Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 09, 2017 | Aug. 08, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | RED ROBIN GOURMET BURGERS INC | |
Entity Central Index Key | 1,171,759 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jul. 9, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 12,927,785 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 09, 2017 | Dec. 25, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 20,179 | $ 11,732 |
Accounts receivable, net | 12,929 | 24,166 |
Inventories | 29,547 | 29,899 |
Prepaid expenses and other current assets | 22,859 | 27,049 |
Total current assets | 85,514 | 92,846 |
Property and equipment, net | 651,166 | 656,439 |
Goodwill | 96,617 | 95,935 |
Intangible assets, net | 40,670 | 42,270 |
Other assets, net | 29,209 | 31,055 |
Total assets | 903,176 | 918,545 |
Current liabilities: | ||
Trade accounts payable | 19,784 | 13,740 |
Construction related payables | 14,709 | 12,862 |
Accrued payroll and payroll-related liabilities | 41,261 | 34,703 |
Unearned revenue | 38,873 | 50,199 |
Accrued liabilities and other | 41,912 | 29,505 |
Total current liabilities | 156,539 | 141,009 |
Deferred rent | 73,699 | 72,431 |
Long-term debt | 280,125 | 336,375 |
Long-term portion of capital lease obligations | 10,461 | 10,805 |
Other non-current liabilities | 10,075 | 9,872 |
Total liabilities | 530,899 | 570,492 |
Stockholders’ equity: | ||
Common stock, $0.001 par value: 45,000 shares authorized; 17,851 and 17,851 shares issued; 12,934 and 12,828 shares outstanding | 18 | 18 |
Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Treasury stock 4,917 and 5,023 shares, at cost | (203,330) | (207,720) |
Paid-in capital | 208,391 | 208,022 |
Accumulated other comprehensive loss, net of tax | (4,041) | (5,008) |
Retained earnings | 371,239 | 352,741 |
Total stockholders’ equity | 372,277 | 348,053 |
Total liabilities and stockholders’ equity | $ 903,176 | $ 918,545 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jul. 09, 2017 | Dec. 25, 2016 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 45,000,000 | 45,000,000 |
Common stock, shares issued | 17,851,000 | 17,851,000 |
Common stock, shares outstanding | 12,934,000 | 12,828,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury stock, shares | 4,917,000 | 5,023,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 09, 2017 | Jul. 10, 2016 | Jul. 09, 2017 | Jul. 10, 2016 | |
Revenues: | ||||
Restaurant revenue | $ 312,351 | $ 302,117 | $ 725,802 | $ 698,887 |
Franchise royalties, fees, and other revenues | 3,420 | 3,432 | 8,526 | 8,788 |
Total revenues | 315,771 | 305,549 | 734,328 | 707,675 |
Restaurant operating costs (excluding depreciation and amortization shown separately below): | ||||
Cost of sales | 73,903 | 70,831 | 168,510 | 163,156 |
Labor | 108,422 | 102,847 | 253,941 | 235,831 |
Other operating | 42,712 | 40,275 | 97,392 | 89,983 |
Occupancy | 25,140 | 24,905 | 58,259 | 57,403 |
Depreciation and amortization | 21,173 | 19,159 | 49,217 | 43,110 |
Selling, general, and administrative expenses | 32,094 | 31,019 | 75,369 | 74,407 |
Pre-opening and acquisition costs | 1,377 | 2,238 | 3,232 | 4,610 |
Other charges | 1,584 | 3,860 | 1,584 | 8,585 |
Total costs and expenses | 306,405 | 295,134 | 707,504 | 677,085 |
Income from operations | 9,366 | 10,415 | 26,824 | 30,590 |
Other expense: | ||||
Interest expense, net and other | 2,453 | 1,486 | 5,437 | 3,124 |
Income before income taxes | 6,913 | 8,929 | 21,387 | 27,466 |
Provision (benefit) for income taxes | (18) | 1,377 | 2,889 | 5,689 |
Net income | $ 6,931 | $ 7,552 | $ 18,498 | $ 21,777 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.54 | $ 0.56 | $ 1.44 | $ 1.60 |
Diluted (in dollars per share) | $ 0.53 | $ 0.55 | $ 1.43 | $ 1.59 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 12,896 | 13,511 | 12,872 | 13,582 |
Diluted (in shares) | 13,008 | 13,644 | 12,971 | 13,724 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 09, 2017 | Jul. 10, 2016 | Jul. 09, 2017 | Jul. 10, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 6,931 | $ 7,552 | $ 18,498 | $ 21,777 |
Foreign currency translation adjustment | 755 | (342) | 967 | 1,138 |
Other comprehensive income (loss), net of tax | 755 | (342) | 967 | 1,138 |
Total comprehensive income | $ 7,686 | $ 7,210 | $ 19,465 | $ 22,915 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 09, 2017 | Jul. 10, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 18,498 | $ 21,777 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 49,217 | 43,110 |
