Company: RRGB
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001628280-25-051046
Chunk: 103

Company: RED ROBIN GOURMET BURGERS INC
Filing Date: 2025-11-10
Form: 10-Q
Item: Part I, Item 3
Chunk 103
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Table of Contents

ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Under our Credit Facility, we are exposed to market risk from changes in interest rates on borrowings. Borrowings under the Credit Facility are subject to rates based on SOFR plus a spread based on leverage or a base rate plus a spread based on leverage. The base rate is the highest of (a) the Prime Rate, (b) the Federal Funds Rate plus 0.5% per annum, or (c) one-month term SOFR plus 1.0% per annum. As of October 5, 2025, we had $177.7 million of borrowings subject to variable interest rates. A 1.0% change in the effective interest rate applied to these loans would have resulted in a pre-tax interest expense fluctuation of $1.8 million on an annualized basis.

We continue to monitor our interest rate risk on an ongoing basis and may use interest rate swaps or similar instruments in the future to manage our exposure to interest rate changes related to our borrowings as the Company deems appropriate.

Commodity Price Risks 

We purchase food, supplies and other commodities for use in our operations based on prices established with our suppliers. Many of the commodities purchased by us are subject to volatility due to market supply and demand factors outside of our control, including the price of other commodities, weather, seasonality, production, trade policy, and other factors. We may or may not have the ability to increase menu prices, or vary menu items, in response to commodity price increases, therefore an increase in food and beverage costs could negatively impact our profitability.

There has been no material change in the interest rate risk or commodity price risk since the filing of the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2024.