Item 7. Management’s Discussion and Analysis
ITEM 7. 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 Consolidated Financial Statements and Notes to Consolidated Financial Statements included in Part II, Item 8 - Financial Statements and Supplementary Data of this report.
The Company's fiscal year ends on the last Sunday of each calendar year. Most of our fiscal years have 52 weeks; however, we experience a 53rd week once every five to six years. Our discussion for fiscal 2025, which ended on December 28, 2025, referred to a 52-week period. Our discussion for fiscal 2024, which ended December 29, 2024, also referred to a 52-week period. The following discussion comparing our results in fiscal years 2025 and 2024 referred to the fifty-two weeks ended December 28, 2025 and December 29, 2024, respectively. For a discussion comparing our results from fiscal 2024 to fiscal
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2023, refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 29, 2024, filed with the SEC on February 26, 2025.
Overview
Description of Business
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 casual dining restaurants with 475 locations in North America. As of December 28, 2025, the Company operated 385 Company-owned restaurants located in 39 states. The Company also had 90 franchised restaurants in 13 states and one Canadian province as of December 28, 2025. The Company operated 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 Fiscal 2025 Compared to Fiscal 2024
• Total revenues were $1.21 billion, a decrease of $38.3 million from fiscal 2024.
• Comparable restaurant revenue (1) decreased 0.3% from fiscal 2024, excluding a 0.4% unfavorable impact of deferred loyalty revenue.
• Net loss was $23.3 million, as compared to a net loss of $77.5 million in fiscal 2024.
• Adjusted EBITDA (2) was $69.7 million, a 52.8% increase from fiscal 2024.
(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 below for a reconciliation of adjusted EBITDA, a non-GAAP measure, to net income (loss).
Key Performance Indicators
Restaurant revenue, compared to the same period in the prior year, is presented in the table below:
(millions)
Restaurant revenue for the fifty-two weeks ended December 29, 2024
$ 1,224.3
Change in comparable restaurant revenue
(8.3)
Change in non-comparable restaurant revenue
(26.2)
Total change
$ (34.5)
Restaurant revenue for the fifty-two weeks ended December 28, 2025
$ 1,189.8
Restaurant Data
The following table details restaurant unit data for our Company-owned and franchised locations for the periods indicated:
Fifty-Two Weeks Ended Fifty-Two Weeks Ended
December 28, 2025 December 29, 2024
Company-owned:
Beginning of period 407 415
Closed
(22) (8)
End of period 385 407
Franchised:
Beginning of period 91 92
Closed
(1) (1)
End of period 90 91
Total number of restaurants, end of period
475 498
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The following table presents total Company-owned and franchised restaurants by state or province as of December 28, 2025:
Company-Owned Restaurants Franchised Restaurants
State:
Arkansas 2
Alaska 3
Alabama 3
Arizona 17 1
California 55
Colorado 21
Connecticut 3
Delaware 4
Florida 16
Georgia 6
Iowa 5
Idaho 8
Illinois 14
Indiana 10
Kansas 5
Kentucky 3
Louisiana 1
Massachusetts 5
Maryland 11
Maine 2
Michigan 19
Minnesota 3
Missouri 7 3
Montana 1
North Carolina 16
Nebraska 4
New Hampshire 3
New Jersey 7 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 7
Texas 16 9
Utah 1 5
Virginia 17
Washington 36
Wisconsin 11
Province:
British Columbia 11
Total 385 90
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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. Certain percentage amounts in the table below do not total due to rounding as well as restaurant operating costs being expressed as a percentage of restaurant revenue and not total revenues.
Year Ended
December 28, 2025 December 29, 2024
Revenues:
Restaurant revenue 98.3 % 98.0 %
Franchise revenue 1.2 1.2
Other revenue 0.5 0.8
Total revenues 100.0 % 100.0 %
Costs and expenses:
Restaurant operating costs (1) (excluding depreciation and amortization shown separately below):
Cost of sales 23.9 % 23.9 %
Labor 36.7 39.2
Other operating 17.9 17.7
Occupancy 8.7 8.4
Total restaurant operating costs 87.3 % 89.2 %
Depreciation and amortization 4.3 4.6
General and administrative
6.4 6.6
Selling
2.6 2.9
Other (gains) charges, net
0.9 2.7
Income (loss) from operations 0.2 % (4.3) %
Other (income) expense:
Interest expense 2.2 % 2.0 %
Interest (income) and other, net — (0.1)
Total other expenses, net 2.2 % 2.0 %
Income (loss) before income taxes
(1.9) % (6.2) %
Income tax (benefit) expense
— —
Net income (loss)
(1.9) % (6.2) %
(1) Expressed as a percentage of restaurant revenue.
