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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-29 · 141 added, 95 removed, 287 unchanged (45% of the section changed)

1 unchanged sentence

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.

References to the second quarter of fiscal 2025 and fiscal 2024 refer to the twelve weeks ended July 13, 2025 and July 14, 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 487 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.

As of July 13, 2025, the Company owned 397 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.

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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%.

Highlights for the Second Quarter of Fiscal 2025, Compared to the Second Quarter of Fiscal 2024:

• Total revenues are $283.7 million, a decrease of $16.5 million.

• Comparable restaurant revenue (1) decreased 3.2%, including recognition of deferred loyalty revenue.

Excluding deferred loyalty revenue, comparable restaurant revenue (1) decreased 1.3%.

• Net income is $4.0 million, compared to a net loss of $9.5 million last year, a $13.5 million increase.

• Adjusted EBITDA (2) is $22.4 million compared to $13.6 million last year, a 64% increase.

• Completed sale of three owned properties during the first quarter for gross proceeds of $5.8 million.

Highlights for the Year to Date Period of Fiscal 2025, Compared to the Year to Date Period of Fiscal 2024:

• Total revenues are $676.1 million, a decrease of $12.6 million.

• Comparable restaurant revenue (1) increased 0.4% including recognition of deferred loyalty revenue.

Excluding deferred loyalty revenue, comparable restaurant revenue (1) increased 1.3%.

• Net income is $5.2 million, compared to a net loss of $18.9 million last year, a $24.2 million increase.

• Adjusted EBITDA (2) is $50.3 million compared to $27.0 million last year, an 86% increase.

• Repaid $20.3 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.

(1) Comparable restaurant revenue represents revenue from Company-owned restaurants that have operated for at least 18 months as of the beginning of the period presented.

(2) See "Reconciliation of Non-GAAP Results to GAAP Results" for more details.

Business Trends

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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.

Continued volatility in global trade and economic policy, however, 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

(Dollars in millions) Twelve Weeks Ended Twenty-Eight Weeks Ended

Restaurant Revenue for the period ended July 14, 2024

$ 294.5 $ 673.0

Increase/(Decrease) in comparable restaurant revenue

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Total increase/(decrease) (15.1) (7.9)

Restaurant Revenue for the period ended April 20, 2025

Restaurant Revenue for the period ended July 13, 2025

$ 279.4 $ 665.1

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

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 13, 2025 July 14, 2024 July 13, 2025 July 14, 2024

Company-owned:

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Total number of restaurants 487 503 487 503

The following table presents total Company-owned and franchised restaurants by state or province as of April 20, 2025:

The following table presents total Company-owned and franchised restaurants by state or province as of July 13, 2025:

Company-Owned Restaurants Franchised Restaurants

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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

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 13, 2025 July 14, 2024 July 13, 2025 July 14, 2024

Restaurant revenue 98.5 % 98.1 % 98.4 % 97.7 %

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General and administrative

6.1 5.5 6.6 6.2

Selling 2.2 4.0 2.3 3.7

Other charges (gains), net

(0.1) 1.0 0.1 (0.2)

Income (loss) from operations 3.5 (1.5) 2.8 (1.0)

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Income (loss) before income taxes

1.4 (3.2) 0.8 (2.7)

Income tax provision (benefit)

Net income (loss) 1.4 % (3.2) % 0.8 % (2.8) %

Certain percentage amounts in the table above do not total due to rounding.

(1) Expressed as a percentage of restaurant revenue.

Sixteen Weeks Ended

(Dollars in thousands) April 20, 2025 April 21, 2024 Percent Change

Twelve Weeks Ended Twenty-Eight Weeks Ended

(Dollars in thousands) July 13, 2025 July 14, 2024 Percent Change July 13, 2025 July 14, 2024 Percent Change

Restaurant revenue $ 279,305 $ 294,457 (5.1) % $ 665,115 $ 673,025 (1.2) %

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Total operating weeks (1)

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.

