Caution Regarding Forward-Looking Statements


This Quarterly Report on Form 10-Q contains "forward-looking statements" that
reflect, when made, the Company's expectations or beliefs concerning future
events that involve risks and uncertainties. Forward-looking statements
frequently are identified by the words "anticipate," "assume," "believe,"
"continue," "could," "estimate," "expect," "forecast," "future," "intend,"
"likely result," "may," "might," "plan," "potential," "predict," "project,"
"seek", "should," "target," "will be," "will continue," "will likely result,"
"would" and other similar words and phrases. Similarly, statements herein that
describe the Company's objectives, plans or goals, including with respect to
restaurant openings/re-openings and acquisitions or closures, capital
expenditures, strategy, financial outlook, cash flows, our effective tax rate,
and the impact of recent accounting pronouncements, also are forward-looking
statements. Actual results could differ materially from those projected, implied
or anticipated by the Company's forward-looking statements. Some of the factors
that could cause actual results to differ include: the negative impact the
COVID-19 pandemic has had and will continue to have on our business, financial
condition, results of operations and cash flows; reductions in the availability
of, or increases in the cost of, USDA Prime grade beef, fish and other food
items; changes in economic conditions and general trends; the loss of key
management personnel; the effect of market volatility on the Company's stock
price; health concerns about beef or other food products; the effect of
competition in the restaurant industry; changes in consumer preferences or
discretionary spending; labor shortages or increases in labor costs; the impact
of federal, state or local government regulations relating to income taxes,
unclaimed property, Company employees, the sale or preparation of food, the sale
of alcoholic beverages and the opening of new restaurants; political conditions,
civil unrest or other developments and risks in the markets where the Company's
restaurants are located; harmful actions taken by the Company's franchisees; the
inability to successfully integrate franchisee acquisitions into the Company's
business operations; economic, regulatory and other limitations on the Company's
ability to pursue new restaurant openings and other organic growth
opportunities; a material failure, interruption or security breach of the
Company's information technology network; the Company's indemnification
obligations in connection with its sale of the Mitchell's Restaurants; the
Company's ability to protect its name and logo and other proprietary
information; an impairment in the financial statement carrying value of our
goodwill, other

                                       16

--------------------------------------------------------------------------------
intangible assets or property; gains or losses on lease modifications; the
impact of litigation; the restrictions imposed by the Company's credit
agreement; changes in, or the suspension or discontinuation of, the Company's
quarterly cash dividend payments or share repurchase program; and the inability
to secure additional financing on terms acceptable to the Company. For a
discussion of these and other risks and uncertainties that could cause actual
results to differ from those contained in the forward-looking statements, see
"Risk Factors" in Part II Item 1A of this Form 10-Q and the Company's Annual
Report on Form 10-K for the fiscal year ended December 27, 2020, which is
available on the SEC's website at www.sec.gov. All forward-looking statements
are qualified in their entirety by this cautionary statement, and the Company
undertakes no obligation to revise or update this Quarterly Report on Form 10-Q
to reflect events or circumstances after the date hereof. You should not assume
that material events subsequent to the date of this Quarterly Report on Form
10-Q have not occurred.

Overview

Ruth's Hospitality Group, Inc. is a restaurant company focused on the upscale
dining segment. Ruth's Hospitality Group, Inc. operates Company-owned Ruth's
Chris Steak House restaurants and sells franchise rights to Ruth's Chris Steak
House franchisees giving the franchisees the exclusive right to operate similar
restaurants in a particular area designated in the franchise agreement. As of
June 27, 2021, there were 148 Ruth's Chris Steak House restaurants, including 73
Company-owned restaurants, three restaurants operating under contractual
agreements and 72 franchisee-owned restaurants.

The Ruth's Chris menu features a broad selection of USDA Prime- and other high
quality steaks and other premium offerings served in Ruth's Chris' signature
fashion - "sizzling" and topped with butter - complemented by other traditional
menu items inspired by our New Orleans heritage. The Ruth's Chris restaurants
reflect over 50 years committed to the core values instilled by our founder,
Ruth Fertel, of caring for our guests by delivering the highest quality food,
beverages and service in a warm and inviting atmosphere.

