RED ROBIN GOURMET BURGERS, INC. 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 2022 and 2021 refer to the sixteen weeks endedApril 17, 2022 andApril 18, 2021 , unless otherwise indicated. Overview Description of BusinessRed Robin Gourmet Burgers, Inc. , aDelaware corporation, together with its subsidiaries ("Red Robin ," "we," "us," "our," or the "Company"), primarily operates, franchises, and develops full-service restaurants with 527 locations inNorth America . As ofApril 17, 2022 , the Company owned 426 restaurants located in 38 states. The Company also had 101 franchised full-service restaurants in 16 states and one Canadian province. The Company operates its business as one operating and one reportable segment.
Financial and Operational Highlights
The following summarizes the operational and financial highlights during the
sixteen weeks ended
Restaurant Revenue, compared to the same period in the prior year, is presented in the table below:
(millions)
Restaurant Revenue for the sixteen weeks ended
61.5
Increase/(decrease) from non-comparable restaurants
0.4
Total increase/(decrease)
61.9
Restaurant Revenue for the sixteen weeks ended
(1) Comparable restaurant revenue represents revenue from Company-owned restaurants that have operated five full quarters as of the end of the period
presented.
Restaurant revenues and operating costs as a percentage of restaurant revenue for the period are detailed in the table below:
Sixteen Weeks
Ended
April 17, 2022 April 18, 2021 Increase/(Decrease)
Restaurant revenue (millions) $ 380.6 $ 318.7 19.4 %
Restaurant operating costs: (Percentage of Restaurant Revenue) (Basis Points)
Cost of sales 23.9 % 21.7 % 220
Labor 36.3 35.0 130
Other operating 17.8 18.1 (30)
Occupancy 8.0 9.4 (140)
Total 86.0 % 84.3 170
Certain percentage and basis point amounts in the table above do not total due to rounding as well as restaurant operating costs being expressed as a percentage of restaurant revenue and not total revenues.
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The following table summarizes Net Loss, loss per diluted share, and adjusted
loss per diluted share for the sixteen weeks ended April 17, 2022 and April 18,
2021 ;
Sixteen Weeks Ended
April 17, 2022 April 18, 2021 Net loss as reported $
(3,105)
Loss per share - diluted: Net (loss) income as reported $
(0.20) $ (0.56) Change in accounting estimate, gift card breakage revenue, net of commissions(1)
(0.33) -
Restaurant asset impairment 0.13 0.08
Litigation contingencies 0.11 0.07
Write-off of unamortized debt issuance costs(2) 0.11 -
Restaurant closure costs 0.06 0.16
Other financing costs(3) 0.02 -
Board and stockholder matter costs - 0.01
COVID-19 related charges 0.01 0.03
Income tax expense (0.03) (0.09)
Adjusted loss per share - diluted $ (0.12) $ (0.30)
Weighted average shares outstanding Basic 15,748 15,579 Diluted 15,748 15,579 (1) During the sixteen weeks endedApril 17, 2022 , the Company re-evaluated the estimated redemption pattern related to gift cards. See Footnote 1. Basis of Presentation and Recent Accounting Pronouncements included in Part I. Financial Information in this quarterly report on form 10-Q. (2) Write-off of unamortized debt issuance costs related to the remaining unamortized debt issuance costs related to our legacy credit agreement with the completion of the refinancing of our Credit Agreement in the first quarter of fiscal year 2022.
(3) Other financing costs includes legal and other charges related to the refinancing of our Credit Facility in the first quarter of 2022.
We believe the non-GAAP measure of adjusted loss per diluted share gives the reader additional insight into the ongoing operational results of the Company, and it is intended to supplement the presentation of the Company's financial results in accordance with GAAP. Adjusted loss per diluted share excludes the effects of changes in accounting estimates, asset impairment, litigation contingencies, the write-off of unamortized debt issuance costs, restaurant closure costs, other financing costs, COVID-19 related costs, and related income tax effects. Other companies may define adjusted net loss per diluted share differently, and as a result our measure of adjusted loss per share may not be directly comparable to those of other companies. Adjusted loss per share should be considered in addition to, and not as a substitute for, net loss as reported in accordance withU.S. GAAP as a measure of performance.
