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Red Robin Serves Q1 Beat; Shares Up 13%
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Red Robin Serves Q1 Beat; Shares Up 13%

Story Highlights

Customer engagement initiatives, pricing actions, and cost measures are helping Red Robin perform on all fronts. Focus on improving online experience and outreach can mean higher footfalls in the periods to come.

Shares of full-service restaurant chain Red Robin Gourmet Burgers, Inc. (RRGB) are up nearly 13% in pre-market trading after the company posted better-than-expected first-quarter numbers.

Revenue jumped 21% year-over-year to $395.6 million. The net loss per share at $0.12 came in much narrower than the consensus estimate of $0.73. The company had posted a net loss per share of $0.30 for the comparable year-ago period.

Comparable restaurant sales were up 19.7% during Q1 on the back of an increase in average Guest Check as well as guest count. A combination of higher pricing and lower discounts helped drive the increase in average Guest Check.

Additionally, the restaurant chain launched a new Red Robin website earlier in the year. The improved online ordering experience is expected to drive an increased number of guest visits as well as a higher conversion of orders.

Management Weighs In

Red Robin President and CEO, Paul J. B. Murphy III, commented, “While we are keeping a keen eye on industry challenges and the macroeconomic environment, we are pleased with the current trajectory of our business. Our innovative limited-time product promotions are driving higher guest traffic and incremental check margin, while our off-premises sales dollars have remained consistent.”

Further, the company has added Donatos pizza to about half of its restaurants, is focusing on marketing to a broader audience, and is communicating with its Red Robin Royalty program members through a new loyalty platform. The program already has 10.6 million members.

Looking ahead to fiscal 2022, while Red Robin expects margin pressures, it is undertaking pricing and other operating initiatives on this front to mitigate cost inflation. For the year, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to be between $80 million and $90 million.

Investors Remain Positive

TipRanks data indicates investor sentiment is very positive about Red Robin. The number of best-performing portfolios on TipRanks that hold Red Robin shares has increased by 5.1% in the last 30 days alone.

Closing Note

After falling 76% over the past 12 months, the Q1 performance should shore up investor confidence in the stock. The company has successfully undertaken pricing and cost initiatives in a difficult macro environment. A focus on driving footfalls via online presence and loyalty programs bodes well for the stock in the coming periods.

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