Red Robin Gourmet Burgers Inc. is making strides in to-go and catering sales, increasing off-premise sales almost 40 percent year over year, as it continued to see challenges in dine-in traffic, executives said Tuesday.
Same-store sales in the first quarter ended April 22 declined 0.9 percent for the Greenwood Village, Colo.-based casual-dining operator. Traffic was virtually flat, rising 0.1 percent. Sales in off-premise channels, like to-go and catering, grew to 9.4 percent of total sales, an increase from 6.3 percent the previous year.
“Put simply, our Q1 results were a mixed bag,” Red Robin CEO Denny Marie Post said in an earnings call. “While we fell short on sales, we made great strides on our off-premise business, and as a result, we did take some share from others, despite their heavily advertised, short-term deep discounting.”
Off-premise channels remained “a key building block” in Red Robin’s strategy to become “a complete source of craveable customizable burgers,” she said. The chain’s “Burger Bar” catering program was growing with minimal sales support.
“We just began testing television advertising in select high-penetration markets, and we like what we see early on from the results,” Post said. “With off-premise averaging 9.4-percent mix in Q1, double-digit mix is clearly within the reach as we grow this segment aggressively.”
Red Robin has delivery in about 70 percent of its units, said CFO Guy Constant, who added that the company was testing its own delivery program.
Third-party providers seldom share customer data with the company, he added, “so it’s hard for us to keep track of the guests as much as we would like, which is one of a number of reasons why we said we’re testing the self-delivery proposition.” Constant noted that self-delivery is cheaper than an aggregator.
Red Robin has also kept an eye on value, increasing its $6.99 Tavern Double platform from four to five sandwiches, executives said. Sales from the platform made up about 14 percent of sales in the first quarter. The expansion of the Tavern platform, which also includes bottomless fries, is aimed at increasing guest frequency and expanding the lunch daypart, Post said.
First-quarter net income fell 62.1 percent, to $4.4 million, or 34 cents per share, from $11.6 million, or 89 cents per share, the previous year. Revenue rose 0.2 percent, to $421.5 million, from $420.6 million the previous year.
While industry trends continue to be choppy, Alexander Slagle, an analyst with Jefferies, wrote in a note Tuesday that Red Robin’s guidance of same-store sales increases between 0.5 percent and 1.5 percent for the year “remains reasonable, and perhaps beatable if the broader casual-dining spending environment sees a modest pick-up from tax reform and potentially better consumer confidence.”
During the first quarter, Red Robin opened four company restaurants, and franchisees opened one unit.
As of April 22, Red Robin had 570 restaurants in the United States and Canada. Of those, 484 were company-owned and 87 were franchised.
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