Red Robin Gourmet Burgers Inc. is working on improving service standards after reporting a decline in dine-in traffic during the third quarter and an increase in off-premise sales, executives said Tuesday.
The Greenwood Village, Colo.-based casual-dining company said off-premise sales grew 22.7 percent during the Oct. 7-ended quarter to now make up 10.1 percent of the brand’s total food-and-beverages sales. However, restaurant guest counts slipped 1.9 percent and same-store sales declined 3.4 percent during the quarter.
“In our race to build to-go,” said Denny Marie Post, Red Robin CEO, in a post-earnings analyst call, “we lost some focus on what made Red Robin Red Robin.
“While we seek to serve the growing demand for carryout,” she said, “we also must turn tables at peak times for those guests who choose to dine-in with us, so that they can take full advantage of our Bottomless Fries and beverages.”
The company spent the last part of the third quarter retraining restaurant teams on peak-hour service standards. Post said that was important as the company prepared for the seasonally higher volumes expected in the fourth quarter.
The retraining has already produced improvements in ticket and wait times, Post said.
“We increased in-store training using our new learning management system,” Post explained. “Our servers were trained on the basics of greeting, one-stop ordering and three-level bussing. Our hosts are being trained via the new system on dine-in seating and to-go standards. To be both a preferred destination and a source of customizable gourmet burgers, we must be great at dine-in and off-premise service.”
Post added that most of the dine-in traffic decline had been more about difficulty in seating and turning tables appropriately, which would be a focus of fourth-quarter efforts.
Red Robin also decided to reduce advertising in the third quarter, she said, and adjusted items on the popular Tavern menu, which now includes two burgers at the $6.99 level, with other options at higher prices. The range is generally $6.99 to $8.99.
Alexander Slagle, an analyst with Jefferies Research Services LLC, said in a note that Red Robin’s average check, which had been negative, should moderate with the changes in the Tavern menu and the reduction in trade-down from the regular menu. Other menu news, he noted, included an extension of Red Robin’s $1.99 Kids Meal on Wednesdays and the $10 lunch bundle Monday through Thursday.
Red Robin’s third-quarter income fell 37 percent to $1.7 million, or 13 cents a share, from $2.7 million, or 21 cents a share, in the same period a year ago. Revenues slipped 3.5 percent to $294.9 million from $305.7 million in the prior-year quarter.
As of Oct. 7, Red Robin, founded in 1969, had more than 574 restaurants in the United States and Canada. Of those, 485 were company-owned.
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