Good afternoon, everyone, and welcome to Red Robin Gourmet Burgers, Inc. Third Quarter 2025 Earnings Call. This conference is being recorded. During management's presentation and to your questions, we will be making forward-looking statements about the company's business outlook and expectations. These forward-looking statements and all other statements that are not historical facts reflect management's beliefs and predictions as of today, and therefore, are subject to risks and uncertainties as described in the company's SEC filings. Management will also discuss non-GAAP financial measures as part of today's conference call. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended to illustrate alternative measures of the company's operating performance that may be useful. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in the earnings release. The company has posted its third quarter 2025 earnings release on its website at ir.redrobin.com. Now I'd like to turn the call over to Red Robin's President and Chief Executive Officer, Dave Pace.

Good afternoon, everyone, and thank you for your interest in Red Robin. It was just 4 months ago that we unveiled our 'First Choice' plan with a core imperative of establishing Red Robin as the first choice for guests, team members, and investors. Today, I'm pleased to report that in the third quarter, we began to see the early fruit of our efforts. During the third quarter, our traffic trends improved sequentially through the quarter, supported by the launch of our Big Yummm promotion and growth in our off-premise business. Equally encouraging are the continued gains in our 4-wall operating efficiency and our team's ability to manage the middle of the P&L, allowing us to beat our expectations for both restaurant level and corporate profitability during the quarter. Going forward, sustaining and extending this improvement requires continued execution across all aspects of our 'First Choice' plan. The momentum we're building reinforces my belief that we're on the right track to deliver on our goal to be the first choice for guests, team members, and investors. With that, let me share more detail on our progress and how we're building momentum as we move forward with this 'First Choice' Plan. First, let's start with hold serve. Our operators have continued to raise the bar on performance. During the quarter, our team once again delivered labor results that beat our internal expectations. It's important to point out that we're achieving this efficiency gain while maintaining guest satisfaction scores at the improved level we established last year. This demonstrates that efficiency and hospitality are not mutually exclusive, and our ops team is proving every day that we can deliver both. The numbers also tell the story. The increased efficiency we achieved in the third quarter drove a 90 basis point improvement year-over-year in restaurant level operating profit, almost entirely driven by improvements in labor. These efficiency gains are being accomplished through a healthy blend of process changes, analytics, and technology, combined with the entrepreneurial spirit of our operators, who are finding the ways to work smarter and more efficiently while refusing to compromise the guest experience. Our managing partner program also ensures that our partners see the benefits of their efforts in increased compensation as they share in the gains that they are achieving in their restaurants. As we turn to our drive traffic initiative, I want to reemphasize that we're committed to creating sustainable traffic growth that is rooted in improvements across all of the relevant consumer touch points, including compelling value for the guest, delivering on our commitment of food quality and great taste and a welcoming, hospitable, and fun environment. As I outlined on our last call, our plan is to build traffic-driving layers, and I'm pleased with our progress. In addressing these elements of our plan, our first priority was to address our competitive positioning in price point value offers. The Red Robin Big Yummm burger deal that we launched at the beginning of the third quarter has performed above our expectations, resulting in an approximately 250 basis point sequential traffic improvement from the second quarter to the third quarter. More specifically, we entered Q3 with a traffic run rate of approximately down 7%, and we exited the quarter with that run rate at approximately negative 1.4%, a result that we're extremely pleased with. Our Big Yummm deal resonated strongly with our midweek dining occasions, particularly the lunch daypart and delivers on our commitment to provide our guests the gift of time. On average, we're delivering a complete dining experience in under 45 minutes. This promotion delivers exactly what we were looking for: immediate market relevance and trial generation. To build on this momentum, our team remains hard at work on new menu innovations to accelerate our competitive positioning and price point value offers, and we look forward to sharing updates on our future calls. That brings us to our second traffic-driving layer. During the third quarter, we launched our data-driven marketing initiative, incorporating microtargeting capabilities that will allow us to engage guests more personally, precisely, and efficiently than traditional broad-based messaging. This approach to marketing is intended to more efficiently and effectively reach guests, allowing us to level the playing field against larger, more resourced competitors. These unique and internally developed algorithms help us understand guest decision-making behaviors and as a result, allow us to specifically target messaging and promotion in ways that resonate more directly with each guest. During our initial rollout of this approach, we saw outsized improvements in traffic and sales for the initial cohort of prioritized restaurants, and we plan to expand our reach to more of our restaurants each period. In addition to the progress we've seen within the 4 walls of the restaurant, we've also seen a dramatic increase in our off-premise business, driven largely through a significantly expanded approach to catering. The off-premise portion of our business represents