UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October 7, 2018~~July 14, 2019



o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34851

RED ROBIN GOURMET BURGERS, INC.

(Exact name of registrant as specified in its charter)



Delaware		84-1573084
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



6312 S. Fiddler’s Green Circle, Suite 200 N
Greenwood Village, CO		80111
(Address of principal executive offices)		(Zip Code)

(303) 846-6000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer ýo		Accelerated filer oý
Non-accelerated filer o		Smaller reporting company o
		Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Securities registered pursuant to Section 12(b) of the Exchange Act:



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value	RRGB	NASDAQ (Global Select Market)

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



~~Class~~		~~Outstanding at November 6, 2018~~
~~Common Stock, $0.001 par value per share~~		~~12,978,127~~

As of August 21, 2019, there were 12,967,566 shares of the registrant's common stock, par value of $0.001 per share outstanding.

RED ROBIN GOURMET BURGERS, INC.

TABLE OF CONTENTS



		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of ~~Comprehensive Income~~Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	56
	Notes to Condensed Consolidated Financial Statements	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1115
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2224
Item 4.	Controls and Procedures	2325
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	2426
Item 1A.	Risk Factors	2527
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2628
Item 6.	Exhibits	2729

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements (unaudited)

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)


	(Unaudited)						(Unaudited)
	October 7, 2018			December 31, 2017			July 14, 2019			December 30, 2018
Assets:
Current assets:
Cash and cash equivalents	$	20,368		$	17,714		$	26,194		$	18,569
Accounts receivable, net	12,801			26,499			12,978			25,034
Inventories	29,197			29,553			27,428			27,370
Prepaid expenses and other current assets	21,503			31,038			15,005			27,576
Total current assets	83,869			104,804			81,605			98,549
Property and equipment, net	595,429			638,151			527,789			565,142
Right of use assets, net							448,352			—
Goodwill	96,548			96,979			96,453			95,838
Intangible assets, net	35,632			38,273			32,071			34,609
Other assets, net	43,337			32,408			73,665			49,803
Total assets	$	854,815		$	910,615		$	1,259,935		$	843,941
Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable	$	28,161		$	35,347		$	32,037		$	39,024
Accrued payroll and payroll-related liabilities	35,248			32,777			37,863			37,922
Unearned revenue	38,237			55,915			39,723			55,360
Short-term portion of lease obligations							42,136			786
Accrued liabilities and other	40,579			36,300			43,899			38,057
Total current liabilities	142,225			160,339			195,658			171,149
Deferred rent	77,234			74,980			—			75,675
Long-term debt	220,875			266,375			181,375			193,375
Long-term portion of capital lease obligations	9,611			10,197
Long-term portion of lease obligations							503,030			9,414
Other non-current liabilities	10,698			11,289			10,158			11,523
Total liabilities	460,643			523,180			890,221			461,136
Stockholders’ equity:
Common stock, $0.001 par value: 45,000 shares authorized; 17,851 and 17,851 shares issued; 12,996 and 12,954 shares outstanding	18			18
Common stock; $0.001 par value: 45,000 shares authorized; 17,851 and 17,851 shares issued; 12,985 and 12,971 shares outstanding							18			18
Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding	—			—			—			—
Treasury stock 4,855 and 4,897 shares, at cost	(200,748		)	(202,485		)
Treasury stock 4,866 and 4,880 shares, at cost							(200,428		)	(201,505		)
Paid-in capital	212,002			210,708			212,059			212,752
Accumulated other comprehensive loss, net of tax	(4,075		)	(3,566		)	(4,724		)	(4,801		)
Retained earnings	386,975			382,760			362,789			376,341
Total stockholders’ equity	394,172			387,435
Total stockholders’ equity							369,714			382,805
Total liabilities and stockholders’ equity	$	854,815		$	910,615		$	1,259,935		$	843,941

See Notes to Condensed Consolidated Financial Statements.

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share amounts)

(Unaudited)


	Twelve Weeks Ended						Forty Weeks Ended					Twelve Weeks Ended						Twenty-Eight Weeks Ended
	October 7, 2018			October 1, 2017			October 7, 2018			October 1, 2017		July 14, 2019			July 15, 2018			July 14, 2019			July 15, 2018
Revenues:
Restaurant revenue	$	290,218		$	301,100		$	1,015,312		$	1,026,902	$	302,418		$	310,392		$	702,902		$	725,094
Franchise and other revenues	4,659			4,600			16,472			16,737		5,563			4,996			14,945			11,813
Total revenues	294,877			305,700			1,031,784			1,043,639		307,981			315,388			717,847			736,907
Costs and expenses:
Restaurant operating costs (excluding depreciation and amortization shown separately below):
Cost of sales	69,003			71,642			242,392			240,152		72,387			74,874			166,102			173,389
Labor	102,322			106,205			351,813			360,146		106,538			106,476			249,432			249,491
Other operating	43,612			41,454			141,305			133,575		43,000			42,668			98,565			97,693
Occupancy	26,629			25,868			88,099			84,127		25,458			26,460			60,478			61,470
Depreciation and amortization	21,819			21,258			73,335			70,475		21,369			22,323			49,807			51,516
Selling, general, and administrative expenses	28,780			33,714			110,715			117,965		35,234			35,617			83,350			81,935
Pre-opening costs	387			1,503			2,093			4,735		—			569			319			1,706
Other charges	520			—			17,422			1,584		16,847			10,615			19,245			16,902
Total costs and expenses	293,072			301,644			1,027,174			1,012,759		320,833			319,602			727,298			734,102

Income from operations	1,805			4,056			4,610			30,880
(Loss) income from operations												(12,852		)	(4,214		)	(9,451		)	2,805
Other expense:
Interest expense, net and other	2,295			2,032			8,087			7,469		2,153			2,385			5,391			5,792
(Loss) income before income taxes	(490		)	2,024			(3,477		)	23,411
Income tax (benefit) provision	(2,199		)	(690		)	(7,692		)	2,199
Net income	$	1,709		$	2,714		$	4,215		$	21,212
Earnings per share:
Loss before income taxes												(15,005		)	(6,599		)	(14,842		)	(2,987		)
Income tax benefit												(15,986		)	(4,725		)	(16,462		)	(5,493		)
Net income (loss)												$	981		$	(1,874	)	$	1,620		$	2,506
Earnings (loss) per share:
Basic	$	0.13		$	0.21		$	0.32		$	1.65	$	0.08		$	(0.14	)	$	0.12		$	0.19
Diluted	$	0.13		$	0.21		$	0.32		$	1.63	$	0.08		$	(0.14	)	$	0.12		$	0.19
Weighted average shares outstanding:
Basic	12,994			12,927			12,977			12,888		12,970			12,982			12,969			12,979
Diluted	13,054			13,023			13,064			12,986		13,043			12,982			13,047			13,080

Other comprehensive income (loss):
Foreign currency translation adjustment												$	406		$	(497	)	$	77		$	(770	)
Other comprehensive income (loss), net of tax												406			(497		)	77			(770		)
Total comprehensive income (loss)												$	1,387		$	(2,371	)	$	1,697		$	1,736

See Notes to Condensed Consolidated Financial Statements.

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~STOCKHOLDERS’EQUITY

(In thousands)

(Unaudited)

Twelve Weeks Ended Forty Weeks Ended
October 7, 2018 October 1, 2017 October 7, 2018 October 1, 2017
Net income $ 1,709
$ 2,714
$ 4,215
$ 21,212
Foreign currency translation adjustment 260
611
(510 ) 1,578
Other comprehensive income (loss), net of tax 260
611
(510 ) 1,578
Total comprehensive income $ 1,969
$ 3,325
$ 3,705
$ 22,790



	Common Stock			Treasury Stock								Accumulated Other Comprehensive Loss, net of tax
	Common Stock			Treasury Stock					Paid-in Capital						Retained Earnings
	Shares	Amount		Shares		Amount			Paid-in Capital						Retained Earnings			Total
Balance, December 30, 2018	17,851	$	18	4,880		$	(201,505	)	$	212,752		$	(4,801	)	$	376,341		$	382,805
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan	—	—		(32	)	1,344			(1,204		)	—			—			140
Acquisition of treasury stock	—	—		31		(974		)	—			—			—			(974		)
Non-cash stock compensation	—	—		—		—			477			—			—			477
Net income	—	—		—		—			—			—			639			639
Other comprehensive income	—	—		—		—			—			(329		)	—			(329		)
Topic 842 transition impairment, net of tax	—	—		—		—			—			—			(15,172		)	(15,172		)
Balance, April 21, 2019	17,851	$	18	4,879		$	(201,135	)	$	212,025		$	(5,130	)	$	361,808		$	367,586
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan	—	—		(30	)	1,208			(907		)	—			—			301
Acquisition of treasury stock	—	—		17		(501		)	—			—			—			(501		)
Non-cash stock compensation	—	—		—		—			941			—			—			941
Net income	—	—		—		—			—			—			981			981
Other comprehensive income	—	—		—		—			—			406			—			406
Balance, July 14, 2019	17,851	$	18	4,866		$	(200,428	)	$	212,059		$	(4,724	)	$	362,789		$	369,714

See Notes to Condensed Consolidated Financial Statements.

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’EQUITY

(In thousands)



	Common Stock			Treasury Stock								Accumulated Other Comprehensive Loss, net of tax
	Common Stock			Treasury Stock					Paid-in Capital						Retained Earnings
	Shares	Amount		Shares		Amount			Paid-in Capital						Retained Earnings			Total
Balance, December 31, 2017	17,851	$	18	4,897		$	(202,485	)	$	210,708		$	(3,566	)	$	382,760		$	387,435
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan	—	—		(26	)	1,042			(1,167		)	—			—			(125		)
Non-cash stock compensation	—	—		—		—			1,287			—			—			1,287
Net income	—	—		—		—			—			—			4,380			4,380
Other comprehensive income	—	—		—		—			—			(273		)	—			(273		)
Balance April 22, 2018	17,851	$	18	4,871		$	(201,443	)	$	210,828		$	(3,839	)	$	387,140		392,704
Exercise of options, issuance of restricted stock, shares exchanged for exercise and tax, and stock issued through employee stock purchase plan	—	—		(22	)	961			(545		)	—			—			416
Non-cash stock compensation	—	—		—		—			1,069			—			—			1,069
Net income	—	—		—		—			—			—			(1,874		)	(1,874		)
Other comprehensive income	—	—		—		—			—			(497		)	—			(497		)
Balance, July 15, 2018	17,851	$	18	4,849		$	(200,482	)	$	211,352		$	(4,336	)	$	385,266		$	391,818

See Notes to Condensed Consolidated Financial Statements.