Revenues
(Revenues in thousands) 2025 2024 Percent Change
Restaurant revenue $ 1,189,780 $ 1,224,254 (2.8) %
Franchise revenue 14,076 14,941 (5.8)
Other revenue 6,369 9,365 (32.0)
Total revenues $ 1,210,225 $ 1,248,560 (3.1) %
Average weekly net sales volumes in Company-owned restaurants (1)
$ 57,605 $ 57,403 0.4 %
Total operating weeks 20,654 21,344 (3.2) %
(1) Average weekly net sales volumes represents 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.
Restaurant revenue, which was comprised primarily of food and beverage sales, decreased $34.5 million in fiscal 2025, or 2.8%, as compared to fiscal 2024. Of the $34.5 million decrease, $8.3 million, or 0.7% including the change in recognition of
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deferred loyalty revenue, was due to a decrease in comparable restaurant revenue and the remaining $26.2 million decrease was due to non-comparable restaurants, primarily attributed to the closure of 22 locations during fiscal 2025. Excluding the change in deferred loyalty revenue, comparable restaurant revenue decreased by 0.3%, driven by a 3.8% decrease in guest count, partially offset by a 3.5% increase in average guest check. The increase in average guest check was driven by a 4.2% net price increase, offset partially by a 0.7% decrease in menu mix. The decrease in menu mix was primarily driven by guests' adoption of our new value offering and growth in our catering business that contributes to a lower average guest check when compared to our other channels. Dine-in sales comprised 75.6% of total food and beverage sales in fiscal 2025, as compared to 77.0% in fiscal 2024.
Franchise revenue primarily included royalty income and advertising fund contributions. Franchise revenue decreased $0.9 million, or 5.8%, in fiscal 2025 compared to 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. The percentage of sales each franchisee is required to contribute could change in the future, as we expect to align contributions with spending levels, subject to compliance with the respective franchise agreement. Franchise restaurants reported a decrease of 2.4% in comparable restaurant revenue in fiscal 2025 compared to an increase of 2.6% in fiscal 2024.
Other revenue decreased by $3.0 million, or 32.0% in fiscal 2025 compared to fiscal 2024. The reduction in other revenue in fiscal 2025 compared to fiscal 2024 was primarily related to lower gift card breakage in the current year.
Cost of Sales
(In thousands, except percentages) 2025 2024 Percent Change
Cost of sales $ 283,883 $ 292,392 (2.9) %
As a percent of restaurant revenue 23.9 % 23.9 % — %
Cost of sales, which was comprised of food and beverage costs, was variable and generally fluctuated with sales volume. Cost of sales as a percentage of restaurant revenue was unchanged compared to the same period in fiscal 2024, primarily due to benefits from pricing and cost saving implementations that were offset by inflation.
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Labor
(In thousands, except percentages) 2025 2024 Percent Change
Labor $ 437,242 $ 479,631 (8.8) %
As a percent of restaurant revenue 36.7 % 39.2 % (2.5) %
Labor costs included restaurant-level hourly wages and management salaries as well as related taxes and benefits. Labor as a percentage of restaurant revenue decreased 250 basis points in fiscal 2025 as compared to 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.
Other Operating
(In thousands, except percentages) 2025 2024 Percent Change
Other operating $ 213,187 $ 216,242 (1.4) %
As a percent of restaurant revenue 17.9 % 17.7 % 0.2 %
Other operating costs included costs such as equipment repairs 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 in fiscal 2025 as compared to fiscal 2024. The increase was primarily driven by higher third party commission expenses associated with the increase in third party delivery sales and deleverage from reduced guest counts, partially offset by the benefit of menu price increases.
