RRGB - Earnings call transcript Q1 2019 | Red Robin Gourmet Burgers, Inc.

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Operator

Good afternoon, everyone, and welcome to the Red Robin Gourmet Burgers Incorporated First Quarter 2019 Earnings Call. Please note that today’s call is being recorded.

During the course of this conference call, management may make forward-looking statements about the company’s business outlook and expectations. These forward-looking statements and all other statements that are not historical facts reflect management’s beliefs and predictions as of today and therefore are subject to risks and uncertainties as described in the Safe Harbor discussion found in the company’s SEC filings.

During the call, the company will also discuss non-GAAP financial measures. performance not but accordance an are of company’s are accepted the alternative measures the principles, useful. accounting intended operating non-GAAP prepared with in generally measure These maybe that to illustrate reconciliation GAAP can comparable the most earnings in measures financial to be measures A the of directly the found release. non-GAAP information www.redrobin.com posted results on the its has XXXX in company to Investors first quarter earnings website related at release The fiscal and the section. supplemental financial its

Red turn to CEO, the like Robin’s would to ahead, Interim Moore. over I go Please Now, Pattye call Pattye.

Pattye Moore

to you Well, and Financial have may joining everyone our this also Muhtar, hello call. help me the Guy Concept during us afternoon and Lynn thank Chief answer Chief for our questions Chief us. Jonathan Officer. is our Schweinfurth, you With Operations Constant, are Officer Officer with

I speaking am you CEO. all as Interim of pleased be with to

saying me well industry. efforts the with for real to management profitability. passion executive Robin start across organization great members and in looking provide number this about continue at during and am To brand Let marketing, environment I Red addition interim the a as return and team fun average Sonic time support serving which unit member to period as development, by to business than casual volumes experience our serve dining and focus a board for in XX-year Robin, doubled. uniquely to Overseeing me, I franchise as had the profits welcoming our of and relations, brand that background and company growth this Red bringing I our bear operations President and this where more this store I sustainable served forward a as to to Director team and I senior career in of previously bit roles. of a a as

search assure on experience has As I the has still The to our which moving industry, with urgency. done Interim The with our interview process. CEO be became the Board the have in begun work much the At worked CEO, can I in turnaround the deep you already is initiatives the financial in management time, weeks I we there list and engaged to Group, has assist results X team are since Elliot to and demonstrate, closely Committee and our same critical the of simplify narrow focus. the Search

units. refranchising estate We are we actively announced on working And real underperforming portfolio. The with and our the today, Group Cypress XX of reassessing closure

are an Insights new have VP efforts as experienced to business. dive These designed flow, our and Consumer industry our drive profitability and increase We shareholder deep cash hired into value. of ultimately experience, customer aspects significantly are improve the leader we continuing all improve our of

performance steadily initiatives that accelerate turnaround. process financial our our improve are will We and who can identify search will confident and this operational our a leader

Time, we and business, As are very build our experiences Gift on and improving to we the Strengthening business, guest and priorities. of off-premise our continuing strategic stabilizing solutions and see. Guy, we focused are momentum share technology evaluating positive the initiatives and and selectively platforms to and real estate progress portfolio. digital and I implementing Lynn refranchising and five key have catering dine-in recapturing beginning our these around outlined previously, specifics will

Guy? for Operating that’s priorities of the end dine-in improving our you to this took and Chief our who over role With the the most Guy at January. like Guy going growth is talk full about turn time I to to call that, sustainable returning profitable would business important want over one by I the to guests. to experience of remind

Guy Constant

and afternoon Thank good everyone. you, Pattye

provide primary stabilizing foremost In we order the that focused experience. to we do on needed and first and four will focus our to said, are turnaround. execute strengthening on operational so, our for dine-in Pattye priority As is the require operations areas

hire, retain. hiring and Manager being people, them the right as level. the fully properly and staffed the particularly training First starts train reducing with experience General turnover, Improving at is as well

Our against progress these team objectives. is making leadership operations real

have turnover than industry in Manager experienced XXXX in QX from turnover broader General reductions and dining for increased are While staffing overall, Robin average the at all QX year. industry. challenges this and hourly better Red of QX to casual Manager our levels And the

even General our average. Manager closer Manager than best-in-class turnover are and levels fact, In are to to they the

been bring restaurants is sustainable over staffed meaningful part our to operational teams improvement and XX.X%, a any also a Manager management very able staffing important in levels execution. stable XXXX. we have better of We where Having to ended improvement

and Year-over-year experience, seen is cleaner Overall issues issue. problem satisfaction House guest delivering throughout reversing decline dining that and our times have wait guests end when to improve down have can shorten a cleanliness identify at Front wait have rooms is complaints by throughout there walkways, getting a that and the on of quarter first the potential are the We us of room Manager X.X%, floor guest XXXX overall results. marked reduce times, dining are scores peak walkways and QX. point improved we an times wait our saw resolve during and low hours improvements engagement. Next managers trend host a at efforts declined they effectively told the resolution in are have meaningfully end know shorter, the on continuously and

throughput those peak busiest managing sales is opportunity By is shifting available shoulder peak make on incremental are the expense. that times during to the to peak day overstaffed labor peaks. thereby during the investment in investment labor our greater to we shifts the hours to without having the from hours understaffed capturing shoulders Next able improve

