GREENWOOD VILLAGE Colo. Red Robin Gourmet Burgers Inc., the operator or franchisor of 393 casual-dining restaurants, reported Tuesday a 2.8-percent dip in first-quarter profit on higher costs and weaker sales in California, Nevada and Arizona.
Net income for the quarter ended April 20 totaled $7.3 million, or 43 cents per share, compared with year-ago net income of $7.5 million, or 44 cents per share.
Restaurant-level operating profit margins at corporate restaurants fell 1 percentage point from a year ago, the company said, from higher food and beverage costs, increased occupancy expenses and larger contributions to the company’s national advertising fund.
The chain’s top line, however, surged 20.4 percent to $255.6 million, mainly on the openings of nine corporate restaurants, acquisitions of formerly franchised units and positive same-store sales -- a rare result for a casual-dining chain in today’s harsh economic environment. At corporate locations, same-store sales increased 3.9 percent, which reflected a 4.3-percent increase in the average check and a 0.4-percent decline in guest counts.
Excluding the year-to-year comparison of sales at 56 restaurants in California, Nevada and Arizona -- states that have been among the hardest hit by macroeconomic pressures -- same-store sales would have increased 6.2 percent, Red Robin reported. Comparable guest counts would have been a positive 1.7 percent for the quarter, it added.
Same-store sales rose 4.0 percent and 6.7 percent at franchised restaurants in the United States and Canada, respectively.
During the quarter, Red Robin completed the $28.6 million acquisition of 15 locations from franchisees. The acquisitions are expected to add between $25 million and $27 million to revenue and 4 cents per share to earnings for the remainder of the current fiscal year.
The company also increased its 2008 guidance, and expects revenue of between $905 million and $918 million and per-share earnings of between $2.04 and $2.23, compared with prior expectations for revenue of between $880 million to $893 million and per-share earnings between $2.00 and $2.20. A year earlier, Red Robin earned $1.98 per share.
The updated expectations are based on expected same-store sales gains of between 2.5 percent and 4 percent, which includes the late March menu price increase of 0.5 percent and an anticipated late-June price increase of 2.7 percent.