Occupancy
(In thousands, except percentages) 2025 2024 Percent Change
Occupancy $ 103,958 $ 103,359 0.6 %
As a percent of restaurant revenue 8.7 % 8.4 % 0.3 %
Occupancy costs included fixed rents, property taxes, common area maintenance charges, general liability insurance, contingent rents, and other property costs. Occupancy costs as a percentage of restaurant revenues increased 30 basis points in fiscal 2025 compared to fiscal 2024, primarily due to increased general liability insurance reserves. The increase also reflected deleverage resulting from lower restaurant sales driven by reduced guest counts, partially offset in part by menu price increases and reduced costs associated with the closure of 22 locations in fiscal 2025.
Depreciation and Amortization
(In thousands, except percentages) 2025 2024 Percent Change
Depreciation and amortization $ 51,120 $ 57,729 (11.4) %
As a percent of total revenues 4.3 % 4.6 % (0.3) %
Depreciation and amortization included depreciation on capital expenditures for restaurants and corporate assets as well as amortization of reacquired franchise rights, leasehold interests, and certain liquor licenses. Depreciation and amortization expense as a percentage of revenue decreased 30 basis points in fiscal 2025 compared to fiscal 2024. The decrease was primarily due to asset impairments and restaurant closures, both of which reduced the depreciable asset base.
General and Administrative Expenses
(In thousands, except percentages) 2025 2024 Percent Change
General and administrative
$ 76,254 $ 81,721 (6.7) %
As a percent of total revenues 6.4 % 6.6 % (0.2) %
General and administrative costs include all corporate and administrative functions. Components of this category included our restaurant support center, regional, and franchise support salaries and benefits, travel and meetings, professional and consulting fees, corporate information systems, legal expenses, and office rent.
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General and administrative expenses decreased $5.5 million or 6.7% in fiscal 2025 as compared to fiscal 2024. The decrease in fiscal 2025 as compared to fiscal 2024 was 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 was partially offset by higher accrued incentive compensation expense due to the Company's improved financial performance.
Selling Expenses
(In thousands, except percentages) 2025 2024 Percent Change
Selling
$ 31,328 $ 36,719 (14.7) %
As a percent of total revenues 2.6 % 2.9 % (0.3) %
Selling costs were comprised of all marketing and advertising costs and decreased $5.4 million or 14.7% in fiscal 2025 as compared to fiscal 2024. The decrease was primarily driven by intentionally reducing 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 of fiscal 2025.
Other (Gains) Charges, net
(In thousands)
2025 2024
Asset impairment and restaurant closure costs, net $ 2,785 $ 34,080
Gain on sale of restaurant property (1,127) (7,425)
Severance and executive transition
2,181 1,181
Litigation contingencies 2,198 1,037
Asset disposal and other, net
4,426 4,975
Other (gains) charges, net $ 10,463 $ 33,848
During fiscal 2025, the Company closed 22 locations and is continuing to evaluate alternatives for our remaining underperforming restaurant locations, including closure upon expiration of the current lease term. The Company recognized non-cash impairment charges of $2.7 million, which were primarily associated with this review of underperforming locations.
During fiscal 2024, the Company closed eight underperforming locations. The Company recognized non-cash impairment charges of $32.8 million, primarily associated with the review of underperforming locations.
For further information on other (gains) charges line items, refer to Note 4. Other (Gains) Charges, net and Note 9. Fair Value Measurements of the Notes to the Consolidated Financial Statements in Part II, Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Interest Expense
Interest expense in fiscal years 2025 and 2024 were $26.0 million and $25.3 million, respectively. The $0.7 million increase was primarily due to an increase in the weighted average interest rate to 14.2% in fiscal 2025 compared to 13.6% in fiscal 2024. Average outstanding debt in fiscal years 2025 and 2024 was $180.9 million and $187.8 million, respectively.
Interest Income and Other
Interest income and other decreased by $0.6 million in fiscal 2025 primarily due to lower interest income earned on cash investments.
Income Tax (Benefit) Provision
Income tax provision was $0.3 million in fiscal 2025, compared to an income tax benefit of $0.1 million in fiscal 2024. Our effective tax rate was 1.1% in fiscal 2025 as compared to a 0.1% benefit in fiscal 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
In addition to the results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP"), we provide certain non-GAAP measures, which present operating results on an adjusted basis. These are supplemental measures of performance that are not required by or presented in accordance with GAAP and include the following: (i) Restaurant level operating profit, (ii) net income (loss) before interest expense, income taxes, and depreciation and amortization ("EBITDA"), (iii) adjusted EBITDA, and (iv) adjusted net income (loss) per diluted share.