for of temperature service quarter. continued Our staffing the focus has promise improved during speed food, of our first guest execution scores on yielded of food, and of our bottomless taste

the proper And coordination and an delivery And have is shown added food the of times active effort Maestro. continuous improvement This ticket service. of the on accurate on benefit, of last fast delivering managers as kitchen benefiting speed temperature. high-quality our the of promise focuses at

the have have the menu core of and the our on reduce our to chicken, of gourmet and steak We updating they We progress providing and products. signature buns bottomless to narrowed and consistency on quality improving still on you impact options focus our desire look coming guests These our while continued course, on months. and of concentrate priorities the menu fries. culinary course include started we burgers, also our of execution forward operational these to key all weeks over their complexity,

back that, will to call over Patty. With turn I the

Pattye Moore

operations us from last that and theme important is an improvements. from operators focused are I want Guy. important implement making success an changes technology our learning and to for Thank, reiterate as efforts operational that year up we we all sure through the setting

we As absorb detail. the about technology some technology the our are rollout that Lynn we more the and we talked to guidance ensure about press are restaurant other in among sufficient Guy giving initiatives updated we be will to to currently reflects that decision being release, now that our in the of talking updated that reasons able guidance operators momentum level a seeing the implemented maintain time mentioned delay the to are deliberate in operations.

to like touch also marketing would briefly efforts. I on

product heart been house years. who over indicate Martinez cooks, latest are celebrates with high-quality of featured items that for of burger ‘Cado. of Early and focused This Zita’s on the in our featuring Burger is including our porky gnocchi us Chicky another restaurant products, the series, XX new Zita first line our talent our results The half gourmet the expectations. our year has Master of burger outperforming

have With pleased I been positive respect and we our fan to quarter. social want first, that channels increased see to media tell you engagement throughout from the creative, to

new Robin. in We love tested campaign, The we conveying in our very new campaign also Red with and connecting an stage omni-channel which emotional launch July. of will what are final guests well consumers, most creative about level development on a has

We campaign this brand will help elevate omni-channel us about the both with guests. conversation our are and that our internally confident

from new and million royalty the our campaign. they technology staffing marketing routines this to as into from were year We in And solidify and and to quarter utilizing ensure third and we begin operations to segment rollout late restaurant members. XXXX quarter the X.X the media target weight better also perspective for processes and we first preparation ready will an shifted enhancements to

announce who joins going hiring Kelley, Finally, Loyalty, of we enhance Restaurants. us new our capability, pleased forward. all a to facing are Vice Insights activity and from guests Cyrus and the his data insights Darden which Cyrus to President guide Consumer greatly of will and aimed team

on that’s our brief dine-in update a first operations. stabilizing So priority

of and off-premise building is Our area second to continue focus catering.

first growth business with at rate off-premise of total XX.X% the quarter. mixing is the of revenues, end Our total a XX.X% year-over-year at now of

operational improved continuing We improve third-party are reach focused increase delivery and to processes tools are additional on experience implementing looking we to our to-go and the with by partners. also

or of compared company us represents X.X% big now Catering XXXX to for We essentially year. growth quarter sales of the of XXX% a all to catering through represent continues believe opportunity last incremental. first

marketing. we We awareness by our we strategic foundation We for team out back XXXX, XXXX. building half In a relevancy. XXXX, included from targeted believe are built increases also infrastructure. that supported the it that building In and brand strong catering sales members and began leadership on momentum adding of

building to and continuing local are national our on accounts. focusing and team both We sales enhance

the to gift pace. also Guy Our their gift Robin the own Red in operations third is simply of convenience improvement a priority of restaurants out recapture that which involves getting our improve as guest but both differentiator, of the customers and allowing the means talked which and experience at about, time technology

as In satisfaction see addition and pace we times are improvements wait on to about, ticket to experience. of Guy improving talked times reducing beginning customer

looking are simplification improvements forward back and menu half more the year. technology speed to with with investments rollout to of up We also that are adding the throughput beginning in to

our our and this fourth of communication digital We implementing enhance rollout priority among managers headsets the our and team solutions. members. to to of Speaking month completed certain technology, technology platforms is restaurants

minor While during and busy to this point seem a more like some, operators stay to allowed it shift. our engaged tables faster may to a turn has

end members servers POS third at Additionally, take to quarter. table, rollout not an the our we to of This expect inputting improving ticket portable by to the team accuracy, terminals time. enable order but will our only the

focus real our and refranchising portfolio. final selectively fifth and on assessing of is estate area Our

underway. see most Lynn believe As Cypress and our improved shareholder the and I discuss beginning refranchising is to Group mentioned mall assessment drive we will including results this is our estate that lead value. real our are portfolio, work well Thank financial helping of continue strategy. recent and efforts earlier, momentum will you. our focus and us We The to

me to Now, the turn Lynn. call over let

Lynn Schweinfurth

and you, Thank afternoon Patty good everyone.

