Skip navigation

Red Robin posts 37% rise in 4Q profit

Turnaround efforts appear to be taking hold at Red Robin Gourmet Burgers Inc., which reported a 37-percent increase in profit in the fourth quarter, officials said Thursday. 

Looking ahead, a menu price increase will be necessary to counter rising commodity costs, the company added.

For the fourth quarter ended Dec. 26, Red Robin reported earnings of $2.2 million, or 14 cents per share, compared with $1.6 million, or 10 cents per share, a year ago. The latest quarter result beat analyst expectations that averaged 5 cents per share, according to Thomson Financial Network.

Corprate revenue increased 5.7 percent to $192.6 million in the fourth quarter.

Same-store sales at company-owned restaurants increased 0.8 percent, driven by a 1.1-percent increase in guest counts that was offset by a 0.3-percent decrease in average check, the company reported.

“In a matter of a few short months, we have galvanized and focused the entire Red Robin team to drive performance improvements and re-establish our company as a best-in-class restaurant operator,” said Steven Carley, Red Robin’s chief executive.

Company officials said that earnings would have been 12 cents per share for the quarter, excluding executive transition expense with the appointment of a new chief executive and the closing of two company-owned restaurants.

Carley briefly outlined a strategic plan dubbed “Project RED,” which aims to improve same-store sales, reduce expenses and improve margins.
Initiatives include plans to launch a “Red Royalty” loyalty program that will attempt to improve alcohol sales, and use of a limited-time offer strategy supported by television advertising.

Red Robin also plans to increase prices by 1.5 percent in April to help mitigate rising commodity costs expected in 2011.

The Greenwood Village, Colo.-based chain has faced increasing pressure by activist investor groups to go private, which the investors contend would ease turnaround efforts.

Red Robin recently modified its “poison pill” provision set up to prevent hostile takeovers, raising from 15 percent to 16.5 percent the threshold of stock acquired to trigger the plan’s protections.

Carley said the company will continue its focus on reducing restaurant costs, which has included an unspecified reduction in “administrative headcount.” Red Robin officials said they also are in the process of identifying $16 million to $18 million in annualized savings from cost reduction efforts at the restaurant level.

Through Feb. 14 in the company’s 16-week first quarter, officials said same-store sales at company-owned locations were down 0.4 percent. If not for bad weather and the timing of Valentine’s Day, however, the company said comparable-store sales would have been up 0.4 percent.

At the end of the fiscal year, Red Robin operated 314 locations and another 136 were franchised.

Contact Lisa Jennings at [email protected].

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.