Restaurant Data
The following table details restaurant unit data for our Company-owned and franchised locations for the periods indicated:
Sixteen Weeks Ended
April 17, 2022 April 18, 2021
Company-owned:
Beginning of period 430 443
Closed during the period (4) (3)
End of period 426 440
Franchised:
Beginning of period 101 103
End of period 101 103
Total number of restaurants 527 543
14-------------------------------------------------------------------------------- Table of Contents The following table presents total Company-owned and franchised restaurants by state or province as ofApril 17, 2022 : Company-Owned Restaurants Franchised Restaurants State: Arkansas 2 2 Alaska - 3 Alabama 4 - Arizona 17 1 California 58 - Colorado 22 - Connecticut - 3 Delaware - 5 Florida 19 - Georgia 6 - Iowa 5 - Idaho 8 - Illinois 21 - Indiana 13 - Kansas - 4 Kentucky 4 - Louisiana 2 - Massachusetts 4 2 Maryland 12 - Maine 2 - Michigan - 20 Minnesota 4 - Missouri 8 3 Montana - 2 North Carolina 17 - Nebraska 4 - New Hampshire 3 - New Jersey 12 1 New Mexico 3 - Nevada 6 - New York 14 - Ohio 18 2 Oklahoma 5 - Oregon 15 5 Pennsylvania 11 21 Rhode Island 1 - South Carolina 4 - South Dakota 1 - Tennessee 11 - Texas 20 9 Utah 1 6 Virginia 20 - Washington 38 - Wisconsin 11 - Province: British Columbia - 12 Total 426 101 15
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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 2021
annual financial statements, 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.
Sixteen Weeks Ended
April 17, 2022 April 18, 2021
Revenues:
Restaurant revenue 96.2 % 97.7 %
Franchise and other revenues 3.8 2.3
Total revenues 100.0 100.0
Costs and expenses:
Restaurant operating costs (exclusive of depreciation and
amortization shown separately below):
Cost of sales 23.9 21.7
Labor 36.3 35.0
Other operating 17.8 18.1
Occupancy 8.0 9.4
Total restaurant operating costs 86.0 84.3
Depreciation and amortization 6.0 7.9
Selling, general and administrative 8.7 9.4
Other charges, net 1.3 1.7
Income (Loss) from operations 1.1 (1.3)
Interest expense, net and other 1.9 1.3
Loss before income taxes (0.8) (2.7)
Income tax benefit - -
Net loss (0.8) % (2.7) %
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Revenues
Sixteen Weeks Ended
Percent
(Revenues in thousands) April 17, 2022 April 18, 2021 Change
Restaurant revenue $ 380,612 $ 318,677 19.4 %
Franchise royalties, fees and other revenue 14,938 7,598 96.6 %
Total revenues $ 395,550 $ 326,275 21.2 %
Average weekly net sales volumes in Company-owned
restaurants $ 55,743 $ 46,515 19.8 %
Total operating weeks 6,828 6,851 (0.3) %
Net sales per square foot $ 142 $ 119 19.7 %
Restaurant revenue for the sixteen weeks ended April 17, 2022 , which comprises
primarily food and beverage sales, increased $61.9 million , or 19.4%, as
compared to the first quarter of 2021. The increase was due to a $61.5 million ,
or 19.7%, increase in comparable restaurant revenue, and a $0.4 million increase
at non-comparable restaurants, including the impact of restaurant closures. The
comparable restaurant revenue increase was driven by a 12.8% increase in average
Guest check, and a 6.9% increase in Guest count. The increase in average Guest
check resulted from a 6.0% increase in menu mix, a 5.4% increase in pricing, and
a 1.4% decrease in discounts. The increase in menu mix was primarily driven by
our limited time menu offerings and higher dine-in sales volumes. Off-premises
sales decreased 12.9% and comprised 30.5% of total food and beverage sales
during the first quarter of 2022, as compared to the same period in 2021.