Other charges - asset impairment | 1,584 | 4,685 |
Stock-based compensation expense | 2,487 | 3,079 |
Other, net | (139) | (1,619) |
Changes in operating assets and liabilities, net of business acquisition: | ||
Accounts receivable and other current assets | 16,331 | 11,923 |
Trade accounts payable and accrued liabilities | 23,039 | (3,240) |
Unearned revenue | (9,280) | (13,206) |
Other operating assets and liabilities, net | 2,988 | 546 |
Net cash provided by operating activities | 104,725 | 67,055 |
Cash flows from investing activities: | ||
Purchases of property, equipment, and intangible assets | (41,847) | (96,175) |
Acquisition of franchise restaurants, net of cash acquired | 0 | (39,977) |
Proceeds from sales of real estate and property, plant, and equipment and other investing activities | 113 | 1,944 |
Net cash used in investing activities | (41,734) | (134,208) |
Cash flows from financing activities: | ||
Borrowings of long-term debt | 85,250 | 211,500 |
Payments of long-term debt and capital leases | (141,826) | (121,299) |
Purchase of treasury stock | 0 | (20,000) |
Debt issuance costs | (664) | (1,058) |
Proceeds from exercise of stock options and employee stock purchase plan and tax benefit from exercise of stock options | 2,588 | 1,066 |
Net cash (used in) provided by financing activities | (54,652) | 70,209 |
Effect of exchange rate changes on cash | 108 | 181 |
Net change in cash and cash equivalents | 8,447 | 3,237 |
Cash and cash equivalents, beginning of period | 11,732 | 22,705 |
Cash and cash equivalents, end of period | 20,179 | 25,942 |
Supplemental disclosure of cash flow information | ||
Income taxes paid | 2,205 | 2,231 |
Interest paid, net of amounts capitalized | 5,699 | 3,057 |
Change in construction related payables | $ 1,847 | $ (2,481) |
Basis of Presentation and Recen
Basis of Presentation and Recent Accounting Pronouncements | 6 Months Ended |
Jul. 09, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Recent Accounting Pronouncements | 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 July 9, 2017 , the Company owned and operated 472 restaurants located in 39 states and two Canadian provinces. The Company also had 86 franchised full-service restaurants in 15 states as of July 9, 2017 . 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 25, 2016 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 25, 2016 , filed with the SEC on February 21, 2017. The Company’s quarter that ended July 9, 2017 is referred to as second quarter 2017, or the twelve 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 and second quarters of 2017 are referred to as the twenty-eight weeks ended July 9, 2017 . The quarter ended July 10, 2016 is referred to as second quarter 2016, or the twelve weeks ended July 10, 2016 ; the first quarter ended April 17, 2016 is referred to as first quarter 2016, or the sixteen weeks ended April 17, 2016; and together, the first and second quarters of 2016 are referred to as the twenty-eight weeks ended July 10, 2016 . The Company’s fiscal year 2017 comprises fifty-three weeks and will end on December 31, 2017 . Reclassifications Certain amounts presented in prior periods have been reclassified to conform with the current period presentation. For the twelve weeks ended July 10, 2016 , the Company reclassified impairment charges of $3.9 million from Asset impairment to Other charges on the condensed consolidated statement of operations. For the twenty-eight weeks ended July 10, 2016 , the Company reclassified impairment charges of $4.7 million from Asset impairment and litigation contingencies of $3.9 million from Selling, general, and administrative expenses to Other charges on the condensed consolidated statement of operations. Management believes separating these items on the condensed consolidated statement of operations provides more clarity for readers of these financial statements. See Note 4, Other Charges . Recently Issued Accounting Standards In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for leases. 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. Early adoption is permitted. We are evaluating the full impact this guidance will have on our consolidated financial statements but expect this adoption will result in a significant increase in the assets and liabilities on our consolidated balance sheet. In May 2014, the FASB issued guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. 