Workflow
Red Robin Gourmet Burgers(RRGB) - 2022 Q3 - Earnings Call Transcript
RRGBRed Robin Gourmet Burgers(RRGB)2022-11-03 02:12
Filings

Financial Data and Key Metrics Changes - Comparable restaurant revenues grew by 5.3% compared to 2021 and 5.9% compared to 2019, marking the third consecutive quarter of positive comparable restaurant revenues versus pre-pandemic sales [25] - Total company revenue increased by 4.2% to 286.9million,drivenbyincreasedpricingandfavorablemenumixshifts[30]−AdjustedEBITDAwas286.9 million, driven by increased pricing and favorable menu mix shifts [30] - Adjusted EBITDA was 4 million, down from 8.3millioninQ32021,withadjustedlossperdilutedshareat8.3 million in Q3 2021, with adjusted loss per diluted share at 1.03 compared to 0.88inQ32021[36]BusinessLineDataandKeyMetricsChanges−Off−premisessalesdollarsweremorethandoublepre−pandemiclevels,withthird−partydeliveryat53.50.88 in Q3 2021 [36] Business Line Data and Key Metrics Changes - Off-premises sales dollars were more than double pre-pandemic levels, with third-party delivery at 53.5%, To-Go at 34.9%, catering at 7.5%, and Red Robin Delivery at 4.1% [26] - Average guest check increased by 9%, driven by a 7.7% increase in pricing and a 2.5% increase in menu mix [29] Market Data and Key Metrics Changes - The company outperformed peers in category sales and traffic in Q3, attributed to new limited-time product offerings and compelling promotions [15] - Restaurants with Donatos Pizza outperformed non-Donatos restaurants by 10.1% versus 2019, up from approximately 8% in Q2 and 5% in Q1 [18] Company Strategy and Development Direction - The company aims to strengthen restaurant management structure and service model, improve food quality, and optimize the menu [13] - There is a focus on enhancing the guest experience and operational efficiency, with plans to prioritize capital spending on refreshing the restaurant base [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged higher-than-expected commodity and operating costs but expects restaurant margins to improve in Q4 and beyond [22][40] - The company plans to implement additional pricing in Q4 to mitigate inflation while retaining a strong value proposition [39] Other Important Information - The company ended the quarter with liquidity of approximately 75 million, including cash and cash equivalents and available borrowing capacity [28] - Leadership changes were announced, including the retirement of CFO Lynn Schweinfurth and the appointment of Todd Wilson as the new CFO [44][46] Q&A Session Summary Question: Insights on current strategy and macro backdrop - Management is focused on enhancing the brand's core values and improving execution at a higher level, including expanding the menu and improving guest experience [61][64] Question: Clarification on guidance and EBITDA outlook - The majority of the change in guidance is attributed to higher commodity and operating costs experienced in Q3 [73] Question: Thoughts on Donatos rollout and future expansion - Management is prioritizing existing restaurant maintenance and refreshes before focusing on the expansion of Donatos [75][91] Question: Capital allocation for deferred maintenance - An assessment of deferred maintenance needs is ongoing, and specific capital allocation will be communicated once the plan is finalized [82] Question: Profitability model and investment strategy for 2023 - Management believes in a balanced approach between investment in quality and operational improvements while recognizing the need for returns on these investments [87][88] Question: Corporate versus franchise growth strategy - Future growth will be a combination of corporate and franchise-driven initiatives, with a focus on stabilizing the brand before significant expansion [90][92]