Item 2. Management’s Discussion and Analysis
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain information and statements contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 codified at Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as "anticipate," "assume," "believe," "could," "estimate," "expect," "future," "intend," "may," "plan," "project," "will," "would," and similar expressions. Forward-looking statements in this report relate to, among other things: our business objectives and strategic plans; strategies with respect to financial flexibility and potential capital raising transactions; our refinancing efforts; our financial condition, including working capital, and the ability of our future cash flows from restaurant operations and our borrowing capacity to satisfy our anticipated cash requirements and fund capital expenditures; our expectations about pricing and restaurant operating costs, including labor, food, supplies, and other commodities, as well as interest rates, and our ability to mitigate potential increases in such costs; our expectations about anticipated uses of, and risks associated with, future cash flows, liquidity, capital expenditures, other capital deployment opportunities, and taxes; the seasonality of our business; and our purchase commitments and 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. 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 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 First Choice 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; our ability to effectively compete in the industry and attract and retain guests; our ability to extend or refinance our maturing indebtedness; the adequacy of cash flows and the cost and availability of capital or credit facility borrowings; our ability to service our debt and comply with the covenants in our credit facility; a privacy or security breach or a failure of our information technology systems; the effectiveness and timing of the Company's marketing and branding strategies and impact on reputation, including the loyalty program and social media platforms; changes in consumer preferences; costs associated with our lease obligations, including those incurred through closures and sale-leaseback transactions, as well as potential contingent lease liability; changes in cost and availability of commodities and the uncertain impact of tariffs or other potential disruptions in the supply chain; interruptions in the delivery of food and other products from third parties; pricing increases and labor costs; changes in consumer behavior or preference; aging technology infrastructure; our ability to successfully complete tactical refranchising initiatives and on favorable terms; maintaining and improving our existing restaurants; potential acquisitions, dispositions, or refranchising of our restaurants; our geographic concentration in the Western United States; the retention of our management team; our compensation strategy including availability of equity-based compensation for our management team; our ability to recruit, staff, train, and retain our workforce; operating conditions, including adverse weather conditions, natural disasters, pandemics, and other events affecting the regions where our restaurants are operated; actions taken by our franchisees that could harm our business or reputation; negative publicity regarding food safety or health concerns; protection of our intellectual property rights; changes in laws and regulations affecting the operation of our restaurants; volatility in our stock price; and an increase in litigation or legal claims by team members, franchisees, customers, vendors, stockholders, and others; and the other Risk Factors described from time to time in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 28, 2025.
All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.
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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 first quarter of fiscal 2026 and fiscal 2025 refer to the sixteen weeks ended April 19, 2026 and April 20, 2025, respectively.
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 469 locations in North America. As of April 19, 2026, the Company operated 379 Company-owned restaurants located in 39 states. The Company also had 90 franchised restaurants in 13 states and one Canadian province as of April 19, 2026. 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 the Fiscal First Quarter of 2026, Compared to the Fiscal First Quarter of 2025:
• Total revenues were $378.3 million, a decrease of $14.1 million.
• Comparable restaurant revenue (1) decreased 0.6%, excluding the impact of deferred loyalty revenue.
• Net loss was $2.2 million, compared to net income of $1.2 million last year, a $3.4 million decrease.
• Adjusted EBITDA (2) was $27.3 million compared to $27.9 million last year, a 2% decrease.
(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, excluding the impact of deferred loyalty revenue. See below for reconciliation to restaurant revenues.
(2) Adjusted EBITDA is a Non-GAAP measure. See "Non-GAAP Financial Measures" for more details and a reconciliation of Net Income (loss) to Adjusted EBITDA.
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 20, 2025
$ 385.8
Change in comparable restaurant revenue
(2.1)
Change in non-comparable restaurant revenue
(13.4)
Change in deferred loyalty revenue
0.8
Total change
$ (14.7)
Restaurant revenue for the period ended April 19, 2026
$ 371.1
Restaurant Data
The following table details restaurant unit data for our Company-owned and franchised locations for the periods presented:
Sixteen Weeks Ended
April 19, 2026 April 20, 2025
Company-owned:
Beginning of period 385 407
Closed
(6) (6)
End of period 379 401
Franchised:
Beginning of period 90 91
Closed
— (1)
End of period 90 90
Total number of restaurants, end of period
469 491
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The following table presents total Company-owned and franchised restaurants by state or province as of April 19, 2026:
Company-Owned Restaurants Franchised Restaurants
State:
Alabama
3
Alaska
3
Arizona 17 1
Arkansas
2
California 54
Colorado 21
Connecticut 3
Delaware 4
Florida 16
Georgia 6
Idaho 8
Illinois 12
Indiana 10
Iowa 5
Kansas 5
Kentucky 3
Louisiana 1
Maine 2
Maryland 10
Massachusetts 5
Michigan 19
Minnesota 3
Missouri 7 3
Montana 1
Nebraska 4
Nevada 6
New Hampshire 3
New Jersey 6 1
New Mexico 3
New York 14
North Carolina 16
Ohio 14 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 379 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.
