Red Robin Gourmet Burgers Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 17, 2023

There are 5 speakers on the call.

Operator

Afternoon, everyone, and welcome to the Red Robin Gourmet Burgers Incorporated Second Quarter 2023 Earnings Call. This conference is being recorded. During management's presentation and in response to your questions, there will be making forward looking statements about the company's business outlook and expectations. These forward looking statements and all other statements that are not historical facts reflect management's beliefs and predictions as of today and therefore are subject to risks and uncertainties as described in the company's SEC filings. Management will also discuss non GAAP financial measures as part of today's conference call.

Operator

These non GAAP measures are not prepared in accordance with Generally accepted accounting principles, but are intended to illustrate alternative measures of the company's operating performance that may be useful. Reconciliations of the non GAAP financial measures to the most directly comparable GAAP measures can be found in the earnings release. The company has posted its Q2 2023 earnings release on its website at ir.redrobbin.com. Now, I'd like to turn the call over to Red Robin's CEO, G. J.

Operator

Hart. You may begin.

Speaker 1

Good afternoon and thank you for joining us today. With me is Todd Wilson, our Chief Financial Officer, who will review our Q2 results Let me first begin by expressing how pleased we are with our performance through the first half of twenty twenty three and the continued traction we are seeing with our North Star plan. I want to acknowledge the hard work of our restaurant team operators, our team members as well as our restaurant support center team. Thank you and keep up the great work. Our strong financial results in the Q2 combined with other guest data provide Further proof points that we are on the right track in this multi year comeback.

Speaker 1

The highlights include comparable restaurant sales increase for the 10th Consecutive quarter. The simple changes we have already made provide our operators greater ownership and control of their businesses And they continue to break sales records. In the first half of twenty twenty three, we have now broken over 900 hourly, Daily, weekly and period sales records. This is an amazing accomplishment for a 50 year old brand. Guest feedback continues to demonstrate how much they appreciate the changes we are making.

Speaker 1

We measure these in multiple ways And find aligned proof points across all measures. Dine in is where most guests experience the improvements We have made to hospitality and food. We are encouraged by our growth in dine in sales and our overall SMG satisfaction scores, which increased 3 percentage points versus a year ago. We also monitor Google, Yelp and TripAdvisor reviews. Total net sentiment and service net sentiment increased 13% 28%, respectively, as compared to the Q2 of 2022.

Speaker 1

Finally, we routinely survey our loyalty database. Among These most loyal guests who have visited us in the past month say, 42% agree food quality has improved, 44% agree burgers have improved and 46% agree service and hospitality have improved. When we drill in further, the greatest gains are in our bottom quartile special focus restaurants, which represent tremendous opportunity for us. While making improvements in the guest experience, we've also quickly reinvigorated our profitability. In the first half of twenty twenty three, We have already generated $51,500,000 of adjusted EBITDA compared to just $52,100,000 for the entire year of 2022.

Speaker 1

Now let me provide some brief updates on each of our five points of our NorthStar plan. First, we are transforming into an operations focused restaurant company. Our frontline operators are the most influential people in This is why we are keeping them front and center in every decision we make. They are the ones closest to the action And so this is paying dividends as we roll out our guest experience improvements. We want to make sure the goals of our operators Are the same as the goals of our support center and shareholders.

Speaker 1

As announced previously at the start of the second quarter, we launched Our revamped market partner compensation program, which rewards our multiunit operators by allowing them to share in the profitability of the restaurants they oversee. This incentivizes strong financial results and helps us hire and retain the best talent available. We are learning from the multi unit operator rollout, which has been well received to date and we are developing a single unit operator program, which we expect to launch in early 2024. 2nd, we are elevating the guest experience. As I mentioned earlier, we are seeing traction amongst our guest base Evidenced by increases to our overall satisfaction, this is a direct result of the people, food and hospitality investments We have made to improve their experience.

