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What changed in RED ROBIN GOURMET BURGERS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of RED ROBIN GOURMET BURGERS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+305 added−334 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-28)

Top changes in RED ROBIN GOURMET BURGERS INC's 2024 10-K

305 paragraphs added · 334 removed · 249 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

66 edited+19 added−24 removed33 unchanged
Biggest changeForward-looking statements may relate to, among other things: (i) our business objectives and strategic plans, including projected or anticipated growth, including in Guest traffic and revenue, growth strategies, planned improvements in operational efficiencies, gross margins, and 8 Table of Contents expense management and enhancements to our restaurant environments and Guest engagement, including the anticipated impacts of innovations, improvements, marketing and branding strategies, and changes to our loyalty program; (ii) our expectations about pricing strategy and average check size; (iii) our expectations of the competitiveness of the labor market and our ability to hire, train, and retain Team Members, as well as the success of our Managing Partner and Market Partner compensation program; (iv) anticipated capital investments and the results of such investments including in our restaurant refresh and remodel program and our digital ecosystem, information technology systems, our restaurant development program, and the anticipated related benefits; (v) our expectations about restaurant operating costs, including commodity and food prices and labor and energy costs; (vi) anticipated legislation and other regulation of our business; (vii) anticipated continued investments in our partnership with Donatos®; (viii) our expectations about anticipated uses of, and risks associated with future cash flows, liquidity, future capital expenditures and other capital deployment opportunities, and taxes; (ix) our expectations regarding competition; and (x) our expectations regarding demand, consumer preferences, and consumer discretionary spending; (xi) our expectations regarding the implementation and anticipated benefits of our ESG, diversity, equity and inclusion and other initiatives; (xii) our ability to successfully implement our food safety programs, (xii) our ability to successfully implement our health and safety initiatives; (xiii) the seasonality of our business; (xiv) our ability to successfully implement, and our expectations regarding, our North Star five-point plan to enhance the Company’s competitive positioning; (xv) our expectations and other statements regarding interest rates, commodity prices and other factors; (xvi) the expected impacts of government regulations on our operations and financial condition, and changes in such regulation; (xvii) the implementation of our restaurant management transition program, including anticipated benefits to our sales, Team Member performance and engagement, Guest traffic, community focus and results of operations; and (xiii) the other risks discussed under Risk Factors below.
Biggest changeForward-looking statements may relate to, among other things: (i) our business objectives and strategic plans, including projected or anticipated growth, including in Guest traffic and revenue, growth strategies, planned improvements in operational efficiencies, gross margins, and expense management and enhancements to our restaurant environments and Guest engagement, including the anticipated impacts of innovations, improvements, marketing and branding strategies, and our loyalty program; (ii) our expectations about pricing strategy and average check size; (iii) our expectations of the competitiveness of the labor market and our ability to hire, train, and retain Team Members, as well as the success of our Managing Partner and Market Partner compensation program; (iv) anticipated capital investments and the results of such investments, including the evaluation of our restaurant refresh and remodel program, and our digital ecosystem, information technology systems, our restaurant development program, and the anticipated related benefits, as well as anticipated changes to our restaurant portfolio; (v) our expectations about restaurant operating costs, including commodity and food prices and labor and energy costs; (vi) anticipated legislation and other regulation of our business; (vii) anticipated continued investments in our partnership with Donatos®; (viii) our expectations about anticipated uses of, and risks associated with future cash flows, liquidity, future capital expenditures and other capital deployment opportunities, and taxes; (ix) our expectations regarding competition; and (x) our expectations regarding demand, consumer preferences, and consumer discretionary spending; (xi) our expectations regarding the implementation and anticipated benefits of our corporate responsibility initiatives; (xii) our ability to successfully implement our food safety 8 Table of Contents programs, (xiii) our ability to successfully implement our health and safety initiatives; (xiv) the seasonality of our business; (xv) our ability to successfully implement, and our expectations regarding, our North Star five-point plan to enhance the Company’s competitive positioning; (xvi) our expectations and other statements regarding interest rates, commodity prices and other factors; and (xvii) the risks discussed under Risk Factors below.
From 2000 to 2011, Mr. Hart served as President of Texas Roadhouse Holdings, LLC and as Chief Executive Officer and member of the board from 2004 to 2011. Mr. Hart also held leadership positions at Al Copeland Investments, TriFoods International, New Zealand Lamb Company, and Shenandoah Valley Poultry earlier in his career. Todd Wilson. Mr.
Hart served as President of Texas Roadhouse Holdings, LLC and as Chief Executive Officer and member of the board from 2004 to 2011. Mr. Hart also held leadership positions at Al Copeland Investments, TriFoods International, New Zealand Lamb Company, and Shenandoah Valley Poultry earlier in his career. Todd Wilson. Mr.
These technologies include (but are not limited to) labor management systems, sales and forecasting tools, inventory management, and operational execution technologies. These technologies are integrated with our point-of-sale system to provide daily, weekly, and period-to-date reporting that is important for our Operators to run an efficient and high-performing restaurant.
These technologies include (but are not limited to) food waste and labor management systems, sales and forecasting tools, inventory management, and operational execution technologies. These technologies are integrated with our point-of-sale system to provide daily, weekly, and period-to-date reporting that is important for our Operators to run an efficient and high-performing restaurant.
In order to provide fresh ingredients and products and to maximize operating efficiencies between purchase and usage, each restaurant's management team determines the restaurant's daily usage requirements for food ingredients, products, and supplies, and accordingly, orders from approved suppliers, and distributors. The restaurant management team inspects deliveries to ensure that the products received meet our safety and quality specifications.
In order to provide fresh ingredients and products and to maximize operating efficiencies between purchase and usage, each restaurant's management team determines the restaurant's daily usage requirements for food ingredients, products, and supplies, and accordingly, orders from approved suppliers, and distributors. The restaurant management team inspects deliveries to confirm that the products received meet our safety and quality specifications.
In addition, we use an Operations scorecard that integrates data from our centralized systems and distributes information to assist in managing the performance of our restaurants. We believe these combined tools are important in analyzing and improving our operations, profit margins, and monitoring other key business metrics.
In addition, we use an Operations dashboard that integrates data from our centralized systems and distributes information to assist in managing the performance of our restaurants. We believe these combined tools are important in analyzing and improving our operations, profit margins, and monitoring other key business metrics.
Trademarks We have a number of registered trademarks and service marks, including the Red Robin®, Red Robin Gourmet Burgers®, "YUMMM®", Red Robin Gourmet Burgers + Brews®, and Red Robin Royalty® and logos. We have registered these marks, among others, with the United States Patent and Trademark Office, and we have registered various trademarks in certain other international jurisdictions.
Intellectual Property We have a number of registered trademarks and service marks, including the Red Robin®, Red Robin Gourmet Burgers®, "YUMMM®", Red Robin Gourmet Burgers + Brews®, and Red Robin Royalty® and logos. We have registered these marks, among others, with the United States Patent and Trademark Office, and we have registered various trademarks in certain other international jurisdictions.
Learning and Development We strive to maintain quality and consistency in each of our restaurants through the training and development of Team Members and the establishment of, and adherence to, high standards relating to Team Member performance, Guest satisfaction, food and beverage preparation, and the maintenance of our restaurants.
Learning and Development We strive to maintain quality and consistency in each of our restaurants through the training and development of Team Members and the establishment of, and adherence to, high standards relating to Team Member performance, Guest satisfaction, food and beverage preparation, and the appearance of our restaurants.
ITEM 1. Business Overview Red Robin Gourmet Burgers, Inc., together with its subsidiaries, primarily operates, franchises, and develops casual dining restaurants in North America famous for serving more than two dozen craveable, high-quality burgers with Bottomless Steak Fries ® and sides in a fun environment welcoming to Guests of all ages.
ITEM 1. Business Overview Red Robin Gourmet Burgers, Inc., together with its subsidiaries, primarily operates, franchises, and develops casual dining restaurants in North America famous for serving more than 20 craveable, high-quality burgers with Bottomless Steak Fries ® and sides in a fun environment welcoming to Guests of all ages.
We specialize in customizing our menu items to meet our Guests' dietary needs and preferences and have received recognition from experts in the allergen community. In addition to burgers, which accounted for 56% of food sales in 2023, Red Robin serves an array of other mainstream favorites that appeal to our Guests.
We specialize in customizing our menu items to meet our Guests' dietary needs and preferences and have received recognition from experts in the allergen community. In addition to burgers, which accounted for 56% of food sales in fiscal 2024, Red Robin serves an array of other mainstream favorites that appeal to our Guests.
This same follow-up requirement is in place for government regulatory inspections. 4 Table of Contents To enhance our purchasing efficiencies and obtain competitive prices for our high-quality ingredients, products, and supplies, our centralized purchasing team negotiates supply agreements that may include fixed price contracts that can vary in term or formula-based pricing agreements that can fluctuate on changes in raw material commodity pricing.
A similar follow-up requirement is in place for government regulatory inspections. 4 Table of Contents To enhance our purchasing efficiencies and obtain competitive prices for our high-quality ingredients, products, and supplies, our centralized purchasing team negotiates supply agreements that may include fixed price contracts that can vary in term or formula-based pricing agreements that can fluctuate on changes in raw material commodity pricing.
Our fiscal years, fiscal year end dates, and the number of weeks in each period are summarized in the table below: Fiscal Year Year End Date Number of Weeks in Fiscal Year Current and Prior Fiscal Years: 2023 December 31, 2023 53 2022 December 25, 2022 52 2021 December 26, 2021 52 Upcoming Fiscal Years: 2024 December 29, 2024 52 2025 December 28, 2025 52 Business Strategy In January of 2023, the Company released its North Star five-point plan designed to enhance the Company's competitive positioning.
Our fiscal years, fiscal year end dates, and the number of weeks in each period are summarized in the table below: Fiscal Year Year End Date Number of Weeks in Fiscal Year Current and Prior Fiscal Years: 2024 December 29, 2024 52 2023 December 31, 2023 53 2022 December 25, 2022 52 Upcoming Fiscal Years: 2025 December 28, 2025 52 2026 December 27, 2026 52 Business Strategy In January of 2023, the Company released its North Star five-point plan designed to enhance the Company's competitive positioning.
We qualify and require outside third party certification audits on an annual basis for all of our food and beverage suppliers (excluding alcoholic beverages, which are not held to the same auditing standards), as well as growers. Their certifications must comply with the Global Food Safety Initiative, if applicable.
We qualify and require outside third party certification audits on an annual basis for all of our food and beverage suppliers (excluding alcoholic beverages, which are held to different auditing standards), as well as growers. The certifications must comply with the Global Food Safety Initiative, if applicable.
We refer to our fiscal years as 2023, 2022, and 2021 throughout this Annual Report on Form 10-K.
We refer to our fiscal years as 2024, 2023, and 2022 throughout this Annual Report on Form 10-K.
Our franchisees are independent organizations to whom we provide certain support. See "Restaurant Franchise and Licensing Arrangements" for additional information about our franchise program. As of December 31, 2023, there were Red Robin restaurants in 39 states and one Canadian province. The Company operates its business as one operating and one reportable segment.
Our franchisees are independent organizations to whom we provide certain support. See "Restaurant Franchise and Licensing Arrangements" for additional information about our franchise program. As of December 29, 2024, there were Red Robin restaurants in 39 states and one Canadian province. The Company operates its business as one (1) operating and one (1) reportable segment.
We have a successful Women's Excellence program, a Company-wide resource group to support and inspire Team Members through development, networking, leadership, and other resources while fueling a culture of opportunity and diversity. In 2022, we established a Diversity, Equity, and Inclusion Committee to develop a mission and vision for DE&I from a Team Member’s point of view.
We have a successful Women's Excellence program, a Company-wide resource group to support and inspire Team Members through development, networking, leadership, and other resources while fueling a culture of opportunity and diversity. In 2022, we established an Inclusion and Belonging Committee to develop a mission and vision for inclusion and belonging from a Team Member’s point of view.
We engage external security assessors and consultants to review and advise us on our other data security practices with respect to protection of other sensitive personal information that we obtain from Guests and Team Members. Marketing and Advertising Our marketing strategy has been designed to foster awareness, elevate brand equity, encourage consideration, and ultimately drive traffic and sales.
We engage external security assessors and consultants to review and advise us on our other data security practices with respect to protection of other sensitive personal information that we obtain from Guests and Team Members. Marketing and Advertising Our marketing strategy is designed to foster awareness, elevate brand equity, encourage consideration, and ultimately drive increases in Guest traffic and sales.
This realignment emphasizes personalized Guest engagement within the communities we serve, with a focused objective to enhance the dine-in experience. Recently, we undertook an extensive consumer research initiative, coupled with a segmentation study, to deepen our understanding of today's Guests.
This realignment emphasizes personalized Guest engagement within the communities we serve, with a focused objective to enhance the dine-in experience. In fiscal 2024, we completed an extensive consumer research initiative, coupled with a segmentation study, to deepen our understanding of today's Guests.
Pursuant to our licensing arrangement with Donatos®, we license the right to use the Donatos® trademark. In order to better protect our brand, we have also registered the Internet domain name www.redrobin.com.
Pursuant to our licensing arrangement with Donatos®, we license the right to use the Donatos® trademark. 7 Table of Contents In order to better protect our brand, we have also registered the Internet domain name www.redrobin.com.
We welcome open, candid feedback to promote Team Members feeling heard and engaged and to better support the values important to each of our Team Members. We accomplish this through a variety of programs and forums, including Team Member engagement surveys, virtual open forums, one-on-one coaching, wellness and engagement meetings, Town Hall meetings, leadership conferences, and exit interviews.
We welcome open, candid feedback to promote Team Members feeling heard and engaged and to better support the experience of our Team Members. We accomplish this through a variety of programs and forums, including Team Member engagement surveys, one-on-one coaching, Town Hall meetings, leadership conferences, and onboarding and exit interviews.
Unless otherwise provided in this Annual Report on Form 10-K, references to "Red Robin," "we," "us," "our", or the "Company" refer to Red Robin Gourmet Burgers, Inc. and our consolidated subsidiaries. As of the end of our fiscal year on December 31, 2023, there were 506 Red Robin restaurants, of which 415 were Company-owned and 91 were operated by franchisees.
Unless otherwise provided in this Annual Report on Form 10-K, references to "Red Robin," "we," "us," "our", or the "Company" refer to Red Robin Gourmet Burgers, Inc. and our consolidated subsidiaries. As of the end of our fiscal year on December 29, 2024, there were 498 Red Robin restaurants, of which 407 were Company-owned and 91 were operated by franchisees.
Additionally, we engage an independent auditing company to perform unannounced comprehensive food safety and sanitation assessments at least three times a year in all Company-owned and franchised restaurants. If an assessment identifies any gaps, a documented plan is required for any deficiency noted.
Additionally, we engage an independent auditing company to perform unannounced comprehensive food safety and sanitation assessments at least three times a year in all Company-owned and franchised restaurants. If an assessment identifies any gaps, a documented plan is created to address it.
We offer a selection of buns, including gluten free, sesame, brioche, and lettuce wraps, with a variety of toppings, including house-made sauces, crispy onion straws, sautéed mushrooms, several cheese choices, and a fried egg. All of our burgers are served with a choice from eight all-you-can-eat bottomless sides from steak fries, to broccoli, to garlic fries.
We offer a selection of buns, including gluten free, sesame, brioche, and lettuce wraps, with a variety of toppings, including house-made sauces, crispy onion straws, sautéed mushrooms, several cheese choices, and a sunny-side up egg. All of our burgers are served with a choice from eight bottomless sides including steak fries, broccoli, garlic fries and more.
The information we post through this channel may be deemed material. Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings, conference calls, webcasts, and other investor events. Investors and others can receive notifications of new information posted on our investor relations website by signing up for email alerts.
Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings, conference calls, webcasts, and other investor events. Investors and others can receive notifications of new information posted on our investor relations website by signing up for email alerts.
These items include a variety of foods like Donatos ® pizza, wings, salads, other entrees, and desserts. We also offer a range of single-serve and shareable desserts as well as our milkshakes. Our beverages include signature alcoholic and non-alcoholic specialty drinks, cocktails, wine, and a variety of national and craft beers.
These items include a variety of foods like Donatos ® pizza (available at select locations), wings, salads, other entrees, and desserts. We also offer a range of single-serve and shareable desserts as well as our handspun milkshakes. Our beverages include signature alcoholic and non-alcoholic specialty drinks, cocktails, wine, and a variety of domestic, imported and craft beers.
We also believe this program rewards our Partners for making the right day-to-day decisions to satisfy our Guests and meet our financial objectives. Health and Safety We operate with the health, safety, and well-being of Red Robin's Team Members, Guests, and communities in mind, as well as federal, state and local regulatory requirements.
We also believe this program rewards our Partners for making the right day-to-day decisions to satisfy our Guests, lead our Team Members, and meet our financial objectives. Health and Safety We operate with the health, safety, and well-being of Red Robin Team Members, Guests, and communities in mind.
