GJ Hart started as Red Robin’s CEO a little more than a year ago, bringing with him a multi-faceted North Star strategy to turn around the casual-dining chain.
From the beginning, the intention was for it to be a three-to-four-year plan, meaning the burger chain is only in the “second or third inning” of the comeback effort truly taking shape, said CFO Todd Wilson at CL King’s 21st Annual Best Ideas Conference earlier this month. But Red Robin is moving quickly to achieve its objectives. For instance, the company rolled out flat-top grills systemwide in a 90-day window. According to Wilson, “That’s a speed our company has never acted with.”
“[We’re] recognizing a lot of work has been done, but we’re still really early in this,” Wilson said. “Why do I say we’re really early? The average frequency of a Red Robin customer is roughly one time per year. And so we still have guests that probably haven’t come in to see these changes that we’ve made. And that’s OK. We’ll start to kick in some marketing in the second half of the year here and certainly in 2024.”
Arguably the biggest tenet of the North Star playbook is elevating the dine-in experience, Red Robin’s most margin-friendly channel. Burgers—which used to be cooked on a conveyor system similar to a quick-service kitchen—are switching to the aforementioned flat-top grills. The equipment is viewed as the gold standard for preparing gourmet burgers, Wilson says. The grill sears the burger, locks in juices, retains heat for delivery purposes, and keeps the patty 25 percent heavier. The flat-top grills will be useful for topping as well, such as bacon. Beforehand, the strips were thin and cooked in the microwave. Now, the bacon strips are thicker and juicier and preserve their sweet flavor. The enhancement isn’t exclusive to bacon either; mayo, pickles, ketchup, mustard, and other toppings will be upgraded too.
In addition to a better taste, the flat-top grills decrease cooking times by 30 seconds. They’re also easier to clean and don’t break down as frequently as the conveyor belt. Wilson estimated that the chain is saving $2 million in labor and repair and maintenance costs.
Red Robin is also looking to expand outside of burgers to eliminate the dreaded veto vote. The chain recently launched Whiskey River BBQ Ribs (A half rack of tender St. Louis-style pork ribs glazed with Whiskey River BBQ Sauce, served with coleslaw and a side) and Tsunami Shrimp (panko-breaded shrimp tossed in a sweet and spicy sauce, garnished with sesame seeds, and served with garlic parmesan broccoli and a side). These new additions will be on the higher end of pricing, in accordance with Red Robin’s barbell menu strategy.
For appetizers, there are Crispy Parmesan Brussel Sprouts. Also, because the chain is improving the produce that goes on hamburgers, there’s an opportunity for a better salad lineup.
Here’s a look at the full new lineup, which was unveiled Tuesday:
- BBQ Burnt Ends ‘N Bacon Burger—Available for a limited time and piled with smoked burnt ends, crispy onion straws, Whiskey River BBQ Sauce, melted cheddar, black-peppered bacon, pickles, and mayo
- Smashed Avocado ‘N Bacon—With freshly smashed avocado, hardwood-smoked bacon, melty Swiss, onion, lettuce, vine-ripened tomato and mayo
- Burnin’ Love—Fried jalapeño coins, house-made salsa, pepper jack cheese, lettuce, vine-ripened tomato, and chipotle aioli, topped with a charred jalapeño
Appetizers & Entrées
- Crispy Parmesan Brussels Sprouts—Lightly fried and topped with grated Parmesan cheese
- Tsunami Shrimp—Panko-breaded shrimp tossed in a sweet and spicy sauce, served on a bed of Yukon Chips and finished with sesame seeds (available as an appetizer or entrée)
- BBQ Burnt Ends Loaded Fries—Red Robin’s signature Steak Fries loaded with smoked burnt ends, drizzled with house-made ranch and Whiskey River BBQ Sauce with a cilantro garnish
- Whiskey River BBQ Ribs—A half rack of St. Louis-style pork ribs glazed with Whiskey River BBQ Sauce. Served with coleslaw and choice of a Bottomless side
Desserts, Milkshakes & Beverages
- Caramel Apple Pie Milkshake—Vanilla soft serve blended with milk, cinnamon streusel, and apple pie filling. Topped with crumbles of cinnamon streusel and drizzled with caramel
- Caramel Apple Lemonade—The flavors of granny smith apple and spiced brown sugar paired with Minute Maid lemonade
- Casamigos Cadillac Margarita—Casamigos Blanco Tequila, agave, lime juice, and a Grand Marnier float
- Golden Maker’s Highball—Maker’s Mark Bourbon Whiskey with Sprite and a splash of honey mango syrup
- Old Fashioned—Angel’s Envy Bourbon, muddled orange, simple syrup, bitters, and a maraschino cherry
Looking at it from a hospitality standpoint, the chain reverted to its traditional approach. This involved assigning a greater number of servers to handle a smaller number of tables. Additionally, Red Robin reintroduced bussers, resulting in improved cleanliness ratings. They also increased the number of staff at the host stand to reduce waiting times and hired over 200 managers exclusively dedicated to the kitchen.
There are three buckets to let Red Robin know it’s on the right track: improvement in guest satisfaction, growth in transactions and traffic, and increased traction from new customers. The first one is already being filled. Using insights from the customer experience platform SMG, the brand is receiving a 5-percentage-point lift in satisfaction, and that’s ramped up through 2023. The chain is also seeing better feedback socially across Google Reviews, TripAdvisor, and other websites.
Translating that into better traffic numbers is the next step, but it won’t be an easy one.
“We believe we see evidence of a step back in consumer traffic in the industry in Q3,” Wilson said. “And so is that part of the normal ups and downs of our industry, or is that maybe a broader trend? Only time will tell. But I think it certainly has our attention. When you look at the broader economic news, I think it’s one that we’re probably more sensitive to—the state of the consumer now than we were six, 12, 18 months ago. It seems there is some degree of elevated risk. With that said, we’re encouraged by what we’re doing.”
Red Robin wants traffic growth to be sustainable, so it won’t chase deep discounting, except for a few occasions where it may try to drive trial for a new item or attempt to reel in lapsed users. This differs from 2022’s strategy. In the second quarter of the previous year, Red Robin introduced a $10 Gourmet Meal Deal. This offer included unlimited fries, a beverage, and a choice of either a Gourmet Cheeseburger, Whiskey River BBQ Burger, or Banzai Burger. While this promotion boosted customer traffic by 3 to 5 percent, the substantial discounts negatively impacted the chain’s profitability in the latter part of 2022.
Roughly half of the company’s 13 million loyalty members are engaged. Wilson wants to ensure the program rewards the best customers instead of discounting for those who are not active.
“Kevin Mayer has come in as our CMO, and our marketing team has done great work,” Wilson said. “What we’re reimagining is a future loyalty program that recognizes you as a person for being in our restaurants more frequently, but then offers other types of rewards that aren’t necessarily discounts. Could we look at lapsed users type discounts? Absolutely. I think that has a place. We do want to get people back into Red Robin trying our product, but I think that’s a different strategy than loyalty.”
In the second quarter, Red Robin’s same-store sales lifted 1.5 percent in Q2, marking its 10th straight quarter of positive growth. That figure was driven by an 8.8 percent menu price increase and offset by a 6 percent drop in traffic and negative 2.1 percent menu mix. Dine-in same-store sales improved 5.9 percent and now account for 75 percent of sales.