Red Robin’s new turnaround plan is beginning to bear fruit.
Just ignore most of the fourth quarter.
Like much of the restaurant industry, the casual-dining burger chain saw a slowdown at the end of 2025. Same-store sales fell 3.1% on a 3.6% traffic decline.
And for the full year, same-store sales came in at negative 0.7%, driven by a 3.8% traffic slide.
But a closer look shows signs that the chain’s First Choice strategic plan is starting to take hold.
The plan, unveiled in July, builds upon Red Robin’s previous North Star plan launched in 2023. It’s focused on improving the chain’s operations, traffic, financing and physical restaurants following years of declines in its traffic and share price.
An early piece of the plan was the $9.99 Big Yummm value meal combo, aimed at price-conscious customers. Marketing of that meal helped drive a noticeable increase in traffic beginning in December that continued into January before it was derailed by Winter Storm Fern.
Big Yummm accounted for about 10% of sales in the fourth quarter, and Red Robin is now expanding it to include more options and price points. There will be six selections including burgers, chicken sandwiches, Donatos Pizza and wraps, ranging from $9.99 to $16.99.
Also contributing to the traffic improvement was a new data-driven marketing strategy introduced in the third quarter. The program is designed to target ads to customers more precisely as opposed to broad-based campaigns.
Meanwhile, operational changes under First Choice are showing up on Red Robin’s bottom line. In 2025, earnings before interest, taxes, depreciation and amortization increased by 53%, to $69.7 million. That included a 108% increase back in the first quarter.
Restaurant-level margins rose 190 basis points, to 12.7%.
These results wowed investors: Red Robin stock surged more than 35% on Thursday.
CEO David Pace said the chain has become more efficient on labor and staffing. It has given managers tools to help identify “outliers” and coach them up. And managers are more incentivized to do that thanks to a new program that gives them a share of their store’s profits.
Red Robin also recently gave managers access to ChatGPT. They’re using the AI chatbot to understand their labor spend, forecasting and other metrics, Pace said.
“There's been a great adoption of that tool at the restaurant level,” he said. “So we think the combination of all of those things is going to give us room to go even further than we have so far.”
Despite that confidence, the chain’s forecast for the year reflects an environment that remains challenging. Red Robin is expecting same-store sales growth of just 0.5% to 1.5%, which would imply another year of negative traffic, as prices will be about 3% higher.
The forecast is factoring in the “choppy” start to 2026: Same-store sales are down 1% quarter to date. But executives expect sales to improve as the year goes on, in part due to the price increase and the expanded Big Yummm lineup, which is designed to get customers to spend a little more.
Red Robin closed 23 restaurants last year, finishing the year with 475 in the U.S. That was part of a previously announced plan to close up to 70 underperforming locations by 2030.
However, the chain also made repairs to 20 restaurants within that group and said they are no longer candidates for closure. It does expect to close another 20 restaurants in 2026.
“As we look ahead to 2026, I'm confident that the progress we've made across each pillar of our First Choice plan positions us well for continued performance improvement,” Pace said.
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