Red Robin Gourmet Burgers Inc. intends to continue with its pandemic-streamlined menu this year, executives said Thursday on a first-quarter earnings call.
The Greenwood Village, Colo.-based casual-dining brand said it would continue to rely on limited-time offers, such as the Whiskey River Backyard barbecue lineup that began in March and includes a Smokehouse Brisket Burger and Tequila Sunset Cocktail, for variety and interest.
“Even as we emerge from the pandemic, we have no intention to broaden the menu,” said Paul Murphy, Red Robin CEO and president, in a first-quarter earnings call. “This not only ensures that we do not add operational complexity, but also because our LTO offerings keep the menu fresh and exciting for guests.”
Red Robin’s staffing challenges have ease, Murphy said, but hurdles remain.
“As we have discussed over the past several quarters, we are implementing process and minor floor-plan modifications to improve off-premises efficiency and accuracy and intend to complete these modifications by year-end,” Murphy said. “We are also evaluating opportunities to make heart of the house execution simpler, which will reduce ticket times and enable us to better cater to our guest time and occasion.”
Murphy said the Donatos Pizza offering, which began in 2020, will be rolled out to about 50 more restaurants this year.
“This is a long-term growth vehicle that is exceeding our expectations,” he said. “We had approximately 200 restaurants serving this high-quality product during Q1, which is similar to Q4.”
Donatos Pizza sales reached more than $7 million in first quarter, he added, and were supported by additional marketing sat certain locations.
Restaurants with Donatos continue to outperform the rest of the Red Robin system, he said. “For restaurants that had Donatos, comparable restaurant revenue grew by more than 5% over restaurants that did not yet have Donatos,” Murphy said, and guest checks with Donatos were more than $10 larger than those without pizza.
“We also see that Donatos drives higher visit frequency among our loyalty members, adding one more visit per year,” he said.
Donatos should be expanded to the system’s remaining 150 restaurants in 2023, Murphy noted. “All of the kitchen equipment that will be installed in 2022 has been secured,” he said, giving the company confidence it will meet the rollout schedule.
“By the end,” he added, “we expect Donatos to generate annual company pizza sales of at least $60 million and profitability of at least $25 million. While we continue to leverage Donatos to enhance the Red Robin dine-in experience growth, we also believe there is more runway to drive long-term incremental transactions through catering and delivery.”
For the first quarter ended April 17, Red Robin narrowed its loss to $3.1 million, or 20 cents a share, from $8.7 million, or 56 cents a share, in the same period last year. Revenues increased to $395.6 million from $326.3 million in the prior-year quarter.
First-quarter same-store sales were up 19.7% from the same period last year.
That increase “was primarily driven by operating our dining rooms at higher capacity,” said Lynn Schweinfurth, Red Robin chief financial officer. “We have seen positive sales momentum in Q1 as the country emerges from the COVID-19 pandemic. Our full quarter comparable restaurant revenues increased 3.9% compared to the same period in 2019, marking the first full quarter of positive comparable restaurant revenues to pre-pandemic sales.”
Off-premises sales were led by third-party delivery at 55%, to-go at 36.7%, catering at 4.3% and Red Robin Delivery at 4%, Schweinfurth said.
Red Robin Gourmet Burgers owns and franchises has more than 520 restaurants across the United States and Canada.
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