It took about two and a half years, but Red Robin’s comeback effort under CEO G.J. Hart is beginning to bear fruit.
In the last quarter of 2024, same-store sales at the 500-unit casual-dining chain rose 3.4% year over year, according to preliminary earnings results published earlier this month.
If it holds, that would be Red Robin’s best performance since the first quarter of 2023. That’s when Hart publicly unveiled his five-point “North Star” plan to improve shareholder value and make the company more competitive.
Greenwood Village, Colorado-based Red Robin was slower to rebound from the pandemic than some of its counterparts in casual dining. It struggled to re-staff its restaurants after COVID. Its stock price declined through much of 2021 and 2022. And in June of 2022, then-CEO Paul Murphy announced his retirement. Hart, a seasoned executive, was hired a month later after serving on the chain’s board since 2019.
In an interview at the ICR conference earlier this month, Hart said that when he took over, Red Robin was not in consumers’ consideration set. “We fell out, for whatever reason, over the years,” he said.
To turn that around, Hart and his hand-picked leadership team developed the following five-point plan: Transform Red Robin into an operations-focused company; elevate the customer experience; remove costs and complexity; optimize customer engagement; and grow same-store sales and profits.
The plan was expected to take three years, and the company has been checking off boxes in workmanlike fashion. It began with an overhaul of its core product, burgers. It replaced the old conveyor-belt cooking system with flat-top grills and upgraded the ingredients and the presentation of its burgers.
It also revamped its labor model, reinstating positions like bussers and bartenders that had been eliminated under previous leadership. The cuts were intended to lower costs, but wait times spiked as a result, frustrating customers.
To further help operations, Red Robin began paying managers based on the performance of their restaurants. The program has helped managers think more like businesspeople, Hart said. “They eat what they kill,” he said.
By midway through 2024, the improvements had helped boost Red Robin’s customer satisfaction scores to their highest levels since 2016. But sales were still lagging, down 0.8% in the second quarter, as inflation-weary consumers continued to pull back on their restaurant spending.
That changed this past quarter, and Red Robin specifically credited a couple of other strategies for the boost. First is the chain’s new loyalty program, Red Robin Royalty. The program allows customers to earn points faster than before. $1 earns 1 point, and 100 points yields a $10 reward. The catch is that it must be redeemed within 90 days, giving customers an incentive to come back sooner.
The new program has been a success on multiple fronts, Hart said. It has driven 1.5 million new signups, and those new members are visiting more frequently. Overall, the number of loyalty members who visit Red Robin three to five times a year has increased by 12%. The chain has also been able to collect a lot of customer data through the program that it can use to create personalized offers for certain customer segments and even individuals.
The second thing was a product of economic and competitive realities: a series of promotions offered on certain days of the week, such as Monster Mondays, when customers can upgrade their burgers for a reduced price of $2, and $10 cheeseburgers on Tuesdays.
These “appointment dining” offers were a response to a wave of deals from rival chains like Chili’s and Applebee’s. But they doubled as a way to expose new customers to the improved food and service that Red Robin has spent the past couple of years perfecting.
“We’re starting to hit our stride on that,” Hart said. “That work went on in spite of the [macroeconomic] difficulties in the year.”
As their efforts begin to pay off, Red Robin executives highlighted another element of the five-point plan that is having some success: the reinvigoration of local store marketing efforts.
Red Robin has historically been a “poster child” for community marketing strategies like fundraisers for local organizations. But it had gotten away from that in recent years. Hart’s team has focused on bringing it back, in part by offering local marketing boot camps for operators to show them the ropes.
Red Robin held 165 such boot camps last year, and the number of fundraisers hosted by its restaurants doubled, said CMO Kevin Mayer. The majority of the visitors brought in by those fundraisers were lapsed customers or people who had never been to a Red Robin before, he added.
“I’m so incredibly amazed by the response this brand has in the consumer space,” said Mayer, who joined the company in May of 2023. “There’s a lot of love for this brand.”
Customers just hadn’t shown that love for a while. But they are starting to once again. “That means all the building blocks to get to this point are working,” Mayer said.
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