Red Robin Gourmet Burgers reported a 76-percent increase in profit on Thursday saying turnaround efforts are taking hold.
The casual-dining chain reported net income of $8.7 million, or 56 cents per share, for the first quarter ended April 17, compared with net income of $4.9 million, or 32 cents per share, for the same quarter a year ago.
Same-store sales increased 1.9 percent for company-owned restaurants, which was driven by a 0.9-percent rise in traffic and a 1-percent increase in average check.
Revenues, including sales from company-owned stores, franchising royalties and fees, increased 4.1 percent to $286.8 million, compared with $275.5 million for last year’s quarter.
The Greenwood Village, Colo.-based company said revenues from franchised locations in the United States were $100.5 million, a 7.4-percent increase over the $93.6 million reported for the first quarter last year.
Same-store sales for franchised locations in the United States increased 2.5 percent, while sales at franchised restaurants in Canada dropped 1.2 percent.
Steven Carley, Red Robin’s chief executive, said the company has been focused on implementing its Project RED initiative, a strategic plan aiming to improve same-store sales, reduce expenses and improve margins. The effort included the launch of a new loyalty program, an emphasis on boosting bar business, and the use of limited-time offer promotions supported by television advertising.
“While we are still in the early stages of this effort, we are encouraged by the traction that our team members have already achieved by strengthening our business performance and setting a course to become a best-in-class restaurant company,” Carley said in a statement.
In recent months, the chain has faced increasing pressure by activist investor groups to go private and make other changes that would ease turnaround efforts.
While labor costs were lower in the first quarter, commodity costs continued to pressure margins. The company said commodity inflation is expected to increase 5 percent to 6 percent for the year, mainly due to high beef costs.
During the quarter, the company opened one new Red Robin location, and one franchised restaurant opened. At the end of the quarter the chain had 315 company-owned and 137 franchised locations.
Eight new company-owned restaurants and one new franchised location are expected to open in the second quarter.
For the year, the company expects to open 10 restaurants.
Contact Lisa Jennings at [email protected]