What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-10 compared with 2025-08-14 · 120 added, 120 removed, 308 unchanged (44% of the section changed)

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

References to the third quarter of fiscal 2025 and fiscal 2024 refer to the twelve weeks ended October 5, 2025 and October 6, 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 July 13, 2025, the Company owned 397 restaurants located in 39 states, and had 90 franchised restaurants in 13 states and one Canadian province.

Red Robin Gourmet Burgers, Inc., a Delaware corporation, is the parent company for Red Robin International, Inc., a Nevada corporation, that together with its subsidiaries ("Red Robin," "we," "us," "our," or the "Company"), primarily operates, franchises, and develops full-service restaurants with 480 locations in North America.

As of October 5, 2025, the Company owned 390 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 Second Quarter of Fiscal 2025, Compared to the Second Quarter of Fiscal 2024:

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

• Total revenues are $265.1 million, a decrease of $9.5 million.

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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.

• Net loss is $18.4 million, compared to a net loss of $18.9 million last year, a $0.5 million improvement.

• Adjusted EBITDA (2) is $7.6 million compared to $4.2 million last year, an 81% increase.

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

• Total revenues are $941.2 million, a decrease of $22.2 million.

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

• Comparable restaurant revenue (1) was unchanged during the year to date period including recognition of deferred loyalty revenue.

Excluding deferred loyalty revenue, comparable restaurant revenue (1) increased 0.6%.

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

• Net loss is $13.2 million, compared to a net loss of $37.8 million last year, a $24.6 million improvement.

• Adjusted EBITDA (2) is $58.0 million compared to $31.2 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 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.

(2) See "Non-GAAP Financial Measures" for more details.

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.

We continue to closely monitor evolving macroeconomic conditions, including the potential impacts of the federal government shutdown, 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, 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.

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Continued volatility in global trade and economic policy, however, presents a risk to both profitability and future demand.

See "Item 1A.

Risk Factors" below.

Key Performance Indicators

Restaurant revenue, compared to the same quarter in the prior year, is presented in the table below:

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

Restaurant Revenue for the period ended July 14, 2024

(Dollars in millions) Twelve Weeks Ended Forty Weeks Ended

Restaurant revenue for the period ended October 6, 2024

$ 270.6 $ 943.6

Increase (decrease) in comparable restaurant revenue

Decrease in non-comparable and closed restaurant revenue

Increase (decrease) in non-comparable and closed restaurant revenue

Total increase (decrease)

Restaurant Revenue for the period ended July 13, 2025

Restaurant revenue for the period ended October 5, 2025

$ 260.9 $ 926.0

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The following table details restaurant unit data for our Company-owned and franchised locations for the periods presented:

Twelve Weeks Ended Twenty-Eight Weeks Ended

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

Twelve Weeks Ended Forty Weeks Ended

October 5, 2025 October 6, 2024 October 5, 2025 October 6, 2024

Company-owned:

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Total number of restaurants 480 500 480 500

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

The following table presents total Company-owned and franchised restaurants by state or province as of October 5, 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.

Twelve Weeks Ended Twenty-Eight Weeks Ended

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

Twelve Weeks Ended Forty Weeks Ended

October 5, 2025 October 6, 2024 October 5, 2025 October 6, 2024

Restaurant revenue 98.4 % 98.5 % 98.4 % 98.0 %

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General and administrative 6.4 7.6 6.5 6.6

6.1 5.5 6.6 6.2

Selling 2.6 2.0 2.4 3.2

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(1) Expressed as a percentage of restaurant revenue.

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

Twelve Weeks Ended Forty Weeks Ended

(Dollars in thousands) October 5, 2025 October 6, 2024 Percent Change October 5, 2025 October 6, 2024 Percent Change

Restaurant revenue $ 260,909 $ 270,605 (3.6) % $ 926,024 $ 943,630 (1.9) %

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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.

Restaurant revenue decreased $9.7 million, or 3.6%, in the third quarter of fiscal 2025, as compared to the comparable period of fiscal 2024.

Comparable restaurant revenue decreased $3.2 million, or 1.2%, including the change in recognition of deferred loyalty revenue.

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Comparable restaurant revenue includes a 3.0% decrease in guest count, offset in part by a 1.7% 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.

The increase in average guest check resulted from a 2.8% increase in net menu prices, partially offset by a 1.1% decrease from menu mix.

