Red Robin Gourmet Burgers (NASDAQ: RRGB) faced another period of declining comparable-restaurant revenue in its fiscal first quarter ending April 21. The tough quarter comes amid Red Robin's search for a new CEO and as the company is executing on initiatives it believes will reinvigorate its business.
Red Robin's turnaround efforts have failed to show signs of any meaningful traction yet. But the company remains confident in its plan and believes its initiatives will eventually pay off.
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Red Robin's first-quarter results: The raw numbers
- Red Robin's revenue decreased 2.8% year over year to $409.9 million.
- Adjusted earnings per share fell 72% to $0.19.
- Comparable-restaurant sales decreased 3.3% in constant currency.
- Red Robin's decline in comps was comprised of a 5.5% decrease in guest counts and a 2.2% decline in the average guest check.
- Off-premise sales were up 20.6% -- a deceleration compared with 23.2% growth in Q1.
What management had to say
"As our financial results demonstrate, there is still much work to be done on the turnaround, and we are moving with urgency," said interim CEO Pattye Moore. "We continue to focus on our five strategic priorities and are starting to see progress on multiple fronts and in the underlying key operational metrics we are tracking."
Meanwhile, Red Robin is "selectively refranchising and reassessing" its real estate portfolio, Moore added. As part of this initiative, the company announced Thursday that it is closing 10 underperforming restaurants. And since Moore has taken over as interim CEO, she said she has narrowed the company's crucial initiatives and hired a new vice president of consumer insights "to identify ways to improve all aspects of our business."
Moore believes the company's urgency to narrow its focus and improve its operations will accelerate its turnaround.
"All of these efforts are designed to enhance the customer experience, significantly improve cash flow, increase profitability, and drive shareholder value," Moore said. "We are confident our initiatives will steadily improve our financial and operational performance."
Looking to the 2019 full fiscal year, management reduced its outlook for comps and widened its expected range for earnings per share. It now expects comps to show somewhere between a decline of 1% and an increase of 1% in constant currency. This is down from a previous outlook for the metric to be between breakeven and 1.5% growth.
Management now expects full-year adjusted EPS between $1.14 and $1.77. The low end of this guidance range is down from Red Robin's former forecast between $1.30 and $1.70.
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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of Red Robin Gourmet Burgers and has the following options: short June 2019 $40 calls on Red Robin Gourmet Burgers. The Motley Fool has a disclosure policy.