Red Robin’s Mixed Earnings Call: Growth Amid Challenges

Red Robin Gourmet Burgers ((RRGB)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for Red Robin Gourmet Burgers presented a mixed sentiment. While the company reported improvements in revenue, operating profit, and loyalty program growth, it continues to face challenges such as declining guest traffic, reduced revenue guidance, and external cost pressures. Despite strong operational improvements, the company is navigating ongoing hurdles related to traffic and macroeconomic conditions.

Positive Financial Performance in Q1 2025

The company reported a positive financial performance in the first quarter of 2025, with total revenues rising to $392.4 million from $388.5 million in the same period in 2024. Additionally, the restaurant-level operating profit as a percentage of restaurant revenue increased by 330 basis points to 14.3%, highlighting effective operational strategies.

Growth in Loyalty Program

Red Robin’s revamped loyalty program has been a success, with membership growing to approximately 15.3 million members by the end of Q1 2025. This growth indicates strong customer engagement and the potential for increased repeat business.

Adjusted EBITDA Increase

The company saw an increase in adjusted EBITDA by $14.5 million, reaching $27.9 million in Q1 2025 compared to the previous year. This growth was driven by cost efficiency gains and menu price increases, reflecting effective financial management.

Debt Reduction

Red Robin made significant strides in reducing its debt, repaying approximately $17.8 million in Q1 2025. This repayment reduced the outstanding principal balance to $171.7 million, strengthening the company’s financial position.

Operational Improvements

The company reported significant improvements in labor cost efficiency and guest satisfaction scores. These operational changes have been positively received by guests, indicating a successful strategy in enhancing customer experience.

Decline in Guest Traffic

Despite the positive financial metrics, guest traffic declined by 3.5% in Q1 2025. This decline has contributed to a more cautious outlook for the remainder of the year, as the company navigates broader market challenges.

Reduced Revenue Guidance

Red Robin revised its total revenue guidance for 2025 to between $1.21 billion and $1.23 billion, down from the previous range of $1.225 billion to $1.25 billion. This adjustment reflects challenges in the macroeconomic and consumer environment.

Closure of Company-Owned Restaurants

The company plans to close 14 company-owned restaurants in 2025, a move that reflects ongoing challenges in certain locations and aims to optimize the overall restaurant portfolio.

Cost Headwinds from Tariffs

Red Robin anticipates cost pressures due to current tariff policies, which add a headwind to their financial outlook. This challenge underscores the need for strategic cost management.

Forward-Looking Guidance

Looking ahead, Red Robin projects total revenue between $1.21 billion and $1.23 billion for the year, with expectations of ending 2025 with 393 company-owned restaurants. The company anticipates comparable restaurant sales to remain flat at approximately 0%, with restaurant-level operating profit between 12% and 13%. Adjusted EBITDA is expected to range from $60 million to $65 million. Despite a decline in guest traffic, the company plans to maintain its pricing strategy to prioritize guest value while absorbing tariff impacts.

In summary, Red Robin Gourmet Burgers’ earnings call highlighted a mixed sentiment, with notable financial improvements and loyalty program growth countered by challenges such as declining guest traffic and cost pressures. The company remains focused on strategic initiatives to navigate these challenges and drive future growth.