Red Robin Gourmet Burgers is betting on carryout and delivery sales and sticking with a trimmed down menu as it reopens dining rooms.
The Greenwood Village, Colo.-based casual-dining chain has reopened 270 dining rooms as states ease business restrictions across the U.S. Most are operating at about 50% capacity and maintaining off-premise sales, which have nearly doubled at reopened restaurants compared to pre-COVID-19 levels. Overall, off-premise sales have tripled systemwide during the pandemic.
“What the pandemic has done is it’s taught people how to use off-premise. It’s teaching people how to effectively order, pay, use delivery,” CEO Paul Murphy told investors Wednesday during its first quarter earnings conference call.
The company expects to have 80% of its more than 550 restaurants reopened for dine-in service over the next 40 to 45 days. The majority of the reopenings are concentrated along the West Coast and the Pacific Northwest, markets with the highest volume stores.
During the pandemic, Murphy said Red Robin customers have given the brand high satisfaction marks for taste of food, ease of ordering from the company’s enhanced website, order accuracy, speed of service, order packaging and simplified pickup process executed by friendly workers.
Murphy said reducing the menu by 55 items during the pandemic contributed to operational and labor efficiencies, a strategy that many other restaurant chains have taken including McDonald’s, Taco Bell and Panda Express.
As such, Murphy said Red Robin plans to keep a reduced menu even as dining rooms reopen.
“Given the success, we plan to leverage a simplified menu as part of our ongoing business plan,” he said.
The company also plans to expand its off-premise channels by increasing curbside and home delivery options, a decision made by the surge in carryout and delivery orders. Off-premise sales increased 86.1% in the quarter, representing 26.3% of total food and beverage sales. Off-premise sales accounted for 13.9% of sales in the fourth quarter of 2019.
For the week ending June 7, same-store sales declined 26.7% at restaurants with open dining rooms. Off-premise sales represented 40% of total food and beverage sales, the company said.
“I am extremely confident in Red Robin's ability to move through and past the current environment and in the process emerge stronger as an organization and as a brand,” Murphy said.
During the pandemic, Red Robin restaurants serving Donatos Pizza outperformed those that did not have the Ohio-based pizza menu.
The company paused the rollout of Donatos when government shutdowns swept the nation. Though stores with Donatos are performing well, Murphy said capital spending on ovens to support the Donatos rollout remains on hold to preserve liquidity.
However, the brand does plan to roll out Donatos at 40 restaurants in the Seattle market because the kitchen equipment had already been purchased back in early 2020.
“We currently plan to resume rollout of Donatos in this legacy [Seattle] market by the end of the year,” Murphy said.
Total revenue for the quarter decreased 25.3% to $306.1 million. Net loss of $174.3 million, or $6.66 per share, compared to net income of $639,000, or 5 cents per share, in the first quarter of 2019.
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