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 guidance is effective for reporting periods beginning after December 15, 2017 with early adoption permitted. The new guidance may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. In March 2016, the FASB issued an Accounting Standards Update (“ASU”) that amends the principal versus agent guidance in the new revenue recognition standard. In April 2016, the FASB issued an ASU to clarify the guidance on accounting for licenses or intellectual property and identifying performance obligations in the new revenue recognition standard. In addition, in May 2016, the FASB issued an ASU that clarifies several narrow-scope improvements and practical expedients for adopting the new revenue guidance. We have determined the new revenue recognition standard will not have an impact on our recognition of food and beverage sales from Company-owned restaurants or our recognition of royalty fees from franchisees. The Company will recognize franchise advertising fund contributions as Franchise royalties, fees, and other revenues, with the related advertising fund expenses recognized as Selling, general, and administrative expenses. The Company will adopt this guidance beginning with its fiscal first quarter 2018 and will apply the guidance retrospectively to each prior period presented. Upon adoption of the standard, the Company does not expect the impact of recognizing initial franchise fees over the franchise agreement period or franchise advertising fund contributions as revenues and expenses to have a material effect on our consolidated financial statements. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jul. 09, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table presents goodwill as of July 9, 2017 and December 25, 2016 (in thousands): Balance, December 25, 2016 $ 95,935 Foreign currency translation adjustment 682 Balance, July 9, 2017 $ 96,617 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 July 9, 2017 and December 25, 2016 (in thousands): July 9, 2017 December 25, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets subject to amortization: Franchise rights $ 55,749 $ (29,160 ) $ 26,589 $ 55,902 $ (27,306 ) $ 28,596 Favorable leases 13,931 (7,789 ) 6,142 13,931 (7,400 ) 6,531 Liquor licenses 10,349 (9,898 ) 451 10,253 (9,857 ) 396 $ 80,029 $ (46,847 ) $ 33,182 $ 80,086 $ (44,563 ) $ 35,523 Indefinite-lived intangible assets: Liquor licenses and other $ 7,488 $ — $ 7,488 $ 6,747 $ — $ 6,747 Intangible assets, net $ 87,517 $ (46,847 ) $ 40,670 $ 86,833 $ (44,563 ) $ 42,270 There was an immaterial impairment to franchise rights during the twenty-eight weeks ended July 9, 2017 related to two of the restaurants impaired in the second quarter of 2017. There was an immaterial impairment to franchise rights during the twenty-eight weeks ended July 10, 2016 related to one of the restaurants impaired in the second quarter of 2016. The estimated aggregate future amortization expense as of July 9, 2017 is as follows (in thousands): Remainder of 2017 $ 2,043 2018 4,257 2019 4,210 2020 3,693 2021 3,265 Thereafter 15,714 $ 33,182 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jul. 09, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 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 Twenty-eight Weeks Ended July 9, 2017 July 10, 2016 July 9, 2017 July 10, 2016 Basic weighted average shares outstanding 12,896 13,511 12,872 13,582 Dilutive effect of stock options and awards 112 133 99 142 Diluted weighted average shares outstanding 13,008 13,644 12,971 13,724 Awards excluded due to anti-dilutive effect on diluted earnings per share 169 248 317 214 |
Other Charges
Other Charges | 6 Months Ended |
Jul. 09, 2017 | |
Other Income and Expenses [Abstract] | |
Other Charges | Other Charges Other charges consist of the following (in thousands): Twelve Weeks Ended Twenty-eight Weeks Ended July 9, 2017 July 10, 2016 July 9, 2017 July 10, 2016 Asset impairment $ 1,584 $ 3,860 $ 1,584 $ 4,685 Litigation contingencies — — — 3,900 Other charges $ 1,584 $ 3,860 $ 1,584 $ 8,585 During the second quarter of 2017, the Company determined that five Company-owned restaurants, including three restaurants nearing the end of their lease, were impaired and recognized a non-cash impairment charge of $1.6 million . During the second quarter of 2016, the Company determined that six Company-owned restaurants were impaired and recognized a non-cash impairment charge of $3.9 million . The Company recognized the impairment charges resulting from the continuing and projected future results of these restaurants, primarily through projected cash flows. In the first quarter of 2016, the Company relocated one restaurant and recognized a $0.8 million asset impairment charge due to the relocation. In the first quarter of 2016, the Company recorded $3.9 million of litigation contingencies for employment-related claims. |
