Another piece of Red Robin’s overall strategy, growth in off-premises and digital, is progressing, as well. In March, Red Robin launched virtual concepts Chicken Sammy’s, The Wing Dept., and Fresh Set, and those are now live systemwide across all delivery platforms. The brands have little operational complexity and don’t require many additional SKUs, making them a seamless transition in the back of the house. The virtual restaurants contributed $5.1 million to restaurant sales in Q2, or roughly six orders per restaurant per day on average. Much of that is incremental as 70 percent of virtual brand customers have never ordered online from Red Robin before.
Off-premises mixed 32.8 percent in the second quarter, which is more than double 2019 levels—even with the removal of dining restrictions. Of those off-premises sales, 85.3 percent came through digital channels. Third-party delivery mixed 49.3 percent, while takeout accounted for 42.7 percent and catering represented 4 percent.
After adding enhanced segmentation and personalized targeting in Q4 2020, Red Robin’s loyalty program has continued to bring back lapsed guests and increase frequency of core customers above 2019 levels. The program now includes 9.9 million members, up from 9.7 million in the first quarter. To position itself for strong profitability over the long-term, Red Robin shifted from broad discounting initiatives to targeted loyalty program offers. The brand is also in the process of integrating loyalty with its upcoming app and improved website to create a more user-friendly and efficient online ordering platform.
To maintain the stickiness of off-premises, Red Robin plans to increase space inside restaurants for takeout, delivery, and catering orders without impacting the dine-in business. Murphy said the brand is on track to complete these reconfigurations in 2022.
“The strategic initiatives we are executing are meaningfully impacting our brand by enabling us to earn and perpetuate our guest trust,” Murphy said. “And in doing so, foster loyalty and frequency for the benefit of our shareholders.”
Red Robin finished Q2 with 531 restaurants systemwide, including 430 company-run units and 101 franchises. That’s down from 552 total locations in the year-ago period. The chain earned revenue of $272.2 million in the second quarter, compared to $302.4 million in 2019. Restaurant level operating profit as a percentage of restaurant revenue was 15.7 percent, versus 18.2 percent two years ago.