G.J. Hart presided over his first earnings call as CEO of Red Robin on Wednesday and offered a glimpse at how the brand might change under his leadership.
The restaurant veteran, who has had a hand in growing established brands like Torchy’s Tacos and Texas Roadhouse, was plucked from Red Robin’s board to help re-energize a brand he said has made some mistakes.
“I think Red Robin has been an iconic brand for five decades,” he told investors, according to a transcript on financial services site Sentieo. “And I think over time, for whatever reason, some of those things have slipped away or changed or they vanished completely.”
For one thing, Hart wants the 520-unit burger chain to improve its burgers.
“We have ‘Gourmet Burgers’ on every building that we have out there,” he said. “We do a great job when our burgers are prepared today, but I think we can improve upon that.” He said the same thing about its milkshakes. “We want to go back to owning shakes.”
More broadly, he wants to reshape the menu with a barbell strategy, or a greater balance of lower-priced and premium items.
Red Robin has flirted with that approach in recent months, rolling out a $10 meal deal intended to appeal to cash-strapped guests. The offering has been effective, and Hart appears ready to take the strategy even further.
“I think we need to have a full barbell menu strategy, where from appetizers to entrees, there's a wide range,” he said.
That will include expanding Red Robin’s limited entree selection. “Today, it's really about fish and chips,” he said. “We have three items in total.”
Hart also wants to fix some past operational decisions that proved disastrous—most notably a 2018 service model change that eliminated bussers. The move greatly lengthened guest wait times because tables were left uncleaned until servers could clear them. Customers bolted rather than wait.
The chain’s sales fell 3.6% that year and 0.2% the next, and its unit count shrunk for the first time since at least 1999, according to Technomic Ignite data. The pandemic interrupted any opportunity to recover under former CEO Paul Murphy.
“The decision that we all know about, taking bussers out of the restaurant, was a major one,” Hart said. “We're taking a long look at that to see, ‘How do we help strengthen the management teams?’”
That could include hiring more managers—up to four or five per unit—and giving them specific responsibilities, like kitchen manager, he said.
Hart acknowledged that would represent a significant investment at a time when restaurants are looking to cut costs. But he said it could help improve the guest experience and offset other expenses like turnover and training.
“We recognize that we're going into a challenging economic environment,” he said. “But I also believe that some of these things are necessary for this brand to get back in the direction that we all wanted to from where we've been in some of the decisions of the past. We have to correct those in my opinion.”
In the third quarter ended Oct. 2, Red Robin’s same-store sales rose 5.3% year over year, which included a 9% increase in average check and a 3.7% traffic decline. The sales growth helped boost restaurant-level operating margins by one-tenth of a percentage point, to 12.6%.
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