Good afternoon, everyone, and welcome to the Red Robin Gourmet Burgers, Incorporated Second Quarter 2020 Earnings Call. Please note that today's call is recorded. During today's call, management 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 Safe Harbor discussion found in the company's SEC filings. During today's conference call, management will also discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended to illustrate an alternative measure of the company's operating performance that may be useful. A reconciliation 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 fiscal second quarter 2020 earnings release and supplemental financial information related to the results on its website at www.redrobin.com in the Investor Relations section. Now, I would like to turn the call over to Red Robin's CEO, Paul Murphy.

Hello and thank you for joining us. Let me begin by saying that I hope everyone on the call and your loved ones are safe and healthy during these tumultuous times. With me today is Lynn Schweinfurth, our Chief Financial Officer, who'll provide a detailed update on our liquidity and then review our quarterly results. But first, I would like to discuss where we are with the business and what our plans are for the remainder of the year and beyond. Following the initial outbreak of COVID, we set the following priorities for our business: one, secure the long-term viability of Red Robin through increased liquidity; two, ensure the health and safety of all team members and guests; three, leverage our off-premise channel to drive sales and opportunistically reopen our dining rooms; four, reduce expenses and improve flow-through on lower sales; and five, position Red Robin for recovery and future growth. Preserving liquidity and the long-term viability of Red Robin included several immediate, and in some cases, difficult actions. Reducing salaries, eliminating a material number of corporate positions, significantly reducing spending at both the restaurant and corporate levels, renegotiating our credit agreement, raising approximately $30 million in capital through our at-the-market equity offering and within the next 12 months, generating significant cash tax refunds. As a result, as of August 9, we have substantially improved our liquidity since last quarter to more than $103 million between cash and cash equivalents and available borrowing capacity. I am confident that we have the liquidity capacity to emerge from this period a stronger, more profitable enterprise. Red Robin has not only persevered over the past several months, we have used the focus created by the pandemic to improve the quality of our operations and build trust and loyalty with our guests that will…

Thank you, Paul. Before I review our second quarter financials, I will discuss a few other relevant topics starting with liquidity. As of August 9, we had liquidity of more than $103 million, including cash and cash equivalents and available borrowing capacity under our revolving line of credit. We believe our liquidity is sufficient given expected cash tax refunds, seating capacity expansion currently underway, improved flow-through due to reduced restaurant level and corporate costs and continued cash management efforts. Due to these same factors, I currently expect we will generate positive cash flow before the end of the year and I'm confident in our long-term financial viability. However, given the recent resurgence of the pandemic and the resulting closure of our California dining room, we currently estimate that we will still be losing cash in the fiscal third quarter, with a weekly cash burn rate of approximately $2 million, including the impact of increased occupancy payments compared to the second quarter. During the second quarter, we made meaningful progress in restructuring many of our leases. We appreciate the long-term perspective that our landlords are taking as we continue to engage in ongoing discussions. In response to the COVID-19 pandemic, the company undertook several other measures to preserve liquidity and reduce costs, some of which are meaningful permanent reductions to better position Red Robin for recovery and long-term growth. We intend to dedicate a significant portion of our free cash flow once achieved over the next several quarters to delevering our balance sheet. During the second quarter, we amended our credit facility, which provides covenant relief through the third quarter of 2021. In addition, we filed a $40 million shelf registration statement with the SEC for the purpose of raising incremental capital as needed to satisfy a condition in our credit…

Thank you, Lynn. Before we take your questions, let me leave you with the following thoughts: Before the crisis, there were already headwinds challenging casual dining brands to evolve and raise their game, from demographic and lifestyle shifts to increased pressure to innovate, while driving convenience and value. The pandemic has created a laboratory with extreme circumstances for accelerating changes, changes that are already underway at Red Robin. I am confident we have the liquidity capacity to emerge from the crisis with a more robust business model and strong brand position that will deliver long-term, sustainable shareholder value creation. While the pandemic is certainly not yet behind us, our confidence is based upon the results produced by our incredible Red Robin team members prior to and during this crisis. Thank you for your time today and interest in Red Robin and we would now be happy to take your questions.

