Red Robin Gourmet Burgers, Inc. RRGB reported solid first-quarter fiscal 2023 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. Following the announcement, shares of the company moved up 5.3% during the after-hours trading session on May 24.
Earnings & Revenue Discussion
In the fiscal first quarter, Red Robin recorded adjusted earnings per share (EPS) of 25 cents, surpassing the Zacks Consensus Estimate of a loss of 62 cents. In the prior-year quarter, the company reported an adjusted loss per share of 12 cents.
Quarterly revenues of $418 million beat the consensus mark of $405 million. The top line increased 5.7% year over year. The upside was primarily driven by strong comps growth, courtesy of menu price increases, favorable sales channel mix and growth in restaurant traffic.
Red Robin Gourmet Burgers, Inc. Price, Consensus and EPS Surprise
Red Robin Gourmet Burgers, Inc. price-consensus-eps-surprise-chart | Red Robin Gourmet Burgers, Inc. Quote
During the quarter under review, comparable restaurant revenues rose 8.6% year over year, primarily driven by an 8% rise in guest check. Average guest count increased 0.6% year over year. The rise in guest check can be attributed to a 7.2% increase in pricing and a 0.8% improvement in menu mix.
The restaurant-level operating profit margin was 14.7% in the fiscal first quarter (compared with 14% reported in the prior-year quarter). The figure compares to our projection of 16.9%.
During the fiscal first quarter, restaurant labor costs increased 5.3% year over year to $145.4 million. The figure compares to our projection of $129.7 million. Restaurant labor costs (as a percentage of restaurant revenues) declined 60 basis points (bps) year over year to 35.7%.
Meanwhile, other operating costs during the quarter increased 6.2% year over year to $72.1 million. The figure compares to our projection of $63.1 million. Other operating costs (as a percentage of restaurant revenues) declined 10 bps year over year to 17.7%.
During the quarter under review, cost of sales (as a percentage of restaurant revenues) increased 60 bps year over year to 24.5%. Occupancy costs (as a percentage of restaurant revenues) fell 70 bps year over year to 7.3%.
Adjusted earnings before interest expenses, income taxes, depreciation and amortization (EBITDA) during the fiscal first quarter amounted to $36.1 million (compared with $28 reported in the prior year quarter).
Other Financial Information
As of Apr 16, 2023, Red Robin had cash and cash equivalents of $49 million compared with $48.8 million as of Dec 25, 2022. Long-term debt as of Apr 16, 2023 was $203.2 almost flat sequentially. Inventories during the quarter were $25.4 million, compared with $26.4 million reported in the year-ago period.
For 2023, the company expects total revenues to be at least $1.3 billion. Restaurant-level operating profit is anticipated to be at least 13.5% up from the previous expectation of 13%.
The selling, general and administrative costs are expected in the range of $127-$132 compared with the prior anticipation of $120-$125 million. Capital expenditures are anticipated to be between $45 and $50 million compared with the prior expectation of $35 million and $40 million.
In 2023, adjusted EBITDA is expected in the range of $70-$80 million compared with the previous anticipation of $62.5-$72.5 million.
Zacks Rank & Key Picks
Red Robin currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Chipotle Mexican Grill, Inc. CMG, Arcos Dorados Holdings Inc. ARCO and Chuy's Holdings, Inc. CHUY.
Chipotle carries a Zacks Rank #1 (Strong Buy). CMG has a long-term earnings growth rate of 31.8%. The stock has improved 59.3% in the past year. You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for Chipotle’s 2024 sales and EPS suggests growth of 12.4% and 19.6%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 9.5%. The stock has gained 16.9% in the past year.
The Zacks Consensus Estimate for Arcos Dorados’ 2023 sales and EPS suggests growth of 13.4% and 4.4%, respectively, from the year-ago period’s levels.
Chuy’s Holdings carries a Zacks Rank #2. CHUY has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of CHUY have increased 78.8% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings 2023 sales and EPS suggests growth of 9.9% and 24.8%, respectively, from the year-ago period’s levels.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report