Business Context and Reporting Period
Company: Red Robin Gourmet Burgers, Inc.
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Twelve and twenty-eight weeks ended July 12, 2026 (Fiscal Q2 2026)
Business Overview: The Company operates and franchises casual dining restaurants in North America. As of July 12, 2026, it owned and operated 375 restaurants and had 90 franchised locations. The Company operates as a single reportable segment.
Key Financial Metrics
| Metric | 12 Weeks Ended July 12, 2026 | 28 Weeks Ended July 12, 2026 |
|---|---|---|
| Total Revenues | $277.6 million | $655.9 million |
| Net Income (Loss) | $0.4 million | $(1.8) million |
| Adjusted EBITDA | $18.9 million | $46.2 million |
| Restaurant Level Operating Profit | $40.1 million (14.7% margin) | $94.8 million (14.7% margin) |
| Cash and Cash Equivalents | $22.8 million | $22.8 million (Balance Sheet) |
| Total Liquidity | $47.8 million (Cash + Revolver Capacity) | $47.8 million |
| Long-Term Debt | $163.4 million | $163.4 million |
| Operating Cash Flow (YTD) | N/A | $14.5 million |
Material Changes vs. Prior Period
- Revenue Decline: Total revenues decreased 2.1% ($6.1 million) in Q2 and 3.0% ($20.2 million) year-to-date (YTD) compared to the prior year. This was primarily driven by the closure of 22 locations since Q2 2025.
- Comparable Sales: Comparable restaurant revenue increased 1.3% in Q2 and 0.2% YTD, driven by a 1.5% increase in average guest check (Q2) offset by a 0.2% decrease in guest count.
- Profitability: Net income decreased $3.6 million in Q2 and swung to a net loss of $1.8 million YTD (vs. $5.2 million net income prior year). Adjusted EBITDA decreased 16% in Q2 and 8% YTD.
- Cost Structure:
- Cost of Sales: Increased 20 basis points (Q2) and 40 basis points (YTD) as a percentage of revenue due to commodity inflation.
- Labor: Decreased 10 basis points (Q2) and 90 basis points (YTD) due to improved efficiency and higher guest checks.
- Selling Expenses: Increased significantly (63.2% in Q2) due to higher paid media spend.
- Balance Sheet: Total assets decreased to $528.7 million from $563.5 million, largely due to the reclassification of $53.8 million in assets to "held for sale" pending refranchising.
Guidance, Outlook, and Material Events
- Pending Refranchising: The Company entered into three asset purchase agreements to sell 116 Company-owned restaurants for aggregate consideration of approximately $96.0 million. These transactions are expected to close in fiscal 2026. Proceeds are intended to repay debt and enhance financial flexibility. Upon closing, these locations will convert to franchise operations, shifting revenue from restaurant sales to royalties.
- Real Estate Optimization: Completed two sale-leaseback transactions in Q2, resulting in a net gain of $0.9 million after a $1.1 million impairment on one property.
- Liquidity: The Company maintains a Credit Facility with $225.0 million capacity ($25.0 million revolver, $200.0 million term loan). As of July 12, 2026, outstanding borrowings were $167.2 million. The facility matures on September 3, 2027.
- Risks: Risks include the potential failure of refranchising transactions to close on favorable terms, continued commodity price inflation, and reliance on franchisee performance post-transaction.
Investor Verification Checklist
- Refranchising Closing: Verify the status and closing dates of the three pending asset purchase agreements totaling $96.0 million.
- Debt Covenants: Confirm continued compliance with the net total leverage ratio covenant under the Credit Facility.
- Asset Impairments: Monitor for additional impairment charges related to the "held for sale" classification of 116 restaurants.
- Commodity Costs: Track the impact of inflation on food costs and the effectiveness of menu pricing strategies.
- Share Repurchases: Note that the Company has $58.5 million remaining under its share repurchase program but has not repurchased shares recently due to credit agreement limitations.