RED ROBIN GOURMET BURGERS INC 10-Q

ITEM 1. Financial Statements (unaudited) RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except for per share amounts) April 20, 2025 December 29, 2024 Assets: Current assets: Cash and cash equivalents $ 24,150 $ 30,651 Accounts receivable, net 13,100 19,688 Inventories 27,016 26,737 Prepaid expenses and other current assets 12,797 13,608 Restricted cash 9,140 8,750 Total current assets 86,203 99,434 Property and equipment, net 178,147 181,224 Operating lease assets, net 318,762 331,617 Intangible assets, net 10,454 11,064 Assets held for sale — 4,313 Other assets, net 12,663 13,662 Total assets $ 606,229 $ 641,314 Liabilities and stockholders ' equity: Current liabilities: Accounts payable $ 32,976 $ 29,783 Accrued payroll and payroll-related liabilities 38,783 39,672 Unearned revenue 18,264 27,083 Current portion of operating lease liabilities 51,620 50,083 Accrued liabilities and other 43,899 42,931 Total current liabilities 185,542 189,552 Long-term debt 164,831 181,641 Long-term portion of operating lease liabilities 327,850 345,635 Other non-current liabilities 8,418 8,755 Total liabilities 686,641 725,583 Commitments and contingencies (see Note 8. Commitments and Contingencies) Stockholders' equity (deficit): Common stock; $ 0.001 par value: 45,000 shares authorized; 22,050 shares issued; 17,738 and 17,403 shares outstanding as of April 20, 2025 and December 29, 2024 22 22 Preferred stock, $ 0.001 par value: 3,000 shares authorized; no shares issued and outstanding as of April 20, 2025 and December 29, 2024 — — Treasury stock 4,312 and 4,647 shares, at cost, as of April 20, 2025 and December 29, 2024 ( 152,944 ) ( 164,937 ) Paid-in capital 224,280 233,667 Accumulated other comprehensive loss, net of tax ( 60 ) ( 62 ) Accumulated deficit ( 151,710 ) ( 152,959 ) Total stockholders' equity (deficit) ( 80,412 ) ( 84,269 ) Total liabilities and stockholders' equity (deficit) $ 606,229 $ 641,314 See Notes to Condensed Consolidated Financial Statements 1 Table of Contents RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) Sixteen Weeks Ended (in thousands, except for per share amounts) April 20, 2025 April 21, 2024 Revenues: Restaurant revenue $ 385,809 $ 378,568 Franchise revenue 4,489 5,341 Other revenue 2,053 4,632 Total revenues 392,351 388,541 Costs and expenses: Restaurant operating costs (excluding depreciation and amortization shown separately below): Cost of sales 88,028 90,209 Labor 143,058 148,958 Other operating 67,532 66,490 Occupancy 32,197 31,428 Depreciation and amortization 15,434 18,154 General and administrative (includes $ 2,589 and $ 1,190 of stock-based compensation) 26,989 25,842 Selling 9,376 13,547 Other charges (gains), net (includes $( 225 ) and $ 33 of stock-based compensation) 676 ( 3,976 ) Total costs and expenses 383,290 390,652 Income (loss) from operations 9,061 ( 2,111 ) Other expense (income): Interest expense 8,066 7,480 Interest (income) and other, net ( 251 ) ( 312 ) Income (loss) before income taxes 1,246 ( 9,279 ) Income tax provision (benefit) ( 3 ) 181 Net income (loss) $ 1,249 $ ( 9,460 ) Net income (loss) per share: Basic $ 0.07 $ ( 0.61 ) Diluted $ 0.07 $ ( 0.61 ) Weighted average shares outstanding: Basic 17,546 15,554 Diluted 18,302 15,554 Other comprehensive income (loss): Foreign currency translation adjustment $ 2 $ ( 18 ) Other comprehensive income (loss), net of tax 2 ( 18 ) Total comprehensive income (loss) $ 1,251 $ ( 9,478 ) See Notes to Condensed Consolidated Financial Statements. 2 Table of Contents RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ' EQUITY (DEFICIT) (Unaudited) Common Stock Treasury Stock Accumulated Other Comprehensive Loss, net of tax Paid-in Capital Accumulated Deficit (in thousands) Shares Amount Shares Amount Total Balance, December 29, 2024 22,050 $ 22 4,647 $ ( 164,937 ) $ 233,667 $ ( 62 ) $ ( 152,959 ) $ ( 84,269 ) Issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 335 ) 11,993 ( 11,752 ) — — 241 Non-cash stock compensation — — — — 2,365 — — 2,365 Net income (loss) — — — — — — 1,249 1,249 Other comprehensive income (loss), net of tax — — — — — 2 — 2 Balance, April 20, 2025 22,050 $ 22 4,312 $ ( 152,944 ) $ 224,280 $ ( 60 ) $ ( 151,710 ) $ ( 80,412 ) Common Stock Treasury Stock Accumulated Other Comprehensive Loss, net of tax Paid-in Capital Accumulated Deficit (in thousands) Shares Amount Shares Amount Total Balance, December 31, 2023 20,449 $ 20 4,921 $ ( 174,702 ) $ 229,680 $ ( 22 ) $ ( 75,418 ) $ ( 20,442 ) Issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan — — ( 84 ) 3,011 ( 3,382 ) — — ( 371 ) Non-cash stock compensation — — — — 1,190 — — 1,190 Net income (loss) — — — — — — ( 9,460 ) ( 9,460 ) Other comprehensive loss, net of tax — — — — — ( 18 ) — ( 18 ) Balance, April 21, 2024 20,449 $ 20 4,837 $ ( 171,691 ) $ 227,488 $ ( 40 ) $ ( 84,878 ) $ ( 29,101 ) See Notes to Condensed Consolidated Financial Statements. 