) ( 22.3 ) ( 24.2 )

Impact of CARES Act and related method changes — — —

Other tax credits — — —

Meals and entertainment — — —

Excess stock options ( 0.8 ) ( 3.3 ) ( 1.1 )

Employee travel — — —

Other 1.7 ( 1.1 ) ( 0.7 )

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Interest expense 15,938 11,345

Property & Equipment

Other non-current deferred tax assets 1,594 2,478

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Prepaid expenses ( 1,862 ) ( 1,472 )

Advanced Payments ( 364 ) —

Other non-current deferred tax liabilities ( 7,887 ) ( 7,548 )

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The realization of deferred tax assets depends on the generation of future taxable income during the periods in which the temporary differences become deductible.

In making this determination, the Company considers all available positive and negative evidence including historical operating losses, the reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies.

In making this determination, the Company considers all available positive and negative evidence including

historical operating losses, the reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies.

In 2020, management determined that a full valuation allowance was required and has recorded a full valuation allowance as of December 29, 2024 and at December 31, 2023.

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The Company does not anticipate significant changes in the aggregate amount of unrecognized tax benefits within the next 12 months, other than nominal tax settlements.

The Company had outstanding federal and state refund claims of approximately $ 0.6 million as of December 31, 2023.

The Company expects the unrecognized tax benefits to reduce to zero during 2025.

Commitments and Contingencies

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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, administrative proceedings, and other contingencies.

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

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.

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.

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

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

As of December 31, 2023, we had reserves of $ 8.7 million for loss contingencies include within Accrued liabilities and other on our Consolidated Balance Sheet.

As of December 29, 2024, we had reserves of $ 4.4 million for loss contingencies included within Accrued liabilities and other on our Consolidated Balance Sheet.

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

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Stockholders' Deficit

On December 3, 2024 the Company entered into an Equity Purchase Agreement with JCP Investment Management, LLC and certain of its affiliates (collectively, “JCP”) and Jumana Capital, LLC and certain of its affiliates (collectively, “Jumana,” and together with the JCP Parties, the “Investor Parties”), pursuant to which the Investor Parties purchased an aggregate of 1,600,909 shares of Common Stock, at a purchase price of $ 5.19 per share, resulting in $ 8.3 million in gross proceeds.

On August 9, 2018, the Company's Board of Directors authorized an increase to the Company's share repurchase program of approximately $ 21 million to a total of $ 75 million of the Company's common stock.

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The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the Company may suspend or discontinue the repurchase program at any time.

In 2023, the Company repurchased $ 10.0 million in shares under its share repurchase program.

In fiscal 2024, the Company did no t repurchase any shares under its share repurchase program.

From the date of the current program approval through December 29, 2024, we have repurchased a total of 1,088,588 shares at an average price of $ 15.18 per share for an aggregate amount of $ 16.5 million.

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In May 2024, the Company's stockholders approved the 2024 Performance Incentive Plan (the "2024 Stock Plan").

Following the date of approval, all grants are made under the 2017 Stock Plan and no new awards may be granted under the Second Amended and Restated 2007 Performance Plan (the "2007 Stock Plan").

Following the date of approval, all grants are made under the 2024 Stock Plan and no new awards may be granted under the Second Amended and Restated 2017 Performance Incentive Plan (the "2017 Stock Plan").

The 2024 Stock Plan authorizes the issuance of stock options, stock appreciation rights (SARs), and other forms of awards granted or denominated in the Company common stock or unit of the Company's common stock, as well as cash performance awards pursuant to the plan.

Persons eligible to receive awards under the 2024 Stock Plan include officers, employees, directors, consultants, and other service providers or any affiliate of the Company.

The maximum number of shares of the Company's common stock that may be issued or transferred pursuant to awards under the 2017 Stock Plan was 630,182 shares.

The 2017 Stock Plan was amended in May 2019, and again in May 2020 to add an additional 660,000 and 275,000 shares, respectively, bringing the total maximum shares that may be issued to 1,565,182 shares as of December 31, 2023.

The maximum number of shares of the Company's common stock that may be issued or transferred pursuant to awards granted under the 2024 Stock Plan is 2,072,163 shares.

Vesting of the awards under the 2024 Stock Plan is determined at the date of grant by the plan administrator.

