Earnings call transcript Q1 2023

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Operator

Good afternoon, everyone, and welcome to the Red Robin Gourmet Burgers Incorporated First Quarter 2023 Earnings Call. This conference is being recorded.

During management's presentation and in response to your questions, they 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 company's SEC filings. Management will also discuss non-GAAP financial measures as part of today's conference call. performance not but accordance an are of company's are accepted the alternative measures useful. the principles, be accounting intended operating non-GAAP prepared with in generally measure These may that to illustrate

A reconciliation to directly company the GAAP website comparable release has in ir.redrobin.com. financial posted can found quarter release. at the on XXXX be earnings most measures earnings the of non-GAAP measures The its first its

Hart. Now Red G.J. I'd like Robin's call turn to over to the CEO,

G.J. Hart

thank for review Financial discuss all today. quarter guidance me and after other us afternoon, Chief Good outlook and our is you items financial I Officer, With joining our revised results Todd our XXXX conclude Wilson, among upwardly my will who first remarks.

to are traction and team our support performance start members. thank roll want out and We XXXX seeing Star we operators are we plan. I our center North to with the as restaurant pleased and our

You are fantastic job. doing a

and into in Your dedication our will future. the carry success and QX hard work drove us

Our great journey. first quarter this time step are will to strong a fully is take this we know deliver. And first on in results comeback a that the

are points of early see encouraged success. to We proof

have XXXX. satisfaction now percentage guest compared X to scores First, as points increased

We increase would quartile with restaurants gains expect. the as the are seeing in full portfolio we across greatest our bottom

than reported more properly. our guest ago, Second, waiting substantially declined minutes more our wait times seated. and A year restaurants guests XX% have we staff to false as waits than be of XX

only and walkaways. wait result guests times it's reduced down Shorter to in Now of X% guests. our that happier

and benefits capturing we the wait progressed. both times. same-store to speed Casual Box beat We waits Third, for attribute previously extended to sales benchmark increased the the first That quarter Black exceeded due false that of industry results and sales lost quarter traffic. as Dining the

our quarter. many Robin companies, compared XX-week XX-week peer report a first is a of first unique typically Red to has more restaurant quarter as who

point-of-sale our sales data, the sales weeks based XX% in point XX a on first increased restaurant our quarter. As comparison, of comparable the of

XXX These sales established a over old, per to a new restaurant teams daily celebrated nearly quarter. restaurant. records and our than also and the the first is of more incredible in is set that XXX hourly, years We company. XX brand new testament work of records to weekly high overall In watermarks the are direction our

a first level meaningful printed profitability significant to and we restaurant levels Lastly, EBITDA. to restore step gains in historical adjusted

changes brand January, in comeback designed our to our shared are growth for our value. we are and iconic drive this positioning, Five-Point of initially I Plan. cement competitive Star As is long-term the implementing The blueprint North shareholder build sustainable

I we share of key our on will the all plan. involving are Number pillar an underway decisions. to as North are one, operations-focused updates each in is we change well Now restaurant Star operators frontline This company. transforming

are of partner to incentivized leaders the multiunit the we changes By for delivering to oversee. and restaurants With all change, reward partners start for of structure these the making second profits the operators. based they and on program quarter, them launched driving these this the our rewarded program results. market compensation This

of rollout the launch from incorporate of single-unit which we program, our learning multiunit operator are the learning expect this We program into and with will operator start this to XXXX.

Number two, guest elevating the experience.

number number options. of Our two, staffing one, hospitality breadth related menu the food experience top investment priorities and are: quality X guest enhancements to at and levels;

that the assistance. to to back first for We do were reduced quarter investments heavily many have changes hospitality Red to not progress are years rely where Robin tables and or fewer standard past and more represent server as than in expo Our generate additions. XX% standard Robins complete staffing used these and Key eliminated traditional with an reverting and Red model hospitality on bartenders model changes add in our industry and success. bussers, great the and back return staffing made more hosts, model servers a significant roles