The decrease in menu mix was primarily driven by guest adoption of our new value offering and growth in our catering business that contributes to a lower average guest check than our other channels.

In addition, restaurant revenue decreased $6.5 million due to the closure of 18 locations compared to the third quarter of fiscal 2024.

Restaurant revenue decreased $17.6 million, or 1.9%, 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.

Comparable restaurant revenue decreased $0.3 million, or 0.0% including change in recognition of deferred loyalty revenue.

Excluding the change in deferred loyalty revenue, comparable restaurant revenue increased 0.6%.

Comparable restaurant revenue includes a 4.5% increase in average guest check, offset in part by a 3.9% 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 increase in average guest check resulted from a 5.2% increase in net 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.

I n addition, restaurant revenue decreased $17.3 million due to the closure of 18 locations compared to the third quarter of fiscal 2024.

Franchise revenue increased by $0.3 million, or 8.6%, in the third quarter of fiscal 2025 compared to the same period of fiscal 2024, primarily due to transfer fee revenue earned in conjunction with a franchisee to franchisee transaction.

Franchise revenue decreased by $1.7 million, or 13.4%, in the year to date periods of fiscal 2025 compared to the same period of fiscal 2024, driven by a decrease in the franchisee contribution rate for marketing programs and lower franchise royalties, offset partially by transfer fee revenue earned in conjunction with a franchisee to franchisee sale.

Franchise restaurants reported a decrease of 2.1% in comparable restaurant revenue in the third quarter of fiscal 2025 compared to the same period in fiscal 2024 and a decrease of 2.2% for the year to date period of fiscal 2025 compared to the same period in fiscal 2024.

Other revenue decreased $0.1 million and $2.9 million in the third quarter and year to date periods of fiscal 2025, respectively, compared to the same periods of fiscal 2024.

The decrease in the year to date period is primarily related to lower gift card breakage in the current year.

Cost of Sales

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

Twelve Weeks Ended Forty Weeks Ended

(In thousands, except percentages) October 5, 2025 October 6, 2024 Percent Change October 5, 2025 October 6, 2024 Percent Change

Cost of sales $ 65,158 $ 65,105 0.1 % $ 218,344 $ 224,759 (2.9) %

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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 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 increased 90 basis points for the third quarter of fiscal 2025 as compared to the comparable period in fiscal 2024.

The increase was primarily driven by an increase in commodity prices in the current year, increased discounts related to our value offerings, and vendor credits that reduced cost of sales in 2024, partially offset by menu price increases and cost savings initiatives.

Cost of sales as a percentage of restaurant revenue decreased 20 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

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

Twelve Weeks Ended Forty Weeks Ended

(In thousands, except percentages) October 5, 2025 October 6, 2024 Percent Change October 5, 2025 October 6, 2024 Percent Change

Labor $ 97,238 $ 107,692 (9.7) % $ 340,005 $ 370,559 (8.2) %

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Labor costs include restaurant level hourly wages and management salaries as well as related taxes and benefits.

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 250 basis points for the third 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 benefit from menu price increases, partially offset by wage inflation and deleverage from reduced guest counts.

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

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

Twelve Weeks Ended Forty Weeks Ended

(In thousands, except percentages) October 5, 2025 October 6, 2024 Percent Change October 5, 2025 October 6, 2024 Percent Change

Other operating $ 49,160 $ 49,740 (1.2) % $ 166,292 $ 168,014 (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.

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

Other operating costs as a percentage of restaurant revenue increased 40 basis points for the third 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, vendor credits that reduced other operating costs in 2024, and deleverage from reduced guest counts, partially offset by benefit of menu price increases.

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

Twelve Weeks Ended Forty Weeks Ended

(In thousands, except percentages) October 5, 2025 October 6, 2024 Percent Change October 5, 2025 October 6, 2024 Percent Change

Occupancy $ 23,531 $ 23,826 (1.2) % $ 80,056 $ 79,850 0.3 %

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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 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 third quarter of fiscal 2025 increased 20 basis points compared to the same period in fiscal 2024.

The increase is primarily due to an increase in general liability insurance reserves, and deleverage from reduced guest counts, offset in part by menu price increases and reduced rent associated with the closure of 18 locations since the third quarter of fiscal 2024.

Occupancy costs as a percentage of restaurant revenue for the year to date period of fiscal 2025 increased 10 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.