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Forty Weeks Ended						Twenty-Eight Weeks Ended
	October 7, 2018			October 1, 2017			July 14, 2019			July 15, 2018
Cash flows from operating activities:
Net income	$	4,215		$	21,212		$	1,620		$	2,506
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	73,335			70,475			49,807			51,516
Other charges - asset impairment and unpaid other charges	13,925			1,584
Gift card breakage							(4,320		)	(1,673		)
Unpaid other charges							15,964			14,537
Deferred income tax (benefit) provision	(11,569		)	1,707			(21,526		)	(7,766		)
Stock-based compensation expense	3,101			3,588			1,415			2,356
Other, net	(1,177		)	(2,385		)	560			709
Changes in operating assets and liabilities:
Accounts receivable	15,268			12,978			12,132			14,070
Prepaid expenses and other current assets	10,156			(819		)	3,459			13,744
Trade accounts payable and accrued liabilities	(4,127		)	22,615			(7,388		)	(732		)
Unearned revenue	(15,450		)	(9,663		)	(11,343		)	(13,591		)
Other operating assets and liabilities, net	1,103			272			1,366			1,344
Net cash provided by operating activities	88,780			121,564			41,746			77,020
Cash flows from investing activities:
Purchases of property, equipment, and intangible assets	(39,842		)	(61,033		)	(21,168		)	(27,319		)
Proceeds from sales of real estate and property, plant, and equipment and other investing activities	265			114			178			115
Net cash used in investing activities	(39,577		)	(60,919		)	(20,990		)	(27,204		)
Cash flows from financing activities:
Borrowings of long-term debt	194,500			148,250			162,000			160,500
Payments of long-term debt and capital leases	(240,553		)	(208,340		)
Payments of long-term debt and finance leases							(174,464		)	(205,870		)
Purchase of treasury stock	(337		)	—			(1,475		)	—
Debt issuance costs	—			(664		)
Proceeds from exercise of stock options and employee stock purchase plan	733			2,616			693			732
Net cash used in financing activities	(45,657		)	(58,138		)	(13,246		)	(44,638		)
Effect of exchange rate changes on cash	(892		)	745			115			(996		)
Net change in cash and cash equivalents	2,654			3,252			7,625			4,182
Cash and cash equivalents, beginning of period	17,714			11,732			18,569			17,714
Cash and cash equivalents, end of period	$	20,368		$	14,984		$	26,194		$	21,896

Supplemental disclosure of cash flow information
Income taxes paid	$	1,286		$	3,189		$	2,742		$	991
Interest paid, net of amounts capitalized	$	7,638		$	7,964		$	5,482		$	5,411
Change in construction related payables	$	(1,084	)	$	(1,166	)	$	1,883		$	2,127

See Notes to Condensed Consolidated Financial Statements.

RED ROBIN GOURMET BURGERS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation and Recent Accounting Pronouncements

Red Robin Gourmet Burgers, Inc., a Delaware corporation, together with its subsidiaries (“Red Robin” or the “Company”), primarily develops, operates, and franchises full-service restaurants in North America. As of ~~October 7, 2018,~~July 14, 2019, the Company owned and operated ~~485~~472 restaurants located in 39 states and two Canadian provinces. The Company also had 8990 franchised full-service restaurants in 16 states as of ~~October 7, 2018.~~July 14, 2019. The Company operates its business as one operating and one reportable segment.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Red Robin and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for any interim period are not necessarily indicative of results for the full year.

The accompanying condensed consolidated financial statements of Red Robin have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements on Form 10-K have been condensed or omitted. The condensed consolidated balance sheet as of December ~~31, 2017~~30, 2018 has been derived from the audited consolidated financial statements as of that date, but does not include all disclosures required for audited annual financial statements. For further information, please refer to and read these interim condensed consolidated financial statements in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~31, 2017,~~30, 2018, filed with the SEC on February 27, ~~2018.~~2019.

The Company’s quarter that ended ~~October 7, 2018~~July 14, 2019 is referred to as ~~third~~second quarter ~~2018,~~2019, or the twelve weeks ended ~~October 7, 2018;~~July 14, 2019; the first quarter ended April 21, 2019 is referred to as first quarter 2019; and together, the first and second quarters of 2019 are referred to as the twenty-eight weeks ended July 14, 2019. The Company’s quarter that ended July 15, 2018 is referred to as second quarter 2018, or the twelve weeks ended July 15, 2018; the first quarter ended April 22, 2018 is referred to as first quarter ~~2018, or the sixteen weeks ended April 22,~~ 2018; and together, the first ~~second,~~ and ~~third~~second quarters of 2018 are referred to as the forty weeks ended October 7, 2018. The quarter ended October 1, 2017 is referred to as third quarter 2017, or the twelve weeks ended October 1, 2017; the second quarter ended July 9, 2017 is referred to as the twelvetwenty-eight weeks ended July 9, 2017; the first quarter ended April 16, 2017 is referred to as first quarter 2017, or the sixteen weeks ended April 16, 2017; and together, the first, second, and third quarters of 2017 are referred to as the forty weeks ended October 1, 2017.15, 2018. The Company’s fiscal year ~~2018~~2019 comprises 52 weeks and will end on December ~~30, 2018.~~29, 2019.

Reclassifications

Certain amounts presented in prior periods have been reclassified to conform with the current period presentation. For the ~~twelve weeks~~fiscal year ended ~~October 1, 2017,~~December 30, 2018, the Company reclassified ~~local marketing costs~~unfavorable lease rights of ~~$3.3~~$1.4 million from Deferred rent to Other ~~operating to Selling, general, and administrative expenses~~non-current liabilities on the condensed consolidated ~~statements of operations. For the forty weeks ended October 1, 2017, the Company reclassified local marketing costs of $8.7 million.~~balance sheets. Management believes this presentation better reflects ~~marketing expenses subject~~the nature of these liabilities subsequent to ~~corporate, rather than restaurant-level, decision making.~~the adoption of Topic 842, as defined below.

~~Recently Issued Accounting Standards~~

~~In February 2016, the Financial Accounting Standards Board (“FASB”) issued Update 2016-02,~~ ~~Leases~~ (“Topic 842”), subsequently amended by various standard updates. This guidance requires the recognition of liabilities for lease obligations and corresponding right-of-use assets on the balance sheet and disclosure of key information about leasing arrangements. This guidance is effective for annual and interim reporting periods beginning after December 15, 2018 using a modified retrospective adoption method with the option of applying the guidance either retrospectively to each prior comparative reporting period presented or retrospectively at the beginning of the period of adoption. Early adoption is permitted. The Company will adopt this guidance beginning with its fiscal first quarter 2019 and will apply it retrospectively at the beginning of the period of adoption through a cumulative-effect adjustment to retained earnings. We will elect to apply the practical

expedients that do not require us to reassess existing contracts for embedded leases or to reassess lease classification or initial direct costs. The Company selected and began implementing a new lease management system during 2017. Once the transition to the new system is completed in 2018, this software will enable us to quantify the full impact Topic 842 will have on our consolidated financial statements. We expect adoption of Topic 842 will result in a significant increase in the assets and liabilities on our consolidated balance sheet.

2. Revenue

~~In May 2014, the FASB issued~~ ~~Revenue from Contracts with Customers~~ (“Topic 606”), subsequently amended by various standard updates. This guidance requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, this guidance expands related disclosure requirements. The Company adopted Topic 606 in first quarter 2018 and applied the guidance retrospectively to all prior periods presented. Topic 606 impacts the accounting treatment of the Company’s advertising contribution funds, and the Company’s financial statements, as outlined below.

~~Advertising Fund Contributions~~

Under Red Robin franchise agreements, the Company and its franchisees are required to contribute a certain percentage of revenues to two national media advertising funds. The Company’s national advertising services are provided on a system-wide basis and, therefore, not considered distinct performance obligations for individual franchisees. The Company previously recorded the advertising contributions from franchisees as a reduction to advertising expense under Selling, general, and administrative expenses. In accordance with Topic 606, the Company recognizes these sales-based advertising contributions from franchisees as franchise revenue when the underlying franchisee sales occur. The Company records the related advertising expenses as incurred under Selling, general, and administrative expenses. When an advertising fund is over-spent at year end, advertising expenses will be reported on the consolidated statement of operations in an amount that is greater than the revenue recorded for advertising contributions. Conversely, when an advertising fund is under-spent at year end, the Company will accrue advertising costs up to advertising contributions recorded in revenue. All prior periods presented have been retrospectively adjusted for this change in accounting policy. The adoption of this standard did not impact previously reported amounts of net income.

~~Impacts on Financial Statements~~

Franchise and other revenue for the twelve weeks ended October 1, 2017 were previously reported as $3.1 million with adjustments of $1.5 million, resulting in an adjusted amount of $4.6 million. Franchise and other revenue for the forty weeks ended October 1, 2017 were previously reported as $11.7 million with adjustments of $5.1 million, resulting in an adjusted amount of $16.8 million.

Selling, general, and administrative expenses were previously reported as $28.9 million prior to the reclassification of $3.3 million of local marketing costs and adjustments of $1.5 million, resulting in an adjusted amount of $33.7 million for third quarter 2017. Selling, general, and administrative expenses were previously reported as $104.2 million prior to the reclassification of $8.7 million of local marketing costs and adjustments of $5.1 million, resulting in an adjusted amount of $118.0 million for forty weeks ended October 1, 2017. See “Reclassifications” under Note 1, ~~Basis of Presentation and Recent Accounting Pronouncements~~.

~~Revenue recognition~~

Revenues consist of sales from restaurant operations; franchise revenue; and other revenue, including gift card breakage and miscellaneous revenue. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a restaurant guest, franchisee, or other customer.

~~Restaurant revenue~~

The Company recognizes revenues from restaurant sales when payment is tendered at the point of sale, as the Company’s performance obligation to provide food and beverage to the customer has been satisfied.

The Company sells gift cards which do not have an expiration date, and it does not deduct dormancy fees from outstanding gift card balances. We recognize revenue from gift cards as either: (i) Restaurant revenue, when the Company’s performance obligation to provide food and beverage to the customer is satisfied upon redemption of the gift card, or (ii) gift card breakage, as discussed in Other revenue below.

Red Robin Royalty™ deferred revenue primarily relates to a program in which registered members earn an award for a free entrée for every nine entrées purchased. We recognize the current sale of an entrée and defer a portion of the revenue to

reflect partial pre-payment for the future entrée the member is entitled to receive. We estimate the future value of the award based on the historical average value of redemptions. We also estimate what portion of registered members are not likely to reach the ninth purchase based on historical activity and recognize the deferred revenue related to those purchases. We recognize the deferred revenue in restaurant revenue on earned rewards when the Company satisfies its performance obligation at redemption, or upon expiration. We compare the estimate of the value of future awards to historical redemptions to evaluate the reasonableness of the deferred amount.

~~Franchise revenue~~

Revenues we receive from our franchise arrangements include sales-based royalties and advertising fund contributions, area development fees, and franchise fees. Red Robin franchisees are required to remit 4.0% to 5.0% of their revenues as royalties to the Company and contribute up to 3.0% of revenues to two national advertising funds. The Company recognizes these sales-based royalties and advertising fund contributions as the underlying franchisee sales occur.

The Company also provides its franchisees with management expertise, training, pre-opening assistance, and restaurant operating assistance in exchange for area development fees and franchise fees. The Company capitalizes these fees upon collection from the franchisee, which then amortize over the contracted franchise term as the services comprising the performance obligation are satisfied. The Company typically grants franchise rights to franchisees for a term of 20 years, with the right to extend the term for an additional ten years if various conditions are satisfied by the franchisee.

~~Other revenue~~

Gift card breakage is recognized when the likelihood of a gift card being redeemed by the customer is remote and the Company determines that there is not a legal obligation to remit the unredeemed gift card balance to the relevant jurisdiction. The determination of the gift card breakage rate is based upon the Company’s specific historical redemption patterns. The Company recognizes gift card breakage by applying its estimate of the rate of gift card breakage on a pro rata basis over the period of estimated redemption.

