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Red Robin Gourmet Burgers misses Wall Street's fiscal 2Q estimates due to a slowdown in customers

Published: 16:29 21 Aug 2018 EDT

cheeseburger
The burger chain was hit by a slowdown in traffic to its restaurants

The burger chain Red Robin Gourmet Burgers Inc (NASDAQ:RRGB) failed to live up to Wall Street’s expectations for its fiscal second quarter revenue and profit, due to a decline in traffic to its restaurants.

On an adjusted basis, its earnings per share came in at US$0.46 per share on revenue of US$315.4mln, which missed market projections. Wall Street had expected the burger chain to earn US$0.48 on revenue of US$316.85mln.

“[We] were disappointed with our second quarter topline sales and declines in dine-in traffic,” said Red Robin CEO Denny Marie Post, in a statement. “We did not execute as well as we know we are capable of, particularly at critical peak demand hours when we must be prepared to serve dine-in guests and our rapidly growing off-premise demand.”

In response, investors sent Red Robin shares down nearly 4% to US$38.60 in after-hours trade.

The Greenwood Village, Colorado-based company’s total revenues, which include sales from its own restaurants as well as franchise royalties, also slumped from the same period last year when they came in at US$317.3mln. Its restaurant-level operating profit margin declined as well to 19.3% compared with 20.8% in the year-ago quarter.

A bright spot was that Red Robin’s off-premise sales jumped by 260 basis points to nearly 10% of the company’s food and beverage sales as customers chose to eat burgers outside of its restaurants.

On a GAAP basis, its net loss swung to US$1.9mln compared with a profit of US$6.9mln for the year-ago quarter.

The company opened two Red Robin restaurants in the quarter while one new restaurant was opened by a franchisee.

As of July, Red Robin was sitting on cash and cash equivalents of US$21.9mln and total debt of US$221.4mln, which excludes US$10.6mln worth of capital lease liabilities.

Founded in 1969, there are more than 570 Red Robin restaurants and franchises across the US and Canada.

Contact Ellen Kelleher at ellen@proactiveinvestors.com

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