Borrowings
Borrowings | 6 Months Ended |
Jul. 09, 2017 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings Borrowings as of July 9, 2017 and December 25, 2016 are summarized below (in thousands): July 9, 2017 December 25, 2016 Revolving credit facility and other long-term debt $ 280,125 $ 336,375 Capital lease obligations 11,138 11,463 Total debt 291,263 347,838 Less: Current portion (677 ) (658 ) Long-term debt $ 290,586 $ 347,180 On June 30, 2016 , the Company replaced its existing credit facility (“Previous Credit Facility”) with a new credit facility (the “New Credit Facility”). The New Credit Facility 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, the Company entered into the first amendment (the “Amendment”) to the New Credit Facility. The Amendment increases the lease adjusted leverage ratio to 5.25 x through October 1, 2017 before stepping down to 5.0 x through July 15, 2018 and returning to 4.75 x thereafter. The Amendment also provides for additional pricing tiers that increase LIBOR spread rates and commitment fees to the extent the Company’s lease adjusted leverage ratio exceeds 4.75 x, in addition to revising terms for permitted acquisitions and investments under the New Credit Facility. The Amendment is effective through October 7, 2018 and is cancelable at the Company’s discretion. The New Credit Facility matures on June 30, 2021 . As of July 9, 2017 , the Company had outstanding borrowings under the New Credit Facility of $279.3 million , in addition to amounts issued under letters of credit of $7.6 million , which reduced the amount available under the facility but were not recorded as debt. As of December 25, 2016 , the Company had outstanding borrowings under the New Credit Facility of $335.5 million , in addition to amounts issued under letters of credit of $8.8 million . Loan origination costs associated with the New Credit Facility are included as deferred costs in Other assets, net in the accompanying condensed consolidated balance sheets. In the first quarter of 2017, the Company recorded $0.7 million in debt issuance costs related to the Amendment to the New Credit Facility. Unamortized debt issuance costs were $2.7 million and $2.3 million as of July 9, 2017 and December 25, 2016 . |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jul. 09, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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 July 9, 2017 and December 25, 2016 (in thousands): July 9, 2017 Level 1 Level 2 Level 3 Assets: Investments in rabbi trust $ 9,157 $ 9,157 $ — $ — Total assets measured at fair value $ 9,157 $ 9,157 $ — $ — December 25, 2016 Level 1 Level 2 Level 3 Assets: Investments in rabbi trust $ 9,165 $ 9,165 $ — $ — Total assets measured at fair value $ 9,165 $ 9,165 $ — $ — 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 July 9, 2017 and December 25, 2016 , the Company measured non-financial assets for impairment using continuing and projected future cash flows, as discussed in Note 4, 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 the New Credit Facility and capital leases are carried at historical cost in the accompanying condensed consolidated balance sheets. For disclosure purposes, the Company estimated the fair value of the New Credit Facility and capital lease obligations using discounted cash flow analysis based on market rates obtained from independent third parties for similar types of debt. Both the New Credit Facility and the Company’s capital lease obligations are considered to be level 2 instruments. The following table presents the carrying value and estimated fair value of the Company’s New Credit Facility and capital lease obligations as of July 9, 2017 and December 25, 2016 (in thousands): July 9, 2017 December 25, 2016 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Credit facility $ 279,250 $ 279,020 $ 335,500 $ 335,611 Capital lease obligations 11,138 11,806 11,463 12,917 Total $ 290,388 $ 290,826 $ 346,963 $ 348,528 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 09, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 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 financial statements. As previously disclosed, law enforcement officials have made the Company aware that cyber criminals are actively targeting restaurant companies, including Red Robin. The Company is continuing to investigate whether Red Robin guests have been impacted. The Company’s practice, which has been published in the Privacy Policy on Red Robin’s website, is to share information about security incidents impacting Red Robin guests only when the Company has complete and accurate information. |