Of our total cost of goods in 2023, ground beef represented approximately 14%, potatoes represented approximately 12%, and poultry represented approximately 11%. We monitor the market for the primary commodities we purchase and extend contract positions when applicable in order to minimize the impact of fluctuations in price and availability.
Of our total cost of goods in fiscal 2024, ground beef represented approximately 15%, potatoes represented approximately 13%, and poultry represented approximately 10%. We monitor the market for the primary commodities we purchase and extend contract positions when applicable in order to minimize the impact of fluctuations in price and availability.
This research informed our growth targets, reinforced the distinctive essence of our brand, and guides our commitment to delivering on our promise to Guests. Additionally, utilizing a Guest satisfaction tool in our restaurants, we actively gather feedback to identify areas for improvement, enhancing restaurant performance and tracking progress.
This research informed our growth targets, reinforced the distinctive essence of our brand, and guides our commitment to delivering on our promise to Guests. Additionally, we utilize Guest satisfaction tools in our restaurants and gather feedback to identify areas for improvement, enhance restaurant performance and track progress.
Mussetter worked for the law firm of Holme Roberts & Owen LLP (now Bryan Cave Leighton Paisner LLP). Most recently, Ms. Mussetter was SVP Deputy General Counsel for Skillsoft Corp., a learning application and technology company, from September 2021 to December 2022. Jyoti Lynch. Ms. Lynch joined Red Robin as Chief Technology Officer in June 2023.
Mussetter worked for the law firm of Holme Roberts & Owen LLP (now Bryan Cave Leighton Paisner LLP). Most recently, Ms. Mussetter was SVP Deputy General Counsel for Skillsoft Corp from September 2021 to December 2022. Meghan Spuler. Ms. Spuler joined Red Robin as Chief People Officer in December 2023.
We are committed to combining the key ingredients of diverse identities, perspectives, and experiences to create our own special seasoning of Unbridled Hospitality. By respecting and supporting our Team Members, our Guests, and our Communities, we all win together.
Inclusion and Belonging At Red Robin, we value everyone for who they are. We are committed to combining the key ingredients of diverse identities, perspectives, and experiences to create our own special seasoning of Unbridled Hospitality. By respecting and supporting our Team Members, our Guests, and our communities, we all win together.
Spuler joined Red Robin as Chief People Officer in December 2023. Prior to joining the Company, she held the roles of Chief People Officer of Eckerd Connects from 2021 to 2023. From 2016 to 2021, Ms. Spuler served as Director of Human Resources, Senior Director of Human Resources, and Vice President of Human Resources for Bloomin' Brands. Kevin Mayer. Mr.
Prior to joining the Company, she served as Chief People Officer of Eckerd Connects from 2021 to 2023. From 2016 to 2021, Ms. Spuler served as Director of Human Resources, Senior Director of Human Resources, and Vice President of Human Resources for Bloomin' Brands.
We changed our legacy program because we believe providing each Partner with a direct and uncapped financial incentive will attract and retain the best talent in the industry and incentivizes each Partner to take action to drive growth in the restaurant or market they manage.
We believe providing each Partner with a direct and uncapped financial incentive attracts and retains the best talent in the industry and incentivizes each Partner to take action to drive growth in the restaurant or market they manage.
Our restaurants are subject to various licensing requirements and other regulations by state, and local health, safety, fire, and other authorities, including licensing requirements, regulations for the sale of alcoholic beverages and food, and public health related indoor capacity restrictions. We obtain and maintain necessary licenses, permits, and approvals to run our business.
For example, our restaurants are subject to licensing requirements, building and zoning regulations, regulations for the sale of alcoholic beverages and food, and public health related indoor capacity restrictions. We obtain and maintain necessary licenses, permits, and approvals to run our business.
Food Safety and Purchasing Our food safety and quality assurance programs help manage our commitment to safe, quality ingredients and responsible food preparation and service. Our Food Safety Management Program is a set of systems designed to protect from risk and control hazards. We provide detailed specifications for our proprietary food ingredients, products, and supplies to our suppliers.
Our Food Safety Management Program is a set of systems designed to protect from risk and control hazards. We provide detailed specifications for our proprietary food ingredients, products, and supplies to our suppliers.
In 2023, we had an average check per Guest of $17.08. Average check per Guest increased 6.8% compared to 2022. We believe our price-to-value relationship, featuring our innovative array of quality burgers, "instaworthy" beverages, and over 30 bottomless items, differentiates us from our casual dining competitors and allows us to appeal to a broad base of middle income, multi-generational consumers.
We believe our price-to-value relationship, featuring our innovative array of quality burgers, "instaworthy" burgers and beverages, and over 30 bottomless items, differentiates us from our casual dining competitors and allows us to appeal to a broad base of middle income, multi-generational consumers.
We believe our Guest demographics, strong brand recognition, Gourmet Burger concept, family friendly atmosphere, attractive price-value relationship, and the quality of our food and service enable us to differentiate ourselves from our casual dining competitors. We believe we compete favorably with respect to each of these factors. Our competitors include well-established national chains which have more substantial marketing resources.
We believe our Guest demographics, strong brand recognition, Gourmet Burger concept, family friendly atmosphere, attractive price-value relationship, and the quality of our food and service differentiate us from our casual dining competitors. Our competitors include well-established national chains that have more substantial marketing resources. We also compete with many other restaurant and retail establishments for Team Members.
Hart joined Red Robin as President and Chief Executive Officer in September 2022. Mr. Hart served as a director of the Company since August 2019. Mr. Hart most recently served as Chief Executive Officer of Torchy’s Tacos from 2018 until 2021. He was previously the Executive Chairman and Chief Executive Officer of California Pizza Kitchen from 2011 to 2018.
He has served as a director of the Company since August 2019. Mr. Hart previously served as Chief Executive Officer of Torchy’s Tacos from 2018 until 2021. Prior to that, he served as the Executive Chairman and Chief Executive Officer of California Pizza Kitchen from 2011 to 2018. From 2000 to 2011, Mr.
The number, size, and strength of competitors vary by region, concept, market, and even restaurant. We compete on the basis of taste, quality, price of food and related Guest value, Guest service, ambiance, location, and overall dining experience.
In addition, we compete to attract Guests for off-premises dining occasions, including online ordering, delivery, to-go, and catering. The number, size, and strength of competitors vary by region, concept, market, and even restaurant. We compete on the basis of taste, quality, price of food and related Guest value, Guest service, ambiance, location, and overall dining experience.
Information Systems and Digital Technology We rely on information systems and digital technology in all aspects of our operations, striving to create seamless Guest experiences and enable Operations to deliver on our Brand commitments. In our restaurants, these technologies are designed to facilitate operational efficiency and support the Guest experience.
Information Systems and Digital Technology We leverage information systems and digital technology to deliver seamless Guest experience and empower our operations team to fulfill our brand commitments. In our restaurants, these technologies are designed to facilitate operational efficiency and support the Guest experience.
As part of our human capital management strategy, we focus on the following areas: Our Team Members As of December 31, 2023, we had 22,516 Team Members, consisting of 22,149 Team Members at Company-owned restaurants and 367 Restaurant Support Center and field-based Team Members.
As part of our human capital management strategy, we focus on the following areas: Our Team Members As of December 29, 2024, we had 21,443 Team Members, consisting of 21,196 Team Members at Company-owned restaurants and 247 Restaurant Support Center Team Members.
Although, for some occasions, we compete against other segments of the restaurant industry, including quick-service and fast-casual restaurants, our primary competition is with other sit-down, casual dining restaurants within the full-service dining segment. In addition, we compete to attract Guests for off-premises dining occasions, including online ordering, delivery, to-go, and catering.
Competition The restaurant industry is highly competitive, and our Guests may choose to purchase food at supermarkets or other food retailers. Although, for some occasions, we compete against other segments of the restaurant industry, including quick-service and fast-casual restaurants, our primary competition is with other sit-down, casual dining restaurants within the full-service dining segment.
As of December 31, 2023, approximately 50% of our estimated annual food and beverage purchases were covered by fixed price contracts, most of which are scheduled to expire at various times through the end of 2024.
As of December 29, 2024, approximately 42% of our estimated annual food and beverage purchases were covered by fixed price contracts, most of which are scheduled to expire at various times through the end of fiscal 2025. Restaurant Development, Remodels, and Donatos ® We have prioritized investments to maintain our restaurants and technology infrastructure.
We believe our trademarks, service marks, and other intellectual property rights have significant value and are important to our brand building efforts and the marketing of our restaurant concept. Government Regulation We are subject to laws and regulations relating to the preparation and sale of food, including regulations regarding product safety, nutritional content, and menu labeling.
We believe our trademarks, service marks, and other intellectual property rights have significant value and are important to our brand building efforts and the marketing of our restaurant concept.
When complete, we expect this evaluation will inform our go forward design criteria, investment level, and pace of refreshes and remodels. In 2020, we announced our partnership with Donatos ® , a high-quality pizza brand "nested" inside of Red Robin restaurants. Through this partnership, our restaurants prepare and serve Donatos ® branded pizzas to our dine-in and off-premises Guests.
In 2020, we announced our partnership with Donatos ® , a high-quality pizza brand "nested" inside of Red Robin restaurants. Through this partnership, our restaurants prepare and serve Donatos ® branded pizzas to our dine-in and off-premises Guests. Pursuant to a licensing arrangement, we pay royalties on sales of Donatos ® pizza products to Donatos ® .
We are subject to federal regulation and state laws that regulate the offer and sale of franchises and substantive aspects of the franchisor-franchisee relationship. Various federal and state labor laws govern our relationship with our Team Members and can significantly impact our operating costs.
We are subject to various labor and employment laws and regulations that govern our relationship with our Team Members and can significantly impact our operating costs.
We invested $8.6 million and $6.1 million in the Donatos ® expansion in fiscal 2023 and 2022, respectively. Restaurant Franchise and Licensing Arrangements As of December 31, 2023, our franchisees operated 91 restaurants in 14 states and British Columbia, Canada. Our two largest franchisees own 41 restaurants located in Eastern and Central Pennsylvania, Michigan and Ohio.
As of December 29, 2024, we have introduced Donatos ® pizzas to 269 restaurants. Restaurant Franchise and Licensing Arrangements As of December 29, 2024, our franchisees operated 91 restaurants in 13 states and British Columbia, Canada. Our two largest franchisees own 42 restaurants located in Eastern and Central Pennsylvania, Michigan and Ohio.
In 2023, we established a DE&I Steering Council made up of senior leaders of the organization to establish an overarching long-term strategy and plan for our Company. The DE&I Committee meets routinely to assess opportunities for the Company to improve its efforts to create a best-in-class work environment that thrives on inclusion and diversity of thought.
In 2023, we established a Steering Council made up of senior leaders of the organization to establish an overarching long-term strategy and plan for our Company.
We also use technology to interact with our Guests via our digital platforms, including our website, mobile Apps, loyalty platform, online ordering site, tabletop kiosks, Server handhelds, and Guest feedback systems, which provide actionable insights on the overall Guest experience. We utilize centralized financial, accounting, and human resource management systems to support our Restaurant Support Center and Company-owned restaurants.
We also engage with our Guests through various digital platforms, such as our website, mobile apps, loyalty program, online ordering, and Guest feedback surveys. We utilize centralized financial, accounting, and human resource management systems to support our Restaurant Support Center and Company-owned restaurants.
Hart 66 President, Chief Executive Officer, and Member of the Board of Directors Todd Wilson 46 Chief Financial Officer Sarah Mussetter 45 Chief Legal Officer and Secretary Jyoti Lynch 52 Chief Technology Officer Meghan Spuler 43 Chief People Officer Kevin Mayer 54 Chief Marketing Officer G.J. Hart. Mr.
Hart 67 President, Chief Executive Officer, and Member of the Board of Directors Todd Wilson 47 Chief Financial Officer Sarah Mussetter 46 Chief Legal Officer and Secretary Meghan Spuler 44 Chief People Officer G.J. Hart. Mr. Hart joined Red Robin as President and Chief Executive Officer in September 2022.
We also provide our Team Members the opportunity to grow and develop, promote health and safety, and value inclusion, diversity, and engagement.
Our values empower and motivate our Team Members and create a Company culture that we collectively take pride in every day. We also provide our Team Members the opportunity to grow and develop, promote health and safety, and value inclusion, belonging, and engagement.
Compensation and performance evaluations are designed to compensate our Team Members fairly for their level of experience and overall contribution to our business. We leverage our rewards to motivate our Team Members to do what is necessary in our mission to deliver a best-in-class Guest experience. For our operations leaders we implemented a performance-based compensation program.
We leverage our rewards to motivate our Team Members to do what is necessary in our mission to deliver a best-in-class Guest experience. For our operations leaders, beginning in fiscal 2024, we utilize a performance-based compensation program. Our individual restaurant managers and multi-restaurant operators are referred to as "Managing Partners" and "Market Partners," respectively (and collectively, "Partners").
Our typical restaurant employs 40 to 70 Team Members, most of whom work part-time on an hourly basis.
Our typical restaurant employs 40 to 70 Team Members, most of whom work part-time on an hourly basis. We believe that a full complement of restaurant managers rationalized for restaurant sales volume and other factors is important to successful restaurant operations.
To manage this risk in part, we enter into fixed-price purchase commitments for certain commodities; however, it may not be possible for us to enter into fixed-price purchase commitments for certain commodities, or we may choose not to enter into fixed-price contracts for certain commodities.
As tactics to manage the risk of volatile cost increases and available product supply, we enter into fixed-price purchase commitments for certain commodities; however, it may not be possible for us to do so from time to time or at all with respect to certain commodities, or we may choose not to enter into fixed-price contracts for certain commodities.
In 2023, we published our second sustainability report and Sustainability Accounting Standards Board (the "SASB") Restaurant Industry disclosures, which is available on our website at ir.redrobin.com. The contents of the sustainability report, our SASB Restaurant Industry disclosures and our website are not incorporated by reference into this Form 10-K.
The contents of the sustainability report, our SASB Restaurant Industry disclosures and our website are not incorporated by reference into this Form 10-K. We review our corporate responsibilities, at the stakeholder, Board, and management level and incorporate corporate responsibility initiatives into our strategic planning.
We strive to provide our people with a great place to work, opportunities for growth, and competitive compensation for their contributions. Our values empower 2 Table of Contents and motivate our Team Members and create a Company culture that we collectively take pride in every day.
We nurture this by providing our Team Members with a clear understanding of what is expected, and our goal is that people love working for our brand. We strive to provide our people with a great place to 2 Table of Contents work, opportunities for growth, and competitive compensation for their contributions.
Continuous performance monitoring relative to industry peers, coupled with testing potential business drivers among current and potential Guests, promotes our adaptability and responsiveness to market dynamics. Leveraging our expansive Red Robin Royalty TM database, comprising over 13 million members, we also gain valuable insights into Guest behavior, frequency, and purchase patterns.
Continuous performance monitoring relative to industry peers, coupled with testing potential business drivers among current and potential Guests, promotes our adaptability and responsiveness to market dynamics.
Our collection or use of personal information about Guests or our Team Members is regulated at the federal and state levels, including the California Consumer Privacy Act.
We are also subject to laws and regulations relating to privacy and data protection, including the collection or use of personal information about Guests or our Team Members, such as the California Consumer Privacy Act.
Our sustainability efforts continue to evolve, and we intend to continue to adapt our sustainability approach to integrate with our North Star strategic priorities. Human Capital Management We strive to ensure our people, who we refer to as Team Members, live out and benefit from our core values: Integrity, Fun, Unbridled Hospitality, and High Performance.
Human Capital Management We strive to ensure our people, who we refer to as Team Members, demonstrate and benefit from our core values: Integrity, Fun, Unbridled Hospitality, and High Performance. We believe that when we exemplify these values, we win together! Winning together is our core objective.
These laws govern minimum wage requirements, overtime pay, tip credits, paid leave, meal and rest breaks, unemployment tax rates, health care and other benefits, workers' compensation rates, citizenship or residency requirements, child labor regulations, and discriminatory conduct. Available Information We use our investor relations website, ir.redrobin.com, as a channel of distribution of Company information.
These laws govern minimum wage requirements, overtime pay, tip credits, paid leave, meal and rest breaks, unemployment tax rates, health care and other benefits, workers' compensation rates, work authorization, discriminatory conduct, and union organizing rights and activities.
Our benefit programs include medical, dental, and vision insurance offerings, employee assistance programs, shift meals, Red Robin meal discounts, paid time off, 401(k) with employer match, an employee stock purchase plan, and equity-based awards for eligible Restaurant Support Center and operations Team Members, generally, at the director level and above.
We design tipped positions to make more than the federal, state, or local minimum wage when including tips. Our current benefit programs include medical, dental, and vision insurance offerings, an employee assistance program, shift meals, Red Robin meal discounts, paid time off, 401(k) with employer match, and an employee stock purchase plan.
