RRGB - Earnings call transcript Q4 2020 | Red Robin Gourmet Burgers, Inc.

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Operator

Good afternoon, everyone, and welcome to the Red Robin Gourmet Burgers, Incorporated fourth-quarter 2020 earnings call. Please note that today's call is being recorded.

During today's conference call, management will be making 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 today's conference call, management will also discuss non-GAAP financial measures. that not are accordance alternative intended the operating are Accounting Generally measure measures company's but useful. Principles to performance non-GAAP prepared with in Accepted of These be may illustrate an reconciliation GAAP can comparable the most earnings in measures financial to be measures A the of directly the found release. non-GAAP related in posted on its results its has earnings the company the Relations fourth-quarter XXXX release at to www.redrobin.com and The fiscal supplemental Investor section. financial information website

Red turn to Paul the like Robin's would to CEO, over I Now, Murphy. call

Paul Murphy

Good improving improving thank me for our in who accomplishments recapture resume strong service, and our us TGX servers an pandemic included was intensely forth challenges the brand. implementation strategy is position, of is attentive will it a results to I scores. the enabled promise pandemic decreased to combines of to accelerate ticket joining enable our Lynn window our cleanliness Part in growth. give technology Experience providing model. section our we soul XXXX unprecedented to times, guest in summary time. Total created business the made transformation speed officer in year, on deliver reopened. wait operating by in and remarks. experience, to after high-level review rooms an tell Robin of our improved our and dining of improving future to afternoon. an brought today, our confidence financial stronger our our TGX service Improving as while would the the of and you their and Guests including The material majority or even and stay complex And begin Red brand brand us today. accelerate profitable our us like my XXXX prepared how the us enabling coverage an service more Schweinfurth, elevated our model to transformation deliver guest With improvements our promise, will Red story, of our model. and financial hospitality opportunity Robin to quarterly of effectively, deliver chief our where strategy and The focus

also the goes and We triple a annual and savings accuracy a to model waste. including flexibility peak team house to our ensuring made in check handed execution, of of program improvements to guest. enhancements, as implementing and also over terms coverage before is which labor, for are times. highest cost our service and The to TGX with on to We our focus supports members. management-labor model contributing generate million of our simplified and our positions better allows supervisors team flexibility guests structured improving operations million. allowed $XX menu, three historically our to beneficial new management-labor We permanent guest and labor reductions. and in one-third fixed model model it of satisfaction restructured career clear ever scores. supervisory enhanced business $X operational one moving increased new us efficiencies of both and The meaningful hospitality us path reduced offerings also resulting our salary enterprise two to annual and every provide the hourly shift off-premise of convert technology also our Both three process This back creating and over our to during while manager approximately pandemic TGX reduced for model order savings model members checks being significant costs through

guest increase than satisfaction overall sales as doubled, to prior order and off-premise accuracy, in in XX% Our more the a compared offering year. improvements in resulted even XX% scores increase a the

XX% plus savings general costs. prior drivers a corporate infrastructure other our approximately and million reset permanent expenses of administrative also growth We reduction made and future $XX annual flexible in through to and inflationary more in it

as we in restaurants negotiations X% Finally, over XX% as near completion more portfolio occupancy negotiations. of Through our we for X% February, with compared optimize XXXX. the than savings to lease lease we company-owned of expected to remaining had terms completed our

families Robin and Red atmosphere of robust, not XXX-basis-points playful, cost diverse, is than sales. and and fun We X, on mainstream enterprise served improved differentiated for to favorites to guest anyone or of only centennials, approximately to is who us. and milkshakes, The made wings, representative sales Our table. shareable and but structures margin as focus volumes. proposition. what returns expect create pre-COVID of Red the better together know Robin connect represent Robin, over another improvement incremental around is we a setting an our demographic, friends is company At multigenerational the Gen a burgers attention two-thirds ideal else, like our pizza, or of and which millennials, beer, our Red they guest offers one with

