Red Robin released preliminary fourth quarter results last week ahead of the ICR Conference in Orlando, Fla., with same-store sales expected to increase by 3.4%, a measurable improvement from an otherwise sluggish 2024 that included comp sales of -6.5%, -0.8%, and 0.6% sequentially.
The positive Q4 projections exceeded analysts’ expectations and pushed shares up by double digits upon release of the news. During an interview at the conference, chief executive officer G.J. Hart cited the continued execution of his five-point “North Star” plan put into place in early 2023 after he joined the company. Last quarter, he admitted the process of a turnaround has been slower than preferred because of a tough macroeconomic backdrop, but now the momentum seems to be picking up a bit.
“We’ve been working really hard to fix every piece of the business,” he said. “These turnarounds don’t happen overnight – they take a period of time. I've said many times what I think that takes, and we're fast approaching that.”
Red Robin’s early efforts toward this plan included a menu overhaul and a staffing adjustment to ensure stations – from the kitchen to the host stand – were sufficiently covered. Its loyalty program has also generated plenty of traction during its early days, and Hart said the statistics so far have been “phenomenal.” To wit – about 25% of loyalty transactions in 2024 were from acquired customers, while 20% were lapsed users. Customers who have historically visited three to five times a year also started coming in more frequently after the launch.
“The loyalty program also allows us to personalize our offers, which we couldn’t do before, which will then drive frequency and also drive discounts down because we will give them surprise and delight offers, but we don’t have to wholesale across-the-board discount as much,” Hart said.
The timing is ideal – Hart said he thinks the value environment will run its course this year and that consumers will tire of such offers, but he feels good about where Red Robin is positioned in the meantime.
“We own Bottomless (sides) and have had it for 50-some years and we don’t need to react in this environment,” he said. “If you look at our results and our sequential improvement, that would suggest (other casual dining chains) are not stealing share from us. We’re gaining share.”
Two other initiatives have taken some time to build momentum, but now the upside is clearly visible – Red Robin’s new managing partner program and its increased focus on local marketing. The company spent much of 2024 “transforming into an operations-focused company,” including through the launch of the managing partner program, which empowers operators to make business decisions about their restaurants while getting paid off of the bottom line.
“It’s taken a lot of education to take a restaurant operator and turn them into a businessperson, but a lot of people in our system are used to a program like that,” Hart said. “The number of calls from them worrying about the (profit and loss statement) and specific line items has gone through the roof and we’re seeing results. They’re very motivated,” Hart said, adding that the most successful brands have some version of a managing partner program. He’s not wrong – Texas Roadhouse (where he formerly served as CEO), Chick-fil-A, and Raising Cane’s are three such examples.
As these managing partners add more skin to the game, they’re also taking on a bigger role in local marketing, which has been another major driver of Red Robin’s recent momentum. The company doubled the number of fundraisers it hosted in 2024, for instance, with each bringing in an average of 60 to 75 people, of which the majority are either lapsed customers or have never been to a Red Robin.
“Not only are we ingratiating into the community, it’s doing what we need it to do to show all the progress we’ve made – that it’s a new day at Red Robin,” Hart said.
Red Robin ramped up its local marketing boot camp across the country in 2024 to teach operators how to plan and execute such fundraisers and will continue that “big time” in 2025, Hart said.
“It’s been really successful for us. It’s driving momentum,” he said. “When you’re doing a turnaround, once you gain momentum, you continue to gain momentum and I think we’re headed in that direction. We feel good about it.”
Contact Alicia Kelso at [email protected]
