Business Wire | Aug 18, 2021 04:05PM EDT

Red Robin Gourmet Burgers, Inc. Reports Results for the Fiscal Second Quarter Ended July 11, 2021

Aug. 18, 2021

GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Aug. 18, 2021--Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) ("Red Robin" or the "Company"), a full-service restaurant chain serving an innovative selection of high-quality gourmet burgers in a family-friendly atmosphere, today reported financial results for the quarter ended July 11, 2021.

Key Highlights

* Restaurant revenue of $272.2 million and Restaurant Level Operating Profit as a percentage of restaurant revenue (a non-GAAP metric) of 15.7%; * Second quarter 2021 comparable restaurant revenue(1) increased 66.3% over the same period in 2020, and decreased 2.4% compared to the same period in 2019; * Average weekly sales per fiscal period grew by a total of $2,503 during the second quarter of 2021; * Off-premises sales comprised 32.8%, 63.8% and 12.5% of total food and beverage sales for the second quarters of 2021, 2020 and 2019, respectively; * By the end of the second fiscal quarter, restaurants that were able to operate at 100% indoor dining capacity and with full hours delivered a comparable restaurant revenue increase of 7.0% compared to 2019 and restaurant margin of 19.5%, representing an increase of 1.8% compared to 2019; and, * Restaurants that offered Donatos(r) pizza outperformed the rest of the system by 550 basis points as compared to 2019 and outperformed our original restaurant sales growth target by 250 basis points. Donatos(r) pizza generated sales of $2.9 million dollars in the second quarter of 2021.

Paul J. B. Murphy III, Red Robin's President and Chief Executive Officer, said, "While we have reasons to be optimistic about the recovery, overall performance in the second quarter was below our expectation. Contributing factors included ongoing jurisdictional restrictions and challenging labor availability which resulted in reduced operating hours to ensure a quality Guest experience and reduce impact on our restaurant management teams. Notably, we generated strong sales and margins at restaurants where staffing levels supported elevated traffic compared to 2019. Specific initiatives that are addressing our staffing needs include national hiring events, technology enhancements to the application and hiring processes, and incremental hiring and training resources to grow staffing levels above 2019."

Murphy continued, "Off-premises sales are holding at roughly a third of total sales mix, more than double pre-pandemic levels, demonstrating that Guests are enjoying the convenience of takeout and delivery even as dining room sales recover. While we continue to monitor developments regarding the COVID-19 variants, at this time we remain confident that we can capture heightened demand with full capacity, and restored staffing and operating hours, providing substantial opportunity for additional sales. Importantly, our conviction that Donatos(r) will be a long-term growth driver is stronger than ever, with sales exceeding expectations and positioning Red Robin to deliver annual pizza sales of over $60 million and profitability of over $25 million by 2023."

Second Quarter 2021 Financial Summary Compared to Second Quarter 2020 and 2019

The following table presents financial highlights for the fiscal second quarter of 2021, compared to results from the same period in 2020 and 2019:

Twelve weeks Twelve ended weeks ended

July 11, July 12, Change July 14, Change 2021 2020 2019^(1)

Total revenues $ 277.0 $ 161.1 71.9 % $ 308.0 (10.1 )(millions) %

Net (loss) income (5.0 ) (56.3 ) (91.1 ) 1.0 *(millions) %

Adjusted EBITDA $ 19.0 $ (15.3 ) * $ 25.5 (25.6 )(millions)^(2) %



(Loss) income per )diluted share ($ per $ (0.32 ) $ (4.09 ) (95.9 % $ 0.08 *share)

Adjusted (loss) income )per diluted share ($ $ (0.22 ) $ (3.31 ) (95.5 % $ 1.03 *per share)^(3)

________________________(1)

Presented for improved comparability.

(2)

See schedule III for a reconciliation of Adjusted EBITDA, a non-GAAP measure, to net (loss) income.

(3)

See schedule II for a reconciliation of Adjusted (loss) income per diluted share, a non-GAAP measure, to (Loss) income per diluted share.

*Percentage increases and decreases over 100 percent were not considered meaningful.

Second Quarter 2021 Operating Results

Comparable restaurant revenue(1) increased 66.3% in the second quarter of 2021 compared to the same period a year ago, driven by a 47.7% increase in Guest count and a 18.6% increase in average Guest check. The increase in average Guest check resulted from a 3.0% increase in pricing, a 14.9% increase in menu mix, and a 0.7% increase from lower discounts. The increase in menu mix was primarily driven by higher sales of beverages and appetizers, partially offset by lower gourmet burger mix. Comparable restaurant revenuedecreased 2.4% in the second quarter of 2021 compared to the same period of fiscal year 2019. Average weekly sales per fiscal period grew by a total of $2,503 during the second quarter of 2021.

________________________^ Presented for improved comparability.(1)

^ See schedule III for a reconciliation of Adjusted EBITDA, a non-GAAP(2) measure, to net (loss) income.

