GREENWOOD VILLAGE, Colo. – Red Robin Gourmet Burgers Inc. reported a drop in comparable sales for the third quarter and lowered its earnings guidance for the full year.
Comparable restaurant revenue decreased 3.4 percent in the third quarter ended Oct. 7, 2018 compared to the same period a year ago, driven by a 1.5 percent decrease in average guest check and a 1.9 percent decrease in guest counts, Red Robin said. The decrease in average guest check comprised a 3.0 percent decrease in menu mix, offset by a 1.5 percent increase in pricing.
Total revenues — which primarily include company-owned restaurant revenue and franchise royalties — for the most recent quarter decreased to $294.9 million from $305.7 million reported in the third quarter of 2017.
System-wide restaurant revenue, which includes franchised units, totaled $351.0 million, compared to $361.0 million for the third quarter a year ago.
Net income was $1.7 million for the third quarter of 2018 compared to $2.7 million for the same period in 2017. Adjusted net income for the third quarter was $2.1 million.
“We are pleased with our continued improvement in managing labor and food costs, fundamental to achieving sustainable profit growth when we regain top-line sales momentum. Our third quarter sales performance was the result of a decline in dine-in traffic, which we expected when we chose mid quarter to shift remaining media weight to later in the year,” said CEO Denny Marie Post. “We took the last part of the third quarter to begin retraining all of our restaurant teams on peak-hour service standards based on our success in pilot locations. We believe this will ensure our restaurant teams are well-prepared for seasonally higher volume in the fourth quarter and we are encouraged that we are already seeing improvements in ticket and wait times.”
Red Robin also launched a new value offering heading into the fourth quarter. The new Haystack Tavern is being offered at $6.99 for a limited time, along with the original Red’s Tavern Double. Post said the Tavern Double lineup priced from $6.99 to $8.99 is a better value than virtually all fast-casual competitors.
In its earnings guidance, Red Robin projected earnings per diluted share in the range of $1.60 to $1.80 for full-year 2018.
“By refreshing our marketing plans and improving service execution, we firmly believe we can get back to where we all want and need to be, although how long that will take is not entirely clear,” Post told analysts during an earnings call. “As it stands, we do not expect to see meaningful same-store sales trend improvement in Q4 over Q3. This is also our first-ever holiday season with full catering offerings. So, projecting accurately on sales is challenging. Given this combination, we decided it was prudent to lower full year guidance.”