Red Robin Gourmet Burgers (RRGB 6.15%) has had a tough run recently. Comparable-restaurant revenue has been disappointing, leading to lower sales and a worse bottom line. The company has been aiming to correct course under new leadership. But Red Robin still notably only has an interim CEO, as the board's search for a new CEO continues.
The restaurant chain's second quarter, however, was a breath of fresh air for investors. In the quarterly update last week, there were several signs that Red Robin's turnaround is beginning to take hold.
Image source: Red Robin Gourmet Burgers.
Red Robin's second-quarter results: The raw numbers
|
Metric |
Q2 2019 |
Q2 2018 |
Change |
|---|---|---|---|
|
Revenue |
$308 million |
$315.4 million |
(2.3%) |
|
Non-GAAP EPS |
$1.03 |
$0.46 |
124% |
GAAP = generally accepted accounting principles. Data source: Red Robin Gourmet Burgers' second-quarter earnings release.
Second-quarter highlights
Red Robin's revenue declined 2.3% year over year. Of that decline, $4.4 million was attributable to a 1.5% decrease in comparable-restaurant revenue, while $4.2 million of the decrease was the result of restaurant closures. These declines were partially offset by a $0.6 million increase in revenue that came from restaurant openings at the end of 2018.
While Red Robin's comparable-restaurant revenue was down from the year-ago period, the decline wasn't as steep as its 3.3% decrease in the metric in Q1.
Another key highlight was an acceleration in the company's off-premise sales. These sales were up 25.7% year over year and accounted for 12.5% of food and beverage sales. Off-premise sales increased 20.6% in Q1.
What management had to say
Red Robin board Chair and interim CEO Pattye Moore said she believes the company has "reached an inflection point in our transformation."
She continued:
This was underscored during the second quarter by achieving our strongest comparable restaurant revenue result in five quarters, including a sequential improvement from the first quarter. Importantly, we are encouraged to see early signs of our recent sales momentum continuing, which reflect our ongoing improvements in operating and guest satisfaction metrics, as well as the new omnichannel advertising campaign that launched July 15.
Looking ahead
The company left its full-year outlook for comparable-restaurant revenue and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) unchanged. Management expects comparable restaurant revenue to fall between a 1% drop and a 1% increase in constant currency for the full year. It expects adjusted EBITDA to come in between $107 million and $117 million.
"While there is still considerable work to do, our improving metrics, growing off-premise and catering channels, and traction in implementing technology solutions highlight what we have already accomplished in stabilizing the business and laying the foundation for long-term success," Moore said.
