RED ROBIN GOURMET BURGERS INC 10-Q

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's Discussion and Analysis of Financial Condition and Results of Operations provides a narrative of our financial performance and condition that should be read in conjunction with the accompanying Condensed Consolidated Financial Statements. References to the first quarter of fiscal 2025 and fiscal 2024 refer to the sixteen weeks ended April 20, 2025 and April 21, 2024, respectively. Description of Business Red Robin Gourmet Burgers, Inc., a Delaware corporation, together with its subsidiaries ("Red Robin," "we," "us," "our," or the "Company"), primarily operates, franchises, and develops full-service restaurants with 491 locations in North America. As of April 20, 2025, the Company owned 401 restaurants located in 39 states, and had 90 franchised restaurants in 13 states and one Canadian province. The Company operates its business as one operating and one reportable segment. Our primary source of revenue is from the sale of food and beverages at Company-owned restaurants. We also earn revenue from royalties and fees from franchised restaurants. Highlights for the First Quarter of Fiscal 2025, Compared to the First Quarter of Fiscal 2024: • Total revenues are $392.4 million, an increase of $3.8 million. • Comparable restaurant revenue (1) increased 3.1%. • Net income is $1.2 million, compared to a net loss of $9.5 million last year, a $10.7 million increase. • Adjusted EBITDA (2) is $27.9 million compared to $13.4 million last year, a 108.2% increase. • Completed sale of three owned properties during the first quarter for gross proceeds of $5.8 million. • Repaid $17.8 million of debt. (1) Comparable restaurant revenue represents revenue from Company-owned restaurants that have operated for 18 months as of the beginning of the period presented. (2) See below for a reconciliation of adjusted EBITDA to Net income. Business Trends We are closely monitoring evolving macroeconomic conditions, including ongoing inflationary pressures and uncertainty stemming from proposed and enacted trade policies such as tariffs. Although a significant portion of our supply chain is domestically sourced, helping to mitigate some exposure, we recognize that changes to trade regulations and tariff implementations could lead to increased costs for certain commodities and materials. Additionally, the broader implications of tariff-driven price increases could influence consumer spending habits and negatively affect our business. At this time, we do not anticipate a material adverse impact to our financial performance for the remainder of fiscal year 2025; however, continued volatility in global trade and economic policy presents a risk to both profitability and future demand. Key Performance Indicators Restaurant Revenue, compared to the same quarter in the prior year, is presented in the table below: (Dollars in millions) Sixteen Weeks Ended Restaurant Revenue for the period ended April 21, 2024 $ 378.6 Increase/(decrease) in comparable restaurant revenue 11.5 Decrease in non-comparable and closed restaurant revenue (4.3) Total increase/(decrease) 7.2 Restaurant Revenue for the period ended April 20, 2025 $ 385.8 14 Table of Contents Restaurant Data The following table details restaurant unit data for our Company-owned and franchised locations for the periods presented: Sixteen Weeks Ended April 20, 2025 April 21, 2024 Company-owned: Beginning of period 407 415 Opened during the period — — Closed during the period (6) (2) End of period 401 413 Franchised: Beginning of period 91 92 Opened during the period — — Closed during the period (1) — End of period 90 92 Total number of restaurants 491 505 15 Table of Contents The following table presents total Company-owned and franchised restaurants by state or province as of April 20, 2025: Company-Owned Restaurants Franchised Restaurants State: Arkansas 2 Alaska 3 Alabama 3 Arizona 18 1 California 56 Colorado 21 Connecticut 3 Delaware 4 Florida 16 Georgia 6 Iowa 5 Idaho 8 Illinois 17 Indiana 11 Kansas 5 Kentucky 3 Louisiana 1 Massachusetts 5 Maryland 11 Maine 2 Michigan 19 Minnesota 4 Missouri 8 3 Montana 1 North Carolina 16 Nebraska 4 New Hampshire 3 New Jersey 11 1 New Mexico 3 Nevada 6 New York 14 Ohio 15 3 Oklahoma 5 Oregon 15 5 Pennsylvania 11 20 Rhode Island 1 South Carolina 4 South Dakota 1 Tennessee 9 Texas 17 9 Utah 1 5 Virginia 18 Washington 36 Wisconsin 11 Province: British Columbia 11 Total 401 90 16 Table of Contents Results of Operations Operating results for each fiscal period presented below are expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenue. This information has been prepared on a basis consistent