Red Robin Gourmet Burgers, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Commitments and Contingencies

Commitments and Contingencies

12 Months Ended

Dec. 27, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments

Leasing Activities—The Company leases land, buildings, and equipment used in its operations under operating leases. The Company’s operating leases have remaining non-cancelable terms ranging from less than one year to more than 15 years. These leases generally contain renewal options which permit the Company to renew the leases at defined contractual rates or prevailing market rates. Certain equipment leases also include options to purchase equipment at the end of the lease term. Certain leases provide for contingent rents, which are determined as a percentage of adjusted restaurant sales in excess of specified levels. The Company records a contingent rent liability and the corresponding rent expense when specified levels have been achieved or when management determines that achieving the specified levels during the fiscal year is probable. Certain lease agreements also require the Company to pay maintenance, insurance, and property tax costs. Rental expense related to land, building, and equipment leases for the fiscal years ended December 27, 2015, December 28, 2014, and December 29, 2013 are as follows (in thousands):



	2015		2014		2013
Minimum rent	$	67,078	$	58,083	$	49,206
Contingent rent	2,264		2,239		2,164
Equipment rent under operating leases	791		895		990
	$	70,133	$	61,217	$	52,360

The Company leases certain of its owned land, buildings, and equipment to outside parties under non-cancelable operating leases. Cost of the leased land, building, and equipment was $4.6 million at the fiscal years ended December 27, 2015 and December 28, 2014, and related accumulated depreciation was $2.9 million and $2.8 million, respectively. Rental income was immaterial for 2015, 2014, and 2013.

Future minimum lease commitments and minimum rental income under all leases as of December 27, 2015 are as follows (in thousands):



	Capital Leases			Operating Leases		Rental Income
2016	$	905		$	72,796	$	131
2017	900			70,786		104
2018	900			66,193		104
2019	900			60,612		104
2020	912			54,818		104
Thereafter	5,712			226,642		82
Total	10,229			$	551,847	$	629
Less amount representing interest	(2,257		)
Present value of future minimum lease payments	7,972
Less current portion	(531		)
Long-term capital lease obligations	$	7,441

At the end of 2015 and 2014, property and equipment included $19.0 million and $21.7 million of assets under capital lease, and $9.1 million and $10.0 million of related accumulated depreciation.

Contingencies

In the normal course of business, there are various claims in process, matters in litigation, and other contingencies. These include claims resulting from “slip and fall” accidents, employment related claims and claims alleging illness, injury or other food quality, health or operational issues. To date, no claims of these types of litigation, certain of which are covered by insurance policies, have had a material effect on the Company. While it is not possible to predict the outcome of these other suits, legal proceedings and claims with certainty, management is of the opinion that adequate provision for potential losses associated with these other matters has been made in the financial statements and that the ultimate resolution of these other matters will not have a material effect on the Company’s financial position and results of operations.