of reinforcing to value first deliver by begin to and business share focus me our our the intensity transform we Let shareholders. to

decisively that will position. acting are us We in to a business the in changes make put stronger

and capital our our spending while and prioritizing to store recent strategically through approach disciplined closures refining program. G&A, enhanced and a taking also refranchising are We portfolio

the driven owned declined you lower increase As or Dine-in of sales. the I $XX.X higher basis than rose revenues company X company note walk restaurants balance through in system XX the highlights, continue million QX were growth. at and Off-premise enclosed million, year. of quarter to on XX.X% includes total fiscal by please weeks represents mix periods now the representing meaningful XX total that perform was by mall down X.X% sales X.X% our $XXX.X to decreased offset first QX the approximately traffic partially beverage of Off-premise guest from Overall XXX a in after year a X.X% offset by train average X.X%, points. QX. partially pricing our mix. growth XX.X% increase down by Comparable to and ago. by account locations continues in locations net in was sales off-premise check. X.X% discounting tavern restaurant taking X.X% our decline Traffic be and into while driven worse X.X% a mix food

QX we XX we winter disclosed, approximately to points. XXX impacted As weather severe basis estimate previously we that by negatively experienced sales

by and operating Restaurant ago, a at restaurant headcount costs ago, XX.X% costs Other sales versus a XX.X%, favorable increases mix. XX points level year associated to due sales management X.X%, in basis costs ago, due year rates, measured food execution performance basis XXX margin versus a factors. the of versus points operating basis favorable points primarily unfavorable as to to XX.X%, due fees labor following to provide maintenance. XX QX focus quality driven lower tavern of primarily waste, due points and and XX.X% with theoretical basis actual Cost staffed on being was and primarily third-party were year by was repairs fully higher our down basis increased increased versus XXX sales delivery de-leverage. of Occupancy increased points to to XX primarily to de-leverage. equipment wage

due services partially equity X.X% XX quality fully revenues, training to higher and increased travel based with compensation. incentive basis by execution costs to economics. in Selling related focus primarily managers related offset expenses, $X.X G&A XX basis work our and increases associated provide improving staffed on our openings total to future, spending. being related and professional primarily to to due to points points primarily due lower of projects million, to X.X% foreseeable on to Pre-opening four as of expenses of the increased suspension total costs the continue wall revenues, for we decreased salaries, restaurant

million Net year, deferred interest due plan assets. a was expense compensation prior lower versus gain primarily $X.X in the and other to our

rate interest Our weighted average was X%.

than due the tax prior to Our income. year, lower effective rate and XXX% primarily benefit was better

costs $X.X QX previously of was QX QX in million $XX.X XXXX. associated and $X.XX adjusted primarily the During million executive EBITDA costs million, share to adjusted were diluted in $X.XX, recognize due $XX.X XXXX. quarter, charges transition as as locations. earnings QX per to with to compared closed other we compared

Now, with which turning related in We was quarter in to information the and million we primarily and $XX the in cash $XX.X invested facilities improvements cash balance equivalents. technology. million in investments to QX, in sheet, ended CapEx

and leverage lease Our we in adjusted X.XX debt ratio all times with compliance was were covenants.

paid quarter million outstanding resulting $XX in revolving $X.X credit credit on in million. of we outstanding of to a of letters facility, and down quarter the debt addition During our balance $XXX.X million

initial total offsetting to and of is dilutive as the course to growth. XX.XXXX the reinvest debt, we shares the We equity we compensation our This of effect sustainable with business a consistent our of business flow also of reduce bought million. goal back over program cash while to $X four approximately approximately return quarters, for in primarily our utilize

refranchising portfolio. enclosed mall we me the strategic we selectively today, locations. $X.X our priority, next These expense. go of pursue to amount leases press including be dark in have as X us restaurants Pre-tax $X.X locations, announced fifth total quickly million totaled for of revenue. In AUV average turn restaurants as a that possible. and an All closing reassessing XX these million, will termination QX million to will our unit and sublease QX all generated or related options immaterial restaurant volume key Let an release and including of operating allow in $X.X and losses lease depreciation we in

to and and non their continue improve financial strategies performance they mall focus negotiated through concessions. marketing locations We underperforming improving also of for the mall operations. restaurants rent building on targeted other Catering once and sales

engaged As Patty noted, Group Cypress our we to help facilitate have program. The franchising

We and buyer transaction have related process, next material, to refine restaurant strategy, and steps. real portfolio working with financial, our other diligently been related estate them sourcing

future determine Red We along other for refranchising purposes. continue Robin to targeted, markets, geographies will that XXX includes previously the existing locations which with pursue approximately any we be locations viable to

Based lot that so are improving pacing much and our we the field our too learning that Turning better a capitalize execution approach. operational to see our improved very that momentum once we certain at items, the to last and expectations, understand a on operators rolled we dine-in through desire we from delay we execution, to the We disciplined year are focus learned out made can operational with to to beginning taking and have on defer experience. XXXX or experience recently guest our initiatives. decision that we on

we a brighter beginning we a being strong while will are core foundation plan. do, We business to for in work execution a KPIs to is future. by there more build driven improvements see specific And against believe

comp are comparable improving expecting X%, down up of sales, of XXXX. to in to More offset store off-premise back previous trajectory X% lower we sales the higher continue sales lower to by an specifically, due half We guidance than of expect partially dine-in sales.