~~Other revenue also consists of miscellaneous revenues considered insignificant to the Company’s business.~~

Disaggregation of revenue

In the following table, revenue is disaggregated by type of good or service (in thousands):


	Twelve Weeks Ended				Forty Weeks Ended				Twelve Weeks Ended				Twenty-Eight Weeks Ended
	October 7, 2018		October 1, 2017		October 7, 2018		October 1, 2017		July 14, 2019		July 15, 2018		July 14, 2019		July 15, 2018
Restaurant revenue	$	290,218	$	301,100	$	1,015,312	$	1,026,902	$	302,418	$	310,392	$	702,902	$	725,094
Franchise revenue	3,914		3,855		13,363		13,506		4,389		4,006		9,752		9,449
Other revenue	745		745		3,109		3,231		$	1,174	$	990	$	5,193	$	2,364
Total revenues	$	294,877	$	305,700	$	1,031,784	$	1,043,639	$	307,981	$	315,388	$	717,847	$	736,907

Contract liabilities

Unearned gift card revenue at ~~October 7, 2018~~July 14, 2019 and December ~~31, 2017~~30, 2018 was ~~$28.3~~$29.4 million and ~~$45.4~~$45.3 million. Deferred loyalty revenue, which was also included in Unearned revenue in the accompanying condensed consolidated balance sheets, was $10.3 million and $10.0 million ~~and $10.6 million~~ at ~~October 7, 2018~~July 14, 2019 and December ~~31, 2017.~~30, 2018.

Revenue recognized in the condensed consolidated statements of operations and comprehensive income (loss) for the redemption of gift cards that were included in the liability balance at the beginning of the fiscal year was as follows (in thousands):

Forty Weeks Ended
October 7, 2018 October 1, 2017
Gift card revenue $ 16,842
$ 16,873



	Twenty-Eight Weeks Ended
	July 14, 2019		July 15, 2018
Gift card revenue	$	18,380	$	16,269

3. Leases

Adoption of Financial Accounting Standards Board (“FASB”) ASU 2016-02

On January 1, 2019, we adopted ASU 2016-02, “Leases (Topic 842),” along with related clarifications and improvements using the modified retrospective approach without application to prior periods. This guidance requires the recognition of liabilities for lease obligations and corresponding right-of-use assets on the balance sheet and disclosure of key information about leasing arrangements. We applied the practical expedients that do not require us to reassess existing contracts for embedded leases, to separate lease and non-lease components for our population of operating assets, or to reassess lease classification or initial direct costs.

The effect of the changes made to our consolidated December 31, 2018 balance sheet as a result of the adoption of Topic 842 was as follows (in thousands):



	Balance at December 30, 2018		Adjustments due to Topic 842			Balance at December 31, 2018
	Balance at December 30, 2018		Adjustments due to Topic 842			Balance at December 31, 2018
Balance sheet
Non-current assets
Right of use assets, net	$	—	$	478,268		$	478,268
Prepaid expenses and other current assets	27,576		(6,592		)	20,984

Current liabilities
Short-term portion of lease obligations	786		40,606			41,392
Non-current liabilities
Deferred Rent	75,675		(75,675		)	—
Long-term portion of lease obligations	9,414		506,745			516,159

Stockholders’ equity:
Retained earnings	$	376,341	$	(15,172	)	$	361,169

This change did not have any impact on our consolidated statement of operations or consolidated statement of cash flows.

Leases

The Company leases land, buildings, and equipment used in its operations under operating and finance leases. Our leases generally have remaining terms of 1-15 years, most of which include options to extend the leases for additional 5-year periods. Generally, the lease term is the minimum of the non-cancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years.

We determine if a contract contains a lease at inception. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases. We estimate this rate based on comparable company and credit analysis, prevailing financial market conditions, comparable company and credit analysis, as well as management judgment.

Our leases typically contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term.

Some of our leases include rent escalations based on inflation indexes and fair market value adjustments. Certain leases contain contingent rental provisions that include a fixed base rent plus an additional percentage of the restaurant’s sales in excess of stipulated amounts. Operating lease liabilities are calculated using the prevailing index or rate at lease commencement. Subsequent escalations in the index or rate and contingent rental payments are recognized as variable lease expenses. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Leases are included in right-of-use assets, net, short-term portion of lease obligations, and long-term portion of lease liabilities on our condensed consolidated balance sheet as of July 14, 2019 as follows (in thousands):



	Finance		Operating		Total
Right of use assets, net	$	8,878	$	439,474	$	448,352

Short-term portion of lease obligations	931		41,205		42,136
Long-term portion of lease obligations	10,459		492,571		503,030
Total	$	11,390	$	533,776	$	545,166

We have elected the short-term lease recognition exemption for all applicable classes of underlying assets. Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the balance sheet.

The components of lease expense, including variable lease costs primarily consisting of common area maintenance charges and real estate taxes, are included in occupancy on our condensed consolidated statement of operations as follows (in thousands):



	Twelve Weeks Ended		Twenty-Eight Weeks Ended
	July 14, 2019		July 14, 2019
Operating lease cost	$	17,442	$	41,114
Finance lease cost
Amortization of right of use assets	193		441
Interest on lease liabilities	125		294
Total finance lease cost	318		735
Variable lease cost	6,647		15,532
Total	$	24,407	$	57,381

Maturities of our lease liabilities as of July 14, 2019 were as follows (in thousands):



	Finance Leases		Operating Leases		Total
Remainder of 2019	$	626	$	32,754	$	33,380
2020	1,396		78,506		79,902
2021	1,437		77,773		79,210
2022	1,283		75,260		76,543
2023	1,220		72,931		74,151
Thereafter	8,828		469,432		478,260
Total future lease liability	14,790		806,656		821,446
Less imputed interest	3,400		272,880		276,280
Fair value of lease liability	$	11,390	$	533,776	$	545,166

As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting guidance, maturities of lease liabilities were as follows as of December 30, 2018 (in thousands):



	Capital Leases			Operating Leases
2019	$	1,234		$	80,367
2020	1,242			76,936
2021	1,240			70,419
2022	1,063			61,649
2023	1,019			54,121
Thereafter	7,552			206,879
Total	13,350			$	550,371
Less amount representing interest	(3,150		)
Present value of future minimum lease payments	10,200
Less current portion	(786		)
Long-term capital lease obligations	$	9,414

Supplemental cash flow information related to leases is as follows:



	Twenty-Eight Weeks Ended
	July 14, 2019
Cash paid for amounts included in the measurement of lease liabilities (in thousands):	$	40,129
Right of use assets obtained in exchange for operating lease obligations following the adoption of Topic 842 (in thousands):	$	7,022
Right of use assets obtained in exchange for finance lease obligations following the adoption of Topic 842 (in thousands):	$	1,669

Other information related to operating leases as follows:
Weighted average remaining lease term	11 years
Weighted average discount rate	7.35		%

Other information related to financing leases as follows:
Weighted average remaining lease term	12 years
Weighted average discount rate	4.74		%

4. Goodwill and Intangible Assets

The following table presents goodwill as of ~~October 7, 2018~~July 14, 2019 and December ~~31, 2017~~30, 2018 (in thousands):

Balance, December 31, 2017 $ 96,979
Foreign currency translation adjustment (431 )
Balance, October 7, 2018 $ 96,548



Balance, December 30, 2018	$	95,838
Foreign currency translation adjustment	615
Balance, July 14, 2019	$	96,453

The Company recorded no goodwill impairment losses in the period presented in the table above or any prior periods.

The following table presents intangible assets as of ~~October 7, 2018~~July 14, 2019 and December ~~31, 2017~~30, 2018 (in thousands):


	October 7, 2018							December 31, 2017							July 14, 2019							December 30, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Intangible assets subject to amortization:
Franchise rights	$	54,430	$	(32,368	)	$	22,062	$	54,447	$	(29,685	)	$	24,762	$	53,736	$	(34,580	)	$	19,156	$	54,404	$	(33,160	)	$	21,244
Favorable leases	13,001		(7,992		)	5,009		13,001		(7,459		)	5,542		13,001		(8,490		)	4,511		13,001		(8,136		)	4,865
Liquor licenses and other	10,854		(9,752		)	1,102		10,148		(9,667		)	481		10,730		(9,786		)	944		10,810		(9,770		)	1,040
	$	78,285	$	(50,112	)	$	28,173	$	77,596	$	(46,811	)	$	30,785	$	77,467	$	(52,856	)	$	24,611	$	78,215	$	(51,066	)	$	27,149
Indefinite-lived intangible assets:
Liquor licenses and other	$	7,459	$	—		$	7,459	$	7,488	$	—		$	7,488	$	7,460	$	—		$	7,460	$	7,460	$	—		$	7,460
Intangible assets, net	$	85,744	$	(50,112	)	$	35,632	$	85,084	$	(46,811	)	$	38,273	$	84,927	$	(52,856	)	$	32,071	$	85,675	$	(51,066	)	$	34,609

4.5. Earnings Per Share

Basic earnings per share amounts are calculated by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per share amounts are calculated based upon the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period. Potentially dilutive shares are excluded from the computation in periods in which they have an anti-dilutive effect. Diluted earnings per share reflect the potential dilution that could occur if holders of options exercised their options into common stock.

The Company uses the treasury stock method to calculate the effect of outstanding stock options. Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands):


	Twelve Weeks Ended		Forty Weeks Ended		Twelve Weeks Ended		Twenty-Eight Weeks Ended
	October 7, 2018	October 1, 2017	October 7, 2018	October 1, 2017	July 14, 2019	July 15, 2018	July 14, 2019	July 15, 2018
Basic weighted average shares outstanding	12,994	12,927	12,977	12,888	12,970	12,982	12,969	12,979
Dilutive effect of stock options and awards	60	96	87	98	73	—	78	101
Diluted weighted average shares outstanding	13,054	13,023	13,064	12,986	13,043	12,982	13,047	13,080

Awards excluded due to anti-dilutive effect on diluted earnings per share	548	209	428	324	378	344	457	298

5.6. Other Charges

Other charges consist of the following (in thousands):


	Twelve Weeks Ended				Forty Weeks Ended				Twelve Weeks Ended				Twenty-Eight Weeks Ended
	October 7, 2018		October 1, 2017		October 7, 2018		October 1, 2017		July 14, 2019		July 15, 2018		July 14, 2019		July 15, 2018
Asset impairment	$	—	$	—	$	9,643	$	1,584	$	14,064	$	9,643	$	14,064	$	9,643
Executive transition and severance									370		—		2,364		—
Restaurant closure costs									1,001		—		1,305		—
Board and shareholder matter costs									1,152		—		1,152		—
Litigation contingencies	—		—		4,000		—		—		—		—		4,000
Reorganization costs									—		466		—		2,753
Spiral menu disposal	—		—		506		—		—		506		—		506
Reorganization costs	520		—		3,273		—
Executive retention									260		—		360		—
Other charges	$	520	$	—	$	17,422	$	1,584	$	16,847	$	10,615	$	19,245	$	16,902

In second quarter ~~2018,~~2019, the Company determined ~~eight~~29 Company-owned restaurants were impaired and recognized a non-cash impairment charge of ~~$9.6~~$14.1 million. In ~~the~~ second quarter ~~of 2017,~~2018, the Company determined ~~five~~eight Company-owned restaurants were impaired and recognized a non-cash impairment charge of ~~$1.6~~$9.6 million. The Company recognized the impairment charges resulting from the continuing and projected future results of these restaurants, primarily through projected cash flows.

6.7. Borrowings

~~Borrowings~~Long-term debt as of ~~October 7, 2018~~July 14, 2019 and December ~~31, 2017 are summarized below (in thousands):~~30, 2018 was $181.4 million and $193.4 million.