This information has been prepared on a basis consistent with our audited fiscal 2025 annual financial statements, and, in the opinion of management, includes all adjustments necessary for a fair presentation of the information for the periods presented. Our operating results may fluctuate significantly as a result of a variety of factors, and operating results for any period presented are not necessarily indicative of results for a full fiscal year.
Sixteen Weeks Ended
April 19, 2026 April 20, 2025
Revenues:
Restaurant revenue 98.1 % 98.4 %
Franchise revenue 1.3 1.1
Other revenue 0.6 0.5
Total revenues 100.0 % 100.0 %
Costs and expenses:
Restaurant operating costs (1) (excluding depreciation and amortization shown separately below):
Cost of sales 23.3 % 22.8 %
Labor 35.7 37.1
Other operating 17.7 17.5
Occupancy 8.5 8.3
Total restaurant operating costs 85.2 % 85.6 %
Depreciation and amortization 4.0 3.9
General and administrative 6.1 6.9
Selling 3.5 2.4
Other (gains) charges, net 1.3 0.2
Income (loss) from operations 1.5 % 2.3 %
Other (income) expense:
Interest expense 2.1 % 2.1 %
Interest (income) and other, net — (0.1)
Income (loss) before income taxes
(0.6) % 0.3 %
Income tax (benefit) expense
— —
Net income (loss) (0.6) % 0.3 %
(1) Expressed as a percentage of restaurant revenue.
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Revenues
Sixteen Weeks Ended
(Dollars in thousands, excluding average weekly net sales)
April 19, 2026 April 20, 2025 Percent Change
Restaurant revenue $ 371,101 $ 385,809 (3.8) %
Franchise revenue 4,932 4,489 9.9 %
Other revenue 2,228 2,053 8.5 %
Total revenues $ 378,261 $ 392,351 (3.6) %
Average weekly net sales volumes in Company-owned restaurants (1)
$ 60,706 $ 59,483 2.1 %
Total operating weeks 6,113 6,486 (5.8) %
(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 $14.7 million, or 3.8%, in the first quarter of fiscal 2026, as compared to the comparable period of fiscal 2025. Comparable restaurant revenue decreased $2.1 million, or 0.6%, inclusive of a 1.6% decrease in guest count, offset in part by a 1.0% increase in average guest check. The non-comparable portion of the decrease in restaurant revenue was $13.4 million, due to the closure of 22 locations since the first quarter of fiscal 2025. The impact of deferred loyalty revenue was an increase of $0.8 million due to increased loyalty program usage.
Franchise revenue primarily included royalty income and advertising fund contributions. Franchise revenue increased by $0.4 million, or 9.9%, in the first quarter of fiscal 2026 compared to the same period of fiscal 2025, primarily due to an increase in the franchisee contribution rate for marketing programs. Franchise restaurants reported an increase of 2.4% in comparable restaurant revenue in the first quarter of fiscal 2026 compared to the same period in fiscal 2025.
Other revenue increased $0.2 million in the first quarter of fiscal 2026 compared to the same period of fiscal 2025. The increase was primarily related to higher gift card breakage in the current year.
Cost of Sales
Sixteen Weeks Ended
(In thousands, except percentages) April 19, 2026 April 20, 2025 Percent Change
Cost of sales $ 86,600 $ 88,028 (1.6) %
As a percent of restaurant revenue 23.3 % 22.8 % 0.5 %
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 increased 50 basis points in the first quarter of fiscal 2026 as compared to the comparable period in fiscal 2025. The increase was primarily driven by an increase in commodity prices in the current year and was partially offset by higher average guest check.