to expected growth, Third-party and service are coverage delivery more sales to organic to restaurants added due higher added increase partners. delivery

to million opportunities XXXX $XXX to to $XXX reduce focused we reduced have our million, expenses our sustain administrative from on and We $XXX while identified million, $XXX spending, to million selling, as delivering general objectives.

share exclude adjusted now shifted of $XXX adjusted non-recurring adjusted impairment. executive to $XXX earnings to also transition, adjusted to of and $XXX expect certain have charges, professional expect diluted We various We million closures, and restaurant per – we EBITDA XXX fees guidance EBITDA to now million including EBITDA million.

at initiative, to are reduce wages the better originally manage wage a labor programs turnover field these competitive In are we level environment. a pacing higher impact pressures proactively what market expecting of of through we addition continuation a to of to inflation and mitigate the expected than and addressing cost

the sales commission delivery that third-party of was impact flow incremental still costs profitable these sales through increase the will Lastly, on category. include

We share include includes do $X.XX currently of the estimated any positive both an impact to diluted updated benefit These XX the ranges of adjusted tax reflect benefit restaurant $X.XX per $X.XX, transactions. expecting earnings $X.XX. the with They however, are impact of the refranchising which to associated of closures. not,

also have from XXXX million of million still headsets our have is gift $XX technology. improvements, down Patty consists technology range time of be of achieve and of earlier million, other rolled of expenditures and out the us to lowered to restaurant completely which out to lowered rolled reflects terminals delay will elements range We expectations the This facilities as guests $XX $XX August. to some for field handheld and mentioned, and to the capital our guest we by primarily help $XX investments better And just million. POS

the and and trajectory focused of results. product with will can strategic five focus translate continued Before has improvements successfully visible of progress our marketing, business We efforts business. a and focus I into our me guest of that in operational our believe enhancements driving we satisfaction recognize organization let collaborative areas close, rallied in the behind technology impactful ongoing in improve conjunction improvement core

that, turn will With over back to the I Patty. call

Pattye Moore

you, Thank Lynn.

our to the wrap are turnaround. take show key progress all me every dine-in in need that the in to entire believe of business. very improving But those impact critical beginning operational, quarter, is be by proud where narrowed energized and it business to that by across will financial most progress are stabilizing the to focused the this I’m the direction. the interest right team with initiatives. we the have to the we five is in in few to focus acting I in the and up that I’m have we right I’m are Thank your critical we now get on And urgency the performance. confident members. we see reiterating time Robin. Within of Let will and team to but our moving determination the initiatives the you things Robin that Red of going focus Red priorities for on priorities,

And take now, would any we be happy questions. to

Operator

from Thank America. Frankfurt We Gregory take Instructions] you [Operator our Bank very much. question with first will of

line Your moment, open will go be a just ahead. in

Gregory Francfort

for question. thanks the Hey,

Just that you maybe you the tax – in for benefit expect, time rate tax where one that one guess, or comment just a the is I the year? on guidance. overall, the quantifying put tax that Is benefit to be

Pattye Moore

latter, It’s the Greg.

Gregory Francfort

Got it.

so this that the get Okay. evidence are improvement a that and industry expectation are metrics. the a comps, seeing in with some guest half the sales to in business quarter that second quarter? And seeing quarter better year see an you full I in you’re into or in talk second year, little where of guidance that seeing, and lot playing added seeing guess, dynamic the of more traction this you far the going about just bit half to far third the range? marketing an sales in lift some the you so the Are back can is you you’re of a in Or maybe you’re running then, out on changes improvement you in

Lynn Schweinfurth

in I say May. What is, some improvement we will have sequential seen

with However, we our that do half initiatives we of addressed that our the business remarks during but turnaround, in improving prepared we and second in are drive still have the we year. early believe the trajectory will items

Gregory Francfort

think last in, prompted increasing you of you’re into one change business or into then And that change or management made management comment move and around that did one headcount. investing that sort model the of operational I’ll how you sneak the the stores? effect just go a maybe, in it. what in headcount, Got about running When the I of that were terms back seeing

Guy Constant

is Greg, Guy. Yes, this

like added is out staffing for staffing expected level was budget We been overall organizations change some of we’ve and of at at an kind restaurant. quite that and same the the part management performance higher which and the point battling time was been other So been us the in in the investment to to challenges within XXXX, many leveling have a while. getting levels for

So seen wanted XXXX effort get of quarter. to we the happened progress we’ve better levels and manager made a the we to throughout say at staffing first conscious that start to that,

Gregory Francfort

Thank you. Appreciate it.

Operator

question from Stephens with will We next Will Inc. now take Slabaugh our

Your line will be open in a moment. Go ahead.