October 7, 2018 December 31, 2017
Revolving credit facility and other long-term debt $ 220,875
$ 266,375
Capital lease obligations 10,385
10,938
Total debt 231,260
277,313
Less: Current portion (774 ) (741 )
Long-term debt $ 230,486
$ 276,572

On June 30, 2016, the Company entered into a credit facility (the “Credit Facility”), which provides for a $400 million revolving line of credit with a sublimit for the issuance of up to $25 million in letters of credit and swingline loans up to $15 million. On ~~April 13, 2017,~~August 19, 2019, the Company entered into ~~the first~~a second amendment (the “Amendment”) to the Credit Facility. The Amendment ~~increased~~increases the lease adjusted leverage ratio to ~~5.25x~~5.0x through ~~October 1, 2017~~December 29, 2019 before ~~stepping down to 5.0x through July 15, 2018 and~~ returning to 4.75x thereafter. ~~The~~In addition, the Amendment ~~also provides for additional pricing tiers that increase LIBOR spread rates and commitment fees~~revises the definition of permitted acquisitions under the Credit Facility to correspond with the change to the ~~extent~~lease adjusted leverage ratio and clarifies the classification of existing capital and operating leases. A copy of the Amendment is filed as Exhibit 10.2 to this Quarterly Report on Form 10-Q.

The Company’s lease adjusted leverage ratio ~~exceeds 4.75x,~~was 4.30x as of July 14, 2019. The lease adjusted leverage ratio is defined in ~~addition to revising terms for permitted acquisitions and investments. The Amendment was effective through October 7, 2018 and was cancelable at~~Section 1.1 of the Company’s ~~discretion. Upon termination of~~credit facility, which is filed as Exhibit 10.32 to the ~~Amendment, the terms of the Credit Facility executed~~Annual Report on ~~June 30, 2016 remain effective.~~Form 10-K filed on February 21, 2017.

The Credit Facility matures on June 30, 2021. As of ~~October 7, 2018,~~July 14, 2019, the Company had outstanding borrowings under the Credit Facility of ~~$220.0~~$180.5 million, in addition to amounts issued under letters of credit of ~~$7.6~~$7.4 million, which reduced the amount available under the facility but were not recorded as debt. As of December ~~31, 2017,~~30, 2018, the Company had outstanding borrowings under the Credit Facility of ~~$265.5~~$192.5 million, in addition to amounts issued under letters of credit of ~~$7.6~~$7.8 million.

Loan origination costs associated with the Credit Facility are included as deferred costs in Other assets, net in the accompanying condensed consolidated balance sheets. Unamortized debt issuance costs were ~~$1.8~~$1.3 million and ~~$2.4~~$1.7 million as of ~~October 7, 2018~~July 14, 2019 and December ~~31, 2017.~~30, 2018.

7.8. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying amounts of the Company’s cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short term nature or maturity of the instruments.

The following tables present the Company’s assets measured at fair value on a recurring basis as of ~~October 7, 2018~~July 14, 2019 and December ~~31, 2017~~30, 2018 (in thousands):


	October 7, 2018		Level 1		Level 2		Level 3		July 14, 2019		Level 1		Level 2		Level 3
Assets:
Investments in rabbi trust	$	8,792	$	8,792	$	—	$	—	$	6,808	$	6,808	$	—	$	—
Total assets measured at fair value	$	8,792	$	8,792	$	—	$	—	$	6,808	$	6,808	$	—	$	—

	December 31, 2017		Level 1		Level 2		Level 3		December 30, 2018		Level 1		Level 2		Level 3
Assets:
Investments in rabbi trust	$	9,292	$	9,292	$	—	$	—	$	8,198	$	8,198	$	—	$	—
Total assets measured at fair value	$	9,292	$	9,292	$	—	$	—	$	8,198	$	8,198	$	—	$	—

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, goodwill, and other intangible assets. These assets are measured at fair value if determined to be impaired.

As of ~~October 7, 2018~~July 14, 2019 and December ~~31, 2017,~~30, 2018, the Company measured non-financial assets for impairment using continuing and projected future cash flows, as discussed in Note 5,6, Other Charges, which were based on significant inputs not observable in the market and thus represented a level 3 fair value measurement.

Disclosures of Fair Value of Other Assets and Liabilities

The Company’s liabilities under its Credit Facility and ~~capital~~finance leases are carried at historical cost in the accompanying condensed consolidated balance sheets. Both the Credit Facility and the Company’s ~~capital~~finance lease obligations are ~~considered to be~~measured using level 2 ~~instruments.~~inputs. The carrying value of the Credit Facility approximates fair value as the interest rate on this instrument approximates current market rates. For disclosure purposes, the Company estimated the fair value of the ~~capital~~finance lease obligations using discounted cash flow analysis based on market rates obtained from independent third parties for similar types of debt.

The following table presents the carrying value and estimated fair value of the Company’s ~~capital~~finance lease obligations as of ~~October 7, 2018~~July 14, 2019 and December ~~31, 2017~~30, 2018 (in thousands):

October 7, 2018 December 31, 2017
Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value
Capital lease obligations $ 10,385
$ 10,633
$ 10,938
$ 11,563



	July 14, 2019				December 30, 2018
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Finance lease obligations	$	11,405	$	10,977	$	10,200	$	10,143

8.9. Commitments and Contingencies

In the normal course of business, there are various claims in process, matters in litigation, and other contingencies. These include employment-related claims and claims alleging illness, injury, or other food quality, health, or operational issues. Evaluating contingencies related to litigation is a complex process involving subjective judgment on the potential outcome of future events, and the ultimate resolution of litigated claims may differ from our current analysis. We review the adequacy of accruals and disclosures pertaining to litigation matters each quarter in consultation with legal counsel, and we assess the probability and range of possible losses associated with contingencies for potential accrual in the consolidated financial statements. While it is not possible to predict the outcome of these claims with certainty, management is of the opinion that adequate provision for potential losses associated with these matters has been made in the condensed consolidated financial statements.

During the ~~forty~~twenty-eight weeks ended ~~October 7,~~July 15, 2018, the Company recorded $4.0 million of litigation contingencies for employment-related claims. ~~Refer to Note 5,~~ ~~Other Charges~~.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations provides a narrative of our financial performance and condition that should be read in conjunction with the accompanying condensed consolidated financial statements. All comparisons under this heading between ~~2018~~2019 and ~~2017~~2018 refer to the twelve and ~~forty~~twenty-eight week periods ending ~~October 7,~~July 14, 2019 and July 15, 2018, ~~and October 1, 2017,~~ unless otherwise indicated.

Overview

Red Robin Gourmet Burgers, Inc., a Delaware corporation, together with its subsidiaries (“Red Robin,” “we,” “us,” “our” or the “Company”), primarily develops, operates, and franchises full-service restaurants with ~~574~~562 locations in North America. As of ~~October 7, 2018,~~July 14, 2019, the Company operated ~~485~~472 Company-owned restaurants located in 39 states and two Canadian provinces. The Company also had 8990 franchised full-service restaurants in 16 states as of ~~October 7, 2018.~~July 14, 2019. The Company operates its business as one operating and one reportable segment.

The following summarizes the operational and financial highlights during the twelve and ~~forty~~twenty-eight weeks ended ~~October 7, 2018:~~July 14, 2019:

Financial performance.

◦

Restaurant revenue decreased ~~$10.9~~$8.0 million, or ~~3.6%~~2.6%, to ~~$290.2~~$302.4 million for the twelve weeks ended ~~October 7, 2018,~~July 14, 2019, as compared to the twelve weeks ended ~~October 1, 2017~~July 15, 2018, ~~primarily~~ due to a ~~$9.9~~$4.4 million, or ~~3.4%~~1.5%, decrease in comparable restaurant revenue, and a $4.2 million decrease from closed restaurants, partially offset by a $0.6 million increase in revenue from late 2018 new restaurant openings. Restaurant revenue decreased $22.2 million, or 3.1%, to $702.9 million for the twenty-eight weeks ended July 14, 2019, as compared to the twenty-eight weeks ended July 15, 2018, due to a $16.8 million, or 2.4%, decrease in comparable restaurant revenue, a ~~$1.5~~$7.1 million decrease from closed restaurants, and a ~~$0.4~~$0.9 million unfavorable foreign currency exchange impact partially offset by a ~~$0.9~~$2.6 million increase in revenue from ~~newly opened restaurants. Restaurant revenue decreased $11.6 million, or 1.1% to $1.0 billion for the forty weeks ended October 7,~~late 2018 ~~as compared to the forty weeks ended October 1, 2017, primarily due to a $21.1 million, or 2.1% decrease in comparable~~new restaurant revenue and a $3.8 million decrease from closed restaurants, partially offset by a $12.8 million increase in revenue from newly opened restaurants and a $0.5 million favorable foreign currency exchange impact.openings.

◦

Restaurant operating costs, as a percentage of restaurant revenue, increased ~~170~~110 basis points to ~~83.2%~~81.8% for the twelve weeks ended ~~October 7, 2018,~~July 14, 2019, as compared to ~~81.5%~~80.7% for the twelve weeks ended ~~October 1, 2017.~~July 15, 2018. For the ~~forty~~twenty-eight weeks ended ~~October 7, 2018,~~July 14, 2019, restaurant operating costs, as a percentage of restaurant revenue increased 140 basis points to ~~81.1%~~81.7%, as compared to ~~79.7%~~80.3% for the same period in ~~2017.~~2018. The ~~increases were~~increase was due to higher ~~food~~labor and ~~beverage costs,~~ other operating costs, ~~and occupancy costs, as a percentage of restaurant revenue,~~ offset by a decrease in ~~labor~~food and beverage costs as a percentage of restaurant revenue.

◦

Net income was ~~$1.7~~$1.0 million for the twelve weeks ended ~~October 7, 2018~~July 14, 2019 compared to ~~$2.7~~a net loss of $1.9 million ~~net income~~ for the twelve weeks ended ~~October 1, 2017.~~July 15, 2018. Diluted earnings per share were ~~$0.13~~$0.08 for the twelve weeks ended ~~October 7,~~July 14, 2019, as compared to diluted loss per share of $0.14 for the twelve weeks ended July 15, 2018. Excluding charges of $0.80 for impairment expenses, $0.07 for board and shareholder matter costs, $0.05 for restaurant closure costs, $0.02 for executive transition and severance, and $0.01 for executive retention, adjusted earnings per diluted share for the second quarter ended July 14, 2019 were $1.03. Excluding charges of $0.54 for asset impairment, $0.03 for spiral menu disposal, and $0.03 for reorganization costs, adjusted earnings per diluted share for the second quarter ended July 15, 2018 were $0.46. Net income was $1.6 million for the twenty-eight weeks ended July 14, 2019 compared to net income of $2.5 million for the twenty-eight weeks ended July 15, 2018. Diluted earnings per share were $0.12 for the twelve weeks ended July 14, 2019, as compared to diluted earnings per share of ~~$0.21~~$0.19 for the ~~twelve~~twenty-eight weeks ended ~~October 1, 2017.~~July 15, 2018. Excluding the impact of ~~$0.03~~$0.80 per diluted share for ~~reorganization~~impairment expenses, $0.13 for executive transition and severance, $0.08 for restaurant closure costs, $0.07 for board and shareholder matter costs, and $0.02 for executive retention, net income per diluted share for the ~~twelve~~twenty-eight weeks ended ~~October 7, 2018~~July 14, 2019 was $0.16. Net income was $4.2 million for the forty weeks ended October 7, 2018 compared to $21.2 million for the forty weeks ended October 1, 2017. Diluted earnings per share were $0.32 for the forty weeks ended October 7, 2018, as compared to diluted earnings per share of $1.63 for the same period in 2017.$1.22. Excluding the impact of ~~$0.55~~$0.54 per diluted share for asset impairment, $0.23 per diluted share for litigation contingencies, ~~$0.18~~$0.16 per diluted share for reorganization costs, and $0.03 per diluted share for the disposal of spiral menus, net income per diluted share for the ~~forty~~twenty-eight weeks ended ~~October 7,~~July 15, 2018 was $1.31. Excluding the impact of $0.08 per diluted share for asset impairment, net income per diluted share for the forty weeks ended October 1, 2017 was $1.71. For the full year 2018, we expect earnings per diluted share to range from $1.60 to $1.80.$1.15.