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We believe that our use of non-GAAP financial measures permits investors to assess the operating performance of our business relative to our performance based on GAAP results and relative to other companies within the restaurant industry by isolating the effects of certain items that may vary from period to period without correlation to core operating performance or that vary widely among similar companies. We believe that the disclosure of these non-GAAP measures is useful to investors as they form part of the basis for how our management team and our Board of Directors evaluate our operating performance, allocate resources and establish employee incentive plans. Determination of these adjustments involves the application of judgment, therefore these non-GAAP financial measures are not intended to replace GAAP financial measures, and they are not necessarily standardized or comparable to similarly titled measures used by other companies. Refer to the reconciliations of non-GAAP measures for descriptions of the actual adjustments made in the current period and the corresponding prior period.
Restaurant Level Operating Profit
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 (gains) charges, net, selling, general and administrative, 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, as well as other (gains) charges, net because these costs are non-operating 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.
The following table reconciles income (loss) from operations to restaurant level operating profit in thousands and in percent of total revenue for the period presented:
Fifty-Two Weeks Ended Fifty-Two Weeks Ended
December 28, 2025 December 29, 2024
Income (loss) from operations $ 2,790 0.2% $ (53,081) (4.3)%
Less:
Franchise revenue and other revenue
$ 20,445 1.7% $ 24,306 2.0%
Add:
Other (gains) charges, net
$ 10,463 0.9% $ 33,848 2.7%
General and administrative
76,254 6.4 81,721 6.6
Selling 31,328 2.6 36,719 2.9
Depreciation and amortization 51,120 4.3 57,729 4.6
Restaurant level operating profit $ 151,510 $ 132,630
Income (loss) from operations as a percentage of total revenues 0.2% (4.3)%
Restaurant level operating profit margin (as a percentage of restaurant revenue) 12.7% 10.8%
A summary view of restaurant level operating profit by financial statement line item and related restaurant level expenses operating expenses as a percent of restaurant revenues are presented in the tables below:
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Fifty-Two Weeks Ended Fifty-Two Weeks Ended 2025 compared to 2024
(Dollars in millions) December 28, 2025 December 29, 2024 Increase/(Decrease)
Restaurant revenue $ 1,189.8 $ 1,224.3 (2.8) %
Restaurant operating costs:
Cost of sales $ 283.9 $ 292.4 (2.9) %
Labor 437.2 479.6 (8.8) %
Other operating 213.2 216.2 (1.4) %
Occupancy 104.0 103.4 0.6 %
Total restaurant operating costs
$ 1,038.3 $ 1,091.6 (4.9) %
Restaurant level operating profit
$ 151.5 $ 132.6 14.2 %
Fifty-Two Weeks Ended Fifty-Two Weeks Ended 2025 compared to 2024
(Dollars in millions) December 28, 2025 December 29, 2024 Increase/(Decrease)
Restaurant revenue $ 1,189.8 $ 1,224.3 (2.8) %
Restaurant operating costs: (Percentage of Restaurant Revenue) (Basis Points)
Cost of sales 23.9 % 23.9 % —
Labor 36.7 39.2 (250)
Other operating 17.9 17.7 20
Occupancy 8.7 8.4 30
Total restaurant operating costs
87.3 % 89.2 % (190)
Restaurant level operating profit
12.7 % 10.8 % 190
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.
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) before interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA is EBITDA, further adjusted to exclude the impact of non-operating 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-cash or discrete items. EBITDA and adjusted EBITDA are supplemental measures of our performance that we believe gives the reader additional insight into the ongoing operational results of the Company.