Speaker 1

We are focused on the quality of staffing and delivering on our promise of unbridled hospitality. We have returned our overall hospitality model to what it was during Red Robin's long and successful history, beginning with service being responsible Other staffing improvements include adding back buses, which has driven increases in cleanliness ratings, Staffing at the host stand, which has improved wait times and bringing back the dedicated expo, who is responsible for the in restaurant execution The additions we targeted for all of these roles are now substantially complete. Finally, We know having the right management complement in place at each restaurant is paramount to ensuring consistent execution. By year end. On food quality, we moved quickly and successfully completed the rollout of flat top grills During the Q2 across the entire system, including franchise owned restaurants.

Speaker 1

This upgraded cooking platform Sears in the natural juices of the burger delivering a 20% larger and more flavorful burger. The cooking process is also simpler to execute, Enabling greater throughput and a more consistent end product delivered to our guests. We are very pleased with the guest feedback thus far. This upgraded cooking technology serves as a foundation for additional and future innovation as it is more flexible platform Then the previous conveyor belt charbroiler. To showcase our food, we have upgraded the presentation by moving away From serving our burgers wrapped in wax paper in baskets and now showcase them on a beautiful new plateware.

Speaker 1

Chef Brian has done fantastic work to identify and develop improvements across our menu and we could not be more excited. Along with changes to our cooking procedures, we have improved the quality of our chicken in our fried chicken sandwich, moving to a hand breaded Fresh product that tastes and looks amazing. Coming down the pipeline, we are phasing in upgrades to our bacon, mayonnaise, We also plan to launch new menu items later this year to broaden our barbell strategy. This includes St. Louis Style Pork Ribs featured in our signature Whiskey River barbecue sauce, panko breaded Tsunami Shrimp and Crispy Parmesan Brussels Sprouts as an appetizer.

Speaker 1

While we are so pleased with the progress to date Through our prioritized investments in people, food and hospitality, it is now time to take the next step. In the second half of the year, we expect to launch the Red Robin renovation program in an alpha test group of up to 5 restaurants. We plan to use this first test group to redefine design elements, evaluate economies of scale for a full rollout and guide our investments in 2024 and beyond. Perhaps most importantly, we expect to demonstrate Red Robin's potential in bringing all elements of the best guest experience together. This entails upgrading the interior ambiance And the exterior appeal of our restaurants to match the food and hospitality upgrades that we are already underway with.

Speaker 1

We expect the Test Group renovations to start in the Q4 and to be complete in late 2023 or early 2024. 3rd, Removing costs and complexity. To fund our guest facing investments, we identified a number of non guest facing cost savings opportunities. Our supply chain team has done a fantastic job collaborating with our vendor partners, finding smart cost savings levers End of Q and A Year to date, we have saved approximately $3,000,000 and expect The savings rate to accelerate in the remainder of 2023. We also made the decision to exit the partnership with Mr.

Speaker 1

Beast Burger Virtual Brand. This decision to support our operators by reducing complexity in our kitchens, allow them to focus on executing great food and hospitality under the Red Robin brand, While driving more profitable sales, we wound down the partnership and were substantially complete with the exit in July. 4th, optimizing the guest engagement. We are making great progress in this area as we refocus our efforts towards driving our vision Being the most loved brand in the communities we serve. Our restaurants are returning to what made them great in the past, a focus on local marketing to build relationships.

Speaker 1

We are empowering each single unit operator with a local store marketing toolkit, including engaging in fundraisers to support local community initiatives. To build visibility and excitement around our investments in food quality, We launched the Coast to Coast Summer of Yum! Promotional tour, letting prospective guests sample our new and improved burgers, win prizes and have some real fun. The response has been great as we connect with local communities across the U. S.