^ See schedule II for a reconciliation of Adjusted (loss) income per(3) diluted share, a non-GAAP measure, to (Loss) income per diluted share.

Percentage increases and decreases over 100 percent were not considered* meaningful.

Second Quarter 2021 Operating Results

Comparable restaurant revenue(1) increased 66.3% in the second quarter of 2021 compared to the same period a year ago, driven by a 47.7% increase in Guest count and a 18.6% increase in average Guest check. The increase in average Guest check resulted from a 3.0% increase in pricing, a 14.9% increase in menu mix, and a 0.7% increase from lower discounts. The increase in menu mix was primarily driven by higher sales of beverages and appetizers, partially offset by lower gourmet burger mix. Comparable restaurant revenuedecreased 2.4% in the second quarter of 2021 compared to the same period of fiscal year 2019. Average weekly sales per fiscal period grew by a total of $2,503 during the second quarter of 2021.

^ Comparable restaurant revenue, representing revenue from Company-owned(1) restaurants that have operated five full quarters as of the end of the period presented.

Twelve weeks ended

July 11, 2021

July 12, 2020

July 14, 2019

Average weekly sales per unit:

Company-owned - Total

$

53,135

$

32,287

$

52,907

Company-owned - Comparable

53,866

32,429

55,122

Franchised units - Comparable

$

57,416

$

33,835

$

55,580

Total operating weeks:

Company-owned units

5,122

4,960

5,716

Franchised units

1,212

1,116

1,075

Twelve weeks ended

July 11, 2021 July 12, 2020 July 14, 2019

Average weekly sales per unit:

Company-owned - Total $ 53,135 $ 32,287 $ 52,907

Company-owned - Comparable 53,866 32,429 55,122

Franchised units - Comparable $ 57,416 $ 33,835 $ 55,580

Total operating weeks:

Company-owned units 5,122 4,960 5,716

Franchised units 1,212 1,116 1,075

________________________System-wide restaurant revenue (which includes franchised restaurants) for the second quarter of 2021 totaled $341.8 million, compared to $200.4 and $366.4 million for the second quarter of 2020 and 2019, respectively.

________________________System-wide restaurant revenue (which includes franchised restaurants) for thesecond quarter of 2021 totaled $341.8 million, compared to $200.4 and $366.4million for the second quarter of 2020 and 2019, respectively.

Twelve weeks ended

July 11, 2021

July 12, 2020

July 14, 2019(1)

Restaurant sales (millions)

$

272.2

$

160.1

$

302.4

Restaurant level operating profit(2) (millions)

$

42.7

$

3.2

$

55.0

Restaurant level operating profit percentage(2)

15.7

%

2.0

%

18.2

%

Twelve weeks ended

July 11, July 12, July 14, 2021 2020 2019^(1)

Restaurant sales (millions) $ 272.2 $ 160.1 $ 302.4

Restaurant level operating profit^ $ 42.7 $ 3.2 $ 55.0 (2) (millions)

Restaurant level operating profit 15.7 % 2.0 % 18.2 %percentage^(2)

________________________(1)

Presented for improved comparability.

(2)

See schedule II for a reconciliation of Restaurant level operating profit, a non-GAAP measure, to Loss from operations.

The increase in restaurant-level operating profit(2) compared to 2020 was due to the following:

* Restaurant revenue increased by $112.0 million, primarily driven by increased Guest traffic due to the continued lifting of jurisdictional indoor dining restrictions; * Cost of goods sold decreased by 140 basis points, primarily driven by pricing, favorable mix shifts, and discounts, partially offset by commodity inflation; * Labor costs decreased by 280 basis points, primarily driven by staffing shortages and sales leverage, partially offset by higher wage rates, staffing costs and increased restaurant management compensation costs in 2021. $1.6 million of incremental labor costs were incurred due to increased hiring ads, incremental hiring and training resources, and retention and sign-on bonuses to support our staffing initiatives; * Other operating expenses decreased by 440 basis points, primarily driven by lower third party delivery fees and supplies due to lower off-premises sales volumes, and sales leverage; and * Occupancy costs decreased by 510 basis points, primarily driven by savings from permanently closed restaurants and restructuring of lease payments, rent concessions, and sales leverage.

The decrease in restaurant-level operating profit compared to 2019 was due to the following:

* Restaurant revenue decreased $30.2 million, primarily driven by reduced Guest traffic due to jurisdictional indoor dining restrictions, and restaurant closures; * Cost of goods sold decreased 110 basis points primarily driven by pricing, lower discounts, and favorable rebates, partially offset by commodity inflation; * Labor costs increased 120 basis points primarily driven by higher wage rates, and sales deleverage, partially offset by our new management labor structure. $1.6 million of incremental labor costs were incurred due to increased hiring ads, incremental hiring and training resources, and retention and sign-on bonuses to support our staffing initiatives; * Other operating expenses increased 290 basis points primarily driven by higher third party delivery fees and supplies due to higher off-premises sales volumes, and hiring costs, and sales deleverage; and * Occupancy costs decreased 50 basis points primarily driven by permanently closed restaurants, restructuring of lease payments and rent concessions, and fewer restaurants, partially offset by sales deleverage.