approximately 25% of sales in the third quarter and delivered traffic growth of 2.9%, a signal that our guests love our food and want to enjoy it in more places than just the dining room. We expect to continue to aggressively grow this segment of our business as we move forward. Next is our Find Money initiative. I'm pleased to report another quarter where adjusted EBITDA beat our expectations, which continues to reinforce our confidence in the operational improvements we've implemented. In addition, thanks to our corporate efficiency initiatives, we continue to expect between $3 million to $4 million benefit in G&A in 2025 with a $10 million run rate expected to be achieved in 2026. These savings are critical as we balance our investment priorities with delivering profitability. Regarding our capital structure, we're exploring all elements that I discussed when I introduced our 'First Choice' Plan. This includes taking a comprehensive and proactive approach through multiple initiatives to give us optionality as we work to strengthen our balance sheet and position the company for long-term success. We've launched four primary tactics to accomplish this. First, as part of this process, we announced today a 6-month extension to the term of our current credit agreement, with the loan now maturing in September of 2027 as compared to March of 2027 previously. This extension provides helpful time to optimize the value of the other efforts. Second, we've engaged Jefferies to assist us in refinancing our debt to further optimize our capital structure. Jefferies is an industry leader in this space, and we expect to work quickly and effectively with them to deliver a successful outcome on this effort as soon as practicable. Third, today, we announced the establishment of an at-the-market or ATM program, which allows us to sell up to $40 million in equity open market transactions. While we may or may not execute against this option, we put this in place so that we have the option to generate funds if needed and to be in a position to move quickly where we may see compelling opportunities. Fourth is our refranchising effort. We continue to have great interest and engagement from both existing and potential new franchisees developed through our partnership with Brookwood Associates. We're encouraged by the level of interest in our brand, and we remain committed to a thoughtful process that maximizes value for our shareholders in both the short and long term. Refranchising is yet another important option to have in our tool belt as we optimize our overall financing structure and work to strengthen our balance sheet. We'll continue to share updates as these projects progress. Supported by the gains we've seen in our operating results through the first three quarters of the year, we believe these actions will provide us with the options and flexibility to create the best long-term financing structure for Red Robin while also assisting us with resources to reinvest in the business. Next, let me provide you with an update to our fixed restaurant efforts. As I mentioned on our last call, we identified the need to invest in critical deferred maintenance to better align our restaurant atmosphere with competitive standards. I'm pleased to report that we successfully completed refreshes in 20 restaurants across four markets during the third quarter. As a reminder, these are relatively light-touch refreshes from a capital perspective and not full reimaging projects, averaging approximately $40,000 per refresh in the third quarter. We've prioritized these investments by targeting areas that we believe will directly benefit the guest experience. This includes flooring updates, internal finishings, furniture repairs, and lighting, coupled with exterior improvements, including signage, paint, lighting, and landscaping, all of which will directly benefit guest perceptions and experience. While results are still early, we're already seeing measurable improvements in both sales and traffic performance at these 20 locations. These results further support our thesis that well-executed improvements that enhance the guests' first impression and overall dining atmosphere can deliver measurable results relatively quickly. The success of these actions has helped us fine-tune our investment priorities as we look to expand the number of restaurants that we can touch. Our goal is to offer an environment that matches the quality of food and hospitality that our teams deliver every day, and we'll continue to take a disciplined approach as we expand this initiative further across our system. Lastly, let me briefly touch on our Win Together plan. As I've continued to travel the country, visiting our restaurants and meeting with restaurant teams, I'm hearing increasingly positive feedback from our team members who see that we're delivering on the promises we made earlier this year. They wanted a value offering, and we delivered the Big Yummm deal. They asked for help addressing long-standing maintenance and repair issues, and we successfully refreshed 20 restaurants during the quarter with more to come. They asked for better technology and tools to execute more efficiently, and we're continuing to roll out additional technology with more planned ahead. It's encouraging to see that our team is embracing our guest-centric culture. And when combined with the strength of our operating results, we believe it's prudent to modestly raise our CapEx guidance for the year as we further accelerate some of these key initiatives that directly support our team members and their ability to deliver a great guest experience. Encouragingly, we've continued to see our team member turnover rates come down each period to a point where we're now at levels below industry benchmarks. As we look ahead, we believe this collaborative team approach will further strengthen our culture and position us favorably to attract and retain the best talent in the industry. To the almost 20,000 Red Robin team members across the country, I want to extend a heartfelt thank you for your dedication and hard work. I'm proud of what we've accomplished so far and excited about what's still to come. With that, Todd will now review our third quarter results.