guest guests is the than category, we less generally digital leverage a and active This has guests transition expensive. to allowing strategies the with and us casual more core Our drove digital dining to our effective that resonated space further number record our younger marketing as in of website. more of that are

in targeted engagement to ever over total nine and our our email with delivered efforts a segmentation royalty increased our Further, loyalty new messaging. best enhance as followers. with engagement we loyalty achieved media social high million Our and well members

strong recovery long-term Red particular. Robin look to shareholders create we casual believe all in on Now we build as and our a is ahead, achievements, prepare dining for be for and future what we these as value bright for intention will a

of dining dining restaurants of fiscal XX% in February our fourth now of and company-owned rooms have XXX reopened quarter, since have currently we reopened. the our open XX, As end rooms

Comparable restaurant were restaurants a indoor are almost create core with pent-up open with rooms our last sales, approximately capacity by for restaurant continue represented We dining dining and on-premise seating closures recent of will Western rooms. growth average which the approximately XX% at opportunities the significant of guest XX% restaurants, trajectory. revenues XXXX. increasing combination XXXX system X% our with our encouraged for week open of for throughout sales very indoor to recovery our down industry check demand brand restaurants dining, higher full-service with indoor The dining, market of

capacity seating approximately expansions outdoor at XX seating representing our XX approximately incremental capacity in to and Additionally, allow of jurisdictions weather incremental where on average. seats XX% restaurants

reflective team for best the operating resuming short, building our guests. ready, to the a increased adapt satisfaction we capacity, dining playbook dining to a to our we continue medium, dining and a vastly coupled frequency. indoor actions with prescriptive Red full-service XXX% retaining restaurants Robin high off-premise us well satisfaction of while within As of demand our believe at positions set, our pent-up with required preparing higher guest record reopen guests post-COVID outdoor addressing operation rooms sales. scores experience improved with to are with We welcome training long-term space, members and back practices our And guiding our environment

to number With when of more are category in XXX Donatos company-owned of Donatos the Turning restaurants locations. for restaurants, by represents than opportunities this to In XXX opportunity growth. pandemic, conviction Donatos planning that by $XX performance sales to XXXX we addition generate of the $XX our the as year. including Donatos that of company new add provides company the than it post-pandemic. expand strengthened approximately XXX the has growth to in a growth pizza XXXX, we end We the total catering to offer bringing rollout profitability beyond approximately approximately million will annual more during of an completed Donatos. Donatos our believe have million significant substantial restaurants, for catalyst we

been off-premise XX% sales we mix. than Our a our approximately expect driver pre-pandemic tremendous model portion retain of higher and a growth for Robin, has Red off-premise to

and channel and higher-order sales. with amid us our pre-pandemic pandemic, the also a we a These Robin satisfaction, conversion, business improving new enabling deal our that fortifying growth operational XX% While use app. drivers the guest continuing the well cost-effective operating industry level capacity, and guests offering sheet. website channels with new moves and more favorable we eventual In These aforementioned and third-party levels. to increased and and for guest ultimately model, partners and increase mobile demographics are great than platforms we bode personalized engage introducing participation, are sales our coupled in drive closer sum an technology accomplishments, sustained recovery. strengthening Red guests; improving XXXX, a over to as operations, achieved our strengthening up, royalty improve within delivery twice balance direct margin including the our initiatives it to to To of execution; on frequency; have Robin streamline ordering, improve through enhancements restaurants Red

our can value we review for grow our for preparing long shareholders staffing Lynn, we demand are in out training, environment, fourth As turn the on pent have and vaccinations a are over to a quarter. Robin and we the the now being I occasion. are term call post-pandemic rolled for to place confident will Red up operating truly when create and to capitalize including nationwide, foundation teams

Lynn Schweinfurth

growth Paul. you, move pandemic. is Thank consistent, beyond as brand our this share I strategically we Paul's positioned for confidence meaningful that

California, some on performance, capacities systemwide by me and Oregon, Colorado, primarily Let key XX% summary comments Washington. of We comparable with opening states; liquidity, revenue, experienced begin XXXX restaurant and restrictions of fourth-quarter fourth-quarter including decline my a our room in accomplishments. a in driven dining