4,764 4,949 (3.7) % 11,281 11,560 (2.4) %

(1) 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.

Restaurant revenue is comprised primarily of food and beverage sales.

Restaurant revenue decreased $15.2 million, or 5.1%, in the second quarter of fiscal 2025, as compared to the comparable period of fiscal 2024.

Comparable restaurant revenue decreased $9.1 million, or 3.2% including the change in recognition of deferred loyalty revenue.

Excluding the change in deferred loyalty revenue, comparable restaurant revenue decreased 1.3%.

Comparable restaurant revenue includes a 5.5% decrease in Guest count, offset in part by a 4.2% increase in average Guest check.

The increase in average Guest check resulted from a 4.4% increase in menu prices, partially offset by a 0.2% decrease from menu mix.

The decrease in menu mix was primarily driven by growth in our catering business that contributes to a lower average Guest check than our other channels.

In addition, restaurant revenue decreased $6.0 million due to the closure of 14 locations since the second fiscal quarter of 2024.

Restaurant revenue decreased $7.9 million, or 1.2%, in the year to date period of fiscal 2025, as compared to the comparable period of fiscal 2024.

Comparable restaurant revenue increased $2.4 million, or 0.4% including change in recognition of deferred loyalty revenue.

Excluding the change in deferred loyalty revenue, comparable restaurant revenue increased 1.3%.

Comparable restaurant revenue includes a 5.6% increase in average Guest check, offset in part by a 4.3% decrease in Guest count.

The increase in average Guest check resulted from a 6.3% increase in menu prices, partially offset by a 0.7% decrease from menu mix.

The decrease in menu mix was primarily driven by growth in our catering business that contributes to a lower average Guest check than our other channels.

In addition, restaurant revenue decreased $10.3 million due to the closure of 14 locations since the second fiscal quarter of 2024.

Franchise revenue decreased by $1.1 million, or 25.7%, in the second 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 2.9% in comparable restaurant revenue in the second quarter of fiscal 2025 compared to the same period in fiscal 2024 and a decrease of 2.3% for the year to date period of fiscal 2025 compared to the same period in fiscal 2024.

Other revenue decreased $0.2 million and $2.8 million in the second quarter and year to date periods of fiscal 2025, respectively, compared to the same periods of fiscal 2024.

The decreases are primarily related to lower gift card breakage in the current periods.

Cost of Sales

Sixteen Weeks Ended

(In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change

Twelve Weeks Ended Twenty-Eight Weeks Ended

(In thousands, except percentages) July 13, 2025 July 14, 2024 Percent Change July 13, 2025 July 14, 2024 Percent Change

Cost of sales $ 65,159 $ 69,444 (6.2) % $ 153,186 $ 159,653 (4.1) %

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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.

Sixteen Weeks Ended

(In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change

Cost of sales as a percentage of restaurant revenue decreased 30 basis points for the second quarter of fiscal 2025 as compared to the comparable period in fiscal 2024.

The decrease was primarily driven by menu price increases and cost saving initiatives, partially offset by an increase in commodity prices.

Cost of sales as a percentage of restaurant revenue decreased 70 basis points for the year to date period of fiscal 2025 as compared to the comparable period in fiscal 2024.

The decrease was primarily driven by menu price increases, cost saving initiatives 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.

Twelve Weeks Ended Twenty-Eight Weeks Ended

(In thousands, except percentages) July 13, 2025 July 14, 2024 Percent Change July 13, 2025 July 14, 2024 Percent Change

Labor $ 99,709 $ 113,908 (12.5) % $ 242,767 $ 262,866 (7.6) %

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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.

Labor as a percentage of restaurant revenue decreased 300 basis points for the second quarter of fiscal 2025 compared to the same period in fiscal 2024.

The decrease was primarily driven by ongoing efforts to increase hourly and management labor efficiency, reduced turnover, and lower group health and workers comp self insurance costs.