All Company-owned Ruth's Chris Steak House restaurants are located in the United
States. The franchisee-owned Ruth's Chris Steak House restaurants include 21
international franchisee-owned restaurants in Aruba, Canada, China, Hong Kong,
Indonesia, Japan, Mexico, Singapore and Taiwan.

In March 2020 the World Health Organization declared the novel coronavirus 2019
(COVID-19) a pandemic and the United States declared it a National Public Health
Emergency, which has resulted in a significant reduction in revenue at the
Company's restaurants due to mandatory restaurant closures, capacity
limitations, social distancing guidelines or other restrictions mandated by
governments across the world, including federal, state and local governments in
the United States. As a result of these developments, the Company has
experienced a significant negative impact on its revenues, results of operations
and cash flows compared to periods prior to the onset of the pandemic. As of
June 27, 2021, 75 of the 76 Company-owned and -managed restaurants were offering
dining service, one Company-owned restaurant was closed, 63 franchisee-owned
restaurants were offering dining service, two franchisee-owned restaurants
offering outdoor seating only and three franchisee-owned restaurants were
offering to-go and delivery service only. The Ruth's Chris Steak House located
in Bellevue, WA permanently closed in April 2021. The extent to which COVID-19
will continue to impact the Company will depend on future developments, which
are highly uncertain and cannot be predicted with confidence, including the
unknown duration and severity of the COVID-19 pandemic, which may be impacted by
variants of the COVID-19 virus and the adoption rate of the COVID-19 vaccines in
the jurisdictions in which the Company operates, the actions taken to contain
the impact of COVID-19, and further actions that may be taken to limit the
resulting economic impact.

Our business is subject to seasonal fluctuations. Historically, our first and
fourth quarters have tended to be the strongest revenue quarters due largely to
the year-end holiday season and the popularity of dining out during the fall and
winter months.  Due to the impacts of COVID-19, it is uncertain whether future
quarters will be stronger or weaker than the second fiscal quarter of
2021. Consequently, results for any one quarter are not necessarily indicative
of results to be expected for any other quarter or for any year and comparable
restaurant sales for any particular period may decrease.

Our annual report on Form 10-K for the fiscal year ended December 27, 2020
provides additional information about our business, operations and financial condition.


                                       17

————————————————– ——————————

Results of operations


The table below sets forth certain operating data expressed as a percentage of
total revenues for the periods indicated, except as otherwise noted. Our
historical results are not necessarily indicative of the operating results that
may be expected in the future.



                                        13 Weeks Ended                      26 Weeks Ended
                                  June 27,          June 28,          June 27,          June 28,
                                    2021              2020              2021              2020
Revenues:
Restaurant sales                        93.9 %            94.9 %            93.7 %            94.9 %
Franchise income                         4.1 %             3.4 %             4.2 %             3.3 %
Other operating income                   2.0 %             1.7 %             2.1 %             1.8 %
Total revenues                         100.0 %           100.0 %           100.0 %           100.0 %

Costs and expenses:
Food and beverage costs
(percentage of
  restaurant sales)                     30.3 %            29.8 %            29.3 %            29.7 %
Restaurant operating expenses
(percentage
  of restaurant sales)                  43.6 %            97.4 %            44.7 %            62.9 %
Marketing and advertising                2.9 %             5.2 %             2.6 %             3.6 %
General and administrative
costs                                    7.9 %            24.9 %             8.1 %            11.0 %
Depreciation and amortization
expenses                                 4.6 %            19.4 %             5.1 %             8.3 %
Pre-opening costs                        0.1 %             1.1 %             0.3 %             0.6 %
Gain on lease modifications                -              (1.7 %)              -              (0.4 %)
Loss on impairment                       0.4 %            15.1 %             0.2 %             9.5 %
Total costs and expenses                85.3 %           184.7 %            85.7 %           120.6 %