Marketing. Our Red Robin Royalty™ loyalty program operates in all our U.S. and Canadian Company-owned Red Robin restaurants and has been rolled out to most of our franchised restaurants. We engage our guests through Red Robin Royalty with offers designed to increase frequency of visits as a key part of our overall marketing strategy. We also inform enrolled guests early about new menu items to generate awareness and trial of these offerings. Our media buying approach is concentrated on generating significant reach and frequency while on-air. In addition, we use digital, social, and earned media to target and more effectively reach specific segments of our guest base.

Restaurant Data

The following table details restaurant unit data for our Company-owned and franchised locations for the periods indicated:


	Twelve Weeks Ended			Forty Weeks Ended				Twelve Weeks Ended				Twenty Eight Weeks Ended
	October 7, 2018		October 1, 2017	October 7, 2018		October 1, 2017		July 14, 2019		July 15, 2018		July 14, 2019		July 15, 2018
Company-owned:
Beginning of period	484		472	480		465		483		484		484		480
Opened during the period	2		7	8		16		—		2		—		6
Acquired from franchisees	—		—	—		—
Closed during the period	(1	)	—	(3	)	(2	)
Closed during the period⁽¹⁾								(11	)	(2	)	(12	)	(2	)
End of period	485		479	485		479		472		484		472		484
Franchised:
Beginning of period	88		86	86		86		89		87		89		86
Opened during the period	1		—	3		1		1		1		1		2
Sold or closed during the period	—		—	—		(1	)
End of period	89		86	89		86		90		88		90		88
Total number of restaurants	574		565	574		565		562		572		562		572

(1) Restaurants closed during the twelve weeks ended July 14, 2019 include the permanent closure of ten restaurants and the temporary closure of one restaurant. Restaurants closed during the twenty-eight weeks ended July 14, 2019 include the permanent closure of eleven restaurants, and the temporary closure of one restaurant. Restaurants closed in the twelve and twenty-eight week periods ended July 15, 2018 consisted entirely of permanently closed restaurants.

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.

This information has been prepared on a basis consistent with our audited ~~2017~~2018 annual financial statements, with the exception of changes made due to the adoption of Topic ~~606,~~842, and, in the opinion of management, includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for the periods presented. Our operating results may fluctuate significantly as a result of a variety of factors, and operating results for any period presented are not necessarily indicative of results for a full fiscal year.


	Twelve Weeks Ended				Forty Weeks Ended				Twelve Weeks Ended				Twenty-Eight Weeks Ended
	October 7, 2018		October 1, 2017		October 7, 2018		October 1, 2017		July 14, 2019		July 15, 2018		July 14, 2019		July 15, 2018
Revenues:
Restaurant revenue	98.4	%	98.5	%	98.4	%	98.4	%	98.2	%	98.4	%	97.9	%	98.4	%
Franchise royalties, fees, and other revenues	1.6		1.5		1.6		1.6		1.8		1.6		2.1		1.6
Total revenues	100.0		100.0		100.0		100.0		100.0		100.0		100.0		100.0

Costs and expenses:
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Cost of sales	23.8		23.8		23.9		23.4		23.9		24.1		23.6		23.9
Labor	35.3		35.3		34.7		35.1		35.2		34.3		35.5		34.4
Other operating	15.0		13.8		13.9		13.0		14.2		13.7		14.0		13.5
Occupancy	9.2		8.6		8.7		8.2		8.4		8.5		8.6		8.5
Total restaurant operating costs	83.2		81.5		81.1		79.7		81.8		80.7		81.7		80.3
Depreciation and amortization	7.4		7.0		7.1		6.8		6.9		7.1		6.9		7.0
Selling, general, and administrative	9.8		11.1		10.8		11.3		11.4		11.3		11.6		11.1
Pre-opening costs	0.1		0.5		0.2		0.5		—		0.2		—		0.2
Other charges	0.2		—		1.7		0.2		5.5		3.4		2.7		2.3
Income from operations	0.6		1.3		0.4		3.0		(4.2	)	(1.3	)	(1.3	)	0.4

Interest expense, net and other	0.8		0.7		0.8		0.7		0.7		0.8		0.8		0.8
Income before income taxes	(0.2	)	0.7		(0.3	)	2.2		(4.9	)	(2.1	)	(2.1	)	(0.4	)
Income tax (benefit) provision	(0.7	)	(0.2	)	(0.7	)	0.2
Income tax benefit									(5.2	)	(1.5	)	(2.3	)	(0.7	)
Net income	0.6	%	0.9	%	0.4	%	2.0	%	0.3	%	(0.6	)%	0.2	%	0.3	%

Certain percentage 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.

Revenues


	Twelve Weeks Ended						Forty Weeks Ended						Twelve Weeks Ended						Twenty-Eight Weeks Ended
(Revenues in thousands)	October 7, 2018		October 1, 2017		Percent Change		October 7, 2018		October 1, 2017		Percent Change		July 14, 2019		July 15, 2018		Percent Change		July 14, 2019		July 15, 2018		Percent Change
Restaurant revenue	$	290,218	$	301,100	(3.6	)%	$	1,015,312	$	1,026,902	(1.1	)%	$	302,418	$	310,392	(2.6	)%	$	702,902	$	725,094	(3.1	)%
Franchise and other revenue	4,659		4,600		1.3	%	16,472		16,737		(1.6	)%	5,563		4,996		11.3	%	14,945		11,813		26.5	%
Total revenues	$	294,877	$	305,700	(3.5	)%	$	1,031,784	$	1,043,639	(1.1	)%	$	307,981	$	315,388	(2.3	)%	$	717,847	$	736,907	(2.6	)%
Average weekly sales volumes in Company-owned restaurants⁽¹⁾	$	49,995	$	52,877	(5.5	)%	$	52,482	$	54,640	(3.9	)%	$	52,907	$	53,266	(0.7	)%	$	52,272	$	53,470	(2.2	)%
Total operating weeks	5,805		5,686		2.1	%	19,346		18,803		2.9	%	5,716		5,827		(1.9	)%	13,447		13,544		(0.7	)%
Restaurant revenue per square foot	$	98	$	101	(3.0	)%	$	340	$	348	(2.3	)%	$	102	$	104	(1.9	)%	$	236	$	243	(2.9	)%

(1)

Calculated using constant currency rates. Using historical currency rates, the average weekly sales per unit for the twelve and ~~forty~~twenty-eight weeks ended ~~October 1, 2017~~July 15, 2018 for Company-owned restaurants was ~~$52,955~~$53,268 and ~~$54,614.~~$53,536, respectively. The Company calculates non-GAAP constant currency average weekly sales per unit by translating prior year local currency average weekly sales per unit to U.S. dollars based on current quarter average exchange rates. The Company considers non-GAAP constant currency average weekly sales per unit to be a useful metric to investors and management as they facilitate a more useful comparison of current performance to historical performance.

Restaurant revenue for the twelve weeks ended ~~October 7, 2018,~~July 14, 2019, which comprises primarily food and beverage sales, decreased ~~$10.9~~$8.0 million, or ~~3.6%~~2.6%, as compared to ~~third~~second quarter ~~2017.~~2018. The decrease was due to a ~~$9.9~~$4.4 million, or ~~3.4%~~1.5%, decrease in comparable restaurant revenue and a ~~$1.5~~$4.2 million decrease from closed restaurants, ~~and a $0.4 million unfavorable foreign currency exchange impact,~~partially offset by a ~~$0.9~~$0.6 million increase in revenue from ~~newly opened restaurants.~~late 2018 new restaurant openings. The comparable restaurant revenue decrease was driven by a ~~1.5%~~6.4% decrease in guest counts offset by a 4.9% increase in average guest ~~check and a 1.9% decrease in guest counts.~~check. The ~~decrease~~increase in average guest check resulted from a ~~3.0% decrease~~2.6% increase in pricing and a 2.3% increase in menu mix. The increase in menu mix was primarily driven by our current menu and promotional strategy, resulting in lower Tavern burger sales and higher Finest burger and entrée sales.

Restaurant revenue for the twenty-eight weeks ended July 14, 2019, decreased $22.2 million or 3.1%, as compared to the twenty-eight weeks ended July 15, 2018. The decrease was due to a $16.8 million, or 2.4%, decrease in comparable restaurant revenue, a $7.1 million decrease from closed restaurants, and a $0.9 million unfavorable foreign currency exchange impact partially offset by $2.6 million increase in revenue from late 2018 new restaurant openings. The comparable restaurant revenue decrease was driven by a 5.9% decrease in guest counts offset by a ~~1.5%~~3.5% increase in ~~pricing.~~average guest check. The ~~decrease~~increase in average guest check resulted from a 2.2% increase in pricing and a 1.3% increase in menu mix. The increase in menu mix ~~is the result of~~was primarily driven by our ~~differentiated~~current menu and promotional strategy, ~~to drive traffic growth through everyday affordability.~~ resulting in lower Tavern burger sales and higher Finest burger and entrée sales.

We are focusing on opportunities to improve our service execution, which we believe will drive increased guest counts and comparable restaurant revenue.

Restaurant revenue for the forty weeks ended October 7, 2018 decreased $11.6 million, or 1.1% as compared to the same period in 2017. The decrease was due to a $21.1 million, or 2.1%, decrease in comparable sales and a $3.8 million decrease from closed restaurants, offset by a $12.8 million increase in revenue from newly opened restaurants and a $0.5 million favorable foreign currency exchange impact. The comparable restaurant revenue decrease was driven by a 1.5% decrease in average guest check and a 0.6% decrease in guest counts. The decrease in average guest check resulted from a 2.5% decrease in menu mix offset by a 1.0% increase in pricing.

Average weekly 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 at the end of each period presented. New restaurants are restaurants that are open but not included in the comparable category because they have not operated for five full quarters. 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 and acquired restaurants during the period and the average square footage of our restaurants.

Franchise and other revenue increased ~~$0.1~~$0.6 million for the twelve weeks ended ~~October 7, 2018~~July 14, 2019 compared to the twelve weeks ended ~~October 1, 2017. Franchise~~July 15, 2018 and ~~other revenue decreased $0.3~~increased $3.1 million for the ~~forty~~twenty-eight weeks ended ~~October 7, 2018~~July 14, 2019 compared to the ~~forty~~twenty-eight weeks ended ~~October 1, 2017,~~July 15, 2018, primarily due to ~~a decrease~~an increase in gift card breakage. Our franchisees reported a comparable restaurant revenue decrease of ~~0.6%~~2.8% for the twelve weeks ended ~~October 7, 2018~~July 14, 2019 compared to the twelve weeks ended ~~October 1, 2017~~July 15, 2018 and ~~remained flat~~a decrease of 2.2% for the ~~forty~~twenty-eight weeks ended ~~October 7, 2018~~July 14, 2019 compared to the ~~forty~~twenty eight weeks ended ~~October 1, 2017.~~July 15, 2018.