Labor as a percentage of restaurant revenue decreased 260 basis points for the year to date period of fiscal 2025 compared to the same period in fiscal 2024.

The decrease was primarily driven by ongoing efforts to increase hourly and management labor efficiency, reduced turnover, and lower group health and workers comp self insurance costs.

Other Operating

Sixteen Weeks Ended

(In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change

Twelve Weeks Ended Twenty-Eight Weeks Ended

(In thousands, except percentages) July 13, 2025 July 14, 2024 Percent Change July 13, 2025 July 14, 2024 Percent Change

Other operating $ 49,600 $ 51,783 (4.2) % $ 117,132 $ 118,273 (1.0) %

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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.

Sixteen Weeks Ended

(In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change

Other operating costs as a percentage of restaurant revenue increased 20 basis points for the second quarter of fiscal 2025 compared to the same period in fiscal 2024.

The increase was primarily driven by higher third party commission expenses associated with the increase in third party delivery sales.

Other operating costs as a percentage of restaurant revenue was consistent for the year to date period of fiscal 2025 compared to the same period in fiscal 2024.

The increase was primarily driven by higher third party commission expenses associated with the increase in third party delivery sales, offset by lower restaurant supply costs.

Twelve Weeks Ended Twenty-Eight Weeks Ended

(In thousands, except percentages) July 13, 2025 July 14, 2024 Percent Change July 13, 2025 July 14, 2024 Percent Change

Occupancy $ 24,329 $ 24,595 (1.1) % $ 56,526 $ 56,023 0.9 %

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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.

Occupancy costs as a percentage of restaurant revenue for the second quarter of fiscal 2025 increased 30 basis points compared to the same period in fiscal 2024.

The increase is primarily due to an increase in general liability insurance reserves, offset in part by reduced rent associated with the closure of 14 locations since the second quarter of fiscal 2024.

Occupancy costs as a percentage of restaurant revenue for the year to date period of fiscal 2025 increased 20 basis points compared to the same period in fiscal 2024.

The increase is primarily due to the impact of increases in fixed rents and general liability insurance reserves, offset in part by reduced rent associated with the closure of 14 locations since the second quarter of fiscal 2024.

Depreciation and Amortization

Sixteen Weeks Ended

(In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change

Twelve Weeks Ended Twenty-Eight Weeks Ended

(In thousands, except percentages) July 13, 2025 July 14, 2024 Percent Change July 13, 2025 July 14, 2024 Percent Change

Depreciation and amortization $ 11,579 $ 13,402 (13.6) % $ 27,013 $ 31,556 (14.4) %

As a percent of total revenues 4.1 % 4.5 % (0.4) % 4.0 % 4.6 % (0.6) %

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.

Depreciation and amortization includes 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 second quarter of fiscal 2025, depreciation and amortization expense as a percentage of revenue decreased 40 basis points compared to the comparable period in 2024, primarily due to asset impairments and restaurant closures.

For the year to date period of fiscal 2025, depreciation and amortization expense as a percentage of revenue decreased 60 basis points compared to the comparable period in 2024, primarily due to asset impairments, restaurant closures, and a sale-leaseback transaction that closed in the first quarter of fiscal 2024, reducing the depreciable asset base.

General and Administrative Expenses

Sixteen Weeks Ended

(In thousands, except percentages) April 20, 2025 April 21, 2024 Percent Change

Twelve Weeks Ended Twenty-Eight Weeks Ended

(In thousands, except percentages) July 13, 2025 July 14, 2024 Percent Change July 13, 2025 July 14, 2024 Percent Change

General and administrative

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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.

General and administrative costs in the second quarter of fiscal 2025 were $17.4 million, an increase of $0.8 million compared to the comparable period in 2024.

The increase is primarily related to higher accrued incentive compensation expense due to the Company's increased financial performance, partially offset by a reduction in Team Member costs associated with lower headcount.