Each award granted under the 2017 Stock Plan and 2007 Stock Plan fully vests, becomes exercisable and/or payable, as applicable, upon a change in control event.

However, unless the individual award agreement provides otherwise, with respect to executive and certain other high level officers, upon the occurrence of a change in control, no award will vest unless such officers' employment with the Company is terminated by the Company without cause during the two years following such change in control event.

Each award granted under the 2024 Stock Plan and the 2017 Stock Plan may become exercisable and/or payable, as applicable, upon a change in control event described in the applicable Stock Plan.

Each award expires on such date as shall be determined at the date of grant;

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Vesting of awards under these plans were generally time based over a period of one year to four years .

As of December 31, 2023, 100,210 options and awards to acquire the Company's common stock remained outstanding under the 2007 Stock Plan;

As of December 29, 2024, 70,235 and 1,162,500 options and awards to acquire the Company's common stock remained outstanding under the 2007 Stock Plan and the 2017 Stock Plan, respectively;

all remaining options and awards are outstanding under the 2024 Stock Plan.

Stock-based compensation costs recognized in 2023, 2022, and 2021 were $ 6.8 million, $ 6.3 million, and $ 6.6 million with related income tax benefits of $ 0.8 million, $ 0.6 million, and $ 1.4 million.

The 2022 costs were comprised of $ 9.6 million stock-based compensation, partially offset by a $ 3.3 million reduction due to Executive Team forfeitures recorded in Other charges in the Consolidated Statements of Operations and Comprehensive Loss.

Stock-based compensation costs recognized in fiscal 2024, 2023, and 2022 were $ 6.9 million, $ 6.8 million, and $ 6.3 million with related income tax benefits of $ 0.5 million, $ 0.8 million, and $ 0.6 million.

The fiscal 2022 costs were comprised of $ 9.6 million stock-based compensation, partially offset by a $ 3.3 million reduction due to Executive Team forfeitures recorded in Impairment and other charges in the Consolidated Statements of Operations and Comprehensive Loss.

As of December 29, 2024, there was $ 9.3 million of unrecognized compensation cost, excluding estimated forfeitures.

Unrecognized compensation costs are expected to be recognized over the weighted average remaining vesting period of approximately 1.13 years for the restricted stock units ("RSU") and 1.65 years for the performance stock units ("PSU").

Unrecognized compensation costs are expected to be recognized over the weighted average remaining vesting period of approximately one year for the restricted stock units ("RSU") and 1.62 years for the performance stock units ("PSU").

There is no unrecognized compensation cost for stock options in the year ended December 29, 2024.

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The estimated fair value of each option granted is calculated using the Black-Scholes multiple option-pricing model, and expense is recognized straight line over the vesting period.

No options were granted during 2023, 2022, or 2021.

Total intrinsic value of options exercised was $ 213 thousand, $ 4 thousand, and $ 89 thousand in 2023, 2022, and 2021, respectively.

No options were granted during fiscal 2024, 2023, or 2022.

Total intrinsic value of options exercised was $ 0 , $ 213 thousand, and $ 4 thousand in fiscal 2024, 2023, and 2022, respectively.

Time-Based RSUs

During 2023, 2022, and 2021, the Company issued time-based restricted stock units ("RSUs") to certain employees as permitted under the 2017 Stock Plan.

During fiscal 2024, 2023, and 2022, the Company issued time-based restricted stock units ("RSUs") to certain participants as permitted under the 2017 Stock Plan and the 2024 Stock Plan.

The RSUs granted to employees typically vest in equal installments over three to four years .

For the Company's Board of Directors, RSUs vest in full on the earlier of the one -year anniversary of the grant date or the next annual stockholder meeting.

For the Company's non-employee directors, under the 2024 Stock Plan, RSUs vest in full on the later of fifty weeks following the date of grant and the Company's next annual meeting of stockholders.

Upon vesting, one share of the Company's common stock is issued for each RSU.

The fair value of each RSU granted is equal to the market price of the Company's stock at the date of grant, and expense is recognized straight line over the vesting period.

