Red Robin Upgraded On Confidence In Top-line Growth, Improved Casual Dining Trends

By Tonya GarciaMarketsMarketWatch Pulse

Red Robin Gourmet Burgers Inc. shares are up 2.1% after the restaurant chain was upgraded to buy from hold at Canaccord Genuity on Tuesday based on the belief that the company can grow its sales in the second half of 2017. Analysts were more confident after meetings with management and restaurant checks that suggest trends in casual dining are improving with better-than-expected May same-restaurant sales. Analysts think the industry could produce positive same-restaurant sales in June "albeit lapping an easier comparison." Analysts observed weekday customer waits during those restaurant checks as well. Analysts believe the negative same-restaurant sales at Red Robin were "self-inflicted" as the company focused on the "finest" burger messaging, which led to higher pricing and longer waits. Now, with a focus on value and services like curbside pickup, catering and delivery, analysts think same-restaurant sales will turn positive. Red Robin shares are up 58.4% for the last three months while the S&P 500 index is up 2.1% for the period.

Copyright © 2017 MarketWatch, Inc.

Continue Reading Below