with our audited 2024 annual financial statements, and, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. Our operating results may fluctuate significantly as a result of a variety of factors, and operating results for any period presented are not necessarily indicative of results for a full fiscal year. Sixteen Weeks Ended (Dollars in thousands) April 20, 2025 April 21, 2024 Revenues: Restaurant revenue 98.4 % 97.4 % Franchise revenue 1.1 1.4 Other revenue 0.5 1.2 Total revenues 100.0 100.0 Costs and expenses: Restaurant operating costs (1) (excluding depreciation and amortization shown separately below): Cost of sales 22.8 23.8 Labor 37.1 39.3 Other operating 17.5 17.6 Occupancy 8.3 8.3 Total restaurant operating costs 85.6 88.9 Depreciation and amortization 3.9 4.7 General and administrative 6.9 6.7 Selling 2.4 3.5 Other charges (gains), net 0.2 (1.0) Income (loss) from operations 2.3 (0.5) Other expense (income): Interest expense 2.1 1.9 Interest (income) and other, net (0.1) (0.1) Income (loss) before income taxes 0.3 (2.4) Income tax provision (benefit) — — Net income (loss) 0.3 % (2.4) % (1) Expressed as a percentage of restaurant revenue. 17 Table of Contents Revenues Sixteen Weeks Ended (Dollars in thousands) April 20, 2025 April 21, 2024 Percent Change Restaurant revenue $ 385,809 $ 378,568 1.9 % Franchise revenue 4,489 5,341 (16.0) % Other revenue 2,053 4,632 (55.7) % Total revenues $ 392,351 $ 388,541 1.0 % Average weekly net sales volumes in Company-owned restaurants $ 59,483 $ 57,139 4.1 % Total operating weeks 6,486 6,611 (1.9) % Restaurant revenue, which is comprised primarily of food and beverage sales, increased $7.2 million, or 1.9%, in the first quarter of fiscal 2025, as compared to the comparable period of fiscal 2024. Comparable restaurant revenue increased $11.5 million, or 3.1%, partially offset by a $2.9 million decrease associated with the closure of 12 locations since the first fiscal quarter of 2024. The comparable restaurant revenue increase includes a 6.6% increase in average Guest check offset in part by a 3.5% decrease in Guest count. The increase in average Guest check resulted from a 6.8% increase in menu prices, partially offset by a 0.1% decrease from menu mix. The decrease in menu mix was primarily driven by growth in our catering business that contributes a lower average Guest check than our other channels. Average weekly net sales volumes are calculated as the total restaurant revenue for all Company-owned Red Robin restaurants for each time period presented, divided by the number of operating weeks in the period. Franchise revenue decreased by $0.9 million, or 16.0%, in the first quarter of fiscal 2025 compared to the same period of fiscal 2024, primarily due to a decrease in franchisee contributions for marketing programs. Franchise restaurants reported a decrease of 1.6% in comparable restaurant revenue in the first quarter of fiscal 2025 compared to the same period in fiscal 2024. Other revenue decreased $2.6 million in the first quarter of fiscal 2025 compared to the same period of fiscal 2024. The decrease is primarily related to lower gift card breakage in the current period. Cost of Sales Sixteen Weeks Ended (In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change Cost of sales $ 88,028 $ 90,209 (2.4) % As a percent of restaurant revenue 22.8 % 23.8 % (1.0) % Cost of sales, which comprises food and beverage costs, is variable and generally fluctuates with sales volume. Cost of sales as a percentage of restaurant revenue decreased 100 basis points for the first quarter of fiscal 2025 as compared to the comparable period in fiscal 2024. The decrease was primarily driven by menu price increases and vendor contributions to support our annual Partner recognition events which is recorded as a reduction to cost of sales, partially offset by an increase in commodity prices. 18 Table of Contents Labor Sixteen Weeks Ended (In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change Labor $ 143,058 $ 148,958 (4.0) % As a percent of restaurant revenue 37.1 % 39.3 % (2.2) % Labor costs include restaurant level hourly wages and management salaries as well as related taxes and benefits. For the first quarter of fiscal 2025, labor as a percentage of restaurant revenue decreased 220 basis points compared to the same period in fiscal 2024. The decrease was primarily driven by ongoing efforts to reduce hourly labor costs, and reduced turnover. Other Operating Sixteen Weeks Ended (In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change Other operating $ 67,532 $ 66,490 1.6 % As a percent of restaurant revenue 17.5 % 17.6 % (0.1) % Other operating costs include costs such as repair and