Will Slabaugh

you. thank Yes,

You’re in better mentioned in average many of of and on that the earlier number you doing fact a metrics on them. improving

back was going and issues goes that your a those step hoping key first sales take and where to I to talk quarter in below drove confidence expectations maybe improve where year that comes you are along? the the the as see the about So

Lynn Schweinfurth

in. and Guy to start will then if chime and you want I Well, Pattye

our we of improving I stages execution. in think the beginning operational are

And impact visit. the and to guest really so our it for does that increase experience take next time

I so, we’re to that’s a think slow part of reason behind beginning why seeing the And year. the

Pattye Moore

with are to all add staffed improving happen that. Yes. the the fully straight starts in we that in experience return Again, And those half line. a being do and the experience improvements the and year. guest as in continuing see operations not in of to have reducing But just won’t turnover, happen a I sales we customers customer talked it will of straight we about but marketing all off the line. the second of kick And will the return initiatives would and

Will Slabaugh

I talk about value, follow-up much could on that. didn’t If we

your prepared about for the talk comments. fourth platform. that the that during you’re guys And quarter? thinking on approach didn’t historically consistent talked about you to the bit I after your Can the $XX talk in a about of more much the I first you how versus tavern year? initiative rest the about focus value know, you think quarter

could additional to address any plan that So, value? general into around if you go just you or thoughts in how

Pattye Moore

Jonathan that ask for to to Muhtar address going you. I’m

Jonathan Muhtar

Yes, also Yes, we pivot on And that were make as and our feature featuring we’re with first on our away thanks. did with did mentioned, quarter, we so guests $XX there. Gourmet focusing move there quarter well. our core a $XX We Gourmet local is the local going message our level. and we results primary full line. a tavern burger the are the saw – bundle XXX focus and out second more into toward markets the we Gourmet value without continuing in we as pleased our externally featuring bundle price in forward a at from offer pleased with But national there what do

third the that’s the of In going quarter. terms campaign new launching be to in

the message communicate entire menu. associated on commenting value our which our to our it across will exists not with guests We’re value great that, but

Will Slabaugh

Got it. you. Thank

Operator

now take Jefferies. Alex We will from next our with Slagle question

Your right ahead. a line open ahead Go be moment. in will

Alex Slagle

or XX terminating and to? remaining a on to comments be the if of clarify the I need those to will sounds out clarification just are mall these could be you after leases like for lease on there thanks sort some what for questions. the you you if flexibility units. Hey, the have get portion flexibility. able exit closed miss mall locations of XX either One It was the

Pattye Moore

mall you Well, are correct. locations. mall are XX not locations. But locations remaining There are all bad

rent is to But subset were cases there of may that our to And exiting and work the upon landlords may in other at then, the exit so. try locations will of achieve we sense just look proactively some make with malls do we that those to naturally a continuing So, concessions. expiration term.

Alex Slagle

started about for of then Okay. what’s and there Thanks. don’t P&L we impact changed talking and Day of more refranchising, could sort since on this How of know some provide, potential at it And the use think range first the priorities granularity how you just if might to is I about scenarios. Analyst proceeds?

Lynn Schweinfurth

engaged related won’t Well, say The been Group. I Cypress have I We’ve we to packages back group. But with this engaged a transactions. couple of would recently we’ve developing years. go

We’re working portfolio case with want portfolio little evaluation our our to in we a bit them about on think differently.

and along meeting progress a making we them And some that months. So in with progress strategic meeting those can lines. coming and having more we’re we’ll be report so good make the hopefully

Alex Slagle

Okay. Thank you.

Operator

will question We next our Morgan with Stanley. take now John Glass from

line Your in moment. be will just a open

John Glass

thanks. afternoon. Good Hey,

First, value if from looking way pivot value. away or just different come this could to of back you a at

with it you tavern So still they number pulling I have on fourth focused the a more think whatever back some on peers Do this be that? to Why when emphasizing example? were or of you did back direct – focused right be incrementally you the are burgers seem on think and gives was. from that’s quarter the you pivot some would and to or decline or strategy pullback the were price in doubling that said quarter you the away premium it in premium what traffic that that do the on fact giving your full you confidence for headroom you to that’s

Jonathan Muhtar

to So the previous messaging the We the fourth quarter. be quarter still did tavern from double. clear, in the bit changed a feature was we –

a a job So we’re strategy in doing we’ve that to that. ways There’s our we with that QX. been the current we’re And multiple good guests getting and confident shift that’s of that was that feedback from place communicate the value took our guests.

royalty as role program a big Our well. plays

enhancing and that our use to capabilities continuing we’re so, we’re there. And

and even we’ll year that’ll on the us So more even goes more. become leveraging powerful as for that be

John Glass

the – is that Okay. done about the of And something menu simplification. to improve then you broad way or sweeping menus now is how talked or you’re on speed testing initiative secondly the or you’ve to simplify menu the Is service?

Jonathan Muhtar

on I over out process we something been Yes. But testing comments. as in markets simplification anything the years my invite to kind if so a consistent winning and couple past Guy Sure, nationally. can the chime of of to he and rolling and following we’ve that focused have then menu add in initiatives of is well been has I the

that years so, past our in we more well of this out the some removing over then more few year, later have second rolled we’ve menu a couple we’re us. half the reduced being XX% for on simplification And by of items the net year, about and tested

John Glass

the and more or the first needed closures a to be of you be then those questions. you to I that maybe, store quarter specific review probably portfolio that XX yet? over is closed this and of having an identified need kind two, result is Okay. entire just time there’s related closed used rolling stores of this – review Are more a there found process think just

Lynn Schweinfurth

I of review think process. a it’s rolling more

to are landlords. We negotiate continuing with

some the hopefully recently. most agreement on we to an can with So borderline that come them of locations were

Pattye Moore

as and coming commented, their sitting Cypress And in days. Lynn Group looking things forward review been over just we’re is the going The and they’ve reviewing in Right. and with to them down

John Glass

the you’re stores going look sort do sometimes question you about figure? have those provide hold those margin for stores? like last just structure to think look structure or the out the XXX so profitability Today, contemplating of you me, that maybe if what be? were what question that Do without our margin got profitability I think better, in quarter company as the is Okay. take much we you base. would are Could like different through the and out franchising stores then And how business of refranchising would you would last the the of you

Lynn Schweinfurth

something currently, influx in because Well portfolio refine information. it’s the it’s little we we’ll providing consider going off future certainly bit the But I’m to as that hold a strategy.