Speaker 1

Our team is also focused on enhancing the ability to reach more guests efficiently through a digital infrastructure and omni channel approach. This includes leveraging the strength of our Owned marketing channels, including our approximately 12,900,000 member loyalty program to drive traffic efficiently. At the same time, we are making changes to the program, pivoting away from what we view as an overreliance on discounts, Instead rewarding those who are truly most loyal to the brand. As we continue to make investments in our people and food, We intend to reduce our reliance on discounts going forward. We are currently designing and developing new program structure that we believe will enhance the value of To our guests and to Red Robin, our new Chief Marketing Officer, Kevin Mayer and the team have hit the ground running And I will share more as this work progresses.

Speaker 1

5th, we are driving growth in comparable restaurant revenue We achieved this despite the headwind of intentional reductions in marketing spend and discounting compared to a year ago quarter. Credibility with our multiple stakeholders is critically important. With the results that have been achieved this quarter, We continue to demonstrate our ability to deliver on our financial commitments. Now let me turn the call over to Todd. Thank you, G.

Speaker 1

J, and good afternoon, everyone. I will begin with a recap of our financial performance for the Q2, Then discuss the moderating inflation trends we are seeing and our updated financial guidance for 2023. Total revenues in the Q2 of fiscal 2023 are $298,600,000 revenue of 1.5%. We continue to see strength in dine in sales which increased 5.9% as compared to the Q2 of and represented approximately 75% of sales. We expect this shift back to dine in will continue As consumers seek the service and experiential aspects of dining with family and friends and as we step away from virtual brands.

Speaker 1

Like many in the industry, we experienced year over year sales declines in the off premise portion of our business and the 3rd party delivery segment In particular, we observed the greatest change in consumer behavior in the 3rd party segment with guests managing their check down by approximately 12% as compared to the Q2 of fiscal 2022. A bright spot in our off premise business is catering. Catering generated approximately $23,000,000 of revenue in fiscal 2022 and has grown 44% in the first half of twenty twenty three as compared to last year. The team has done fantastic work building and growing this business and we believe plenty of opportunity remains. Restaurant level operating profit as a percentage of restaurant revenue was 12.6%, A decrease of approximately 100 basis points compared to the Q2 of 2022.

Speaker 1

Directionally, this change was expected As we said on our last conference call and the actual result was better than our internal target. The reduction was driven by inflation across all Cost categories and our intentional investments back into the guest experience through both food quality and staffing levels. While we do continue to see rising costs, the rate of inflation has eased faster than we expected. Commodity inflation was 5% in the Q2 of 2023, down from 8% in the Q1 And 13% in the Q4 of 2022. We expect commodity inflation will continue to sequentially Step down through the balance of 2023.

Speaker 1

Hourly wage inflation was approximately 5%, Moderating from 6% in the Q1, we invested approximately $5,000,000 in the quarter to add staffing across the different roles G. J. Reviewed earlier. This amount substantially represents the quarterly run rate of our people investments And increased total labor to approximately 37% of restaurant revenue in the 2nd quarter. We anticipate a lag effect In time, we expect these added resources to gain mastery of their role and build efficiency.

Speaker 1

In addition, we expect traffic growth To leverage our fixed costs, together we anticipate these levers can drive total labor as a percentage of restaurant revenue Back to Red Robin's historical run rate of approximately 35%. In other operating expenses, Inflation continues to moderate, particularly in natural gas as we lap the geopolitical events that drove increases last year And electric costs now that we are past the big increases in absolute rates during the first half of twenty twenty two. In addition, this expense category experienced lower third party sales commissions due to the lower third party sales mix. General and administrative costs were approximately $20,700,000 an increase versus the prior year of $1,900,000 The increase is led by accrual of higher incentive compensation expenses. We intentionally reduced marketing and promotional activity to