Additionally, in offsetting in restaurant fourth-quarter indoor the the over restaurants restrictions that revenue. XXX-basis-points, offered similar dining by outperformed non net comparable partially with restaurants are Donatos Donatos decline

of to of mixed of revolving with have including occasions that have regions to for before We and under were orders off-premise closures, off-premise We guests equivalents, believe are off-premise times We over at digital at dining pre-pandemic higher we seeing XX% the adapted sales reopen are to total approximately line both stabilize been million, sales. our that rooms maintaining our in cash a two and beverage had as comprising And off-premise $XXX borrowing level mix driven period. available return credit. have $XX quarter approximately subject XX.X% food the of indoor sales level. levels. capacity that and prolonged ended room multiple strong will a than off-premise liquidity Approximately million through sustain dining cash we and the regions post-pandemic channels more of

the during anticipated spring, pandemic beyond entered to first the Given into second we impact quarter of XXXX, prolonged a previously agreement. our of credit was what last amendment the

XXXX to our balance The and positioned provides we near-term increased as amendment deliver for second strategically the flexibility continue brand and beyond. sheet

second first during sales legal a As quarter one-time $X.X end of million, paid the million of cash settlement. XX, the February impact payment of of ended $XXX was XXXX, to the including related the our liquidity fiscal of XXXX period a

fiscal XXXX this cash impact approximately flow positive we the one-time eight $X.X the of million. had of payment, Excluding of legal weeks in first settlement

confirmed we down loss which cash our $XX.X payments we we in As net used to provision, refunds, pay a and QX last inclusive our of the tax interest CARES result of during deleverage balance sheet. million operating quarter, received credit of as line revolving Act, carryback

the benefits XXXX currently by we are specifically, of refunds payroll Additionally, deferrals tax taking million CARES advantage $XX fiscal to the approximately and from of additional allowed back Act. we generate and $XX early operating in More million are carrybacks. in taxes And be expect loss as to net tax in cash deferring XXXX, approximately paid XXXX. we

we restructure landlords continue our to leases. quarter, engage to fourth the with diligently During our

to concluding improvement mentioned and our had COVID-XX to expect reductions permanent undertook the with landlords, and appreciate cost will long-term meaningful the return remaining ongoing deliver company partnerships preserve measures these permanent strategic restaurants we have to related of reduce to to are As over several we we margin pre-COVID costs our [indiscernible]. as discussions including structure Due the pandemic, Paul enterprise XXX-basis-points sales close XXXX, our volume. currently throughout liquidity We previously, reductions.

Robin intend while bottom indoor dedicate loosen sheet dining our execute cost flexibility positioned next are recovery line deliver initiatives as has manage to growth, brand restrictions. pursue several as our financial outlined. management to initiatives future on markets our and quarters that flow over for effectively strategy the strategic and liquidity We diligence balance initiatives. free to our Prioritizing we confident especially in to room cash transformation Additionally, Red returns our and Western to on continue strategic strong and of the Paul maintaining long-term our continue previously the our growth maintaining deleveraging we to while continue our

in finest QX burgers from the lower a by an X.X% Now specifics XXXX increase by sales turning Fourth-quarter in to at by operating X.X% million were higher driven and Mix response in beverages by offset revenues of offset ago in discount, fourth restaurant partially a XX.X% decreased XX.X% decreased sales, sales our XX%, the from decreased to driven total by quarter, the due traffic off-premise $XXX.X revenues by of sales company decrease and reduced of to million, pandemic $XXX.X and to decline guest pricing the and related and down some X%. fiscal a to average year down the X.X%, Dine overall partially driven closed growth. XX.X%, comparable additional check. COVID-XX decrease off-premise restaurants capacity a restaurants. higher an

