The chain is also adding James C. Pappas and Christopher Martin to its board of directors
Red Robin Gourmet Burgers today announced an $8.3 million investment from JCP Investment Management LLC and Jumana Capital LLC to help pay down the casual dining company’s debt and support its current business strategy.
The announcement comes on the heels of JCP and Jumana taking 7.9% and 3.7% stakes in the chain, respectively. According to the SEC filing in October, both investment firms – which have a history of activist investing in the industry – acquired the stakes because they believed that “the shares, when purchased, were undervalued and represented an attractive investment opportunity.”
Their new investment agreement includes the addition of James C. Pappas and Christopher Martin to Red Robin’s board of directors, expanding the board to 10 directors, nine of whom are independent. Pappas founded JCP Investment Management in 2009 and is the managing member and owner of the firm. Martin has served as a managing director of Jumana Capital since 2020. They will both be nominated by the board to stand for election for a full term at the Englewood, Colo.-based company's 2025 annual stockholders meeting.
"JCP's and Jumana's additional investments demonstrate their commitment and belief in the future of Red Robin," board chairman David A. Pace said in a statement. "We are pleased to welcome James and Chris to Red Robin's Board of Directors and look forward to their contributions and expertise as we continue to execute on our strategy for the comeback of this beloved brand. James brings significant experience in board roles at restaurant brands in similar phases of revitalization and Chris adds both industry and financial expertise that will be important to our progress."
“From day one, our focus will be to help decrease debt through our investment proceeds, increased operating cash flow and the thoughtful exploration and consideration of other debt reduction options available, including the potential for selective franchising of some company-operated restaurants. Strengthening the balance sheet positions Red Robin to continue to deliver fantastic and craveable burgers every day while also building long-term shareholder value,” Pappas said in a statement.
As of October 6, 2024, Red Robin had outstanding borrowings under its credit facility of $187.9 million and liquidity of approximately $42.0 million, including cash and cash equivalents and available borrowing capacity under its credit facility. On August 21, the company entered into the second amendment to its credit agreement to provide relief by increasing the required maximum net total leverage ratio covenant beginning in the third quarter of 2024 through the third quarter of 2025. The amendment also increases the aggregate revolving commitments by $15 million to $40 million and was extended in November through the first quarter of 2026.
The amendment and investments are aimed at supporting Red Robin’s North Star strategy, first put into place in early 2023 shortly after G.J. Hart was named chief executive officer. Hart said in a recent interview that the strategy was moving the needle on metrics such as customer engagement and satisfaction, though macroeconomic pressures this year have slowed progress a bit.
Contact Alicia Kelso at [email protected]
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