Operations

Red Robin expects to save $5M a year by hand-breading its chicken

The move will help offset some of the $8 million per quarter the chain is spending on better food and staffing.
Red Robin
Red Robin said guests are noticing improvements, even though sales are still negative. | Photo courtesy of Red Robin

UPDATE: This article has been updated to reflect that Red Robin is switching to hand-breaded chicken, not fresh chicken as the chain originally stated.

Red Robin Gourmet Burgers is now hand-breading the chicken that goes on its crispy chicken sandwich and cooking the sandwiches to order, a move that it said will save it $5 million a year while also improving food quality.

The change is part of the casual-dining chain’s ongoing turnaround strategy under CEO G.J. Hart. Red Robin is pouring millions of dollars into its food, service and marketing and cutting costs where it can. 

So far this year, it has spent $16 million on better food and staffing and plans to invest about $8 million a quarter going forward, mostly on labor, said CFO Todd Wilson. But it also expects to save about $12 million this year thanks to the chicken switch and other efforts.

“This type of change illustrates how we think about cost savings as changes that are both good for our guests and for Red Robin,” Hart said during an earnings call Wednesday.

During the call, Hart mistakenly said the chain was switching from frozen chicken breast to a fresh product. Red Robin later said Hart misspoke and clarified that it will still be using frozen chicken but that it is changing the preparation process for the sandwich.

The chain said it is making progress in righting itself after years of sales and profit problems. It pointed primarily to improvements in guest satisfaction scores and also believes underlying traffic trends are moving in the right direction. 

Still, the chain’s third quarter results show just how far it has to go. Same-store sales fell 3.4% year over year, in part because the brand was lapping a deeply discounted $10 meal deal from last year that drove traffic but hurt profits. It also stopped using delivery-only virtual brands like MrBeast Burger, which it said will hurt sales in the short-term but will reduce complexity in the kitchen.

Restaurant-level profit margins also fell 1.5 points from last year to 11.1%, largely due to the chain’s investments in staffing and food.

Red Robin has done things like add bussers, hosts and expo people back to its restaurants, boosting cleanliness and shortening wait times. It has also hired more than 250 kitchen managers.

Meanwhile, it has upgraded about 85% of its menu with better ingredients, including its mayonnaise, tomatoes, buns, pickles, pineapples and sauces. It has also completely revamped its burgers with a new cooking process and a more upscale presentation—they’re now served on a plate instead of in a basket.

The investments seem to be making an impression on customers. In surveys of Red Robin loyalty members, 46% agreed that the chain’s food quality has improved, 52% said its burgers are better, and 48% said that service and hospitality has improved. All of the results increased since the last survey, Hart said.

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