maintenance costs, restaurant supplies, utilities, restaurant technology, and other miscellaneous costs. For the first quarter of fiscal 2025, other operating costs as a percentage of restaurant revenue decreased 10 basis points compared to the same period in fiscal 2024. Occupancy Sixteen Weeks Ended (In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change Occupancy $ 32,197 $ 31,428 2.4 % As a percent of restaurant revenue 8.3 % 8.3 % — % Occupancy costs include fixed rents, property taxes, common area maintenance charges, general liability insurance, contingent rents, and other property costs. Occupancy costs as a percentage of restaurant revenue was consistent for the first quarter of fiscal 2025 compared to the same period in fiscal 2024. Depreciation and Amortization Sixteen Weeks Ended (In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change Depreciation and amortization $ 15,434 $ 18,154 (15.0) % As a percent of total revenues 3.9 % 4.7 % (0.8) % Depreciation and amortization include depreciation on capital expenditures for restaurants and corporate assets as well as amortization of reacquired franchise rights, leasehold interests, and certain liquor licenses. For the first quarter of fiscal 2025, depreciation and amortization expense as a percentage of revenue decreased 80 basis points compared to the comparable period in 2024, primarily due to asset impairments, restaurant closures, and a sale-leaseback transaction reducing the depreciable asset base. 19 Table of Contents General and Administrative Expenses Sixteen Weeks Ended (In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change General and administrative $ 26,989 $ 25,842 4.4 % As a percent of total revenues 6.9 % 6.7 % 0.2 % General and administrative costs include all corporate and administrative functions. Components of this category include restaurant support center, regional, and franchise support salaries and benefits, travel, professional and consulting fees, corporate information systems, legal expenses, office rent, training, and Board of Directors' expenses. General and administrative costs in the first quarter of fiscal 2025 were $27.0 million, an increase of $1.1 million compared to the comparable period in 2024. The increase is primarily related to higher costs associated with noncash stock-based compensation expense and other costs incurred for annual Partner recognition events. This increase is partially offset by a reduction in team member costs associated with lower headcount. Selling Expenses Sixteen Weeks Ended (In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change Selling $ 9,376 $ 13,547 (30.8) % As a percent of total revenues 2.4 % 3.5 % (1.1) % Selling costs are comprised of all marketing and advertising costs. Selling costs in the first quarter of fiscal 2025 were $9.4 million, a decrease of $4.2 million compared to the comparable period in 2024. The decrease was primarily driven by reduced paid media spend overlapping a marketing test last year. Interest Expense Interest expense for the first quarter of fiscal 2025 and fiscal 2024 was $8.1 million and $7.5 million, respectively. The $0.6 million increase was primarily due to an increase in the weighted average interest rate to 14.1% in the first quarter of fiscal 2025 compared to 13.2% in the first quarter of fiscal 2024. Average outstanding debt was $187.7 million and $187.0 million for the first quarter of fiscal 2025 and fiscal 2024, respectively. Income Tax Provision (benefit) Income tax benefit was $0.0 million in the first quarter of fiscal 2025, compared to an income tax provision of $0.2 million in the first quarter of fiscal 2024. Our effective tax rate was a 0.2% benefit in the first quarter of fiscal 2025 reflecting state income taxes. Our effective tax rate was a 2.0% provision in the first quarter of fiscal 2024, reflecting minimum state income taxes and state franchise taxes despite a pretax net loss position. 20 Table of Contents Non-GAAP Financial Measures A reconciliation of Restaurant revenue to restaurant level operating profit is detailed in the table below: Sixteen Weeks Ended (Dollars in millions) April 20, 2025 April 21, 2024 Increase/ (Decrease) Restaurant revenue $ 385.8 $ 378.6 1.9 % Restaurant operating costs: Cost of sales 88.0 90.2 (2.4) % Labor 143.1 149.0 (4.0) % Other operating 67.5 66.5 1.5 % Occupancy 32.2 31.4 2.5 % Total restaurant operating costs $ 330.8 $ 337.1 (1.9) % Restaurant level operating profit (1) $ 55.0 $ 41.5 32.5 % (1) Restaurant level operating profit is a non-GAAP measure. See below for a reconciliation of restaurant level operating profit to Income from Operations and Income from Operations as a percentage of total revenues. Sixteen Weeks Ended (Dollars in millions) April 20, 2025 April 21, 2024 Increase/(Decrease) Restaurant revenue $ 385.8 $ 378.6 1.9 % Restaurant operating costs: (Percentage of Restaurant Revenue) (Basis Points) Cost of sales 22.8 % 23.8 % (100) Labor 37.1 39.3 (220) Other operating 17.5 17.6 (10) Occupancy 8.3 8.3 — Total restaurant operating costs 85.6 % 88.9 % (330) Restaurant level operating profit 14.3 % 11.0 % 330 Certain percentage and basis point amounts in the table above do not total due to rounding as well as restaurant operating costs being expressed as a percentage of restaurant revenue and not total revenues. 