3 Table of Contents RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Sixteen Weeks Ended (in thousands) April 20, 2025 April 21, 2024 Cash flows from operating activities: Net income (loss) $ 1,249 $ ( 9,460 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 15,434 18,154 Non-cash other gains, net ( 172 ) ( 193 ) Stock-based compensation expense 2,365 1,190 Gain on sale of property ( 1,137 ) ( 7,425 ) Deferred financing costs and other, net 1,386 672 Changes in operating assets and liabilities: Accounts receivable 6,588 7,641 Inventories ( 518 ) ( 383 ) Prepaid expenses and other current assets 416 ( 195 ) Operating lease assets, net of liabilities ( 2,550 ) 3,024 Trade accounts payable and accrued liabilities 5,092 13,179 Unearned revenue ( 8,820 ) ( 11,394 ) Other operating assets and liabilities, net 241 ( 1,076 ) Net cash provided by operating activities 19,574 13,734 Cash flows from investing activities: Purchases of property, equipment, and intangible assets ( 11,972 ) ( 8,248 ) Net proceeds from sale of property 5,593 23,393 Net cash provided by (used in) investing activities ( 6,379 ) 15,145 Cash flows from financing activities: Net (repayments) borrowings on revolving credit facility ( 15,000 ) — Repayments on term loan ( 2,770 ) ( 21,232 ) Repayments of finance lease obligations ( 251 ) ( 291 ) Repayments of insurance premium financing ( 1,528 ) — Proceeds (uses) from other financing activities, net 241 ( 371 ) Net cash used in financing activities ( 19,308 ) ( 21,894 ) Effect of exchange rate changes on cash 2 2 Net change in cash and cash equivalents, and restricted cash ( 6,111 ) 6,987 Cash and cash equivalents, and restricted cash, beginning of period 39,401 31,565 Cash and cash equivalents, and restricted cash, end of period $ 33,290 $ 38,552 Supplemental disclosure of cash flow information Income taxes paid, net $ 77 $ 146 Interest paid, net of amounts capitalized $ 5,734 $ 5,708 Accrued purchases of property, equipment, and intangible assets $ 2,461 $ 1,737 Right of use assets obtained in exchange for operating lease obligations $ 3,561 $ 15,951 See Notes to Condensed Consolidated Financial Statements. 4 Table of Contents RED ROBIN GOURMET BURGERS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation and Recent Accounting Pronouncements Red Robin Gourmet Burgers, Inc., a Delaware corporation, together with its subsidiaries ("Red Robin" or the "Company"), primarily operates, franchises, and develops full-service restaurants in North America. As of April 20, 2025, the Company owned and operated 401 restaurants located in 39 states. The Company also had 90 franchised full-service restaurants in 13 states and one Canadian province. The Company operates its business as one operating and one reportable segment. Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of Red Robin and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. In the opinion of management, all adjustments (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. The results of operations for any interim period are not necessarily indicative of results for the full year. The accompanying Condensed Consolidated Financial Statements of Red Robin have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the Company's annual Consolidated Financial Statements on Form 10-K have been condensed or omitted. The Condensed Consolidated Balance Sheet as of December 29, 2024 has been derived from the audited Consolidated Financial Statements as of that date but does not include all disclosures required for audited annual financial statements. For further information, please refer to and read these interim Condensed Consolidated Financial Statements in conjunction with the Company's audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2024 filed with the SEC on February 26, 2025. Our current, prior, and upcoming fiscal year periods, period end dates, and number of weeks included in the periods are summarized in the table below: Periods Period End Date Number of Weeks in Period Current, Prior and Upcoming Fiscal Quarters: First Quarter 2025 April 20, 2025 16 First Quarter 2024 April 21, 2024 16 Second Quarter 2025 July 13, 2025 12 Second Quarter 2024 July 14, 2024 12 Third Quarter 2025 October 5, 2025 12 Third Quarter 2024 October 6, 2024 12 Current and Prior Fiscal Years: Fiscal Year 2025 December 28, 2025 52 Fiscal Year 2024 December 29, 2024 52 Upcoming fiscal year: Fiscal Year 2026 December 27, 2026 52 5 Table of Contents Reclassifications Certain amounts presented have been reclassified to conform with the current period presentation. The reclassifications had no effect on the Company’s consolidated results. We made adjustments to the Condensed Consolidated Statements of Cash Flows to net borrowings with repayments on revolving credit facilities, to reclassify gift card breakage within unearned revenue, and to include income tax receivable within accounts receivable. Beginning in the current reporting period, we have revised the presentation of operating expenses in the Condensed Consolidated Statements of Operations to separately disclose Selling expenses and General and administrative expenses. Previously, these amounts were presented on a combined basis as Selling, general and administrative expenses. Recently Issued and Recently Adopted Accounting Standards 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. In November 2023, FASB issued Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024. Management adopted this ASU beginning with the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2024 filed with the SEC on February 26, 2025. 