Operating income (loss)                 14.7 %           (84.7 %)           14.3 %           (20.6 %)

Other income (expense):
Interest expense, net                   (1.0 %)           (4.5 %)           (1.2 %)           (1.4 %)
Other                                    0.0 %             0.0 %             0.0 %             0.0 %
Income (loss) before income
taxes                                   13.7 %           (89.2 %)           13.1 %           (22.0 %)
Income tax expense (benefit)             2.5 %           (27.3 %)            2.2 %            (6.3 %)
Net income (loss)                       11.2 %           (61.9 %)           10.9 %           (15.7 %)



End of second trimester June 27, 2021 (13 weeks) compared to the closed second quarter
June 28, 2020 (13 weeks)


Overview. Operating income (loss) increased by $40.3 million to $16.3 million
for the second quarter of fiscal year 2021 from the loss reported for the second
quarter of fiscal year 2020. Operating income for the second quarter of fiscal
year 2021 was favorably impacted by a $77.2 million increase in restaurant
sales, a $3.9 million decrease in loss on impairment and a $3.6 million increase
in franchise income offset by a $23.6 million increase in food and beverage
costs and a $19.1 million increase in restaurant operating expenses. Net income
(loss) increased from the second quarter of fiscal year 2020 by $30.0 million to
$12.4 million.

Segment Profits. Segment profitability information is presented in Note 7 in the
notes to the condensed consolidated financial statements included in Item 1.
"Financial Statements". Segment profit for the second quarter of fiscal year
2021 for the Company-owned steakhouse restaurant segment increased by $36.2
million to a $28.5 million profit compared to the second quarter of fiscal year
2020. The increase was driven primarily by an $79.0 million increase in
restaurant sales offset by an increase of $23.6 million in food and beverage
costs and a $19.1 million increase in restaurant operating expenses. Franchise
income increased $3.6 million in the second quarter of fiscal year 2021 compared
to the second quarter of fiscal year 2020.

Restaurant Sales. Restaurant sales increased by $77.2 million, or 286.1%, to
$104.2 million in the second quarter of fiscal year 2021 from the second quarter
of fiscal year 2020.  Company-owned comparable restaurant sales increased by
286.6%, which consisted of a 199.8% increase in traffic and a 29.0% increase in
average check. At the end of the second quarter, 72 Company-owned Ruth's Chris
Steak House restaurants were in operation offering dining room service, and one
Company-owned restaurant was closed.

Franchise Income. Franchise income in the second quarter of fiscal year 2021
increased by $3.6 million, or 373.6%, to $4.5 million in the second quarter of
fiscal year 2021 compared to the second quarter of fiscal year 2020. The
increase in franchise income compared

                                       18

————————————————– ——————————

in the second quarter of fiscal 2020 was due to increased sales at franchise-owned restaurants due to the decrease in COVID-19 restrictions.


Other Operating Income. Other operating income increased by $1.7 million in the
second quarter of fiscal year 2021 compared to the second quarter of fiscal year
2020. The increase was primarily due to a $936 thousand increase in income from
restaurants operating under contractual agreements and an increase in breakage
income of $695 thousand resulting from an increase in gift card redemptions. The
increased in these items were due to increases in restaurant traffic as
restaurant dining rooms reopened as COVID-19 restrictions were eased.

Food and Beverage Costs. Food and beverage costs increased by $23.6 million, or
293.6%, to $31.6 million in the second quarter of fiscal year 2021 compared to
the second quarter of fiscal year 2020 primarily due to increased restaurant
sales. As a percentage of restaurant sales, food and beverage costs increased to
30.3% in the second quarter of fiscal year 2021 from 29.8% in the second quarter
of fiscal year 2020, primarily driven by a 27.0% increase in beef costs.