Speaker 2

For our

Speaker 1

hospitality investment, selling expenses were approximately $6,200,000 a decrease versus the prior year of approximately $7,200,000 led by reduced spend in Internet, local media and Donato's marketing costs. Discounts represented 3.9 percent of revenue in 2023, a decrease of 90 basis points compared to the Q2 of 2022. Adjusted EBITDA is $15,500,000 compared to adjusted EBITDA of $11,900,000 in the Q2 of 2022. We ended the quarter with approximately $44,000,000 of cash and cash equivalents and $25,000,000 available borrowing capacity under our revolving line of credit. At quarter end, our outstanding principal balance under our credit agreement was $197,500,000 and letters of credit outstanding were $11,700,000 During the Q2, among other items, we used cash to repay $15,500,000 of debt, Purchase $5,000,000 of stock and capital expenditures totaled $9,700,000 We have made 2 updates to our 2023 financial guidance metrics.

Speaker 1

First, we updated comparable restaurant revenue guidance From an increase of 2% to 4% previously to now an increase of 1% to 3%. This change is primarily due to the elimination of the Mr. Beast virtual brands. Due to the economics of the agreement, We do not anticipate a material profitability impact. 2nd, we increased adjusted EBITDA guidance to $82,500,000 The increase is due to first, our over performance versus our expectations in the 2nd quarter And second, inflation rates easing more quickly than we previously expected.

Speaker 1

We reiterate all other measures from our prior guidance. I will add texture to one of the other guidance metrics. Our prior and current guidance for capital expenditures is from $45,000,000 to $50,000,000 We are actively marketing additional properties for potential sale leaseback transactions and remain optimistic these efforts will prove successful. If we do complete additional sale leaseback transactions in 2023, We expect to reinvest a portion of the proceeds back in the business through capital expenditures, which could increase our 2023 expectation. Finally, as a reminder, as we think about the remainder of 2023, we will overlap Red Robin's $10 meal deal promotion from the second half of twenty twenty two.

Speaker 1

We expect our marketing messaging in 2023 will support the launch of our Now Better Burger with significantly less discounting than last year. While last year's promotion successfully drove traffic and sales, The deep discount economics were quite penalizing to the profitability of the company in the second half of twenty twenty two. We anticipate shifting away from this type of heavy discount promotion in 2023 and building a healthy, sustainable and more profitable traffic base. In summary, we are extremely pleased with our financial performance through the 1st 2 quarters of the year and have set up Red Robin to achieve and exceed our objectives for 2023. With that, I will turn the call back over to G.

Speaker 1

J. Thank you, Todd. In closing, I remain incredibly optimistic about the future of Red Robin. Our mission is very simple, serving up an awesome American food and bottomless fun. We have great And we are having fun doing it.

Speaker 1

We have the right people, the right plan, an iconic brand with 50 years of amazing history And an amazing loyal guest base to build on. And I'm proud to be a part of this incredible comeback story. We are now happy to take your questions. Operator, please open the lines.

Operator

Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer Our first question comes from the line of Alex Slagle with Jefferies. Please proceed with your question.

Speaker 3

All right. Thank you. Congrats on the progress. I wanted to kind of touch on on the same store sales and traffic and maybe you could elaborate on those trends relative to the peer benchmarks As you progress through the quarter and into the 3Q and what you think were the bigger drivers of relative performance because I think you would mostly Pick the low hanging fruit from bringing down the false weights and we're really shifting more to driving the sales per hour as you start to improve the service and food and experience and Really leverage those investments, but imagine that does come pretty gradually. So if you could kind of talk about how that progressed and what the path ahead looks like as you

Speaker 1

Yes, Alex, hey, Todd here. Absolutely happy to talk about that. As we saw the quarter progress, and now thinking about the balance of the year, if you go back to Q1, We outpaced the industry and especially on the marketing front. We had, I'd say, relatively similar levels of marketing support this year versus last year. And so with similar marketing, to your point, the benefit of eliminating the false weight, those types of things in our favor, that drove the beat versus the segment.