The table below summarizes the status of the Company's time-based RSUs under the 2017 and 2007 Stock Plans (shares in thousands):

The table below summarizes the status of the Company's time-based RSUs under the 2017 Stock Plan and 2024 Stock Plan (shares in thousands):

Restricted Stock Units

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Performance Stock Units

During 2023, 2022, and 2021, the Company granted performance stock unit awards ("PSUs") to certain employees as permitted under the 2017 Stock Plan.

During fiscal 2024, 2023, and 2022, the Company granted performance stock unit awards ("PSUs") to certain employees as permitted under the 2017 Stock Plan and the 2024 Stock Plan.

Each PSU represents the right to receive one share of the Company's common stock on the payment date.

Prior to 2020, each PSU was divided into three equal tranches with applicable performance periods, typically consisting of a fiscal year, subject to the achievement of the applicable performance goals at target and applicable vesting conditions.

Fair value of each PSU granted was equal to the market price of the Company's stock at the grant date, and expense is recognized ratably across the total performance period based on probability of achieving applicable performance goals.

PSUs remain unvested until the end of the third performance period and are forfeited in the event of termination of employment of a grantee prior to the last day of the third performance period.

Beginning in 2020, the Company began granting PSU awards based on relative total stockholder return defined as increases in the Company's stock price during a performance period of three years as compared to the total stockholder return of a group of peer companies.

The PSU awards use a performance metric based on relative total stockholder return defined as increases in the Company's stock price during a performance period of three years as compared to the total stockholder return of a group of peer companies.

Fair value of each PSU granted is determined by a Monte Carlo valuation model, and expense is recognized straight line over the performance period.

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If the relative total stockholder return target is not met, compensation cost for these PSUs is not reversed.

The table below summarizes the status of the Company's performance stock units under the 2017 Stock Plan (shares in thousands):

The table below summarizes the status of the Company's performance stock units under the 2017 Stock Plan and the 2024 Stock Plan (shares in thousands):

Performance Stock Units

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Inducement Grants

The Company granted stock-based awards to certain of the Company’s new executive officers as inducements material to their commencement of employment and entry into an employment agreement with the Company.

In prior years, the Company granted stock-based awards to certain of the Company’s new executive officers as inducements material to their commencement of employment and entry into an employment agreement with the Company.

The inducement grants were made in accordance with Nasdaq Listing Rule 5635(c)(4) and were not made under the 2017 Plan.

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Long-Term Cash Incentive Plan

Beginning in 2020, the long-term cash incentive plan is based on relative total stockholder return defined as increases in the Company's stock price during a performance period of 3 years as compared to the total stockholder return of a group of peer

Compensation is recognized variably over the 3 -year performance period based on a Monte Carlo valuation model.

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Compensation expense for awards granted before 2020 is recognized variably over the performance period based on the plan-to-date performance achievement.

All long-term cash incentive awards cliff vest after 3 years at the end of each performance cycle.

In 2023, 2022, and 2021, the Company recorded $( 0.1 ) million, $( 0.4 ) million, and $ 0.5 million, respectively in compensation expense to Selling, general, and administrative expenses in the consolidated statements of operations and comprehensive loss related to the 2017 long-term cash incentive plan.

The amounts recorded in 2023 include the reversal of the expense related to 2021 grants for which performance targets were not met.

During 2023 and 2022, there were no long-term cash incentive plan payouts.

All long-term cash incentive awards cliff vest after three years at the end of each performance cycle.

In fiscal years 2024, 2023, and 2022, the Company recorded $( 0.1 ) million, $( 0.1 ) million, and $( 0.4 ) million, respectively in compensation expense (benefit) to Selling, general, and administrative expenses in the consolidated

statements of operations and comprehensive loss related to the 2017 long-term cash incentive plan.

The amounts recorded in fiscal 2024 and fiscal 2023 include the reversal of the expense related to 2021 and 2020 grants for which performance targets were not met.

During fiscal 2024 and 2023, there were no long-term cash incentive plan payouts.

At December 29, 2024 and December 31, 2023, a $ 0.3 million and $ 0.4 million long-term cash incentive plan liability was included in Accrued payroll and payroll-related liabilities on the consolidated balance sheets.

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A corresponding change in the liability associated with the deferred compensation plan results in an offsetting deferred compensation expense, or reduction of expense, reported in Selling, general, and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss.