Restaurant Operating Expenses. Restaurant operating expenses increased by $19.1
million, or 72.8%, to $45.4 million in the second quarter of fiscal year 2021
from the second quarter of fiscal year 2020. Restaurant operating expenses, as a
percentage of restaurant sales, decreased to 43.6% in the second quarter of
fiscal year 2021 from 97.4% in the second quarter of fiscal year
2020. Restaurant operating expenses, as a percentage of restaurant sales, in the
second quarter of fiscal year 2019 were 49.2%. The decrease in restaurant
operating expenses as a percentage of restaurant sales during the second quarter
of fiscal year 2021 compared to the second quarter of fiscal year 2019 were
primarily due to labor efficiencies.

Marketing and Advertising. Marketing and advertising expenses increased by $1.7
million, or 117.4%, to $3.2 million in the second quarter of fiscal year 2021
from the second quarter of fiscal year 2020. The increase in marketing and
advertising expenses in the second quarter of fiscal year 2021 was attributable
to a return to our planned level of spending in line with our increase in
revenues.

General and Administrative Costs. General and administrative costs increased by
$1.7 million, or 24.2%, to $8.8 million in the second quarter of fiscal year
2021 from the second quarter of fiscal year 2020. The increase in general and
administrative costs was primarily attributable to a $1.8 million increase in
incentive-based compensation. As a percentage of revenue, general and
administrative costs decreased from 24.9% in the second quarter of fiscal year
2020 to 7.9% in the second quarter of fiscal year 2021 primarily due to sales
increasing.

Depreciation and Amortization Expenses. Depreciation and amortization expense
decreased by $438 thousand to $5.1 million in the second quarter of fiscal year
2021 from the second quarter of fiscal year 2020 primarily due to the permanent
closure of nine Ruth's Chris Steak House restaurants during fiscal year 2020.

Pre-opening Costs. Pre-opening costs were $159 thousand in the second quarter of
fiscal year 2021 compared to pre-opening costs of $304 thousand in the second
quarter of fiscal year 2020. These expenses are primarily due to the recognition
of rent expense at unopened Ruth's Chris Steak House restaurants where the
Company has taken possession of the property.

Gain on Lease Modifications. During the second quarter of fiscal year 2020, the
Company recorded a $488 thousand gain on lease modifications primarily related
to the conversion of a lease with a fixed payment stream to a variable payments
stream at a Ruth's Chris Steak House restaurant. There were no lease
modifications resulting in a gain during the second quarter of fiscal year 2021.

Loss on Impairment. During the second quarter of fiscal year 2021, the Company
recorded a $394 thousand loss on impairment of which $306 thousand related to
long-lived assets as described further in Note 2 in the notes to the condensed
consolidated financial statements included in Item 1. "Financial Statements".

Interest Expense. Interest expense decreased $163 thousand to $1.1 million in
the second quarter of fiscal year 2021 compared to $1.3 million in the second
quarter of fiscal year 2020. The decrease primarily relates to a lower average
debt balance during the second quarter of fiscal year 2021 compared to the
second quarter of fiscal year 2020.

Other income and expenses. During the second quarter of fiscal 2021, we recognized other revenue from $ 36,000. During the second quarter of fiscal 2020, we recognized further revenue of $ 3,000.


Income Tax Expense (Benefit). During the second quarter of fiscal year 2021, we
recognized income tax expense of $2.8 million. During the second quarter of
fiscal year 2020, we recognized an income tax benefit of $7.8 million. The
effective tax rate, including the impact of discrete items, decreased to a 18.2%
expense for the second quarter of fiscal year 2021 compared to a 30.6% benefit
for the second quarter of fiscal year 2020, primarily due to the generation of
pretax income for the second quarter of fiscal year 2021 compared to a pretax
loss in the second quarter of fiscal year 2020. Fiscal year 2021 discrete items
and other unexpected changes

                                       19

--------------------------------------------------------------------------------
impacting the annual tax expense may cause the effective tax rate for fiscal
year 2021 to differ from the effective tax rate for the second quarter of fiscal
year 2021.