Beginning in 2023, we changed the typical restaurant management team to consist of a Managing Partner, an assistant General Manager, a kitchen manager, and service managers, associate managers, or shift supervisors, as appropriate, dependent primarily on restaurant Sales volume. This transition in restaurant management is occurring in phases.
Restaurant Management Our typical restaurant management team consists of a Managing Partner, an Assistant General Manager, and a Kitchen Manager. Depending on restaurant sales volume and other factors, we may also utilize Service Managers, Associate Managers, and/or Shift Supervisors. The restaurant management team is responsible for the day-to-day operations, operating results, and other matters including hiring, training, and staffing.
We also plan to offer the use of this survey tool multiple times during the year to gain feedback when key events occur, so we can quickly respond to suggestions and concerns when they arise. We believe that such a tool will not only assist us with workforce retention, but also enhance labor productivity over time.
We utilize the surveys to gather insights from our Team Member population and create action plans from this data to continue to enhance our workplace. We also offer the use of this survey tool to gain feedback when key events occur, so we can quickly respond to suggestions and concerns when they arise.
In addition to these structured programs and forums, we maintain an open-door policy at all levels of the Company. Our Company remains committed to offering Team Members numerous opportunities to have their voices heard because we believe our Team Members are our most valuable resource.
In addition to these structured programs and forums, we maintain an open-door policy at all levels of the Company. In fiscal 2023, we launched a new Team Member engagement survey to all field Team Members. In fiscal 2024 we gathered additional field Team Member feedback and extended the engagement survey tool to our Restaurant Support Center Team Members.
In support of this approach, beginning in 2024, the compensation plan for field restaurant leaders will change significantly. A larger portion of the total compensation package for Managing Partners will be in 3 Table of Contents the form of a monthly bonus linked to restaurant-level operating profit.
For example, we expect restaurant management teams to engage in meaningful activities at the local level. 3 Table of Contents The compensation plan for restaurant management teams is currently linked to restaurant-level operating profit in the form of a monthly bonus.
Red Robin not only meets the requirements but also maintains a higher-level designation as a Merchant. These PCI compliance standards, set by a consortium of the major credit card companies, require annual assessment to ensure certain levels of system security and procedures are in place to protect our Guests' credit card and other personal information.
In addition, our systems undergo annual 5 Table of Contents assessment to ensure certain levels of system security and procedures are in place to protect our Guests' credit card and other personal information in accordance with Payment Card Industry (PCI) guidelines.
Each restaurant maintains a group of certified learning coaches, including a head learning coach, who collectively are tasked with preparing new Team Members for success by providing on-the-job training leading up to a final skills certification for their position. Team Members seeking advancement have the opportunity to join our management development program as a Shift Supervisor.
This approach, culminating in a final skills certification, sets our new Team Members up for immediate success as they start their Red Robin career. Team Members seeking advancement have the opportunity to further their career as a Shift Supervisor through our Management training program.
This transition marks a major change in our operational approach with expectations for local restaurant leadership to behave as if they are the “owner” of the restaurant. Decision making on a number of activities is now being driven by local leadership with the support of multi-unit field operations leaders when appropriate.
We expect our restaurant management teams to provide leadership at the restaurant as if the management team was the “owner” of the restaurant including localized decision-making with support of multi-unit field operations leaders when appropriate.
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ESG: Ongoing Commitment to Sustainability Red Robin is a company that cares; we strive to impact Guests, Team Members, communities, and our planet for the better. We continued our sustainability journey by completing a materiality assessment, designed to help us identify and understand the ESG topics that matter most to our stakeholders.
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In fiscal 2024, we had an average check per Guest of $17.81. Average check per Guest increased 4.6% compared to fiscal 2023.
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We believe that when we live out these values, we win together! Winning together is our core objective. We nurture this culture by ensuring that our people are front and center, that they have a clear understanding of what is expected, and that people love working for our brand.
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Corporate Responsibility Red Robin is a company that cares; we strive to impact Guests, Team Members, communities, and our planet for the better. In fiscal 2024, we published our third sustainability report and Sustainability Accounting Standards Board (the "SASB") Restaurant Industry disclosures, which is available on our website at ir.redrobin.com.
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We aim to ensure tipped positions make more than the federal, state, or local minimum wage when including tips.
Added
Additionally, we offer incentive bonuses tied to restaurant and company level results, as well as equity-based awards for eligible Team Members. Our compensation programs are designed to compensate our Team Members fairly for their level of experience and overall contribution to our business.
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Our individual restaurant managers and multi-restaurant operators are now referred to as "Managing Partners" and "Market Partners," respectively. Under the new compensation plan for these field Team Members, they will earn a base salary plus a performance bonus, which represents a percentage of each of their respective restaurant’s operating profit.
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Under this compensation program, Partners earn a base salary plus a performance bonus, which is linked to their respective restaurant or market operating profit. Additionally, Market Partners are eligible to receive equity-based awards.
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Since the COVID-19 pandemic, we have taken additional measures to protect our Team Members and Guests from infectious disease as well as comply with state and local protocols designed to maintain a healthy work environment. Diversity, Equity, and Inclusion ("DE&I") At Red Robin, we value everyone for who they are.
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We have strict health and safety standards in place that meet or exceed local, state, and federal requirements, and timely review and act on data and trends from regulatory, internal, third party, or vendor inspections. We continue to innovate our products and processes to reduce our environmental impact, improve safety, and create a healthy work environment.
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The DE&I Steering Council meets with the DE&I Committee, our Executive Team, and Board of Directors on a periodic basis to provide recommendations and updates on our progress against our evolving DE&I objectives.
Added
The Inclusion and Belonging Committee meets routinely to spotlight and celebrate the diverse experiences of our Team Members, to share these across the Company and to assess opportunities for the Company to improve its efforts to create a best-in-class work environment that thrives on inclusion and diversity of thought.
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Restaurant Management From 2020 through 2022, our typical restaurant management team consisted of a General Manager, an assistant General Manager, one to two associate managers, and additional shift supervisors depending on restaurant sales volumes. We believe it is critical to operate our restaurants with a full complement of experienced and professional restaurant management.
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Our expectation is this variable compensation approach will help to drive meaningful results in traffic, sales, and profitability consistent with the Company's financial plans.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe success of our expansion strategy and the success of new restaurants depends upon numerous factors, many of which are beyond our control, including the following: • changes to or volatility in the macroeconomic environment nationally and regionally, which could affect restaurant-level performance and influence our decisions on the rate of expansion, timing, and the number of restaurants to be opened; • competition in our markets and general economic conditions that may affect consumer spending or choice; • our ability to locate, hire, train, and retain qualified operating Team Members to staff our new restaurants, especially our Managing Partners and Market Partners; • identification of and ability to secure an adequate supply of available and suitable restaurant sites; • timely adherence to development schedules; • cost and availability of capital to fund restaurant expansion and operation; • negotiation of favorable lease and construction terms; 15 Table of Contents • the availability and cost of construction materials and labor; • our ability to manage construction and development costs of new restaurants; • unforeseen environmental problems with new locations; • securing required governmental approvals and permits, including liquor licenses, in a timely manner or at all; • our ability to attract and retain Guests; • weather, natural disasters, and other calamities; and • our ability to operate at acceptable profit margins.
Biggest changeThe expansion of our restaurant base depends upon numerous factors, some of which are out of our control, including the cost and availability of capital, the ability to attract qualified operating Team Members to staff new restaurants, the ability to secure available and suitable restaurant sites on favorable lease and construction terms, timely adherence to development schedules, and competition that may affect consumer spending.
A failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, or any other failure to maintain a continuous and secure information technology network for any of the above reasons could result in interruption and delays in Guest services, adversely affect our reputation, and negatively impact our results of operations.
A failure of these systems to operate effectively, problems with transitioning to upgraded or replacement systems, or any other failure to maintain a continuous and secure information technology network for any of the above reasons could result interruption and delays in Guest services, adversely affect our reputation, and negatively impact our results of operations.
These third party delivery companies require us to pay them a commission, which lowers our profit margin on those sales, and delivery drivers make errors, fail to make timely deliveries, damage our food or poorly represent our brand, which may lead to customer disappointment, reputational harm and unmet sales expectations.
These third-party delivery companies require us to pay them a commission, which lowers our profit margin on those sales, and delivery drivers may make errors, fail to make timely deliveries, damage our food or poorly represent our brand, which may lead to customer disappointment, reputational harm and unmet sales expectations.
We believe there is a risk that prolonged uncertain economic conditions might cause consumers to make long-lasting changes to their discretionary spending behavior, including dining out less frequently or at lower priced restaurants on a more permanent basis, which would have a negative effect on our profitability as we spread fixed costs across a lower level of sales.
We believe there is a risk that uncertain economic conditions might cause consumers to make long-lasting changes to their discretionary spending behavior, including dining out less frequently or at lower priced restaurants on a more permanent basis, which would have a negative effect on our profitability as we spread fixed costs across a lower level of sales.
Because we employ a large workforce, any wage increase and/or expansion of benefits mandates will have a particularly significant impact on our labor costs. Our vendors, contractors and business partners are similarly impacted by wage and benefit cost inflation, and many have or will increase their price for goods, construction and services in order to offset their increasing labor costs.
Because we employ a large workforce, any wage increase and/or expansion of benefit mandates will have a particularly significant impact on our labor costs. Our vendors, contractors and business partners are similarly impacted by wage and benefit cost inflation, and many have or will increase their price for goods, construction and services in order to offset their increasing labor costs.
A significant increase in litigation could have a material adverse effect on our results of operations, financial condition, and business prospects. As a member of the restaurant industry, we are sometimes the subject of complaints or litigation, including class action lawsuits, or from Guests alleging illness, injury, or other food quality, health, or operational concerns.
A significant increase in litigation could have a material adverse effect on our business, financial condition, and results of operations. As a member of the restaurant industry, we are sometimes the subject of complaints or litigation, including class action lawsuits, or from Guests alleging illness, injury, or other food quality, health, or operational concerns.
Changes to our operations structure and compensation, service model, Guest experience and cooking platform, supply chain and vendors, marketing and branding strategies, loyalty program, technology, and Guest engagement may not achieve the business growth and results we expect, which may negatively affect Guest satisfaction, Guest traffic, sales, profits, or liquidity.
Changes to our operations structure and compensation, service model, menu, Guest experience and cooking platform, supply chain and vendors, marketing and branding strategies, loyalty program, technology, and Guest engagement may not achieve the business growth and results we expect, which may negatively affect Guest satisfaction, Guest traffic, sales, profits, or liquidity.
Other significant risks associated with our suppliers and distributors include improper handling of food and beverage products, and/or the adulteration or contamination of such food and beverage products. Price increases may negatively affect Guest visits. From time to time, we increase prices, primarily to offset increased costs and operating expenses.
Other significant risks associated with our suppliers and distributors include improper handling of food and beverage products, and/or the adulteration or contamination of such food and beverage products. Price increases may negatively affect Guest visits. From time to time, we increase menu prices, primarily to offset increased costs and operating expenses.
If we are unable to successfully recruit and retain qualified restaurant management and operations Team Members in an increasingly competitive market, we may be unable to effectively operate and grow our business and revenues, which could materially adversely affect our financial performance.
If we are unable to successfully recruit, retain, and motivate qualified restaurant management and operations Team Members in an increasingly competitive market, we may be unable to effectively operate and grow our business and revenues, which could materially adversely affect our financial performance.
We may not continue to repurchase our common stock pursuant to our share repurchase program, and any repurchases may not enhance long-term stockholder value. Share repurchases could also increase the volatility of the price of our common stock and could diminish our cash reserves. The Company has an authorized share repurchase program.
We may not repurchase our common stock pursuant to our share repurchase program, and any repurchases may not enhance long-term stockholder value. Share repurchases could also increase the volatility of the price of our common stock and could diminish our cash reserves. The Company has an authorized share repurchase program.
The inappropriate use of social media vehicles by our Guests or Team Members could increase our costs, lead to litigation, or result in negative publicity that could damage our reputation. Changes in consumer preferences could negatively affect our results of operations.
The inappropriate use of social media by our Guests or Team Members could increase our costs, lead to litigation, or result in negative publicity that could damage our reputation. Changes in consumer preferences could negatively affect our results of operations.
Our operations are susceptible to the changes in cost and availability of commodities which could negatively affect our operating results. Our profitability depends in part on our ability to anticipate and react to changes in commodity costs.
Our operations are susceptible to the changes in cost and availability of commodities which could negatively affect our results of operations. Our profitability depends in part on our ability to anticipate and react to changes in commodity costs.
Failure to obtain and maintain adequate directors' and officers' insurance could materially adversely affect our ability to attract and retain qualified officers and directors. 20 Table of Contents Risks Related to Owning Our Stock The market price of our common stock is subject to volatility, which has and may continue to attract the interest of activist stockholders or subject us to securities litigation, which could cause us to incur significant expenses, hinder execution of our strategy and impact our stock price.
Failure to obtain and maintain adequate directors' and officers' insurance could materially adversely affect our ability to attract and retain qualified officers and directors. 19 Table of Contents Risks Related to Owning Our Stock The market price of our common stock is subject to volatility, which has and may continue to attract the interest of activist stockholders or subject us to securities litigation, which could cause us to incur significant expenses, hinder execution of our strategy, and impact our stock price.
It may be expensive and time-consuming to remediate material vulnerabilities, and our operations, reputation, sales and financial performance may be adversely impacted if we are not able to successfully and promptly remediate such vulnerabilities.
It may be expensive and time-consuming to remediate material vulnerabilities, and our operations, reputation, and financial performance may be adversely impacted if we are not able to successfully and promptly remediate such vulnerabilities.
Our ability to repurchase stock will depend on our ability to generate sufficient cash flows from operations, as supplemented our capacity to borrow funds, which may be subject to economic, financial, competitive and other factors that are beyond our control. Further, our Credit Agreement limits our ability to repurchase shares to certain conditions set forth by the lenders.
Our ability to repurchase stock will depend on our ability to generate sufficient cash flows from operations, as supplemented our capacity to borrow funds, which may be subject to economic, financial, competitive and other factors that are beyond our control. Further, our credit facility limits our ability to repurchase shares to certain conditions set forth by the lenders.
Changes in the price or availability of commodities for which we do not have fixed price contracts could have a material adverse effect on our profitability. Expiring contracts with our food suppliers could also result in unfavorable renewal terms and therefore increase costs associated with these suppliers or may necessitate negotiations with alternate suppliers.
Changes in the price or availability of commodities for which we do not have fixed price contracts could have a material adverse effect on our profitability. Expiring contracts with our food suppliers could also result in disruptions in relationships or unfavorable renewal terms and therefore increase costs associated with these suppliers or may necessitate negotiations with alternate suppliers.
Increased labor costs, whether due to competition, unionization, increased minimum and tip wage, state unemployment rates, employee benefits costs, or otherwise, may adversely impact our operating expenses. A considerable amount of our restaurant Team Members are paid at rates related to the federal, state, or local minimum wage.
Increased labor costs, whether due to our business model, competition, unionization, increased minimum and tip wage, state unemployment rates, employee benefits costs, or otherwise, may adversely impact our operating expenses. A considerable amount of our restaurant Team Members are paid at rates related to the federal, state, or local minimum wage.
For example, California enacted legislation that increased its minimum wage through a series of annual rate increases, from $10.50 an hour in January 2017 to $16 an hour in January 2024, and some California localities currently mandate wages higher than the state minimum.
For example, California enacted legislation that increased its minimum wage through a series of annual rate increases, from $10.50 an hour in January 2017 to $16.50 an hour in January 2025, and some California localities currently mandate wages higher than the state minimum.
Our business is subject to various federal, state, and local government laws and regulations, including, among others, those relating to our employees, public health and safety, food safety, alcoholic beverage control, public accommodations, data privacy and security, securities regulation, and consumer health regulations, including those pertaining to nutritional content and menu labeling such as the Affordable Care Act, which requires restaurant companies such as ours to disclose calorie information on their menus.
Our business is subject to various government laws and regulations, including, among others, those relating to our employees, public health and safety, food safety, alcoholic beverage control, public accommodations, data privacy and security, securities regulation, and consumer health regulations, including those pertaining to nutritional content and menu labeling such as the Affordable Care Act, which requires restaurant companies such as ours to disclose calorie information on their menus.
Additionally, such an event could expose us to regulatory sanctions or penalties, lawsuits or other legal action or cause us to incur legal liabilities and costs, which could be significant, in order to address and remediate the effects of an attack and related security concerns.
Additionally, such an event could expose us to regulatory sanctions or penalties, lawsuits or other legal action or cause us to incur legal liabilities and costs, which could be significant, to address and remediate the effects of an attack and related security concerns.
As a result, we have experienced increased pressure and expectations to provide expanded disclosure and make commitments, establish goals or set targets with respect to various environmental and social issues and to take the actions necessary to meet those commitments, goals and targets.
As a result, we have experienced increased expectations and costs to provide expanded disclosure and make commitments, establish goals or set targets with respect to various environmental and social issues and to take the actions necessary to meet those commitments, goals and targets.