Average weekly net sales volumes represent the total restaurant revenue for all
Company-owned Red Robin restaurants for each time period presented, divided by
the number of operating weeks in the period. Comparable restaurant revenues are
comprised of Company-owned restaurants that have operated five full quarters as
of the end of the period presented. The Company-owned restaurants that were
temporarily closed due to the COVID-19 pandemic were not included in the
comparable base for the sixteen weeks ended April 17, 2022 or April 18, 2021 .
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, the average
square footage of our restaurants, as well as the impact of changing capacity
limitations in response to COVID-19 levels in a given locality. Net sales per
square foot represents the total restaurant revenue for Company-owned
restaurants included in the comparable base divided by the total square feet of
Company-owned restaurants included in the comparable base.
Franchise and other revenue increased $7.3 million for the sixteen weeks ended
April 17, 2022 compared to the sixteen weeks ended April 18, 2021 , primarily due
to the re-evaluation of the estimated redemption pattern related to gift cards
resulting in a $5.2 million adjustment to gift card breakage from aligning our
estimate to the updated estimated redemption pattern. Our franchisees reported a
comparable restaurant revenue increase of 18.7% for the sixteen weeks ended
April 17, 2022 compared to the same period in 2021.
Cost of Sales
Sixteen Weeks Ended
(In thousands, except percentages)
$ 90,941 $ 69,166 31.5 % As a percent of restaurant revenue 23.9 % 21.7 % 2.2 %
Cost of sales, which comprises of food and beverage costs, is variable and
generally fluctuates with sales volume. Cost of sales as a percentage of
restaurant revenue increased 220 basis points for the sixteen weeks ended
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Labor
Sixteen Weeks Ended
(In thousands, except percentages) April 17 ,
2022
$ 138,108 $ 111,659 23.7 % As a percent of restaurant revenue 36.3 % 35.0 % 1.3 % Labor costs include restaurant-level hourly wages and management salaries as well as related taxes and benefits. For the sixteen weeks endedApril 17, 2022 , labor as a percentage of restaurant revenue increased 130 basis points compared to the same period in 2021. The increase was primarily driven by higher labor inflation and staffing costs, partially offset by sales leverage.
Other Operating
Sixteen Weeks Ended
(In thousands, except percentages)
$ 67,864 $ 57,712 17.6 % As a percent of restaurant revenue 17.8 % 18.1 % (0.3) % Other operating costs include costs such as equipment repairs and maintenance costs, restaurant supplies, utilities, restaurant technology, and other miscellaneous costs. For the sixteen weeks endedApril 17, 2022 , other operating costs as a percentage of restaurant revenue decreased 30 basis points as compared to the same period in 2021. The decrease was primarily driven by lower supply costs driven by lower off-premises sales, and sales leverage, partially offset by increased maintenance costs due to outsourcing.
Occupancy
Sixteen Weeks Ended
(In thousands, except percentages)
$ 30,599 $ 30,100 1.7 % As a percent of restaurant revenue 8.0 % 9.4 % (1.4) % Occupancy costs include fixed rents, property taxes, common area maintenance charges, general liability insurance, contingent rents, and other property costs. For the sixteen weeks endedApril 17, 2022 , occupancy costs as a percentage of restaurant revenue decreased 140 basis points compared to the same period in 2021 primarily driven by sales leverage.
Our fixed rents for the sixteen weeks ended
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Depreciation and Amortization
Sixteen Weeks Ended
(In thousands, except percentages)
$ 23,919 $ 25,888 (7.6) % As a percent of total revenues 6.0 % 7.9 % (1.9) % 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 sixteen weeks endedApril 17, 2022 , depreciation and amortization expense as a percentage of revenue decreased 190 basis points over the same period in 2021 primarily due to net closed Company-owned restaurants, and sales leverage.
Selling, General, and Administrative
Sixteen Weeks Ended
(In thousands, except percentages)
12.3 %
As a percent of total revenues 8.7 % 9.4 % (0.7) %
Selling, general, and administrative costs include all corporate and administrative functions. Components of this category include marketing and advertising costs; restaurant support center, regional, and franchise support salaries and benefits; travel; professional and consulting fees; corporate information systems; legal expenses; office rent; training; and board of directors expenses.
