GREENWOOD VILLAGE, Colo. – Red Robin Gourmet Burgers are well known for three things, according to CEO Denny Marie Post – craveable burgers, prompt service and affordable abundance. Leveraging those three attributes will be central to driving traffic and improving results, Post told analysts during an earnings call.
Red Robin Gourmet Burgers Inc. weathered a tough second quarter that saw the premium burger chain’s comparable store sales ease 2.6 percent on a 0.7 percent decline in restaurant traffic.
Total revenues for the quarter ended July 15, 2018, retreated 0.6 percent to $315.4 million compared with $317.3 million in the second quarter of 2017. The company attributed the result to a $7.9 million drop in comparable restaurant revenues and a $1.0 million decrease from closed restaurants, partially offset by a $6.6 million increase in revenue from new restaurant openings and a $0.3 million favorable foreign currency exchange impact.
The company reported a net loss of $1.9 million in the second quarter, compared with $6.9 million in net income for the year-ago period. Adjusted net income was $6.0 million for the second quarter of 2018.
Referring to the company’s financial performance, Post said, “We did not execute as well as we know we are capable of, particularly at critical peak demand hours when we must be prepared to serve dine-in guests and our rapidly growing off-premise demand.”
Post said weakness in dine-in traffic caught executives off guard and represents the primary challenge facing Red Robin today. She said an analysis of hourly sales data revealed 75 percent of dine-in traffic losses came during peak hours. She attributed the losses to rising wait times. But Post reassured analysts that the company is “…moving urgently to improve service execution with renewed and narrowed focus on fundamentals…” while adding resources to drive sales.
“The growing complexity of our business has put pressure on our hosts to handle dine-in and carryout guests,” Post said. “Our hosting was traditionally an entry level position where your primary role was to greet and seat. Today, those hosts are asked to do much more as our check-out and third-party delivery businesses grow. We are moving rapidly forward with required new host training and improved selection criteria.”
Additionally, operations teams have focused on improving fix times and table turns. Post said the additional labor support should improve wait times and sales during peak hours.
Red Robin also is tweaking value options by varying prices. Post said the offering of five Tavern Double Burgers at $6.99 “went too far” and had a negative impact on per-person average than anticipated. “To address this issue,” Post said, “we will vary pricing on our Tavern line from now on. We will add new Tavern Double Burgers less often and likely remove another when we do so.”