Red Robin stock price rises as 4Q profit doubles

Combating economic headwinds

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As reported earlier this year at analyst events, Carley said Red Robin would make efforts to improve the restaurant experience for customers and better manage margins by improving efficiency.  

Carley said the chain is testing various levels of “brand transformation” within 21 restaurants to evaluate upgrades that range from a $125,000 “bar only” enhancement to a more comprehensive $400,000 remodel. He also noted that the brand would open 20 company-owned restaurants.

Meanwhile, a more immediate menu improvement includes a shift to a spiral menu format by midyear that Carley said would allow for “more regional menu items and more regional pricing,” making the brand “more nimble and responsive to a changing marketplace.”

Red Robin is testing new premium burgers that could be added to the menu in a “barbell” balance to the more value-positioned Tavern Double burgers launched last year. Also coming are new appetizers and desserts that the company hopes will build the average check.

For the year, Red Robin’s net income was $28.3 million, or $1.93 per share, compared with $20.6 million, or $1.34 per share, including an extra week in 2012 that contributed an estimated $3.1 million, or 21 cents per share.

Revenue for the year totaled $977 million, compared with $914.9 million in fiscal 2011. Same-store sales for the year increased 1.1 percent, including a 1.7-percent increase in average guest check partially offset by a 0.6-percent decline in traffic.

Looking ahead at 2013, the company expects same-store sales growth of 2.5 percent to 3 percent, based on expected increases in average check and guest visits, along with a 2-percent menu price increase designed to offset expected commodity inflation of 4 percent.

Traffic overall, however, is expected to be flat to down 0.5 percent, said Stuart Brown, the chain’s chief financial officer, and the company is expecting to continue to see consumers cautious about spending.

“Economic headwinds will continue to impact casual dining, and we perceive the sector as experiencing another year of flat to negative traffic,” he said.

Red Robin ended the year with 339 company-owned restaurants, including five of the smaller Burger Works locations, as well as 133 franchised units.

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout