Red Robin Gourmet Burgers(US:RRGB)2021-08-18 23:25Financial Data and Key Metrics Changes - In Q2 2021, total company revenues increased by 71.9% to $277 million compared to the previous year, driven by increased restaurant capacities [27] - Comparable restaurant revenues rose by 66.3%, with a 47.7% increase in guest traffic and an 18.6% increase in average guest check [27] - Adjusted EBITDA was $19 million, compared to an adjusted EBITDA loss of $15.3 million in Q2 2020 [36] Business Line Data and Key Metrics Changes - Dine-in sales increased by 210.9% in Q2, while off-premises sales represented 32.8% of total food and beverage sales, significantly up from 12.5% in Q2 2019 [28] - Donatos Pizza generated sales of $2.9 million in Q2, with restaurants offering Donatos outperforming the rest of the system by 550 basis points compared to 2019 [11] - The revamped Red Robin Royalty program expanded to 9.9 million members, up from 9.7 million in Q1 [15] Market Data and Key Metrics Changes - Total sales driven through digital channels represented 85.3% of off-premises sales [24] - Third-party delivery accounted for 49.3% of off-premises sales, while to-go represented 42.7% [25] - The company experienced a sequential improvement in average weekly sales throughout Q2 [46] Company Strategy and Development Direction - The company is focused on enhancing off-premises strength through operational and technology improvements, as well as expanding the Donatos footprint [20] - A shift from broad discounting initiatives to targeted royalty offers aims to drive stronger long-term profitability [16] - The company plans to maintain a significant portion of its marketing investment in digital channels while also adding broadcast TV in select markets [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery trajectory, assuming no significant impact from the Delta variant [41] - The company aims to achieve staffing levels above 2019 to support elevated demand [7] - Management highlighted the importance of understanding guest expectations and enhancing digital engagement [42] Other Important Information - The company ended the quarter with liquidity of approximately $117 million, including $25.6 million in cash and cash equivalents [25] - General and administrative costs increased to $17.7 million, primarily due to increased team member benefits and salaries [32] - The company recognized a tax benefit of $0.4 million in Q2, with an effective tax benefit of 6.6% [34] Q&A Session Summary Question: July or August in-store sales trends - Management indicated that the fiscal eighth period saw sequential improvement off of Q2 trends [46][47] Question: Labor dynamics and costs - Management isolated $1.6 million in nonrecurring hiring and training costs, with mid-single-digit wage rate inflation noted [50][51] Question: Donatos performance improvement - Management attributed the improved performance to a combination of marketing support and increased appetizer sales [52] Question: Sales cadence and monthly comps - Comps compared to 2019 started at down 3.7% and ended the quarter at a positive 2.2% [55] Question: Commodity inflation outlook - Commodity inflation was noted at approximately 8% of restaurant sales, with expectations of increasing beef costs in the second half of the year [59][60] Question: Staffing levels versus pre-COVID - Management indicated a need for approximately 2,000 additional hires to reach staffing levels above 2019 [61]