General and administrative costs in the year to date period of fiscal 2025 were $44.4 million, an increase of $2.0 million compared to the comparable period in 2024.

The increase is primarily related to higher accrued incentive compensation expense due to the Company's increased financial performance, 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

Twelve Weeks Ended Twenty-Eight Weeks Ended

(In thousands, except percentages) July 13, 2025 July 14, 2024 Percent Change July 13, 2025 July 14, 2024 Percent Change

$ 6,350 $ 12,040 (47.3) % $ 15,726 $ 25,587 (38.5) %

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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.

Selling costs in the second quarter of fiscal 2025 were $6.4 million, a decrease of $5.7 million compared to the comparable period in 2024.

The decrease was primarily driven by intentionally reduced paid media spend in the current fiscal quarter as we develop our new Marketing strategy.

Selling costs in the year to date period of fiscal 2025 were $15.7 million, a decrease of $9.9 million compared to the comparable period in 2024.

The decrease was primarily driven by intentionally reduced paid media spend in the current fiscal year as we develop our new Marketing strategy.

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.

Interest expense for the second quarter of fiscal 2025 and fiscal 2024 was $5.8 million and $5.1 million, respectively.

The $0.7 million increase was primarily due to an increase in the weighted average interest rate to 14.3% in the second quarter of fiscal 2025 compared to 12.9% in the second quarter of fiscal 2024.

Average outstanding debt was $176.2 million and $176.5 million for the second quarter of fiscal 2025 and fiscal 2024, respectively.

Interest expense for the year to date period of fiscal 2025 and fiscal 2024 was $13.9 million and $12.6 million, respectively.

The $1.3 million increase was primarily due to an increase in the weighted average interest rate to 14.2% in the year to date period of fiscal 2025 compared to 13.5% in the year to date period of fiscal 2024.

Average outstanding debt was $182.8 million and $187.8 million for the year to date periods 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.

Income tax benefit was $0.1 million in the second quarter of fiscal 2025, compared to an income tax benefit of $0.0 million in the second quarter of fiscal 2024.

Income tax benefit was $0.1 million in the year to date period of fiscal 2025 compared to an Income tax provision of $0.1 million in the year to date of period of fiscal 2024.

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/

Twelve Weeks Ended Twenty-Eight Weeks Ended

(Dollars in millions) July 13, 2025 July 14, 2024 Increase/

(Decrease) July 13, 2025 July 14, 2024 Increase/

Restaurant revenue $ 279.3 $ 294.5 (5.2) % $ 665.1 $ 673.0 (1.2) %

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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)

Twelve Weeks Ended Twenty-Eight Weeks Ended

(Dollars in millions) July 13, 2025 July 14, 2024 Increase/(Decrease) July 13, 2025 July 14, 2024 Increase/(Decrease)

Restaurant revenue $ 279.3 $ 294.5 (5.1) % $ 665.1 $ 673.0 (1.2) %

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(Percentage of Restaurant Revenue) (Basis

Points) (Percentage of Restaurant Revenue) (Basis

Cost of sales 23.3 % 23.6 % (30) 23.0 % 23.7 % (70)

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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.

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

The following table summarizes net income (loss), income (loss) per diluted share, and adjusted net income (loss) per diluted share for the periods presented:

Twelve Weeks Ended Twenty-Eight Weeks Ended

(in thousands, except per share amounts) July 13, 2025 July 14, 2024 July 13, 2025 July 14, 2024

Net income (loss) as reported $ 3,993 $ (9,489) $ 5,242 $ (18,949)

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Stock-based compensation expense (1)

0.08 0.12 0.22 0.19

Other charges (gains), net:

Restaurant closure costs, net 0.01 0.01

Gain on sale of restaurant property — — (0.06) (0.48)

Asset impairment and restaurant closure costs, net (0.09) 0.10 (0.08) 0.11

Severance and executive transition 0.02 0.01 0.07 0.07

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Income tax effect (0.02) (0.08) (0.06) (0.03)

Adjusted income (loss) per share - diluted (1)

Adjusted net income (loss) per share - diluted (2)

$ 0.26 $ (0.38) $ 0.46 $ (1.12)

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Diluted 18,925 15,680 18,598 15,608

(1) Consists of compensation expense associated with stock-based awards including phantom performance awards that may be settled in stock or cash at the Company’s option.