Cost of Sales


	Twelve Weeks Ended								Forty Weeks Ended								Twelve Weeks Ended								Twenty-Eight Weeks Ended
(In thousands, except percentages)	October 7, 2018			October 1, 2017			Percent Change		October 7, 2018			October 1, 2017			Percent Change		July 14, 2019			July 15, 2018			Percent Change		July 14, 2019			July 15, 2018			Percent Change
Cost of sales	$	69,003		$	71,642		(3.7	)%	$	242,392		$	240,152		0.9	%	$	72,387		$	74,874		(3.3	)%	$	166,102		$	173,389		(4.2	)%
As a percent of restaurant revenue	23.8		%	23.8		%	—	%	23.9		%	23.4		%	0.5	%	23.9		%	24.1		%	(0.2	)%	23.6		%	23.9		%	(0.3	)%

Cost of sales, which comprises food and beverage costs, is variable and generally fluctuates with sales volume. Cost of

sales as a percentage of restaurant revenue ~~remained flat~~decreased 20 basis points for the twelve weeks ended ~~October 7, 2018~~July 14, 2019 as compared to the same period in ~~2017. For~~2018, and decreased 30 basis points for the ~~forty~~twenty-eight weeks ended ~~October 7, 2018, cost of sales as a percentage of revenue increased 50 basis points~~July 14, 2019 as compared to the ~~forty weeks ended October 1, 2017.~~same period in 2018. The ~~increase~~decrease was mainly driven by ~~the higher tavern mix~~reduction in waste and lower ~~non-alcoholic beverage mix, and the higher cost of steak fries.~~Tavern mix.

Labor


	Twelve Weeks Ended								Forty Weeks Ended								Twelve Weeks Ended								Twenty-Eight Weeks Ended
(In thousands, except percentages)	October 7, 2018			October 1, 2017			Percent Change		October 7, 2018			October 1, 2017			Percent Change		July 14, 2019			July 15, 2018			Percent Change		July 14, 2019			July 15, 2018			Percent Change
Labor	$	102,322		$	106,205		(3.7	)%	$	351,813		$	360,146		(2.3	)%	$	106,538		$	106,476		0.1	%	$	249,432		$	249,491		—	%
As a percent of restaurant revenue	35.3		%	35.3		%	—	%	34.7		%	35.1		%	(0.4	)%	35.2		%	34.3		%	0.9	%	35.5		%	34.4		%	1.1	%

Labor costs include restaurant-level hourly wages and management salaries as well as related taxes and benefits. For the twelve weeks ended ~~October 7, 2018,~~July 14, 2019, labor as a percentage of restaurant revenue ~~remained flat compared to the same period in 2017. For the forty weeks ended October 7, 2018, labor as a percentage of restaurant revenue decreased 40~~increased 90 basis points compared to the same period in ~~2017.~~2018. The ~~decrease~~increase was primarily driven by sales deleverage.

For the twenty-eight weeks ended July 14, 2019, labor ~~model changes, partially offset~~as a percentage of restaurant revenue increased 110 basis points compared to the same period in 2018. The increase was primarily driven by increases in minimum wage rates in certain jurisdictions, increased management headcount to allow our restaurants to become fully staffed in support of our focus on operational execution, and ~~management salaries.~~sales deleverage.

Other Operating


	Twelve Weeks Ended								Forty Weeks Ended								Twelve Weeks Ended								Twenty-Eight Weeks Ended
(In thousands, except percentages)	October 7, 2018			October 1, 2017			Percent Change		October 7, 2018			October 1, 2017			Percent Change		July 14, 2019			July 15, 2018			Percent Change		July 14, 2019			July 15, 2018			Percent Change
Other operating	$	43,612		$	41,454		5.2	%	$	141,305		$	133,575		5.8	%	$	43,000		$	42,668		0.8	%	$	98,565		$	97,693		0.9	%
As a percent of restaurant revenue	15.0		%	13.8		%	1.2	%	13.9		%	13.0		%	0.9	%	14.2		%	13.7		%	0.5	%	14.0		%	13.5		%	0.5	%

Other operating costs include costs such as equipment repairs and maintenance costs, restaurant supplies, utilities, restaurant technology, and other miscellaneous costs. For the twelve ~~weeks~~and twenty-eight week periods ended ~~October 7, 2018, other~~July 14, 2019, Other operating costs as a percentage of restaurant revenue increased ~~120~~50 basis points as compared to the same ~~period~~periods in ~~2017.~~2018. The increase was primarily due to higher costs of ~~equipment repairs and maintenance and~~ third-party delivery fees, partially offset by a decrease in ~~janitorial costs. For the forty weeks ended October 7, 2018, other operating costs as a percentage of revenue increased 90 basis points. The increases were primarily due to higher costs of~~ restaurant ~~supplies, restaurant technology, and third-party delivery fees, partially offset by a decrease in janitorial costs.~~supplies.

Occupancy


	Twelve Weeks Ended								Forty Weeks Ended								Twelve Weeks Ended								Twenty-Eight Weeks Ended
(In thousands, except percentages)	October 7, 2018			October 1, 2017			Percent Change		October 7, 2018			October 1, 2017			Percent Change		July 14, 2019			July 15, 2018			Percent Change		July 14, 2019			July 15, 2018			Percent Change
Occupancy	$	26,629		$	25,868		2.9	%	$	88,099		$	84,127		4.7	%	$	25,458		$	26,460		(3.8	)%	$	60,478		$	61,470		(1.6	)%
As a percent of restaurant revenue	9.2		%	8.6		%	0.6	%	8.7		%	8.2		%	0.5	%	8.4		%	8.5		%	(0.1	)%	8.6		%	8.5		%	0.1	%

Occupancy costs include fixed rents, property taxes, common area maintenance charges, general liability insurance, contingent rents, and other property costs. Occupancy costs incurred prior to opening our new restaurants are included in pre-opening costs. For the twelve and ~~forty weeks~~twenty-eight week periods ended ~~October 7, 2018,~~July 14, 2019, occupancy costs as a percentage of restaurant revenue ~~increased 60 basis points and 50 basis points~~remained flat over the ~~prior year. The increases were primarily driven by an increase~~same periods in ~~fixed rents, property taxes, and general liability insurance costs.~~2018. Our fixed rents for the twelve weeks ended ~~October 7,~~July 14, 2019 and July 15, 2018 were $17.0 million and ~~October 1, 2017 were~~ $17.7 million, ~~and $17.4 million, an increase~~a decrease of ~~$0.3~~$0.7 million due to ~~nine~~10 net ~~additional~~ locations ~~opened since third quarter 2017.~~permanently closed during the period. Our fixed rents for the ~~forty~~twenty-eight weeks ended ~~October 7,~~July 14, 2019 and July 15, 2018 ~~and October 1, 2017~~ were ~~$58.9~~$40.2 million and ~~$57.1~~$41.2 million, ~~an increase~~a decrease of ~~$1.8~~$1.0 million due to 1511 net ~~additional~~ locations ~~opened since~~permanently closed during the ~~fourth quarter of 2016.~~period.

Depreciation and Amortization


	Twelve Weeks Ended								Forty Weeks Ended								Twelve Weeks Ended								Twenty-Eight Weeks Ended
(In thousands, except percentages)	October 7, 2018			October 1, 2017			Percent Change		October 7, 2018			October 1, 2017			Percent Change		July 14, 2019			July 15, 2018			Percent Change		July 14, 2019			July 15, 2018			Percent Change
Depreciation and amortization	$	21,819		$	21,258		2.6	%	$	73,335		$	70,475		4.1	%	$	21,369		$	22,323		(4.3	)%	$	49,807		$	51,516		(3.3	)%
As a percent of total revenues	7.4		%	7.0		%	0.4	%	7.1		%	6.8		%	0.3	%	6.9		%	7.1		%	(0.2	)%	6.9		%	7.0		%	(0.1	)%

Depreciation and amortization includes depreciation on capital expenditures for restaurants and corporate assets as well as amortization of acquired franchise rights, leasehold interests, and certain liquor licenses. For the twelve ~~weeks~~and twenty-eight week periods ended ~~October 7, 2018,~~July 14, 2019, depreciation and amortization expense ~~increased $0.6 million, or 2.6%,~~as a percentage of revenue remained flat over the prior year. For the forty weeks ended October 7, 2018, depreciation and amortization expense increased $2.9 million or 4.1% over the prior year. The increases were primarily related to new restaurants opened and new restaurant technology implemented since third quarter 2017.same periods in 2018.

Selling, General, and Administrative


	Twelve Weeks Ended								Forty Weeks Ended								Twelve Weeks Ended								Twenty-Eight Weeks Ended
(In thousands, except percentages)	October 7, 2018			October 1, 2017			Percent Change		October 7, 2018			October 1, 2017			Percent Change		July 14, 2019			July 15, 2018			Percent Change		July 14, 2019			July 15, 2018			Percent Change
Selling, general, and administrative	$	28,780		$	33,714		(14.6	)%	$	110,715		$	117,965		(6.1	)%	$	35,234		$	35,617		(1.1	)%	$	83,350		$	81,935		1.7	%
As a percent of total revenues	9.8		%	11.1		%	(1.3	)%	10.7		%	11.3		%	(0.6	)%	11.4		%	11.3		%	0.1	%	11.6		%	11.1		%	0.5	%

Selling, general, and administrative costs include all corporate and administrative functions. Components of this category include marketing and advertising costs; corporate, 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 costs in the twelve weeks ended ~~October 7, 2018~~July 14, 2019 decreased ~~$4.9~~$0.4 million, or ~~14.6%~~1.1%, as compared to the same period in ~~2017.~~2018. The decrease was primarily due to ~~decreases~~lower media spend, partially offset by increases in ~~local marketing, incentive compensation,~~professional and ~~salaries related to the reorganization in first quarter 2018.~~legal fees. For the ~~forty~~twenty-eight weeks ended ~~October 7, 2018,~~July 14, 2019, selling, general, and administrative costs ~~decreased $7.3~~increased $1.4 million, or ~~6.1%.~~1.7%, as compared to the same period in 2018. The ~~decrease~~increase was primarily ~~due to decreases in incentive compensation, salaries~~ related to ~~the reorganization~~an increase in ~~first quarter 2018,~~professional services and ~~professional services.~~higher wages.

Pre-opening Costs


	Twelve Weeks Ended								Forty Weeks Ended								Twelve Weeks Ended								Twenty-Eight Weeks Ended
(In thousands, except percentages)	October 7, 2018			October 1, 2017			Percent Change		October 7, 2018			October 1, 2017			Percent Change		July 14, 2019			July 15, 2018			Percent Change		July 14, 2019			July 15, 2018			Percent Change
Pre-opening costs	$	387		$	1,503		(74.3	)%	$	2,093		$	4,735		(55.8	)%	$	—		$	569		(100.0	)%	$	319		$	1,706		(81.3	)%
As a percent of total revenues	0.1		%	0.5		%	(0.4	)%	0.2		%	0.5		%	(0.3	)%	—		%	0.2		%	(0.2	)%	—		%	0.2		%	(0.2	)%

Pre-opening costs, which are expensed as incurred, comprise the costs of labor, hiring, and training the initial work force for our new ~~restaurants;~~restaurants and new initiatives; occupancy costs incurred prior to opening; travel expenses for our training teams; the cost of food and beverages used in training; licenses and marketing; supply costs; and other direct costs related to the opening of new restaurants. Our pre-opening costs fluctuate from period to period, depending upon, but not limited to, the number of restaurant openings, the size of the restaurants being opened, and the location of the restaurants. Pre-opening costs for any given quarter will typically include expenses associated with restaurants opened during the quarter as well as expenses related to restaurants opening in subsequent quarters.

