Value push boosts Red Robin's traffic, not comps

A slight gain in transactions failed to generate a same-store sales boost for the grill-and-bar concept.

A push for bargain hunters bumped up traffic for Red Robin during the first quarter, but the slight gain in transactions failed to generate a same-store sales boost for the grill and bar concept.

Still, the casual chain plans to keep a spotlight on value going forward by stressing the unlimited side servings that come with its burgers, an extra the franchisor intends to tout in a new campaign called #BurgerMath.

“This is only the first of many messages to come contrasting our everyday value with others,” said CEO Denny Post. “The goal is to make it stone-cold easy for our guests to say ‘Yes’ everyday to visiting Red Robin, and to unlock greater frequency and share going forward.” 

In disclosing financial results for the January-through-March period, Red Robin also noted that it has completed a changeover to a full-team service model, in which every person on the floor helps in servicing guests. The switch has raised productivity by 11%, Post said.

The concept also sought to improve restaurant-level margins by renegotiating janitorial contracts and bringing the cleaning process in-house in some instances, Post revealed.

Comparable store sales decreased 0.9% for the quarter despite a 0.1% rise in customer counts. Checks were 1% smaller because of customers opting for $6.99 burgers from Red Robin’s Tavern value menu, according to management.

As with all sandwiches on Red Robin’s bill of fare, the Tavern selections are offered with unlimited servings of fries, broccoli or salad.

Red Robin’s off-premise sales rose by 40% year over year during the quarter, revealed CFO Guy Constant. Delivery, takeout and catering now account for 9.4% of overall sales, added Post.

However, the typical off-premise check tends to be a little lower than what patrons would spend for a comparable dine-in order because it’s not likely to include a beverage, said Constant.

Off-premise customers “do add on a little more, but the nonalcoholic beverage incident does make it a little bit lower than what you see in dine-in,” he said.

Overall, revenues for Red Robin rose 0.2%, to $421.5 million. Net income fell 62%, to $4.4 million, because of reserves for litigation expenses and the cost of a headquarters restructuring. Details about the litigation were not disclosed.     


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