Basis of Presentation and Rec14
Basis of Presentation and Recent Accounting Pronouncements (Policies) | 6 Months Ended |
Jul. 09, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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 25, 2016 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 25, 2016 , filed with the SEC on February 21, 2017. The Company’s quarter that ended July 9, 2017 is referred to as second quarter 2017, or the twelve 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 and second quarters of 2017 are referred to as the twenty-eight weeks ended July 9, 2017 . The quarter ended July 10, 2016 is referred to as second quarter 2016, or the twelve weeks ended July 10, 2016 ; the first quarter ended April 17, 2016 is referred to as first quarter 2016, or the sixteen weeks ended April 17, 2016; and together, the first and second quarters of 2016 are referred to as the twenty-eight weeks ended July 10, 2016 . The Company’s fiscal year 2017 comprises fifty-three weeks and will end on December 31, 2017 . |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance on accounting for leases. 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. Early adoption is permitted. We are evaluating the full impact this guidance will have on our consolidated financial statements but expect this adoption will result in a significant increase in the assets and liabilities on our consolidated balance sheet. In May 2014, the FASB issued guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. 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 guidance is effective for reporting periods beginning after December 15, 2017 with early adoption permitted. The new guidance may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. In March 2016, the FASB issued an Accounting Standards Update (“ASU”) that amends the principal versus agent guidance in the new revenue recognition standard. In April 2016, the FASB issued an ASU to clarify the guidance on accounting for licenses or intellectual property and identifying performance obligations in the new revenue recognition standard. In addition, in May 2016, the FASB issued an ASU that clarifies several narrow-scope improvements and practical expedients for adopting the new revenue guidance. We have determined the new revenue recognition standard will not have an impact on our recognition of food and beverage sales from Company-owned restaurants or our recognition of royalty fees from franchisees. The Company will recognize franchise advertising fund contributions as Franchise royalties, fees, and other revenues, with the related advertising fund expenses recognized as Selling, general, and administrative expenses. The Company will adopt this guidance beginning with its fiscal first quarter 2018 and will apply the guidance retrospectively to each prior period presented. Upon adoption of the standard, the Company does not expect the impact of recognizing initial franchise fees over the franchise agreement period or franchise advertising fund contributions as revenues and expenses to have a material effect on our consolidated financial statements. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jul. 09, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The following table presents goodwill as of July 9, 2017 and December 25, 2016 (in thousands): Balance, December 25, 2016 $ 95,935 Foreign currency translation adjustment 682 Balance, July 9, 2017 $ 96,617 |
Schedule of intangible assets subject to amortization | The following table presents intangible assets as of July 9, 2017 and December 25, 2016 (in thousands): July 9, 2017 December 25, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets subject to amortization: Franchise rights $ 55,749 $ (29,160 ) $ 26,589 $ 55,902 $ (27,306 ) $ 28,596 Favorable leases 13,931 (7,789 ) 6,142 13,931 (7,400 ) 6,531 Liquor licenses 10,349 (9,898 ) 451 10,253 (9,857 ) 396 $ 80,029 $ (46,847 ) $ 33,182 $ 80,086 $ (44,563 ) $ 35,523 Indefinite-lived intangible assets: Liquor licenses and other $ 7,488 $ — $ 7,488 $ 6,747 $ — $ 6,747 Intangible assets, net $ 87,517 $ (46,847 ) $ 40,670 $ 86,833 $ (44,563 ) $ 42,270 |
