Business Context and Reporting Period
Company: Red Robin Gourmet Burgers, Inc.
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Sixteen weeks ended April 19, 2026 (Fiscal Q1 2026)
Business Overview: The Company operates and franchises casual dining restaurants in North America. As of April 19, 2026, it owned and operated 379 restaurants in 39 states and had 90 franchised locations. The Company operates as a single reportable segment.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $378.3 million | $392.4 million |
| Net Income (Loss) | $(2.2) million | $1.2 million |
| Adjusted EBITDA | $27.3 million | $27.9 million |
| Operating Cash Flow | $7.0 million | $19.6 million |
| Cash and Restricted Cash | $33.9 million | $33.3 million |
| Total Debt (Gross) | $175.7 million | $170.2 million |
| Restaurant Level Operating Profit Margin | 14.8% | 14.3% |
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 3.6% ($14.1 million) year-over-year. Restaurant revenue fell 3.8% due to the closure of 22 locations since Q1 2025, which accounted for a $13.4 million decrease. Comparable restaurant revenue declined 0.6%, driven by a 1.6% drop in guest count, partially offset by a 1.0% increase in average guest check.
- Profitability Shift: The Company reported a net loss of $2.2 million compared to net income of $1.2 million in the prior year. This was primarily driven by a $4.2 million increase in "Other (gains) charges, net" and higher selling expenses.
- Cost Structure:
- Labor: Decreased 7.5% in absolute terms and 140 basis points as a percentage of revenue due to efficiency gains and reduced health insurance claims.
- Selling Expenses: Increased 41.3% ($3.9 million) due to higher paid media spend.
- Cost of Sales: Increased 50 basis points as a percentage of revenue due to rising commodity prices.
- One-Time Charges: "Other (gains) charges, net" rose to $4.8 million from $0.7 million, including $1.8 million in asset impairment and closure costs, $2.9 million in asset disposal/strategic project costs, and a $0.5 million reclassification of equity offering costs.
Guidance, Outlook, and Risks
- Liquidity: The Company reported $40.8 million in total liquidity (cash plus available borrowing capacity). Management believes current cash flows and borrowing capacity are sufficient to meet needs for the next 12 months.
- Debt Status: The Credit Facility matures on September 3, 2027. The Company is in compliance with all debt covenants, including the net total leverage ratio. Interest rates on variable debt are high, with a weighted average effective rate of 13.4%.
- Strategic Initiatives: The Company continues to evaluate alternatives for underperforming locations, including closures upon lease expiration. It also terminated its at-the-market equity offering program in February 2026 without issuing any shares.
- Risks: Key risks include the ability to service debt, commodity price volatility, labor cost inflation, and the outcome of ongoing litigation (reserves of $5.6 million). The Company faces potential contingent lease liabilities of up to $2.8 million related to franchisees.
Investor Verification Checklist
- Debt Maturity: Verify the timeline and strategy for refinancing the $175.7 million credit facility maturing in September 2027, given current high interest rates.
- Store Count Trajectory: Monitor the pace of restaurant closures versus openings to assess the impact on future revenue base.
- Non-GAAP Reconciliations: Review the specific components of the $4.8 million "Other (gains) charges" to determine the recurring nature of asset disposal and strategic project costs.
- Liquidity Runway: Assess the sustainability of operating cash flows ($7.0 million) against capital expenditure requirements and debt service obligations.
- Commodity Exposure: Evaluate the effectiveness of pricing strategies in offsetting rising food and supply costs, which increased cost of sales margins by 50 basis points.