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. 31, 2017

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 31, 2017, December 25, 2016, and December 27, 2015, which is recorded under Occupancy on the consolidated statements of operations, are as follows (in thousands):



	2017		2016		2015
Minimum rent	$	77,778	$	73,605	$	67,078
Contingent rent	1,604		1,676		2,264
Equipment rent under operating leases	1,024		1,052		791
	$	80,406	$	76,333	$	70,133

The Company leases certain of its owned land, buildings, and equipment to outside parties under non-cancelable operating leases. Rental income was immaterial for 2017, 2016, and 2015.

Future minimum lease commitments under all leases as of December 31, 2017 are as follows (in thousands):



	Capital Leases			Operating Leases
2018	$	1,234		$	75,613
2019	1,234			72,328
2020	1,238			67,568
2021	1,240			61,375
2022	1,063			52,754
Thereafter	8,570			224,517
Total	14,579			$	554,155
Less amount representing interest	(3,641		)
Present value of future minimum lease payments	10,938
Less current portion	(741		)
Long-term capital lease obligations	$	10,197

At the end of 2017 and 2016, property and equipment included $29.9 million and $29.3 million of assets under capital lease, and $12.3 million and $10.5 million of related accumulated depreciation.

Future minimum rental income is immaterial.

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. 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 and year end 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 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 consolidated financial statements.