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Red Robin Gourmet Burgers (RRGB) 6 Nov 24 2024 Q3 Earnings call transcript

AInvestThursday, Nov 7, 2024 9:43 am ET
2min read

In the third quarter of 2024, Red Robin Gourmet Burgers, Inc. reported results that largely met expectations, with a focus on the progress of their Loyalty 2.0 relaunch and the ability to drive guest interest in their brand. Despite the macroeconomic challenges, the company expressed confidence in their ability to compete and win in the market.

Financial Performance

Red Robin's third quarter revenues were $274.6 million, a decrease from $277.6 million in the previous year, primarily due to the closure of nine restaurants. However, the company achieved a comparable restaurant revenue increase of 0.6%, driven by an increase in guest check average, which exceeded the industry average. Operating profit decreased by 210 basis points compared to the third quarter of 2023, mainly due to lower guest counts and increased discount levels. The company has been proactive in pursuing cost savings, particularly in the supply chain, to offset these challenges.

Loyalty 2.0 and Marketing Strategies

One of the key initiatives for Red Robin has been the launch of Loyalty 2.0, which has exceeded expectations with increased sign-ups, frequent visits, and higher spending per visit. This program is a major factor in the company's marketing strategy, as it encourages guests to engage with the brand more frequently. The company has also introduced targeted promotional offers, such as Monster Monday, Tuesday gourmet cheeseburgers, and Kids Day on Wednesdays, to attract guests and upsell additional items. These strategies have shown promising results in driving incremental traffic and increasing average check sizes.

Challenges and Future Outlook

Red Robin faces challenges in the form of inflation and the macroeconomic environment, which have impacted consumer spending on dining out. The company is actively addressing these challenges by focusing on improving the guest experience, quality of food, and service. The third quarter saw a 13-point increase in overall OSAT scores and a closing of the 500 basis points gap in guest traffic, which is now in line with the industry average. Looking ahead, Red Robin expects to meet or exceed the industry average on traffic through the remainder of the year.

Investor Questions and Insights

During the Q&A session, analysts asked about the impact of discounting on the brand and the progress of underperforming restaurants. Red Robin acknowledged the need to balance the discounting strategy with maintaining a high-quality guest experience. The company also shared that they are actively supporting the operating teams in the bottom 70 restaurants to demonstrate their long-term viability.

Conclusion

Red Robin Gourmet Burgers, Inc.'s third quarter earnings call highlighted the company's focus on improving the guest experience, driving traffic through targeted promotions, and leveraging the Loyalty 2.0 program. Despite the macroeconomic challenges, Red Robin is optimistic about its future prospects and is confident in its ability to compete and win in the market. The company's emphasis on quality, guest satisfaction, and operational efficiency sets a strong foundation for sustainable long-term growth.

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