Thank you. We will now be conducting a question-and-answer session. Our first questions come from the line of Alex Slagle with Jefferies. Please proceed with your question.

Hey, good afternoon, and thanks for the question. Just wondering if you guys could update us on the progress of figuring your dining rooms to handle 75% capacity levels. I believe you held your dining room capacity somewhere around 50% so far, so just curious what portion of your company restaurant base could be bumped up to 75% when you're ready to expand on your end?

Alex, this is Paul. Yeah. We did hold to 50% capacity. We have a pilot test on the partitions. It's going well, we have 155 restaurants that we're taking a look at now to be able to take the partitions into, that where the local jurisdictions or the state regulations would allow us to increase capacity to the 75% number. So we're already doing the work on that. We'll start with the, obviously the higher volume restaurants first and then work our way through that number of stores. At the same time, we're also, I just would emphasize, that we're working on expanding our patio capacity in all of our restaurants beyond just the kind of the small patio that couple of our prototypes had. So we're in the process of doing that right now and see that being completed over the next two or three weeks across the system.

Okay. How much have you added in terms of incremental new patio space thus far and other sort of outdoor dining areas?

Frankly, we've added very few so far. We just really launched it about 10 days ago and that's why we see it'll take us about two to three weeks to get the majority of the system up on that. We had to go out there and obviously procure the umbrellas and get that ready and then do some of the licensing extensions that we had to do. But we will have that rolled out, we believe, within the next three weeks.

Thank you. That's helpful.

Great.

Thank you. Our next questions come from the line of John Glass with Morgan Stanley. Please proceed with your question. John Glass - Morgan Stanley & Co. LLC: Thank you, thank you very much. Paul, can you just provide a little more color on the current comp trends and I'm sorry if I didn't see it in the release, but you didn't comment on it. How much has California's closing of dining rooms hurt you? Maybe some color on outside of that in some states where you haven't had closures maybe, but increased cases. How much dispersion is there in terms of the comp performance really over the last six or eight weeks?

John, this is Lynn. We did provide weekly sales information in the press release, which includes a comprehensive set of numbers and then the numbers associated with restaurants with open dining rooms. And you can see based on those charts that as of early July, when California required our indoor dining rooms to close, you see an adjustment there in terms of our comp store sales performance of about 4% on a comprehensive basis. However, since the dining rooms were closed, we have since increased our weekly average sales every week for the past five weeks since that occurrence. John Glass - Morgan Stanley & Co. LLC: Thanks for that. And then Lynn, while I've got you, what is the profitability at the restaurant? I think you said it improved through the quarter, so assuming comps sort of stay where they are today, where do you think restaurant margins would be, say, in the third quarter or at this comp or AUV level? And you've talked about finding ways to take out costs that aren't just temporary costs, but permanent. Can you give us some examples of where those costs that need to bend and maybe the order of magnitude that maybe gets preserved post COVID?

Well, that was a pretty large question, John. I mean, as you can see from our second quarter results, we did generate operating profit of $3.2 million at the restaurant level. I think we'll be in the mid single to low double digit margin as we move forward. And that's with an increase in terms of comp store sales as we continue to expand our seating capacity. The areas where we're expecting some savings from a permanent standpoint include some areas within our labor line item that we found some ways to be more efficient. Our occupancy costs, as we continue to work with our landlords, as it relates to restructuring our leases and then we're continuing to dive into other operating costs to see what other opportunities we may have. John Glass - Morgan Stanley & Co. LLC: Okay. Thank you.

Thank you. Our next questions come from the line of Gregory Francfort of Bank of America. Please proceed with your question.

Thanks. This is actually John Michael on for Greg. Thanks for taking the question. I wanted to ask on labor. It's been a lot more variable than we would have expected. And you mentioned the shifting labor mix in support of off-premise. I was wondering if you could just address what's changing on that front and how much is due to the new operating model versus something we might not be aware of.

I think that the majority of the variability that you've seen is really the move from the increase in the off-premise sales. And so, especially with the number of restaurants that the dining room is still closed and the number of tipped employees who obviously are at a lower wage rate, that has shifted to a higher average – hourly wage rate, not only in the restaurants that have no dine-in right now, but also in the restaurants that do have dine-in just because we continue to have strong off-prem sales as the dining rooms have reopened at the 50% capacity. So it's really just a shift in from tip to non-tip labor inside of the restaurants and the percentage of business that's associated with that.

