5 Menu Items Helping Red Robin Gourmet Burgers Inc Boost Profits

Red Robin Gourmet Burgers (NASDAQ: RRGB  ) is coming off a profitable first quarter, with new restaurants opening in Phoenix and Orlando. It's also featuring a tie-in with the new movie "Hercules," and a line of chef-inspired premium burgers intended to garner repeat business and bring in new customers.

First-quarter numbers included an 11% increase in revenue, a comparable-restaurant-revenue increase of 5.4%, and a slight increase in restaurant-level operating profit from 21.5% of revenue to 22.4%. The company, based in Greenwood Village, Colo., already owns or franchises nearly 500 locations. It expects to add 20 new company-owned Red Robin locations, five Red Robin's Burger Works spots, and another 32 franchise locations across the U.S. and Canada later this year.

The top 5
We asked Denny Marie Post, Red Robin's senior vice president and chief marketing officer, how the company's menu serves not only customers but investors. Here are her top five picks, from the investor relations department's point of view:

1. Post's top pick is Red's Tavern Double. As a fast-casual and quick-serve restaurant, customers look for more variety and upscale choices, and this burger helps set the chain apart. It's the slightly smaller version of the Red's Big Tavern Signature burger, and the chain serves it as a classic cheeseburger or a signature variation with ghost peppers and jalapenos, bacon and bacon aioli, or pepper Jack cheese, and roasted chile peppers.

2. In keeping with the industry trend toward more upscale, foodie-oriented offerings, the chain debuted the half-pound Red Robin's Finest Smoke & Pepper Burger, based on chef Laurent Tourondel's award-winning contribution to last year's South Beach Wine & Food Festival. This burger, which CEO Steve Carley credited with helping Red Robin's first-quarter numbers, is just the beginning, said Post. "Red Robin's Finest is a permanent line that will continue to roll out chef-inspired burgers."

3. Between the double-patty Tavern burger and the half-pound Smoke & Pepper offering, Red Robin is clearly in the more-is-more camp. Post's next choice, the Colossus burger, confirms it. Timed to the release of the new "Hercules" film, the Colossus mixes a traditional beef patty with smoked brisket and barbecue sauce to appeal to hardcore carnivores. It's also designed to appeal to summer moviegoers -- Red Robin has launched tie-in discount deals and ticket offers to draw them in.

4. Beyond meat-lovers, foodies, and film fans, Red Robin is also appealing to the grown-up crowd with a mixed drink menu that sets it apart from quick-serve competition that's limited to sodas and shakes.

Source: Red Robin Gourmet Burgers.  

Post said that last summer's Can-Crafted Cocktails (blends of liquor and beer in a reusable container) did so well that the company is rolling out two new flavors, a vodka strawberry-lemonade mixed drink, and a sweet-and-sour beer-tequila blend.

5. Finally, Post said, the menu offers choices for guests who want something besides burgers. She cited the company's fish and chips, made with Arctic cod, as an example. Other non-burger entrees include seafood platters, chicken, pork ribs, and turkey wraps.

Red Robin has also been in the spotlight recently for the way it manages changes to its menu. The Wall Street Journal reported earlier this month that the chain's restaurant managers use social media to share customer feedback with corporate higher-ups in order to cut menu-change time to as little as one month.

The takeaway
The premium approach seems to be bearing fruit for Red Robin. Ad campaigns led to a half-percent increase in guest counts, but the average check totaled 4.9% more than the same time last year, as guests paid more for gourmet menu items and featured cocktails. If the loop from customer, to manager, to corporate keeps delivering fast feedback that results in appealing new menu items, Red Robin could be flying high for a while.

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Casey Kelly-Barton

Casey is a writer and journalist who follows the consumer goods, travel, and tech industries for The Motley Fool.

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8/27/2015 3:19 PM
RRGB $80.63 Up +1.58 +1.99%
Red Robin Gourmet… CAPS Rating: ***