John Glass

you. Thank Okay.

Operator

Chris take our with O’Cull from question next We’ll Stifel.

in be will a line right Go just open Your moment. ahead.

Chris O’Cull

afternoon, if missed I you the Good the what quarter guys. it, Thanks. you year? be Lynn, apologize it I hourly inflation was our but during for and what wage did to see expect

Lynn Schweinfurth

wages and are first try the believe a the forward that to the the get the did, proactively through with of continue inflation balance to X.X% quarter was of year to don’t most and expect I that caveat basis. wage address on wage I inflation in – go do we down trying factor that inflation we

Chris O’Cull

inflation wage hourly And the total restaurants? the or the is that wage inflation for

Lynn Schweinfurth

the wage inflation. It’s hourly

Chris O’Cull

then cost. dollar like operating per It year-over-year. relatively cost week on labor labor as And just flat looks Okay. a spend follow-up the was

realized or the that dollar wage? So to higher opportunities where offset what you were was offset the

Guy Constant

Not Can you sure your question, understand it? repeat Chris.

Chris O’Cull

at If you it that look just of year-over-year. operating the week operating dollar per week it cost labor looked relatively flat spent per was like in was terms

structure to in just stores the or so, that help like there hourly a just understand, offset that in traffic hours other And was I’m wage inflation? because to the it management declining reduction trying of were changes

Jonathan Muhtar

talked about we’re in earlier, manager Chris than No, at we fact were we before. as more staffed the level

the direction. some the the less So traffic drag have of less Most composition understandably, traffic, Lynn No, where think models last and and restaurant year with more points levels it in traffic this other and assigned traffic I the the about that with levels made the that sales you came that coming and been down. labor are would the PPA. PPA actually base year a of earlier more hours

have labor as would it the as restaurant hours we environment was where as as not not we’re in an is. in So up PPA using many much

Chris O’Cull

on of some you impactful And can color what improving fair terms changes Okay, staffing the give levels us and in enough. most were then, retention?

Guy Constant

talk we continue. want we a that tougher especially on, working that staffing. something hear constant you’re is environment not It’s said But a labor always that, battle is with it’s staffing problem about. to Well, deal see in that you to restaurant this companies what

shifts so, help how it. benefiting them levels hours because real certainly managers the lot have during the to different But to to is conscious that a to prescriptive get peaking and week. levels. out as staff staffed approach on we we comes make peak of to in a by you that. course, tools And higher people more managers have you the staffing need to level, remainder But we is, those giving people starting And higher staffing then, of our make them getting to to of your the more available gives effort a obviously, peak to it driving change peaks

get most basically to we’re as the good we we be versus very particularly for to we’re it’s able have casual productivity If restaurant, on very at hard staffed are. of But that doing what execute the us said not dining. to going in fully us we

difference approach a been and how make in made in we we’ve curve to real conscious a bent where that so, conscious difference change, staffing it sure the And we time. was some a for

Chris O’Cull

other that’s how maintenance And is and on on year, much Lynn, little any a detail then, for helpful. this more Okay, the maybe CapEx can us you give item? breakdown bit a budget

Lynn Schweinfurth

Yes.

is the million. for expectation to current million $XX $XX Our year

represents of capital really well balance I as maintenance systems million around and think some projects. as ongoing $XX discrete are restaurant our the maintenance

Chris O’Cull

guys. Thanks, Great.

Operator

Gordon I’ll We’ll take question Jeff. from Farmer our just Jeff with moment be a your Get next open Haskett. in line

Jeff Farmer

you. thank Great,

Just one question. more labor

that last X% Do to any year benefit carryover guys labor those to into metric. see you think productivity ‘XX in X% from expect you improvement I delivered efforts?

Jonathan Muhtar

the flat, a down Now first bit in to we fact, be it expect pretty little was quarter. in

need to hourly is is just that Some because, of regular you generally the a close labor course, basis. driven, on to variable, restaurant is of Jeff, be mostly. while it sales open considered some rest There’s to labor hourly the and

year productivity. we’re sales if of XX% expecting saw down down, on slightly we very backs you effort still last your the started maybe leverage to before year, but a we to are bit to our where lose productivity improve the But that. be on the which X%, little no, good to So, we productivity flattish last X%, of were

Jeff Farmer

months do word seven from this for embedded in expect down ‘XX. better topic, What different store to have you view what’s your over so? in next the the Then up of for that sector you dine-in sales performance Okay. assumption casual lack X% or casual sector the guys a dining guidance X% same