Net Income (Loss). Net income was $12.4 million in the second quarter of fiscal
year 2021, which reflected an increase of $30.0 million compared to a net loss
of $17.6 million in the second quarter of fiscal year 2020. The increase was
attributable to the factors noted above.

Twenty-six weeks completed June 27, 2021 Compared to the twenty-six weeks completed June 28, 2020


Overview. Operating income (loss) increased by $56.5 million to $28.3 million
for the first twenty-six weeks of fiscal year 2021 from the loss reported for
the first twenty-six weeks of fiscal year 2020. Operating income for the first
twenty-six weeks of fiscal year 2021 was favorably impacted by a $55.8 million
increase in restaurant sales, a $3.7 million increase in franchise income and a
$12.6 million decrease in loss on impairment which was partially offset by a
$15.9 million increase in food and beverage costs. Net income (loss) increased
from the first twenty-six weeks of fiscal year 2020 by $43.0 million to $21.5
million.

Segment Profits. Segment profitability information is presented in Note 7 in the
notes to the condensed consolidated financial statements included in Item 1.
"Financial Statements". Segment profit for the first twenty-six weeks of fiscal
year 2021 for the Company-owned steakhouse restaurant segment increased by $39.7
million to a $50.7 million profit compared to the first twenty-six weeks of
fiscal year 2020. The increase was driven primarily by a $56.7 million increase
in restaurant sales offset by a $15.9 million increase in food and beverage
costs and a $1.2 million increase in restaurant operating expenses. Franchise
income increased $3.7 million in the first twenty-six weeks of fiscal year 2021
compared to the fist twenty-six weeks of fiscal year 2020.

Restaurant Sales. Restaurant sales increased by $55.8 million, or 42.9%, to
$185.8 million in the first twenty-six weeks of fiscal year 2021 from the first
twenty-six weeks of fiscal year 2020.  Company-owned comparable restaurant sales
during the first twenty-six weeks of fiscal year 2021 were $175.0 million, which
represented an increase of $66.7 million compared to the first twenty-six weeks
of fiscal year 2020. Company-owned comparable restaurant sales increased by
54.5%, which consisted of a 42.2% increase in traffic and an 8.6% increase in
average check.

Franchise Income. Franchise income in the first twenty-six weeks of fiscal year
2021 increased by $3.7 million, or 81.6%, to $8.3 million in the first
twenty-six weeks of fiscal year 2021 compared to the first twenty-six weeks of
fiscal year 2020. The increase in franchise income compared to the first
twenty-six weeks of fiscal year 2020 was due to an increase in franchisee-owned
restaurant sales due to the lessening of COVID-19 restrictions.

Other Operating Income. Other operating income increased by $1.7 million in the
first twenty-six weeks of fiscal year 2021 compared to the first twenty-six
weeks of fiscal year 2020. The increase was primarily due to a $1.3 million
increase in income from restaurants operating under contractual agreements and
an increase in breakage income of $554 thousand resulting from an increase in
gift card redemptions. The increased in these items were due to increases in
restaurant traffic as restaurant dining rooms reopened as COVID-19 restrictions
were eased.

Food and Beverage Costs. Food and beverage costs increased by $15.9 million, or
41.1%, to $54.5 million in the first twenty-six weeks of fiscal year 2021
compared to the first twenty-six weeks of fiscal year 2020 primarily due to
increased restaurant sales. As a percentage of restaurant sales, food and
beverage costs decreased to 29.3% in the first twenty-six weeks of fiscal year
2021 from 29.7% in the first twenty-six weeks of fiscal year 2020, primarily
driven by an increase in average check of 8.6% partially offset by a 15.7%
increase in beef costs.

Restaurant Operating Expenses. Restaurant operating expenses increased by $1.2
million, or 1.4%, to $83.0 million in the first twenty-six weeks of fiscal year
2021 from the first twenty-six weeks of fiscal year 2020. Restaurant operating
expenses, as a percentage of restaurant sales, decreased to 44.7% in the first
twenty-six weeks of fiscal year 2021 from 62.9% in the first twenty-six weeks of
fiscal year 2020. The decrease in restaurant operating expenses as a percentage
of restaurant sales was primarily due to labor efficiencies and savings in
occupancy expenses.