We quarter. of second expect substantially by complete the the to end be

and our food menu updates. For

one has our On side means upping Gourmet truly proclaiming to every a restaurants, ante. we over and hangs it of raised years the Burgers, been deliver what Burger sign Gourmet of the the on a the bar are

larger, and legacy cooking platform more the burger. began tested in Changing flavorful alone in our step cooking first a method juicier in the a The system-wide rollout system belt-driven upgrading flat-top flat-top the We guests the April. conveyor the our from grills first year grill. of a XX% delivers to and quarter

to quickly expect does and second are of only pride this in We flavor, great is flat-top execute. our and very have value excited guests, provide it easier installed members grills to change, system-wide sense complete implementation the quarter. and Not and change their restaurants already team report greater moved the quality work this nearly to have a XXX by in for

and the significantly costs, cleaning to repair our Finally, system. will compared maintenance grills as we flat-top reduce legacy expect costs

toppings The investments a stopping and and patty first Chef key He the have done to team In we are new to and fantastic we February, culinary options. there. burger solve Brian not work critical a efforts. in welcomed to Sullivan and identify the is upgrades step lead menu burger our

and buns, we other flat-top tomatoes completion phase mayonnaise, other Following amongst ripe installation, the and in bacon, will to changes. produce upgrades wine, of

truly beauty plentiful to fries Burger. to each come we wrapping wax and can ingredients preparation deliciousness move Gourmet paper, time of the this year, new will brand and burgers was think next paper the our our its change has our patty also its away own, from mushrooms. to presented procedure at and has time With we to Robin will which developed. deliver wrapped in platewear the historically burger an more the we the source, best delicious other on to of stand We allowing salted fresh the Red Later fit serving introduce wax tall bottomless and showcase sides. upgraded caramelized and the onions burger

a final strategy. the beyond in entrees menu were and greater true barbell to non-fried Lastly, development we appetizers as guests new for provide burger stages pricing it enable that our with new lineup variety relates menu,

expect We the year. across will of by system upgrades all this October be implemented these

three, thoughtfully help we we and support or experience from costs commitment In or work do where investments, at our reduce quality. can to our identifying the guest-facing areas been have Number guest remove removing order complexity. impede hard costs not that detract to

a great at team and supply better done that a capturing now product identifying Our chain guests a or our reduced provide has cost. opportunities parity job

with rates sides business both many addition, partnered favorable us In to the have to opportunity contracts and for as provide our grows. more vendors that restructure benefit

engagement. guest the optimizing four, Number

move Red marketing strive are become this we to local to loved empowering in most focused was our brand original leader and with routes. operator we to return drive in communities As company restaurants the their to marketing, that and the directly. Robin our an engage local to communities we serve, we will

incredibly to fortunate ago. Red loyalty are program, now XX.X members, an have members million a We strong Royalty quarter XX.X with from Robin million up

the past. and We guests rewarding rather evolve program focusing to the have a the was strategy on by further our in than primarily discount engage begun work what most loyal

future. team and Kevin I'll Our Marketing running, have and the more ground the the in progress share Mayer, new Officer, hit Chief

begun. right driving on what financial growth profitability accomplish in five, to results our demonstrate QX revenue commitments. have strategy unit deliver can place in when Number and comparable the we level restaurant we first community critical, we credibility and The and journey. with the this start and and results good step are have just investment is a execute on only quarter first this accordingly, a

provide when profit We we them. sales and drive will to be and operational in growth confident our continue can we diligent financial that deliver on execution to commitments,

Let me now turn Todd. to the call over

Todd Wilson

revenue increases The in X.X% an Comparable X.X%. quarter our the increased acceleration sales due good of and revised the which growth The sales a financial increase comparable our a QX increase sales the of and channel restaurant $XX.X mix. in positive I price and approximately revenues quarter guidance afternoon, favorable G.J., quarter to first everyone. ninth of million our fourth posted financial XXXX. comp traffic in quarter growth of walk you restaurant then million, an begin menu with performance from for is XXXX. upwardly we recap X.X%, of increase $XXX growth sales fiscal from were balance and of of was consecutive you, Thank an first XXXX. will for through resulted the quarter, the comparable in Total XX-week versus