The increase is primarily due to the impact of increases in fixed rents and general liability insurance reserves, and deleverage from reduced guest counts, offset in part by menu price increases and reduced rent associated with the closure of 18 locations since the third quarter of fiscal 2024.

Depreciation and Amortization

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

Twelve Weeks Ended Forty Weeks Ended

(In thousands, except percentages) October 5, 2025 October 6, 2024 Percent Change October 5, 2025 October 6, 2024 Percent Change

Depreciation and amortization $ 12,019 $ 13,330 (9.8) % $ 39,031 $ 44,886 (13.0) %

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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.

For the third quarter of fiscal 2025, depreciation and amortization expense as a percentage of revenue decreased 40 basis points compared to the comparable period in fiscal 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 fiscal 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

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

Twelve Weeks Ended Forty Weeks Ended

(In thousands, except percentages) October 5, 2025 October 6, 2024 Percent Change October 5, 2025 October 6, 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 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.

General and administrative costs in the third quarter of fiscal 2025 were $16.9 million, a decrease of $3.9 million compared to the comparable period in fiscal 2024.

The decrease is primarily related to a reduction in team member costs associated with lower headcount and cost incurred for annual partner recognition events in the prior year, partially offset by higher accrued incentive compensation expense due to the Company's increased financial performance.

General and administrative costs in the year to date period of fiscal 2025 were $61.3 million, a decrease of $2.0 million compared to the comparable period in fiscal 2024.

The decrease is primarily related to a reduction in team member costs associated with lower headcount and cost incurred for annual partner recognition events in the prior year.

This decrease is partially offset by higher accrued incentive compensation expense due to the Company's increased financial performance and higher costs associated with noncash stock-based compensation expense.

Selling Expenses

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

Twelve Weeks Ended Forty Weeks Ended

(In thousands, except percentages) October 5, 2025 October 6, 2024 Percent Change October 5, 2025 October 6, 2024 Percent Change

$ 6,797 $ 5,467 24.3 % $ 22,523 $ 31,052 (27.5) %

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Selling costs are comprised of all marketing and advertising costs.

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.

Selling costs in the third quarter of fiscal 2025 were $6.8 million, an increase of $1.3 million compared to the comparable period in fiscal 2024.

The increase was primarily driven by paid media spend in the current fiscal quarter as we support our new marketing strategy.

Selling costs in the year to date period of fiscal 2025 were $22.5 million, a decrease of $8.5 million compared to the comparable period in fiscal 2024.

The decrease was primarily driven by intentionally reduced paid media spend in the first half of the current fiscal year as we developed our new marketing strategy that launched in the third quarter.

Interest Expense

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 third quarter of fiscal 2025 and fiscal 2024 was $6.0 million and $6.3 million, respectively.

The $0.3 million decrease was primarily due to less debt in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024, offset partially by an increase in the weighted average interest rate to 14.3% in the third quarter of fiscal 2025 compared to 14.0% in the third quarter of fiscal 2024.

Average outstanding debt was $174.4 million and $191.6 million for the third quarter of fiscal 2025 and fiscal 2024, respectively.

Interest expense for the year to date period of fiscal 2025 and fiscal 2024 was $19.9 million and $18.9 million, respectively.

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Income Tax Provision (Benefit)

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.

Income tax provision was $0.3 million in the third quarter of fiscal 2025, compared to an income tax benefit of $0.1 million in the third quarter of fiscal 2024.

Income tax provision was $0.2 million in the year to date period of fiscal 2025 compared to an income tax provision of $0.0 million in the year to date of period of fi sc al 2024.

The taxes recognized are immaterial as the Company has net operating losses and tax credits to reduce current taxes and a full valuation allowance against all deferred taxes, which collectively minimize the taxes paid and recognized.

Non-GAAP Financial Measures

A reconciliation of Restaurant revenue to restaurant level operating profit is detailed in the table below:

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/

Twelve Weeks Ended Forty Weeks Ended

(Dollars in thousands)

October 5, 2025 October 6, 2024 Increase

Restaurant revenue $ 260,909 $ 270,605 (3.6) % $ 926,024 $ 943,630 (1.9) %

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(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.

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)

See below for definition of and a reconciliation of restaurant level operating profit to Income from Operations and Income from Operations as a percentage of total revenues.