Marketing and Advertising. Marketing and advertising expenses increased by $300
thousand, or 6.1%, to $5.2 million in the first twenty-six weeks of fiscal year
2021 from the first twenty-six weeks of fiscal year 2020. The increase in
marketing and advertising expenses in the first twenty-six weeks of fiscal year
2021 was attributable to a partial return in spending following our response to
the COVID-19 pandemic in line with our anticipated level of operations.

General and Administrative Costs. General and administrative costs increased
$875 thousand, or 5.8%, to $16.0 million in the first twenty-six weeks of fiscal
year 2021 from the first twenty-six weeks of fiscal year 2020. The increase in
general and administrative costs was primarily attributable to a $1.6 million
increase in compensation related expenses and a $337 thousand decrease in

                                       20

————————————————– ——————————

occupancy-related expenses. As a percentage of sales, general and administrative expenses fell from 11.0% in the first twenty-six weeks of fiscal 2020 to 8.1% during the first twenty-six weeks of the fiscal year 2021, mainly due to increased sales.


Depreciation and Amortization Expenses. Depreciation and amortization expense
decreased by $1.2 million to $10.1 million in the first twenty-six weeks of
fiscal year 2021 from the first twenty-six weeks of fiscal year 2020 primarily
due to the permanent closure of nine Ruth's Chris Steak House restaurants during
fiscal year 2020.

Pre-opening Costs. Pre-opening costs were $604 thousand in the first twenty-six
weeks of fiscal year 2021 compared to pre-opening costs of $781 thousand in the
first twenty-six weeks of fiscal year 2020. These expenses are primarily due to
the recognition of rent expense at unopened Ruth's Chris Steak House restaurants
where the Company has taken possession of the property.

Gain on Lease Modifications. During the first twenty-six weeks of fiscal year
2020, the Company recorded a $488 thousand gain on lease modifications primarily
related to the conversion of a lease with a fixed payment stream to a variable
payments stream at a Ruth's Chris Steak House. There were no lease modifications
resulting in a gain during the first twenty-six weeks of fiscal year 2021.

Loss on Impairment. During the first twenty-six weeks of fiscal year 2021, the
Company recorded a $394 thousand impairment loss of which $306 thousand related
to long-lived assets as described further in Note 2 in the notes to the
condensed consolidated financial statements included in Item 1. "Financial
Statements".

Interest Expense. Interest expense increased $512 thousand to $2.4 million in
the first twenty-six weeks of fiscal year 2021 compared to $1.9 million in the
first twenty-six weeks of fiscal year 2020. The increase primarily relates to a
higher average debt balance during the first twenty-six weeks of fiscal year
2021 compared to the first twenty-six weeks of fiscal year 2020.

Other Income and Expense. During the first twenty-six weeks of fiscal year 2021,
we recognized other income of $80 thousand. During the first twenty-six weeks of
fiscal year 2020, we recognized other income of $36 thousand.

Income Tax Expense (Benefit). During the first twenty-six weeks of fiscal year
2021, we recognized income tax expense of $4.5 million. During the first
twenty-six weeks of fiscal year 2020, we recognized an income tax benefit of
$8.6 million. The effective tax rate, including the impact of discrete items,
decreased to a 17.1% expense for the first twenty-six weeks quarter of fiscal
year 2021 compared to an 28.7% benefit for the first twenty-six weeks of fiscal
year 2020, primarily due to the generation of pretax income for the first
twenty-six weeks of fiscal year 2021 compared to a pretax loss in the first
twenty-six weeks of fiscal year 2020. Fiscal year 2021 discrete items and other
unexpected changes impacting the annual tax expense may cause the effective tax
rate for fiscal year 2021 to differ from the effective tax rate for the first
twenty-six weeks of fiscal year 2021.