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. 6 Table of Contents 2. Revenue Disaggregation of revenue In the following table, revenue is disaggregated by type of good or service (in thousands): Sixteen Weeks Ended April 20, 2025 April 21, 2024 Restaurant revenue $ 385,809 $ 378,568 Franchise revenue 4,489 5,341 Gift card breakage 1,705 4,162 Other revenue 348 470 Total revenues $ 392,351 $ 388,541 Contract Liabilities Components of Unearned revenue in the Condensed Consolidated Balance Sheets are as follows (in thousands): April 20, 2025 December 29, 2024 Unearned gift card revenue $ 14,660 $ 24,333 Unearned Royalty revenue 3,604 2,750 Unearned revenue $ 18,264 $ 27,083 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): Sixteen Weeks Ended April 20, 2025 April 21, 2024 Gift card revenue $ 10,704 $ 12,629 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): Sixteen Weeks Ended April 20, 2025 April 21, 2024 Unearned Royalty revenue, beginning balance $ 2,750 $ 7,509 Revenue deferred 1,625 2,325 Revenue recognized ( 771 ) ( 1,802 ) Unearned Royalty revenue, ending balance $ 3,604 $ 8,032 7 Table of Contents 3. Leases The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and real estate taxes, are included in Occupancy on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as follows (in thousands): Sixteen Weeks Ended April 20, 2025 April 21, 2024 Operating lease cost $ 23,020 $ 23,007 Finance lease cost: Amortization of right of use assets 238 288 Interest on lease liabilities 127 137 Total finance lease cost $ 365 $ 425 Variable lease cost 6,059 5,903 Total $ 29,444 $ 29,335 See Note 5. Other Charges (Gains), net, for information regarding the sale-leaseback transaction completed during the fiscal quarter ended April 21, 2024. 4. Earnings (Loss) Per Share Basic earnings (loss) per share amounts are calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share amounts are calculated based upon the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period. Potentially dilutive shares are excluded from the computation in periods in which they have an anti-dilutive effect. Diluted earnings per share 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 the sixteen week period ended April 21, 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): Sixteen Weeks Ended April 20, 2025 April 21, 2024 Basic weighted average shares outstanding 17,546 15,554 Dilutive effect of stock options and awards 756 — Diluted weighted average shares outstanding 18,302 15,554 Awards excluded due to anti-dilutive effect on diluted income (loss) per share 2,095 1,422 5. Other Charges (Gains), net Other charges (gains), net consisted of the following (in thousands): Sixteen Weeks Ended April 20, 2025 April 21, 2024 Gain on sale of restaurant property $ ( 1,137 ) $ ( 7,425 ) Restaurant closure costs, net 210 175 Severance and executive transition (includes $( 225 ) and $ 33 of stock-based compensation) 880 945 Litigation contingencies 12 420 Asset disposal and other, net 711 1,909 Other charges (gains), net $ 676 ( 3,976 ) 8 Table of Contents Gain on Sale of Restaurant Property During the first quarter of fiscal 2025, the Company sold three restaurant properties for total proceeds of $ 5.8 million that resulted in a gain, net of expenses of $ 1.1 million. The net proceeds are included within cash flows from investing activities on the Condensed Consolidated Statements of Cash Flows and were used to pay down long-term debt. 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. The net proceeds are included within cash flows from investing activities on the Condensed Consolidated Statements of Cash Flows. Severance and Executive Transition During the first quarter of fiscal 2025, the Company incurred severance and executive transition costs primarily related to the departure of certain executive officers, and costs associated with changes in leadership positions. During the first quarter of fiscal 2024, 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. Asset Disposal and Other Asset disposal and other primarily relates to the closure of a corporate office location, asset disposals, strategic projects and other non-recurring items. 