Red Robin Gourmet Burgers Inc. reported higher profit and improved sales for the April 18-ended first quarter, but lowered its outlook for the full year.
Shares in the casual-dining company sank more than 14 percent Friday on news of the downgraded outlook, closing at $20.22.
Red Robin’s chief executive, Dennis Mullen, said Thursday that the company was “encouraged by the strengthening of our comparable-restaurant sales,” despite lingering macroeconomic challenges. Red Robin’s same-store sales at company units fell 2.3 percent in the first quarter, compared with an 8.1-percent decrease in the year-ago period. Same-store sales at franchised branches fell 2.1 percent in the first quarter, compared with a decline of 7.2 percent in last year’s first quarter.
Red Robin last reported positive same-store sales for company units in the first quarter of 2008.
“Our guest counts and same-store sales have benefited from our recent television advertising support, as well as our continued focus on quality, variety, value and our restaurant team members’ commitment to outstanding guest service,” Mullen said in a statement.
“We’re looking forward to building on that momentum into the summer, with innovative and craveable additions to our menu, new [limited-time offers] supported with TV advertising and other exciting marketing programs and the new restaurant development we have underway for the balance of the year,” he added.
Red Robin said first-quarter net income climbed 28.8 percent to nearly $5.0 million, or 32 cents a share, compared with year-ago net income of $3.8 million, or 25 cents a share. The company noted that it benefited in the latest quarter from $3.5 million associated with a one-time adjustment to unredeemed gift card liabilities.
First-quarter revenue rose 1.7 to $275.5 million, Red Robin reported.
For the full year, Red Robin lowered its projected earnings range to between $1.10 and $1.30 a share, down from earlier estimates of $1.27 to $1.45 a share, on reduced sales expectations.
The company now expects revenue of $872 million to $880 million for fiscal 2010 and estimates same-store sales will be flat to up 1 percent. Red Robin had earlier projected revenue of $887 million to $895 million and a same-stores increase between 2.4 percent and 3.4 percent.
In fiscal 2009, the company reported revenues of $841 million and earnings per share of $1.14.
At the end of the quarter, Red Robin operated 308 restaurants and franchised another 131 locations, marking a net gain of 10 company stores and one franchised location from the prior year.
The company said it has opened four restaurants so far 2010 and expects to open eight to nine more before the end of the year, including four now under construction. It added that franchisees have opened two restaurants, to date, and are expected to open one or two more by year’s end.
Contact Alan J. Liddle at [email protected].