Red Robin announced in a January 7 securities filing that executive vice president and chief operating officer Guy Constant’s employment has been “terminated without cause.” The casual burger chain has begun an external search for his replacement, it said, with SVP and chief people officer, Michael Buchmeier, serving in the interim role.
Red Robin did not offer any additional information. Constant was promoted to the COO position in January 2019, replacing Carin Stutz, who had held the title since April 2016. Like Constant, Stutz, the former president of McAlister’s Deli and CEO of Cosi, was “terminated without cause.”
Prior to his promotion, Constant served as Red Robin’s chief financial officer starting in December 2016 (Lynn Schweinfurth is the chain’s current CFO). Most recent to the hire, Constant was CFO and EVP of finance and treasurer for Rent-A-Center Inc. Previously he served in various executive roles at Brinker International, including EVP and CFO, president of Chili’s global restaurant division, senior vice president and vice president of finance, and senior director of executive compensation.
From early 2019 to now, much of Red Robin’s C-suite has changed. Following Stutz’s departure in September 2018, chief executive Denny Marie Post announced she would step aside to retire in April, effective immediately, after seven years with the company and three as CEO. Patty Moore, the company’s board chair for nine years, took over and Red Robin kicked off a lengthy search for Post’s replacement.
In September, Moore announced her retirement when Red Robin announced Noodles & Company chairman Paul Murphy would lead the company. He directed the fast casual since 2017, where he was responsible for 459 locations across 29 states. Before, Murphy was CEO of Del Taco Restaurants from 2009–2017, overseeing 543 stores with revenues of $470 million. Other roles included leadership positions at Einstein Noah Restaurant Group, Inc. for 11 years, including as president, CEO, and board director from 2003–2008.
When Constant took charge of operations, Red Robin was staring down a turnaround effort that stemmed from several internal challenges. Post said at the time that Red Robin was committed “to regaining our operational edge in this increasingly complex and competitive environment.”
Constant was tasked with leading supply chain, facilities, and development. But notably, he had to address some key declining metrics across multiple areas of Red Robin’s business. In the quarter heading up to the executive change, the brand’s total ticket times out of the kitchen and wait times were up about a minute on average. Red Robin witnessed an alarming 85 percent lift, year-over-year, in walkaways. Revenue fell 0.6 percent to $315.4 million. The company reported a loss in the quarter of $1.9 million, or 14 cents per share, from a profit of $6.9 million, or 53 cents per share, in the year-ago period.
This was due, in some respects, to growing complexity in Red Robin’s business thanks to rising off-premises sales and turnover concerns. Red Robin went to a team service system model earlier that year that required servers to bus as they go, something Post said Red Robin “did not execute … well at all.”
The chain approached cost-cutting measures by cutting back on labor, asking hosts to handle carryout orders as well.
In response, walkways jumped as total ticket times lifted. Tables weren’t being cleaned efficiently, either.
Red Robin appeared to be making progress under Constant’s leadership. This past quarter—Q3 of 2019—the brand posted a quarterly loss of 24 cents per share compared to a gain of 16 cents in 2018. Same-store sales increased 1.6 percent to snap a six-period negative streak, although traffic fell 3.1 percent. The comps result marked three straight quarters of accelerating gains and was comprised of average check of 4.7 percent and overall pricing, net of discounts, of 1.5 percent. For perspective, Red Robin’s Q2 traffic was down 6.4 percent. Some of the bump came from an “All the Fulls” campaign Schweinfurth said “had a significant positive impact on our traffic trend.”
However, some back-end fixes were starting to show, too, the company said.
The climb back to positive same-store sales
- Q3 2019: 1.6 percent
- Q2 2019: –1.5 percent
- Q1 2019: –3.3 percent
- Q4 2018: –4.5 percent
- Q3 2018: –3.4 percent
- Q2 2018: –2.6 percent
- Q1 2018: –0.9 percent
- Q4 2017: 2.7 percent
- Q3 2017: –0.1 percent
- Q2 2017: 0.5 percent
- Q1 2017: –1.2 percent
- Q4 2016: –4.3 percent
- Q3 2016: –3.6 percent
- Q2 2016: –3.2 percent
- Q1 2016: –2.6 percent
When 2019 began, Constant said in November, Red Robin was short more than 100 managers across its 561-unit system. At Q3’s end, Red Robin was “essentially fully staffed” at the manager level and its turnover numbers were best in class for casual dining—a move that helped crew-level performance as well, Constant said. “Now, with more fully staffed management teams, we are also able to reduce the churn of managers between locations and provide a better and more stable experience for our team members,” he said. “The resulting benefit is apparent in the progress we have made in hourly turnover numbers which improved, again, in the third quarter as they have throughout 2019, in sharp contrast, we continued deterioration in turnover and staffing metrics seen throughout the industry.”
One of Constant’s main points was to improve front-of-house engagement by having managers establish a better presence on the floor and move them to the host end during peak hours. He said the focus rerouted a guest satisfaction trend that was headed in the wrong direction after metrics reached a low point at the end of Q4 2019. He said they hit their highest level in more than three years at Q3’s close.
Ticket times also improved more than 90 seconds in Q3 thanks, in part, to Red Robin’s “Maestro” platform that zeroes in on kitchen managers and works to coordinate fast and accurate delivery of food at the right temperature.
Additionally, the chain worked to shift labor investment from overstaffed shoulder hours to understaffed peak hours, Constant said, and improve throughput at critical times. He added Red Robin’s renewed focus on staffing yielded improvement in Q3 on guest ratings for speed of service, food temperature, and cleanliness, which led to repeat business.
The next evolution for the brand was to add labor hours during busy shifts to aid off-premises volume. The chain’s away-from-the-restaurant segment, including catering, increased 37.3 percent, year-over-year, in Q3 to comprise 13.2 percent of the company’s total food and beverage sales.