Red Robin Gourmet Burgers Q2 Earnings Call Highlights

Key Points

• Comparable sales rose 1.3% in the second quarter, with traffic effectively flat and restaurant-level margins improving to 14.7%, a four-year high for the period.
• Revenue fell to $278 million and adjusted EBITDA declined to $18.9 million, largely because restaurant closures reduced sales and marketing spending increased by $4 million year over year.
• Red Robin expects approximately $96 million from three refranchising deals to help reduce debt and support refinancing, while maintaining its full-year outlook for 0.5%–1.5% comparable-sales growth and $70 million–$73 million in adjusted EBITDA.

Red Robin Gourmet Burgers NASDAQ: RRGB reported second-quarter 2026 comparable sales growth and improved restaurant-level margins as the casual-dining chain continued to invest in value offerings, marketing and operational efficiency under its “First Choice” plan.

Chief Executive Officer Dave Pace said same-store sales increased 1.3% during the quarter, while traffic was effectively flat, down 20 basis points. The traffic result outperformed the industry by 40 basis points, according to Black Box Intelligence, and represented the company’s best traffic performance since the first quarter of 2023.

Pace said Red Robin increased its share of visits by 80 basis points in trade areas with competitors. He attributed part of the performance to the Big Yummm Burger Deal, a value platform that includes the company’s bottomless sides and beverages, as well as targeted marketing intended to improve local awareness and guest frequency.

Revenue Declines as Closures Offset Comparable Sales Growth

Total second-quarter revenue was $278 million, down $6.1 million from the prior-year period. Chief Financial Officer Mark Graff said the decline primarily reflected restaurant closures, partly offset by the increase in comparable restaurant sales.

Comparable sales, excluding deferred loyalty revenue, rose 1.3%. The result reflected a 1.5% increase in average check and flat traffic. The average-check gain included a 3.3% price increase, offset by a 1.8% decline in mix and discounts, which Graff said was driven largely by the Big Yummm Burger Deal.

Management said it has sought to maintain value for guests while using pricing cautiously. Pace said the second quarter marked the fourth consecutive quarter in which Red Robin’s average-check increase trailed the industry.

Restaurant-level operating margin increased 20 basis points from the prior year to 14.7%, the company’s highest second-quarter margin in four years. Graff said higher average check, cost savings and labor efficiencies partly offset inflation.

Adjusted EBITDA was $18.9 million, down $3.5 million from the prior-year quarter. The decline was primarily due to a $4 million year-over-year increase in marketing spending. Selling expense rose to $10.4 million from $6.4 million a year earlier as Red Robin invested in the Big Yummm Burger Deal and personalization efforts.

Labor Savings, Menu Additions and Marketing Efforts

Pace said labor-efficiency programs produced approximately 50 basis points of year-over-year savings. He pointed to the company’s managing partner model, which directly rewards restaurant leaders for improvements at their locations, as an important contributor to those savings.

The company said guest satisfaction scores remained strong while it pursued efficiencies. Pace also said hourly and restaurant-management turnover remained at historically low levels, while employee engagement scores were above industry benchmarks.

Red Robin continued to broaden its food and beverage offerings during the quarter. The company introduced Towering Double Cheeseburger Sliders as a limited-time offering and expanded its bone-in wing lineup with eight-, 12- and 16-count options. The wing expansion coincided with the nationwide launch of Garage Beer, making Red Robin the first national restaurant chain to offer the brand owned by the Kelce brothers, according to Pace.

Management also discussed a targeted Dinner Double Feature offer aimed at dine-in dinner occasions. Pace said the Big Yummm Burger Deal has particularly helped lunch traffic, and the new offer is intended to help narrow the traffic gap in dinner business.

Graff said menu pricing is expected to remain just above 3% in the second half, or about 3.2% to 3.3%. Commodity costs, which ran at nearly 5% inflation in the first half, are expected to become more favorable in the back half, with blended inflation closer to 3%, aided by easing beef and poultry costs. Beef is still expected to be inflationary, but less so than in the first half.

Refranchising Deals Intended to Support Debt Reduction

Red Robin announced three refranchising agreements expected to generate approximately $96 million in gross proceeds upon closing. The agreements cover 69 restaurants with Op Burgers across eight Southeastern, Mid-Atlantic and Midwestern states; 30 restaurants with Evergreen Dining in Washington and western Idaho; and 17 restaurants with Kuber Dining in Oregon and Washington.

The company expects to receive the proceeds in the third quarter and use them to pay down debt and support a refinancing of existing debt that becomes current later in 2026. Pace said Red Robin has made “considerable progress” in the refinancing process but did not provide details on potential terms.

At the end of the second quarter, Red Robin held $23 million in cash and equivalents and $10 million in restricted cash. Total liquidity was $48 million, including $25 million of available borrowing capacity under its revolving credit facility.

Pace said the company intends to focus on completing and smoothly transitioning the three announced refranchising transactions before considering additional refranchising activity, despite receiving outside interest.

Company Maintains Full-Year Outlook

Red Robin maintained its fiscal 2026 guidance, which excludes the effect of the refranchising initiatives. The company continues to expect:

• Comparable restaurant revenue growth of 0.5% to 1.5%, excluding deferred loyalty revenue;
• Restaurant-level operating margin of approximately 13%;
• Adjusted EBITDA of $70 million to $73 million; and
• Capital expenditures of $25 million to $30 million.

Management said it expects comparable-sales momentum to improve in the second half, with the fourth quarter anticipated to be stronger than the third quarter. Pace said the company will face more difficult comparisons as it laps the mid-2025 introduction of the Big Yummm Burger Deal but remains encouraged by traffic trends, new menu offerings and marketing initiatives.

About Red Robin Gourmet Burgers (NASDAQ:RRGB)

Red Robin Gourmet Burgers, Inc, trading on NASDAQ under the ticker RRGB, is a leading casual dining restaurant company headquartered in Greenwood Village, Colorado. The company specializes in offering a diverse menu centered on gourmet burgers, bottomless steak fries, salads, sandwiches and a selection of alcoholic beverages. Red Robin operates restaurants under its flagship Red Robin® brand, serving guests through both dine-in and off-premises channels, including delivery and carry-out. The company also leverages technology and loyalty programs to enhance the guest experience and drive repeat visits.

Founded in 1969 in Seattle, Washington, Red Robin began as a small tavern before evolving into a family-friendly restaurant concept focused on premium burgers.

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