Twelve Weeks Ended Forty Weeks Ended

(Dollars in thousands)

October 5, 2025 October 6, 2024 Increase (Decrease)

Restaurant revenue $ 260,909 $ 270,605 (3.6) % $ 926,024 $ 943,630 (1.9) %

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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

Twelve Weeks Ended Forty Weeks Ended

(in thousands, except per share amounts) October 5, 2025 October 6, 2024 October 5, 2025 October 6, 2024

Net income (loss) as reported $ (18,419) $ (18,876) $ (13,177) $ (37,825)

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Net income (loss) as reported

$ (1.03) $ (1.20) $ (0.74) $ (2.42)

Stock-based compensation expense (1)

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

Twelve Weeks Ended Twenty-Eight Weeks Ended

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

Twelve Weeks Ended Forty Weeks Ended

(Dollars in thousands) October 5, 2025 October 6, 2024 October 5, 2025 October 6, 2024

Net income (loss) as reported $ (18,419) $ (18,876) $ (13,177) $ (37,825)

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(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.

(2) Beginning in the fiscal first quarter of fiscal 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.

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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):

Twelve Weeks Ended Twenty-Eight Weeks Ended

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

The following table summarizes Income (loss) from operations and Restaurant level operating profit for the periods presented:

Twelve Weeks Ended Forty Weeks Ended

(Dollars in thousands)

October 5, 2025 October 6, 2024 October 5, 2025 October 6, 2024

Income (loss) from operations $ (12,113) (4.6)% $ (12,877) (4.7)% $ 6,765 0.7% $ (19,551) (2.0)%

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Restaurant level operating profit $ 25,822 9.9% $ 24,242 9.0% $ 121,327 13.1% $ 100,448 10.6%

Income (loss) from operations as a percentage of total revenues 3.5% (1.5)% 2.8% (1.0)%

Restaurant level operating profit margin (as a percentage of restaurant revenue) 14.5% 11.8% 14.4% 11.3%

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.

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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 $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.

Cash and cash equivalents, and restricted cash decreased $8.5 million to $30.9 million as of October 5, 2025, from $39.4 million at the beginning of the fiscal year.

As of October 5, 2025, the Company had approximately $50.7 million in liquidity, including cash and cash equivalents and $29.0 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):

Twenty-Eight Weeks Ended

July 13, 2025 July 14, 2024

Forty Weeks Ended

October 5, 2025 October 6, 2024

Net cash provided by operating activities $ 26,003 $ 1,840

Net cash provided by (used in) investing activities (12,382) 9,415

Net cash (used in) provided by investing activities (18,976) 4,873

Net cash (used in) financing activities (15,555) (7,990)

Effect of exchange rate changes on cash — (2)

Net change in cash and cash equivalents, and restricted cash $ (8,528) $ (1,277)

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Net cash flows provided by operating activities increased $24.2 million to $26.0 million for the year to date period of fiscal 2025 compared to $1.8 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.

The increase in net cash provided by operating activities is primarily attributabl e to the increase in restaurant level profitability and reduced selling expenses.

Investing Cash Flows

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.

Net cash flows used in investing activities was $19.0 million for the year to date period of fiscal 2025, as compared to net cash flows provided by investing activities of $4.9 million for the comparable period in fiscal 2024.

The $23.9 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):

Twenty-Eight Weeks Ended

July 13, 2025 July 14, 2024

Forty Weeks Ended

October 5, 2025 October 6, 2024

Restaurant improvement capital and other $ 13,522 $ 9,772

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Financing Cash Flows

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.

Net cash flows used in financing activities was $15.6 million for the year to date period of fiscal 2025, as compared to $8.0 million for the comparable period in fiscal 2024.

Cash flows used in financing activities in the year to date period 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

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.

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 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.

As of October 5, 2025, the Company had outstanding borrowings under the Credit Facility of $177.7 million.

As of October 5, 2025, the Company had $29.0 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.

See Note 6 for more information regarding our borrowings.

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

As of October 5, 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 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.

From the date of the current program approval through October 5, 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 July 13, 2025, we had $58.5 million of availability under the current share repurchase program.

Accordingly, as of October 5, 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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There were no other material changes outside the ordinary course of business to our contractual obligations since the filing of the Annual Report on Form 10-K for the fiscal year ended December 29, 2024.

Commitments and Contingencies .

Critical Accounting Estimates

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our business objectives and strategic plans;

strategies with respect to financial flexibility;

capital structure initiatives;

our refinancing efforts, including but not limited to the amendment to our credit agreement;

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;

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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;

In addition, the factors described under Item 1A 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;

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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