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Red Robin's sales softened more than expected in the third quarter, but the off-premises channels remained strong.

Red Robin’s sales soften in Q3, but off-premises channel remains strong

Casual-dining burger brand adds Donatos pizza to 38 more locations in quarter

Red Robin Gourmet Burgers Inc.’s sales were softer than anticipated in the third quarter, but the off-premises channel remained strong during the period, executives said Wednesday.

Greenwood Village, Colo.-based casual-dining brand, which released earnings for the period ended Oct. 3, said the sales trajectory picked up later in the third quarter.

“Although sales were softer than we expected due to the spread of the COVID-19 delta variant and continued staffing challenges, we are optimistic about the positive trajectory we are seeing in our sales trends including 4% comparable restaurant revenue growth in the last period of the third quarter vs. 2019,” said Paul J. B. Murphy III, Red Robin’s CEO and president.

Red Robin added Donatos pizza to another 38 locations in the third quarter and expects an additional 40 in the fourth quarter, he said.

“Our continued progress in rolling out Donatos will bring our systemwide total to about 200 restaurants,” Murphy said.

“Overall, Donatos generated sales of $4.1 million in the quarter, which was aided by an increase in marketing support at certain restaurants,” he said. “Our restaurants that offered Donatos for the full quarter and did not experience supply chain disruptions experienced comparable restaurant revenue growth of 4.3% compared to 2019.”

In addition to offering Donatos, Red Robin in May rolled out three virtual delivery-only brands — Chicken Sammy’s, Fresh Set and The Wing Dept.

The off-premises sales mix was 30.8% in the third quarter, which was the sixth consecutive reporting period that doubled off-premises sales of 14% before the pandemic was declared in March 2020.

Growth in off-premises sales have been sustained over the past three years. The company said off-premises revenue totaled $81 million in the third quarter of 2021 was $81 million, $80.7 million in 2020 and $35 million in 2019.

“We believe that Red Robin is well-positioned to take advantage of the shift in customer habits toward off-premises occasions due to our value proposition and menu offerings,” Murphy said.

“The elevation of the off-premises experience is critical to maintaining the sales channel, which is why we continue to enhance building modifications to increase space for off-premises orders to improve efficiency and accuracy without impacting our dine-in business,” he said. “We are on track to complete these reconfiguration efforts in 2022.”

Red Robin’s digital efforts also advanced during the quarter, he said, with iOS and Android apps working toward a launch along with a new website and a new loyalty platform.

“In 2021 to-date, we have leveraged new loyalty segmentation capabilities to connect with our guests more meaningfully through personalized messaging based upon their purchase history,” Murphy said. “This led to new all-time high levels of guest engagement in Q3.

Marketing will begin in early 2022 to drive awareness and trial of the new app and website ordering, he noted, adding that the new digital tools were aimed at improving traffic, order completion and average guest check.

For the third quarter ended Oct. 3, Reb Robin’s loss widened to $15 million, or 95 cents a share, from $6.2 million, or 40 cents a share, in the same quarter a year ago. Revenues increased to $275.4 million from $200.5 million in the same period last year.

Same-store sales were up 34.3% over the 2020 third quarter and increased 0.6% compared to the same period in 2019.

Red Robin Gourmet Burgers, founded in 1969, has more than 525 restaurants across the United States and Canada.

Contact Ron Ruggless at [email protected]

Follow him on Twitter: @RonRuggless


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