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RedRobin_Orange001_CreditNancyLuna.jpg Nancy Luna
Red Robin stops paying all of its rent to preserve cash during COVID-19 crisis.

Red Robin paying partial rent during COVID-19 crisis

The company has reopened 158 dining rooms, and is seeing sequential sales improvements

Casual-dining chain Red Robin Gourmet Burgers has reopened 158 company-operated dining rooms and is taking a number of steps, including paying partial rent for its headquarters, to reduce its cash burn rate during the COVID-19 crisis.

According to media reports, the company is being sued by its landlord for lack of payment. Citing a lawsuit, publication Business Denver said Red Robin owes its landlord $186,000. 

“Like most other restaurant and retail companies, Red Robin is engaging in constructive discussions with landlords regarding the potential restructuring of lease payments,” the company told NRN in a statement when asked about the lawsuit. “These discussions remain ongoing as we’ve said previously.”

The Greenwood Village, Colo.-based casual-dining chain said in a May 29 regulatory filing that it has taken several actions to “enhance liquidity, reduce costs, and strengthen its organizational structure.” 

The company said it has reduced its cash burn rate to an average of $2 million per week. The spending covers “partial rent payments, re-opening costs, one-time COVID-19 expenses and costs associated with finalizing the amendment to its credit facility,” the company said. 

Red Robin said it began reopening dining rooms at limited capacity April 28. As of May 24, 158 restaurants, or 38% of company stores, had reopened.

Preliminary same-store sales for restaurants with dining rooms reopened were down 31.9% for the week ended May 24. That compares to a 47% decline for all company restaurants for the same week.

The company said restaurants continue to see “significantly higher off-premise sales, which have tripled when compared to pre-COVID-19 levels.” 

In a statement, CEO Paul Murphy said: “We are very encouraged by our five sequential weeks of sales improvement through May 24 due to the continued strong growth in off-premise sales and early traction in dine-in sales.”

“Across our 158 re-opened dining rooms, sales have been positively impacted by the accelerated implementation of our new hospitality model, coupled with strong health and safety standards,” Murphy continued. “Notably, restaurants with re-opened dining rooms are still capturing meaningful off-premise sales, demonstrating the enduring and growing popularity of Red Robin for off-premise occasions.”

Red Robin is not the only chain relying on rent relief during the COVID-19 crisis. Starbucks, in a formal letter to store landlords, has asked property owners for rent relief through summer 2021. 

For our most up-to-date coverage, visit the coronavirus homepage.

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Contact Nancy Luna at [email protected] 

Follow her on Twitter: @fastfoodmaven

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