Of represent XX% of dine-in sales at note, XXXX. dine-in restaurant Robin. reflect and sales of Star a increased and XX% North guests our seeking of Red as the compared experience first in the effectiveness Dine-in to first quarter. broad normalization the point plan a the these of sales quarter figures enjoying further proof with post-COVID believe We

point to of sequential XX the revenue fourth operating profit was XX.X%, quarter XXXX an a XXX from and XXXX. as basis points of percentage in increase basis XX.X% restaurant quarter of first compared the a increase of approximately Restaurant-level

through inflation cost growth in able many of across to cost we profit grow While implementation restaurant categories, restaurant-level margin were the experienced initial revenue the measures. we and savings comparable operating

year-over-year Commodity step the balance was of in of fourth we We the quarter the than the quarter approximately continue of in inflation will and moderated sequentially year. XX% experienced the XXXX first to inflation X% expected from XXXX. down faster anticipate through

hourly wage inflation expenses, approximately X%. was In labor

$X roles operational million mentioned in to G.J. We invested approximately quarter also the staffing the in earlier. add

profit the million expense performance sales of for significant restaurant Additionally, first compensation $X produced. to the increased over due restaurant in versus teams management quarter incentive and teams our the XXXX gains

quarter costs added investments real costs sales see profit compared the investments, leverage we with these labor basis from points in total evidence are of the as the first these results. of satisfaction, led While guest XX Even these and by gains. sales benefits to XXXX, of declined

were experienced lower fees sales offset the year leaseback acquisition higher resulting mix, franchise approximately In $XX.X General by costs third-party $X.X other higher was administrative The commissions offset which staffing in and reductions with repair costs. accrual million, levels. the we prior million. maintenance operating expenses and and an led of is professional by generally by sales transactions, expenses, lower and partially incentive associated and versus increase from increase of legal compensation sale third-party

print, versus approximately Donatos will spending. existing substantially reinvestment installations the compared $X.X to anticipate was XXXX. primarily into quarter $XX.X reductions for million Adjusted expenses and CapEx prior continued and were of the expenditures million a related million, year be EBITDA into million, the and of year complete of the are $XX and website related second were Selling XXXX in first of restaurants $X.X by now to $X.X Donatos. as million expansion to front-loaded led XXXX of $XX.X complete. in were We decrease XXXX in million in totaled the agency the quarter that million $X.X Capital

We expansion in the expect XXXX. to Donatos of continue

agreement and million We was and $XXX our cash capacity were letters credit. approximately credit outstanding million. borrowing outstanding quarter equivalents balance quarter under our revolving $X ended and available line $XX the end, credit million million of under with of of cash $XX principal our At

In our great view outperformance XXXX. of and raising our fiscal financial guidance start for are QX, we in expectations

$XX.X profit total from restaurant to our the revised to of million new our while believe led guidance compensation investments. prior of also million, $X.X million increasing guidance both operating investments investments our revenue least to helpful to an adjusted restaurant-level of EBITDA to reflects general food million addition $XX of investments of from will confidence growth $XX community; Our $XX.X our experience; our least expenditures selling way XX.X%, capital that higher million. a revenue in guest X% This is additional There increase approach adjusted at billion; $XXX guidance in as phasing guidance to the million. performance; and administrative be earn incentive is from is $XX million; expense comparable our to is expected follows: of $XX to This to our increase from X%. and outlook. to and $XXX labor, costs we to original our EBITDA by at and million accelerate a due investment thoughtful inclusive is The guidance to

start better balance the of fiscal look As the have comparable industry quarter. benchmarks year, we the to remained to than and second the restaurant positive sales

full restaurant quarter quarter seasonal levels, typical accelerated increase the to from of second first year through we to rate. then savings cost shifts margin Due a operating as the back investments, take profit level sequentially a the step balance achieve and run sales expect

would communication evaluating I our like to a transaction. update Finally, previous sale-leaseback regarding

marketing we of of initial interested in parties the investors. quarter, XX and our an evaluation The owned multiple multiple marketed to Following tranche properties process included rounds bidding. first

the through and with progressing final diligence are winning We of documentation buyer. currently stages the

approximately to XXXX the the our $X capital into expected add in the expense closing and our and have occupancy of supports expenditure guidance. million of gross close of the transaction. in expect million guidance approximately in increase the we We second $X.X transaction million. anticipation $XX We additional an proceeds incorporated XXXX this quarter expense transaction completing occupancy The generate will of of transaction anticipate

sale used shares leaseback support agreement of will We fund expect and and company the repurchasing investments Board debt, to be our transaction credit subject capital approval. of stock, proceeds from to the the repay terms

pleased Robin. are the our In extremely for closing, Red XXXX performance, with quarter our we and of overall direction track first