Net Income (Loss). Net income was $21.5 million in the first twenty-six weeks of
fiscal year 2021, which reflected an increase of $43.0 million compared to a net
loss of $21.4 million in the first twenty-six weeks of fiscal year 2020. The
increase was attributable to the factors noted above.

Liquidity and capital resources

Overview


Our principal sources of cash have been historically provided by our operating
activities as well as periodic borrowings from our senior credit
facility. During the first twenty-six weeks of fiscal year 2021 our principal
uses of cash flow were debt repayments and capital expenditures.

During the fourth quarter of fiscal year 2019, our Board of Directors approved a
new share repurchase program authorizing us to repurchase up to $60 million of
outstanding common stock from time to time. As a result of the impacts to our
business arising from the COVID-19 pandemic, the Company has suspended its share
repurchase program and dividend payments.

Senior credit facility


As of June 27, 2021, we had $70.0 million of outstanding indebtedness under our
senior credit facility and approximately $4.7 million of outstanding letters of
credit, pursuant to a credit agreement entered into with Wells Fargo Bank,
National Association as administrative agent, and certain other lenders (as
amended, as of the end of the fiscal year 2020, the "Credit Agreement "). As of
June 27, 2021, the weighted average interest rate on our outstanding debt was
3.5% and the weighted average interest rate on our outstanding letters of credit
was 2.6%. In addition, the fee on the unused portion of our senior credit
facility was 0.4%.

On January 28, 2021 the Company entered into a Sixth Amendment to Credit
Agreement (the "Sixth Amendment" and the "Credit Agreement as amended by the
Sixth Amendment"), which makes certain amendments to the Credit Agreement. The
Sixth

                                       21
--------------------------------------------------------------------------------
Amendment provides for a $10.0 million commitment reduction from the $120.0
million available under the Credit Agreement so that the Credit Agreement will
provide for a $110.0 revolving credit facility. The commitment reduction became
effective as of March 29, 2021, the first day of the Company's second fiscal
quarter for 2021. The Credit Agreement as amended by the Sixth Amendment has a
$5.0 million subfacility of letters of credit and a $5.0 million subfacility for
swingline loans. The Sixth Amendment limited non-maintenance capital
expenditures by the Company and its subsidiaries to no more than $5.0 million
during fiscal year 2021.

On May 4, 2021, the Company entered into a Seventh Amendment to Credit Agreement
(the "Seventh Amendment" and the Credit Agreement as amended by the Seventh
Amendment, the "Amended Credit Agreement"), which amends its existing $110.0
million Credit Agreement as amended by the Sixth Amendment. The Seventh
Amendment increases the permitted non-maintenance related capital expenditures
from $5.0 million to $20.0 million in fiscal year 2021 and adjusted the interest
rate pricing and maximum Consolidated Leverage Ratio. Beginning in fiscal year
2022, requirements for non-maintenance capital expenditures revert back to the
terms in the Credit Agreement when the Consolidated Leverage Ratio is less than
2.50 to 1.00, and non-maintenance capital expenditures will not be permitted if
the Consolidated Leverage Ratio is greater than 2.50 to 1.00. The Seventh
Amendment requires that the Consolidated Leverage Ratio not exceed the following
thresholds for the periods indicated:





Period                           Maximum Ratio
The last day of the second       4.00 to 1.00
Fiscal Quarter of the 2021
Fiscal Year
The last day of the third Fiscal 3.50 to 1.00
Quarter of the 2021 Fiscal Year
The last day of the fourth       3.00 to 1.00
Fiscal Quarter of the 2021
Fiscal Year and thereafter




Under the Seventh Amendment, the Fixed Charge Coverage Ratio thresholds remain
the same as required under the Sixth Amendment. Both the Consolidated Leverage
Ratio and the Fixed Charge Coverage Ratio will be calculated under the Seventh
Amendment by including the results from the first quarter of fiscal year 2021.