Thank you, Dave, and good afternoon, everyone. In the third quarter, total revenues were $265.1 million versus $274.6 million in the third quarter of fiscal 2024. Comparable restaurant revenue beat our expectations for the quarter and are in line with last week's announcement at a decline of 1.2%. This result includes a 1.7% increase in net menu price, offset by a 3% decline in guest traffic. Guest traffic trends improved sequentially through the quarter and delivered a 250 basis point trend improvement as compared to the second quarter. We attribute this improvement to the success of our Big Yummm Burger deal that launched in July and continued traffic strength in our off-premise business. Restaurant level operating profit as a percentage of restaurant revenue was 9.9%, an increase of 90 basis points compared to the third quarter of 2024. This was driven by the continued success of our operations team, delivering significant gains in labor efficiency. I would also note, while cost of goods increased due in part to beef inflation that we anticipated, our commitment to deliver value for the guest is also reflected with this increase with the goal that this value ultimately contributes to delivering increasing guest traffic. General and administrative costs were $16.9 million as compared to $20.8 million in the third quarter of 2024. The reduction is primarily due to not holding a partner conference event in 2025 as we did in 2024. In 2024, this cost was mostly offset with vendor contributions credited to other parts of the income statement. Selling expenses were $6.8 million, an increase as compared to $5.5 million in the third quarter of 2024. The increase is primarily due to additional investment in third-party delivery platforms and other channels. Adjusted EBITDA was $7.6 million in the third quarter of 2025, an increase of $3.4 million versus the third quarter of 2024. Adjusted EBITDA increased due to cost efficiency gains, particularly in labor and the benefit of menu price increases. We ended the third quarter with $21.7 million of cash and cash equivalents, $9.2 million of restricted cash and $29 million of available borrowing capacity under our revolving line of credit. Turning to our outlook. We will now provide the following guidance for 2025. First, total revenue of approximately $1.2 billion is unchanged from our prior guidance. This incorporates expectations that comparable restaurant sales will decline approximately 3% in the fourth quarter, and we will end 2025 with 386 company-owned restaurants in operation. Second, restaurant-level operating profit of at least 12.5% as compared to our prior guidance of 12% to 13%. Third, we now expect adjusted EBITDA of at least $65 million as compared to $60 million to $65 million previously. Finally, we now expect capital expenditures of approximately $33 million as compared to approximately $30 million previously as we continue to execute against the 'First Choice' Plan and make investments back into our restaurants and technology. As added commentary on our guidance, I would note the following points. In recent weeks, we have seen guest traffic trends slow from where we exited the third quarter. We attribute this to intentional timing shifts in our marketing spend and the consumer impact of the government shutdown. While our guidance is grounded in expectation for both traffic and comparable restaurant sales to decline approximately 3% in the fourth quarter, we are optimistic traffic trends will regain traction as our marketing spend levels increase in the remainder of the quarter. On the margin side, we expect cost of goods in the fourth quarter to be similar to the third quarter. For the other operating cost categories, we expect marginal improvement in the fourth quarter as compared to the third as we leverage fixed costs with higher seasonal sales in the fourth quarter. Overall, we are very pleased with our progress, capturing cost efficiencies while delivering a great guest experience. We have made significant gains, increasing restaurant level profitability, reducing debt, and growing EBITDA. Initial results from the launch of the Big Yummm are encouraging, and we look forward to the great value at Red Robin delivering growing guest counts. In closing, I'd like to offer a tremendous thank you to our operators, our restaurant teams, and the team at the restaurant support center. This great progress in the business is a result of your hard work, and I'm excited for what's next. Dave, I will now turn the call back to you.