Continuing share repurchases, or alternatively limiting or halting share repurchases under our share repurchase program may negatively impact investor perception of us and may therefore affect the market price and volatility of our stock. ITEM 1B. Unresolved Staff Comments None.
Making share repurchases, or alternatively limiting or halting share repurchases under our share repurchase program may negatively impact investor perception of us and may therefore affect the market price and volatility of our stock. ITEM 1B. Unresolved Staff Comments None.
We may be unable to obtain 14 Table of Contents favorable contract terms with suppliers or adjust our purchasing practices and menu prices to respond to changing food costs, and a failure to do so could negatively affect our operating results. We may experience interruptions in the delivery of food and other products from third parties.
We may be unable to obtain favorable contract terms with suppliers or adjust our purchasing practices and menu prices to respond to changing food costs, and a failure to do so could negatively affect our operating results. We may experience interruptions in the delivery of food and other products from third parties.
Our software or information technology systems, or that of third parties upon who we rely to operate our business, may have material vulnerabilities and, despite our efforts to identify and remediate these vulnerabilities, our efforts may not be successful or we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.
Our software or information technology systems, or those of our employees or of third parties upon who we rely to operate our business, may have material vulnerabilities and, despite our efforts to identify and remediate these vulnerabilities, our efforts may not be successful or we may experience delays in developing and deploying remedial measures designed to address any such identified vulnerabilities.
Our image and reputation and the image and reputation of 17 Table of Contents other franchisees may suffer materially, and system-wide sales could significantly decline if our franchisees do not operate restaurants according to our standards. We are subject to federal and state laws that regulate the offer and sale of franchises and aspects of the licensor-licensee relationship.
Our image and reputation and the image and reputation of other franchisees may suffer materially, and system-wide sales could significantly decline if our franchisees do not operate restaurants according to our standards. We are subject to federal and state laws that regulate the offer and sale of franchises and aspects of the licensor-licensee relationship.
ITEM 1A. Risk Factors An investment in our common stock involves a high degree of risk. You should carefully read and consider the risks described below before making an investment decision. The occurrence of any of the following risks could materially harm our business, financial condition, results of operations, or cash flows.
ITEM 1A. Risk Factors An investment in our common stock involves a high degree of risk. You should carefully read and consider the risks described below before making an investment decision. The occurrence of any of the following risks could materially harm our business, financial condition, and results of operations.
However, despite the precautions we take to mitigate the risks of such events, an attack on our enterprise information technology system, or those of third parties with which we do business, could result in theft or unauthorized disclosure of our proprietary or confidential information or a breach of confidential customer, supplier or employee information.
However, despite the precautions we take to mitigate the risks of such events, an attack on our information technology systems, or those of third parties with which we do business, could result in theft or unauthorized disclosure of our proprietary or confidential information or a breach of confidential customer, supplier or employee information.
The insurance coverage we maintain may be inadequate to cover claims or liabilities relating to a cybersecurity attack. 12 Table of Contents We also use information technology systems to process financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements.
The insurance coverage we maintain may be inadequate to cover claims or liabilities relating to a cybersecurity attack. We also use information technology systems to process financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements.
Risks Related to Our Business Our business strategy may not be successful or achieve the desired results, which may have an adverse impact on our business and financial results. The Company is currently undergoing a significant transformation. In 2023, we launched our "North Star" business strategy.
Risks Related to Our Business Our business strategy may not be successful or achieve the desired results, which may have an adverse impact on our business, financial condition, and results of operations. The Company is currently undergoing a significant transformation. In 2023, we launched our "North Star" business strategy.
Further, there have been historical actions before the National Labor Relations Board (NLRB) where it was alleged that a parent company could be held liable for the actions of its franchisees, including potentially jointly liable for labor and wage violations by its franchisees.
Further, there have been historical actions before the National Labor Relations Board (NLRB) where it was alleged 16 Table of Contents that a parent company could be held liable for the actions of its franchisees, including potentially jointly liable for labor and wage violations by its franchisees.
Various factors beyond our control, including adverse weather conditions, governmental regulation and monetary policy, trade barriers and import tariffs, product availability, recalls of food products, and seasonality, as well as the effects of the current macroeconomic environment on our suppliers, may affect our commodity costs or cause a disruption in our supply chain.
Various factors beyond our control, including adverse weather conditions, governmental regulation and monetary policy, new or increased trade barriers and import tariffs (including retaliatory trade actions), product availability, recalls of food products, and seasonality, as well as the effects of the current macroeconomic environment on our suppliers, may affect our commodity costs or cause a disruption in our supply chain.
We cannot provide assurance that any future price increases will not deter Guests from visiting our restaurants, reduce the frequency of their visits, or affect their purchasing decisions. New or improved technologies or changes in consumer behavior facilitated by these technologies could negatively affect our business.
We cannot provide assurance that any future menu price increases will not deter Guests from visiting our restaurants, reduce the frequency of their visits, or affect their purchasing decisions. 14 Table of Contents New or improved technologies or changes in consumer behavior facilitated by these technologies could negatively affect our business.
However, such methods may not afford adequate protection and others could independently develop similar know-how or obtain access to our know-how, concepts, and recipes. Consequently, our business could be negatively affected and less profitable if we are unable to successfully defend and protect our intellectual property.
However, such methods may not afford adequate protection and others could independently develop similar know-how or obtain access to our know-how, concepts, and recipes. 18 Table of Contents Consequently, our business could be negatively affected and less profitable if we are unable to successfully defend and protect our intellectual property.
These negative consequences could increase the cost of or interfere with our ability to operate our business and execute our strategies. Various federal, state, and local employment laws govern our relationship with our Team Members and affect operating costs.
These negative consequences could increase the cost of or interfere with our ability to operate our business and execute our strategies. Various employment laws govern our relationship with our Team Members and affect operating costs.
There has been increasing public focus by investors, environmental activists, the media and governmental and nongovernmental organizations on social and environmental sustainability matters, including packaging and waste, animal health and welfare, human rights, climate change, greenhouse gases and land, energy and water use.
In recent years, there has been public focus by investors, environmental activists, the media and governmental and nongovernmental organizations on social and environmental sustainability matters, including packaging and waste, animal health and welfare, human rights, climate change, greenhouse gases and land, energy and water use.
We have registered or filed applications 19 Table of Contents for trademarks for these names and logos, among others, with the United States Patent and Trademark Office and in Canada and we have applied to register various trademarks in certain other international jurisdictions.
We have registered or filed applications for trademarks for these names and logos, among others, with the United States Patent and Trademark Office and in Canada and we have applied to register various trademarks in certain other international jurisdictions.
Such events could impair our ability to conduct our operations or cause disruptions to our supply chain, which could have an adverse impact on revenue and harm our reputation.
Such events could impair our ability to conduct our operations or cause disruptions to our supply chain, which could have an adverse impact on our financial condition and harm our reputation.
These conditions include unemployment, weakness and lack of consistent improvement in the housing markets, downtrend or delays in residential or commercial real estate development, volatility in the U.S. stock market and in other financial markets, inflationary pressures, wage rates, tariffs and other trade barriers, reduced access to credit or other economic factors that may affect consumer confidence.
These conditions include unemployment, weakness in the housing markets, downtrend or delays in residential or commercial real estate development, volatility in the U.S. stock market and in other financial markets, inflationary pressures, wage rates, tariffs and other trade barriers, disputes and tensions, reduced access to credit or other economic factors that may affect consumer confidence.
Compliance with these requirements may result in cost increases due to necessary system changes and the development of new administrative processes, and if we fail to comply with the laws and regulations regarding privacy and security, we could be exposed to risks of fines, investigations, litigation and disruption of our operations.
Compliance with these requirements may result in cost increases due to necessary system changes and the development of new administrative processes, and if we fail to comply, we could be exposed to risks of fines, investigations, litigation, and disruption of our operations.
Social media can be challenging because it provides consumers, employees, and others with the ability to communicate approval or displeasure with a business, in near real time, and provides any individual with the ability to reach a broad audience and with comments that are often not filtered or checked for accuracy.
Social media provides consumers, employees, and others with the ability to communicate approval or displeasure with a business, in near real time, and provides any individual with the ability to reach a broad audience and with comments that are often not filtered or checked for accuracy.
If we are unable to attract and retain qualified people, our restaurants could be short staffed, we may be forced to incur overtime expenses, hourly Team Member turnover could increase, and our ability to operate our restaurants and roll out new service model and technology solutions effectively could be limited, and the Guest experience could be negatively affected, leading to a decline in traffic and sales, which could materially adversely affect our financial performance.
If we are unable to attract and retain qualified people, our restaurants could be short staffed, we may be forced to incur overtime expenses, hourly Team Member turnover could increase, and our ability to operate our restaurants effectively could be limited, and the Guest experience could be negatively affected, leading to a decline in traffic and sales, which could materially adversely affect our financial performance.
As a result, our Guests may be apprehensive about the economy and maintain or further reduce their level of discretionary spending, especially in a potential recessionary environment. This could affect the frequency with which our Guests choose to dine-out or the amount they spend on meals, thereby decreasing our revenues and potentially negatively affecting our operating results.
As a result, our Guests may be apprehensive about the economy and reduce their level of discretionary spending. This could affect the frequency with which our Guests choose to dine-out or the amount they spend on meals, thereby decreasing our revenues and potentially negatively affecting our operating results.
Our revenues and operating results may fluctuate significantly due to various risks and unexpected circumstances, including adverse weather conditions, natural disasters, climate change, pandemics, and other factors outside our control that could increase costs, disrupt our supply change, and impact seasonality, among other things.
Our results of operations may fluctuate significantly due to various risks and unexpected circumstances, including adverse weather conditions, natural disasters, climate change, pandemics, catastrophic events, and other factors outside our control that could increase costs, disrupt our supply change, and impact seasonality, among other things.
Any failure by us to comply with the various federal and state labor laws governing our relationship with our Team Members including requirements pertaining to minimum wage, overtime pay, meal and rest breaks, unemployment tax rates, workers' compensation rates, citizenship or residency requirements, child labor regulations, and discriminatory conduct, may have a material adverse effect on our business or operations.
Any failure by us (or claims of failure) to comply with the various federal and state labor laws governing our relationship with our Team Members including requirements pertaining to minimum wage, overtime pay, meal and rest breaks, unemployment tax rates, workers' compensation rates, work authorization, and discriminatory conduct, may have a material adverse effect on our business or operations.
These laws govern employee classification, wage rates, fair scheduling and payment requirements including tip credit laws and overtime pay, meal and rest breaks, unemployment and other taxes, health care and benefits, workers' compensation rates, citizenship or residency requirements, labor relations, child labor regulations, and discriminatory conduct.
These laws govern employee classification, wage rates, fair scheduling and payment requirements including tip credit laws and overtime pay, meal and rest breaks, unemployment and other taxes, health care and benefits, workers' compensation rates, labor relations, work authorization regulations, and discriminatory conduct.
These strategies and related initiatives, including changes to our restaurant management structures, may not result in increased traffic and sustained higher sales, which are important to achieving our strategic objectives.
These strategies and related initiatives may not result in increased traffic and sustained higher sales, which are important to achieving our strategic objectives.
A privacy or security breach involving our information technology systems, or the failure of our data security measures could interrupt our business, damage our reputation, and negatively affect our operations and profits. The protection of Guest, Team Member, and Company data is critical to us.
A privacy or security breach involving our information technology systems, or the failure of our data security measures could interrupt our business, damage our reputation, and negatively affect our operations and financial condition. Protecting Guest, Team Member, and Company data is critical.
There can be no assurance we will be able to develop or implement these or other important strategic initiatives, or that we have, or will have, sufficient resources to fully and successfully implement, sustain results from, or achieve additional expected benefits from them, which could in turn adversely affect our business.
There can be no assurance we will be able to develop or implement these or other important strategic initiatives in accordance with our expectations or on the expected timeline, or that we have, or will have, sufficient resources to fully and successfully implement, sustain results from, or achieve additional expected benefits from them in accordance with our expectations or on the expected timeline, which could in turn adversely affect our business, financial condition, and results of operations.
Accordingly, they may be better equipped than us to increase marketing or to take other measures to maintain their competitive position, including the use of significant discount offers to attract Guests.
Accordingly, they may be better equipped than us to invest in improving and expanding restaurants and infrastructure, increase marketing, or to take other measures to maintain their competitive position, including the use of significant discount offers to attract Guests.
We are subject to all of the risks associated with leasing space subject to long-term non-cancelable leases, and risks related to renewal. As of December 31, 2023, 398 of our 415 Company-owned restaurants are located on leased premises.
We are subject to all of the risks associated with leasing space subject to long-term non-cancelable leases, and risks related to renewal. As of December 29, 2024, 400 of our 407 Company-owned restaurants are located on leased premises.
As of the end of 2023, approximately 50% of our estimated 2024 annual food and beverage purchases were covered by fixed price contracts, most of which are scheduled to expire at various times through 2024.
As of the end of fiscal 2024, approximately 42% of our estimated fiscal 2025 annual food and beverage purchases will be covered by fixed price contracts, most of which are scheduled to expire at various times through 2025.
For example, our Red Robin Royalty™ loyalty program has historically contributed to sales and Guest count growth. We plan to launch a new loyalty program in 2024 to transition to a points-based program to reward our most loyal guests, but we cannot guarantee this new loyalty program will be a success.
The Red Robin Royalty™ loyalty program has historically contributed to sales and Guest count growth. We launched a new loyalty program in fiscal 2024 which transitioned to a points-based program to reward our most loyal Guests, but we cannot guarantee this new loyalty program will be a success.
We rely on our Senior Executive Team for the development and execution of our business strategy and the loss of any member of our Senior Executive Team could negatively affect our operating results. We recently implemented significant changes in our senior executive management team to support the Company’s new “North Star” five-point plan.
We rely on our management team for the development and execution of our business strategy and the loss of a member of our management team could negatively affect our operating results. 15 Table of Contents We implemented changes to our management team to support the Company’s new “North Star” five-point plan.
The trading price or value of our common stock could decline, and you could lose all or part of your investment. When making an investment decision with respect to our common stock, you should also refer to the other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes.
When making an investment decision with respect to our common stock, you should also refer to the other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes.
If our franchisees fail to maintain the appropriate level 11 Table of Contents of PCI compliance or they experience a security breach, it could negatively impact their business operations, and we could face a loss of or reduction in royalties or other payments they are required to remit to us and it could adversely affect our reputation and Guest confidence.
If our franchisees fail to maintain the appropriate level of PCI compliance or they experience a security breach, it could negatively impact their business operations, and we could face a loss of or reduction in royalties or other payments they are required to remit to us and it could adversely affect our reputation and Guest confidence. 11 Table of Contents If there is a material failure in our information technology systems, our business could be negatively affected, and our systems may be inadequate to support our future growth strategies.
As of December 31, 2023, a total of 167 or 40% of our 415 Company-owned restaurants, representing 49% of restaurant revenues, were located in the Western United States (i.e., Arizona, California, Colorado, Nevada, Oregon, Idaho, New Mexico, Utah, and Washington state).
As of December 29, 2024, a total of 166 or 41% of our 407 Company-owned restaurants, representing 51% of restaurant revenues, were located in the Western United States (i.e., Arizona, California, Colorado, Nevada, Oregon, Idaho, New Mexico, Utah, and Washington state).
We have in the past and may in the future engage in sale-lease back transactions, which have and may in the future increase the number of our leased properties. For example, in 2023, we completed two such transactions, selling and simultaneously leasing back an aggregate of 18 previously owned properties.
We have in the past and may in the future engage in sale-leaseback transactions, which have and may in the future increase the number of our leased properties. During fiscal 2023 and 2024, we completed three such transactions, selling and simultaneously leasing back an aggregate of 28 previously owned properties.
A shortage in the labor pool or other general inflationary pressures or changes could also increase our labor costs. 18 Table of Contents While we try to offset labor cost increases through price increases, more efficient purchasing practices, productivity improvements, changing staffing models, greater economies of scale and by offering a variety of health plans to our Team Members, there can be no assurance that these efforts will be successful.
While we try to offset labor cost increases through price increases, more efficient purchasing practices, productivity improvements, changing staffing models, greater economies of scale and by offering a variety of health plans to our Team Members, there can be no assurance that these efforts will be successful.
The regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements including the California Consumer Privacy Act (CCPA) and other similar legislative initiatives.
We are subject to numerous privacy and data protection laws and regulations and the regulatory environment surrounding information security and privacy is increasingly demanding, with the frequent imposition of new and constantly changing requirements including the California Consumer Privacy Act, the California Privacy Rights Act, and other similar legislative initiatives.
Our distributors and suppliers also may be affected by higher minimum wage or health care costs, which could result in higher costs for goods and services supplied to us.
Our distributors and suppliers also may be affected by higher minimum wage or health care costs, which could result in higher costs for goods and services supplied to us. A shortage in the labor pool or other general inflationary pressures or changes could also increase our labor costs.