was wages partially revenue sales General to of in and the reduction to higher driven We off-premise million $XX.X Our cost. continued national a favorable member media. service to team versus pricing in tax costs, sales costs year food million by XX.X% of valuation quarter. income, and growth increased for offset lower the by benefit local decrease fourth the channel, X.X%, quarter, lower meaningful tax XX% Selling of for and a professional by to due service the the operating $X.X benefit administrative focus lower driven the quarter, us The rose costs costs. restaurant profit janitorial primarily off-premise Restaurant-level This of capture additional and offset million, rate and of quarter effective the lower million, million in our a representing higher the percentage recognition on $X.X benefit a recognized of tax $X.X versus driven due prior prior of travel and mix the partially benefit. of in allowed pre-pandemic primarily entertainment deleverage, fourth primarily XXX.X% during initiatives year expenses XXXX. model and and were and off-premise team to and lower fourth commodity was $X.X in approximately decrease in cost the and total which costs salaries a broadcast the benefit a $X.X of X.X% sales, our by the hourly beverage compares fees maintenance allowance sales by as primarily change member by offset year is decrease were partially wages, effective quarter. expenses, million, due

restaurant and charges million, During the closures; costs primarily after of of $X.X to impairment; adjusted related pandemic. emergency for to quarter, COVID-XX an including was $X.X members pay members. other protective million, purchasing equipment $XX.X restaurant and sick by the charges adjusted million, was million diluted These EBITDA of EBITDA personal QX we to gas, adjusted compared Fourth-quarter our share related related recognized compared and included; related $X.X $X.X QX triggered restaurant loss in million, the to to for $X.X the diluted COVID-XX providing our million $X.XX, contingencies; QX litigation $XX.X as XXXX. loss team of per in share loss adjusted million, a per $X.XX XXXX. restaurant to as team

balance letters of outstanding $XXX.X our the was balance At million, Now outstanding $X.X million. credit were debt quarter-end, to turning sheet. and

Next, XXXX. guidance for

afternoon release we demand follows; portion in a Western pent the comparable XXXX. our full-service revenue is on-premise and with our guests check dining, up growth meaningful that recovery represent As significant average drive as in markets, earnings expect higher for of will increasing which our closures of restaurant this industry restaurant dining, published portfolio

restoration off-premise expansions, and single-digit of combination enhancement. maintaining infrastructure capital, technology expect benefits mid-to-high the will locations. systems approximately continued We expansion expenditures revenue recovery. execution of we seating maintenance solutions million, incremental of restaurant the with and Donatos our XXX guest growth generate of investment $XX including outdoor and associated full-operating the to and pricing, also capacity Donatos with $XX And restaurants that currently beyond operational Digital enterprise million expect hours, in capital comparable to and

for conclude, take strategic I through moment generating, our growth. to drive team future Before the a including I'd entire thank are our to preparing results like execution high-quality to to team and Red they Robin capture occasions

long-term guests, deliver to Paul. ability members, over back will team With our our for in suppliers. of turn partners, that, landlords, all and to franchise the confident are call We shareholders, value stakeholders, I

Paul Murphy

you, Thank Lynn.

open takeaways key questions. few we a with before line conclude the all a year XXXX for was me fronts. on challenging Let

in future communities have for the great our would course, done work all they as run casual optimism And promise confidence of of recovery our and with company for members, and told and the our the and for did team Red guests without members. the guests to growth also only we we lens ever enough satisfaction We we behalf recovery. our of operational our brand Robin. and business. the in for We by introspection Red we serve, short on position service efforts story profitable the our And efficiencies communities cost operational them improving significantly our our continuing to business by by Red ready Robin to and accelerated use place, core pandemic improve We readiness We not ourselves improving in soul our which focus and on strengths truly accomplishments meaningful the best while incredible experience. record-high the permanent of and For as the and develop improved future our Not unique digital reductions, to dining our by thank the committed with have that and playing remaining to future recapture guest model Engagement, be be well growth driving of we our Robin in resulting with for persevere, and team cannot with website to marketing, a with deliver for scores serve. enterprise Loyalty look but execution. of differentiated our positioned both our and Having drivers possible our what the guests our traffic. ourselves for provide strategy in at future. connecting identifying model our serve

open for Let us call questions. now the

will now Q&A We instructions]. begin session.[Operator the

Alex today Jefferies. with question first Slagle from come Our will

Alex Slagle

your to the gains in the wanted on markets. Western market get just thoughts share I opportunity for

you markets. comp that getting would suggest shape as As levels recovery all I many mentioned an volumes the to for country in these and closures pre-COVID competitive levels above sales an higher guess, of over the takes potentially rebound interested. of stronger opportunity the even

the provide Robin what markets could others, to on that for any in road. additional you relative these mean down color you're and what If might seeing Red