Thanks, Todd. The progress we've made across all pillars of our 'First Choice' Plan gives me confidence that we have the right strategy in place. Our operators are proving every day that efficiency and hospitality can coexist. Our strategic value offering is delivering the expected change in our traffic trends, and we have additional innovations under development for next year. Our data-driven marketing capabilities are being strengthened to position us to compete more effectively, and our restaurant refresh initiatives are being well received by both our team members and our guests. We're not declaring victory, but delivering a sustainable recovery requires a clear strategy, coordinated tactics, and engaged team and disciplined execution. I've seen personally that our Red Robin team members are up to the challenge. Let me close with this. We have more work ahead of us, but we're building momentum with each period and each quarter, positioning us to create a Red Robin that our guests will choose first. Our team members are proud to work for and our shareholders can rely on for predictable and reliable returns. Before I hand it over to the operator for questions, I want to call out two organizational announcements that we made last week. First, I want to recognize the appointment of Jesse Griffith to Chief Operations Officer. As you heard today, our operations team under Jesse's leadership has been a major contributor to the progress we've seen both financially and with our guests. This is a well-deserved move that is reflective of those contributions. I'd also like to acknowledge Todd's plan to move on to another opportunity in our industry. During his time with Red Robin, Todd has been an integral part and member of our executive team and has provided great leadership to the finance team and well beyond. His many contributions were greatly appreciated by all of us, and I want to thank him for all that he did and wish him well in his next role. With that, we're now happy to take your questions. Operator, please open the lines.

The first question comes from Jeremy Hamblin from Craig-Hallum.

Congrats on the strong results. I wanted to start with just some of the commentary around the Big Yummm initiative and where it's mixing. Just to get a sense for where that's mixing as a portion of sales. And then as you talked about a little bit of an uptick here in food and beverage costs to get a sense if you expect that to kind of stabilize in this current range or given a little bit of pressure on beef prices as well, we should be expecting that to click up a little bit here going forward?

Yes. Thanks, Jeremy. Two parts. I'll let Todd answer the second part. The first point about mix, the Big Yummm deal is mixing at about 8% of our total sales. So we feel pretty good about that. That's kind of where we expected it to come in from a mix standpoint, but it's definitely having the impact that we had hoped it would.

Yes. Jeremy, regarding the second part of your question, the overall cost of goods indicates that beef is currently the most inflationary component. We believe the 25% increase we observed in Q3 will also serve as a reliable guide for Q4. Our team has implemented various strategies to address this beef inflation, so we expect to maintain that 25% through the fourth quarter.

Great. And then just switching gears a bit here. I wanted to understand the cost of getting the amendment to your current debt agreement, getting that extension to September 2027. What was the financial cost of that getting the extra 6 months? And then secondly, related to the refranchising efforts to get a sense for how that initiative is progressing and what valuations are looking like if you have maybe a better sense, I think you called out initially 25 to 75 potential locations. If you have winnowed that down a bit more or what other color you might be able to share with us?

Yes. Let me address that, and then I'll let Todd add his thoughts. Regarding the extension, it incurred a cost of 50 basis points for us to extend for that timeframe, which we considered reasonable given our objectives. As for the refranchising efforts, Jeremy, I can say that everything is progressing as we anticipated. The number of restaurants drawing interest is within the range we initially shared. We have specific proposals in hand that we have yet to negotiate. We are currently evaluating and getting to know the interested parties. Progress is being made, and as I mentioned earlier, refranchising remains an option for us. We will explore all available options to determine the best mix for moving forward with refinancing and strengthening our balance sheet. We are where we expected to be, but we don’t have any firm announcements to make at this moment. Todd, do you have anything to add?

No, I think that I'd just reiterate those points. Refranchising an option. It was, I think, a good thing for the business to get the Fortress amendment or the amendment with our lender across the finish line. It gives us the time to really vet through those other options and make sure we maximize value, as Dave said on the call. So a good progress for us.