Under the Credit Agreement there are a number of customary representations and
affirmative and negative covenants (including limitations on indebtedness and
liens) as well as financial covenants, as described further in Note 5 in the
notes to the condensed consolidated financial statements included in Item 1.
"Financial Statements". The Company currently is prohibited from paying any
dividends or repurchasing any shares of its common stock if the Company cannot
demonstrate that its Consolidated Leverage Ratio is less than 2.00 to 1.00 (both
before and after giving effect to the proposed repurchase or dividend).

For more information on our long-term debt, see note 5 of the notes to the condensed consolidated financial statements included in section 1. “Financial statements”.

Sources and uses of species

The following table is a summary of our net cash provided by (used in) operating, investing and financing activities (in thousands):



                                                           26 Weeks Ended
                                                       June 27,      June 28,
                                                         2021          2020
Net cash provided by (used in):
Operating activities                                   $  42,004     $  (2,732 )
Investing activities                                      (2,504 )      (8,202 )
Financing activities                                     (47,563 )     101,494

Net increase (decrease) in cash and cash equivalents $ (8,063) $ 90,560





Operating Activities. Operating activities provided cash during the first
twenty-six weeks of fiscal year 2021 and used cash during the first twenty-six
weeks of fiscal year 2020. Operating cash outflows pertain primarily to
expenditures for food and beverages, restaurant operating expenses, marketing
and advertising, general and administrative costs and income taxes. Operating
activities provided cash flows primarily because operating revenues have
exceeded cash-based expenses.

Investing Activities. Cash used in investing activities aggregated $2.5 million
in the first twenty-six weeks of fiscal year 2021 compared with $8.2 million
used in the first twenty-six weeks of fiscal year 2020. Cash used in investing
projects during the first

                                       22
--------------------------------------------------------------------------------
twenty-six weeks of fiscal year 2021 primarily pertained to $1.4 million for new
restaurants and $981 thousand for capital replacement projects. The Company was
restricted by its Amended Credit Agreement for capital expenditures, resulting
in a significant decrease in the first twenty-six weeks of fiscal year
2021. Cash used in investing activities during the first twenty-six weeks of
fiscal year 2020 primarily pertained to $5.1 million for new restaurants that
opened during 2019 and 2020 or were originally anticipated to open in 2020 or
2021 and $2.5 million for restaurant remodel and capital replacement projects.

Financing Activities. Financing activities used cash during the first twenty-six
weeks of fiscal year 2021 and provided cash during the first twenty-six weeks of
fiscal year 2020. During the first twenty-six weeks of fiscal year 2021, we
reduced debt by $45.0 million, paid $2.4 million in employee withholding taxes
in connection with the vesting of restricted stock and paid $145 thousand in
deferred financing costs. We paid the $2.4 million in taxes in connection with
the vesting of restricted stock for recipients who elected to satisfy their
individual tax withholding obligations by having us withhold a number of vested
shares of restricted stock. During the first twenty-six weeks of fiscal year
2020, we: increased debt by $71.2 million to secure additional liquidity in
response to COVID-19; sold common stock for $49.6 million, used $13.2 million to
repurchase common stock; paid dividends of $4.4 million; paid $1.1 million in
taxes in connection with the vesting of restricted stock; and paid $582 thousand
in deferred financing costs.

Off-balance sheet provisions

From June 27, 2021, we had no off-balance sheet arrangements.

Critical accounting conventions and estimates


The preparation of our financial statements requires management to make
estimates, judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses during the periods presented. Our Annual
Report on Form 10-K for the fiscal year ended December 27, 2020 includes a
summary of the critical accounting policies and estimates that we believe are
the most important to aid in the understanding our financial results. There have
been no material changes to these critical accounting policies and estimates
that impacted our reported amounts of assets, liabilities, revenues or expenses
during the first twenty-six weeks of fiscal year 2021.

© Edgar online, source Previews

Leave a Reply

Your email address will not be published.