The chain continues to find ways to increase seating capacity.
In August, Red Robin started to reshape its dining experience. This was as much a physical change as anything else, as the brand guided three weeks to expand patios systemwide. Red Robin raced to procure umbrellas and licensing extensions. The aim was 16–24 extra seats to soften two COVID-19 realities—reduced dine-in capacity from city and state mandates, and the fact Red Robin’s research showed some customers weren’t ready to venture inside, whether they could or not. As CEO Paul Murphy said then, “if they're not quite willing to come into a dining room right now, they are willing to engage with Red Robin in an outdoor patio situation.”
Results have followed. Red Robin Thursday shared a business update as it prepares to present at the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum on September 14.
Here’s a look at how company-run restaurants with open indoor dining rooms have fared of late.
Week ended August 2
- Weekly same-store sales: –30.4 percent
- Average net sales per restaurant: $39,058
- Number of comparable company-run restaurants: 348
Week ended August 9
- Weekly same-store sales: –27.9 percent
- Average net sales per restaurant: $39,808
- Number of comparable company-run restaurants: 346
Week ended August 16
- Weekly same-store sales: –25.2 percent
- Average net sales per restaurant: $40,823
- Number of comparable company-run restaurants: 342
Week ended August 23
- Weekly same-store sales: –21.1 percent
- Average net sales per restaurant: $41,831
- Number of comparable company-run restaurants: 343
Week ended August 30
- Weekly same-store sales: –17.1 percent
- Average net sales per restaurant: $41,300
- Number of comparable company-run restaurants: 344
Week ended September 6
- Weekly same-store sales: –16.1 percent
- Average net sales per restaurant: $41,160
- Number of comparable company-run restaurants: 349
And here’s the overall corporate picture:
Week ended August 2
- Weekly same-store sales: –35.4 percent
- Average net sales per restaurant: $37,239
- Number of comparable company-run restaurants: 412
Week ended August 9
- Weekly same-store sales: –39.2 percent
- Average net sales per restaurant: $38,031
- Number of comparable company-run restaurants: 412
Week ended August 16
- Weekly same-store sales: –30.6 percent
- Average net sales per restaurant: $39,099
- Number of comparable company-run restaurants: 412
Week ended August 23
- Weekly same-store sales: –26.1 percent
- Average net sales per restaurant: $40,348
- Number of comparable company-run restaurants: 412
Week ended August 30
- Weekly same-store sales: –22.1 percent
- Average net sales per restaurant: $39,865
- Number of comparable company-run restaurants: 412
Week ended September 6
- Weekly same-store sales: –21.9 percent
- Average net sales per restaurant: $39,593
- Number of comparable company-run restaurants: 412
“We are encouraged by our improving comparable sales trend over the past several weeks as we continue to expand our seating capacity primarily through outdoor dining,” Murphy said Thursday in a statement. “Looking ahead, we expect to build further momentum from the implementation and related seating expansion of all-weather tents and booth partitions by early in the fourth quarter along with indoor dining rooms beginning to reopen in California.”
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In addition to expanding patios, Red Robin worked to introduce table partitions and boost seating capacity. By August, the chain was running a partitions pilot. There were 155 units operating in local jurisdictions or state regulations that allowed capacity of 75 percent.
Red Robin’s goal was to start with higher-volume units and work its way through that pool. Roughly 30–40 percent of seats in a standard Red Robin are booths versus tables.
All-weather tents and booth partitions are fully slated for early Q4, as Murphy highlighted. But there are other trends at hand.
“Off-premises sales also remain strong as guests continue to seek out our craveable, high-quality food through the convenience of carryout, and third-party delivery,” Murphy added. “As we navigate through the pandemic, our team members are doing an incredible job prioritizing health and safety protocols while delivering consistent, quality execution of our brand promise with continued, record guest satisfaction scores."
In recent updates, digital channels, including online ordering through its website and third-party marketplaces, have driven about 80 percent of Red Robin’s business outside the four walls. Off-premises sales spiked 208.7 percent, year-over-year, to 63.8 percent of Red Robin’s total food and beverage business in Q2. That was up from 26.3 percent the previous period and 14 percent pre-pandemic. Meanwhile, dine-in sales fell 76.2 percent.
Red Robin’s Thursday update represents significant improvement. Revenue slumped 48 percent to $161.1 million from $308 million a year ago this past quarter as the company swung to a net loss of $56.3 million versus net income of $981,000 in Q2 2019.
On the top line, same-store sales dropped 41.4 percent as traffic declined 38.5 percent.
The mid-to high-teens result in recent weeks is Red Robin’s best performance since COVID-19 arrived.
Even with reopened indoor dining rooms, company-run units were tracking around the negative 30 percent range for much of July. For instance, in the week that ended July 19, same-store sales declined 30.5 percent as average net sales per restaurants came in at $37,380 on 349 locations.
Getting that capacity up, by whatever means, has been key.
The pandemic trough—as was the case for many chains—surfaced in that March-April stretch.
For Red Robin:
- Week ending March 1: 0.9 percent
- Week ending March 8: –3.7 percent
- Week ending March 15: –26.3 percent
- Week ending March 22: –72.7 percent
- Week ending March 29: –70.5 percent
- Week ending April 5: –63.9 percent
- Week ending April 12: –65.2 percent
Red Robin said Thursday, as of September 6, it had liquidity of approximately $104 million comprising cash and cash equivalents and available capacity under its credit facility.
On the guest experience note Murphy alluded to, Red Robin has touted a trimmer menu of late that’s 33 percent lighter. The company also dedicated additional space for off-premises assembly inside kitchens and implemented direct, or last-mile, delivery across all corporate stores and third-party systemwide.
The menu scale-back resulted in improved quality and ticket times. “There may be some items brought back to the menu over time, but we see that being a more of a permanent structure,” he said in August.
Additionally, Red Robin is working on a new prototype set to launch in 2021. Murphy hinted it would “more effectively balance and address quality of execution for both off-premises and dine-in channels,” and provide the company flexibility to navigate a projected favorable real estate environment. Red Robin will look at remodeling some units this year as well.
The rollout of Donatos Pizza has returned, too, with plans to add the nested brand to 31 restaurants in the Seattle market by year’s end. Units with the product outperformed those without it from a comp-sales standpoint by about 700 basis points. Traffic lifted 3.5 percent in pilots as well. Naturally, it’s a highly incremental delivery channel as well and caters to the growing off-premises demand.