~~Pre-opening~~We incurred no pre-opening costs ~~decreased $1.1 million for~~during the twelve weeks ended ~~October 7, 2018, and~~July 14, 2019. Pre-opening costs decreased ~~$2.6~~$1.4 million for the ~~forty~~twenty-eight weeks ended ~~October 7, 2018. The decreases were primarily due to fewer restaurant openings during the twelve and forty week periods ended October 7, 2018~~July 14, 2019 as compared to the same ~~periods~~period in ~~2017.~~2018. The decrease was primarily due to fewer openings during the twenty-eight week period ended July 14, 2019 as compared to the same period in 2018.

Interest Expense, Net and Other

Interest expense, net and other was ~~$2.3~~$2.2 million for the twelve weeks ended ~~October 7, 2018,~~July 14, 2019, a ~~increase~~decrease of ~~$0.3~~$0.2 million, or ~~12.9%~~9.7%, from the same period in ~~2017.~~2018. Interest expense, net and other was ~~$8.1~~$5.4 million for the ~~forty~~twenty-eight weeks ended ~~October 7, 2018, an increase~~July 14, 2019, a decrease of ~~$0.6~~$0.4 million, or ~~8.3%~~6.9%, from the same period in ~~2017.~~2018. The ~~increase~~decrease was primarily related to recognizing a ~~loss~~gain on the Company’s deferred compensation plan assets ~~during first quarter 2018~~ compared to a ~~gain in~~loss the same period a year ago. Our weighted average interest rate was ~~4.4%~~5.2% and ~~4.1%~~5.0% for the twelve week and twenty-eight weeks ended July 14, 2019, as compared to 4.5% and 4.3% for the twelve and ~~forty~~twenty-eight weeks ended ~~October 7, 2018, as compared to 3.5% and 3.6% for the twelve weeks and forty weeks ended October 1, 2017.~~July 15, 2018.

Provision for Income Taxes

The effective tax ~~rate for the twelve weeks ended October 7, 2018 was a 448.3% benefit, compared to a 34.1%~~ benefit for the twelve weeks ended ~~October 1, 2017.~~July 14, 2019 was 106.5%, compared to 71.6% benefit for the twelve weeks ended July 15, 2018. The effective tax ~~rate~~benefit for the ~~forty~~twenty-eight weeks ended ~~October 7,~~July 14, 2019 and July 15, 2018 was 110.9% and ~~October 1, 2017 was a 221.2% benefit and a 9.4% expense.~~183.9%. The change in both the twelve and ~~forty~~twenty-eight week effective tax ~~rates~~benefits are primarily due to the decrease in income ~~as well as~~compared to the ~~decrease in the federal statutory rate from 35% to 21% in the first quarter of 2018.~~same period a year ago.

Liquidity and Capital Resources

Cash and cash equivalents increased ~~$2.7~~7.6 million to ~~$20.4~~$26.2 million at ~~October 7, 2018,~~July 14, 2019, from ~~$17.7~~$18.6 million at the beginning of the fiscal year. We expect to continue to reinvest available cash flows from operations to pay down debt, maintain existing restaurants and infrastructure, ~~repurchase our common stock, develop new restaurants, and~~ execute our long-term strategic ~~initiatives.~~initiatives, and repurchase our common stock.

Cash Flows

The table below summarizes our cash flows from operating, investing, and financing activities for each period presented (in thousands):


	Forty Weeks Ended						Twenty-Eight Weeks Ended
	October 7, 2018			October 1, 2017			July 14, 2019			July 15, 2018
Net cash provided by operating activities	$	88,780		$	121,564		$	41,746		$	77,020
Net cash used in investing activities	(39,577		)	(60,919		)	(20,990		)	(27,204		)
Net cash used in financing activities	(45,657		)	(58,138		)	(13,246		)	(44,638		)
Effect of exchange rate changes on cash	(892		)	745			115			(996		)
Net change in cash and cash equivalents	$	2,654		$	3,252		$	7,625		$	4,182

Operating Cash Flows

Net cash flows provided by operating activities decreased ~~$32.8~~$35.3 million to ~~$88.8~~$41.7 million for the ~~forty~~twenty-eight weeks ended ~~October 7, 2018.~~July 14, 2019. The ~~decrease was~~changes in net cash provided by operating activities are primarily ~~driven by~~attributable to a ~~a $17.0~~$14.4 million decrease in profit from operations for the twenty-eight weeks ended July 14, 2019 compared to the same period in 2018, as well as changes in working capital as presented in the condensed consolidated statements of cash generated from restaurant operations, a $14.4 million increase in payments to vendors, a $7.5 million increase in bonus payout, and a $3.3 million increase in reorganization costs, partially offset by a $5.4 million returned vendor deposit, a $1.9 million decrease in income taxes paid, and a $1.7 million decrease in corporate salaries.flows.

Investing Cash Flows

Net cash flows used in investing activities decreased ~~$21.3~~$6.2 million to ~~$39.6~~$21.0 million for the ~~forty~~twenty-eight weeks ended ~~October 7, 2018,~~July 14, 2019, as compared to ~~$60.9~~$27.2 million for the same period in ~~2017.~~2018. The decrease is primarily due to decreased investment in new restaurant ~~openings and restaurant remodels.~~openings.

The following table lists the components of our capital expenditures, net of currency translation effect, for the ~~forty~~twenty-eight weeks ended ~~October 7, 2018~~July 14, 2019 (in thousands):


	Forty Weeks Ended October 7, 2018		Twenty-Eight Weeks Ended July 14, 2019
Investment in technology infrastructure and other	$	20,705
Investment in technology infrastructure			$	11,862
Restaurant maintenance capital			8,331
New restaurants	9,650		975
Restaurant maintenance capital and other	9,487
Total capital expenditures	$	39,842	$	21,168

Financing Cash Flows

Cash used in financing activities decreased ~~$12.5~~$31.4 million to ~~$45.7~~$13.2 million for the ~~forty~~twenty-eight weeks ended ~~October 7, 2018,~~July 14, 2019, as compared to the same period in ~~2017.~~2018. The decrease primarily resulted from a ~~$14.0~~$32.9 million decrease in net repayments made on long-term debt, ~~and a $0.7 million decrease in debt issuance costs~~ offset by ~~a $1.9~~$1.5 million ~~decrease in net cash proceeds received from the exercise~~ of ~~employee stock options and purchase plan and $0.3 million~~ cash used to repurchase the ~~Company's~~Company’s common stock.

Credit Facility

The Amendment ~~increased~~increases the lease adjusted leverage ratio to ~~5.25x~~5.0x through ~~October 1, 2017~~December 29, 2019 before ~~stepping down to 5.0x through July 15, 2018 and~~ returning to 4.75x thereafter. ~~The~~In addition, the Amendment ~~also provides for additional pricing tiers that increase LIBOR spread rates and commitment fees~~revises the definition of permitted acquisitions under the Credit Facility to correspond with the ~~extent~~change to the ~~Company’s~~ lease adjusted leverage ratio ~~exceeds 4.75x, in addition to revising terms for permitted acquisitions~~ and ~~investments. The Amendment was effective through October 7, 2018~~clarifies the classification of existing capital and ~~was~~

~~cancelable at the Company’s discretion. Upon termination~~operating leases. A copy of the Amendment ~~the terms of the Credit Facility executed~~is filed as Exhibit 10.2 to this Quarterly Report on ~~June 30, 2016 remain effective. As of October 7, 2018, the~~Form 10-Q.

The Company’s lease adjusted leverage ratio was ~~4.03x.~~4.30x as of July 14, 2019. The lease adjusted leverage ratio is defined in Section 1.1 of the Company’s credit facility, which is filed as Exhibit 10.32 to the Annual Report on Form 10-K filed on February 21, 2017.

The Credit Facility matures on June 30, 2021. Borrowings under the Credit Facility are secured by first priority liens and security interests in substantially all of the Company’s assets, including the capital stock of certain Company subsidiaries. Borrowings are available for financing activities including restaurant construction costs, working capital, and general corporate purposes, including, among other uses, to refinance certain indebtedness, permitted acquisitions, and redemption of capital stock. We do not believe any of our lenders will be unable to fulfill their lending commitments under our Credit Facility. Loan origination costs associated with the Credit Facility are included as deferred costs in Other assets, net in the accompanying condensed consolidated balance sheets. As of ~~October 7, 2018,~~July 14, 2019, the Company had outstanding borrowings under the Credit Facility of ~~$220.0~~$180.5 million, in addition to amounts issued under letters of credit of ~~$7.6~~$7.4 million, which reduce the amount available under the Credit Facility but are not recorded as debt. As of July 14, 2019, we had unused borrowing capacity under the Credit Facility of approximately $237.1 million.

Covenants. We are subject to a number of customary covenants under our Credit Facility, including limitations on additional borrowings, acquisitions, stock repurchases, sales of assets, and dividend payments. As of ~~October 7, 2018,~~July 14, 2019, we were in compliance with all debt covenants.

Debt Outstanding. Total debt ~~and capital lease obligations~~ outstanding decreased ~~$46.1~~$12.0 million to ~~$231.3~~$181.4 million at ~~October 7, 2018,~~July 14, 2019, from ~~$277.3~~$193.4 million at December ~~31, 2017, primarily~~30, 2018, due to net repayments of ~~$45.5~~$12.0 million on the Credit Facility during the ~~forty~~twenty-eight weeks ended ~~October 7, 2018.~~July 14, 2019.

~~Share Repurchase.~~ Working Capital.On August 9, 2018, the Company’s board of directors authorized an increase to the Company’s share repurchase program of approximately $21 million to a total of $75 million of the Company’s common stock. The share repurchase authorization was effective as of August 9, 2018, and 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.

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. Rapid turnover of inventory results in limited investment in inventories, and cash from sales is usually received before related payables for food, supplies, and payroll become due. In addition, receipts from the sale of gift cards are received well in advance of related redemptions. Rather than maintain higher cash balances that would result from this pattern of operating cash flows, we typically utilize operating cash flows in excess of those required for currently-maturing liabilities to pay for capital expenditures, debt repayment, or to repurchase stock. When necessary, we utilize our ~~revolving credit facility~~Credit Facility to satisfy short-term liquidity requirements. We believe our future cash flows generated from restaurant operations combined with our remaining borrowing capacity under the Credit Facility will be sufficient to satisfy any working capital deficits and our planned capital expenditures.

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 was effective as of August 9, 2018, and 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.

Inflation

The primary inflationary factors affecting our operations are food, labor costs, energy costs, and materials used in the construction of new restaurants. A large number of our restaurant personnel are paid at rates based on the applicable minimum wage, and increases in the minimum wage rates have directly affected our labor costs in recent years. Many of our leases require us to pay taxes, maintenance, repairs, insurance, and utilities, all of which are generally subject to inflationary increases. We believe labor cost inflation ~~along with food cost inflation due primarily to potatoes and ground beef~~ had a negative impact on our financial condition and results of operations during the ~~forty~~twelve and twenty-eight weeks ended ~~October 7, 2018.~~July 14, 2019. Uncertainties related to fluctuations in costs, including energy costs, commodity prices, annual indexed or potential minimum wage increases, and construction materials make it difficult to predict what impact, if any, inflation may continue to have on our business, but it is anticipated inflation will have a negative impact on labor costs for the remainder of ~~2018.~~2019.

Seasonality

Our business is subject to seasonal fluctuations. Historically, sales in most of our restaurants have been higher during the summer months and winter holiday season and lower during the fall season. As a result, our quarterly and annual operating results and comparable restaurant revenue may fluctuate significantly as a result of seasonality. Accordingly, results for any one

quarter or year are not necessarily indicative of results to be expected for any other quarter or for any year, and comparable restaurant sales for any particular future period may decrease.