Pattye Moore

and our the then dining there’s Well, casual sector business. there’s

do positive focused our the of And the to dining business, casual a start just we And this about than build that on is believe for early what we’re will have of year in on probably turnaround end think expectation XXXX. to so, while into stages already our then and the place the in the call again, index. we’ve we I that talked really different a a is items trajectory as I which get we

Jeff Farmer

flow. Okay. guys name operating a of but appreciate lot cash guidance, flow last do cash I focused provide you investors on that are just question. And this on not free

that understanding is EBITDA guidance? flow won’t cash to would the the guidance, there that provide again, any it not So, reason think operating you directionally with lowered trend

Pattye Moore

sure our we question, down investments, to I as we paying as greatly not which spend I have year, debt. cash flow our will I’m think this sizable the being on well intend generated understand but

Jeff Farmer

Thank Okay. you.

Operator

take will question We from Anderson next Group. Stephen our with Maxim

will Your a in moment. line be open just

Stephen Anderson

you I want Thank call. just Okay. for taking [Technical ask the? to the Difficulty] basically

Jonathan Muhtar

Stephen. Hi,

your out you question. cut restart bit, that. the about line just very Sorry sorry about The that, tiniest can

Stephen Anderson

Okay.

traffic turn are expect you question, trend that second decrease coming Going essentially Tavern saw from confidence it the You continuing walkways, in that Guy, but drivers is you year, anything or Or quarter? of you maybe see see really the about Red something do in positive what seeing you back? maybe comps gives the comp finest? are seeing to like to specifically see the do but the mentioned, guest an pivot else what you mentioned, in the half this into you you is is by the Robin the you you second gives mentioned you you confidence what the that away also you do Double’s increase that think specific

Pattye Moore

off-premise thing, on as then, should catering Lynn see color delivery it Jonathan, as an and the we grow. continues leaning And on marketing? Pattye. want are have to in One as is if we to sales, mentioned more you I to improves well this into think continue Well, third-party business turn increase dine-in any

Jonathan Muhtar

Yes.

with new focus building that traffic about things we’re more year year with but off think items, those those premium and the highlighting the our that improvements both in addition also we guests improvements be of to that some know the that they enough the those the I on experiences PPA improved will off-premise service campaign through growth brand, throughout at our looking mix having and expect.

Lynn Schweinfurth

And to technology we’re then out to as field. rolling the of relates investments some the it

throughput, improve in have think benefit execution. Some the we addition an will to investments those of which should improved quality of added

Stephen Anderson

it server the you’re technology about talking throughput to improvement, that POS is specifically as leading Now improvement?

Pattye Moore

take order will That’s fired kitchen, the it the the experience. the speeds which be at correct. into service up the Because and will actually table immediately

Stephen Anderson

the kind POS you the POS have that’s Now any with expense labor? roll-out of specifically system of to with associated allocated regard

Jonathan Muhtar

it labor should a better and provide will be mentioned should utilize be experience. technology able No, at Stephen, accommodate. running the helping server in help be improve periods we’re We to number new throughput, it. those so, the more able efficient But we as are peak that us server a existing And I think to we that volumes, expect levels. to guest during is restaurants that. handle guests Lynn the those able lot do good of

Stephen Anderson

you. Thank Right.

Operator

take will We Instructions] with Brian. Brian ahead from Raymond James. Vaccaro next [Operator our question Please go,

Brian Vaccaro

you, and Thank evening. good

relates handhelds want And that out to as expected be the can confirm little productivity company be units you more you’d or benefits share to rolled Just expected all saw about willing end sizes or in just benefits then is that, station other quantify? quarter? of you server you server go to if could a any third the back maybe also bit to to it by tests what the the ticket and to average times,

Guy Constant

Guy. this Brian, is Hey,

So, to end roll we the year. out by the expect them of

not huge items as that time the experience labor stations while for is support out. support orders can help to out all of model in because server that point we having Well we’re the it out in successfully And roll-out We’re made which the restaurant the orders, benefit industry roll-out the want piece be about. have servers then, and the that system at all that get can better then those they’re by on servers servers quarter. there’s the return roll sale of and made time effective then floor of as could to contemplating, then is about the let’s at to of talked comments we’re technology rolled kitchen. to into into we one get hopeful expect benefits say, who provide Brian, of rolled a of comment the that careful by what to a next to the some on and understand leans we’re metrics might there’s point the multiple at a the And before should model end that with result, do kitchen do may that the which take of on they’re the and we what and often course, we them that overwhelms to initiative. third to how We model that look and this But, things the kitchen and as we a the that But handheld it that better then on guest as that for we XXXX way what reference an that wouldn’t ready move kitchen. we’ve be have we the time. even the much this to at other specifics to become pacing when provide you allow itself on more the technology a want able you Patty imagine, on after specifically. a a proficient able Lynn inside more two-stage both surface, really many do might just operations are the to and with technology take to larger to Lynn watched mean That’s table solidly the would enter out it I us delivery system.