Speaker 1

It was really the second half of the second quarter that we started to see the change in year over year spend. Now keep in mind, we very intentionally held Powder dry, so to speak, in the first half of the year, so that we have marketing dollars to work for us in the second half of the year to support the Better Burger. But even with that, we're going to face year over year declines in marketing spend. Again, we think that's right, because ultimately we do have to make the guest experience compelling To build that healthier, stickier traffic that G. J.

Speaker 1

Spoke about, but that's part of really what you see in our sales guidance. We knew that hurdle was going to be out there, Our sales guidance of 1% to 3% for the full year really implies flat to potentially negative sales in the balance of the year. That's been contemplated in our numbers and even with that we're able to deliver the much higher adjusted EBITDA guidance. But that's how we're thinking about the year. And so yes, we see the headwinds in the absolute numbers and relative to the segment.

Speaker 1

But part of this, really all of this It's about the reset of this brand to set us up long term.

Speaker 3

That's good. Maybe you could talk about The opportunity to build awareness and get people in the doors to experience the improvements in the food and service and Perhaps more details on the marketing plan. You mentioned a few things, but just whether you need to step beyond the digital, social and local or

Speaker 1

Alex, it's G. J. Here. At this point, the way we're looking at it is we revamp our whole loyalty platform and focus on doing the right thing by our most loyal guests and being able to communicate them. That's a Process that we're in the middle of right now, we will use that as we really have the launch of our 3rd or if I would call it T3, Our promotion with all better ingredients that we launched in early October, and that will be combined with Things that we're doing digitally that are very, very targeted to the communities that we serve and becoming much more efficient in terms of how we use media.

Speaker 1

That's the current plan. In terms of going outside into something more of a more national media itself, I don't see us doing that at the moment. I think candidly, we think that there's enough going on here that from a word-of-mouth and an experience perspective that we're going to gain traction Pretty rapidly. And we're seeing that early phases with what we've done with our flattop cooking. Just the changes we've made today with the bun, The burger cooking as well as the way we presented on the plateware.

Speaker 1

So I feel good about where we are And when we will take some of this marketing spend and put it to work here later in the year.

Speaker 3

Perfect. Thanks.

Operator

Our next question comes from the line of Andrew Wolf with CL King. Please proceed with your question.

Speaker 4

Thank you. Just wanted to kind of ask a follow-up on the same store sales Guidance. First of all, for the quarter, did the discontinuation of the virtual brand, the Mr. B's, Was that in the Q2 at all? Or was that a comp that did not get penalized by that?

Speaker 1

Yes, Andy, Todd here. A little bit in the second quarter, Really more of a 3rd quarter impact, but right at the tail end of the second quarter is when we really started to wind that down and we did exit.

Speaker 4

Okay. So if I just use the number there and kind of back into the back half, I mean, Todd, you did say that you can be flat to down, but I think I've got it's a pretty wide range, Plus 1% to down 3%. And so is there something in some of the trends you're seeing that Maybe a lot of variability in the weekly sales or daily sales that suggest you need that wider range or is that sort of Just the typical prudence you'd like to have on your guidance instead of tightening it up. I'm just trying to get to why that range might be so tight for the back Wide for the back half.

Speaker 1

Yes. I guess as we think about it, it's not an intentional wide or narrow just kind of the range that we feel like we need. The trend certainly can ebb and flow, but we still frankly have right half of the year to go. So there's a long way to still get through the balance of the year. And so not intentionally wide or narrow, just kind of the range that we felt comfortable with I think we would typically have at this point in the year.

Speaker 4

Okay. And I just want to ask a Kind of generalized strategic question on kind of the two things. Well, basically on driving traffic with promotions For advertising and obviously you brought the selling expense down. I guess that makes sense if you don't have the kind of offer you want to Enticing new customers with complete yet, but as we look to next year, is that To newer diners, will be more or less complete and unrelated, but a different topic is How does the loyalty program play into that, into traffic? Is it a retention tool because you want to use it more as a Really a loyalty, true loyalty program versus a discount program.

Speaker 4

So Two different questions, but both at least related to traffic.