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Labor
Sixteen Weeks Ended
(In thousands, except percentages) April 19, 2026 April 20, 2025 Percent Change
Labor $ 132,393 $ 143,058 (7.5) %
As a percent of restaurant revenue 35.7 % 37.1 % (1.4) %
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 140 basis points in the first quarter of fiscal 2026 compared to the same period in fiscal 2025. The decrease was primarily driven by ongoing efforts to increase hourly and management labor efficiency, benefit from menu price increases, and reduced group health insurance claims, partially offset by wage inflation and deleverage from reduced guest counts.
Other Operating
Sixteen Weeks Ended
(In thousands, except percentages) April 19, 2026 April 20, 2025 Percent Change
Other operating $ 65,704 $ 67,532 (2.7) %
As a percent of restaurant revenue 17.7 % 17.5 % 0.2 %
Other operating costs included 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 in the first quarter of fiscal 2026 compared to the same period in fiscal 2025 . The increase was primarily driven by higher restaurant supplies costs.
Occupancy
Sixteen Weeks Ended
(In thousands, except percentages) April 19, 2026 April 20, 2025 Percent Change
Occupancy $ 31,645 $ 32,197 (1.7) %
As a percent of restaurant revenue 8.5 % 8.3 % 0.2 %
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 revenue in the first quarter of fiscal 2026 increased 20 basis points compared to the same period in fiscal 2025. The increase was primarily due to an increase in general liability insurance claims activity, offset in part by reduced rent associated with the closure of 22 locations since the first quarter of fiscal 2025.
Depreciation and Amortization
Sixteen Weeks Ended
(In thousands, except percentages) April 19, 2026 April 20, 2025 Percent Change
Depreciation and amortization $ 15,263 $ 15,434 (1.1) %
As a percent of total revenues 4.0 % 3.9 % 0.1 %
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. In the first quarter of fiscal 2026, depreciation and amortization expense as a percen tage of revenue increased 10 basis points compared to the comparable period in fiscal 2025. The increase was primarily due to decreased revenues from restaurant closures.
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General and Administrative Expenses
Sixteen Weeks Ended
(In thousands, except percentages) April 19, 2026 April 20, 2025 Percent Change
General and administrative
$ 23,092 $ 26,989 (14.4) %
As a percent of total revenues 6.1 % 6.9 % (0.8) %
General and administrative costs included all corporate and administrative functions. Components of this category include 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. General and administrative costs in the first quarter of fiscal 2026 were $23.1 million, a decrease of $3.9 million compared to the comparable period in fiscal 2025. The decrease was primarily related to a reduction in team member costs associated with lower headcount and timing of corporate events.
Selling Expenses
Sixteen Weeks Ended
(In thousands, except percentages) April 19, 2026 April 20, 2025 Percent Change
Selling
$ 13,247 $ 9,376 41.3 %
As a percent of total revenues 3.5 % 2.4 % 1.1 %
Selling costs were comprised of all marketing and advertising costs. Selling costs in the first quarter of fiscal 2026 were $13.2 million, an increase of $3.9 million compared to the comparable period in fiscal 2025. The increase was primarily driven by paid media spend in the current fiscal quarter as we continue to support our ongoing marketing strategy.
Other (Gains) Charges, net
Sixteen Weeks Ended
(In thousands)
April 19, 2026 April 20, 2025
Asset impairment and restaurant closure costs, net $ 1,753 $ 210
Gain on sale of restaurant property
— (1,137)
Severance and executive transition
70 880
Litigation contingencies 87 12
Asset disposal and other, net
2,920 711
Other (gains) charges, net $ 4,830 $ 676
During the first quarter of fiscal 2026, the Company closed six 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 $0.5 million, which were primarily associated with this review of underperforming locations.
During the first quarter of fiscal 2025, the Company closed six underperforming locations and recognized no impairment.
For further information on other (gains) charges line items, refer to Note 5. Other (Gains) Charges, net and Note 7. Fair Value Measurements of the Notes to the Condensed Consolidated Financial Statements.
Interest Expense
Interest expense for the first quarter of fiscal 2026 and fiscal 2025 was $7.8 million and $8.1 million, respectively. The $0.3 million decrease was primarily due to less debt in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025, and partially due to a decrease in the weighted average effective interest rate to 13.4% in the first quarter of fiscal 2026 compared to 14.1% in the first quarter of fiscal 2025. Average outstanding debt was $180.8 million and $187.7 million for the first quarter of fiscal 2026 and fiscal 2025, respectively.
Income Tax (Benefit) Expense
The taxes recognized in the first quarter of fiscal 2026 and fiscal 2025 were 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.
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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.