Schedule of intangible assets not subject to amortization | The following table presents intangible assets as of July 9, 2017 and December 25, 2016 (in thousands): July 9, 2017 December 25, 2016 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Intangible assets subject to amortization: Franchise rights $ 55,749 $ (29,160 ) $ 26,589 $ 55,902 $ (27,306 ) $ 28,596 Favorable leases 13,931 (7,789 ) 6,142 13,931 (7,400 ) 6,531 Liquor licenses 10,349 (9,898 ) 451 10,253 (9,857 ) 396 $ 80,029 $ (46,847 ) $ 33,182 $ 80,086 $ (44,563 ) $ 35,523 Indefinite-lived intangible assets: Liquor licenses and other $ 7,488 $ — $ 7,488 $ 6,747 $ — $ 6,747 Intangible assets, net $ 87,517 $ (46,847 ) $ 40,670 $ 86,833 $ (44,563 ) $ 42,270 |
Schedule of estimated aggregate future amortization expense | The estimated aggregate future amortization expense as of July 9, 2017 is as follows (in thousands): Remainder of 2017 $ 2,043 2018 4,257 2019 4,210 2020 3,693 2021 3,265 Thereafter 15,714 $ 33,182 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jul. 09, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of computations for basic and diluted earnings per share | Basic weighted average shares outstanding is reconciled to diluted weighted average shares outstanding as follows (in thousands): Twelve Weeks Ended Twenty-eight Weeks Ended July 9, 2017 July 10, 2016 July 9, 2017 July 10, 2016 Basic weighted average shares outstanding 12,896 13,511 12,872 13,582 Dilutive effect of stock options and awards 112 133 99 142 Diluted weighted average shares outstanding 13,008 13,644 12,971 13,724 Awards excluded due to anti-dilutive effect on diluted earnings per share 169 248 317 214 |
Other Charges (Tables)
Other Charges (Tables) | 6 Months Ended |
Jul. 09, 2017 | |
Other Income and Expenses [Abstract] | |
Summary of other charges | Other charges consist of the following (in thousands): Twelve Weeks Ended Twenty-eight Weeks Ended July 9, 2017 July 10, 2016 July 9, 2017 July 10, 2016 Asset impairment $ 1,584 $ 3,860 $ 1,584 $ 4,685 Litigation contingencies — — — 3,900 Other charges $ 1,584 $ 3,860 $ 1,584 $ 8,585 |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended |
Jul. 09, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of borrowings | Borrowings as of July 9, 2017 and December 25, 2016 are summarized below (in thousands): July 9, 2017 December 25, 2016 Revolving credit facility and other long-term debt $ 280,125 $ 336,375 Capital lease obligations 11,138 11,463 Total debt 291,263 347,838 Less: Current portion (677 ) (658 ) Long-term debt $ 290,586 $ 347,180 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 09, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value assets measured on recurring basis | The following tables present the Company’s assets measured at fair value on a recurring basis as of July 9, 2017 and December 25, 2016 (in thousands): July 9, 2017 Level 1 Level 2 Level 3 Assets: Investments in rabbi trust $ 9,157 $ 9,157 $ — $ — Total assets measured at fair value $ 9,157 $ 9,157 $ — $ — December 25, 2016 Level 1 Level 2 Level 3 Assets: Investments in rabbi trust $ 9,165 $ 9,165 $ — $ — Total assets measured at fair value $ 9,165 $ 9,165 $ — $ — |
Summary of fair value of debt | The following table presents the carrying value and estimated fair value of the Company’s New Credit Facility and capital lease obligations as of July 9, 2017 and December 25, 2016 (in thousands): July 9, 2017 December 25, 2016 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Credit facility $ 279,250 $ 279,020 $ 335,500 $ 335,611 Capital lease obligations 11,138 11,806 11,463 12,917 Total $ 290,388 $ 290,826 $ 346,963 $ 348,528 |
Basis of Presentation and Rec20
Basis of Presentation and Recent Accounting Pronouncements - Additional Information (Details) $ in Thousands | 3 Months Ended | 4 Months Ended | 6 Months Ended | ||
Jul. 09, 2017USD ($)stateprovincerestaurant | Jul. 10, 2016USD ($) | Apr. 17, 2016USD ($) | Jul. 09, 2017USD ($)stateprovincerestaurantsegment | Jul. 10, 2016USD ($) | |
Franchisor Disclosure [Line Items] | |||||
Number of operating segments | segment | 1 | ||||
Number of reportable segments | segment | 1 | ||||
