Even as dine-in sales return, off-premises remains highly incremental. Average weekly off-premises sales per restaurant are more than double pre-pandemic sales levels at company-run restaurants that are operating at 100 percent. At the end of Q1, the channel mixed 29.9 percent at those particular locations. Much of that digital strength comes from the loyalty program. It’s not only brought back lapsed guests, but increased frequency of the most loyal guests by more than 10 percent in Q1 compared to pre-pandemic. There are 9.7 million members, an increase of 300,000 since Q4 2020.
Adding even more incrementality are three new virtual brands that were launched back in March—The Wing Dept., Fresh Set, and Chicken Sammies. The emerging delivery-only concepts feature a mix of Red Robin menu items for which the brand is typically not known for, as well as new products that are variations on core items. Each virtual concept is served through DoorDash, as well as additional national and regional partners. Early results show 70 percent of customers have never ordered online at Red Robin before.
“Something that we find fairly interesting, at least in our data, is that dine-in guests are actually fairly loyal to dine-in,” Murphy said. “They don't really cross-pollinate too much to off-premise. However, off-premise guests utilize both dine-in and off-premise. And what we have seen is a higher visitation frequency out of our off-premise guests. So that, at least from my perspective, it indicates that the off-premise occasion is an incremental occasion to the dine-in visit. And as capacity in the dine-in arena continues to accelerate for Red Robin, we think it just has a multiplier effect for us.”
Another ongoing growth driver is the rollout of Donatos Pizza, which helps restaurants outperform their peers by roughly 300 basis points. In Q4 2020, Red Robin added Donatos to 31 stores in the Pacific Northwest, back when restaurants reverted to off-premises only. Because of the circumstances, the chain pulled back related marketing plans, but that’s expected to resume in Q2, Murphy said. Red Robin is still on pace to bring Donatos to 120 stores in 2021, with 40 coming in Q2 and 80 coming across Q3 and Q4.
If successful, roughly 200 Red Robin locations will have Donatos by the end of the year. The end goal is to place Donatos in 400 company-run units by 2023, which would translate to more than $60 million in annual pizza sales and more than $25 million in profitability.
“We believe that our brand promise to create memorable moments connecting family, friends, and fun positions us well to be a leading choice as guests return to restaurants,” Murphy said. “The combination of pent-up demand and the meaningful contraction of the number of restaurants in the industry over the past year provides us with an opportunity to increase our market share and bring guests back to Red Robin with increased frequency.”
Total Q1 revenue was $326.3 million, or a 20.4 percent decline from 2019. The chain swung a net loss of $8.7 million compared to net income of $600,000 two years ago. Adjusted EBITDA in the first quarter was $27.4 million, or a 20.2 percent drop from 2019.