Brian Vaccaro

shifting closed loss selling costs, with is sales? units the on a after burdened wanted just those X.X% to first, numbers units, I to Okay. or of Lynn, And guess I question. the and the X% that $X.X or ask, million

Lynn Schweinfurth

the There’s, losses. not. it’s operating No, not

Brian Vaccaro

Okay.

pre that’s advertising. So,

group we’ll back store maybe But high XX the the the level, remarks. I a we have EBITDA or whatever months Okay. versus you in how of And your left. level set on step the to level XX heard have could twelve and handy? non-mall AUVs maybe guess, four prepared the where at relative But level or units non units, a maybe and mall maybe performing mall I take trailing are units. might just high is commentary

Lynn Schweinfurth

locations the quantified we Overall, We’ll AUVs I XX believe locations. that non-mall think or opening talked give in of about. basis in the X.X I neighborhood take. remarks We traffic down the was after that points we have the Yes. versus XX mall closed XXX are

are lower So, performing cases. in they some

And so, the focused we’re on. those are ones that

Brian Vaccaro

clear, Okay. And is be total XX that’s just those the to on XX the X.X? XX the AUV

Jonathan Muhtar

locations. closed are Those

Lynn Schweinfurth

are the closed Those locations.

Brian Vaccaro

the Those right. ones, are closed

have ones XX the could off line it for or We you rest perhaps provide of the that? are that the

Lynn Schweinfurth

providing about think that Well, Brian. on we’ll go a forward basis,

Brian Vaccaro

Okay. Alright, understood. And then?

Jonathan Muhtar

the much average than when they mall had has different dramatically performance unit the costs levels in we that to volumes But Brian, occupancy higher. few system. were Historically, obviously been historically we talked that, and quarters, past not now rest when poor. refer about But at the in malls were were historically of the

in poorer was is was comment from calls XX ago, past poorer no But the than so locations. that following months at profitability much have been that our you normal gap little comp, three [indiscernible] comps, X as know, to quarters before. mall the there’s mall So,

Brian Vaccaro

was of last delivery? that me, much questions it set quick the then was of I And third-party think two numbers XX.X% Great. Okay. off-premise for sales. How just you

Lynn Schweinfurth

points. percentage X About

Brian Vaccaro

$XX Okay, wanted then great. just I on the G&A million. Any confirm And the had change your at new the guidance, on guidance, selling to selling in cost old SG&A guidance that the guidance? to

Lynn Schweinfurth

be to it about expecting Right now, we’re same. the

Brian Vaccaro

much. very you Thank great. Alright,

Operator

our will now Fargo. from Jon We Tower next Wells with take question

just Jon. in right open ahead. a be will moment, Go line Your

Jon Tower

me. you. Great. Excuse Thank

traffic and loyalty that there going? million equation of discern on have where do you from can a you the is I five deceleration traffic X.X that anything database is in given side, members, of sequential think, quarters been, Just traffic is the now

Pattye Moore

we segment one answer mean, better on will be putting and royalty time, to enhancements our technology better that. the and to later in year get the I don’t But to we analytics. year of continue data is at later next that have that and an at in to we’re talk beginning members, into this so No, able target

Jon Tower

of and expectations fear the going just to rest obviously, an there’s Okay. the the switching protein that on rising for that’s have And structure. ports to commodity market year, impact then, in the

of for costs commodity balance what’s for So, the embedded ‘XX?

Lynn Schweinfurth

this as expect of now, the be restaurant compared year. last do roughly we pricing for percent year favorable right still And Yes, our to company. a to sales is X%

Jon Tower

is And locked? how much

Lynn Schweinfurth

That’s XX% And about in not for of entirety our cases. of are there commodities locked some the year the is in.

the for we the middle look year forward-looking periods. contracts in will So, of at additional

Jon Tower

to I you spend, traditional. And spend or also sounds a the quite it just years allocating but flesh curious, Are into of bit toward bit guess I are omni-channel dollars, the relative evolving higher that past, going marketing a know versus just TRP’s lastly more little out year-over-year like Okay. then, in thinking quarters more? and you about spend. kind spending more it’s [indiscernible]

Guy Constant

not looking we’re in significant spend total. Overall, Yes. year-over-year change at any in

as have, first shifted fourth, to to quarter, the about planned and dollars now right be from mentioned, we We quarter second the some are third consistent year-over-year. are

into the year We in the first through those and shift significantly and seen we’ve also we’ve that have have grown digital made some of levels channels. additional investment and the pleased social really actually which been quarter with engagement

Jon Tower

you. Alright. Thank

Operator

Please We will take Group. our last Stephen go with question Anderson Maxim ahead. Stephen. from

Stephen Anderson

anything evaluating look XX-K That’s estate. your asked that a to report a by you are you’ve the if own real group the question Just good in including And consulting own you those when may restaurants, number outright have [indiscernible] about go you to the XX it’s properties. you there’s still at something or follow-up properties.

Pattye Moore

transaction properties that’s question. of with those if we will if properties, sell we’re refranchising your to every some along owned Well, offer franchising the

Stephen Anderson

is, it Yes, Thank yes. you.

Operator

additional it, And to remarks. call at closing Moore to over time. further Pattye for the I’d like no there turn or are back questions this appear any

Pattye Moore

second Thank you. again, to for Alright. us our joining forward August. Thanks, everyone you in results with sharing We look today. quarter

Red Robin Gourmet Burgers (RRGB) 30 May 192019 Q1 Earnings call transcript