Speaker 1

Yes, Andy, I'll start with the back question there. Relative to the loyalty, exactly, we want to do exactly that. We'll recognize our most loyal guests and reward them accordingly And be able to develop a relationship with them. And that revamp of that program, as I said, is ongoing. And I'm very confident that the direction that We're going to reap some real, real benefits.

Speaker 1

In fact, I would tell you that our we're finally going to use our loyalty platform in a way to really drive our business. So I'm very excited as we go into 20 In a way to really drive our business. So I'm very excited as we go into 'twenty four what we'll be able to achieve. In terms of your question around marketing and The level of marketing spend, I want to I'm not I won't totally answer your question, but I'm going to say this to you, Is that the marketing spend that was done here, in my opinion, was not done effectively. It was not spent in a very targeted way.

Speaker 1

In fact, we have plenty of proof points That demonstrate that candidly it didn't work at all and it wasn't targeted to the folks that we want to get to. So I believe the working dollars that we'll have available in 2024, will we spend a little bit more? Possibly. But I think we can do a lot with what we've been spending At these kind of levels to be much more efficient and drive our business forward. So yet to be determined, Will we ultimately end up investing back in our business for the right reasons to drive new people into our buildings to tell them about new news?

Speaker 1

The answer is yes. Will we continue to do the deep discounting that this company did in last year, particularly Last half of all of the year, the answer is no. We don't believe we need to give our product away. We've got something pretty special that we're bringing back and candidly, Our guests are telling us that as well.

Speaker 4

Great. Thank you very much.

Operator

Our next question comes from the line of Todd Brooks with The Benchmark Company. Please proceed with your question.

Speaker 2

Hey, good afternoon everyone and congrats on the continued progress.

Speaker 1

Thanks, Todd. Thanks, Todd.

Speaker 2

First thing, I just want to clarify, off of Andy's last question. You guys did not broaden out your range for same store sales guidance. It's still the same 200 basis points, Right. It's up 1 to up 3, not up 1 to down 3.

Speaker 1

That's exactly right, Todd. Yes, we shifted it because of the elimination of Mr. Beast. Your point, the range, it's the same spread of 2 points for the year, just shifted due to Mr. Beast.

Speaker 2

Okay, perfect. Thanks. And then just Couple of additional questions. G. J, you talked about the greatest improvement being seen in the bottom quartile And I think at the ICR conference, you talked about that being a 3,800 basis points spread from top to bottom.

Speaker 2

Would you want to share how much improvement you've How much that spreads closed between the bottom quartile and top quartile store with all your efforts?

Speaker 1

Hey, Todd. Todd here. I'll start that and Jay obviously will chime in. But yes, as we look at the quartiles, yes, I think I'd frame it this way from 2 lenses. 1, for same store sales And 2, from a customer satisfaction, guest satisfaction level.

Speaker 1

1, fortunately, as we looked at the quartiles, All 4 quartiles posted positive same store sales, but the bottom quartile was clearly the leader, which is what we would expect, right? It's the greatest opportunity there. It also was a leader as G. J. Said in his prepared remarks in terms of improvement in guest satisfaction.

Speaker 1

So it's still A opportunity for us, right? That bottom quartile is still on the bottom, but we're seeing the greatest improvement there, both in terms of guest satisfaction as well as same store sales. Yes, I don't know that we've really quantified that publicly, but I think directionally we're seeing very much what we would aspire to see there of The top performing restaurants are getting a little bit stronger and the bottom restaurants are showing the greatest improvement, which is very encouraging.

Speaker 2

Okay, great. Thanks Todd. And then the final one for me. You talked about the elimination of Mr. Beast and some of the other virtual brands.

Speaker 2

That 100 basis point drag to same store sales was in a relatively profitless business. So it eases complexity for your operators And you're really not taking a hit on the restaurant level operating margin line or the EBITDA line from exiting those businesses? It

Speaker 1

was no hey, Todd. It's nowhere near as profitable as our regular business at all. And in fact, That whole business over time has become even more complex and the margins continue to deteriorate in terms of what their expectations were. So No, it's not even close.

