The chain's same-store sales increased 3.9 percent in Q1 compared to 2019—its first full quarter of positive sales versus pre-pandemic figures.
Because Red Robin implemented a scaled-down menu pre-pandemic, its LTOs are now receiving more attention than ever, CEO Paul Murphy said.
And the executive has more than just anecdotes to point to. Since March, the 520-unit chain has featured the Whiskey River Backyard BBQ menu lineup, which includes the Smokehouse Brisket Burger and Tequila Sunset Cocktail—it's the third consecutive menu innovation to hit record levels of sales.
The product followed the Cheesy Bacon Fondue Burger and Mozzarella Cheese Sticks, both of which were among Red Robin’s best-performing LTOs of all time. The strength of these offers have driven average check, incremental margin, and attachment, Murphy said.
“I think the main change is it's against a reduced menu, but there's a burger, there's an appetizer, nonalcoholic beverage and alcoholic beverage and a shake,” the CEO said during the chain’s Q1 earnings call. “And those together, we're seeing an extremely high take rate and more in the premium category of pricing. And quite honestly, they just continue to accelerate.”
Red Robin’s same-store sales increased 3.9 percent in Q1 compared to 2019—its first full quarter of positive gains versus pre-pandemic figures. Comps lifted 19.7 year-over-year, driven mostly by higher pricing and mix, and to a lesser extent, traffic growth. In May, comps rose 7.3 percent when compared to three years ago.
Murphy said dine-in sales haven’t reached pre-pandemic numbers yet, but he knows opportunities are growing as labor continues to improve. In Q1, the company decreased the number of stores that had to close early, delivered more operating hours quarter-over-quarter, and as of the end of May, it improved hourly staffing levels to more than 85 percent of its target. At the general manager ranks, the burger brand is filled appropriately.
Red Robin is focusing on three main factors when it comes to employees: ensuring restaurant leadership is providing quality training and running productive shifts, addressing wage rates at the local level to remain competitive, and improving flexibility by implementing a new scheduling tool. The company is also driving applicant flow by leveraging an outsourced staffing organization to support more challenged restaurants.
“As we have emphasized over the past few quarters staffing remains our No. 1 priority,” Murphy said. “When restaurants are staffed properly, we deliver a more consistent quality experience, which leads to higher guest satisfaction, higher throughput, and higher sales. It also supports our team members in a manner that prioritizes their own satisfaction and retention. We are making progress in hiring and retaining team members.”
Although the dine-in occasion is Red Robin’s most profitable transaction, the brand still recognizes the importance of digital. The chain saw its eighth straight quarter of off-premises sales dollars at more than double pre-pandemic levels. The mix included 55 percent third-party delivery, 36.7 percent to-go, 4.3 percent catering, and 4 percent Red Robin Delivery.
In late March, the company launched a new website equipped with upgrades to presentation, navigation, and online ordering, all geared toward fueling incremental frequency, traffic, and guest check.
In Q4, Red Robin soft launched its iOS and Android mobile apps and integrated them with its enhanced Royalty program, which has 10.6 million members, an increase of 300,000 since the end of 2021.The chain has released four guest-facing enhancements to its app, but more is still to come, like an online waitlist and more payment options. Even though the apps have had limited marketing support, there were more than 400,000 downloads at the end of May, with an average rating of 4.6 out of 5.
“Leveraging our digital ordering enhancements, we expect to drive higher checks by featuring appetizers, beverages and other add-on items that appeal to specific guest segments while staying committed to our bottomless promise and core value propositions,” CFO Lynn Schweinfurth said.
Expect future versions of Red Robin stores to lean even further into off-premises. In Q4, the brand relocated a high-volume restaurant so it could add prototype configurations. The space is laid out to improve dine-in and curbside execution while optimizing kitchen layout. The store is on pace to deliver sales of more than $4 million in its first full year—twice the AUV of Red Robin’s existing system.
The chain is developing a real estate pipeline to resume modest unit growth starting in 2023 and looking to reestablish its refresh program. Both will use elements of the current prototype designs.