Natural disasters such as earthquakes, hurricanes, and severe adverse weather conditions, climate change and health pandemics may keep customers in the affected area from dining out, adversely affect consumer spending and confidence levels.
Adverse weather conditions, natural disasters (such as earthquakes, hurricanes, and wildfires), climate change, pandemics, or catastrophic events, such as terrorist acts, can adversely impact restaurant sales, as they may keep customers in the affected area from dining out, adversely affect consumer spending and confidence levels.
Key members of our senior executive management team are central to our success and difficult to replace. We may be unable to retain them or attract other highly qualified senior executives, particularly if we do not offer 16 Table of Contents competitive employment terms.
Our management team is central to our success and difficult to replace. We may be unable to retain our management team or attract new highly qualified members, particularly if we do not offer competitive employment terms.
The loss of the services of any of our key senior executives or the failure to implement an appropriate succession plan could prevent us from achieving our business strategy and initiatives, which could adversely affect our operating results. Changes in our management team can also disrupt our business.
Turnover on our management team or the failure to implement an appropriate succession plan could disrupt our business and prevent us from achieving our business strategy and initiatives, which could adversely affect our operating results.
Furthermore, the competitive landscape presents a challenge, as some competitors boast larger marketing resources and more extensive national strategies, potentially limiting our ability to successfully compete against these well-established programs.
Furthermore, the competitive landscape presents a challenge, as some competitors boast larger marketing resources and more extensive national strategies, potentially limiting our ability to successfully compete against these well-established programs. Damage to our brand image or reputation, including due to unfavorable social and digital media, could adversely impact our business.
Shifts in consumer preferences away from this cuisine or dining style could have a material adverse effect on our future profitability. In addition, competitors' use of significant advertising and food 13 Table of Contents discounting could influence our Guests' dining choices.
Shifts in consumer preferences away from this cuisine or dining style could have a material adverse effect on our future profitability. In addition, competitors' use of significant advertising and food discounting could influence our Guests' dining choices. Further, changing health or dietary preferences may cause consumers to avoid our products in favor of alternative foods.
Our restaurants are primarily located near high density retail areas such as regional malls, lifestyle centers, big box shopping centers, and entertainment centers. We depend on a high volume of visitors at these centers to attract Guests to our restaurants. As demographic and economic patterns change, current locations may or may not continue to be attractive or profitable.
The success of our restaurants depends in large part on leased locations. Our restaurants are primarily located near high density retail areas such as regional malls, lifestyle centers, big box shopping centers, and entertainment centers. We depend on a high volume of visitors at these centers to attract Guests to our restaurants.
Further, changes to our staffing models in our restaurants due to labor costs or any labor shortages, could negatively impact our ability to provide adequate service levels to our Guests, which could result in adverse Guest reactions and a possible reduction in Guest traffic at our restaurants.
Further, changes to our staffing models in our restaurants due to labor costs or any labor shortages, could negatively impact our ability to provide adequate service levels to our Guests, which could result in adverse Guest reactions and a possible reduction in Guest traffic at our restaurants. 17 Table of Contents Our failure to remain in compliance with governmental laws and regulations as they continually evolve, and the associated costs of compliance, could cause our business results to suffer.
Because of the number of credit card transactions we process, we are required to maintain the highest level of PCI Data Security Standard compliance at our Restaurant Support Center and Company-owned restaurants. As part of an overall security program and to meet PCI standards, we undergo regular external vulnerability scans and we are reviewed by a third party assessor.
Because of the number of credit card transactions we process, we are required to maintain the highest level of PCI Data Security Standard compliance at our Restaurant Support Center and Company-owned restaurants.
Our marketing and branding strategies to attract, engage, and retain our Guests, including anticipated changes to our loyalty program, may not be successful, which could negatively affect our business. While we persistently refine our communication strategies to effectively target and compete for the right customers, it's essential to acknowledge potential challenges that may arise.
Our marketing and branding strategies to attract, engage, and retain our Guests, including recent and future changes to our loyalty program, may not be successful, which could negatively affect our business. 12 Table of Contents While we routinely refine our communication strategies to effectively target and compete for customers, these strategies may not prove to be successful.
Our restaurants compete on the basis of a varied menu and feature burgers, salads, soups, appetizers, other entrees, desserts, and our signature alcoholic and non-alcoholic beverages, and we are in the process of rolling out Donatos® pizza to our restaurants. Our success depends, in part, upon the continued popularity of these foods and this style of dining.
Our restaurants provide a full-service casual dining experience and offer a varied menu consisting of burgers, salads, appetizers, other entrees, desserts, our signature alcoholic and non-alcoholic beverages, and Donatos® pizza available in a portion of our restaurants. Our success depends, in part, upon the continued popularity of these foods and this style of dining.
As PCI standards change, we may be required to implement additional security measures. If we do not maintain the required level of PCI compliance, we could be subject to costly fines or additional fees from the card brands that we accept or lose our ability to accept those payment cards.
If we do not maintain the required level of PCI compliance, we could be subject to costly fines or additional fees from the card brands that we accept or lose our ability to accept those payment cards. Our franchisees are separate businesses that have different levels of compliance required depending on the number of credit card transactions processed.
Further, there is no assurance our less mature restaurants will attain operating results similar to those of our existing restaurants. The large number of Company-owned restaurants concentrated in the Western United States makes us susceptible to changes in economic and other trends in that region.
The large number of Company-owned restaurants concentrated in the Western United States makes us susceptible to changes in economic and other trends in that region.
Our ability to effectively manage and run our business depends on the reliability and capacity of our information technology systems, including technology services and systems for which we contract from third parties. These systems and services may be insufficient to effectively manage and run our business.
Our ability to effectively manage and run our business depends on the reliability and capacity of our information technology systems, including technology services and systems for which we contract from third parties. These systems and our business needs continue to evolve and require upgrading and maintenance over time, consequently requiring significant future commitments of resources and capital.
Further, employee claims against us based on, among other things, discrimination, harassment, or wrongful termination may divert our financial and management resources that would otherwise be used to benefit the future performance of our operations. Labor organizing could adversely affect our operations and harm our competitive position in the restaurant industry, which could harm our financial performance.
Further, employee claims against us based on, among other things, discrimination, harassment, or wrongful termination may divert our financial and management resources that would otherwise be used to benefit the future performance of our operations. Litigation proceedings are subject to inherent uncertainties, and we have in the past received, and may in the future receive, unfavorable rulings.
We also plan to launch a new marketing program in 2024 designed to drive sales and traffic. If our advertising, branding, and other marketing initiatives fall short, there is a risk that we may not achieve the expected levels of restaurant sales or Guest traffic, potentially impacting our financial results negatively.
If our advertising, branding, and other marketing initiatives do not drive visits from consumers, we may not achieve the expected levels of restaurant sales or Guest traffic, potentially impacting our financial results negatively.
We are subject to the risks presented by acquisitions or refranchising. As part of our expansion efforts, we have acquired some of our franchised restaurants in the past. In the future, we may, from time to time, consider opportunistic acquisitions or dispositions of restaurants. We may in the future pursue refranchising with quality operators in certain identified markets.
In the future, we may, from time to time, consider opportunistic acquisitions or dispositions of restaurants. We may in the future pursue refranchising with quality operators in certain identified markets. Any future acquisitions or dispositions will be accompanied by the risks commonly encountered in acquisitions.
During fiscal 2023, the price of our common stock fluctuated between $5.39 and $15.63 per share.
During fiscal 2024, the price of our common stock fluctuated between $3.04 and $11.83 per share.
We are subject to a number of significant risks that might cause our actual quarterly and annual results to fluctuate significantly or be negatively affected. Adverse weather conditions, natural disasters, climate change, or catastrophic events, such as terrorist acts, can adversely impact restaurant sales.
We are subject to a number of significant risks that might cause our quarterly and annual results to fluctuate significantly or be negatively affected.
The Company's effective tax rate could be volatile and materially change as a result of changes in tax laws.
The Company's effective tax rate could be volatile and materially change as a result of changes in tax laws. During 2022, tax legislation was enacted that includes the 15% corporate minimum income tax for certain large corporate taxpayers.
If we are unable to renew a lease or determine not to renew a lease, there may be costs related to the relocation and development of a replacement restaurant or, if we are unable to relocate, reduced revenue.
If we are unable to renew a lease or determine not to renew a lease, there may be costs related to the relocation and development of a replacement restaurant or, if we are unable to relocate, reduced revenue. 13 Table of Contents Changes in consumer buying patterns, particularly due to declines in traffic near our leased locations, and increases in online sales, may affect our financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo further bolster the Board's understanding of cybersecurity issues, management facilitates ongoing educational opportunities. For instance, in December 2023, the Board engaged in a discussion with cybersecurity experts on building resilience to cyber risk. These educational initiatives empower Board members to make informed decisions and actively contribute to the oversight of cybersecurity governance.
Biggest changeThe Board routinely engages in discussions with cybersecurity experts on building resilience to cyber risk and receives updates regarding management tabletop exercises. These educational initiatives empower Board members to make informed decisions and actively contribute to the oversight of cybersecurity governance. Currently, our Vice President of Infrastructure and Security assumes primary responsibility for assessing and managing material cybersecurity risks.
The Company evaluates third-party service providers from a cybersecurity risk perspective, which may include an assessment of that service provider’s cybersecurity posture or a recommendation of specific mitigation controls. • Audits and Assessments: Regular audits and assessments are conducted by both internal and external experts (consultants, auditors, and other third parties) to evaluate the effectiveness of our cybersecurity controls and processes 21 Table of Contents and recommend improvements.
The Company evaluates third-party service providers from a cybersecurity risk perspective, which may include an assessment of that service provider’s cybersecurity posture or a recommendation of specific mitigation controls. • Audits and Assessments: Regular audits and assessments are conducted by both internal and external experts (consultants, auditors, and other third parties) to evaluate the effectiveness of our cybersecurity controls and processes 20 Table of Contents and recommend improvements.
The Audit Committee receives regular reports and updates, typically quarterly, from our Chief Technology Officer (CTO) on a wide range of cybersecurity topics. These reports include detailed insights into risk assessments, mitigation strategies, emerging threats, vulnerabilities, incidents, and prevailing industry trends.
The Audit Committee receives regular reports and updates, typically quarterly, from senior management on a wide range of cybersecurity topics. These reports include detailed insights into risk assessments, mitigation strategies, emerging threats, vulnerabilities, incidents, and prevailing industry trends. After each such report, the Chair of the Audit Committee updates the full Board for transparency and accountability in cybersecurity governance.
After each such report, the Chair of the Audit Committee updates the full Board for transparency and accountability in cybersecurity governance. Additionally, at least annually and as needed from time to time, the Board receives similar cybersecurity updates directly from the CTO. Further, the Board oversees cybersecurity as part of our enterprise risk management program.
Additionally, at least annually and as needed from time to time, the Board receives similar cybersecurity updates directly from senior management. Further, the Board oversees cybersecurity as part of our enterprise risk management program. To further bolster the Board's understanding of cybersecurity issues, management facilitates ongoing educational opportunities.
Our CTO, supported by our Vice President of Infrastructure and Security, assumes primary responsibility for assessing and managing material cybersecurity risks. With over 25 years of experience spanning restaurant, retail, and technology brands, our CTO brings a wealth of expertise to the role.
With experience spanning restaurant, retail, financial, and technology brands, including serving in similar roles overseeing information security programs at other companies, and a degree in Computer Science, our Vice President of Infrastructure and Security brings experience and expertise to the role.
Removed
Having previously held similar positions leading and overseeing cybersecurity programs at both private and public companies, our CTO is well-equipped to navigate the complex landscape of cybersecurity threats and challenges. Our Company has established robust policies and processes governing the assessment, response, and notifications associated with cybersecurity incidents.
Added
Our Vice President of Infrastructure and Security leads a team of professionals who oversee the prevention, detection, and remediation activities within our cybersecurity environment. Our Company has established robust policies and processes governing the assessment, response, and notifications associated with cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

4 edited+0 added−0 removed3 unchanged
Biggest changeCertain lease agreements also require the Company to pay maintenance, insurance, and property tax costs. We own real estate for 17 Company-owned restaurants located in Arizona (2); California (1); Colorado (4); Florida (1); North Carolina (2); Ohio (1); Pennsylvania (1); Texas (2); Virginia (2); and Washington (1). Our Restaurant Support Center and test kitchen is located in Englewood, Colorado.
Biggest changeCertain lease agreements also require the Company to pay maintenance, insurance, and property tax costs. We own real estate for 7 Company-owned restaurants located in North Carolina (2); Ohio (1); Pennsylvania (1); Texas (1); Virginia (1); and Washington (1). Of these locations, three are classified as Assets Held for Sale within the Consolidated Balance Sheet as of December 29, 2024.
We develop restaurants under ground leases on which we build our own restaurants in addition to converting existing buildings on standalone, in-line, end cap, and mall locations. As of December 31, 2023, our restaurant locations comprised approximately 2.6 million square feet.
We develop restaurants under ground leases on which we build our own restaurants in addition to converting existing buildings on standalone, in-line, end cap, and mall locations. As of December 29, 2024, our restaurant locations comprised approximately 2.6 million square feet.
For on-site critical, Company leadership, and those who desire to work in a shared location, we have optimized our office footprint at this location to meet the needs of that population. We occupy this facility under a lease 22 Table of Contents that expires May 31, 2025.
For on-site critical, Company leadership, and those who desire to work in a shared location, we have optimized our office footprint at this location to meet the needs of that population. We occupy this facility under a lease that expires May 31, 2027.
We have a dispersed workforce policy that permits many of our Restaurant Support Center Team Members to continue working remotely and we expect that to continue on a go-forward basis.
Our Restaurant Support Center and test kitchen is located in Englewood, Colorado. We currently have a dispersed workforce policy that permits many of our Restaurant Support Center Team Members to work remotely or on a hybrid basis, 21 Table of Contents and we expect that to continue.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−1 removed0 unchanged
Biggest changeITEM 3. Legal Proceedings For information regarding contingencies related to litigation, please see Note 12. Commitments and Contingencies included within Item 8. Financial Statements and Supplementary Data of Part II of this Annual Report on Form 10-K for the period ended December 31, 2023, the contents of which are incorporated herein by reference. ITEM 4.
Biggest changeITEM 3. Legal Proceedings For information regarding contingencies related to litigation, please see Note 12. Commitments and Contingencies included within Item 8. Financial Statements and Supplementary Data of Part II of this Annual Report on Form 10-K for the period ended December 29, 2024, the contents of which are incorporated herein by reference.
Removed
Mine Safety Disclosures Not applicable. 23 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−1 removed3 unchanged
Biggest change(RRGB) $ 100.00 $ 116.13 $ 75.22 $ 64.22 $ 21.33 $ 46.67 The Russell 3000 Index 100.00 132.48 158.33 199.31 162.32 204.32 S&P 600 Restaurants (2) $ 100.00 $ 112.21 $ 145.58 $ 141.17 $ 112.11 $ 132.82 ——————————————————— (1) Represents performance of $100 invested on December 28, 2018 in stock or index, including reinvestment of dividends based on fiscal year ends for purposes of comparability.
Biggest change(RRGB) 100.00 64.78 55.30 18.37 40.19 17.37 The Russell 3000 Index 100.00 119.51 150.44 122.52 154.23 193.70 S&P 600 Restaurants (2) 100.00 129.74 125.81 99.91 118.36 141.79 ——————————————————— (1) Represents performance of $100 invested on December 27, 2019 in stock or index, including reinvestment of dividends based on fiscal year ends for purposes of comparability.
Performance Graph The following graph compares the yearly percentage in cumulative total stockholders' return on Common Stock of the Company since the end of its fiscal year 2018, with the cumulative total return over the same period for (i) The Russell 3000 Index, and (ii) the S&P 600 Restaurants.
Performance Graph The following graph compares the yearly percentage in cumulative total stockholders' return on Common Stock of the Company since the end of its fiscal year 2019, with the cumulative total return over the same period for (i) The Russell 3000 Index, and (ii) the S&P 600 Restaurants.
Dividends We did not declare or pay any cash dividends on our common stock during 2023, 2022 or 2021. We currently anticipate we will retain future cash flow to service debt, maintain existing restaurants and infrastructure, and execute on our long-term business strategy.
Dividends We did not declare or pay any cash dividends on our common stock during fiscal 2024, 2023 or 2022. We currently anticipate we will retain future cash flow to service debt, maintain existing restaurants and infrastructure, and execute on our long-term business strategy.
This performance graph shall not be deemed to be "soliciting material" or to be "filed" under either the Securities Act or the Exchange Act. 24 Table of Contents COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (1) Fiscal Years Ended December 30, 2018 December 29, 2019 December 27, 2020 December 26, 2021 December 25, 2022 December 31, 2023 Red Robin Gourmet Burgers, Inc.