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

G.J. Hart

Todd. Thank you,

We appointments recently announced our like Chief their Simpson and empower Robin am Jyoti Mayer, Officer. potential. these to on including Officer, Chief Interim leaders Development Mark Business today. confident people have the full the team, People to to Lynch, leadership of and Officer; to Officer; our our drive achieve Red welcome as complete leadership Rusk promotion his I'd Technology changes help to team. Jason These Chief will our Chief I addition Marketing our Kevin success congratulations

our simple, closing, American food very is bottomless mission up awesome serving fun. In and

them operators about resources We are our I we continue optimistic of of strategic are incredibly company, and future thank empowering results, our QX the your for evident will our and you succeed. initial and proof to plan. interest. execute and success on our The tools providing all to remain in points

We to be Operator, your now open please take the will questions. lines. happy

Operator

the first Brooks of line comes Instructions] from Benchmark [Operator with question The Our Company. Todd

Todd Brooks

on evident results Great job. for question some the improvement really Thanks taking in and my excellent quarter. congrats and

think attacking you waits big the in us Wanted supply the and cited against trend combined pointed and at quarter. to Two efficiency, How the of harvested? that How chain it's opportunity that about in, has you revenue false a of much been were kind real progress both of to had jump model of question. in forward? going still areas we is opportunity front much start as

Todd Wilson

the start numbers in. XX% Hey, guidance, least is and X% we quoted at he down Todd data, think -- We were I'll false here. year, But over we add were recently. at then look Todd. right? I to G.J. on This some as let that most to started wait, some you give this last

progress like to progress to feel we've of significant encouraging super go, see very bit but still little and room there. So the made we a quick

little QX. over the and as ultimately terms supply save of really captured We relates chain, it in million the particular, innings $X to In cost savings, the in early a in very bit of QX.

really run up rate in ratchet full really and QX. will QX its QX that expect and We in quickly hit

So we're the on expected. pace that we

But fully say so And that would I was expect we through year. in quickly saves, as line with our cost to the the expectations. far ramp that of as balance

G.J. Hart

And we staffing wait saying sales go, that but going progress progress. perspective. fully a But on to our some by Todd, as to a in is make up from finish per our significant perspective, we're room where made just have levels training is hour false and place, I'll really we've

individual hour per operators some week, sales are we cetera. and sales the heard was per that But You levels during quote per from seeing broke that records best et sales records of incredible. we our period, XXX the me are hour,

here the that so what gives great hope And we do me on in future. can

Todd Brooks

my And I'll final great. one, queue. back That's in and jump

initiatives North you've With Is the with plan feels started part as and that CapEx yourself guys the of these upgrading progress gave know flat-tops. we're given the getting the there? it's some in started in early some as work that the rapid results really the we've of against like maybe platform just the do dig equipment seen year. window, faster acceleration Star, the goals strength you forward you here and I execute like first three-year than a behind of maybe accelerating the overall you in pulled and to expected feel showed of spending against It to you which

G.J. Hart

plan. are of as really we Todd, all the we Well, do ahead from to a fast there that's we uncertainty our we're perspective. so out not listen, really of in three-year know It's want that not There's the way much what as I'm the trying exactly and yet. out to And to say terms that there to things do that earn so. say we're move all that macro -- economy ready to

can we where doing So up has been and say significantly, wouldn't but we're about around are like we feel Yes. I've that work. this here team come I to to pleased X move are? happy some super, we we're But we're ready I are. flag and months the are incredible we bullish we say, where hey, this raise super feeling

Operator

CL [Operator Andrew Instructions] from of the comes King. Our line with next Wolf question