Paul Murphy

the seeing, I longest real Coast I'm very Alex, we're we've the I'm reopening. The Coast outdoor shut from Red volume The has what California say country. Well, had what of as been of obviously, the any for frankly, by down Robin. parts that strength you're highest of West I'd some by on encouraged the think, is the West the in sales correct. just even restrictions and seeing seating with level it

We tells to performing a on Black the well take transaction that are standpoint. able what market as share dining And me against Coast Box rooms to there. West we're reopen get we to that's from especially going be the

that data and gain be move but to going forward. us not the that market know we're Oregon, hypothesis for share today your to So, growth and that also you I California, just look seeing we as I at tells there's that Robin. Washington, believe When Red

is to what what be I bullish So for I'm seeing extremely pleased on with going the our brand. think and outcome

Alex Slagle

sort national program XQ deck, in Got comments if expectations. on the coming comment changes TV on marketing And that on activities And then with timing then you potential on the on just what might you in of and line of the any marketing the Loyalty if results with if it. the efforts could be? had was changes the separately -- on and

Paul Murphy

that had. all basically where side and we did amount believe that We lot QX. messaging frankly do also been we did the segmented have we or work pleased. in outreach the messaging, our quite through even digital loyalty some technology a a that top the we XXXX fourth work will very doing restaurants pivot expect as in marketing Well, not a It of and we've that we're that our we doing is closures is royalty XXXX. to [indiscernible] QX, number been side that's in do didn't first We -- and room segments. enable A what from broadcast guest us better but in did the on the media we -- three but of the dining had of at we substantial and especially only obviously, quarter, get we move

for us than how So, gives lower I'm broadcast it I pleased in or opportunity Red TV. of working, the well is QX digital-only to with the because actually outreach digitals expand cost which marketing as think certainly outreach our more Robin bodes just

Operator

[Operator instructions].

come next Our Vaccaro with James. Brian from question will Raymond

Brian Vaccaro

Thanks, evening. and good

I it a the and back sales and of recent But know broad-based, improvement you've on One significant like business just perhaps was or accelerated category. it one AWS more. week week it seen. it's before pretty of just a the the that for increase seems questions pretty good region probably curious the of segment is obviously, XX,XXX particular there's was a

Just driving improvement. some week and color that he on that what's could if been

Paul Murphy

some dining this week XX% but it obviously, some are reopening. the their X% were that I We down had in restaurants broad-based. dining capacity in down was for We room. were for week, very last think Well, rooms

XX any only team restaurant, point up, week we members. restaurants is I the and restaurants for had one individuals I'd that's recently and allowing the inclusive in only have thing it -- did in California that indoor we is XX think but In that Oregon, three the of out open dining.

XX% the range. capacity XX% to probably in So, more is

extremely able and are to we more both Washington XX% to XX a Oregon California we XX% come the results with -- X being with and to level. beyond and still, reopening, the see the So, expand pleased XX% because or lot then

XXX% states, really that of some of was the Texas certainly more other move of to sense yesterday the XX% the out it's into pace, can't news in the but able that really capacity. recovery. to restaurants the beginning I good to So, speak being we the think and

from just actually those So, are numbers. I to going think get better things

Brian Vaccaro

in in think other sense. and Texas news well. I the Yes, Francisco needs as And California, San California Yes. makes that some

seating think sense what's guess Does to restaurants bogey. of with room that? reopened open allow do -- you correct? -- is dining need restaurants to see higher typical allowing that if than XX%, you XX%? they I But you're what's for the new if I it Or make