General, and administrative costs in the sixteen weeks endedApril 17, 2022 increased$2.8 million , or 12.3%, as compared to the same period in 2021. The increase was primarily driven by increased stock based compensation expense, merit increases, and increased manager-in-training costs. Selling costs in the sixteen weeks endedApril 17, 2022 increased$1.0 million , or 11.8%, as compared to the same period in 2021. The increase was primarily driven by increased marketing spend.
Pre-opening Costs
Sixteen Weeks Ended
(In thousands, except percentages) April 17 ,
2022
$ 62 $ - *
As a percent of total revenues - % - % - %
* Percentage increases and decreases over 100 percent were not considered meaningful
Pre-opening costs, which are expensed as incurred, comprise the costs related to preparing restaurants to introduce Donatos® and other initiatives, as well as direct costs, including labor, occupancy, training, and marketing, incurred related to opening new restaurants and hiring the initial work force. Our pre-opening costs fluctuate from period to period, depending upon, but not limited to, the number of restaurants where Donatos® has been introduced, 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.
We incurred pre-opening costs during the sixteen weeks ended
Interest Expense, Net and Other
Interest expense, net and other was$7.4 million for the sixteen weeks endedApril 17, 2022 , an increase of$3.1 million , or 71.2%, compared to the same period in 2021. The increase was primarily related to a higher weighted average interest rate for the quarter as well as the write off of approximately$1.7 million of deferred financing charges related to the Company's prior credit facility upon the execution of the Credit Agreement onMarch 4, 2022 . Our weighted average interest rate was 8.2% for the sixteen weeks endedApril 17, 2022 as compared to 6.3% for the same period in 2021. 19
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Income Tax Provision
The effective tax rate for the sixteen weeks endedApril 17, 2022 was a 2.0% expense, compared to a 0.6% expense for the sixteen weeks endedApril 18, 2021 . The Company had outstanding federal and state refund claims of approximately$15.8 million as ofDecember 26, 2021 . During the sixteen weeks endedApril 17, 2022 , the Company received$2.5 million of those refund claims. OnMay 24, 2022 , the Company received an additional$12.7 million , and expects to receive the remaining$0.6 million during 2022, due to ongoing processing delays at theIRS and state authorities.
Liquidity and Capital Resources
Cash and cash equivalents, and restricted cash increased$19.2 million to$41.9 million as ofApril 17, 2022 , from$22.8 million at the beginning of the fiscal year. As the Company continues to recover from the COVID-19 pandemic and generates operating cash flow, the Company is using available cash flow from operations to pay down debt, maintain existing restaurants and infrastructure, and execute on its long-term strategic initiatives. As ofApril 17, 2022 , the Company had approximately$55.8 million in liquidity, including cash on hand and available borrowing capacity under its credit facility.
Cash Flows
The table below summarizes our cash flows from operating, investing, and financing activities for each period presented (in thousands):
Sixteen Weeks Ended
April 18,
April 17, 2022 2021
Net cash provided by operating activities $ 13,296 $ 18,932
Net cash used in investing activities (9,548) (5,400)
Net cash provided by (used in) financing activities 15,417 (7,393)
Effect of exchange rate changes on cash 8 29
Net change in cash and cash equivalents, and restricted cash $ 19,173 $ 6,168
Operating Cash Flows
Net cash flows provided by operating activities decreased $5.6 million to $13.3
million for the sixteen weeks ended April 17, 2022 . The changes in net cash
provided by operating activities are primarily attributable to lower accounts
payable balances due to the timing of operational receipts and payments, as well
as other changes in working capital as presented in the Condensed Consolidated
Statements of Cash Flows, partially offset increased income from operations,
driven primarily by an increase in comparable restaurant revenue.