6. Borrowings Borrowings as of April 20, 2025 and December 29, 2024 are summarized below (in thousands): April 20, 2025 Variable Interest Rate December 29, 2024 Variable Interest Rate Revolving line of credit $ 5,000 11.92 % $ 20,000 12.03 % Term loan $ 166,702 12.06 % $ 169,470 12.21 % Total borrowings 171,702 189,470 Less: unamortized debt issuance costs and discounts 6,871 7,829 Long-term debt $ 164,831 $ 181,641 Revolving line of credit unamortized deferred financing charges: $ 1,119 $ 1,298 Credit Facility On March 4, 2022, the Company replaced its prior amended and restated credit agreement (the "Prior Credit Agreement") with a new credit agreement (the "Credit Agreement") by and among the Company, Red Robin International, Inc., as the borrower, the lenders from time to time party thereto, the issuing banks from time to time party thereto, Fortress Credit Corp., as Administrative Agent and as Collateral Agent and JPMorgan Chase Bank, N.A., as Sole Lead Arranger and Sole Bookrunner. The five-year $ 240.0 million Credit Agreement provides for a $ 40.0 million revolving line of credit and a $ 200.0 million term loan (collectively, the "Credit Facility"). The borrower maintains the option to increase the Credit Facility in the future, subject to lenders’ participation, by up to an additional $ 40.0 million in the aggregate on the terms and conditions set forth in the Credit Agreement. The Credit Facility will mature on March 4, 2027. No amortization is required with respect to the revolving Credit Facility. The term loans require quarterly principal payments in an aggregate annual amount equal to 1.0 % of the original principal amount of the term loan. The Credit Agreement's interest rate references the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements and backed by U.S. 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 April 20, 2025, the Company had outstanding borrowings under the Credit Facility of $ 164.8 million, including $ 5.0 million drawn on its revolving line of credit. As of December 29, 2024, the Company had outstanding borrowings under the Credit Facility of $ 181.6 million, with $ 20.0 million drawn on its revolving line of credit. In addition, the Company had amounts issued under letters of credit of $ 8.8 million and $ 8.5 million as of April 20, 2025 and December 29, 2024, respectively. 9 Table of Contents Red Robin International, Inc., is the borrower under the Credit Agreement, and certain of its subsidiaries and the Company are guarantors of the borrower’s obligations under the Credit Agreement. Borrowings under the Credit Agreement are secured by substantially all of the assets of the borrower and the guarantors, including the Company, and are available to: (i) refinance certain existing indebtedness of the borrower and its subsidiaries, (ii) pay any fees and expenses in connection with the Credit Agreement, and (iii) provide for the working capital and general corporate requirements of the Company, the borrower and its subsidiaries, including permitted acquisitions and capital expenditures, but excluding restricted payments. On March 4, 2022, Red Robin International, Inc., the Company, and the guarantors also entered into a Pledge and Security Agreement (the “Security Agreement”) granting to the Administrative Agent a first priority security interest in substantially all of the assets of the borrower and the guarantors to secure the obligations under the Credit Agreement. Red Robin International, Inc. as the borrower is obligated to pay customary fees to the agents, lenders and issuing banks under the Credit Agreement with respect to providing, maintaining, or administering, as applicable, the credit facilities. On July 17, 2023, the Company amended the Credit Agreement (the “First Amendment”) to, among other things, remove the previously included $ 50.0 million aggregate cap on sale-leasebacks of Company-owned real property that are permitted under the Credit Agreement, subject to certain conditions set forth in the Credit Agreement. On August 21, 2024, the Company entered into the second amendment to the Credit Agreement (the “Second Amendment”). The Second Amendment, among other things, 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. 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, each of which was filed February 26, 2025, as an exhibit to the Annual Report on Form 10-K. 10 Table of Contents 7. Fair Value Measurements Assets and Liabilities Measured at Fair Value on a Recurring Basis The carrying amounts of the Company's cash and cash equivalents, accounts receivable, accounts payable, and current accrued expenses and other liabilities approximate fair value due to the short-term nature or maturity of the instruments. The Company maintains a rabbi trust to fund obligations under a deferred compensation plan. Amounts in the rabbi trust are invested in mutual funds, which are designated as trading securities and carried at fair value and are included in Other assets, net in the accompanying Condensed Consolidated Balance Sheets. Fair market value of mutual funds is measured using level 1 inputs (quoted prices for identical assets in active markets). The following tables present the Company's assets measured at fair value on a recurring basis (in thousands): April 20, 2025 Level 1 Level 2 Level 3 Assets: Investments in rabbi trust $ 1,739 $ 1,739 $ — $ — Total assets measured at fair value $ 1,739 $ 1,739 $ — $ — December 29, 2024 Level 1 Level 2 Level 3 Assets: Investments in rabbi trust $ 1,821 $ 1,821 $ — $ — Total assets measured at fair value $ 1,821 $ 1,821 $ — $ — Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Assets and liabilities recognized or disclosed at fair value in the Condensed Consolidated Financial Statements on a nonrecurring basis include items such as property, plant and equipment, right of use assets, and other intangible assets. These assets are measured at fair value if determined to be impaired. During 2025 and 2024, 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. 