________________________^ Presented for improved comparability.(1)

^ See schedule II for a reconciliation of Restaurant level operating(2) profit, a non-GAAP measure, to Loss from operations.

The increase in restaurant-level operating profit(2) compared to 2020 was due to the following:

* Restaurant revenue increased by $112.0 million, primarily driven by increased Guest traffic due to the continued lifting of jurisdictional indoor dining restrictions; * Cost of goods sold decreased by 140 basis points, primarily driven by pricing, favorable mix shifts, and discounts, partially offset by commodity inflation; * Labor costs decreased by 280 basis points, primarily driven by staffing shortages and sales leverage, partially offset by higher wage rates, staffing costs and increased restaurant management compensation costs in 2021. $1.6 million of incremental labor costs were incurred due to increased hiring ads, incremental hiring and training resources, and retention and sign-on bonuses to support our staffing initiatives; * Other operating expenses decreased by 440 basis points, primarily driven by lower third party delivery fees and supplies due to lower off-premises sales volumes, and sales leverage; and * Occupancy costs decreased by 510 basis points, primarily driven by savings from permanently closed restaurants and restructuring of lease payments, rent concessions, and sales leverage.

The decrease in restaurant-level operating profit compared to 2019 was due to the following:

* Restaurant revenue decreased $30.2 million, primarily driven by reduced Guest traffic due to jurisdictional indoor dining restrictions, and restaurant closures; * Cost of goods sold decreased 110 basis points primarily driven by pricing, lower discounts, and favorable rebates, partially offset by commodity inflation; * Labor costs increased 120 basis points primarily driven by higher wage rates, and sales deleverage, partially offset by our new management labor structure. $1.6 million of incremental labor costs were incurred due to increased hiring ads, incremental hiring and training resources, and retention and sign-on bonuses to support our staffing initiatives; * Other operating expenses increased 290 basis points primarily driven by higher third party delivery fees and supplies due to higher off-premises sales volumes, and hiring costs, and sales deleverage; and * Occupancy costs decreased 50 basis points primarily driven by permanently closed restaurants, restructuring of lease payments and rent concessions, and fewer restaurants, partially offset by sales deleverage.

Twelve weeks ended

July 11, July 12, July 14, 2021 2020 2019^(1)

General and administrative costs $ 17.7 $ 14.1 $ 21.8 (millions)

General and administrative costs as a 6.4 % 8.8 % 7.1 %percentage of total revenues

^(1) Presented for improved comparability.

The increase in general and administrative costs in 2021 was primarily driven by increased Team Member benefits, and temporary salary reductions in 2020, partially offset by lower professional services spend.

Twelve weeks ended

July 11, July 12, July 14, 2019 2021 2020 ^(1)

Selling costs (millions) $ 10.6 $ 5.6 $ 13.4

Selling costs as a percentage of 3.8 % 3.4 % 4.4 %total revenues

^(1) Presented for improved comparability.

The increase in selling costs in 2021 was primarily driven by lapping the significant reduction in marketing spend in 2020 due to the COVID-19 pandemic.

Balance Sheet and Liquidity

The Company made net repayments of $9.4 million on its Amended and Restated Credit Agreement (the "credit facility") during the Second quarter of 2021. As of July 11, 2021, the Company had outstanding borrowings under its credit facility of $153.9 million, in addition to amounts issued under letters of credit of $8.6 million, and liquidity of approximately $116.9 million including cash on hand and available borrowing capacity under its credit facility.

Income Taxes

The Company has filed federal and state cash tax refund claims totaling approximately $16 million during 2021 from net operating loss carrybacks. While we expect to receive a portion of the refunds in 2021, due to government delays in processing these claims we do not expect to receive the majority until 2022.

Restaurant Portfolio

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

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 11, July 12, July 11, July 12, 2021 2020 2021 2020

Company-owned:

Beginning of period 440 452 443 454

Closed during the period (10 ) (2 ) (13 ) (4 )

End of period 430 450 430 450

Franchised:

Beginning of period 103 102 103 102

Closed during the period (2 ) - (2 ) -

End of period 101 102 101 102

Total number of 531 552 531 552 restaurants

As of July 11, 2021, the Company had 430 total (comparable and non-comparable) restaurants.

Outlook for 2021 and Guidance Policy

The Company provides guidance as it relates to select information related to the Company's financial and operating performance, and such measures may differ from year to year. Due to the uncertainty caused by the on-going COVID-19 pandemic, limited guidance is being provided for fiscal year 2021.

