January 31, 2011
Red Robin Gourmet Burgers (Nasdaq: RRGB ) wants to see more of you. And me. And your sister-in-law. And her cousin's best friend.
This month, the would-be burger baron quietly introduced a loyalty program that it calls Red Robin Royalty. Patrons who request one from their server get a card they can register online for tracking visits. Think of it as a cross between Starbucks' (Nasdaq: SBUX ) prepaid card registration program and a frequent travel program.
Regulars may find the pitch for Red Robin Royalty familiar in that it resembles eClub, which promised patrons a free burger on their birthday. Its successor goes further by encouraging regular visits via tangible rewards. And they're good rewards. I'm already due a free appetizer during our next visit. Four more stops and we'll get $20 off the bill.
Hats off to Red Robin's marketing team on this one. I'm already inclined toward Red Robin because of its food-allergy-friendly menu and staff. Adding a rewards program makes it that much harder to justify a visit to another allergy-friendly favorite of our family's, Chipotle (NYSE: CMG ) . Both Colorado companies have won acclaim for aspiring to use better ingredients.
But if I have to choose one of them to invest in now -- to either add to our existing position in Chipotle or purchase new shares of Red Robin -- I'll take Red. Creative marketing has a way of lifting margins and boosting cash flow. Given its bargain-basement price, Red Robin doesn't need much of either to reward shareholders even more handsomely than it rewards regulars.
Do you agree? Disagree? Please let us know what you think using the comments box below. You can also join me in rating Red Robin in Motley Fool CAPS.