Red Robin Gourmet Burgers
Sales will come in at $116.5 million instead of the $118 million to $119.5 million the company had expected. The sales miss by itself is not a huge problem, but the press release doesn't stop there. Same-store sales will come in at 2.7% instead of the 3% to 4% range the company had expected, and, perhaps most importantly, the sales shortfall and an increase in operating expenses caused a "de-leveraging of fixed costs." I'm interpreting this to mean that the company didn't generate enough sales growth to cover its proportional increase in fixed costs, which means margins will decline. Adding up all the damage, Red Robin now expects to miss its earnings-per-share expectations by about 25% and report $0.29 to $0.32 per share instead of the $0.40 to $0.41 originally forecast.
I made my first visit to the restaurant after fellow Fool Stephen Simpson told me how much he liked the burgers.
Readers who caught our Diving Into the Dow series from a couple of months ago know that Stephen and I go back and forth on many items each day. But stocks, jokes, and bizarre news headlines aren't the only things we like to chat about. Food is also high on the list.
After I wrote about Red Robin back in August, and was fairly unimpressed by the management team, Stephen couldn't help but let me know that the burgers are still great. I was skeptical, but as a lifelong lover of burgers -- with the bulging waistline to prove it -- I was curious to see if there was something special about a company warranting a P/E multiple in the mid-30s. So a few weeks ago, my wife and I drove by a Red Robin in Woodbridge, Virginia, and stopped for a quick meal. My wife was not in the mood for a burger, but I talked her into it.
In short, I made a mistake by talking my wife into eating at Red Robin. The food itself was average. I didn't find the burgers to be more special than anything I could have picked up at a Chili's, which is a BrinkerInternational
That's a one-restaurant sample and isn't necessarily worth all that much, but making a good impression on customers is very important to a restaurant like Red Robin, which is trying to position itself between fast-food restaurants like McDonald's
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