(2) 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.

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The following table summarizes net income (loss), EBITDA, and adjusted EBITDA for the periods presented:

Sixteen Weeks Ended

April 20, 2025 April 21, 2024

Twelve Weeks Ended Twenty-Eight Weeks Ended

(Dollars in thousands) July 13, 2025 July 14, 2024 July 13, 2025 July 14, 2024

Net income (loss) as reported $ 3,993 $ (9,489) $ 5,242 $ (18,949)

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Stock-based compensation expense (1)

1,489 1,839 4,078 3,029

Other charges (gains), net:

Gain on sale of restaurant property — — (1,137) (7,425)

Restaurant closure costs, net 210 175

Asset impairment and restaurant closure costs, net (1,615) 1,551 (1,405) (398)

Severance and executive transition 459 137 1,339 1,082

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$ 22,429 $ 13,640 $ 50,339 $ 27,043

(1) Consists of compensation expense associated with stock-based awards including phantom performance awards that may be settled in stock or cash at the Company’s option.

(2) Beginning in the fiscal first quarter of 2025, the Company revised its definition of Adjusted EBITDA to exclude noncash stock-based compensation expense.

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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.

Adjusted EBITDA and Adjusted net 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.

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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.

Adjusted net 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.

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

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 13, 2025 July 14, 2024 July 13, 2025 July 14, 2024

Income (loss) from operations $ 9,815 3.5% $ (4,561) (1.5)% $ 18,877 2.8% $ (6,672) (1.0)%

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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 and cash equivalents, and restricted cash decreased $5.9 million to $33.5 million as of July 13, 2025, from $39.4 million at the beginning of the fiscal year.

As of July 13, 2025, the Company had approximately $61.9 million in liquidity, including cash and cash equivalents and $37.5 million available borrowing capacity under our Credit Facility.

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

Twenty-Eight Weeks Ended

July 13, 2025 July 14, 2024

Net cash provided by operating activities $ 29,511 $ 14,246

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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.

Net cash flows provided by operating activities increased $15.3 million to $29.5 million for the year to date period of fiscal 2025 compared to $14.2 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 and reduced selling expenses.

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.

Net cash flows used in investing activities was $12.4 million for the first half of fiscal 2025, as compared to net cash flows provided by investing activities of $9.4 million for the comparable period in fiscal 2024.

The $21.8 million decrease in cash flows from investing activities is primarily due to an increase in capital expenditures and 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

Twenty-Eight Weeks Ended

July 13, 2025 July 14, 2024

Restaurant improvement capital and other $ 9,648 $ 7,485

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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.

Net cash flows used in financing activities was $23.0 million for the first half of fiscal 2025, as compared to $24.1 million for the comparable period in fiscal 2024.

Cash flows used in financing activities in the first half of fiscal 2025 primarily relate to the repayment 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 repayment of debt with the net proceeds from the sale-leaseback transaction.

Credit Facility

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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.

As of July 13, 2025, the Company had outstanding borrowings under the Credit Facility of $163.1 million, net of $6.1 million of unamortized deferred financing charges and discounts, none of which was classified as current.

As of July 13, 2025, the Company had $37.5 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.

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.

As of July 13, 2025, we were in compliance with all debt covenants.

Working Capital

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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.

From the date of the current program approval through July 13, 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.

Accordingly, as of July 13, 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.

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the seasonality of our business;

and our purchase commitments and litigation contingencies and the adequacy of our reserves for legal matters.

and our purchase commitments and lease 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.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis