Red Robin Gourmet Burgers (RRGB -2.60%), a family-friendly, casual-dining chain known for gourmet burgers and bottomless sides, released its fiscal second quarter 2025 results on August 13, 2025. The standout news was that The company reported adjusted diluted earnings per share (EPS) of $0.26, reversing a GAAP net loss from the prior year in Q2 FY2025. Revenue (GAAP) at $283.7 million also topped expectations, mainly as a result of lower guest traffic. Margin expansion and improved profitability suggest progress under its “First Choice” plan, but the company lowered its full-year total revenue outlook to approximately $1.2 billion due to continued declines in sales and guests. Overall, the quarter reflected improving bottom-line results despite ongoing challenges in guest traffic and top-line growth.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS – Adjusted, Diluted (Non-GAAP) | $0.26 | N/A | ($0.38) | Positive |
| Revenue (GAAP) | $283.7 million | N/A | $300.2 million | (5.5 %) |
| Net Income (GAAP) | $4.0 million | ($9.5 million) | Positive | |
| Adjusted EBITDA (Non-GAAP) | $22.4 million | $13.6 million | 64.7 % | |
| Restaurant Level Operating Profit (Non-GAAP) | $40.5 million | $34.7 million | 16.7 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q2 2025 earnings report.
About the Business and Recent Focus
Red Robin operates as a full-service, casual-dining restaurant chain with nearly 500 locations in the United States and Canada. It specializes in gourmet burgers, family-friendly dining, and a variety of beverages, making it a popular spot for a range of customers. The brand’s experience centers on customization, menu variety, and its signature “bottomless” sides.
Recently, the company has centered its efforts on the “First Choice” strategic plan—focused on operational discipline, enhancing the guest experience, cost control, and careful market positioning. Sustainable growth hinges on effective guest engagement programs like its Red Robin Royalty loyalty initiative and success in cost management through supply chain optimization. Its ability to drive restaurant-level profitability while stabilizing traffic remains a key metric to watch.
Quarter Highlights: Financial and Operational Developments
Profitability was a standout this quarter. Net income (GAAP) rose to $4.0 million, a swing from a GAAP net loss of $9.5 million in Q2 FY2024. Adjusted EBITDA, which is earnings before interest, taxes, depreciation, and amortization—with certain expenses excluded—climbed 64%. Adjusted EBITDA reached $22.4 million. Restaurant-level operating profit (non-GAAP metric specific to restaurant chains, measuring results from core restaurant operations) increased to $40.5 million, lifting restaurant-level operating profit margin (non-GAAP) from 11.8% to 14.5%.
The company’s revenue result beat Wall Street forecasts but was still down compared to a year ago. This decline reflected a 5.5% drop in guest traffic. Price increases of 4.4% partly offset the reduction in customers, but did not fully make up for lost sales. The recognition of deferred loyalty revenue also caused headline comparable restaurant revenue to look weaker, trimming 1.9 percentage points from comp sales results.
Ongoing cost management efforts are visible in several expenses. Cost of sales, labor expenses, and selling costs all declined from last year (GAAP), reflecting management’s focus on margin improvement and operational efficiency. Depreciation and amortization (GAAP) also fell, pointing to reduced capital spending and a smaller base of assets, as the company continued to right-size its restaurant portfolio. This included: The restaurant portfolio was reduced by 14 company-owned and 2 franchised units over the past year (Q2 FY2025 vs Q2 FY2024).
On the menu and marketing side, Red Robin introduced the “Big YUMMM Burger Deal”—a value-focused burger product—in July, seeking to attract more guest traffic. While no specific sales figures were provided for this product, management reported it produced “meaningful improvement in traffic compared to our exit rate.” The loyalty program (Red Robin Royalty) remains central for guest engagement, but its accounting treatment affected reported comparable sales negatively.
Looking Ahead: Financial Outlook and Watchpoints
Management updated its full-year 2025 guidance, lowering expected total revenue (GAAP) to about $1.2 billion from a previous range of $1.21–$1.23 billion, citing lower anticipated sales and continued traffic softness. Adjusted EBITDA and restaurant-level operating profit margin guidance remained unchanged, at $60–$65 million and 12–13%, respectively. Capital expenditures are planned at approximately $30 million. Comparable restaurant sales are now forecast to fall 3–4% in the second half, reflecting continued challenges in traffic and competitive pressures.
The key question for investors will be whether new marketing efforts like the Big YUMMM Burger Deal and ongoing cost discipline can reverse negative traffic trends and stabilize sales. The company reported improved profitability, but unless traffic stabilizes, sustaining these margins may prove challenging in future quarters.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