Great. Congratulations, Todd. Best wishes on the next part of your journey.

Thank you, Jeremy. Really appreciate it.

The next question comes from Todd Brooks from Benchmark Stern.

I'll echo Jeremy's congratulations, Todd. And also, Jesse, I assume you might be in the room, congrats on the promotion to COO, well deserved.

Thanks, Todd.

I wanted to start by thanking you for providing clarity on the entry and exit traffic run rate for the business. Dave, I believe Big Yummm was launched in the third week of July, so we haven't even seen a full quarter's impact yet. I know you mentioned focusing on upselling and training the front-of-house teams on how to sell the product, and the mix seemed relatively stable, only down 10 basis points. Coming out of Q3, while you noted a slight drop at the beginning of the quarter, I wonder if we can still unlock the benefits from Big Yummm and the resulting traffic. Is there still potential for us to drive further improvement from it?

Yes, we believe there is. We see potential to further enhance the impact of Big Yummm, and we are actively working on that. You're correct that it wasn't a complete quarter; it was probably around three weeks in. We feel optimistic about it because it performed as we anticipated. It attracted customers and provided a reason for them to visit, leading to trial. From a tactical perspective, it achieved our goals. Additionally, we are taking a more strategic approach to the entire menu and how we combine offerings, which includes some significant initiatives related to Big Yummm and beyond. I believe there is more potential to be realized. Although there was a slight dip at the start of the quarter, our fourth quarter pattern shows that October is our slowest month, with November gaining some momentum, and December is when we really see success. Therefore, we intentionally adjusted our marketing spend, shifting resources from October to the later part of the quarter when we typically see increased traffic.

Great. And just one follow-up there. What do you feel or what are you hearing from customers about the importance of having an everyday value platform now instead of having a be appointment dining? How important has that been and what you're hearing and feedback?

I believe we are seeing that it resonates with guests, particularly during early week, midweek, and lunch times. The value offering is a bit different from the weekend experience, where people tend to go out for date nights. During the early week lunch hours, customers are more inclined to seek out value opportunities with us. We see potential in how and when we provide this value. I don't expect this to change; I see it being an everyday aspect rather than being limited to certain days of the week. However, it does influence different times of the week more significantly than others.

Great. Dave, you also mentioned the data-driven marketing efforts and the fact that you had kind of a cohort of stores that maybe are a little bit more challenged where you saw really outsized improvement, I think, was your actual words from these efforts. Can you talk about any way to dimensionalize the traffic improvement from the effort? And then you talked about a path to expand this further. Can you maybe walk us through what that looks like going into '26?

Yes. This approach is extremely targeted, focusing on individual restaurants and their guests. We analyze the trade area to understand its characteristics and what attracts customers. Is it the value aspect, or are they drawn to premium burgers? We gather this information in a highly detailed manner. During our initial phase, we began with a small number of restaurants and learned that value appeals to one group while premium offerings might resonate better with another. We adjusted our messaging accordingly, emphasizing what works best for each specific group. This process helps us build a knowledge base that allows us to tailor messaging and promotions very precisely. As we initiated this strategy, we tracked performance, and Todd can provide more details on how it compares to the overall system's performance. We started with around 50 restaurants and have since expanded to about 130, with plans to grow further as we analyze more data. Our goal is to implement this across the entire system as swiftly as possible.

Todd, I'll just tag on quickly here to expand on the point of the over 100 restaurants that the team has been focused on. Sequentially, there's been a significant improvement in traffic trends in those restaurants to the point that in many weeks, obviously, we're looking daily, weekly, long term. But in many weeks and many periods, we're seeing that those restaurants are delivering positive traffic on a year-over-year basis. And that's ultimately where we want to be. And so now it's just a matter of, hey, we found a playbook that works in those 100 plus, and we'll work to expand that to the other restaurants, obviously.

Okay. Great. And I'll wrap it up into one final question. If you take the traffic driving benefit of the Big Yummm and you take the early success with the data-driven marketing, Dave, as you're thinking out to '26, I think year-to-date, there's maybe been 17 restaurant closures. Thoughts on stability of the base and maybe improving kind of that bottom decile or bottom quartile of stores with the early success that you're seeing from these two initiatives?

