Quarterly report pursuant to Section 13 or 15(d)

Basis of Presentation and Recent Accounting Pronouncements

v3.23.2
Basis of Presentation and Recent Accounting Pronouncements
 6 Months Ended
Jul. 09, 2023
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 operates, franchises, and develops full-service restaurants in North America. As of July 9, 2023, the Company owned and operated 418 restaurants located in 39 states. The Company also had 91 franchised full-service restaurants in 14 states and one Canadian province. 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, 2022 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, 2022 filed with the SEC on February 28, 2023.
Our current, prior, and upcoming year periods, period end dates, and number of weeks included in the period are summarized in the table below:
Periods Period End Date Number of Weeks in Period
Current and Prior Fiscal Quarters:
First Quarter 2023
 April 16, 2023 16
First Quarter 2022
 April 17, 2022 16
Second Quarter 2023
 July 9, 2023 12
Second Quarter 2022
 July 10, 2022 12
Current and Prior Fiscal Years:
Fiscal Year 2023
 December 31, 2023 53
Fiscal Year 2022
 December 25, 2022 52
Upcoming fiscal year:
Fiscal Year 2024
 December 29, 2024 52
Immaterial Restatement of Prior Period Financial Statements
Subsequent to the issuance of the Company's financial statements as of and for the sixteen weeks ended April 16, 2023, the Company discovered a multi-year error in its calculation and recognition of revenue related to gift cards, primarily related to breakage revenue that had been recognized for bonus and discounted gift cards for which no or discounted monetary consideration was received, which resulted in the Company overstating total revenues by $0.2 million for the sixteen weeks ended April 16, 2023, $1.1 million for the year ended December 25, 2022, and $0.5 million for the twenty-eight weeks ended July 10, 2022. The period (rollover) impact of the error correction on net income (loss) for the year ended December 25, 2022 increased net loss by $1.1 million, and the cumulative impact of the error correction on unearned revenue was an increase of $3.6 million. Management has evaluated this misstatement and concluded it was not material to prior periods, individually or in the aggregate. However, correcting the cumulative effect of the error in the twelve and twenty-eight weeks ended July 9, 2023 would have had a significant effect on the results of operations for such periods. Therefore, the Company is correcting the relevant prior period Condensed Consolidated Financial Statements and related footnotes for this error for comparative purposes. The Company will also correct previously reported financial information for such immaterial errors in future filings, as applicable (see "Part II, Item 5. Other Information" below for additional information). Additionally, comparative prior period amounts in the applicable Notes to the Condensed Consolidated Financial Statements have been restated.
The following tables reflect the effects of the correction on all affected line items of the Company's previously reported Condensed Consolidated Financial Statements presented in this Form 10-Q:
CORRECTED CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
December 25, 2022
(in thousands) As Previously Reported Adjustment As Corrected
Unearned revenue $ 43,358  $ 3,586  $ 46,944 
Total current liabilities 216,627  3,586  220,213 
Total liabilities 826,770  3,586  830,356 
Accumulated deficit (50,604) (3,586) (54,190)
Total stockholders' equity 5,375  (3,586) 1,789 
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited)
Twelve Weeks Ended July 10, 2022
Twenty-Eight Weeks Ended July 10, 2022
(in thousands, except per share amounts) As Previously Reported Adjustment As Corrected As Previously Reported Adjustment As Corrected
Restaurant revenue $ 288,657  $ (36) $ 288,621  $ 669,269  $ (51) $ 669,218 
Franchise and other revenues 5,433  2  5,435  20,371  (459) 19,912 
Total revenues 294,090  (34) 294,056  689,640  (510) 689,130 
Loss before income taxes (17,498) (34) (17,532) (20,541) (510) (21,051)
Net loss (17,932) (34) (17,966) (21,037) (510) (21,547)
Net loss per share (1.13) —  (1.13) (1.33) (0.04) (1.37)
Total comprehensive loss (17,950) (34) (17,984) (21,044) (510) (21,554)
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited)
Sixteen Weeks Ended April 16, 2023
(in thousands) Accumulated Deficit Total Shareholders' Equity
As Previously Reported
Balance, December 25, 2022 $ (50,604) $ 5,375 
Net loss (3,100) (3,100)
Balance, April 16, 2023 (53,704) 4,686 
Adjustments
Balance, December 25, 2022 (3,586) (3,586)
Net loss (156) (156)
Balance, April 16, 2023 (3,741) (3,741)
As Corrected
Balance, December 25, 2022 (54,190) 1,789 
Net loss (3,256) (3,256)
Balance, April 16, 2023 $ (57,445) $ 945 
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (unaudited)
Twenty-Eight Weeks Ended July 10, 2022
(in thousands) Retained Earnings/ (Accumulated Deficit) Total Shareholders' Equity
As Previously Reported
Balance, December 26, 2021 $ 27,196  $ 76,974 
Net loss (3,105) (3,105)
Balance, April 17, 2022 24,091  76,857 
Adjustments
Balance, December 26, 2021 (2,503) (2,503)
Net loss (476) (476)
Balance, April 17, 2022 (2,979) (2,979)
As Corrected
Balance, December 26, 2021 24,693  74,471 
Net loss (3,581) (3,581)
Balance, April 17, 2022 21,112  73,878 
As Previously Reported
Balance, April 17, 2022 24,091  76,857 
Net loss (17,932) (17,932)
Balance, July 10, 2022 6,159  61,575 
Adjustments
Balance, April 17, 2022 (2,979) (2,979)
Net loss (34) (34)
Balance, July 10, 2022 (3,013) (3,013)
As Corrected
Balance, April 17, 2022 21,112  73,878 
Net loss (17,966) (17,966)
Balance, July 10, 2022 $ 3,146  $ 58,562 
CORRECTED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Twenty-Eight Weeks Ended July 10, 2022
(in thousands) As Previously Reported Adjustment As Corrected
Net income (loss) $ (21,037) $ (510) $ (21,547)
Gift card breakage (8,099) 459  (7,640)
Unearned revenue (8,283) 51  (8,232)