The Company recognized a $ 0.4 million increase in deferred compensation expense in 2023, and an increase in deferred compensation expenses of $ 0.8 million in 2022 and $ 0.7 million in 2021.

The Company recognized $ 0.3 million, $ 0.4 million, and $ 0.8 million in deferred compensation expense in fiscal 2024, fiscal 2023 and fiscal 2022, respectively.

As of December 29, 2024 and December 31, 2023, $ 1.7 million and $2.1 million of deferred compensation assets are included in Other assets, net, in the accompanying Consolidated Balance Sheets.

In 2023, $ 0.4 million of this deferred compensation is included in Prepaid expenses and other current assets.

As of December 29, 2024 and December 31, 2023, $ 0.1 million and $ 0.4 million of this deferred compensation is included in Prepaid expenses and other current assets in the accompanying Consolidated Balance Sheets.

As of December 29, 2024 and December 31, 2023, $ 1.7 million and $ 1.7 million of deferred compensation plan liabilities are included in Other non-current liabilities in the accompanying Consolidated Balance Sheets.

In 2023, $ 0.4 million of this deferred compensation is included in Accrued liabilities and other current liabilities.

As of December 29, 2024, and December 31, 2023, $ 0.1 million and $ 0.4 million of this deferred compensation is included in Accrued liabilities and other in the accompanying Consolidated Balance Sheets.

Employee Stock Purchase Plan

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In general, all of the Company's officers and Team Members who have been employed by the Company for at least one year and who are regularly scheduled to work more than 20 hours per week are eligible to participate in this plan, which operates in the successive six months commencing on January 1 and July 1 of each fiscal year.

During 2023, the Company issued a total of 136,190 shares under the ESPP Plan with 269,395 shares available for future issuance.

During 2022, the Company issued a total of 63,841 shares under the ESPP Plan.

For 2023, in accordance with the guidance for accounting for stock compensation, the Company estimated the fair value of the awards granted pursuant to the stock purchase plan using the Black-Scholes multiple-option pricing model.

During fiscal 2024, the Company issued a total of 42,592 shares under the ESPP Plan with 226,803 shares available for future issuance.

During fiscal 2023, the Company issued a total of 136,190 shares under the ESPP Plan.

For fiscal 2024, in accordance with the guidance for accounting for stock compensation, the Company estimated the fair value of the awards granted pursuant to the stock purchase plan using the Black-Scholes multiple-option pricing model.

The assumptions used in the model included risk-free interest rates from 5.03 % to 3.98 %, 0.5 year expected life, expected volatilities from 55.25 % to 55.76 %, and 0 % dividend yield.

The weighted average fair value per share at grant date was $ 0.93 .

For 2022, the assumptions used in the model included 4.05 % risk-free interest rate, 0.5 year expected life, expected volatility of 55.00 %, and 0 % dividend yield.

For fiscal 2023, the assumptions used in the model included 5.46 % risk-free interest rate, 0.5 year expected life, expected volatility of 55.25 %, and 0 % dividend yield.

The weighted average fair value per share at grant date was $ 1.72 .

For 2021, the assumptions used in the model included 0.31 % risk-free interest rate, 0.5 year expected life, expected volatility of 53.94 %, and 0 % dividend yield.

For fiscal 2022, the assumptions used in the model included 4.05 % risk-free interest rate, 0.5 year expected life, expected volatility of 55.00 %,

and 0 % dividend yield.

The weighted average fair value per share at grant date was $ 0.99 .

The Company recognized $ 0.1 million of compensation expense related to this plan in 2023, $ 0.1 million in 2022, and $ 0.2 million in 2021.

The Company recognized $ 0.1 million of compensation expense related to this plan in fiscal 2024, $ 0.1 million in fiscal 2023, and $ 0.1 million in fiscal 2022.

Employee Defined Contribution Plan

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The Company matches contributions when the employee contribution is made, and the employer matching contributions are not subject to a vesting schedule.

The Company recognized matching contribution expense of $ 3.0 million in 2023, $ 2.9 million in 2022, and $ 2.8 million in 2021.

Acquisition of Franchised Restaurants

On April 17, 2023, the Company acquired certain assets and liabilities of five restaurants from one of its U.S.