21 Table of Contents The following table summarizes net income (loss), income (loss) per diluted share, and adjusted income (loss) per diluted share for the periods presented: Sixteen Weeks Ended (in thousands, except per share amounts) April 20, 2025 April 21, 2024 Net income (loss) as reported $ 1,249 $ (9,460) Income (loss) per share - diluted: Net Income (loss) as reported $ 0.07 $ (0.61) Stock-based compensation expense 0.14 0.08 Other charges (gains), net: Restaurant closure costs, net 0.01 0.01 Gain on sale of restaurant property (0.06) (0.48) Severance and executive transition 0.05 0.06 Litigation contingencies — 0.03 Asset disposal and other, net 0.03 0.13 Income tax effect (0.05) 0.05 Adjusted income (loss) per share - diluted (1) $ 0.19 $ (0.73) Weighted average shares outstanding: Basic 17,546 15,554 Diluted 18,302 15,554 (1) Beginning in the fiscal first quarter of 2025, the Company revised its definition of Adjusted Net income (loss) to exclude noncash stock-based compensation expense. The Company believes this change provides investors with a better understanding of our financial performance from period to period. Previously reported results have been revised to reflect the new presentation. 22 Table of Contents The following table summarizes net income (loss), EBITDA, and adjusted EBITDA for the periods presented: Sixteen Weeks Ended April 20, 2025 April 21, 2024 Net income (loss) as reported $ 1,249 $ (9,460) Interest expense, net 7,964 7,313 Income tax provision (benefit) (3) 181 Depreciation and amortization 15,434 18,154 EBITDA 24,644 16,188 Stock-based compensation expense 2,589 1,190 Other charges (gains), net: Gain on sale of restaurant property (1,137) (7,425) Restaurant closure costs, net 210 175 Severance and executive transition 880 945 Litigation contingencies 12 420 Asset disposal and other, net 711 1,909 Adjusted EBITDA (1) $ 27,909 $ 13,402 (1) Beginning in the fiscal first quarter of 2025, the Company revised its definition of Adjusted EBITDA to exclude noncash stock-based compensation expense. The Company believes this change provides investors with a better understanding of our financial performance from period to period. Previously reported results have been revised to reflect the new presentation. We define EBITDA as net income (loss) before interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA and Adjusted income (loss) per share-diluted are supplemental measures of our performance that are not required by or presented in accordance with GAAP. We believe these non-GAAP measures give the reader additional insight into the ongoing operational results of the Company, and are intended to supplement the presentation of the Company's financial results in accordance with GAAP. Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share-diluted exclude the impact of non-operating or nonrecurring items including changes in estimates, asset impairments, litigation contingencies, gains (losses) on debt extinguishment, restaurant and office closure costs, gains (losses) on restaurant sales, severance and executive transition costs, stock-based compensation expense and other non-recurring, non-cash or discrete items; net of income tax impacts. Other companies may define these non-GAAP measures differently, and as a result may not be directly comparable to those of other companies. Adjusted income (loss) per share-diluted and Adjusted EBITDA should be considered in addition to, and not as a substitute for, net income (loss) as reported in accordance with U.S. GAAP as a measure of performance. 