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RedRobin_Orange001_CreditNancyLuna.jpg Nancy Luna

Red Robin to resume pre-pandemic turnaround plan as it records quarterly loss of $56.3 million

In the works for the casual-dining chain: Remodels, a new prototype store, expanded outdoor dining, and Donatos Pizza in Seattle

Red Robin Gourmet Burgers reported a net loss of $56.3 million for the second quarter, a plunge the casual-dining company said was driven by multiple operational shifts tied to the COVID-19 pandemic. 

Same-store sales decreased 41.4% for the quarter, driven by a 38.5% decrease in guest traffic and  a 2.9% decrease in average check. The latter comes as most companies have reported higher check averages during the pandemic, due in part, to consumer spending on large dinner orders.

The pandemic couldn’t have happened at a worse time for the brand, which at the start of the year had launched a major turnaround plan under newly appointed CEO Paul Murphy. That playbook included adding Donatos Pizza to restaurants, improving dining-room service dubbed Total Guest Experience, and remodeling restaurants.

Murphy said the company has logged sequential improvement in average weekly net sales for the past five weeks through Aug. 9. Those improvements come despite the brand being forced in early July to reclose dining rooms in 53 restaurants in its core market of California.

For the quarter ended July 12, off-premise sales increased 208.7% and accounted for 63.8% of total sales.

“We've made it easier for guests to enjoy our food outside of our restaurants” through curbside pickup and two delivery options — third-party delivery and direct delivery through the company’s digital channels, Murphy said.

In states that are allowing 75% capacity, Red Robin said it is planning to add partitions to dining rooms at about 155 restaurants. In addition, the brand is expanding outdoor dining in areas where local officials have allowed makeshift patio dining.

Murphy told investors during the company’s Tuesday afternoon conference call that Red Robin plans to reboot its turnaround plan by adding Donatos Pizza to 31 restaurants in the Seattle area. Murphy said restaurants that currently have Donatos on the menu have recorded higher sales.

The brand also plans to roll out a new prototype store in 2021, and will look at remodeling some stores this year.

“Red Robin is strongly positioned to emerge from the pandemic and resume our strategic plan,  thereby transforming the business for future growth,” Murphy said.

As stated in its last earnings call, Murphy reiterated that trimming the menu during the pandemic has worked well for restaurants. The menu now has one-third fewer items, which has reduced complexity and food costs in the kitchen, while at the same time, increasing throughput.

“We have used the focus created by the pandemic to improve the quality of our operations and build trust and loyalty with our guests that will pay dividends long into the future,” Murphy said.

Total revenue decreased 47.7% to $161.1 million. The company closed the quarter with 552 restaurants. Of those, 346 were open for indoor dining at limited capacity as of Aug. 9. 

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

Contact Nancy Luna at [email protected] 

Follow her on Twitter: @fastfoodmaven

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