Yes, that's a good question. We are indeed experiencing it. Our operations team is concentrating on these target restaurants to ensure we keep them open and profitable. We've successfully moved several restaurants off the watch list and back to a productive status. However, there are still a few that are not quite meeting expectations yet, and we will continue to work with them. There may be a few additional closures, but the number is significantly lower than what was previously discussed.

The next question comes from Mark Smith from Lake Street Capital.

I just want to dig in a little bit more on menu mix and kind of check dynamics and consumer behavior. Big seem to mix well. But can you talk about kind of other parts of the menu, beverages, desserts, people sharing meals. Curious to hear what you're seeing in consumer behavior kind of during the quarter and even post quarter.

Mark, Todd here. I'll start. We were pleased with the mix outcome. Going into the quarter, we thought the Big Yummm deal might have had a more significant mix impact than what we actually experienced. This is partly due to our operators, as we provided trade-up options to guests, and many have taken advantage of those. While many are enjoying the $9.99 deal, others are opting for add-ons like toppings and beverages, which support the overall check. We also monitor trends in add-ons such as appetizers, desserts, and beverages, and we've seen those remain stable. This is encouraging, especially with current headlines suggesting consumers are being more cautious with their spending. We reported a slight negative mix, partly due to Big Yummm and also due to the growth in our catering business, which comes with a lower per-person average. This has a natural dilutive effect as that part of our business expands. However, we are seeing stability in appetizers, desserts, and beverages, with add-ons helping to offset the impact of the lower price point associated with Big Yummm.

Yes, Mark, I would just add, I think I agree with everything Todd said. I think the other thing I would offer is we learned a lot going through this Big Yummm deal, and we learned a lot about mix in consumer behaviors. And what resonates on our menu and what we may want to look at further. And so we're doing a lot of menu work right now that I think you'll see in 2026 that is an output of the learnings that we've got through the Big Yummm deal. Big Yummm is a very narrow, very tactical execution. I think the approach that you'll see us evolve to is a much broader, more strategic approach, including the Big Yummm, but beyond that.

Okay. Then I also wanted to ask about G&A. I know you didn't have this partners conference, but it looks really pretty good. I'm curious just how sustainable G&A is at these levels? Is it further cuts or maybe some ramp back up with more investments.

Yes, Mark, Todd here. I'll start. I'd frame it this way. When we look at our Q3 spend, we're expecting Q4 to be similar. So we think it is sustainable. It reflects some of the efficiencies that we have put in place and started to capture this year. And so we're certainly pleased with that. But as we look at just Q4 as an example, we expect Q4 to be similar to Q3.

Yes. I think we expect it to remain stable, Mark. However, we're exploring other opportunities for the future. I'm not concerned about it, and while I don’t have any signals yet, I believe there are ways we can not only maintain our position but possibly expand even further.

Excellent. And last one for me, Todd, I apologize, but I missed some of your comp guidance here for Q4. If you can walk through that and kind of the thought process behind where you're at for kind of comp expectation.

Yes, Mark, happy to. So the commentary in the prepared remarks, I talked about both same-store sales and traffic expectation for Q4 down 3%. The traffic, I think, is straightforward. That's frankly, exactly what we ran in Q3 in total at least, and we think is achievable, especially to Dave's point with the backloaded marketing. The sales being equal to traffic is obviously a couple of puts and takes. We do have a little bit of what I'll call gross menu price increase in place, meaning we have some year-over-year benefit from menu price increases. That becomes a lesser level in Q4 than it was in Q3. And so we expect mix will basically negate those menu price changes. So no net check, just the benefit or the impact of traffic flowing through to the comp number, if you follow me through all that.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I'd like to turn the call back to Mr. Dave Pace for closing remarks. Thank you.

Okay. Just quickly, thanks, everybody, for joining the call. We appreciate it, and we look forward to giving our next update after the fourth quarter. So thanks, everyone. Talk to you soon.

Thank you. Ladies and gentlemen, that does conclude today's conference for today. Thank you very much for joining us. You may now disconnect your lines.