The challenges facing Red Robin Gourmet Burgers are familiar to many restaurant chains, and casual operations in particular: eroding dine-in business. Making money off delivery. Finding and affording labor. Investing in the right technology at the right time.
The 572-unit chain has set forth a detailed turnaround strategy to reassure franchisees and investors. Will it work? Is it what you’d do as CEO?
Decide for yourself. Here’s the plan.
Fostering dine-in business through new operational initiatives
Some of the issues facing Red Robin are peculiar to a brand that once sought sites in or near malls and movie theaters. That puts pressure on the chain to maximize business when consumers are likely to do their recreational shopping, or primarily on the weekends.
To boost throughput during those busy times—“to peak the peak,” in Red Robin lingo—the operation is taking a number of steps to bolster unit managers’ interactions with guests. On a fundamental basis, that means keeping the general manager’s post filled, an acknowledged challenge. COO Guy Constant noted that a focus on recruitment and retention has trimmed GM vacancies to 3.2%, “a meaningful improvement over where we ended 2018.”
Managers are being encouraged to spend more time in dining areas through initiatives such as outfitting them with headsets, so they can roam, talk and still be connected with other parts of the restaurant. Management says the effort has decreased walkaways, a key problem for the chain, by 4.2%.
In addition, Constant’s team is aiming to put more staff on the floor during peak times by reassigning employees who currently work slower shifts. “We are able to improve throughput on our busiest shifts, thereby capturing the greater sales opportunity without having to make incremental investment in labor,” he told financial analysts.
Technology to the rescue?
In addition to equipping store personnel with headsets, Red Robin is outfitting servers with “portable POS terminals,” as Constant puts it. The handhelds should alleviate a bottleneck in the kitchen, because orders are relayed in a more feasible sequence to the kitchen. Management explained that servers tend to take orders from multiple tables, then input them all at once via the POS system to the back of house, overwhelming operations there.
However, CFO Lynn Schweinfurth said the deployment of some in-store technology will be delayed until later in the year because headquarters wants unit-level operators to have sufficient time to adjust to the changes.
“We understand that last year we rolled out too much at once to our operators, and we learned a lot from that experience,” she said.
Kitchen tweaks
Red Robin has focused for several years on simplifying and streamlining its menu, reducing the number of options by about 10%, said Schweinfurth. “We have some more simplification being rolled out later this year,” she said, noting that a number of deletions have been tested.
Constant said the simplification effort will intensify the kitchen’s focus on Red Robin’s signatures. He included chicken as one of those points of differentiation for the chain—a surprise, given its past emphasis on burgers of all sorts and fries.
Catering push
Red Robin’s off-premise business grew 20.6% year over year during the first quarter, contributing 11.6% of revenues overall, according to interim CEO Pattye Moore.
The smallest part of that, she suggested, is catering, a service Red Robin has added within the past year. That channel currently accounts for only 1.2% of sales, but the volume is growing at an annual rate of 220%, Moore said.
Red Robin intends to keep the numbers climbing by adding catering sales personnel, amassing national and local accounts and using highly targeted marketing.
The chain intends to grow its delivery business in part by associating with more third-party services.
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