Red Robin Gourmet Burgers Inc. brand transformation efforts continued to boost momentum in the second quarter, as customers traded up to more premium burgers and beer, the company said Tuesday.
The casual-dining chain remodeled 31 restaurants during the quarter, moving toward its goal of reworking 153 units by the end of the year, for a total of 295 reworked locations. The entire chain will be reworked by the end of 2016, including new units, the company said.
Greenwood Village, Colo.-based Red Robin is reworking its restaurants with a contemporary design that aims to appeal to a broader audience, with the goal of building sales at the bar without alienating its core audience of families.
This year, Red Robin is also rolling out tabletop Ziosk tablets that allow users to order and pay on their own timing. Officials said the tablets will be available systemwide by the end of the year.
During the second quarter, Red Robin introduced a new kids’ menu with dishes like meatball lollipops and mini corn dogs, along with beverages served with mustache straws and entertaining new place mats.
Customers continued to respond to Red Robin’s new lineup of appetizers, desserts and beers. The chain’s premium line of Finest Burgers also performed well during the quarter, said Denny Marie Post, Red Robin executive vice president and chief concept officer.
This year’s burger-and-movie tie-in with the “Terminator Genisys” blockbuster was also a hit, Post said. In addition to the offer of a limited-time Genisys Burger, the chain offered a free movie ticket with the purchase of a $25 gift card.
Year to date, sales of the Terminator gift card were 25 percent higher than total sales last year from a similar offer tied to the movie “Hercules,” Post said.
“Big man Arnold (Schwarzenegger) trumped The Rock (Dwayne Johnson) from ‘Hercules’ big time,” she said.
Systemwide same-store sales increased 2.9 percent for the July 12-ended quarter, including a 0.5-percent increase in traffic and a 2.4-percent increase in average check, company officials said.
Stuart Brown, Red Robin chief financial officer and senior vice president, noted that traffic rose, although the chain spent less on national cable advertising and focused on more targeted marketing through the Red Robin Royalty loyalty program.
For example, a new Burgers for Better Schools program allows members to donate 1 percent of their check to the school of their choice at each visit.
However, the restaurant remodels are a definite contributor to positive traffic, Brown said. Without the remodels, the same-store sales increase would have been closer to 2.5 percent, and the boost will become more significant as more restaurants are reworked.
Once the remodeling program is complete, the chain will look to accelerate unit growth, said Red Robin CEO Steve Carley.
Red Robin has the opportunity to add more than 400 restaurants in the U.S., particularly in underpenetrated markets like Florida and Texas, he said. Over the next three to five years, the company is projecting the addition of roughly 200 restaurants, which will mostly be company owned, he said.
Net income increased 18 percent, to $11.2 million, or 78 cents per share, during the quarter, compared with $9.5 million, or 65 cents per share, a year ago.
Revenue rose 14 percent, to $293 million, compared with $256.1 million a year ago.
The company opened four Red Robin units during the second quarter, including reopening one unit that was closed temporarily by public construction. The chain ended the quarter with 412 company-owned restaurants, 10 fast-casual Red Robin Burger Works units, and 99 franchised restaurants, for a total of 521 locations.
For the full year, the company expects to add 20 new Red Robin locations and three to five Burger Works units. Same-store sales for the year are expected to grow by about 3 percent, with revenue rising 12 percent.
Contact Lisa Jennings at [email protected].
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