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:
Sixteen Weeks Ended
(Dollars in thousands)
April 19, 2026 April 20, 2025
Income (loss) from operations $ 5,487 1.5% $ 9,061 2.3%
Less:
Franchise revenue $ 4,932 1.3% $ 4,489 1.1%
Other revenue 2,228 0.6 2,053 0.5
Add:
Other (gains) charges, net
$ 4,830 1.3% $ 676 0.2%
General and administrative
23,092 6.1 26,989 6.9
Selling 13,247 3.5 9,376 2.4
Depreciation and amortization 15,263 4.0 15,434 3.9
Restaurant level operating profit $ 54,759 14.8% $ 54,994 14.3%
Income (loss) from operations as a percentage of total revenues 1.5% 2.3%
Restaurant level operating profit margin (as a percentage of restaurant revenue) 14.8% 14.3%
A summary view of restaurant level operating profit by financial statement line item and related restaurant level operating expenses as a percentage of restaurant revenue are presented in the tables below:
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Sixteen Weeks Ended
(Dollars in thousands)
April 19, 2026 April 20, 2025 Increase
(Decrease)
Restaurant revenue $ 371,101 $ 385,809 (3.8) %
Restaurant operating costs:
Cost of sales $ 86,600 $ 88,028 (1.6) %
Labor 132,393 143,058 (7.5)
Other operating 65,704 67,532 (2.7)
Occupancy 31,645 32,197 (1.7)
Total restaurant operating costs
$ 316,342 $ 330,815 (4.4) %
Restaurant level operating profit
$ 54,759 $ 54,994 (0.4) %
Sixteen Weeks Ended
(Dollars in thousands)
April 19, 2026 April 20, 2025 Increase (Decrease)
Restaurant revenue $ 371,101 $ 385,809 (3.8) %
Restaurant operating costs: (Percentage of Restaurant Revenue) (Basis Points)
Cost of sales 23.3 % 22.8 % 50
Labor 35.7 37.1 (140)
Other operating 17.7 17.5 20
Occupancy 8.5 8.3 20
Total restaurant operating costs
85.2 % 85.6 % (40)
Restaurant level operating profit
14.8 % 14.3 % 50
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.
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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:
Sixteen Weeks Ended
(Dollars in thousands) April 19, 2026 April 20, 2025
Net income (loss) as reported $ (2,178) $ 1,249
Interest expense, net (1)
7,704 7,964
Income tax (benefit) expense 29 (3)
Depreciation and amortization 15,263 15,434
EBITDA $ 20,818 $ 24,644
Stock-based compensation expense (2)
$ 1,664 $ 2,589
Other (gains) charges, net:
Asset impairment and restaurant closure costs, net $ 1,753 $ 210
Gain on sale of restaurant property — (1,137)
Severance and executive transition 70 880
Litigation contingencies 87 12
Asset disposal, and other, net 2,920 711
Adjusted EBITDA
$ 27,312 $ 27,909
(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 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
(2) Consists of compensation expense associated with stock-based awards including phantom awards that may be settled in stock or cash at the Company’s option and stock appreciation rights, which are settled in cash.
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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:
Sixteen Weeks Ended
(Dollars and shares in thousands, except per share amounts)
April 19, 2026 April 20, 2025
Net income (loss) as reported $ (2,178) $ 1,249
Adjusted net income (loss) per diluted share:
Net income (loss) as reported
$ (0.12) $ 0.07
Stock-based compensation expense (1)
0.08 0.14
Other (gains) charges, net:
Asset impairment and restaurant closure costs, net 0.09 0.01
Gain on sale of restaurant property — (0.06)
Severance and executive transition — 0.05
Litigation contingencies — —
Asset disposal and other, net 0.16 0.03
Income tax effect (2)
(0.08) (0.05)
Adjusted net income (loss) per share - diluted
$ 0.13 $ 0.19
Weighted average shares outstanding:
Basic 18,120 17,546
Diluted (3)
20,478 18,302
(1) Consists of compensation expense associated with stock-based awards including phantom awards that may be settled in stock or cash at the Company’s option and stock appreciation rights, which are settled in cash.
(2) Assumed a 26% income tax rate, representing a blended average of federal and state statutory rates.
(3) Dilutive securities were included in the computation of adjusted net income (loss) per share - diluted for the sixteen weeks ended April 19, 2026, because the Company reported an adjusted net income for the period. This differs from the GAAP net income (loss) per share - diluted calculation seen on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as the Company reported a net loss for the sixteen weeks ended April 19, 2026.
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Liquidity and Capital Resources
Cash and cash equivalents, and restricted cash increased $4.4 million to $33.9 million as of April 19, 2026, from $29.5 million at the beginning of the fiscal year. As of April 19, 2026, the Company had approximately $40.8 million in liquidity, including cash and cash equivalents and $16.5 million available borrowing capacity under our 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 tactical refranchising, and other transactions.
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.
Cash Flows
The table below summarizes our cash flows from operating, investing, and financing activities for each period presented (in thousands):
Sixteen Weeks Ended
April 19, 2026 April 20, 2025
Net cash provided by (used in) operating activities $ 6,975 $ 19,574
Net cash provided by (used in) investing activities (6,707) (6,379)
Net cash provided by (used in) financing activities 4,115 (19,308)
Effect of exchange rate changes on cash — 2
Net change in cash and cash equivalents, and restricted cash $ 4,383 $ (6,111)
Operating Cash Flows
Net cash flows provided by operating activities decreased $12.6 million to $7.0 million for the year to date period of fiscal 2026 compared to $19.6 million for the comparable period in fiscal 2025. The decrease in net cash provided by operating activities is primarily attributable to the decrease in working capital.
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Investing Cash Flows
Net cash flows used in investing activities was $6.7 million for the year to date period of fiscal 2026, as compared to net cash flows used in investing activities of $6.4 million for the comparable period in fiscal 2025. The $0.3 million increase in cash flows used in investing activities is primarily due to the sale of restaurant property in the year to date period of fiscal 2025, partially offset by lower capital expenditures in fiscal 2026 compared to the year to date period of fiscal 2025.
The following table lists the components of our capital expenditures for the periods presented (in thousands):
Sixteen Weeks Ended
April 19, 2026 April 20, 2025
Restaurant improvement capital and other (1)
$ 5,403 $ 6,146
Technology, infrastructure, and other (2)
1,304 5,826
Total capital expenditures $ 6,707 $ 11,972
(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 provided by financing activities was $4.1 million for the year to date period of fiscal 2026, as compared to net cash flows used in financing activities of $19.3 million for the comparable period in fiscal 2025. Cash flows provided by financing activities in the year to date period of fiscal 2026 primarily relate to the net borrowings of debt under our revolving credit facility. Cash flows used in financing activities in the comparable period in fiscal 2025 primarily relate to the paydown of debt with cash flow from operations and the net proceeds from the sale of three restaurant locations.
Credit Facility
As of April 19, 2026, the Company's credit facility allowed for up to $225.0 million of borrowings and is comprised of a $25.0 million revolving line of credit and a $200.0 million term loan (collectively, the "Credit Facility"). As of April 19, 2026 and December 28, 2025, the Company had outstanding borrowings of $175.7 million and $170.2 million, respectively, inclusive of $8.5 million and $3.0 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 $9.3 million as of April 19, 2026 and December 28, 2025, 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 April 19, 2026, the Company has 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 6. Borrowings included within the Notes to the Condensed Consolidated Financial Statements.
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 net total leverage ratio covenant. As of April 19, 2026, we were in compliance with all debt covenants.
Sale 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.
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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 April 19, 2026, 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 during the periods presented. Accordingly, as of April 19, 2026, we had $58.5 million of availability under the current share repurchase program. Our Credit Agreement limits our ability to repurchase shares to certain conditions set forth by the lenders in the Credit Facility.
Seasonality
Our business is subject to seasonal fluctuations. Sales in most of our restaurants have historically been higher during the spring and summer months and winter holiday season. The timing of holidays and school vacations, as well as severe storms, extended periods of inclement weather, or climate extremes, may affect the seasonal operating results in the areas impacted. As a result, our quarterly operating results may fluctuate significantly due to seasonality, and the seasonal patterns of sales may shift over time. Accordingly, results for any one quarter or year are not necessarily indicative of results to be expected for any other quarter or year.
Contractual Obligations
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 28, 2025. See Note 8. Commitments and Contingencies for further information.
Critical Accounting Estimates
Critical accounting estimates are those we believe are both significant and that require us to make difficult, subjective, or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors we believe to be appropriate under the circumstances. Actual results may differ from these estimates, including our estimates of future restaurant level cash flows, which are subject to the current economic environment and potentially unknown future events, and we might obtain different results if we use different assumptions or conditions. We had no significant changes in our critical accounting estimates which were disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.