The Company currently expects the following in 2021:

* Capital expenditures of $45 million to $55 million, including continued investment in maintaining our restaurants and infrastructure with maintenance and systems capital, Donatos(r) expansion to approximately 120 restaurants, including approximately 80 restaurants in the second half of the fiscal year, digital guest and operational technology solutions, and off-premises execution enhancements; * An effective tax benefit between 1% to 5%; and * Selling, general and administrative costs between $125 and $135 million.

Investor Conference Call and Webcast

Red Robin will host an investor conference call to discuss its second quarter 2021 results today at 5:00 p.m. ET. The conference call can be accessed live over the phone by dialing (201) 689-8560. A replay will be available from approximately two hours after the end of the call and can be accessed by dialing (412) 317-6671; the conference ID is 13722144. The replay will be available through Wednesday, August 25, 2021.

The call will be webcast live from the Company's website at ir.redrobin.com/news-events/ir-calendar, and later archived.

About Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB)

Red Robin Gourmet Burgers, Inc. (www.redrobin.com), is a casual dining restaurant chain founded in 1969 that operates through its wholly-owned subsidiary, Red Robin International, Inc., and under the trade name, Red Robin Gourmet Burgers and Brews. We believe nothing brings people together like burgers and fun around our table, and no one makes moments of connection over craveable food more memorable than Red Robin. We serve a variety of burgers and mainstream favorites to Guests of all ages in a casual, playful atmosphere. In addition to our many burger offerings, Red Robin serves a wide array of salads, appetizers, entrees, desserts, signature beverages and Donatos(r) pizza at select locations. It's now easy to enjoy Red Robin anywhere with online ordering available for to-go, delivery and catering. There are more than 525 Red Robin restaurants across the United States and Canada, including those operating under franchise agreements. Red Robin... YUMMM(r)!

Forward-Looking Statements

Forward-looking statements in this press release regarding the Company's future performance; demand and business recovery; growth drivers; long-term value creation; revenue and comparable revenue growth; sales and profitability including sales trajectory; 2021 effective tax rate; capital expenditures including restaurant maintenance and infrastructure and rollout of Donatos(r) to additional locations and timing thereof, digital guest and operational technology solutions, and off-premises execution enhancements; commodity inflation; 2021 selling, general and administrative spend; statements under the heading "Outlook for 2021 and Guidance Policy;" and all other statements that are not historical facts, are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions believed by the Company to be reasonable and speak only as of the date on which such statements are made. Without limiting the generality of the foregoing, words such as "expect," "believe," "anticipate," "intend," "plan," "project," "could," "should," "will," or "estimate," or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements based on a number of factors, including but not limited to the following: the impact of COVID-19 and new variants 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 staff, train, and retain our workforce for service execution; the effectiveness and timing of the Company's marketing strategies and promotions; menu changes and pricing strategy; the anticipated sales growth, costs, and timing of the Donatos(r) expansion; the implementation, rollout, and timing of new technology solutions; our ability to achieve revenue and cost savings from off-premises 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, distribution, labor, and energy; 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; 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; 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; and other risk factors described from time to time in the Company's Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the U.S. Securities and Exchange Commission.

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 11, July 12, July 11, July 12, 2021 2020 2021 2020

Revenues:

Restaurant revenue $ 272,157 $ 160,144 $ 590,834 $ 461,578

Franchise royalties,fees, and other 4,818 978 12,416 5,609 revenue

Total revenues 276,975 161,122 603,250 467,187



Costs and expenses:

Restaurant operatingcosts (exclusive ofdepreciation and amortization shownseparately below):

Cost of sales 61,917 38,780 131,083 109,206

Labor 98,949 62,742 210,608 181,308

Other operating 46,928 34,663 104,640 86,954

Occupancy 21,614 20,758 51,714 54,415

Depreciation and 19,215 20,560 45,103 48,880 amortization

General and 17,718 14,141 39,973 40,864 administrative

Selling 10,628 5,556 18,983 20,335

Pre-opening costs and 374 3 374 156 acquisition costs

Other charges 2,196 14,501 7,667 133,880

Total costs and 279,539 211,704 610,145 675,998 expenses



Loss from operations (2,564 ) (50,582 ) (6,895 ) (208,811 )



Other expense:

Interest expense, net 2,786 1,979 7,116 5,349 and other



Loss before income (5,350 ) (52,561 ) (14,011 ) (214,160 )taxes

Income tax (benefit) (354 ) 3,700 (302 ) 16,399 provision

Net loss $ (4,996 ) $ (56,261 ) $ (13,709 ) $ (230,559 )

Loss per share:

Basic $ (0.32 ) $ (4.09 ) $ (0.88 ) $ (17.38 )

Diluted $ (0.32 ) $ (4.09 ) $ (0.88 ) $ (17.38 )