23 Table of Contents The following table summarizes Income (Loss) from Operations and Restaurant Level Operating Profit for the periods presented (dollars in thousands): Sixteen Weeks Ended April 20, 2025 April 21, 2024 Income (loss) from operations $ 9,061 2.3% $ (2,111) (0.5)% Less: Franchise revenue 4,489 1.1% 5,341 1.4% Other revenue 2,053 0.5% 4,632 1.2% Add: Other charges (gains), net 676 0.2 (3,976) (1.0) General and administrative expenses 26,989 6.9 25,842 6.7 Selling 9,376 2.4 13,547 3.5 Depreciation and amortization 15,434 3.9 18,154 4.7 Restaurant level operating profit $ 54,994 14.3% $ 41,483 11.0% Income (loss) from operations as a percentage of total revenues 2.3% (0.5)% Restaurant level operating profit margin (as a percentage of restaurant revenue) 14.3% 11.0% The Company believes restaurant level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant level operating efficiency and performance. The Company defines restaurant level operating profit to be income from operations less franchise revenue and other revenue, plus other charges (gains), net, pre-opening costs, selling costs, general and administrative expenses, and depreciation and amortization. The measure includes restaurant level occupancy costs that include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance, and other property costs, but excludes depreciation and amortization expense, substantially all of which is related to restaurant level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. The measure also excludes costs associated with selling, general and administrative functions, and pre-opening costs, as well as other charges (gains), net because these costs are non-operating or nonrecurring and therefore not related to the ongoing operations of its restaurants. Restaurant level operating profit is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to income (loss) from operations as an indicator of financial performance. Restaurant level operating profit as presented may not be comparable to other similarly titled measures of other companies in the Company's industry. 24 Table of Contents Liquidity and Capital Resources Our primary sources of liquidity are cash from operations, cash and cash equivalents on hand, and availability under our revolving Credit Facility. Cash and cash equivalents, and restricted cash decreased $6.1 million to $33.3 million as of April 20, 2025, from $39.4 million at the beginning of the fiscal year. As of April 20, 2025, the Company had approximately $59.2 million in liquidity, including cash and cash equivalents and $35.0 million available borrowing capacity under our Credit Facility. Cash Flows The table below summarizes our cash flows from operating, investing, and financing activities for each period presented (in thousands): Sixteen Weeks Ended April 20, 2025 April 21, 2024 Net cash provided by operating activities $ 19,574 $ 13,734 Net cash provided by (used in) investing activities (6,379) 15,145 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 Operating Cash Flows Net cash flows provided by operating activities increased $5.8 million to $19.6 million for the first quarter of fiscal 2025 compared to $13.7 million for the comparable period in fiscal 2024. The increase in net cash provided by operating activities is primarily attributable to the increase in restaurant level profitability. Investing Cash Flows Net cash flows used in investing activities was $6.4 million for the first quarter of fiscal 2025, as compared to net cash flows provided by investing activities of $15.1 million for the comparable period in fiscal 2024. The $21.5 million decrease in cash flows from investing activities is primarily due to an increase in capital expenditures, coupled with lower proceeds from the sale of restaurant locations in the current year period as compared to the prior year period. The following table lists the components of our capital expenditures for the periods presented (in thousands): Sixteen Weeks Ended April 20, 2025 April 21, 2024 Restaurant improvement capital and other $ 6,146 $ 4,892 Technology, infrastructure, and other 5,826 3,356 Total capital expenditures $ 11,972 $ 8,248 Financing Cash Flows Net cash flows used in financing activities decreased to $19.3 million for the first quarter of fiscal 2025, as compared to $21.9 million for the comparable period in fiscal 2024. Cash flows used in financing activities in the first quarter of fiscal 2025 primarily relate to the paydown of debt with cash flow from operations and net proceeds from the sale of three restaurant locations. Cash flows used in financing activities in the comparable period in fiscal 2024 primarily relate to the net paydown of debt with the net proceeds from the sale-leaseback transaction. Credit Facility On March 4, 2022, the Company entered into a Credit Agreement (as amended, the "Credit Agreement"), which provides for a Senior Secured Term Loan and Revolving Credit Facility (the "Credit Facility"). The Credit Agreement's interest rate references the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements and backed by U.S. Treasury securities, or the Alternate Base Rate, which represents the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.5% per annum, or (c) one-month term SOFR plus 1.0% per annum. 