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Red Robin Reports on 3rd Quarter of Fiscal 2023


On November 1st Red Robin Gourmet Burgers (RRGB) reported on results for the 3rd quarter of FY 2023 ending October 1st 2023, in line with consensus estimates. For the quarter, the company lost $(8.2) million on total revenue of $277.6 million with a diluted negative EPS of $(0.58). For the 3rd quarter of 2022, comparable figures were a net loss of $(12.7) million on total revenue of $286.8 million with an EPS of $(0.80).


Revenue was 3.2 percent lower than for the 3rd quarter of 2022 and operating margin deteriorated from -2.8 percent to -7.0 percent for the most recent quarter.


Growth in same-restaurant sales for the 3rd quarter of 2023 compared to the corresponding quarter in fiscal 2022 attained 0.5 percent. Guidance for FY 2023 included revenue of $1,300 million; Operating margin of 13 percent and an adjusted EBITDA of between $62.5 to $72.5 million


In commenting on Q2 results, G.J. Hart, president and CEO stated:-"We have made tremendous progress in 2023, first investing in people and hospitality and recently launching quality upgrades to ingredients and offerings across our menu. The enhancements we are making across all touch points continue to resonate with our guests resulting in increases in satisfaction, and we expect will ultimately drive increased traffic counts.”


Hart continued, “We anticipated a headwind in sales and traffic in the second half of 2023, as we unwind the deep discounting and promotional activity from 2022 and discontinue virtual brands. This intentional shift supports execution of the great Red Robin experience we expect to deliver to every guest, and is another step to building long term, sustainable traffic. We are pleased to see traffic trends improving to start the fourth quarter. Through the first four weeks of the fourth quarter, comparable restaurant traffic trends have improved 300 basis points as compared to the final four weeks of the third quarter, led by dine-in traffic.”


Hart concluded, “I am incredibly proud of our team and their work. We have invested back into the business while delivering significant gains in financial results. Year-to-date, comparable restaurant revenue increased 2.9% and Adjusted EBITDA increased to $58.3 million from $43.7 million last year. I am more confident than ever in the comeback of this iconic brand.”


During the third quarter of fiscal 2023, the Company completed a $31.1 million Sale-Leaseback transaction with Essential Properties Realty Trust, Inc. (NYSE: EPRT) to sell and simultaneously lease-back nine owned properties. Net proceeds were used to repay debt, fund capital investments, and support share repurchase activity pursuant to the Company's Credit Agreement.


On October 1st Red Robin posted total assets of $777.3 million of which $17.1 million comprised intangibles and goodwill.  The company carries $581.6 million in long-term debt, lease and finance liabilities.


Red Robin has a market capitalization of $137.8 million and has traded over the past fifty-two weeks in a range of $5.35 to $16.5 with a 50-day moving average of $8.53.  On a trailing twelve-month basis, operating margin was -2.8 percent and profit margin -4.0 percent.  The company generated a return on assets of 0.5 percent and -238 percent on equity.