Weighted average shares outstanding:

Basic 15,665 13,741 15,617 13,262

Diluted 15,665 13,741 15,617 13,262

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

July 11, 2021

December 27, 2020

Assets:

Current Assets:

Cash and cash equivalents

$

25,569

$

16,116

Accounts receivable, net

11,323

16,510

Inventories

23,926

23,802

Income tax receivable

16,352

16,662

Prepaid expenses and other current assets

12,342

13,818

Total current assets

89,512

86,908

Property and equipment, net

396,746

427,033

Right of use assets, net

424,647

425,573

Intangible assets, net

23,069

24,714

Other assets, net

8,129

10,511

Total assets

$

942,103

$

974,739

Liabilities and Stockholders' Equity:

Current Liabilities:

Accounts payable

$

31,396

$

20,179

Accrued payroll and payroll related liabilities

34,106

27,653

Unearned revenue

43,531

50,138

Current portion of lease obligations

51,022

55,275

Current portion of long-term debt

9,692

9,692

Accrued liabilities and other

44,258

39,617

Total current liabilities

214,005

202,554

Long-term debt

145,106

160,952

Long-term portion of lease obligations

457,896

465,233

Other non-current liabilities

15,933

25,287

Total liabilities

832,940

854,026

Stockholders' Equity:

Common stock; $0.001 par value: 45,000 shares authorized; 20,449 shares issued; 15,717 and 15,548 shares outstanding as of July 11, 2021 and December 27, 2020

20

20

Preferred stock, $0.001 par value: 3,000 shares authorized; no shares issued and outstanding as of July 11, 2021 and December 27, 2020

-

-

Treasury stock, 4,732 and 4,901 shares, at cost as of July 11, 2021 and December 27, 2020

(193,039

)

(199,908

)

Paid-in capital

238,677

243,407

Accumulated other comprehensive income (loss), net of tax

16

(4

)

Retained earnings

63,489

77,198

Total stockholders' equity

109,163

120,713

Total liabilities and stockholders' equity

$

942,103

$

974,739

Schedule I

Reconciliation of Non-GAAP Results to GAAP Results (In thousands, except per share data, unaudited)

In addition to the results provided in accordance with Generally Accepted Accounting Principles ("GAAP") throughout this press release, the Company has provided non-GAAP measurements which present the twelve and twenty-eight weeks ended July 11, 2021, July 12, 2020 and July 14, 2019(1) Net (loss) income and basic and diluted loss per share, excluding the effects of goodwill impairment, restaurant asset impairment, litigation contingencies, board and stockholder matters costs, restaurant closure and refranchising costs, severance costs, COVID-19 related costs, and related income tax effects. The Company believes the presentation of net loss and loss per share exclusive of the identified item gives the reader additional insight into the ongoing operational results of the Company. This supplemental information will assist with comparisons of past and future financial results against the present financial results presented herein. Income tax effect of reconciling items was calculated based on the change in the total tax provision calculation after adjusting for the identified item. The non-GAAP measurements are intended to supplement the presentation of the Company's financial results in accordance with GAAP.

RED ROBIN GOURMET BURGERS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

July 11, December 2021 27, 2020

Assets:

Current Assets:

Cash and cash equivalents $ 25,569 $ 16,116

Accounts receivable, net 11,323 16,510

Inventories 23,926 23,802

Income tax receivable 16,352 16,662

Prepaid expenses and other current assets 12,342 13,818

Total current assets 89,512 86,908

Property and equipment, net 396,746 427,033

Right of use assets, net 424,647 425,573

Intangible assets, net 23,069 24,714

Other assets, net 8,129 10,511

Total assets $ 942,103 $ 974,739



Liabilities and Stockholders' Equity:

Current Liabilities:

Accounts payable $ 31,396 $ 20,179

Accrued payroll and payroll related liabilities 34,106 27,653

Unearned revenue 43,531 50,138

Current portion of lease obligations 51,022 55,275

Current portion of long-term debt 9,692 9,692

Accrued liabilities and other 44,258 39,617

Total current liabilities 214,005 202,554

Long-term debt 145,106 160,952

Long-term portion of lease obligations 457,896 465,233

Other non-current liabilities 15,933 25,287

Total liabilities 832,940 854,026



Stockholders' Equity:

Common stock; $0.001 par value: 45,000 sharesauthorized; 20,449 shares issued; 15,717 and 15,548 20 20 shares outstanding as of July 11, 2021 and December27, 2020

Preferred stock, $0.001 par value: 3,000 sharesauthorized; no shares issued and outstanding as of - - July 11, 2021 and December 27, 2020

Treasury stock, 4,732 and 4,901 shares, at cost as (193,039 ) (199,908 )of July 11, 2021 and December 27, 2020