Asset impairment | $ 1,584 | $ 3,860 | $ 800 | $ 1,584 | $ 4,685 |
Litigation contingencies | $ 0 | 0 | $ 0 | 3,900 | |
Company-owned operated restaurants | |||||
Franchisor Disclosure [Line Items] | |||||
Number of restaurants | restaurant | 472 | 472 | |||
Number of states in which restaurants are located | state | 39 | 39 | |||
Number of Canadian provinces in which restaurants are located | province | 2 | 2 | |||
Franchised restaurants | |||||
Franchisor Disclosure [Line Items] | |||||
Number of restaurants | restaurant | 86 | 86 | |||
Number of states in which restaurants are located | state | 15 | 15 | |||
Restatement Adjustment | |||||
Franchisor Disclosure [Line Items] | |||||
Asset impairment | (3,900) | ||||
Selling, General and Administrative Expenses | Restatement Adjustment | |||||
Franchisor Disclosure [Line Items] | |||||
Asset impairment | (4,700) | ||||
Litigation contingencies | (3,900) | ||||
Other Charges | Restatement Adjustment | |||||
Franchisor Disclosure [Line Items] | |||||
Asset impairment | $ 3,900 | 4,700 | |||
Litigation contingencies | $ 3,900 |
Goodwill and Intangible Asset21
Goodwill and Intangible Assets - Summary of Goodwill Activity (Details) $ in Thousands | 6 Months Ended |
Jul. 09, 2017USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 95,935 |
Foreign currency translation adjustment | 682 |
Ending balance | $ 96,617 |
Goodwill and Intangible Asset22
Goodwill and Intangible Assets - Summary of Goodwill and Intangible Assets (Details) | 3 Months Ended | 6 Months Ended | |||
Jul. 09, 2017USD ($)restaurant | Jul. 10, 2016restaurant | Jul. 09, 2017USD ($) | Jul. 10, 2016USD ($) | Dec. 25, 2016USD ($) | |
Schedule of Intangible Assets [Line Items] | |||||
Impairment to goodwill | $ 0 | $ 0 | |||
Intangible Assets | |||||
Gross Carrying Amount | $ 80,029,000 | 80,029,000 | $ 80,086,000 | ||
Accumulated Amortization | (46,847,000) | (46,847,000) | (44,563,000) | ||
Net Carrying Amount | 33,182,000 | 33,182,000 | 35,523,000 | ||
Intangible assets, Gross Carrying Amount | 87,517,000 | 87,517,000 | 86,833,000 | ||
Intangible assets, Net Carrying Amount | $ 40,670,000 | 40,670,000 | 42,270,000 | ||
Number of restaurants impaired | restaurant | 5 | 6 | |||
Liquor licenses and other | |||||
Intangible Assets | |||||
Gross Carrying Amount, Indefinite-lived intangible assets | $ 7,488,000 | 7,488,000 | 6,747,000 | ||
Franchise rights | |||||
Intangible Assets | |||||
Gross Carrying Amount | 55,749,000 | 55,749,000 | 55,902,000 | ||
Accumulated Amortization | (29,160,000) | (29,160,000) | (27,306,000) | ||
Net Carrying Amount | $ 26,589,000 | 26,589,000 | 28,596,000 | ||
Impairment to intangible assets | 0 | $ 0 | |||
Number of restaurants impaired | restaurant | 2 | 1 | |||
Favorable leases | |||||
Intangible Assets | |||||
Gross Carrying Amount | $ 13,931,000 | 13,931,000 | 13,931,000 | ||
Accumulated Amortization | (7,789,000) | (7,789,000) | (7,400,000) | ||
Net Carrying Amount | 6,142,000 | 6,142,000 | 6,531,000 | ||
Liquor licenses and other | |||||
Intangible Assets | |||||
Gross Carrying Amount | 10,349,000 | 10,349,000 | 10,253,000 | ||
Accumulated Amortization | (9,898,000) | (9,898,000) | (9,857,000) | ||
Net Carrying Amount | $ 451,000 | $ 451,000 | $ 396,000 |
Goodwill and Intangible Asset23
Goodwill and Intangible Assets - Summary of Future Amortization (Details) - USD ($) $ in Thousands | Jul. 09, 2017 | Dec. 25, 2016 |
Estimated aggregate future amortization expense | ||
Remainder of 2017 | $ 2,043 | |
2,018 | 4,257 | |
2,019 | 4,210 | |
2,020 | 3,693 | |
2,021 | 3,265 | |
Thereafter | 15,714 | |
Net Carrying Amount | $ 33,182 | $ 35,523 |
Earnings Per Share - Summary of
Earnings Per Share - Summary of Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 09, 2017 | Jul. 10, 2016 | Jul. 09, 2017 | Jul. 10, 2016 | |
Earnings Per Share Reconciliation [Abstract] | ||||
Basic weighted average shares outstanding (in shares) | 12,896 | 13,511 | 12,872 | 13,582 |
Dilutive effect of stock options and awards (in shares) | 112 | 133 | 99 | 142 |
Diluted weighted average shares outstanding (in shares) | 13,008 | 13,644 | 12,971 | 13,724 |
Awards excluded due to anti-dilutive effect on diluted earnings per share (in shares) | 169 | 248 | 317 | 214 |
Other Charges - Summary of Othe
Other Charges - Summary of Other Charges (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 6 Months Ended | ||
Jul. 09, 2017 | Jul. 10, 2016 | Apr. 17, 2016 | Jul. 09, 2017 | Jul. 10, 2016 | |
Other Income and Expenses [Abstract] | |||||
