Red Robin CEO GJ Hart has spent the past eight months in his new role outlining his five-point “North Star” plan for the company’s comeback. We may be starting to see some of that plan come to fruition.
The company Thursday reported its Q1 2023 results, including a comp sales increase of 8.6% and comp restaurant traffic growth of 0.6%. Dine-in sales increased 16.4% year-over-year and now represent 74% of sales, while revenues increased by 8.6%. The company also reported that comp restaurant sales for the first 13 weeks of the quarter were up by 10%. CFO Todd Wilson added that restaurant-level operating profit as a percentage of revenue was 14.7% in Q1 – an increase of 330 basis points from 11.4% in Q4 2022. This improvement was driven by comp sales and cost savings measures. The company, for instance, has restructured several vendor contracts to provide more favorable rates.
Further, Hart noted during the company's earnings call that guest satisfaction scores have increased by 5 percentage points since 2022, while wait times and false waits have declined “substantially.”
“A year ago, more than 10% of our guests reported waiting more than 15 minutes to be seated. Now that’s down to only 2% of our guests,” he said.
These improvements in speed are the result of staffing improvements and contributed to the company’s 700 new sales records established in Q1.
“These are hourly, daily and weekly high watermarks per restaurant,” Hart said. “In a brand that is nearly 50 years old, to set more than 700 new records is a testament to the incredible work of our teams and the overall direction of our company.
“The sales per hour levels that we are seeing from some of our best operators are incredible and that gives me hope on what we can do here in the future.”
The North Star plan includes the goal of becoming an operations-focused company and Red Robin launched a market partner program to all multiunit operators to start the second quarter as part of this plan. The program changes the compensation structure to reward partners based on their restaurants’ profits. The company will eventually roll this out to its single-unit operators in early 2024.
The company is also upgrading its cooking platform from a conveyor belt system to a flattop grill, which Hart said delivers a 20% larger and more flavorful burger. The systemwide rollout of the flattops began in April and is expected to be systemwide by the end of Q2. As Red Robin shifts its cooking process, it is also making changes to the makeup of the burgers, including upgrades to its buns, bacon, mayonnaise and tomatoes.
“We will also change our preparation procedure to deliver more delicious, caramelized onions and salted mushrooms,” Hart said.
Also, later this year, Red Robin will remove the wax paper wrapping from its burgers and introduce new plateware.
“On the side of every one of our restaurants, hangs a sign proclaiming 'Gourmet Burgers,' the bar has been raised over the years on what it means to deliver a truly gourmet burger and we are upping the ante,” Hart said.
Red Robin is also adding new non-fried appetizers to “enable a true barbell strategy,” Hart said. All of these changes are expected to be in place by October.
Another shift the company is making is a harder lean into a local marketing strategy leveraging insights from its 11.5-million-member loyalty program. Hart believes this approach will spark more word-of-mouth success and drive the acquisition of new guests. Because of this traction, Red Robin has raised its financial guidance expectations for the duration of the year, including total revenue of at least $1.3 billion and comp store sales growth of 2-to-4%.
Also on Thursday, the company announced Jyoti Lynch as its new technology officer. She will oversee strategic and operational planning, innovation, growth and maintenance of the company’s information systems and technological functions. She most recently served as chief information officer at European Wax Center and, previously as SVP and CIO at Jamba Juice. Lynch joins CMO Kevin Mayer, interim chief people officer Mark Simpson and chief business development officer Jason Rusk as new additions to the c-suite.
Contact Alicia Kelso at [email protected]