On Tuesday afternoon, gourmet burger chain Red Robin (NASDAQ: RRGB) reported its fiscal second-quarter results for the period ending July 15. Having already reported its preliminary quarterly results on Aug. 1, the results were in line with its preliminary figures.
Looking beyond the financial results, management provided more context on what led to the quarter's worse-than-expected performance and a timeline for when investors can expect the company's efforts to correct near-term issues to begin producing results.
Red Robin's second-quarter results: The raw numbers
- Revenue and adjusted earnings per share of $315.4 million and $0.46 were the same as figures provided in Red Robin's pre-release.
- Lower revenue was driven by a 2.6% year-over-year decrease in comparable restaurant revenue.
- Red Robin's restaurant guest counts declined 0.7% year over year.
- Restaurant labor costs as a percentage of restaurant revenue improved 40 basis points.
What management had to say
In line with what management said earlier this month, Red Robin CEO Denny Marie Post admitted the company was "disappointed with our second quarter topline sales and declines in dine-in traffic."
Previously, the CEO had said that Red Robin "simply didn't execute as well as we should have." But this time, Post provided more insight into what the underlying issue was, noting, "We did not execute as well as we know we are capable of, particularly at critical peak demand hours when we must be prepared to serve dine-in Guests and our rapidly growing off-premise demand."
To address the company's subpar execution at peak hours, Post said Red Robin is taking measures to improve service. In addition, as explained in the company's pre-release, Red Robin is aiming to reinvigorate its marketing message. Specifically, Red Robin plans to renew its focus on the fundamentals of service while emphasizing Red Robin's affordability, value, and burger options in its marketing.
"We expect all of these elements to be in place early in Q4," Post said.
Management maintained its recently revised full-year outlook for revenue between $1.35 billion and $1.365 billion and earnings per share between $1.80 and $2.20. Importantly, management also maintained its guidance for full-year comparable-restaurant revenue to decrease 1% to 2% year over year. But management forecast comparable-restaurant revenue to be in the lower end of this range in Q3.
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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 September 2018 $50 calls on Red Robin Gourmet Burgers. The Motley Fool has a disclosure policy.