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A Red Robin storefront Red Robin Gourmet Burgers Inc.
Red Robin found casual-dining customer traffic continued to stabilize in the third quarter.

Red Robin stabilizes traffic amid loyalty program progress

Executives at casual-dining restaurant company said economy remained challenged

Red Robin Gourmet Burgers Inc. continued to stabilize its traffic in the Oct.6-ended third quarter as it made progress in its loyalty program, executives said.

Executives at the Englewood, Colo.-based casual-dining company, which on Wednesday released earnings for the third quarter, said the economic environment remained challenged.

G.J. Hart, Red Robin’s president and CEO, said: “We believe the investments we made in this brand over the past 18 months have positioned us well to compete and win. We remain focused on what we can control, which is positioning our iconic brand as a high-quality gourmet burger occasion and delivering a great experience to every guest through our craveable burgers, bottomless fries, and fun and friendly atmosphere.”

Hart cited the impact of the reimagined version of brand’s loyalty program, launched in May. “We are signing up more loyalty members. They are visiting more frequently and spending more on each visit,” Hart said.

“Loyalty 2.0 is a major factor in how we design our value promotions and marketing strategy as well,” he said. “We know that when guests sign up for loyalty, they value their ability to immediately earn points and score us consistently higher on value, service and quality.”

Red Robin averaged 150,000 sign-ups per four-week financial period during the third quarter, nearly doubling its prior run rate.

“New member transactions increased 141%, as compared to the third quarter of last year,” Hart said. “Including all loyalty members, the number of members transacting two times or more has increased 12%, with the largest increase in members typically visiting three to five times per year. Loyalty members continue to spend more than our non-loyalty members.”

Also, more than 400,000 previously lapsed loyalty members reengaged with Red Robin as part of Loyalty 2.0.

“These previously lapsed guests accounted for approximately 20% of all loyalty member visits from the launch of Loyalty 2.0 in May through the end of the third quarter,” Hart said. “We expect these metrics to continue to improve as our guests get more familiar with the new program, and our operators get even more experienced driving sign-ups and reaping the benefits.”

Todd Wilson, Red Robin’s chief financial officer, said Red Robin has reduced the percentage of sales in discounting, which was generally around 4% during the height of the pandemic in 2021 and 2022.

Wilson added that during the first four weeks of the fourth quarter, traffic has been down about 4% and the overall per person check average, inclusive of menu prices and discounts, has been up about 6% for a net increase of 2%.

Analyst Alexander Slagle of Jefferies said in note after the call that the 2% trend was encouraging, and trends have improved each quarter through 2024.

“[The] path back to positive traffic is certainly taking longer than hoped, given the tough backdrop,” Slagle noted, “but [the company] appears to be demonstrating progress on key guest satisfaction, ops and food quality metrics, and showing evidence of its ability to drive improving customer engagement.”

For the third quarter ended Oct. 6, Red Robin’s net loss was $18.9 million, or $1.20 a share, compared to a loss of $8.2 million, or 52 cents a share, in same period a year ago. Revenues were $274.6 million, down slightly from $277.6 million in the third quarter a year ago.

Red Robin’s same-store sales increased 0.6% in the third quarter.

Red Robin Gourmet Burgers, founded in 1969, more than 500 casual-dining restaurants across the United States and Canada.

Contact Ron Ruggless at [email protected]

Follow him on X/Twitter: @RonRuggless

TAGS: Marketing
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