The Company recognized matching contribution expense of $ 3.3 million in fiscal 2024, $ 3.0 million in fiscal 2023, and $ 2.9 million in fiscal 2022.

Acquisitions and Dispositions

As of December 29, 2024, the land and building assets at three owned restaurant locations were classified as held for sale.

These long-lived assets have a total carrying amount of $ 4.3 million as of December 29, 2024, and are included in Assets held for sale in our consolidated balance sheets.

We expect to close on the sale of these assets during the first quarter of fiscal 2025.

As the fair value of these assets is greater than their carrying amounts as of December 29, 2024, there is no gain or loss to record in our consolidated statements of operations and comprehensive loss until the transaction is closed.

During fiscal 2023, the Company acquired certain assets and liabilities of five restaurants from one of its U.S.

franchisees for cash consideration of $ 3.5 million.

The pro forma impact of this acquisition and the operating results of the acquired restaurants are not presented as the impact was not material to reported results.

The acquisition was accounted for using the purchase method as defined in ASC 805, Business Combinations .

The goodwill arising from the acquisition consists largely of the benefit of the assembled workforce of the acquired restaurants.

The goodwill generated by the acquisition is not amortizable for book purposes but is amortizable and deductible for tax purposes.

The Company allocated the purchase price to the fair value of the assets acquired and liabilities assumed as follows (in thousands):

Fair Value at Acquisition Date

Property and equipment, net $ 2,637

Operating lease assets 7,400

Operating lease liabilities ( 8,250 )

Operating lease assets, net ( 850 )

Other assets, net of liabilities (1)

Intangible assets, net 1,443

Total purchase price $ 3,529

(1) Includes inventory, prepaid assets, till cash, and gift card and loyalty liabilities .

The fair value measurement of tangible and intangible assets and liabilities as of the acquisition date is based on significant inputs not observed in the market and thus represents a level 3 fair value measurement.

The Company acquired $ 2.6 million of property and equipment, net, $ 0.8 million of operating lease liabilities, net of operating lease assets, $ 0.3 million of other assets, net of liabilities, and $ 1.4 million of intangible assets, net.

Segment Reporting

In accordance with Segment Reporting, the Company uses the management approach for determining its reportable segments.

The management approach is based upon the way that management reviews performance and allocates resources.

The Company has one operating and one reportable segment:

We manage our business activities on a consolidated basis, as Red Robin restaurants all have similar customers, sell similar products, and have a similar process to sell those products.

We primarily derive our revenue in the United States through the sale of food and beverage through its Company-owned locations as well as earn franchise fees from franchise restaurants.

The accounting policies of the restaurant segment are the same as those described in Note 1.

Description of Business and Summary of Significant Accounting Policies.

Our Chief Operating Decision Maker ("CODM") is our Chief Executive Officer.

The Company measures segment profit using consolidated Net income (loss).

The CODM uses consolidated Net income (loss), as reported on our Consolidated Statements of Operations and Comprehensive Loss, in deciding whether to reinvest excess cash flow into the restaurant segment or into other parts of the Company.

The CODM does not review assets in evaluating the results of the restaurant segment, and therefore, such information is not presented.

Financial information for the Company's reportable segment is as follows (in thousands):

December 29, 2024 December 31, 2023 December 25, 2022

Restaurant revenue $ 1,224,254 $ 1,274,294 $ 1,230,189

Franchise revenue 14,941 15,867 19,306

Other revenue 9,365 12,885 16,039

Total revenues 1,248,560 1,303,046 1,265,534

Costs and expenses:

Cost of sales

292,392 308,962 306,509

Labor 479,631 473,538 440,564

Other operating

216,242 224,999 224,704

Occupancy 103,359 102,761 98,868

General and administrative expenses 81,721 89,360 84,912

Selling 36,719 34,770 51,700

Other segment items (1)

33,848 ( 2,076 ) 39,529

Depreciation and amortization

57,729 66,190 76,245

Interest expense, net and other

24,550 25,460 20,639

Income tax expense (benefit)

( 90 ) 310 747

Segment net income (loss)

$ ( 77,541 ) $ ( 21,228 ) $ ( 78,883 )

(1) Other segment items consists primarily of impairment and other charges (gains) and pre-opening costs.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data