Red Robin Gourmet Burgers, Inc. RRGB reported preliminary comparable restaurant sales for first-quarter fiscal 2020 and the first five weeks of second quarter. Following the announcement, the company’s shares gained 3.3% during after-hours trading on May 29.
Preliminary Comparable Sales
With 38% (or 158 dining rooms) company-operated restaurants re-opened, Red Robin has been witnessing improvement in sales.
The company’s preliminary comparable restaurant revenues were down 20.8% for the first quarter ended Apr 19, 2020. In the first eight weeks of the first quarter, comps increased 3.7%. However, in the last eight weeks of the first quarter, comps declined 43.2% due to the pandemic. Comparable restaurant guest counts fell 20.9%
In the first five weeks of the second quarter, comparable restaurant revenues witnessed sequential improvement. For the week ended Apr 26, May 3, May 10, May 17 and May 24, comparable restaurant revenues fell 56%, 54.7%, 52.2%, 47.9%, and 47%, respectively.
President and CEO, Paul J.B. Murphy III stated, “We are very encouraged by our five sequential weeks of sales improvement through May 24th due to the continued strong growth in off-premise sales and early traction in dine-in sales. We attribute these trends to our enhanced execution, developed around our strategic plan and implemented on an accelerated basis as restaurants re-open, which has resulted in record dine-in and off-premise guest satisfaction scores.”
So far this year, shares of Red Robin have plummeted 58%, compared with the industry’s decline of 8%.
Off-Premise Sales a Major Growth Driver
Notably, the company’s off-premise sales have tripled from its pre-COVID-19 levels. In the first quarter, off-premise sales increased 86.1% year over year. Notably, reduction in menu items along with enhancement in online food ordering website have improved speed and accuracy of service. Moreover, increased focus on car-side and home delivery options, including Red Robin Delivery, has improved convenience to guests alongside the economics of its off-premise business model.
Other Business Updates
Although the virus has triggered a catastrophe in terms of lives lost and financial impact, the company appears resilient enough to navigate through these uncertain times. Notably, Red Robin has taken several actions to enhance liquidity, reduce costs and strengthen its organizational structure. As a result of these initiatives, cash burn for the second quarter declined to approximately $2 million per week.
As of May 29, the company has liquidity of $80 million, inclusive of cash and borrowing capacity. Moreover, it finalized an amendment to its credit facility, which provides further financial flexibility during the pandemic.
Red Robin — which shares space with Dominos Pizza Inc DPZ, Papa John’s International, Inc. PZZA and Yum China Holdings, Inc. YUMC in the Zacks Retail - Restaurants industry — has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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