Got it. Thank you. And then zooming out, just wondering what are the biggest changes that you've made as a result of COVID that you expect will stick even as we come out on the other side and consumer dine-in confidence sort of normalizes?

I think some of the biggest changes, I mean, as Lynn mentioned, we have made some changes in terms of the labor line, in terms of the management structure at the restaurant level and how we see that moving forward. Also with the new TGX model, we're seeing some efficiencies as the dining rooms reopen in terms of the front-of-the-house labor. And then frankly, as in the menu reduction that we did at the – taking 33% of the menu out, we've seen efficiencies also in the back of the house and the menu reduction that we've had has really been able to drive both quality and ticket times and things like that. So we feel good about it. We are – there may be some items brought back to the menu over time, but we see that being a more of a permanent structure, so whether it's the management structure in the front of the house or the back of the house, we see ongoing savings really in all three areas.

Got it. Thank you very much.

Thank you.

Thank you.

Our next questions come from the line of Brian Vaccaro of Raymond James. Please proceed with your question. Brian M. Vaccaro - Raymond James & Associates, Inc.: Thanks and good evening. Wanted to circle back to the sales mix and looking at the 350 or so company units with reopened dining rooms, curious where the off-premise sales mix has settled out in recent weeks if the AWS in that kind of $38,000, $39,000 a week range, how much is off-premise and then could you break that down further between takeout versus delivery?

Sure. I think we're running about 40% off-premise with the number of restaurants we currently have open and carryout has actually outpaced our delivery percentage of those off-premise dollars. And I'm just trying to get a more specific number here for you, Brian. Brian M. Vaccaro - Raymond James & Associates, Inc.: Okay. And I guess, Paul, one for you maybe as Lynn is looking that up. I wanted to ask about the expanded outdoor dining and I guess based on your current plan, how many seats or total capacity could that add in the average unit?

Well, I mean obviously that's – okay, I guess average unit, we think that that could be somewhere between 16 to 24 seats in the expanded outdoor dining rooms. And obviously, you're seeing it across the industry, but in our own research, we're seeing that our guests certainly that, in the research we're doing, have said that they're – even if they're not quite willing to come into a dining room right now, they are willing to engage with Red Robin in a outdoor patio situation. So, we're, as mentioned earlier, rolling that out right now and we're very pleased with early results in the few restaurants that we have opened that up so far. Brian M. Vaccaro - Raymond James & Associates, Inc.: Okay, great. Great. And similar type question, but on the plastic partitions, I think you said it could help in about a 150-company unit. Could you frame what kind of...

Well, it can help in more than that over time. Right now, we have 155 restaurants that by regulation, they could get to a capacity of that 75% range. And those will obviously be the first restaurants that we're putting them in. Brian M. Vaccaro - Raymond James & Associates, Inc.: Okay. And what percentage of the seats in an average Red Robin are booths versus tables?

That's a good question. And I'll be honest, I take a guess, but I can get back to you with a more specific answer in the future. Brian M. Vaccaro - Raymond James & Associates, Inc.: Okay. No problem.

But I would say about, yeah, I'd say about 30%, 30% to 40%. Brian M. Vaccaro - Raymond James & Associates, Inc.: Okay. Okay, great. And then last one for me, the weekly burn rate of $2 million a week. Could you decompose that a bit and remind us sort of what the weekly G&A run rate you will expect in Q3 and then the interest costs or any other cost assumptions that are embedded into that $2 million weekly burn rate for Q3?

Sure. Sure, Brian and let me circle back to your first question. Of our current off-premise sales when dining rooms opened, about 40% are carryout and 20% are third-party. And then in terms of our ongoing G&A assumption and our cash burn calculation, the G&A assumption is about $1.25 million per week and the interest expense expected is roughly $2 million a quarter. Brian M. Vaccaro - Raymond James & Associates, Inc.: Okay, okay. Okay. Thank you. I'll pass it along.

There are no further questions in the queue. And with that, I would like to conclude the call and thank you for joining Red Robin's conference call today. You may disconnect your lines at this time and have a great evening.