Asset impairment | $ 1,584 | $ 3,860 | $ 800 | $ 1,584 | $ 4,685 |
Litigation contingencies | 0 | 0 | 0 | 3,900 | |
Other charges | $ 1,584 | $ 3,860 | $ 1,584 | $ 8,585 |
Other Charges - Additional Info
Other Charges - Additional Information (Details) $ in Thousands | 3 Months Ended | 4 Months Ended | 6 Months Ended | ||
Jul. 09, 2017USD ($)restaurant | Jul. 10, 2016USD ($)restaurant | Apr. 17, 2016USD ($)restaurant | Jul. 09, 2017USD ($) | Jul. 10, 2016USD ($) | |
Loss Contingencies [Line Items] | |||||
Number of restaurants impaired | restaurant | 5 | 6 | |||
Number of end of lease restaurants impaired | restaurant | 3 | ||||
Asset impairment | $ | $ 1,584 | $ 3,860 | $ 800 | $ 1,584 | $ 4,685 |
Number of restaurants relocated | restaurant | 1 | ||||
Litigation contingencies | $ | $ 0 | $ 0 | $ 0 | $ 3,900 | |
Compensation-related Claims | |||||
Loss Contingencies [Line Items] | |||||
Litigation contingencies | $ | $ 3,900 |
Borrowings - Schedule of Borrow
Borrowings - Schedule of Borrowings (Details) - USD ($) $ in Thousands | Jul. 09, 2017 | Dec. 25, 2016 |
Debt Instrument [Line Items] | ||
Total debt | $ 291,263 | $ 347,838 |
Less: Current portion | (677) | (658) |
Long-term debt | 290,586 | 347,180 |
Revolving line of credit | Credit Facility | ||
Debt Instrument [Line Items] | ||
Total debt | 280,125 | 336,375 |
Capital lease obligations | ||
Debt Instrument [Line Items] | ||
Total debt | $ 11,138 | $ 11,463 |
Borrowings - Additional Informa
Borrowings - Additional Information (Details) | 4 Months Ended | 6 Months Ended | ||||
Apr. 16, 2017USD ($) | Jul. 09, 2017USD ($) | Jul. 10, 2016USD ($) | Apr. 13, 2017 | Dec. 25, 2016USD ($) | Jun. 30, 2016USD ($) | |
Borrowings | ||||||
Debt issuance costs | $ 664,000 | $ 1,058,000 | ||||
Loan origination costs | 2,700,000 | $ 2,300,000 | ||||
New Credit Facility | Revolving line of credit | ||||||
Borrowings | ||||||
Maximum borrowing capacity | $ 400,000,000 | |||||
Additional pricing tiers, lease adjusted leverage ratio threshold | 4.75 | |||||
Debt issuance costs | $ 700,000 | |||||
New Credit Facility | Revolving line of credit | Through October 1, 2017 | ||||||
Borrowings | ||||||
Covenant compliance, lease adjusted leverage ratio | 5.25 | |||||
New Credit Facility | Revolving line of credit | October 2, 2017 through July 15, 2018 | ||||||
Borrowings | ||||||
Covenant compliance, lease adjusted leverage ratio | 5 | |||||
New Credit Facility | Revolving line of credit | July 16, 2018 and Thereafter | ||||||
Borrowings | ||||||
Covenant compliance, lease adjusted leverage ratio | 4.75 | |||||
New Credit Facility | Letter of credit | Line of credit | ||||||
Borrowings | ||||||
Maximum borrowing capacity | 25,000,000 | |||||
New Credit Facility | Swingline loans | Line of credit | ||||||
Borrowings | ||||||
Maximum borrowing capacity | $ 15,000,000 | |||||
Credit Facility | Revolving line of credit | ||||||
Borrowings | ||||||
Amounts outstanding | 335,500,000 | |||||
Credit Facility | Letter of credit | ||||||
Borrowings | ||||||
Amounts outstanding | $ 8,800,000 | |||||
Credit Facility | Line of credit | ||||||
Borrowings | ||||||
Amounts outstanding | 279,300,000 | |||||
Credit Facility | Letter of credit | Line of credit | ||||||
Borrowings | ||||||
Amounts outstanding | $ 7,600,000 |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Assets at Fair Value on a Recurring Basis (Details) - Recurring - USD ($) $ in Thousands | Jul. 09, 2017 | Dec. 25, 2016 |
Assets: | ||
Investments in rabbi trust | $ 9,157 | $ 9,165 |
Total assets measured at fair value | 9,157 | 9,165 |
Level 1 | ||
Assets: | ||
Investments in rabbi trust | 9,157 | 9,165 |
Total assets measured at fair value | 9,157 | 9,165 |
Level 2 | ||
Assets: | ||
Investments in rabbi trust | 0 | 0 |
Total assets measured at fair value | 0 | 0 |
Level 3 | ||
Assets: | ||
Investments in rabbi trust | 0 | 0 |
Total assets measured at fair value | $ 0 | $ 0 |
Fair Value Measurements - Sum30
Fair Value Measurements - Summary of Carrying Value and Estimated Fair Value of Liabilities (Details) - USD ($) $ in Thousands | Jul. 09, 2017 | Dec. 25, 2016 |
Carrying value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Credit facility | $ 279,250 | $ 335,500 |
Capital lease obligations | 11,138 | 11,463 |
Total | 290,388 | 346,963 |
Estimated Fair Value | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Credit facility | 279,020 | 335,611 |
Capital lease obligations | 11,806 | 12,917 |
Total | $ 290,826 | $ 348,528 |