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 20, 2025, the fair value of the Credit Facility was approximately $ 177.7 million and the principal amount carrying value was $ 171.7 million. The Credit Facility term loan is reported net of $ 6.9 million in unamortized discount and debt issuance costs in the Condensed Consolidated Balance Sheet as of April 20, 2025. The carrying value of the Credit Facility was $ 189.5 million and the fair value of the Credit Facility was $ 186.6 million as of December 29, 2024. The interest rate on the Credit Facility represents a level 2 fair value input. 11 Table of Contents 8. Commitments and Contingencies Because litigation is inherently unpredictable, assessing contingencies related to litigation is a complex process involving highly subjective judgment about potential outcomes of future events. When evaluating litigation contingencies, we may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, the availability of appellate remedies, insurance coverage related to the claim or claims in question, the presence of complex or novel legal theories, and the ongoing discovery and development of information important to the matter. In addition, damage amounts claimed in litigation against us may be unsupported, exaggerated, or unrelated to possible outcomes, and as such are not meaningful indicators of our potential liability or financial exposure. Accordingly, we review the adequacy of accruals and disclosures each quarter in consultation with legal counsel, and we assess the probability and range of possible losses associated with contingencies for potential accrual in the Condensed Consolidated Financial Statements. However, the ultimate resolution of litigated claims may differ from our current estimates. As of April 20, 2025, we had reserves of $ 3.8 million for loss contingencies included within Accrued liabilities and other on our Condensed Consolidated Balance Sheet. In the normal course of business, there are various claims in process, matters in litigation, administrative proceedings, and other contingencies. These include employment related claims and class action lawsuits, claims from Guests or Team Members alleging illness, injury, food quality, health, or operational concerns, and lease and other commercial disputes. 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. We ultimately may be subject to greater or less than the accrued amount for this and other matters. As of April 20, 2025, 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 $ 131.8 million. We expect to fulfill our commitments under these agreements in the normal course of business, and as such, no liability has been recorded. 9. 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: restaurants. We manage our business activities on a consolidated basis, as Red Robin restaurants all have similar customers, sell similar products, and have a similar process to sell those products. We primarily derive our revenue in the United States through the sale of food and beverage through its Company-owned locations as well as earn royalties and fees from franchise restaurants. There have been no material changes to the accounting policies of the restaurant segment, which can be found in the filing of the 2024 Annual Report on Form 10-K for the fiscal year ended December 29, 2024. Our Chief Operating Decision Maker ("CODM") is our Chief Executive Officer. The Company measures segment profit using consolidated Net income (loss). The CODM uses consolidated Net income (loss), as reported on our Condensed Consolidated Statements of Operations and Comprehensive 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): 12 Table of Contents Sixteen Weeks Ended April 20, 2025 April 21, 2024 Revenues: Restaurant revenue $ 385,809 $ 378,568 Franchise revenue 4,489 5,341 Other revenue 2,053 4,632 Total revenues 392,351 388,541 Costs and expenses: Cost of sales 88,028 90,209 Labor 143,058 148,958 Other operating 67,532 66,490 Occupancy 32,197 31,428 General and administrative expenses 26,989 25,842 Selling 9,376 13,547 Other segment items (1) 676 ( 3,976 ) Depreciation and amortization 15,434 18,154 Interest expense, net and other 7,815 7,168 Income tax expense (benefit) ( 3 ) 181 Segment net income (loss) $ 1,249 $ ( 9,460 ) (1) Other segment items consists primarily of other charges (gains) and pre-opening costs. 13 Table of Contents