This performance graph shall not be deemed to be "soliciting material" or to be "filed" under either the Securities Act or the Exchange Act. 23 Table of Contents COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (1) Fiscal Years Ended December 29, 2019 December 27, 2020 December 26, 2021 December 25, 2022 December 31, 2023 December 29, 2024 Red Robin Gourmet Burgers, Inc.
Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 28, 2018, the last trading day in the Company's 2018 fiscal year, in the Company's Common Stock and in each of the indices.
Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 27, 2019, the last trading day in the Company's 2019 fiscal year, in the Company's Common Stock and in each of the indices.
ITEM 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on The Nasdaq Global Select Market under the symbol RRGB. As of February 26, 2024, there were 84 registered owners of our common stock.
ITEM 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on The Nasdaq Global Select Market under the symbol RRGB. As of February 24, 2025, there were 79 registered owners of our common stock.
No share repurchases were made by the Company during fourth quarter 2023 and approximately $58.4 million remained available for future purchases as of December 31, 2023. Our ability to repurchase shares is limited to certain conditions set forth by our lenders in the Credit Facility.
Our ability to repurchase shares is limited to certain conditions set forth by our lenders in the credit facility.
Removed
Issuer Purchases of Equity Securities During the fiscal year ended December 31, 2023, the Company did not have any sales of securities in transactions that were not registered under the Securities Act that have not been reported in a Current Report on Form 8-K.
Added
Issuer Sales and Purchases of Equity Securities 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.
Added
The securities described in this paragraph were issued to Investor Parties in reliance upon the exemption from the registration requirements of the Securities Act, as set forth in Section 4(a)(2) under the Securities Act. No share repurchases were made by the Company during fiscal 2024 and approximately $58.5 million remained available for future purchases as of December 29, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

67 edited+22 added−21 removed21 unchanged
Biggest changeFifty-Three Weeks Ended Fifty-Two Weeks Ended 2023 compared to 2022 (Dollars in millions) December 31, 2023 December 25, 2022 Increase/(Decrease) Restaurant revenue $ 1,274.3 $ 1,230.2 3.6 % Restaurant operating costs: (Percentage of Restaurant Revenue) (Basis Points) Cost of sales 24.2 % 24.9 % (70) Labor 37.2 35.8 140 Other operating 17.7 18.3 (60) Occupancy 8.1 8.0 10 Total Restaurant Operating Costs 87.2 % 87.0 % 20 Restaurant Level Operating Profit 12.9 % 13.0 % (10) 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. 27 Table of Contents The following table summarizes net loss and loss per diluted share, and adjusted loss per diluted share for the fifty-three weeks ended December 31, 2023 and fifty-two weeks ended December 25, 2022: Fifty-Three Weeks Ended Fifty-Two Weeks Ended (Dollars and shares in thousands, except per share amounts) December 31, 2023 December 25, 2022 Net loss as reported $ (21,228) $ (78,883) Loss per share - diluted: Net loss as reported $ (1.34) $ (4.98) Gift card breakage (1) 0.03 (0.33) Write-off of unamortized debt issuance costs (2) — 0.11 Other charges (gains), net: Asset impairment 0.58 2.43 Gain on sale of restaurant property, net of expenses (1.87) (0.58) Severance and executive transition, net of $128 and $(3,299) in stock-based compensation 0.22 0.14 Other financing costs (3) — 0.09 Restaurant closure costs, net 0.19 0.05 Closed corporate office costs, net of sublease income 0.03 0.03 Litigation contingencies 0.58 0.26 Asset disposal and other 0.11 0.03 Income tax effect 0.04 (0.58) Adjusted loss per share - diluted $ (1.44) $ (3.32) Weighted average shares outstanding Basic 15,835 15,840 Diluted (4) 15,835 15,840 (1) During 2022, the Company re-evaluated the estimated redemption pattern related to gift cards.
Biggest changeFifty-Two Weeks Ended Fifty-Three Weeks Ended 2024 compared to 2023 (Dollars in millions) December 29, 2024 December 31, 2023 Increase/(Decrease) Restaurant revenue $ 1,224.3 $ 1,274.3 (3.9) % Restaurant operating costs: (Percentage of Restaurant Revenue) (Basis Points) Cost of sales 23.9 % 24.2 % (30) Labor 39.2 37.2 200 Other operating 17.7 17.7 — Occupancy 8.4 8.1 30 Total Restaurant Operating Costs 89.2 % 87.2 % 200 Restaurant Level Operating Profit 10.8 % 12.9 % (210) 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. 31 Table of Contents The following table summarizes net loss and loss per diluted share, and adjusted loss per diluted share for the periods presented: Fifty-Two Weeks Ended Fifty-Three Weeks Ended (Dollars and shares in thousands, except per share amounts) December 29, 2024 December 31, 2023 Net loss as reported $ (77,541) $ (21,228) Loss per share - diluted: Net loss as reported $ (4.93) $ (1.34) Gift card breakage — 0.03 Impairment and other charges (gains), net: Asset impairment and restaurant closure costs, net 2.17 0.77 Gain on sale of restaurant property (0.47) (1.87) Severance and executive transition 0.08 0.22 Litigation contingencies 0.07 0.58 Asset disposal and other, net 0.32 0.13 Income tax effect (0.58) 0.04 Adjusted loss per share - diluted $ (3.34) $ (1.44) Stock-based compensation expense 0.44 0.43 Adjusted loss per share excluding Stock-based compensation expense (1) $ (2.90) $ (1.01) Weighted average shares outstanding Basic 15,736 15,835 Diluted 15,736 15,835 (1) Beginning in the first quarter of fiscal 2025, the Company intends to revise its definition of Adjusted Net income (loss) to exclude noncash stock-based compensation expense.
Adjusted EBITDA and adjusted loss per share-diluted exclude the impact of non-operating or nonrecurring items including changes in estimate, asset impairments, litigation contingencies, gains (losses) on debt extinguishment, restaurant and office closure costs, gains on sale leaseback transactions, severance and executive transition costs and other non-recurring, non-cash or discrete items; net of income tax impacts.
Adjusted EBITDA and adjusted income (loss) per share-diluted exclude the impact of non-operating or nonrecurring items including changes in estimate, asset impairments, litigation contingencies, gains (losses) on debt extinguishment, restaurant and office closure costs, gains on sale leaseback transactions, severance and executive transition costs, and other non-recurring, non-cash or discrete items; net of income tax impacts.
The measure also excludes costs associated with selling, general, and administrative functions, pre-opening costs, as well as, other charges (gains), net because these costs are non-operating or nonrecurring and therefore not related to the ongoing operations of its restaurants.
The measure also excludes costs associated with selling, general, and administrative functions, pre-opening costs, as well as, impairment and other charges (gains), net because these costs are non-operating or nonrecurring and therefore not related to the ongoing operations of its restaurants.
The Company defines restaurant level operating profit to be income from operations less franchise royalties, fees and other revenue, plus other charges (gains), net, pre-opening costs, selling costs, general and administrative expenses, and depreciation and amortization.
The Company defines restaurant level operating profit to be income from operations less franchise royalties, fees and other revenue, plus impairment and other charges (gains), net, pre-opening costs, selling costs, general and administrative expenses, and depreciation and amortization.
Recent Accounting Pronouncements, of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for our discussion of recently issued accounting standards. 40 Table of Contents
Recent Accounting Pronouncements, of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for our discussion of recently issued accounting standards. 37 Table of Contents
During 2023, the Company recognized non-cash impairment charges of $9.1 million, primarily related to the impairment of the long-lived assets at 19 underperforming locations and quota state liquor licenses at three locations.
During fiscal 2023, the Company recognized non-cash impairment charges of $9.1 million, primarily related to impairments of long-lived assets at 19 underperforming locations and quota state liquor licenses at three locations.
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. 38 Table of Contents (5) Other non-current liabilities primarily represent the employee deferred compensation plan liability.
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. (5) Other non-current liabilities primarily represent the employee deferred compensation plan liability.
Most of our fiscal years have 52 weeks; however, we experience a 53rd week once every five to six years. Our discussion for fiscal year 2023, which ended on December 31, 2023, refers to a 53-week period with the fifty-third week occurring in the fourth quarter.
Most of our fiscal years have 52 weeks; however, we experience a 53rd week once every five to six years. Our discussion for fiscal 2024, which ended on December 29, 2024, refers to a 52-week period. Our discussion for fiscal 2023, which ended December 31, 2023, refers to a 53-week period, with the fifty-third week occurring in the fourth quarter.
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 we might obtain different results if we use different assumptions or conditions.
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.
From the date of the current program approval through December 31, 2023, 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 $10.0 million of share repurchases in 2023 and no share repurchases during 2022.
From the date of the current program approval through December 29, 2024, 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 2024 and $10.0 million of share repurchases during fiscal 2023.
The comparable restaurant revenue increase was driven by a 6.8% increase in average Guest check with a 5.2% decrease in Guest count. The increase in average Guest check resulted from a 7.5% increase in menu pricing and 0.9% decrease in discounts, partially offset by a 1.6% decrease in menu mix.
The comparable restaurant revenue decrease was driven by a 5.9% decrease in Guest count, partially offset by a 4.6% increase in average Guest check. The increase in average Guest check resulted from a 7.3% increase in menu pricing, partially offset by a 0.9% decrease in discounts and a 1.8% decrease in menu mix.
Pre-opening Costs (In thousands, except percentages) 2023 2022 Percent Change Pre-opening costs $ 587 $ 568 3.3 % As a percent of total revenues — % — % — % Pre-opening costs, which are expensed as incurred, comprise the costs related to preparing restaurants to introduce Donatos ® and other initiatives, as well as direct costs, including labor, occupancy, training, and marketing, incurred related to opening new restaurants and hiring the initial work force.
Pre-opening Costs (In thousands, except percentages) 2024 2023 Percent Change Pre-opening costs $ — $ 587 (100.0) % As a percent of total revenues — % — % — % Pre-opening costs, which are expensed as incurred, comprise the costs related to preparing restaurants to introduce Donatos ® and other initiatives, as well as direct costs, including labor, occupancy, training, and marketing, incurred related to opening new restaurants and hiring the initial work force.
For a discussion comparing our results from 2022 to 2021, 25 Table of Contents 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 25, 2022, filed with the SEC on February 28, 2023.
For a discussion comparing our results from fiscal 2023 to fiscal 2022, refer to “Management’s Discussion and Analysis of Financial Condition 24 Table of Contents and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024.
The Company also had 91 franchised restaurants in 14 states and one Canadian province as of December 31, 2023. The Company operates its business as one operating and one reportable segment. Our primary source of revenue is from the sale of food and beverages at Company-owned restaurants. We also earn revenue from royalties and fees from franchised restaurants.
The Company also had 91 franchised restaurants in 13 states and one Canadian province as of December 29, 2024. The Company operates its business as one (1) operating and one (1) 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.
Overview 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 casual dining restaurants with 506 locations in North America. As of December 31, 2023, the Company operated 415 Company-owned restaurants located in 39 states.
Overview 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 casual dining restaurants with 498 locations in North America. As of December 29, 2024, the Company operated 407 Company-owned restaurants located in 39 states.
Accordingly, as of December 31, 2023, we had $58.4 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.
Accordingly, as of December 29, 2024, 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.
(2) Finance lease obligations include interest of $2.1 million. (3) Operating lease obligations exclude variable lease costs, such as sales based contingent rent, and include interest of $192.6 million. (4) Purchase obligations primarily include the Company's share of expected system-wide fixed price commitments for food, beverage, and restaurant supply items.
(2) Finance lease obligations include interest of $1.7 million. (3) Operating lease obligations exclude variable lease costs, such as sales based contingent rent, and include interest of $175.0 million. 36 Table of Contents (4) Purchase obligations primarily include the Company's share of expected system-wide fixed price commitments for food, beverage, and restaurant supply items.
Occupancy (In thousands, except percentages) 2023 2022 Percent Change Occupancy $ 102,761 $ 98,868 3.9 % As a percent of restaurant revenue 8.1 % 8.0 % 0.1 % Occupancy costs include fixed rents, property taxes, common area maintenance charges, general liability insurance, contingent rents, and other property costs.
Occupancy (In thousands, except percentages) 2024 2023 Percent Change Occupancy $ 103,359 $ 102,761 0.6 % As a percent of restaurant revenue 8.4 % 8.1 % 0.3 % Occupancy costs include fixed rents, property taxes, common area maintenance charges, general liability insurance, contingent rents, and other property costs.
Working Capital We typically maintain current liabilities in excess of our current assets which results in a working capital deficit. We are able to operate with a working capital deficit because restaurant sales are primarily conducted on a cash or credit card basis.
As of December 29, 2024, we were in compliance with all debt covenants. Working Capital We typically maintain current liabilities in excess of our current assets which results in a working capital deficit. We are able to operate with a working capital deficit because restaurant sales are primarily conducted on a cash or credit card basis.
Our discussion for fiscal years 2022 and 2021, which ended December 25, 2022 and December 26, 2021, refers to a 52-week period in each year. The following discussion comparing our results in 2023 and 2022 refers to the fifty-three weeks ended and fifty-two weeks ended, December 31, 2023 and December 25, 2022, respectively.
Our discussion for fiscal 2022, which ended on December 25, 2022, refers to a 52-week period. The following discussion comparing our results in fiscal 2024 and fiscal 2023 refers to the fifty-two weeks ended, and fifty-three weeks ended, December 29, 2024 and December 31, 2023, respectively.
As of December 31, 2023, the Company had $25.0 million of available borrowing capacity under its Credit Facility, and $7.7 million letters of credit issued against cash collateral. The Company's cash collateral is recorded in Restricted cash on our Consolidated Balance Sheets. For additional information regarding our Credit Facility, see Note 8.
As of December 29, 2024, the Company had $20.0 million of available borrowing capacity under its Credit Facility, and $8.5 million letters of 35 Table of Contents credit issued against cash collateral. The Company's cash collateral is recorded in Restricted cash on our Consolidated Balance Sheets. For additional information regarding our Credit Facility, see Note 8.
Restaurant Data The following table details restaurant unit data for our Company-owned and franchised locations for the periods indicated: 30 Table of Contents Fifty-Three Weeks Ended Fifty-Two Weeks Ended December 31, 2023 December 25, 2022 Company-owned: Beginning of period 414 430 Opened during the period 1 — Acquired from franchisees 5 — Closed during the period (5) (16) End of period 415 414 Franchised: Beginning of period 97 101 Opened during the period — 1 Sold to Company during the period (5) — Closed during the period (1) (5) End of period 91 97 Total number of restaurants 506 511 31 Table of Contents The following table presents total Company-owned and franchised restaurants by state or province as of December 31, 2023: Company-Owned Restaurants Franchised Restaurants State: Arkansas 2 1 Alaska 3 Alabama 4 Arizona 18 1 California 57 Colorado 22 Connecticut 3 Delaware 5 Florida 17 Georgia 6 Iowa 5 Idaho 8 Illinois 20 Indiana 11 Kansas 5 Kentucky 4 Louisiana 1 Massachusetts 5 Maryland 11 Maine 2 Michigan 19 Minnesota 4 Missouri 8 3 Montana 1 North Carolina 17 Nebraska 4 New Hampshire 3 New Jersey 11 1 New Mexico 3 Nevada 6 New York 14 Ohio 16 2 Oklahoma 5 Oregon 15 5 Pennsylvania 11 20 Rhode Island 1 South Carolina 4 South Dakota 1 Tennessee 9 Texas 18 9 Utah 1 5 Virginia 20 Washington 37 Wisconsin 11 Province: British Columbia 11 Total 415 91 32 Table of Contents Results of Operations Operating results for each fiscal period presented below are expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenue.
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-three weeks ended December 31, 2023 $ 1,274.3 Change in revenue due to fifty-third week of fiscal 2023 (24.5) Change in comparable restaurant revenue (14.7) Change in non-comparable restaurant revenue (10.8) Total change (50.0) Restaurant revenue for the fifty-two weeks ended December 29, 2024 $ 1,224.3 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-Three Weeks Ended December 29, 2024 December 31, 2023 Company-owned: Beginning of period 415 414 Opened — 1 Acquired from franchisees — 5 Closed (8) (5) End of period 407 415 Franchised: Beginning of period 92 97 Opened — 1 Sold to Company — (5) Closed (1) (1) End of period 91 92 Total number of restaurants 498 507 25 Table of Contents The following table presents total Company-owned and franchised restaurants by state or province as of December 29, 2024: Company-Owned Restaurants Franchised Restaurants State: Arkansas 2 Alaska 3 Alabama 3 Arizona 18 1 California 57 Colorado 21 Connecticut 3 Delaware 5 Florida 16 Georgia 6 Iowa 5 Idaho 8 Illinois 17 Indiana 11 Kansas 5 Kentucky 4 Louisiana 1 Massachusetts 5 Maryland 11 Maine 2 Michigan 19 Minnesota 4 Missouri 8 3 Montana 1 North Carolina 17 Nebraska 4 New Hampshire 3 New Jersey 11 1 New Mexico 3 Nevada 6 New York 14 Ohio 16 3 Oklahoma 5 Oregon 15 5 Pennsylvania 11 20 Rhode Island 1 South Carolina 4 South Dakota 1 Tennessee 9 Texas 18 9 Utah 1 5 Virginia 18 Washington 37 Wisconsin 11 Province: British Columbia 11 Total 407 91 26 Table of Contents Results of Operations Operating results for each fiscal period presented below are expressed as a percentage of total revenues, except for the components of restaurant operating costs, which are expressed as a percentage of restaurant revenue.
