Red Robin Gourmet Burgers Inc. same-store sales plunged 2.6 percent in the first quarter, driven by a 4.1-percent decline in guest counts, the company said Tuesday.
A 1.5-percent increase in average check, however, offset the decline in traffic.
In a call with analysts, executives blamed efforts to use promotions to compete in the volatile casual-dining segment.
“Many of our casual-dining peers were similarly challenged,” said Steve Carley, Red Robin CEO.
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At Red Robin, a $15 Double Tavern Meal for two promotion earlier this year, for example, was well received by loyal customers, but failed to break through to a broader audience, said Denny Marie Post, Red Robin president.
With other casual-dining chains discounting aggressively, Red Robin’s promotion came over as a “me too” offer, Post said.
“Playing in the sea of sameness does not support our very special brand,” she said. “Being the innovative burger authority is our game.”
Going forward, Red Robin will refocus efforts on creating news around everyday value, Post said, as well as creating new innovative products, like the low-carb, bunless Wedgie burger introduced last year, and the more recent Red Ramen Burger, with ramen noodles in lieu of a bun.
The chain is also working with a new advertising partner, not yet announced, and marketing efforts will pick up later this year, she said.
New kitchen display technology and table management software will also help the chain improve service speed and seating efficiency.
The chain also expects to benefit from increased promotion of to-go business and online ordering in the second half of the year.
In February, Red Robin pledged to double earnings before interest, taxes, depreciation and amortization by 2020 with a plan that includes revenue growth, expense management and more efficient capital deployment.
For the quarter ended April 17, net income was $14.2 million, a 14-percent decline from $16.6 million a year ago. Adjusting for the impact of litigation contingencies and restaurant impairment, net income rose 12.5 percent, to $17.6 million.
Systemwide restaurant revenue totaled $493 million, compared with $488.1 million the previous year.
The chain ended the quarter with 443 company-owned restaurants, 86 franchised locations and 11 fast-casual Burger Works units, for a total of 540 restaurants.
During the quarter, Red Robin also completed the acquisition of 13 franchised units for about $40 million. The chain also completed the remodeling of 32 restaurants. By the end of 2016, the company expects all restaurants will conform to the new brand standards.
For the year, Red Robin expects to open about 25 new full-service restaurants and three Burger Works units. Next year, another 30 restaurants are expected to open.
Revenue is expected to increase 8 percent for the year based on projections of flat to slightly negative same-store sales.
Contact Lisa Jennings at [email protected]
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