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Why Red Robin Gourmet Burgers Jumped 18.4% in September

By Rich Duprey – Oct 4, 2020 at 2:05PM

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The casual dining chain may be starting to see a faint glimmer of recovery.

What happened

Shares of Red Robin Gourmet Burgers (RRGB -0.60%) rose 18.4% in September, according to data from S&P Global Market Intelligence, after telling investors early in the month its business was improving as comparable sales improved ever so slightly as the weeks progressed.

So what

Although comps were down 21.9% in the week ending Sep. 6, it was better than the 22.1% they were down the week before and the greater than 30% decline they experienced throughout most of August.

Man taking big bite out of a burger

Image source: Getty Images.

CEO Paul Murphy III believed it was the beginning of steady improvement going forward. "Looking ahead, we expect to build further momentum from the implementation and related seating expansion of all-weather tents and booth partitions by early in the fourth quarter along with indoor dining rooms beginning to reopen in California," he said in a statement.

Now what

Red Robin wasn't exactly a bustling chain before the COVID-19 pandemic and afterwards it was seriously hurt, although it was able to pivot to a takeout and delivery-only model that has sustained numerous casual dining chains during the crisis.

Off-premise sales have accounted for about 40% of sales during August, and may require the chain to invest more heavily in that avenue. Shake Shack (SHAK -1.01%), for example, has said it will add walk-up and drive-thru windows at most new restaurants it opens because that will likely be the future of dining.

Red Robin Gourmet Burgers also says it will redesign its new restaurants and remodels to enhance the off-premise experience to meet changing consumer needs.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Red Robin Gourmet Burgers Stock Quote
Red Robin Gourmet Burgers
RRGB
$8.24 (-0.60%) $0.05
Shake Shack Stock Quote
Shake Shack
SHAK
$52.07 (-1.01%) $0.53

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