Depreciation and Amortization (In thousands, except percentages) 2023 2022 Percent Change Depreciation and amortization $ 66,190 $ 76,245 (13.2) % As a percent of total revenues 5.1 % 6.0 % (0.9) % 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.
Depreciation and Amortization (In thousands, except percentages) 2024 2023 Percent Change Depreciation and amortization $ 57,729 $ 66,190 (12.8) % As a percent of total revenues 4.6 % 5.1 % (0.5) % 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.
Cost of sales as a percentage of restaurant revenue decreased 70 basis points in 2023 as compared to 2022.
Cost of sales as a percentage of restaurant revenue decreased 30 basis points in fiscal 2024 as compared to fiscal 2023.
Other Operating (In thousands, except percentages) 2023 2022 Percent Change Other operating $ 224,999 $ 224,704 0.1 % As a percent of restaurant revenue 17.7 % 18.3 % (0.6) % Other operating costs include costs such as equipment repairs and maintenance costs, restaurant supplies, utilities, restaurant technology, and other miscellaneous costs.
Other Operating (In thousands, except percentages) 2024 2023 Percent Change Other operating $ 216,242 $ 224,999 (3.9) % As a percent of restaurant revenue 17.7 % 17.7 % — % Other operating costs include costs such as equipment repairs and maintenance costs, restaurant supplies, utilities, restaurant technology, and other miscellaneous costs.
GAAP as a measure of performance. 29 Table of Contents The following table summarizes Income from Operations, and Restaurant Level Operating Profit for the fifty-three weeks ended December 31, 2023 and fifty-two weeks ended December 25, 2022: Fifty-Three Weeks Ended Fifty-Two Weeks Ended December 31, 2023 December 25, 2022 Income (loss) from operations $ 4,542 0.3% $ (57,497) (4.5)% Less: Franchise royalties, fees and other revenue 28,752 2.2% 35,345 2.8% Add: Other charges (gains), net (2,663) (0.2) 38,961 3.1 Pre-opening costs 587 — 568 — Selling 34,770 2.7 51,700 4.1 General and administrative expenses 89,360 6.9 84,912 6.7 Depreciation and amortization 66,190 5.1 76,245 6.0 Restaurant level operating profit $ 164,034 $ 159,544 Income (loss) from operations as a percentage of total revenues 0.3% (4.5)% Restaurant level operating profit margin (as a percentage of restaurant revenue) 12.9% 13.0% The Company believes restaurant level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant level operating efficiency and performance.
GAAP as a measure of performance. 33 Table of Contents The following table summarizes Income from Operations, and Restaurant Level Operating Profit for the period presented: Fifty-Two Weeks Ended Fifty-Three Weeks Ended December 29, 2024 December 31, 2023 Income (loss) from operations $ (53,081) (4.3)% $ 4,542 0.3% Less: Franchise royalties, fees and other revenue 24,306 2.0% 28,752 2.2% Add: Impairment and other charges (gains), net 33,848 2.7 (2,663) (0.2) Pre-opening costs — — 587 — General and administrative expenses 81,721 6.5 89,360 6.9 Selling 36,719 2.9 34,770 2.7 Depreciation and amortization 57,729 4.6 66,190 5.1 Restaurant level operating profit $ 132,630 $ 164,034 Income (loss) from operations as a percentage of total revenues (4.3)% 0.3% Restaurant level operating profit margin (as a percentage of restaurant revenue) 10.8% 12.9% 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.
As of December 31, 2023, the Company had outstanding borrowings under the Credit Facility of $182.6 million net of $6.5 million of unamortized deferred financing charges and discounts, none of which was classified as current.
As of December 29, 2024, the Company had outstanding borrowings under the Credit Facility of $181.6 million net of $7.8 million of unamortized deferred financing charges and discounts, none of which was classified as current.
The following table lists the components of our capital expenditures for each fiscal year presented (in thousands): Year Ended 2023 2022 Restaurant improvement capital and other $ 22,160 $ 15,882 Investment in technology, infrastructure, and other 16,778 12,303 Donatos ® expansion 8,620 6,054 New restaurants and restaurant refreshes 1,882 3,920 Total capital expenditures $ 49,440 $ 38,159 Restaurant improvement capital and other consists of capital equipment for our restaurants.
The following table lists the components of our capital expenditures for each fiscal year presented (in thousands): Year Ended 2024 2023 Restaurant improvement capital and other $ 16,219 $ 22,160 Investment in technology, infrastructure, and other 9,815 16,778 Donatos ® expansion — 8,620 New restaurants and restaurant refreshes — 1,882 Total capital expenditures $ 26,034 $ 49,440 Restaurant improvement capital and other consists of capital equipment for our restaurants.
Cost of Sales (In thousands, except percentages) 2023 2022 Percent Change Cost of sales $ 308,962 $ 306,509 0.8 % As a percent of restaurant revenue 24.2 % 24.9 % (0.7) % Cost of sales, which comprises food and beverage costs, is variable and generally fluctuates with sales volume.
Cost of Sales (In thousands, except percentages) 2024 2023 Percent Change Cost of sales $ 292,392 $ 308,962 (5.4) % As a percent of restaurant revenue 23.9 % 24.2 % (0.3) % Cost of sales, which comprises food and beverage costs, is variable and generally fluctuates with sales volume.
Cash Flows The table below summarizes our cash flows from operating, investing, and financing activities for each fiscal year presented (in thousands): Year Ended 2023 2022 Net cash provided by (used in) operating activities $ (1,157) $ 35,532 Net cash provided by (used in) investing activities 8,226 (29,568) Net cash provided by (used in) financing activities (33,712) 29,533 Effect of exchange rate changes on cash 2 (41) Net change in cash and cash equivalents, and restricted cash $ (26,641) $ 35,456 Operating Cash Flows Net cash flows provided by operating activities decreased $36.7 million to $1.2 million in 2023 as compared to 2022.
Cash Flows The table below summarizes our cash flows from operating, investing, and financing activities for each fiscal year presented (in thousands): Year Ended 2024 2023 Net cash provided by (used in) operating activities $ 7,047 $ (1,157) Net cash provided by (used in) investing activities (1,747) 8,226 Net cash provided by (used in) financing activities 2,536 (33,712) Effect of exchange rate changes on cash — 2 Net change in cash and cash equivalents, and restricted cash $ 7,836 $ (26,641) 34 Table of Contents Operating Cash Flows Net cash flows provided by operating activities increased $8.2 million to $7.0 million in fiscal 2024 as compared to net cash used in operating activities of $1.2 million in fiscal 2023.
The decrease was primarily driven by menu price increases and implementation of various cost savings initiatives, partially offset by commodity inflation and investments to enhance food quality. 34 Table of Contents Labor (In thousands, except percentages) 2023 2022 Percent Change Labor $ 473,538 $ 440,564 7.5 % As a percent of restaurant revenue 37.2 % 35.8 % 1.4 % Labor costs include restaurant-level hourly wages and management salaries as well as related taxes and benefits.
The decrease was primarily driven by menu price increases and implementation of various cost savings initiatives, partially offset by commodity inflation. 28 Table of Contents Labor (In thousands, except percentages) 2024 2023 Percent Change Labor $ 479,631 $ 473,538 1.3 % As a percent of restaurant revenue 39.2 % 37.2 % 2.0 % Labor costs include restaurant-level hourly wages and management salaries as well as related taxes and benefits.
In 2023, depreciation and amortization expense as a percentage of revenue decreased 90 basis points as compared to 2022. The decrease is primarily due to asset impairments and disposals reducing the depreciable asset base.
In fiscal 2024, depreciation and amortization expense as a percentage of revenue decreased 50 basis points as compared to fiscal 2023. The decrease is primarily due to asset impairments, restaurant closures and sale-leaseback transactions reducing the depreciable asset base.
For further information on Other charges (gains) line items, refer to Note 4. Other Charges (Gains), net, of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. Interest Expense and Interest Income Interest expense in 2023 and 2022 was $26.6 million and $20.6 million, respectively.
Impairment and Other Charges (Gains), net, of the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K. Interest Expense and Interest Income Interest expense in fiscal 2024 and 2023 was $25.3 million and $26.6 million, respectively.
Selling, General, and Administrative expenses (In thousands, except percentages) 2023 2022 Percent Change Selling, general, and administrative expenses $ 124,130 $ 136,612 (9.1) % As a percent of total revenues 9.5 % 10.8 % (1.3) % Selling, general, and administrative costs include all corporate and administrative functions.
Selling, General, and Administrative expenses (In thousands, except percentages) 2024 2023 Percent Change Selling, general, and administrative expenses $ 118,440 $ 124,130 (4.6) % As a percent of total revenues 9.5 % 9.5 % — % Selling, general, and administrative costs include all corporate and administrative functions.
As of December 31, 2023, the Company had approximately $48.6 million in liquidity, including cash and cash equivalents and $25.0 million available borrowing capacity under its Credit Facility.
As of December 29, 2024, the Company had approximately $50.7 million in liquidity, including cash and cash equivalents and available borrowing capacity under its credit facility.
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. 39 Table of Contents 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.
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.
During 2022, the Company recognized non-cash impairment charges of $38.5 million, primarily related to impairments of long-lived assets at 46 underperforming locations and quota state liquor licenses at six locations.
During fiscal 2024, the Company recognized non-cash impairment charges of $32.8 million, primarily related to the impairment of the long-lived assets at 58 underperforming locations and quota state liquor licenses at three locations.
Other revenue primarily comprises gift card breakage, which represents the value associated with the portion of gift cards sold that are unlikely to be redeemed, licensing income, and recycling income. During 2023 and 2022, we recognized $9.9 million and $13.8 million of gift card breakage.
Other revenue primarily comprises gift card breakage, which represents the value associated with the portion of gift cards sold that are unlikely to be redeemed, licensing income, and recycling income. The reduction in other revenue in fiscal 2024 compared to fiscal 2023 primarily relates to a reduction in gift card breakage revenue and recycling income.
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.
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.
If the sum of the undiscounted cash flows is less than the carrying value of the asset, we recognize an impairment loss.
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.
We believe these non-GAAP measures give the reader additional insight into the ongoing operational results of the Company, and are intended to supplement the presentation of the Company's financial results in accordance with GAAP.
Adjusted EBITDA and Adjusted income (loss) per share-diluted are supplemental measures of our performance that are not required by or presented in accordance with GAAP. We believe these non-GAAP measures give the reader additional insight into the ongoing operational results of the Company, and are intended to supplement the presentation of the Company's financial results in accordance with GAAP.
Components of this category include marketing and advertising costs, our 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.
Components of this category include marketing and advertising costs, our 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. Selling, general, and administrative expense decreased $5.7 million, or 4.6% in fiscal 2024 as compared to fiscal 2023.
The decrease in menu mix was primarily driven by Guests shifting visits from third party delivery platforms with elevated menu prices, to dine in visits at standard menu prices, and the removal of low Guest preference, but higher priced burger options. Dine-in sales comprised 75.0% of total food and beverage sales in 2023, as compared to 71.3% in 2022.
The decrease in menu mix was primarily driven by Guests shifting visits from third party delivery platforms with elevated menu prices, to dine in visits at standard menu prices, and greater incidence of promotional menu items offered at reduced prices. Dine-in sales comprised 77.0% of total food and beverage sales in fiscal 2024, as compared to 76.3% in fiscal 2023.
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 ("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.
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.
We believe our future cash flows generated from restaurant operations combined with our remaining borrowing capacity under the Credit Facility and sale-leaseback transactions will be sufficient to satisfy any working capital deficits and our planned capital expenditures.
We believe our future cash flows generated from restaurant operations combined with our borrowing capacity under the Credit Facility, and cash on hand, will be sufficient to meet our anticipated cash requirements and fund capital expenditures over the next 12 months.
Other companies may define these non-GAAP measures differently, and as a result may not be directly comparable to those of other companies. Adjusted loss per share-diluted and Adjusted EBITDA should be considered in addition to, and not as a substitute for, net loss as reported in accordance with U.S.
Adjusted income (loss) per share-diluted, Adjusted income (loss) per share-diluted excluding stock-based compensation expense, Adjusted EBITDA and Adjusted EBITDA excluding stock-based compensation expense should be considered in addition to, and not as a substitute for, net income (loss) as reported in accordance with U.S.
Labor as a percentage of restaurant revenue increased 140 basis points in 2023 as compared to 2022. The increase was primarily driven by investments in hourly labor, management labor, and related payroll taxes. Additionally, incentive compensation expense increased due to increased achievement of incentive targets, partially offset by lower group insurance expense.
Labor as a percentage of restaurant revenue increased 200 basis points in fiscal 2024 as compared to fiscal 2023. The increase was primarily driven by additional costs in hourly and management labor, increased incentive compensation related to the new Managing Partner bonus plan and higher workers compensation and group health insurance expense.
Share Repurchase On August 9, 2018, the Company's Board of Directors authorized the Company's current share repurchase program of up to a total of $75 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.
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.
Pre-opening costs for any period will typically include expenses associated with restaurants opened during the period as well as expenses related to restaurants opening in subsequent periods.
Pre-opening costs for any period will typically include expenses associated with restaurants opened during the period as well as expenses related to restaurants opening in subsequent periods. We did not open any new restaurants or roll out any Donatos® locations during fiscal 2024. We opened one restaurant and completed the rollout of 25 Donatos® locations during fiscal 2023.
Investing Cash Flows Net cash flows provided by investing activities increased $37.8 million to $8.2 million in 2023 as compared to 2022. The increase in cash flows provided by investing activities is primarily due to proceeds from sale-leaseback transactions and a sale of real estate, partially offset by increased capital expenditures and the acquisition of five franchised restaurants.
The decrease in investing cash flows is primarily due to reduced proceeds from sale-leaseback transactions and real estate sales in fiscal 2024 as compared to fiscal 2023, partially offset by a reduction in capital expenditures in the current fiscal year.
Key Performance Indicators and Non-GAAP Financial Measures 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 25, 2022 $ 1,230.2 Increase in restaurant revenue from the fifty-third week 24.5 Increase in comparable (1) restaurant revenue 18.8 Increase in non-comparable restaurant revenue 0.7 Total increase 44.1 Restaurant revenue for the fifty-three weeks ended December 31, 2023 $ 1,274.3 (1) Comparable restaurant revenue represents revenue from Company-owned restaurants that have operated five full quarters as of the 52 weeks ending December 24, 2023. 26 Table of Contents Restaurant revenue and operating costs, and restaurant level operating profit for the period are detailed in the table below: Fifty-Three Weeks Ended Fifty-Two Weeks Ended 2023 compared to 2022 (Dollars in millions) December 31, 2023 December 25, 2022 Increase/(Decrease) Restaurant revenue $ 1,274.3 $ 1,230.2 3.6 % Restaurant operating costs: Cost of sales 309.0 306.5 0.8 % Labor 473.5 440.6 7.5 % Other operating 225.0 224.7 0.1 % Occupancy 102.8 98.9 3.9 % Total Restaurant Operating Costs $ 1,110.3 $ 1,070.6 12.4 % Restaurant Level Operating Profit (1) $ 164.0 $ 159.5 2.8 % (1) Restaurant Level Operating Profit is a non-GAAP measure.
Non-GAAP Financial Measures A reconciliation of Restaurant revenue to restaurant level operating profit is detailed in the table below: Fifty-Two Weeks Ended Fifty-Three Weeks Ended 2024 compared to 2023 (Dollars in millions) December 29, 2024 December 31, 2023 Increase/(Decrease) Restaurant revenue $ 1,224.3 $ 1,274.3 (3.9) % Restaurant operating costs: Cost of sales 292.4 309.0 (5.4) % Labor 479.6 473.5 1.3 % Other operating 216.2 225.0 (3.9) % Occupancy 103.4 102.8 0.6 % Total Restaurant Operating Costs $ 1,091.6 $ 1,110.3 (7.4) % Restaurant Level Operating Profit (1) $ 132.6 $ 164.0 (19.1) % (1) Restaurant Level Operating Profit is a non-GAAP measure.
