But there is room to grow and work ahead. Red Robin’s Q2 comp decline was driven by a 6.4 percent drop in guest traffic. The brand partially offset the fall with a 4.9 percent increase in average check. Net pricing, after taking into account discounting, was 2.6 percent, while a 2.3 percent mix increase was pushed downward by lower Tavern mix and higher entrée mix (more on this later).
Red Robin swung to net income of 8 cents per share from a net loss of 14 cents in the year-ago quarter. On an adjusted basis, earnings were $1.03 per share. Revenue dipped 2.3 percent to $308 million, which topped FactSet’s prediction of 31 cents per share on revenue of $306.4 million.
The report sent Red Robin’s shares up about 6 percent mid-afternoon Friday on the stock market.
More on labor
“As we discussed last quarter, improving the dine and guest experience starts with hiring the right people, training them properly and being fully staffed, particularly at the general manager level,” Constant said.
When he noted earlier the industry was experiencing “continued deterioration” across staffing metrics, he wasn’t offbase. According to TDn2K, turnover rates for restaurant management positions are closing on 40 percent annually. Since 2012, the figure jumped more than 10 percentage points, per the insight platform’s People Report.
If being short 100 managers sounds alarming, it’s also, unfortunately, commonplace, which might be more troublesome. TDn2K’s 2019 Recruiting and Turnover Survey revealed that, on average, at any given time, about one in every four full-service restaurants are not fully staffed. Rounding up Red Robin to 600 locations as a hypothetical, you’re talking 150 restaurants trying to serve peak hours with less-than-ideal resources.
TDn2K also found that nearly 20 percent of restaurant companies said they are continuously understaffed for GMs. Also, 52 percent of chain restaurants are constantly understaffed for management positions under the GM. That means, for roughly half of the brands surveyed, at least one of their GMs was coping with a lack of immediate support. It quickly becomes clear then how some service ticks could be whiffed. Not just cleaning tables and greeting guests, but upselling, cross selling, and simply not being stressed and, in response, inattentive to customers.
In a 1,000-customer survey from supply platform Zoro, the No. 1 reason guests said they wouldn’t return to a restaurant was “poor service.” A whopping 82.8 percent of respondents circled the offense. To put that in perspective, just 21.2 percent credited “visible rodents or insects.”