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. 25 Table of Contents 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 third quarter of 2025, increases the aggregate revolving commitments by $15.0 million to $40.0 million through 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 additional reporting requirements. On November 4, 2024, the Company entered into the third amendment to our Credit Agreement (the "Third Amendment") which extends the provisions of the Second Amendment through the end of the first fiscal quarter of 2026. As of April 20, 2025, the Company had outstanding borrowings under the Credit Facility of $164.8 million, net of $6.9 million of unamortized deferred financing charges and discounts, none of which was classified as current. As of April 20, 2025, the Company had $35.0 million of available borrowing capacity under its Credit Facility and $8.8 million of letters of credit issued against cash collateral. The Company's cash collateral is reported in Restricted cash on our Condensed Consolidated Balance Sheets. Covenants We are subject to a number of customary covenants under our Credit Facility, including limitations on additional borrowings, acquisitions, stock repurchases, sales of assets, and dividend payments, as well as a net total leverage ratio covenant. As of April 20, 2025, we were in compliance with all debt covenants. Working Capital We typically maintain current liabilities in excess of our current assets which results in a working capital deficit. We are able to operate with a working capital deficit because restaurant sales are primarily conducted on a cash or credit card basis. Rapid turnover of inventory results in limited investment in inventories, and cash from sales is usually received before related payables for food, supplies, and payroll become due. In addition, receipts from the sale of gift cards are received well in advance of related redemptions. Rather than maintain higher cash balances that would result from this pattern of operating cash flows, we typically utilize operating cash flows in excess of those required for currently maturing liabilities to pay for capital expenditures, debt repayment, or to repurchase stock. When necessary, we utilize our Credit Facility to satisfy short-term liquidity requirements. We believe our future cash flows generated from restaurant operations combined with our borrowing capacity under the Credit Facility, and cash on hand, will be sufficient to meet our anticipated cash requirements and fund capital expenditures over the next 12 months. Share Repurchase On August 9, 2018, the Company's board of directors authorized the Company's current share repurchase program of up to a total of $75.0 million of the Company's common stock. The share repurchase authorization will terminate upon completing repurchases of $75.0 million of common stock unless otherwise terminated by the board. Pursuant to the repurchase program, purchases may be made from time to time at the Company's discretion and the Company is not obligated to acquire any particular amount of common stock. From the date of the current program approval through April 20, 2025, we have repurchased a total of 1,088,588 shares at an average price of $15.18 per share for an aggregate amount of $16,520,000. The Company completed no share repurchases during the periods presented. Accordingly, as of April 20, 2025, we had $58.5 million of availability under the current share repurchase program. Our Credit Agreement limits our ability to repurchase shares to certain conditions set forth by the lenders in the Credit Facility. Seasonality Our business is subject to seasonal fluctuations. Sales in most of our restaurants were historically higher during the spring and summer months and winter holiday season. The timing of holidays and school vacations, as well as severe storms, extended periods of inclement weather, or climate extremes may affect the seasonal operating results in the areas impacted. As a result, our quarterly operating results may fluctuate significantly due to seasonality, and seasonality of sales may shift over time. Accordingly, results for any one quarter or year are not necessarily indicative of results to be expected for any other quarter or for any year. Contractual Obligations There were no other material changes outside the ordinary course of business to our contractual obligations since the filing of the 2024 Annual Report on Form 10-K for the fiscal year ended December 29, 2024. See Note 8. Commitments and Contingencies . 