Paul Murphy

extended in with seating No, and California whether been up to accretive the or at line Brian opening out what outdoor the was XX%, it able with us, it is we've especially line. even accomplish both bottom to gate XX% XX%, of top

Lynn Schweinfurth

are our And what's Brian encouraging really indoor sales opening, our level. off-premise high staying are dining as rooms at a sustained very

Brian Vaccaro

to restaurants capacity where to Maybe dining? like? of And XX% us it how effective average that I further what greater say sense Yes. it weekly be? in isolate, for possible it the dining of along, spoke acts. off-premise But are at guess give sales looks just can the that isolate that you that specifically, to that point, and units many to are those possible are for Currently, capacity, inverse might a speak the sales mixed the or is ones volumes that raising maintaining two and that in is

Paul Murphy

Brian, is Paul this Well, again.

mix seeing at the restaurants seeing XX% the approximately that XX% sales then greater, capacity, that to than in XX% We're XX% restaurants we're of level restaurants the seeing the off-premise about and XX% have we're have For off-premise of XX%, XX%. capacity. less that total or are sales

pleased very and we believe that number pre-pandemic than the of And In terms future. we're for with bodes off-premise more XX% of what to certainly sales the double. that's comparing

those but or did can rises, as not I you it capacity rises as out guess its segments. is, these think break into I

whereas able really incremental -- So, we're what going able line dining strong as tell growth bottom long more that rooms the online. off-premise to and both rooms broken from term as out is I see I'm believe to going back seeing where because are dining be we top to come we to be reopen the

Lynn Schweinfurth

we I sales in today And open system. full what dining which are of which the terms these think is Brian additional then rooms, incorporated some had then, restaurants volumes just data tried press to markets, for we our starting indoor our provide points in to reopen. do and additionally And Western release

Brian Vaccaro

it. appreciate I Yes,

Lynn Schweinfurth

capacity implications. that and the Yes, some of

Brian Vaccaro

That's period. sales but disclose sorry Can quarter-to-date absolutely. you Yes, it, off-premise the helpful. if I the date? disclose in I'm missed you to did quarter the very mix

Paul Murphy

QX? For

Brian Vaccaro

Yes.

Paul Murphy

be I'll sure material Brian, at the have that. We're not if that. with with you honest if we disclosed looking quickly you're I'm Ok

Brian Vaccaro

today, And it's No environment. on specifically Maybe -- reasonable And you see and normalizes thinking thinking environment? price? longer opportunity a term, move based just a what ads do with you're as spend. the how what your in on the as the what's I'll obviously, very spend environment dynamic worries. But stab Okay. optimize about advertising then, to forward selling margins post-COVID XXXX the an

Lynn Schweinfurth

continuing Well, those answer XXXX Brian, over are getting the evolve And I'll levels, we're our way. investments. dollars past. related savings around to are to shared and we're we the your anticipating question marketing we mean, I we this thinking which returns in how spending our

prepared guidance selling to specific on provide not today we're So, expenses.

Paul Murphy

that with you been I've tell Brian the will pleased I results. very though

and TV segments. a I'm we from gate, have and first getting what Robin And of that. against brand, the is the the out into response We the solely campaign. -- I'm this today, pivot have of seeing getting our historically the pleased space very made quarter the bit that that out targeting And Red segmentation you reliance customer broadcast doing we're those of and have seen with digital been a with what the more doing much on

a of you a know less as the the future. be And to you as think broadcast into expensive bit think will I media. move tends see more I that than of we channel So, that

Brian Vaccaro

Yes, All Yes. definitely. right I'll pass you, Thank much. very along.

Lynn Schweinfurth

Brian. Thanks,

Operator

will attending call. conference Thank question-and-answer further well our conclude no As you today's Instructions] this session questions, presentation. [Operator are there as as today's

You may now disconnect.

Red Robin Gourmet Burgers (RRGB) 4 Mar 212020 Q4 Earnings call transcript