Year Ended December 31, 2023 December 25, 2022 Revenues: Restaurant revenue 97.8 % 97.2 % Franchise revenue 1.2 1.5 Other revenue 1.0 1.3 Total revenues 100.0 % 100.0 % Costs and expenses: Restaurant operating costs (1) (excluding depreciation and amortization shown separately below): Cost of sales 24.2 % 24.9 % Labor 37.2 35.8 Other operating 17.7 18.3 Occupancy 8.1 8.0 Total restaurant operating costs 87.2 87.0 Depreciation and amortization 5.1 6.0 Selling, general, and administrative expenses 9.5 10.8 Pre-opening costs — — Other charges (gains), net (0.2) 3.1 Income (loss) from operations 0.3 % (4.5) % Other expense (income): Interest expense 2.0 % 1.6 % Interest (income) and other, net (0.1) — Total other expenses, net 2.0 1.6 Loss before income taxes (1.6) (6.2) Income tax expense (benefit) 0.0 0.1 Net loss (1.6) % (6.2) % (1) Expressed as a percentage of restaurant revenue. 33 Table of Contents Revenues Year Ended (Revenues in thousands) 2023 2022 Percent Change Restaurant revenue $ 1,274,294 $ 1,230,189 3.6 % Franchise revenue 15,867 19,306 (17.8) % Other revenue 12,885 16,039 (19.7) % Total revenues $ 1,303,046 $ 1,265,534 3.0 % Average weekly net sales volumes in Company-owned restaurants $ 59,454 $ 55,852 6.4 % Total operating weeks 21,643 22,028 (1.7) % Restaurant revenue, which comprises primarily food and beverage sales, increased $44.1 million in 2023, or 3.6%, as compared to 2022.
Year Ended December 29, 2024 December 31, 2023 Revenues: Restaurant revenue 98.0 % 97.8 % Franchise revenue 1.2 1.2 Other revenue 0.8 1.0 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 % 24.2 % Labor 39.2 37.2 Other operating 17.7 17.7 Occupancy 8.4 8.1 Total restaurant operating costs 89.2 87.2 Depreciation and amortization 4.6 5.1 Selling, general, and administrative expenses 9.5 9.5 Pre-opening costs — — Impairment and other charges (gains), net 2.7 (0.2) Income (loss) from operations (4.3) % 0.3 % Other expense (income): Interest expense 2.0 % 2.0 % Interest (income) and other, net (0.1) (0.1) Total other expenses, net 2.0 2.0 Loss before income taxes (6.2) (1.6) Income tax expense (benefit) — — Net loss (6.2) % (1.6) % (1) Expressed as a percentage of restaurant revenue.
Our effective tax rate was a 1.5% provision in 2023 and a 1.0% provision in 2022, reflecting minimum state income taxes and state franchise taxes despite a pretax net loss position. 36 Table of Contents Liquidity and Capital Resources Cash and cash equivalents, and restricted cash decreased $26.6 million to $31.6 million at December 31, 2023, from $58.2 million at the beginning of the fiscal year.
Our effective tax rate was a 0.1% benefit in fiscal 2024 and a 1.5% provision in fiscal 2023, reflecting minimum state income taxes and state franchise taxes despite a pretax net loss position.
Average weekly net sales volumes represent 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. Comparable restaurant revenues include those restaurants that are in the comparable base based on operating five full fiscal quarters as of the end of each period presented.
Average weekly net sales volumes represent the total restaurant revenue for all Company-owned Red Robin restaurants for each time period presented, divided by the number of operating weeks in the period. Franchise revenue primarily includes royalty income and advertising fund contributions. Franchise revenue decreased $0.9 million, or 5.8%, in fiscal 2024 compared to fiscal 2023.
Franchise revenue primarily includes royalty income and advertising fund contributions. Franchise revenue decreased $3.4 million, or 17.8%, in 2023 compared to 2022. Franchise revenue declined primarily due to a reduction in the percentage of sales each franchisee is required to contribute to support selling activities.
Franchise revenue declined primarily due to a reduction in the percentage of sales each franchisee is required to contribute to support selling activities in the second half of fiscal 2024 in line with the reduction in overall selling expense.
This reduction results from an increased focus on local restaurant marketing and reduced national and/or mass media channels pursuant to our North Star strategy. 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.
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 an increase of 2.6% in comparable restaurant revenue in fiscal 2024 compared to a decrease of 2.3% in fiscal 2023.
The $5.9 million increase was due to higher weighted average interest rates. Our weighted average interest rate in 2023 and 2022 was 12.7% and 9.1%, respectively. Average outstanding debt in 2023 and 2022 was $205.6 million and $200.8 million, respectively.
The $1.3 million decrease was primarily due to the net paydown of debt with the proceeds from the sale-leaseback transactions, partially offset by an increase in the weighted average interest rate to 13.6% in fiscal 2024 compared to 12.7% in fiscal 2023. Average outstanding debt in fiscal 2024 and 2023 was $187.8 million and $205.6 million, respectively.
(4) The impact of dilutive shares is excluded due to the reported net loss for all periods presented. 28 Table of Contents The following table summarizes net loss, and EBITDA and adjusted EBITDA for the fifty-three weeks ended December 31, 2023 and fifty-two weeks ended December 25, 2022: Fifty-Three Weeks Ended Fifty-Two Weeks Ended December 31, 2023 December 25, 2022 Net loss as reported $ (21,228) $ (78,883) Interest expense, net 25,796 19,882 Income tax provision (benefit) 310 747 Depreciation and amortization 66,190 76,245 EBITDA 71,068 17,991 Gift card breakage (1) 480 (5,246) Other charges, net: Asset impairment 9,130 38,534 Gain on sale of restaurant property (29,543) (9,204) Severance and executive transition 3,419 2,280 Other financing costs (2) — 1,462 Restaurant closure costs 3,062 828 Closed corporate office costs, net of sublease income 416 475 Litigation contingencies 9,140 4,148 Asset disposal and other 1,713 438 Adjusted EBITDA $ 68,885 $ 51,706 (1) During 2022, the Company re-evaluated the estimated redemption pattern related to gift cards.
Previously reported results will be revised to reflect the new presentation. 32 Table of Contents The following table summarizes net loss, and EBITDA and adjusted EBITDA for the periods presented: Fifty-Two Weeks Ended Fifty-Three Weeks Ended December 29, 2024 December 31, 2023 Net loss as reported $ (77,541) $ (21,228) Interest expense, net 24,805 25,796 Income tax provision (benefit) (90) 310 Depreciation and amortization 57,729 66,190 EBITDA 4,903 71,068 Gift card breakage — 480 Impairment and other charges (gains), net: Asset impairment and restaurant closure costs, net 34,080 12,192 Gain on sale of restaurant property (7,425) (29,543) Severance and executive transition 1,181 3,419 Litigation contingencies 1,037 9,140 Asset disposal and other, net 4,975 2,129 Adjusted EBITDA $ 38,751 $ 68,885 Stock-based compensation expense 6,889 6,804 Adjusted EBITDA excluding Stock-based compensation expense (1) $ 45,640 $ 75,689 (1) Beginning in the first quarter of fiscal 2025, the Company intends to revise its definition of Adjusted EBITDA to exclude noncash stock-based compensation expense.
Financing Cash Flows Net cash flows used in financing activities increased $63.2 million to $33.7 million in 2023 as compared to 2022. In 2022, financing activities were a source of cash, due to net draws made on long-term debt as a result of the Company's refinancing of debt on March 4, 2022.
Financing Cash Flows Net cash flows provided by financing activities increased to $2.5 million in fiscal 2024 as compared to net cash used in financing activities of $33.7 million in fiscal 2023.
Selling, general, and administrative expense decreased $12.5 million, or 9.1% in 2023 as compared to 2022. 35 Table of Contents General and administrative expenses increased $4.4 million or 5.2% in 2023 as compared to 2022.
General and administrative expenses decreased $7.6 million or 8.5% in fiscal 2024 as compared to fiscal 2023.
Of the remaining $19.6 million increase, $18.8 million, or 1.6%, was due to an increase in comparable restaurant revenue and the remaining $0.7 million increase was due to non-comparable restaurants, primarily attributed to the Company's purchase of five restaurants from a Franchisee in the second quarter of fiscal year 2023.
The fifty-third week in fiscal 2023 contributed approximately $24.5 million in restaurant revenue. Of the remaining $25.5 million decrease, $14.7 million, or 1.2%, was due to a decrease in comparable restaurant revenue and the remaining $10.8 million decrease was due to non-comparable restaurants, primarily attributed to the closure of eight 27 Table of Contents locations during fiscal 2024.
Highlights for Fiscal 2023 Compared to Fiscal 2022 • Total revenues are $1.3 billion, an increase of $37.5 million. ◦ Comparable restaurant revenue (1) increased 1.6%. ◦ Comparable restaurant dine-in sales (2) increased 6.9%. ◦ The fifty-third week in 2023 contributed $24.5 million or 1.9% in restaurant revenue. • Net loss is $21.2 million, a decrease of $57.7 million from a net loss of $78.9 million during 2022. • Adjusted EBITDA (3) is $68.9 million, a $17.2 million increase. • Completed two Sale-Leaseback transactions, generating net proceeds of $58.8 million and a gain, net of expenses of $29.4 million. • Repaid $24.9 million of debt and repurchased $10.0 million of stock.
Highlights for Fiscal 2024 Compared to Fiscal 2023 • Total revenues are $1.25 billion, a decrease of $54.5 million due in part to the 53rd week in fiscal 2023. • Comparable restaurant revenue (1) decreased 1.2% • Net loss is $77.5 million, as compared to a net loss of $21.2 million during 2023. • Adjusted EBITDA (2) is $38.8 million, a 43.7% decrease.
Income Taxes Income tax provision was $0.3 million in 2023, compared to an income tax provision of $0.7 million in 2022.
Interest income and other decreased by $0.4 million in fiscal 2024 primarily due to lower interest income earned on cash investments. 30 Table of Contents Income Taxes Income tax benefit was $0.1 million in fiscal 2024, compared to an income tax provision of $0.3 million in fiscal 2023.
Contractual Obligations The following table summarizes the amounts of payments due under specified contractual obligations as of December 31, 2023 (in thousands): Payments Due by Period Total 2024 2025 - 2026 2027 - 2028 Thereafter Long-term debt obligations (1) $ 278,312 $ 22,292 $ 44,585 $ 211,435 $ — Finance lease obligations (2) 10,784 1,386 2,815 2,451 4,132 Operating lease obligations (3) 619,896 82,310 153,136 126,940 257,510 Purchase obligations (4) 230,683 61,464 95,328 49,813 24,078 Other non-current liabilities (5) 1,903 360 142 74 1,327 Total contractual obligations $ 1,141,578 $ 167,812 $ 296,006 $ 390,713 $ 287,047 ——————————————————— (1) Long-term debt obligations primarily represent minimum required principal payments under our existing Credit Agreement as of December 31, 2023, including estimated interest of $89.2 million based on a 11.62% average borrowing interest rate.
Contractual Obligations The following table summarizes the amounts of payments due under specified contractual obligations as of December 29, 2024 (in thousands): Payments Due by Period Total 2025 2026 - 2027 2028 - 2029 Thereafter Long-term debt obligations (1) $ 242,147 $ 23,412 $ 218,735 $ — $ — Finance lease obligations (2) 9,425 1,432 2,750 2,068 3,175 Operating lease obligations (3) 570,708 82,159 148,116 116,130 224,303 Purchase obligations (4) 142,086 32,835 52,594 38,675 17,982 Other non-current liabilities (5) 1,742 102 128 55 1,457 Total contractual obligations $ 966,108 $ 139,940 $ 422,323 $ 156,928 $ 246,917 ——————————————————— (1) Long-term debt obligations primarily represent minimum required principal payments under our existing Credit Agreement as of December 29, 2024, including estimated interest of $52.7 million based on a 12.21% average borrowing interest rate.
In 2023, occupancy costs increased $3.9 million or 10 basis points as a percentage of revenue compared to 2022. This increase is primarily driven by an increase in fixed rents related to the sale-leaseback of 18 locations and the acquisition of five restaurants from a franchisee, mostly offset by reduced expenses related to net Company-owned restaurant closures.
The increase is due primarily to the impact of fixed rents associated with the sale-leaseback of 18 locations and the acquisition of five restaurants from a franchisee in the second quarter of fiscal 2023, offset in part by reduced general liability insurance expense.
(3) See below for a reconciliation of adjusted EBITDA, a non-GAAP measure, to Net loss.
(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 loss.
The change in net cash provided by operating activities is primarily attributable to the timing of payroll as a result of the 53rd week discussed above, the receipt of an income tax refund of $14.6 million in 2022, and severance payments and higher interest payments in 2023.
The increase in operating cash flow is primarily related to the timing of rent and payroll payments in the prior fiscal year as a result of the 53rd week, partially offset by lower restaurant profitability in fiscal 2024.
Removed
(1) Comparable restaurant revenue represents revenue from Company-owned restaurants that have operated five full quarters as of the 52 weeks ending December 24, 2023. The comparable restaurant base includes 406 restaurants out of the total 415 Company-owned restaurants. (2) Comparable restaurant dine-in sales are calculated based on the Company’s point-of-sale sales data, which does not include adjustments for loyalty breakage.
Added
Revenues Year Ended (Revenues in thousands) 2024 2023 Percent Change Restaurant revenue $ 1,224,254 $ 1,274,294 (3.9) % Franchise revenue 14,941 15,867 (5.8) % Other revenue 9,365 12,885 (27.3) % Total revenues $ 1,248,560 $ 1,303,046 (4.2) % Average weekly net sales volumes in Company-owned restaurants $ 57,403 $ 59,454 (3.5) % Total operating weeks 21,344 21,643 (1.4) % Restaurant revenue, which comprises primarily food and beverage sales, decreased $50.0 million in fiscal 2024, or 3.9%, as compared to fiscal 2023.
Removed
The impact of this change in estimate comprised $5.9 million included in Other revenue, partially offset by $0.6 million in gift card commission costs included in Selling, general, and administrative expenses on the Consolidated Statements of Operations.
Added
Other operating costs as a percentage of restaurant revenue is unchanged compared to the same period in fiscal 2023.
Removed
(2) During 2022, the Company completed the refinancing of our Credit Facility and reported a non-cash charge associated with the write-off of unamortized debt issuance costs related to the remaining unamortized debt issuance costs. (3) Other financing costs includes legal and other charges related to the refinancing of our Credit Facility in 2022.
Added
In fiscal 2024, occupancy costs as a percentage of restaurant revenue increased 30 basis points compared to fiscal 2023.
Removed
The impact of this change in estimate comprised $5.9 million included in Other revenue, partially offset by $0.6 million in gift card commission costs included in Selling, general, and administrative expenses on the Consolidated Statements of Operations. (2) Other financing costs includes legal and other charges related to the refinancing of our Credit Facility in 2022.
Added
The decrease in fiscal 2024 as compared to fiscal 2023 was primarily driven by a reduction in compensation costs due to reduced incentive compensation accruals and headcount reductions and lower legal fees, partially offset by costs associated with the 2024 Managing Partner conference. 29 Table of Contents Selling expenses increased $1.9 million or 5.6% in fiscal 2024 as compared to fiscal 2023.
Removed
We define EBITDA as net loss before interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA and Adjusted loss per share-diluted are supplemental measures of our performance that are not required by or presented in accordance with GAAP.
Added
The increase resulted from higher menu, marketing and related production costs in fiscal 2024.
Removed
The fifty-third week in 2023 contributed approximately $24.5 million in restaurant revenue.
Added
Impairment and Other Charges (Gains), net (In thousands, except percentages) 2024 2023 Asset impairment and restaurant closure costs, net $ 34,080 $ 12,192 Gain on sale of restaurant property (7,425) (29,543) Severance and executive transition 1,181 3,419 Litigation contingencies 1,037 9,140 Asset disposal and other, net 4,975 2,129 Impairment and other charges (gains), net $ 33,848 $ (2,663) During fiscal 2024, the Company closed eight locations and is evaluating alternatives for approximately 70 underperforming restaurant locations, including closure upon expiration of the current lease term.
Removed
Closed Company-owned restaurants were not included in the comparable base for the fiscal years ended December 31, 2023 and December 25, 2022. Fluctuations in average weekly net sales volumes for Company-owned restaurants reflect the effect of comparable restaurant revenue changes as well as the performance of new restaurants during the period.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed5 unchanged
Biggest changeTo manage this risk in part, we enter into fixed-price purchase commitments for certain commodities. As of December 31, 2023, approximately 50% of our estimated annual food and beverage purchases were covered by fixed price contracts, most of which are scheduled to expire at various times through the end of 2027.
Biggest changeTo manage this risk in part, we enter into fixed-price purchase commitments for certain commodities. As of December 29, 2024, approximately 42% of our estimated annual food and beverage purchases were covered by fixed price contracts, most of which are scheduled to expire at various times through the end of 2025.
The base rate is 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. As of December 31, 2023, we had $189.1 million of borrowings subject to variable interest rates.
The base rate is 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. As of December 29, 2024, we had $189.5 million of borrowings subject to variable interest rates.
A 1.0% increase in food and beverage costs would negatively impact cost of sales by approximately $3.1 million on an annualized basis. 41 Table of Contents
A 1.0% increase in food and beverage costs would negatively impact cost of sales by approximately $2.9 million on an annualized basis. 38 Table of Contents

Other RRGB 10-K year-over-year comparisons