Andrew Wolf

just simple financially year on a it, but X% the Congratulations waiting as had I were customers, with progress, now -- and well. the a waiting. over so understand I of kind are around you obviously XX% your all If guests of question. ago both

obviously, lot measure you them how correlate away many less boost information? -- other traffic you that a didn't what them gap words, the how obviously, do leave. So -- walked how is that of But of measure upon in to is do you and actually do that? how based Or

Todd Wilson

Yes, there our that data is Andy, methodology. through we're The is capturing Todd. this survey

And by guests. it's so as reported our

should right, a that a on Friday to the Wednesday on want time initially we're spectrum of XX:XX randomly, wait. was would our on was guests a One got and full reported example team as G.J. right? to be attention. And be afternoon, night, across key We look give myself just across on a and of dayparts, wait breadth the parts. all never to on at extended caught all in, saw there, data that we pieces, at weak that we it's period But a our striking when our an wait right, that rates we and us an this see

we're on we survey we positions are yet. full at truly these because looking is truly it spectrum that filled when because And all it so of waits? Or we're data reported through across the And is and is capacity? our of haven't

we industry, progress, sales still as G.J. And ultimately, we're our as great there's the to look industry called going to it to on results We traffic but making know our and come. the out, both. at We're more progress right? beat compares

the see quarter. We to that continue into second

us. encouraging all of are to so signs those And

Andrew Wolf

it. Got

I outperform with people customers, a all being think long-term to and who with not be lapsed or sort uptrend just as I now. is at it previous it regaining from the perhaps said from loyalty rapidly -- this, are you have to developed be the question. the last mean, customers are maybe the Or term, goal of quarter, haven't base build biggest is to you traffic through near chains help that Again, new coming who is -- at programs come, an store either as Robins on you growing Red going stopped obviously, simple that? do as the in doing or envision home? especially with other going disappointment to gaining dining may

G.J. Hart

third loyal doing our most we're the first Well, if hospitality spoke guests. into you dine be we're is in hospitality going quarter existing us we improvements and with with will, When around changes both. cooking from started. I users service, about actually really, think that we they the burgers these even and second the what guests getting a quarter, come working or here. When with just our implementing to it's I that lot, interesting with lapsed really happens, quarter, here, those And answer the fourth are particularly think it's us both and to towards what start about we really call we're and

when that help as mouth some word of that do some work marketing well. we So about we’re be ready, But the later will do we'll terms we of both. is pretty how that there new things a from us got exciting speaking think in we'll terms in We've the that. of acquiring answer perspective guests, of the and

Andrew Wolf

modeling just which the just were inflation, it. this it big might saves however or a cost clearly, I know food if to was to about And you or -- quite was I quicker. ask I was cost wasn't all the leverage, least. things consolidation disinflation as last thing the don't the think I mean I'm this because guess I it lower vendor how But still right, -- costs guess you like positive came obviously, call on ask seems I up. surprise asked at well, trying have Todd wanted but

the lot is could much to of mainly assume much opportunity So come a vendors -- more that question more result I giving -- sort how and guess how to for just maybe other the make is volume. I through with is And the sole us. money again, that? proportionalize really source obviously But of

Todd Wilson

about -- of the Yes. bit inflation to comments, going, tried in little And I there. that of, did prepared point-by-point to see kind your texture we add We a we remarks. commodity talked

in pressure So X% Yes, would quarter, and little there we you price to was point continued have first helped do to, of inflationary a over the place that. there. certainly I offset in that

it what cost QX that though, saves, that, balance number an also was with certainly line through As sight we million, that the line in very year. number much to clear have but will the expectation of a over a of expected, the accelerate the we relates $X little

so are And food key within drivers really costs. those the

Operator

back I'd to There hand to the in GJ are Instructions] closing like further remarks. call for the questions [Operator Hart no queue.

G.J. Hart

you thank Well, for today. right. all All us joining

of an your quarter part We reporting We Red on and support, forward exciting journey next our Robin. at the are appreciate we look to at here progress.

Take So thank you care. very, guys much. very

Operator

Thank gentlemen, this your for you participation. does and teleconference. today's conclude Ladies

your You wonderful and may day. have disconnect at time, this lines a

Red Robin Gourmet Burgers (RRGB) 24 May 232023 Q1 Earnings call transcript