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, reported financial results for the quarter and year ended December 29, 2019.
Fourth Quarter 2019 Financial Summary Compared to Fourth Quarter 2018
- Total revenues were USD 302.9 million, a decrease of 1.2 percent;
- Comparable restaurant revenue increased 1.3 percent, the second consecutive quarter of positive comparable restaurant revenue;
- Comparable average guest check increased 4.7 percent, resulting from a 1.1 percent increase in menu mix, a 1.8 percent increase in pricing, and a 1.8 percent increase from lower discounting;
- Comparable restaurant guest counts decreased 3.4 percent;
- Off-premise sales, including catering, increased 26.9 percent and comprised 13.9 percent of total food and beverage sales;
- GAAP loss per diluted share was USD 0.60 compared to USD 0.82;
- Adjusted loss per diluted share was USD 0.36 compared to adjusted earnings per diluted share of USD 0.43;
- Net loss was USD 7.7 million compared to USD 10.6 million; and
- Adjusted Ebitda was USD 26.7 million compared to USD 28.4 million.
Paul J.B. Murphy III, Red Robin’s President and Chief Executive Officer, said, «We are pleased with the continued, measurable progress we are making to deliver on our strategic plan, as we achieved the second consecutive quarter of comparable restaurant revenue growth in the fourth quarter of 2019, while intentionally unwinding significant discounting from the prior-year period. Importantly, our comparable restaurant revenue momentum has continued, and we expect it to accelerate in 2020, which we attribute to the foundational enhancements we made last year. These improvements include our focus on staffing, training, and retaining our Team Members; our commitment to delivering exceptional dining experiences at a compelling value; and our accentuation of brand attributes through the ‘All the Fulls’ creative campaign.»
Murphy continued, «Having recently articulated a vision to accelerate Red Robin’s turnaround, transform the business, and create long-term value for our shareholders at the ICR investor conference in January, we are now focused on successfully executing that strategy. Today, our strategic priorities include recapturing the essence of what makes Red Robin an iconic brand; delivering consistent, quality execution of our brand promise; and reinforcing emotional connections and core brand equities through our omni-channel messaging. We are also focused on accelerating profitable growth by beginning the rollout of Donatos® pizza in our restaurants, implementing a new service model, growing our off-premise platforms, and building our digital capabilities to drive increased guest engagement and frequency. I am encouraged by the growing momentum we continue to see across the business, and look forward to building on this progress in 2020 and beyond as we deliver value for Red Robin guests, shareholders, and other stakeholders.»
Fourth Quarter 2019 Operating Results
Total revenues, which primarily include Company-owned restaurant revenue and franchise royalties, decreased 1.2 percent to USD 302.9 million in the fourth quarter of 2019, from USD 306.8 million in the fourth quarter of 2018. Restaurant revenue decreased USD 4.1 million due to a USD 7.8 million decrease from restaurant closures, partially offset by a USD 3.7 million, or 1.3 percent, increase in comparable restaurant revenue(1).
System-wide restaurant revenue (which includes franchised units) for the fourth quarter of 2019 totaled USD 361.6 million, compared to USD 363.1 million for the fourth quarter of 2018.
Comparable restaurant revenue(1) increased 1.3 percent in the fourth quarter of 2019 compared to the same period a year ago, driven by a 4.7 percent increase in average guest check, partially offset by a 3.4 percent decrease in guest count. The increase in average guest check resulted from a 1.1 percent increase in menu mix, a 1.8 percent increase in pricing, and a 1.8 percent increase from lower discounting. The increase in menu mix was primarily driven by the Company’s current menu and promotional strategy, resulting in lower Tavern burger sales and higher Gourmet and Finest burger sales.
Net loss was USD 7.7 million for the fourth quarter of 2019 compared to a net loss of USD 10.6 million for the same period a year ago. Adjusted net loss (a non-GAAP financial measure) was USD 4.7 million for the fourth quarter of 2019 compared to adjusted net income of USD 5.4 million for the same period a year ago (see Schedule I).
Restaurant-level operating profit as a percentage of restaurant revenue (a non-GAAP financial measure) was 18.9 percent in the fourth quarter of 2019 compared to 19.4 percent in the same period a year ago. Cost of sales as a percentage of restaurant revenue decreased 60 basis points primarily due to lower pork and steak fry costs, partially offset by higher ground beef costs. Restaurant labor costs as a percentage of restaurant revenue decreased 20 basis points due to lower group insurance costs, partially offset by increased wage rates and higher levels of staffing at the restaurant manager level. Other restaurant operating costs increased 110 basis points primarily due to an increase in third-party delivery fees driven by higher off-premise sales volume, and higher restaurant technology costs compared to a favorable adjustment in the prior year. Occupancy costs increased 20 basis points primarily due to higher general liability costs, partially offset by lower rent expense due to restaurant closures.