The following table reconciles net income (loss) to adjusted EBITDA in thousands for the period presented:
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Fifty-Two Weeks Ended Fifty-Two Weeks Ended
December 28, 2025 December 29, 2024
Net income (loss) as reported
$ (23,284) $ (77,541)
Interest expense, net (1)
25,607 24,805
Income tax (benefit) provision
258 (90)
Depreciation and amortization 51,120 57,729
EBITDA $ 53,701 $ 4,903
Stock-based compensation expense (2)
$ 5,573 $ 6,889
Other (gains) charges, net:
Asset impairment and restaurant closure costs, net
$ 2,785 $ 34,080
Gain on sale of restaurant property (1,127) (7,425)
Severance and executive transition 2,181 1,181
Litigation contingencies 2,198 1,037
Asset disposal and other, net
4,426 4,975
Adjusted EBITDA
$ 69,737 $ 45,640
(1) Interest expense, net was comprised of interest expense and interest income, the latter of which was included in interest (income) and other, net on the Consolidated Statements of Operations and Comprehensive Income (Loss).
(2) Consisted 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.
Adjusted Net Income (loss) Per Diluted Share
We define adjusted net income (loss) per diluted share as net income (loss) excluding the impact of non-operating 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-cash or discrete items; net of income tax impacts. Adjusted net income (loss) per share - diluted is a supplemental measure of our performance that we believe gives the reader additional insight into the ongoing operational results of the Company.
The following table reconciles net income (loss) per share - diluted to adjusted net income (loss) per share - diluted:
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Fifty-Two Weeks Ended Fifty-Two Weeks Ended
(Dollars and shares in thousands, except per share amounts) December 28, 2025 December 29, 2024
Net income (loss) as reported
$ (23,284) $ (77,541)
Income (loss) per share - diluted:
Net income (loss) as reported $ (1.31) $ (4.93)
Stock-based compensation expense (1)
0.31 0.44
Other (gains) charges, net:
Asset impairment and restaurant closure costs, net 0.16 2.17
Gain on sale of restaurant property
(0.06) (0.47)
Severance and executive transition
0.12 0.08
Litigation contingencies 0.12 0.07
Asset disposal and other, net
0.25 0.32
Income tax effect (2)
(0.23) (0.69)
Adjusted net income (loss) per share - diluted
$ (0.64) $ (3.01)
Weighted average shares outstanding
Basic 17,789 15,736
Diluted (3)
17,789 15,736
(1) Consisted 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) Assumed a 26% income tax rate, representing a blended average of federal and state statutory rates.
(3) Antidilutive securities were excluded from the computation of diluted earnings per share because the Company reported a net loss for the period.
Liquidity and Capital Resources
Cash and cash equivalents, and restricted cash decreased $9.9 million to $29.5 million on December 28, 2025, from $39.4 million at the beginning of the fiscal year. As of December 28, 2025, the Company had approximately $56.9 million in liquidity, including cash and cash equivalents and available borrowing capacity under its credit facility.
Our primary sources of liquidity were cash flows generated from operating activities and availability under our revolving credit facility, as discussed further below. Our main requirements for liquidity included operating expenses, capital expenditures for restaurant investment, investments in technology, and interest payments on our debt. We have, and in the future may continue to have, negative working capital balances, which is common for many restaurant companies. We can operate with a working capital deficit because cash from restaurant sales is usually received before the related payables for food inventory, supplies, and labor become due.
From time to time, the Company considers and evaluates financial and capital raising transactions related to its portfolio, including debt refinancing or new debt issuances, equity issuances, sales of owned properties and potential for tactical refranchising, and other transactions. If capital were obtained through the issuance of Company equity, the issuance of Company securities would dilute the ownership of the Company’s existing stockholders.
We believe that our current cash and cash equivalents, our future cash flows generated from restaurant operations and gift card sales, and our borrowing capacity under the credit facility, will be sufficient to meet our anticipated working capital and capital expenditure needs for the next 12 months.
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Cash Flows
The table below summarizes our cash flows from operating, investing, and financing activities for each fiscal year presented (in thousands):
Fiscal Year
2025 2024
Net cash provided by (used in) operating activities $ 37,008 $ 7,047
Net cash provided by (used in) investing activities (24,618) (1,747)
Net cash provided by (used in) financing activities
(22,252) 2,536
Effect of exchange rate changes on cash — —
Net change in cash and cash equivalents, and restricted cash $ (9,862) $ 7,836
Operating Cash Flows
Net cash flows provided by operating activities increased $30.0 million to $37.0 million in fiscal 2025 as compared to net cash provided by operating activities of $7.0 million in fiscal 2024. The increase in operating cash flow was primarily attributable to the increase in restaurant level profitability, lower selling expenses, and an increase in cash received related to higher gift card sales.