26 Table of Contents Critical Accounting Estimates Critical accounting estimates are those we believe are both significant and that require us to make difficult, subjective, or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors we believe to be appropriate under the circumstances. Actual results may differ from these estimates, including our estimates of future restaurant level cash flows, which are subject to the current economic environment and potentially unknown future events, and we might obtain different results if we use different assumptions or conditions. We had no significant changes in our critical accounting estimates which were disclosed in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024. 27 Table of Contents Forward-Looking Statements Certain information and statements contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 codified at Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as "anticipate," "assume," "believe," "could," "estimate," "expect," "future," "intend," "may," "plan," "project," "will," "would," and similar expressions. Forward-looking statements in this report relate to, among other things: our business objectives and strategic plans; our financial condition, including working capital, and the ability of our future cash flows from restaurant operations and our borrowing capacity to satisfy our anticipated cash requirements and fund capital expenditures; our expectations about restaurant operating costs, including labor, food, supplies, and other commodities, as well as interest rates, and our ability to mitigate potential increases in such costs; our expectations about anticipated uses of, and risks associated with, future cash flows, liquidity, capital expenditures, other capital deployment opportunities, and taxes; the seasonality of our business; and our purchase commitments and litigation contingencies and the adequacy of our reserves for legal matters. Although we believe the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risks and uncertainties. In some cases, information regarding certain important factors that could cause actual results to differ materially from a forward-looking statement appears together with such statement. In addition, the factors described under Risk Factors, as well as other possible factors not listed, could cause actual results to differ materially from those expressed in forward-looking statements, including, without limitation, the effectiveness of the Company's strategic initiatives, including our strategic plan, labor and service models, and operational improvement initiatives and our ability to execute on such strategic initiatives; the global and domestic economic and geopolitical environment including tariffs, counter-tariffs and other trade barriers; our ability to effectively compete in the industry and attract and retain Guests; the adequacy of cash flows and the cost and availability of capital or credit facility borrowings; our ability to service our debt and comply with the covenants in our credit facility; a privacy or security breach or a failure of our information technology systems; the effectiveness and timing of the Company's marketing and branding strategies and impact on reputation, including the loyalty program and social media platforms; changes in consumer preferences; leasing space including the location of such leases in areas of declining traffic; changes in cost and availability of commodities and the uncertain impact of tariffs or other potential disruptions in the supply chain; interruptions in the delivery of food and other products from third parties; pricing increases and labor costs; changes in consumer behavior or preference; aging technology infrastructure; expanding our restaurant base; maintaining and improving our existing restaurants; potential acquisitions or refranchising of our restaurants; our geographic concentration in the Western United States; the retention of our management team; our ability to recruit, staff, train, and retain our workforce; operating conditions, including adverse weather conditions, natural disasters, pandemics, and other events affecting the regions where our restaurants are operated; actions taken by our franchisees that could harm our business or reputation; negative publicity regarding food safety or health concerns; protection of our intellectual property rights; changes in laws and regulations affecting the operation of our restaurants; and an increase in litigation or legal claims by team members, franchisees, customers, vendors, stockholders, and others; and the other Risk Factors described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 29, 2024. All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. 28 Table of Contents