Greenwood Village / CO. (rrgb) Red Robin Gourmet Burgers Inc., a full-service restaurant chain serving an innovative selection of high-quality gourmet burgers in a family-friendly atmosphere, provided a business and operational update and reported preliminary sales results for the fiscal first quarter ended April 19, 2020.
Relevant Highlights Year-To-Date Include
- Through the first eight weeks of fiscal 2020, comparable restaurant revenue grew 3.7 percent, driven in part by positive Guest counts.
- Since the mid-March peak impact of the Covid-19 pandemic, substantial improvement in revenue with consistent and sequential increases in each of the last five weeks; preliminary comparable restaurant revenue was -47.0 percent for the week ended May 24, 2020.
- Re-opening dining rooms with a measured and strategic approach and a focus on health and safety; preliminary comparable restaurant revenue for restaurants with re-opened dining rooms was -31.9 percent for the week of May 24, 2020.
- Maintaining significantly higher off-premise sales, which have tripled when compared to pre-Covid-19 levels.
- With improving revenue and previously taken cost reductions, reduced estimated average cash burn to USD 2 million per week for the second fiscal quarter.
- As of May 29, 2020, the Company has approximately USD 80 million of total liquidity.
- Finalized an amendment to its credit facility, which provides further financial flexibility during the Covid-19 pandemic.
Paul J.B. Murphy III, Red Robin’s President and Chief Executive Officer, said, «We are very encouraged by our five sequential weeks of sales improvement through May 24th due to the continued strong growth in off-premise sales and early traction in dine-in sales. We attribute these trends to our enhanced execution, developed around our strategic plan and implemented on an accelerated basis as restaurants re-open, which has resulted in record dine-in and off-premise Guest satisfaction scores. Across our 158 re-opened dining rooms, sales have been positively impacted by the accelerated implementation of our new hospitality model, coupled with strong health and safety standards. Notably, restaurants with re-opened dining rooms are still capturing meaningful off-premise sales, demonstrating the enduring and growing popularity of Red Robin for off-premise occasions.»
Murphy added, «The health and safety of our Guests and Team Members is paramount. In addition, our Team Members have done an outstanding job protecting the health and safety of our Guests while also delivering on the Red Robin brand promise. We sincerely thank them for their dedication and commitment to our communities during these difficult times and know how eager they are to welcome our Guests back into our restaurants for elevated dine-in experiences as more dining rooms re-open.»
Business and Operational Update
Red Robin entered fiscal 2020 with strong business momentum and substantially improved guest satisfaction scores. Through the first eight weeks of the year, comparable restaurant revenue grew 3.7 percent, driven in part by positive Guest counts. These results were built on execution of the core tenets of the Company’s strategic plan.
With the onset of the Covid-19 pandemic, Red Robin pivoted to an off-premise only business model and leveraged the opportunity to focus on enhancing the Guest experience while ensuring uncompromising adherence to health and safety protocols. Of note, off-premise sales have tripled compared to pre-Covid 19 levels.
The Company immediately accelerated its menu simplification plan by reducing approximately one third of its menu items to support the off-premise only business model. The simplified menu and ease of ordering from a new enhanced website focused on the online ordering user experience have improved speed of service and accuracy. Increased car-side and home delivery options, including Red Robin Delivery where Guests order directly from Red Robin with outsourced delivery, have improved convenience to our Guests and the economics of our off-premise business.
The Company spent considerable time developing a measured and strategic approach to re-open dining rooms with a focus on the health and safety of our Guests and Team Members. Consumer research also led to several enhanced measures including all Team Members wearing face coverings and completing daily health surveys, including temperature checks, and social distancing protocols. Red Robin has made visible cleaning and disinfecting behaviors important elements of its daily operations, including dedicating one Team Member on each shift to front of house sanitation. In addition, all re-opened dining rooms feature the Company’s new hospitality model, Total Guest Experience (TGX), that Red Robin had previously planned to implement over the course of fiscal 2020.
Sales have continued to grow as the Company began to re-open select dining rooms at a limited capacity beginning April 28, 2020. As of May 24, 2020, Red Robin had re-opened 158 dining rooms with limited capacity representing 38 percent of currently open Company-operated restaurants. Preliminary comparable restaurant revenue for restaurants with dining rooms re-opened for the full week of May 24, 2020 was -31.9 percent. Overall, the Company’s weekly comparable restaurant revenue has sequentially improved and, for the week ended May 24, 2020, preliminary comparable restaurant revenue was -47.0 percent.
Preliminary Comparable Restaurant Revenue and Related Data
|Weekly Net Comparable Restaurant Revenue||-56.0%||-54.7%||-52.2%||-47.9%||-47.0%|
|Average Net Sales per Restaurant||USD 23,908||USD 23,994||USD 26,747||USD 28,292||USD 30,751|
|Number of Comparable Company-operated Restaurants||414||414||414||414||414|
Financial and Liquidity Update
As previously announced, Red Robin has taken several actions to enhance liquidity, reduce costs, and strengthen its organizational structure. As a result of these actions, the Company has reduced its estimated cash burn and currently expects its average cash-burn rate during the fiscal second quarter to be approximately USD 2 million per week, which includes partial rent payments, re-opening costs, one-time Covid-19 expenses and costs associated with finalizing the amendment to its credit facility.
Red Robin had a cash balance of USD 88.9 million as of the fiscal first quarter end on April 19, 2020 and has liquidity of approximately USD 80 million as of May 29, 2020, including cash and borrowing capacity under its credit facility.
Immediately following this press release on June 02, 2020, Red Robin expected to file with the SEC a Current Report on Form 8-K related to the amendment to its credit facility with its lenders.
Preliminary First Quarter 2020 (16 Weeks) Sales Summary Compared to First Quarter 2019 (16 Weeks)
- Total revenues were USD 306.1 million, a decrease of 25.3 percent;
- Comparable restaurant revenue decreased 20.8 percent;
- Comparable restaurant revenue increased 3.7 percent through the first eight weeks;
- Comparable restaurant revenue decreased 43.2 percent through the last eight weeks;
- Comparable restaurant Guest counts decreased 20.9 percent; and
- Off-premise sales increased 86.1 percent and comprised 26.3 percent of total food and beverage sales.