Investing Cash Flows
Net cash flows used in investing activities were $24.6 million in fiscal 2025 as compared to net cash used in investing activities of $1.7 million in fiscal 2024. The $22.9 million decrease in investing cash flows was primarily due to an increase in capital expenditures and lower proceeds from the sale of restaurant locations in the current year.
The following table lists the components of our capital expenditures for each fiscal year presented (in thousands):
Fiscal Year
2025 2024
Restaurant improvement capital and other (1)
$ 17,097 $ 16,219
Investment in technology, infrastructure, and other (2)
13,687 9,815
Total capital expenditures $ 30,784 $ 26,034
(1) Restaurant improvement capital and other consisted of capital equipment for our restaurants.
(2) Investment in technology, infrastructure and other consisted of capital costs related to restaurant technology assets, capital overhead, and other centrally developed assets.
Financing Cash Flows
Net cash flows used in financing activities was $22.3 million in fiscal 2025 as compared to net cash provided by financing activities of $2.5 million in fiscal 2024. Cash flows used in financing activities in fiscal 2025 primarily related to the repayment of debt. Cash flows provided by financing activities in the comparable period in fiscal 2024 primarily related to cash received from stock issuances, partially offset by net repayment of debt.
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Credit Facility
As of December 28, 2025, the Company's credit facility allowed for up to $240.0 million of borrowings and was comprised of a $40.0 million revolving line of credit and a $200.0 million term loan (collectively, the "Credit Facility"). As of December 28, 2025 and December 29, 2024, the Company had outstanding borrowings of $170.2 million and $189.5 million, respectively, inclusive of $3.0 million and $20.0 million drawn on its revolving line of credit, respectively, under its Credit Facility. In addition, the Company had amounts issued under letters of credit of $9.3 million and $8.5 million as of December 28, 2025 and December 29, 2024, respectively.
The Credit Facility will mature on September 3, 2027. The term loans require quarterly principal payments in an aggregate annual amount equal to 1.0% of the original principal amount of the term loan. As of December 28, 2025, the Company fulfilled this obligation for the duration of the Credit Facility via previous principal payments. The Credit Facility's interest rate references the Secured Overnight Financing Rate ("SOFR"), which is an index calculated by short-term repurchase agreements and backed by U.S. Treasury securities, or the Alternate Base Rate ("ABR"), which represents the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.5% per annum, or (c) one-month term SOFR plus 1.0% per annum.
For additional information regarding our Credit Facility, see Note 8. Borrowings included within the Notes to the Consolidated Financial Statements in Part II, Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Debt 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 total net leverage ratio covenant. As of December 28, 2025, we were in compliance with all debt covenants.
Sales and Purchases of Equity Securities
On November 10, 2025, The Company entered into the Distribution Agreement with Evercore, to establish an at-the-market equity offering program. The Company voluntarily terminated the program on February 23, 2026, without any issuances or sales.
On December 3, 2024, the Company entered into an Equity Purchase Agreement with JCP Investment Management, LLC and certain of its affiliates (collectively, "JCP") and Jumana Capital, LLC and certain of its affiliates (collectively, "Jumana," and together with the JCP Parties, the "Investor Parties"), pursuant to which the Investor Parties purchased an aggregate of 1,600,909 shares of our common stock, at a purchase price of $5.19 per share, resulting in $8.3 million in gross proceeds. The proceeds were used to repay indebtedness and general corporate expenses.
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 million of the Company's common stock. The share repurchase authorization will terminate upon completing repurchases of $75 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 December 28, 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 $16.5 million. The Company completed no share repurchases in fiscal 2025 or fiscal 2024. As of December 28, 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.