Speaker 2

Okay. And then last one, I lied before. If you look at Same store sales trends and the outlook for the second half and you have to parse out the headwind that you're up against from lapping the $10 Promotion that ran in second half of last year. I guess, how do you measure the success with the operational initiatives? And if you look at the $10 promotion, was it more impactful at launch?

Speaker 2

So it's one of those things that had a bigger impact, let's say, Deeper into Q3, but then as you got to Q4, it wasn't impactful as far as a mix standpoint or anything or was it a pretty steady impact across the year?

Speaker 1

Thanks. Hey, Todd. I'd say on the last piece there as it relates to the $10 meal deal, it was a pretty steady push through the second half of last year. And a lot of that activity predates many of us, but the company frankly pressed on that With spurts of marketing activity to really drive that message and to your point on how do we measure it, we've benchmarked Sales and traffic back to 2019, right, we look at sequential trends and try to parse all of that out. And we do.

Speaker 1

We see a clear improvement in traffic as a result of the promotion last year, somewhere in the 3%, 4%, 5% range is where we estimate it at. But we also see just very significant discounting that I commented on in my prepared remarks. So through the back half of the year, both Q3 and For discounts for the company last year were between 5% and 6% of sales. We think this year it's going to be closer to 3% to 4% And that's the flow through or the contribution on that is obviously quite significant. So that's part of how we're thinking about this is getting back to that healthier, Profitable base that we talked about, there could be some traffic headwind as a result of that, but we think the move makes us a much stronger and healthier company, especially to GJ's point, Now that we know we've got great products, great experience and we're seeing guests tell us that in their comments to us.

Speaker 1

Yes. And I think it's important that we continue just to monitor The guest response and how they're feeling about what we're doing, how we're doing it, and we're doing a tremendous amount of Work around sentiment and kind of what we're seeing and how and we'll adjust accordingly. So right now, we're feeling like we're pretty close to it And we'll be able to share more of those data points as we get them.

Speaker 2

Okay, great. Thanks to you, Bob.

Operator

There are no further questions in the queue. I'd like to hand it back to management for closing remarks.

Speaker 1

Thank you all for joining us today. We are very, very pleased where we are at the first half of the year, looking forward to the balance of 2023 and Look forward to talking to you in a few months. Take care.

Operator

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful

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Key Takeaways

  • Record Sales & Profit Growth: Red Robin delivered its 10th consecutive quarter of positive comparable restaurant sales, set over 900 sales records in H1, and generated $51.5 million of adjusted EBITDA versus $52.1 million for all of 2022, prompting an increase in full-year 2023 adjusted EBITDA guidance to $82.5 million.
  • Enhanced Guest Experience: The company rolled out flat-top grills system-wide, upgraded plateware, improved menu items (fresh hand-breaded chicken, upcoming ribs and appetizers), and restored hospitality roles (buses, hosts, expos), driving a 3 percentage-point rise in satisfaction scores and double-digit gains in online sentiment.
  • Operator Incentive Program: A revamped market partner compensation plan now rewards multiunit operators with a share of restaurant profitability, aligning support-center and operator goals, with a single-unit program slated for early 2024.
  • Cost Reductions & Simplification: Through supply-chain initiatives, Red Robin has secured about $3 million in non-guest-facing savings year-to-date and exited the Mr. Beast Burger virtual brand to simplify kitchen operations and concentrate on its core brand.
  • Marketing & Loyalty Refocus: The chain is shifting away from deep discount promotions toward targeted local marketing and a loyalty-program overhaul—leveraging its 12.9 million members—to drive efficient, sustainable traffic growth without heavy discounting.
A.I. generated. May contain errors.
Earnings Conference Call
Red Robin Gourmet Burgers Q2 2023
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