The home of endless fries and 25 types of burgers yesterday became the latest casual-dining chain to sketch out how it’s adjusting today to capture more share of market as the pandemic eases into a semblance of normality.
The 546-unit chain told financial analysts it expects to generate same-store sales gains in the mid to high single digits above and beyond a post-pandemic new “normal” for the brand. Simultaneously, it’s looking to channel more of those incremental sales to the bottom line through a number of recent efficiency enhancers, including a new payroll model for managers.
Here’s a sampling of the strategic initiatives Red Robin is pursuing today to be ready for a post-coronavirus world.
Adopt a new unit-management model. Two restaurant-level salaried management positions are being replaced with one to three hourly shift-supervisor jobs. Red Robin CEO Paul Murphy said the overhaul will increase operational supervision and provide more scheduling flexibility while saving the chain $14 million annually.
Build sales and profits with pizza. The chain is adding Donatos-brand pizza to the eat-in and to-go menu of company stores. When all 400 units have added the product, pie sales should add up to about $60 million annually, with $25 million of that intake dropping to the bottom line, Murphy said. The plan is to roll the regional pizza brand into another 120 corporate Red Robins this year, which would raise the tally to 200 units. All 400 should be offering the pizza by 2023, according to Murphy.
Keep the menu smaller. Like virtually every other restaurant chain,Red Robin shrank its menu during the pandemic to reduce labor needs and simplify kitchen operations as off-premise business boomed. Smaller menus mean fewer ingredients to stock, and a bill of fare that’s easier to call up and peruse on a smartphone or laptop. Red Robin plans to keep its menu trimmed to about two-thirds of the typical pre-pandemic listing, Murphy indicated. That effort will save the company’s corporately run restaurants about $2 million annually in labor and waste, he explained.
Offer more seating. Red Robin is increasing the seating capacities of some restaurants by about 10% through the addition of outdoor dining areas, Murphy noted. By retaining the patios and exterior tables, a unit can add 16to 24 seats, he explained.
Hang onto off-premise sales—in part through new partners. Red Robin will likely add new third-party delivery partners in its quest to hold onto as much of the increased off-premise business it managed to snag during the pandemic, Murphy revealed. That business soared to 43.9% of sales during the fourth quarter, compared with a pre-pandemic mix of 14%. At Red Robin units that have at least 50% of their dining rooms back in use, to-go business has held at more than 28% of revenues, Murphy said.
Whatever the company said on Thursday, investors responded: Stock in the company was up 4% at a time when the broader markets declined more than 1% and every other restaurant company was down.