Red Robin (RRGB) Q2 Earnings Beat, Adjusted EBITDA Up Y/Y
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.
Delving Deeper
In the fiscal second quarter, Red Robin recorded an adjusted loss per share of 24 cents, surpassing the Zacks Consensus Estimate of a loss of 55 cents. The company reported an adjusted loss per share of 75 cents in the prior-year quarter.
Quarterly revenues of $298.6 million beat the consensus mark of $295 million. The top line increased 1.5% year over year. The upside was primarily driven by strong comps growth, courtesy of menu price increases.
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 1.5% year over year, primarily driven by a 7.5% rise in guest checks. However, this was partially offset by a 6% fall in the Guest count. The rise in guest checks can be attributed to an 8.8% increase in menu prices, partially offset by a 2.1% decline in menu mix. Per our model, comparable restaurant revenues were anticipated to rise 2.1% year over year.
Operating Results
The restaurant-level operating profit margin was 12.6% in the fiscal second quarter (compared with 13.6% reported in the prior-year quarter). The figure compares to our projection of 12.2%.
During the fiscal second quarter, restaurant labor costs increased 7.9% year over year to $109.7 million. The figure compares to our projection of $103.6 million. Restaurant labor costs (as a percentage of restaurant revenues) increased 220 basis points (bps) year over year to 37.4%.
Meanwhile, other operating costs during the quarter declined 0.3% year over year to $51.8 million. The figure compares to our projection of $52.7 million. Other operating costs (as a percentage of restaurant revenues) declined 30 bps year over year to 17.7%.
During the quarter under review, the cost of sales (as a percentage of restaurant revenues) fell 90 bps year over year to 24.3%. Occupancy costs (as a percentage of restaurant revenues) came in at 8%, flat year over year.
Adjusted earnings before interest expenses, income taxes, depreciation and amortization (EBITDA) during the fiscal second quarter amounted to $15.5 million (compared with $11.9 million reported in the prior year quarter). Our estimate for the metric was $12.6 million.
Other Financial Information
As of Jul 9, 2023, Red Robin had cash and cash equivalents of $44 million compared with $49 million as of Apr 16, 2023. Long-term debt as of Jul 9, 2023, was $188.1 million compared with $203.2 in the previous quarter. Inventories during the quarter were $26.9 million compared with $25.4 million reported in the previous quarter.
2023 Guidance
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%. The company expects 2023 Comparable Restaurant Revenue to grow in the range of 1-3% year over year compared with the previous expectation of 2-4%.
The selling, general and administrative costs are expected in the range of $127-$132 million. Capital expenditures are anticipated to be between $45 million and $50 million.
In 2023, adjusted EBITDA is expected in the range of $72.5-$80.5 million compared with the previous anticipation of $70-$80 million.
Zacks Rank & Key Picks
Red Robin currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Zacks Retail-Wholesale sector are:
BJ's Restaurants, Inc. BJRI sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 121.2%, on average. Shares of BJRI have increased 17.2% so far this year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BJRI’s 2023 sales and EPS indicates 5.6% and 423.5% growth, respectively, from the year-ago period’s levels.
Kura Sushi USA, Inc. KRUS sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 139.7% on average. Shares of KRUS have increased by 75.8% so far this year.
The Zacks Consensus Estimate for KRUS’s 2023 sales and EPS indicates 33.4% and 300% growth, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. CHUY carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 26.6% on average. Shares of CHUY have increased by 29.9% so far this year.
The Zacks Consensus Estimate for CHUY’s 2023 sales and EPS indicate an increase of 9.5% and 32.9%, respectively, from the year-ago period’s levels.
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Red Robin Gourmet Burgers, Inc. (RRGB) : Free Stock Analysis Report
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