Investing Cash Flows
Net cash flows used in investing activities increased$4.1 million to$9.5 million for the sixteen weeks endedApril 17, 2022 , as compared to$5.4 million for the same period in 2021. The increase is primarily due to increased spending on restaurant improvements, and investments in technology. 20
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The following table lists the components of our capital expenditures, net of currency translation, for the sixteen weeks endedApril 17, 2022 andApril 18, 2021 (in thousands): Sixteen Weeks Ended April 17, 2022 April 18, 2021 Restaurant improvement capital and other$ 4,856 $ 2,429 Investment in technology, infrastructure, and other 3,116 2,269 Donatos® expansion 1,176 702 New restaurants and restaurant refreshes 568 - Total capital expenditures$ 9,716 $ 5,400 Financing Cash Flows Net cash flows provided by financing activities increased$22.8 million to$15.4 million for the sixteen weeks endedApril 17, 2022 , as compared to net cash flows used in financing activities of$7.4 million in the same period in 2021. The increase is primarily due to a$20.4 million increase in net draws made on long-term debt as a result of the Company's refinancing of debt onMarch 4, 2022 , partially offset by an increase in cash used for debt issuance costs, compared to a net paydown of debt in 2021.
New Credit Agreement
OnMarch 4, 2022 the Company entered into a new Credit Agreement. The new Credit Agreement references the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements and backed byU.S. Treasury securities, or the Alternate Base Rate ("ABR"), which represents the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.50% per annum, or (c) one-month term SOFR plus 1.00% per annum. As ofApril 17, 2022 , the Company had outstanding borrowings under the Credit Agreement of$194.4 million net of unamortized deferred financing charges and discounts, of which$2.0 million was classified as current. As ofApril 17, 2022 , the Company had$22.0 million of available borrowing capacity under its Credit Agreement. Net draws during the sixteen weeks endedApril 17, 2022 totaled$26.9 million , compared to net payments totaling$6.4 million for the same period in 2021. As ofApril 17, 2022 , the Company had$7.8 million of letters of credit issued against cash collateral, compared to$8.6 million for the same period in 2021. The Company's cash collateral is recorded in Restricted cash on our Condensed Consolidated Balance Sheets for the quarter endedApril 17, 2022 .
Covenants
We are subject to a number of customary covenants under our new Credit Facility, including limitations on additional borrowings, acquisitions, stock repurchases, sales of assets, and dividend payments, as well as a Total Net Leverage ratio covenant. Debt Outstanding Total debt outstanding increased$26.9 million to$203.9 million atApril 17, 2022 , from$177.0 million atDecember 26, 2021 , primarily driven by net proceeds from the issuance of the New Credit Facility during the sixteen weeks endedApril 17, 2022 .
Working Capital
We typically maintain current liabilities in excess of our current assets which
results in a working capital deficit. We are able to operate with a working
capital deficit because restaurant sales are primarily conducted on a cash or
credit card basis. 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 as allowed. When necessary, we utilize
our 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.
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Share Repurchase
OnAugust 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 ofAugust 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. From the date of the current program approval throughApril 17, 2022 , we have repurchased a total of 226,500 shares at an average price of$29.14 per share for an aggregate amount of$6.6 million . Accordingly, as ofApril 17, 2022 , we had$68.4 million of availability under the current share repurchase program. EffectiveMarch 14, 2020 , the Company suspended its share repurchase program to provide additional liquidity during the COVID-19 pandemic. Our ability to repurchase shares is limited to conditions set forth by our lenders in the Credit Agreement; redemptions shall not exceed (in any fiscal year) the greater of$2,500,000 and 4% of Consolidated EBITDA calculated on a Pro Forma Basis for the then most recently ended period.
