Red Robin Gourmet Burgers Makes a Major Business Decision
The renowned fast food chain, Red Robin Gourmet Burgers, is taking a major step towards business resilience. The company plans to shut down up to 70 of its underperforming locations, equating to approximately 14% of its total number of restaurants, in an effort to stabilize its financial landscape.
Reasons Behind The Decision
The decision arrived after a thorough review of the company’s operations, during which it was found that these locations were falling short of the expected performance standards. In the company’s earnings release last week, it was announced that one location has already been shut down upon lease expiration, with plans to close three more additional locations in the first quarter of 2025. The majority of these 70 locations are expected to be shut down within the next five years as their leases expire.
Financial Performance of Red Robin Gourmet Burgers
Red Robin Gourmet Burgers reported a net loss of $39.7 million in the fourth quarter of fiscal 2024, a significant decrease from the $13.7 million loss reported in the same period of 2023. However, despite this, the company reported a 19% increase in adjusted EBITDA, which is a reflection of the success of its cost-saving measures.
Highlights for Q4 and Full-Year 2024
- Total revenues of $1.25 billion for the year, a decrease from $1.3 billion in 2023
- Q4 revenues of $285.2 million, down $23.8 million due to one fewer operating week
- Comparable restaurant revenue decreased 1.2% for the year but increased 3.4% in Q4
- Net loss of $77.5 million for the year, compared to a net loss of $21.2 million in 2023
- Q4 net loss was $39.7 million, impacted by $32.4 million in impairment and closure costs
- Adjusted EBITDA of $38.8 million for the year, down 43.7%, with a 19% increase in Q4 to $12.7 million
Lingering Optimism and Future Plans
Despite the closures marking a challenging chapter for the company, Red Robin’s leadership maintains a sense of optimism. CEO G.J. Hart highlighted the significant improvements in customer traffic. The company is shifting its focus to improving guest experience and operational efficiency with its “North Star” plan. This strategic move aligns Red Robin Gourmet Burgers with other food chains such as Denny’s, Wendy’s, and TGI Fridays, who have also adopted a similar approach to reduce their footprint.