Paid-in capital 238,677 243,407

Accumulated other comprehensive income (loss), net 16 (4 )of tax

Retained earnings 63,489 77,198

Total stockholders' equity 109,163 120,713

Total liabilities and stockholders' equity $ 942,103 $ 974,739

Schedule I

Reconciliation of Non-GAAP Results to GAAP Results (In thousands, except per share data, unaudited)

In addition to the results provided in accordance with Generally Accepted Accounting Principles ("GAAP") throughout this press release, the Company has provided non-GAAP measurements which present the twelve and twenty-eight weeks ended July 11, 2021, July 12, 2020 and July 14, 2019(1) Net (loss) income and basic and diluted loss per share, excluding the effects of goodwill impairment, restaurant asset impairment, litigation contingencies, board and stockholder matters costs, restaurant closure and refranchising costs, severance costs, COVID-19 related costs, and related income tax effects. The Company believes the presentation of net loss and loss per share exclusive of the identified item gives the reader additional insight into the ongoing operational results of the Company. This supplemental information will assist with comparisons of past and future financial results against the present financial results presented herein. Income tax effect of reconciling items was calculated based on the change in the total tax provision calculation after adjusting for the identified item. The non-GAAP measurements are intended to supplement the presentation of the Company's financial results in accordance with GAAP.

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 11, July 12, July 14, July 11, July 12, July 14, 2021 2020 2019^(1) 2021 2020 2019^(1)

Net (loss)income as $ (4,996 ) $ (56,261 ) $ 981 $ (13,709 ) $ (230,559 ) $ 1,620 reported

Restaurantclosure and 1,752 7,602 1,001 4,199 9,008 1,305 refranchising costs

Asset 115 5,281 14,064 1,357 20,779 14,064 impairment

Litigation 85 - - 1,170 4,500 - contingencies

COVID-19 244 651 - 813 849 - related costs

Board andstockholder - 967 1,152 128 2,449 1,152 matter costs

Severance - - 370 - 881 2,364 costs

Goodwill - - - - 95,414 - impairment

Executive - - 260 - - 360 retention

Income tax (571 ) (3,770 ) (4,380 ) (1,993 ) (34,809 ) (5,004 )effect

Adjusted net $ (3,371 ) $ (45,530 ) $ 13,448 $ (8,035 ) $ (131,488 ) $ 15,861 (loss) income



(Loss)earnings per share - basic:

Net loss as $ (0.32 ) $ (4.09 ) $ 0.08 $ (0.88 ) $ (17.38 ) $ 0.12 reported

Restaurantclosure and 0.11 0.55 0.07 0.27 0.68 0.10 refranchising costs

Asset 0.01 0.38 1.08 0.09 1.57 1.08 impairment

Litigation - - - 0.07 0.34 - contingencies

COVID-19 0.02 0.05 - 0.05 0.06 - related costs

Board andstockholder - 0.07 0.09 0.01 0.18 0.09 matter costs

Severance andexecutive - - 0.03 - 0.07 0.18 transition

Executive - - 0.02 - - 0.03 retention

Income tax (0.04 ) (0.27 ) (0.34 ) (0.13 ) (2.62 ) (0.38 )effect

Adjusted(loss) $ (0.22 ) $ (3.31 ) $ 1.03 $ (0.52 ) $ (9.91 ) $ 1.22 earnings per share - basic



(Loss)earnings per share - diluted:

Net loss as $ (0.32 ) $ (4.09 ) $ 0.08 $ (0.88 ) $ (17.38 ) $ 0.12 reported

Restaurantclosure and 0.11 0.55 0.07 0.27 0.68 0.10 refranchising costs

Asset 0.01 0.38 1.08 0.09 1.57 1.08 impairment

Litigation - - - 0.07 0.34 - contingencies

COVID-19 0.02 0.05 - 0.05 0.06 - related costs

Board andstockholder - 0.07 0.09 0.01 0.18 0.09 matter costs

Severance andexecutive - - 0.03 - 0.07 0.18 transition

Executive - - 0.02 - - 0.03 retention

Income tax (0.04 ) (0.27 ) (0.34 ) (0.13 ) (2.62 ) (0.38 )effect

Adjusted(loss)earnings per $ (0.22 ) $ (3.31 ) $ 1.03 $ (0.52 ) $ (9.91 ) $ 1.22 share -diluted



Weightedaverage shares outstanding

Basic 15,665 13,741 12,970 15,617 13,262 12,969

Diluted 15,665 13,741 13,043 15,617 13,262 13,047

^(1) Presented for improved comparability.