Contractual Obligations
The following table summarizes the amounts of payments due under specified contractual obligations as of December 28, 2025 (in thousands):
Payments Due by Period
Total 2026 2027 2028 2029 2030 Thereafter
Long-term debt obligations (1)
$ 203,671 $ 19,843 $ 183,828 $ — $ — $ — $ —
Finance lease obligations (2)
8,012 1,433 1,340 1,111 953 715 2,460
Operating lease obligations (3)
498,064 78,240 72,440 64,925 56,061 48,375 178,023
Purchase obligations (4)
214,490 71,411 65,258 26,085 24,156 21,621 5,959
Total contractual obligations $ 924,237 $ 170,927 $ 322,866 $ 92,121 $ 81,170 $ 70,711 $ 186,442
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(1) Long-term debt obligations primarily represented minimum required principal payments under our existing Credit Agreement as of December 28, 2025, including estimated interest of $33.5 million based on a 11.50% average borrowing interest rate.
(2) Finance lease obligations included interest of $1.3 million.
(3) Operating lease obligations excluded variable lease costs, such as sales-based contingent rent, and included interest of $148.9 million.
(4) Purchase obligations primarily included the Company's share of expected system-wide fixed price commitments for food, beverage, and restaurant supply items. The timing of amounts presented is estimated based on anticipated inventory needed for the Company’s restaurants and could vary due to changes in anticipated traffic counts, consumer preferences, or other factors.
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 have identified the following as the Company's most critical accounting estimates, which are most important to the portrayal of the Company's financial condition and results and require management's most subjective and complex judgment. Information regarding the Company's other significant accounting policies is disclosed in Note 1. Description of Business and Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements in Part II, Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K.
Impairment of Long-Lived Assets - Long-lived assets, including restaurant sites, leasehold improvements, other fixed assets, right of use assets, and intangible assets are reviewed when indicators of impairment are present. Expected cash flows associated with an asset are the key factor in determining the recoverability of the asset. Identifiable cash flows are measured at the restaurant-level. The estimate of cash flows is based upon, among other things, certain assumptions about expected future operating performance, including assumptions on future revenue trends. Management's estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, changes in economic conditions, changes to our business model, or changes in operating performance. If the sum of the undiscounted cash flows is less than the carrying value of the asset, we recognize an impairment loss. The amount of the impairment loss is measured as the amount by which the carrying value exceeds the fair value of the asset, which is determined using discounted cash flows.
Judgments made by management related to our ability to realize undiscounted cash flows in excess of the carrying amounts of such assets are affected by factors such as changes in economic conditions, changes in operating performance, and the ongoing maintenance and improvements of the assets. As the ongoing expected cash flows and carrying amounts of long-lived assets are assessed, these factors could cause us to realize a material impairment charge. Each restaurant's past and present operating performance were reviewed in combination with projected future results, primarily through projected undiscounted cash flows, which indicated possible impairment. For those restaurants for which undiscounted cash flows did not exceed their carrying value, we compared the carrying amount of each restaurant to its fair value as estimated by management. Determining the fair value of the long-lived assets requires the use of estimates and assumptions and is typically determined by using a discounted cash flow projection model. The weighted average cost of capital discount factor is determined by using external information such as the risk-free rate of return, industry beta factors, and premium adjustments. Management uses other market information such as market rent and discount rates, which are subject to judgment, to estimate the fair value of restaurant right of use lease assets. During fiscal 2025, the Company recognized non-cash impairment charges of $2.7 million, primarily related to the impairment of the long-lived assets at four underperforming locations. During fiscal 2024, the Company recognized non-cash impairment charges of $32.8 million, primarily related to impairments of long-lived assets at 58 underperforming locations and quota state liquor licenses at three locations.
Information technology systems, such as internal-use computer software, are reviewed and tested for recoverability if the internal-use computer software is not expected to provide substantive service potential, a significant change occurs to the extent or manner in which the software is used or is expected to be used, a significant change is made or will be made to the software program, or costs of developing or modifying internal-use software significantly exceed the amount originally expected to develop or modify the software.
Liquor licenses with indefinite lives are reviewed for impairment annually or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. If the carrying amount is not recoverable, we record an impairment charge for the excess of the carrying amount over the fair value. We determine fair value based on quoted prices in the active market for the license in the same or similar jurisdictions, representing a level 1 fair value measurement.
Recently Issued Accounting Standards
See Note 2. Recent Accounting Pronouncements, of the Notes to the Consolidated Financial Statements in Part II, Item 8 Financial Statements and Supplementary Data of this Annual Report on Form 10-K for our discussion of recently issued accounting standards.
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