• Total Revenue: $285.2 million in Q4 2024, down from $309 million in Q4 2023 due to one less operating week.
• Comparable Restaurant Revenue: Increased by 3.4% in Q4 2024, excluding deferred loyalty revenue impact.
• Adjusted EBITDA: $12.7 million in Q4 2024, an increase of $2 million from Q4 2023.
• Restaurant Level Operating Profit: 11.5% of restaurant revenue, a decrease of 70 basis points from Q4 2023.
• General and Administrative Costs: $18.4 million in Q4 2024, down from $22.7 million in Q4 2023.
• Selling Expenses: $5.7 million in Q4 2024, down from $6.4 million in Q4 2023.
• Cash and Cash Equivalents: $30.7 million at the end of Q4 2024.
• Outstanding Principal Balance: $189.5 million under the credit agreement at quarter end.
• 2025 Revenue Guidance: Between $1.225 billion and $1.25 billion.
• 2025 Restaurant Level Operating Profit Guidance: 12% to 13%, an increase of 120 to 220 basis points from 2024.
• 2025 Adjusted EBITDA Guidance: $60 million to $65 million, excluding non-cash stock-based compensation.
• 2025 Capital Expenditures Guidance: $25 million to $30 million.
• Store Closures: Expect to close 10 to 15 restaurants in 2025.

• Warning! GuruFocus has detected 3 Warning Signs with RRGB.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Red Robin Gourmet Burgers Inc (NASDAQ:RRGB) reported a 600 basis point improvement in traffic from the first quarter to the fourth quarter of 2024.
• The revamped Red Robin royalty program led to a membership growth of approximately 1.5 million members, ending the year with 14.9 million members.
• Dining guest satisfaction scores increased by approximately 8% points compared to 2023, surpassing the casual dining average.
• The company delivered a 3.4% increase in comparable restaurant revenue in the fourth quarter, excluding the impact of a change in deferred loyalty revenue.
• Adjusted EBITDA increased by 19% to $12.7 million during the fourth quarter, showcasing effective management of the middle of the P&L.

Negative Points

• Total revenues for the fourth quarter were $285.2 million, down from $309 million in the same period last year, primarily due to fewer operating weeks.
• Restaurant level operating profit as a percentage of restaurant revenue decreased by 70 basis points compared to the fourth quarter of 2023.
• Approximately 70 restaurants generated a restaurant level operating loss of $6 million in 2024, impacting overall profitability.
• The company plans to close 10 to 15 underperforming restaurants in 2025, which could lead to short-term disruptions.
• The decline in guest traffic was noted, although partially offset by an increase in guest check average.

Q & A Highlights

Q: Can you discuss the balance between driving customer frequency through promotions and loyalty efforts while also improving margins? A: G.J. Hart, CEO, explained that much of the pricing adjustments were made on the West Coast, where there was room for improvement. The focus for 2025 is on achieving traffic growth and cost efficiency, particularly in labor, without compromising guest experience. The company has trained 800 managers and retrained all staff, which is expected to yield efficiencies in 2025.

Q: What are the quarter-to-date trends, and how is Red Robin performing in the current quarter? A: Todd Wilson, CFO, noted a strong start to the year, particularly due to easier comparisons from last year's weather-affected first quarter. The company expects a 3% same-store sales increase for the quarter, with profitability expected to align with previous quarters, adjusted for stock-based compensation.

Q: How do you plan to drive restaurant-level margins, and what portion of improvements will come from labor versus other areas? A: G.J. Hart stated that the majority of margin improvements will come from labor efficiencies. The company has already seen some improvements in labor costs and expects further gains in 2025.

Q: Can you provide more details on the Loyalty 2.0 program and its impact on transactions? A: G.J. Hart highlighted a 13% increase in loyalty transactions, with 25% of visits from new users and 20% from lapsed users. The program is driving significant traffic growth, and the company is optimistic about its continued impact.

Q: What are your expectations for commodity costs and pricing in 2025? A: Todd Wilson mentioned that the commodity basket is expected to see a 3% inflation, with ground beef being a significant contributor. The company plans a 1% price increase in 2025, with previous pricing actions carrying over, resulting in a gradual decrease in headline pricing throughout the year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.