Red Robin Gourmet Burgers Inc.’s same-store sales for the second quarter ended July 15 will fall short of expectations, the company warned Wednesday.
The Greenwood Village, Colo.-based casual-dining brand, which is scheduled to report the quarter’s earnings on Aug. 21, said same-store sales declined 2.6 percent in the period and guest traffic was down 0.7 percent.
“We are disappointed with our performance in the second quarter,” said Denny Marie Post, Red Robin CEO, said in a statement that accompanied the pre-announcement.
“While we remain confident in the strategy that we have in place to address the shifts going on within casual dining, we simply didn’t execute as well as we should have,” Post said.
The company said revenue in the quarter would be about $315.4 million, which would be down from the same period of 2017, when the company reported revenue of $315.8 million.
“We continue to make progress on driving off-premise traffic growth and differentiation through everyday affordability,” Post said, “However, we have yet to see the needed lift in dine-in traffic to offset the lower check average associated with the higher mix of our Tavern Double Menu.”
At midday Thursday, Red Robin’s stock price was down nearly 20 percent, to about $37.30 a share from a close of $45.85 a share on Wednesday.
Analysts were mixed in their advice on Red Robin.
Andrew Slagle, an analyst with Jefferies, which rates Red Robin shares as a “buy,” said the company “can be a decent value play if it can regain service execution levels being interrupted by off-premise growth and adjust its marketing to better balance both ends of the barbell.”
However, Canaccord Genuity downgraded Red Robin shares to “hold” from “buy” and reduced the stock price target to $42 from $65 a share.
Conaccord Genuity analyst Lynne Collier said in a note Thursday that “as we look forward, we think shares will continue to be range-bound in the near-to-intermediate term given same-store sales challenges and margin pressure.”
Collier said Red Robin’s cuts in labor and the effect on service may have been a factor. “This could result in the company possibly having to reinvest back into labor,” Collier wrote. “Accordingly, we are moving to the sidelines and reducing our price target.”
In prepared remarks Wednesday, Post said the brand had opportunities to improve service, “which has been impacted by the growing complexity of the multiple revenue streams within our four walls.” She also noted that the brand needed to refresh its marketing message and move quickly on the digital guest experience.
Red Robin has more than 570 restaurants across the United States and Canada.
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