GREENWOOD VILLAGE Colo. A nearly 10-percent drop in guest traffic that led to negative same-store sales, as well as impairment charges on two restaurants, resulted in a 43-percent plunge in fourth-quarter earnings for Red Robin Gourmet Burgers Inc.
The company said Thursday that same-store sales for the December-ended quarter fell 7.4 percent at corporate restaurants. A 2.2-percent increase in the average guest check did little to offset a 9.6-percent decline in customer counts, Red Robin said. The Greenwood Village-based company operates 294 units and franchises an additional 129 locations.
Company executives told investors during its conference call that they are working to improve service and will focus on local marketing efforts to drive traffic. In addition, the chain will introduce a new menu in June.
“We are in the midst of a very difficult environment for restaurant operators and customers alike,” said Dennis Mullen, chairman and chief executive. “We are working through the challenges we face with a focus on the factors we can control.”
Bad weather in the Pacific Northwest also impacted traffic counts in the fourth quarter, Mullen said.
Net income for the quarter fell to $5.8 million, or 38 cents per share, compared with $10 million, or 60 cents per share, for the same quarter a year earlier. A charge totaling 5 cents per share was booked in the latest quarter for the impairment of two locations, the company said.
Latest-quarter revenue rose 8.0 percent to $198.6 million, aided by the openings of seven new restaurants.
Red Robin executives said they are not giving earnings or revenue projections for 2009.
For fiscal 2008, the company earned $27.1 million, or $1.69 per share, compared with $30.7 million, or $1.82 per share, in 2007. Revenue rose 13.9 percent to $869.2 million in 2008.
Last month, Red Robin suspended its national cable advertising and reduced franchisee and company-owned store contributions to its national advertising fund to help franchisees continue to thrive during the tough economic times, as well as to shift marketing efforts to the local level.
Red Robin also completed a $3.5 million buyout of employee stock options this month. The company said it would book a one-time, non-cash pretax charge of $4 million, or 19 cents per share, in the first quarter of 2009.
Contact Dina Berta at [email protected].