~~Off Balance Sheet Arrangements~~

~~Except for operating leases, primarily restaurant leases entered into in the normal course of business, we do not have any material off balance sheet arrangements.~~

Contractual Obligations

There were no material changes outside the ordinary course of business to our contractual obligations since the filing of Company’s Annual Report on Form 10-K for the fiscal year ended December ~~31, 2017.~~30, 2018.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are those we believe are both significant and that require us to make difficult, subjective, or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors we believe to be appropriate under the circumstances. Actual results may differ from these estimates, including our estimates of future restaurant level cash flows, which are subject to the current economic environment, and we might obtain different results if we use different assumptions or conditions. We had no significant changes in our critical accounting policies and estimates which were disclosed in our Annual Report on Form 10-K for the fiscal year ended December ~~31, 2017.~~30, 2018.

Recently Issued and Recently Adopted Accounting Standards

See Note 1, Basis of Presentation and Recent Accounting Pronouncements, of Notes to Condensed Consolidated Financial Statements of this report.

Forward-Looking Statements

Certain information and statements contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”) codified at Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. This statement is included for purposes of complying with the safe harbor provisions of the PSLRA. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events, or performance and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as “anticipate,” “assume,” “believe,” “estimate,” “could,” “expect,” “future,” “intend,” “may,” “plan,” “project,~~” “may,~~” “will,” “would,” and similar expressions. Certain forward-looking statements are included in this Quarterly Report on Form 10-Q, principally in the sections captioned “Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations”.~~Operations.” Forward-looking statements in this report include, among other things: our financial performance, ~~including anticipated revenues, earnings per share, and outlook, and comparable restaurant revenue; our~~strategic initiatives, marketing strategy and promotions; expected uses for available cash flow; capital investments; beliefs about the ability of our lenders to fulfill their lending commitments under our Credit Facility and about the sufficiency of future cash flows to satisfy any working capital deficit and planned capital expenditures; the anticipated effects of inflation on labor and commodity ~~costs for 2018;~~costs; and the effect of the adoption of new accounting standards on our financial and accounting systems.

Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those we express in these forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the effectiveness of our business strategy and improvement initiatives, including the effectiveness of our affordability, service improvement, technology, and ~~off-site initiatives; the ability~~off-premise initiatives to ~~fulfill planned expansion;~~drive traffic and sales; the effectiveness of our marketing campaigns; our ability to effectively use and monitor social media; uncertainty regarding general economic and industry conditions; concentration of restaurants in certain markets and lack of market awareness in new markets; changes in consumer disposable income, consumer spending trends and habits; the effectiveness of our information technology and new technology systems, including cyber security with respect to those systems; regional mall and lifestyle center traffic trends or other trends affecting traffic at our restaurants; increased competition and discounting in the casual-dining restaurant market; costs and availability of food and beverage inventory; changes in commodity prices, particularly ground beef; changes in energy and labor costs, including due to changes in health care and ~~energy costs;~~market wage levels; the success of our refranchising efforts; changes in federal, state, or local laws and regulations affecting the operation of our restaurants, including but not limited to, minimum wages, consumer health and safety, health insurance coverage, nutritional disclosures, and employment eligibility-related documentation requirements; limitations on ~~the Company’s~~our ability to execute stock repurchases at all or at the times or in the amounts we currently anticipate due to lack of available share or acceptable stock price levels or other market or Company-specific ~~conditions;~~conditions, or to otherwise achieve anticipated benefits of a share repurchase program; our ability to attract and retain qualified managers and ~~team members; changes in~~Team Members; the ~~availability~~adequacy of cash flows or available access to capital or debit resources under our Credit Facility or ~~other access~~otherwise to ~~capital; minimum wage increases; changes in health care~~fund operations and ~~insurance costs;~~growth opportunities; costs and other effects of legal claims by team members, franchisees, customers, vendors, stockholders, including relating to fluctuations in our stock price, and others, including settlement of those ~~claims; effectiveness~~claims or negative publicity regarding food safety or cyber security; the impact of ~~management strategies and decisions;~~our recent

adoption of a shareholder rights plan; weather conditions and related events in regions where our restaurants are operated; changes in accounting standards policies and practices or related interpretations by auditors or regulatory entities; and other risk factors described from time to time in our SEC reports, including the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December ~~31, 2017,~~30, 2018, filed with the SEC on February 27, ~~2018.~~2019.

Although we believe the expectations reflected in our forward-looking statements are based on reasonable assumptions, such expectations may prove to be materially incorrect due to known and unknown risks and uncertainties. All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except as required by law,

we undertake no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the interest rate risk, foreign currency exchange risk, or commodity price risk since the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~31, 2017.~~30, 2018.

We continue to monitor our interest rate risk on an ongoing basis and may use interest rate swaps or similar instruments in the future to manage our exposure to interest rate changes related to our borrowings as the Company deems appropriate. As of ~~October 7, 2018,~~July 14, 2019, we had ~~$220.0~~$180.5 million of borrowings subject to variable interest rates. A 1.0% change in the effective interest rate applied to these loans would have resulted in pre-tax interest expense fluctuation of ~~$2.2~~$1.8 million on an annualized basis.

The Company’s restaurant menus are highly dependent upon a few select commodities, including ground beef, poultry, and potatoes. We may or may not have the ability to increase menu prices, or vary menu items, in response to food commodity price increases. A 1.0% increase in food costs would negatively impact cost of sales by approximately ~~$3.2~~$3.1 million on an annualized basis.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the management of the Company (“Management”), including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, Management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives. The Company’s CEO and CFO have concluded that, based upon the evaluation of disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act), the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. Legal Proceedings

For a description of our legal proceedings, see Note 8,9, Commitments and Contingencies, of Notes to Condensed Consolidated Financial Statements of this report.

ITEM 1A. Risk Factors

A description of the risk factors associated with our business is contained in Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December ~~31, 2017~~30, 2018 filed with the SEC on February 27, ~~2018.~~2019. There have been no material changes to our Risk Factors disclosed in our ~~2017~~2018 Annual Report on Form 10-K.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the twelve weeks ended ~~October 7, 2018,~~July 14, 2019, the Company did not have any sales of securities in transactions that were not registered under the Securities Act of 1933, as amended, that have not been reported in a Current Report on Form 8-K. On August 9, 2018, the Company’s board of directors authorized ~~an increase to~~ the Company’s current share repurchase program of ~~approximately $21 million~~up to a total of $75 million of the Company’s common stock. The ~~increased~~ share repurchase authorization became effective on August 9, 2018 and will terminate upon completing repurchases of $75 million of common stock unless otherwise terminated by the board. Purchases under the repurchase program may be made in open market or privately negotiated transactions and may include transactions pursuant to a repurchase plan administered in accordance with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended. Purchases may be made from time to time at the Company’s discretion and the timing and amount of any share repurchases will be determined based on share price, market conditions, legal requirements, and other factors. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the Company may suspend or discontinue the repurchase program at any time. The table below provides a summary of the Company’s purchases of its own common stock during the second quarter of 2019.


Period⁽¹⁾	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plan (in thousands)		Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plan (in thousands)
9/10/18-10/7/18	8,600	$	39.13	8,600	$	74,585
12/31/18-1/27/19							10,800	$	31.12	53,400	$	73,190
1/28/19-2/24/19							11,400	32.81		64,800	72,815
2/25/19-3/24/19							9,000	29.31		73,800	72,552
5/20/19-6/16/19							5,800	27.41		79,600	72,393
6/17/19-7/14/19							11,100	30.83		90,700	72,051
Pursuant to Publicly Announced Plans or Programs⁽²⁾	8,600						48,100

(1) The reported periods conform to the ~~Company's~~Company’s fiscal calendar composed of thirteen 28-day periods.

(2) Since ~~February 11, 2016,~~August 9, 2018, when the current share repurchase program of $75 million of the Company's common stock was ~~originally~~ authorized, the Company has purchased ~~940,034~~90,700 shares for a total of ~~$46.1~~$2.9 million. Prior to the increase in the share repurchase authorization, the program had a remaining authorized purchase limit of $53.9 million as of October 7, 2018 and on August 9, 2018. The table below provides a summary of the Company's purchases of its own common stock during the third quarter 2018.

ITEM 6. Exhibits



Exhibit Number		Description

3.1		Certificate of Designation of Series A Junior Participating Preferred Stock of Red Robin Gourmet Burgers, Inc. Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on June 5, 2019.

4.1		Rights Agreement, dated as of June 4, 2019, between Red Robin Gourmet Burgers, Inc. and America Stock Transfer & Trust Company, LLC, as Rights Agent. Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on June 5, 2019.

10.1		Amendment to Employment Agreement, by and between Red Robin Gourmet Burgers, Inc. ~~Executive Change in Control Severance Plan~~and Lynn S. Schweinfurth, dated ~~August 14, 2018. Incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q filed on August 22, 2018.~~as of June 11, 2019.

10.2		~~Amended and Restated Employment~~Second Amendment to Credit Agreement, ~~by and between Red Robin Gourmet Burgers, Inc. and Denny Marie Post,~~ dated August ~~20, 2018. Incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on August 22, 2018.~~

~~10.3~~		Amended and Restated Employment Agreement by and between Red Robin Gourmet Burgers, Inc. and Guy J. Constant, dated August 20, 2018. Incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q filed on August 22, 2018.

~~10.4~~		Amended and Restated Employment Agreement by and between Red Robin Gourmet Burgers, Inc. and Jonathan A. Muhtar, dated August 20, 2018. Incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q filed on August 22, 2018.

~~10.5~~		Amended and Restated Employment Agreement by and between Red Robin Gourmet Burgers, Inc. and Carin L. Stutz, dated August 20, 2018. Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q filed on August 22, 2018.

~~10.6~~		Amended and Restated Employment Agreement by and between Red Robin Gourmet Burgers, Inc. and Michael L. Kaplan, dated August 20, 2018. Incorporated by reference to Exhibit 10.6 to our Quarterly Report on Form 10-Q filed on August 22, 2018.19, 2019.

31.1		Rule 13a-14(a) Certification of Chief Executive Officer

31.2		Rule 13a-14(a) Certification of Chief Financial Officer

32.1		Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

101		The following financial information from the Quarterly Report on Form 10-Q of Red Robin Gourmet Burgers, Inc. for the quarter ended ~~October 7, 2018,~~July 14, 2019 formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets at ~~October 7, 2018~~July 14, 2019 and December ~~31, 2017;~~30, 2018; (ii) Condensed Consolidated Statements of Operations ~~for the twelve~~ and ~~forty weeks ended October 7, 2018 and October 1, 2017; (iii) Condensed Consolidated Statements of~~ Comprehensive Income for the twelve and ~~forty~~twenty-eight weeks ended ~~October 7, 2018~~July 14, 2019 and ~~October 1, 2017;~~July 15, 2018; (iii) Condensed Consolidated Statements of Stockholders' Equity at July 14, 2019 and December 30, 2018; (iv) Condensed Consolidated Statements of Cash Flows for the ~~forty~~twenty-eight weeks ended ~~October 7, 2018~~July 14, 2019 and ~~October 1, 2017;~~July 15, 2018; and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	RED ROBIN GOURMET BURGERS, INC. (Registrant)
~~November 7, 2018~~August 23, 2019	By:	/s/ ~~Guy J. Constant~~Lynn S. Schweinfurth
(Date)		~~Guy J. Constant~~Lynn S. Schweinfurth (Chief Financial Officer)

2830



	October 7, 2018			December 31, 2017
Revolving credit facility and other long-term debt	$	220,875		$	266,375
Capital lease obligations	10,385			10,938
Total debt	231,260			277,313
Less: Current portion	(774		)	(741		)
Long-term debt	$	230,486		$	276,572