Schedule II

Reconciliation of Non-GAAP Restaurant-Level Operating Profit to (Loss) Income from Operations and Net (Loss) Income (In thousands, unaudited)

The Company believes restaurant-level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. The Company defines restaurant-level operating profit to be restaurant revenue minus restaurant-level operating costs, excluding restaurant impairment and closure costs. The measure includes restaurant-level occupancy costs that include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance, and other property costs, but excludes depreciation related to restaurant equipment, buildings, and leasehold improvements. The measure excludes depreciation and amortization expense, substantially all of which is related to restaurant-level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. The measure also excludes selling, general, and administrative costs, and therefore excludes costs associated with selling, general, and administrative functions, and pre-opening costs. The Company excludes restaurant closure costs as they do not represent a component of the efficiency of continuing operations. Restaurant impairment costs are excluded, because, similar to depreciation and amortization, they represent a non-cash charge for the Company's investment in its restaurants and not a component of the efficiency of restaurant operations. Restaurant-level operating profit is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to loss from operations or net loss as indicators of financial performance. Restaurant-level operating profit as presented may not be comparable to other similarly titled measures of other companies in the Company's industry. The table below sets forth certain unaudited information for the twelve and twenty-eight weeks ended July 11, 2021, July 12, 2020, and July 14, 2019(2) expressed as a percentage of total revenues, except for the components of restaurant-level operating profit that are expressed as a percentage of restaurant revenue.

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 11, 2021 July 12, 2020 July 14. 2019^(2) July 11, 2021 July 12, 2020 July 14, 2019^(2)

Restaurant $272,157 98.3 % $160,144 99.4 % $302,418 98.2 % $590,834 97.9 % $461,578 98.8 % $702,902 97.9 %revenues

Restaurantoperating costs^ (1):

Cost of sales 61,917 22.8 38,780 24.2 72,387 23.9 131,083 22.2 109,206 23.7 166,102 23.6 %

Labor 98,949 36.4 62,742 39.2 106,538 35.2 210,608 35.6 181,308 39.3 249,432 35.5 %

Other operating 46,928 17.2 34,663 21.6 43,000 14.3 104,640 17.7 86,954 18.8 98,565 14.0 %

Occupancy 21,614 7.9 20,758 13.0 25,458 8.4 51,714 8.8 54,415 11.8 60,478 8.6 %

Restaurant-level 42,749 15.7 % 3,201 2.0 % 55,035 18.2 % 92,789 15.6 % 29,695 6.4 % 128,823 18.3 %operating profit



Add - Franchiseroyalties, fees, 4,818 1.7 % 978 0.6 % 5,563 1.8 12,416 2.1 % 5,609 1.2 % 14,945 2.1 %and otherrevenue

Deduct - other operating:

Depreciation and 19,215 6.9 20,560 12.8 21,369 6.9 45,103 7.5 48,880 10.5 49,807 6.9 %amortization

General andadministrative 17,718 6.4 14,141 8.8 21,791 7.1 39,973 6.6 40,864 8.7 51,881 7.2 %expenses

Selling 10,628 3.8 5,556 3.4 13,443 4.4 18,983 3.1 20,335 4.4 31,469 4.4 %

Pre-opening &acquisition 374 0.1 3 - - - 374 0.1 156 - 319 - %costs

Other charges 2,196 0.8 14,501 9.0 16,847 5.5 7,667 1.3 133,880 28.7 19,245 2.7 %

Total other 50,131 18.1 % 54,761 34.0 % 73,450 23.8 112,100 18.6 % 244,115 52.3 % 152,721 21.3 %operating



Loss from (2,564 ) (0.9 ) (50,582 ) (31.4 ) (12,852 ) (4.2 ) (6,895 ) (1.1 ) (208,811 ) (44.7 ) (9,451 ) (1.3 )operations % % % % %



Interestexpense, net and 2,786 1.0 1,979 1.2 2,153 0.7 7,116 1.2 5,349 1.1 5,391 0.8 %other

Income tax )(benefit) (354 ) (0.1 ) 3,700 2.3 (15,986 ) (5.2 ) (302 ) (0.1 ) 16,399 3.5 (16,462 ) (2.3 %provision

Total other 2,432 0.9 5,679 3.5 (13,833 ) (4.5 ) 6,814 1.1 21,748 4.7 (11,071 ) (1.5 ) %



Net (loss) $(4,996 ) (1.8 ) $(56,261 ) (34.9 ) $981 0.3 % $(13,709 ) (2.3 ) $ ) (49.4 ) $1,620 0.2 %income % % % (230,559 %

________________________(1)

Excluding depreciation and amortization, which is shown separately.

(2)

Presented for improved comparability.

Certain percentage amounts in the table above do not total due to rounding as well as the fact that components of restaurant-level operating profit are expressed as a percentage of restaurant revenue and not total revenues.

