Shares of Red Robin Gourmet Burgers (NASDAQ:RRGB), a chain of burger restaurants, sank as much as 13% Wednesday after the company released slightly disappointing first-quarter results.
In not-so-surprising news, Red Robin reported a tough first quarter thanks to the closure of many of its dine-in restaurants during the COVID-19 pandemic. Red Robin's non-GAAP (adjusted) per-share loss checked in at $6.66, far worse than analysts' forecast of $1.34 per share. Total revenue declined 25.3% from the prior year, driven by a 20.8% decline in comparable restaurant revenue and a 20.9% decline in comparable restaurant guest counts. The company was able to shift its focus, and off-premise sales increased 86%. Restaurant operating profit margin dropped 950 basis points to 8.8%.
President and CEO Paul J. B. Murphy III had this to say in a press release: "Since the onset of the health crisis, we have significantly improved our off-premise execution, resulting in a material improvement in Guest satisfaction scores. Comparable restaurant revenue trends have also shown continual improvement week by week, including (39.7)% for the week ending June 7th. Importantly, we have recently begun opening dining rooms with limited capacities of up to 50% in our largest and highest volume market on the West Coast."
While the stock markets have largely rebounded since the onset of COVID-19, investors should be prepared for rough quarterly results that are still reflecting the negative economic impact of social distancing restrictions. While restaurants have posted data showing consumers are willing to spend at restaurants as restrictions are lifted, investors would be wise to temper expectations of an immediate recovery in restaurant business.