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. Labor cost inflation had a negative impact on our financial condition and results of operations during the sixteen weeks endedApril 17, 2022 . Uncertainties related to fluctuations in costs, including energy costs, commodity prices, annual indexed and other 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 and commodity costs for the remainder of 2022. Seasonality Our business is subject to seasonal fluctuations. Prior to the COVID-19 pandemic, 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 operating results and comparable restaurant revenue may fluctuate significantly as a result of seasonality. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter, and comparable restaurant sales for any particular future period may decrease. Contractual Obligations There were no other material changes outside the ordinary course of business to our contractual obligations since the filing of the Company's Annual Report on Form 10-K for the fiscal year endedDecember 26, 2021 , except for long-term debt obligations resulting from the changes to our Credit Facility inMarch 2022 as previously discussed in Note 6, Borrowings, of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, Contractual long-term debt payments as ofApril 17, 2022 are as follows (in thousands): Payments Due by Period 2027 and Total 2022 2023-2024 2025-2026 Thereafter Long-term debt obligations(1)$ 279,160 $ 15,563 $ 34,515 $ 34,515 $ 194,566 Purchase obligations(2)$ 185,906 $ 36,471 $ 62,843 $ 38,848 $ 47,744 (1) Long-term debt obligations primarily represent minimum required principal payments under our Credit Facility including estimated interest of$75.3 million based on a 7.50% average borrowing interest rate. (2) Purchase obligations includes the Company's share of expected system-wide fixed price commitments for food, beverage, equipment, and restaurant supply items. These amounts are estimates based on both purchase commitments for contracts, as well as anticipated inventory needed for the Company's restaurants, and could vary due to the timing of anticipated volumes.
See the maturity of lease liabilities table in Note 3, Leases, in the Notes to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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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 future impact from the COVID-19 pandemic, 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 endedDecember 26, 2021 .
Recently Issued and Recently Adopted Accounting Standards
See Note 1, Basis of Presentation and Recent Accounting Pronouncements, of Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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 (the "Securities Act"), and Section 21E of the Exchange Act.
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," "could," "estimate," "expect," "future," "intend," "may,"
"plan," "project," "will," "continue," and similar expressions. Forward-looking
statements may relate to, among other things: (i) anticipated impacts of
litigation, including employment-related claims, on our financial position and
results of operations, (ii) anticipated impacts of COVID-19 on our business, our
financial position and results of operations, (iii) expectations regarding our
ability to attract and retain Team Members, (iv) our business focus and
strategy, (v) expectations regarding claims for tax refunds, (vi) our ability to
maintain our working capital position, (vii) our ability to use our Credit
Facility to satisfy our working capital deficit, short-term liquidity
requirements and capital expenditures, (viii) anticipated impacts of inflation,
and (ix) availability of food and supplies meeting our specifications from
alternate sources.
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.
In some cases, information regarding certain important factors that could cause
actual results to differ materially from a forward-looking statement appears
together with such statement. In addition, the factors described under Risk
Factors, as well as other possible factors not listed, could cause actual
results to differ materially from those expressed in forward-looking statements,
including, without limitation, the following:
•the impact of COVID-19 on our results of operations, supply chain, and
liquidity; the effectiveness of the Company's strategic initiatives, including
alternative labor models, service, and operational improvement initiatives;
•our ability to recruit staff, train, and retain our workforce for service
execution;
•the effectiveness of the Company's marketing strategies and promotions;
•menu changes, including the anticipated sales growth, costs, and timing of the
Donatos® expansion;
•the implementation, rollout, and timing of technology solutions in our
restaurants and at our restaurant support center, in addition to digital
platforms that are accessed by our Guests;
•our ability to achieve and sustain revenue and cost savings from off-premise
sales and other initiatives;
•competition in the casual dining market and discounting by competitors;
•changes in consumer spending trends and habits;
•changes in the cost and availability of key food products and distribution,
restaurant equipment, construction materials, labor, and energy, including the
existence of alternate suppliers and the availability of supplies meeting our
specification;
•general economic conditions, including changes in consumer disposable income,
weather conditions, and related events in regions where our restaurants are
operated;
•the adequacy of cash flows and the cost and availability of capital or Credit
Facility borrowings, including our ability to refinance our Credit Facility, on
terms we expect or at all
•government delays in processing tax refund claims
•the level and impacts of inflation;
• the impact of federal, state, and local regulation of the Company's business;
•changes in federal, state, or local laws and regulations affecting the
operation of our restaurants, including minimum wages, consumer health and
safety, health insurance coverage, nutritional disclosures, and employment
eligibility-related documentation requirements; and
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Table of Contents •costs and other effects of legal claims by Team Members, franchisees, customers, vendors, stockholders, and others, including negative publicity regarding food safety or cyber security.
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 after
the date on which it is made or to reflect the occurrence of anticipated or
unanticipated events or circumstances.
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