Schedule III

Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA (In thousands, unaudited)

The Company defines EBITDA as net (loss) income before interest expense, income taxes, and depreciation and amortization. EBITDA and adjusted EBITDA are presented because the Company believes investors' understanding of its performance is enhanced by including these non-GAAP financial measures as a reasonable basis for evaluating its ongoing results of operations excluding the effects of goodwill impairment, restaurant asset impairment, litigation contingencies, board and stockholder matters costs, restaurant closure and refranchising costs, severance costs, and COVID-19 related costs. EBITDA and adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net (loss) income or cash flow from operations, as determined by GAAP, and the Company's calculation thereof may not be comparable to that reported by other companies in its industry or otherwise. Adjusted EBITDA further adjusts EBITDA to reflect the additions and eliminations shown in the table below. The use of adjusted EBITDA as a performance measure permits a comparative assessment of our operating performance relative to the Company's performance based on its GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance. Adjusted EBITDA as presented may not be comparable to other similarly-titled measures of other companies, and the Company's presentation of adjusted EBITDA should not be construed as an inference that its future results will be unaffected by excluded or unusual items. The Company has not provided a reconciliation of its adjusted EBITDA outlook to the most comparable GAAP measure of Net (loss) income. Providing Net (loss) income guidance is potentially misleading and not practical given the difficulty of projecting event-driven transactional and other non-core operating items that are included in Net (loss) income, including asset impairments and income tax valuation adjustments. The reconciliations of adjusted EBITDA to Net (loss) income for the historical periods presented below are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.

________________________^ Excluding depreciation and amortization, which is shown separately.(1)

^ Presented for improved comparability.(2)

Certain percentage amounts in the table above do not total due to rounding as well as the fact that components of restaurant-level operating profit are expressed as a percentage of restaurant revenue and not total revenues.

Schedule III

Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA (In thousands, unaudited)

The Company defines EBITDA as net (loss) income before interest expense, income taxes, and depreciation and amortization. EBITDA and adjusted EBITDA are presented because the Company believes investors' understanding of its performance is enhanced by including these non-GAAP financial measures as a reasonable basis for evaluating its ongoing results of operations excluding the effects of goodwill impairment, restaurant asset impairment, litigation contingencies, board and stockholder matters costs, restaurant closure and refranchising costs, severance costs, and COVID-19 related costs. EBITDA and adjusted EBITDA are supplemental measures of operating performance that do not represent and should not be considered as alternatives to net (loss) income or cash flow from operations, as determined by GAAP, and the Company's calculation thereof may not be comparable to that reported by other companies in its industry or otherwise. Adjusted EBITDA further adjusts EBITDA to reflect the additions and eliminations shown in the table below. The use of adjusted EBITDA as a performance measure permits a comparative assessment of our operating performance relative to the Company's performance based on its GAAP results, while isolating the effects of some items that vary from period to period without any correlation to core operating performance. Adjusted EBITDA as presented may not be comparable to other similarly-titled measures of other companies, and the Company's presentation of adjusted EBITDA should not be construed as an inference that its future results will be unaffected by excluded or unusual items. The Company has not provided a reconciliation of its adjusted EBITDA outlook to the most comparable GAAP measure of Net (loss) income. Providing Net (loss) income guidance is potentially misleading and not practical given the difficulty of projecting event-driven transactional and other non-core operating items that are included in Net (loss) income, including asset impairments and income tax valuation adjustments. The reconciliations of adjusted EBITDA to Net (loss) income for the historical periods presented below are indicative of the reconciliations that will be prepared upon completion of the periods covered by the non-GAAP guidance.

Twelve Weeks Ended Twenty-Eight Weeks Ended

July 11, July 12, July 14, July 11, July 12, July 14, 2021 2020 2019^(1) 2021 2020 2019^(1)

Net (loss)income as $ (4,996 ) $ (56,261 ) $ 981 $ (13,709 ) $ (230,559 ) $ 1,620 reported

Interest 2,912 2,194 2,322 7,589 5,428 5,667 expense, net

Income tax(benefit) (354 ) 3,700 (15,986 ) (302 ) 16,399 (16,462 )provision

Depreciationand 19,215 20,560 21,369 45,103 48,880 49,807 amortization

EBITDA $ 16,777 $ (29,807 ) $ 8,686 $ 38,681 $ (159,852 ) $ 40,632



Restaurantclosure and $ 1,752 $ 7,602 $ 1,001 $ 4,199 $ 9,008 $ 1,305 refranchising costs

Asset 115 5,281 14,064 1,357 20,779 14,064 impairment

Litigation 85 - - 1,170 4,500 - contingencies

COVID-19 244 651 - 813 849 - related costs

Board andstockholder - 967 1,152 128 2,449 1,152 matter costs

Severance - - 370 - 881 2,364 costs

Goodwill - - - - 95,414 - impairment

Executive - - 260 - - 360 retention

Adjusted $ 18,973 $ (15,306 ) $ 25,533 $ 46,348 $ (25,972 ) $ 59,877 EBITDA

^(1) Presented for improved comparability.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210818005732/en/

CONTACT: For media relations questions: Danielle Paleafico, Coyne PR (973) 588-2000

CONTACT: For investor relations questions: Raphael Gross, ICR (203) 682-8253