Red Robin Gourmet (RRGB 38.50, -1.70, -4.23%) is trading lower today
as cautious comparable restaurant sales guidance overshadows in-line results.
The operator of casual dining restaurants reported in-line second quarter earnings of $0.46/share on a 0.6% year/year decline in revenue to $315.39 mln, which was just shy of expectations. Keep in mind that Red Robin primed the market for these results on August 1.
Comparable restaurant sales declined 2.6% while comparable restaurant guest count fell 0.7%. Off-premise sales grew 260 basis points to 9.6% of total sales. The decline in comparable sales was due to a lower guest count and a 1.9% decline in average guest check.
Red Robin Chief Executive Officer Denny Marie Post said the disappointing results were due to worse than expected execution, especially during peak demand hours. The company believes that improved service execution and added resources to drive sales will be in place during the early part of the fourth quarter.
Restaurant-level operating margin declined to 19.3% from 20.8% one year ago. Higher cost of sales, higher occupancy costs, and an increase in other operating expenses were partially offset by a decrease in labor costs.
On a per-restaurant basis, average weekly sales at company-owned restaurants declined 3.5% year/year to $53,341. On a comparable basis, average weekly sales at company-owned restaurants fell 2.7% to $53,632. Comparable average weekly sales at franchised restaurants increased 1.2% to $61,315.
The company ended the quarter with 484 company-owned restaurants, up from 472 restaurants one year ago. Franchised restaurant count increased to 572 from 558 one year ago. The company indicated plans to open an additional two Red Robin restaurants during the remainder of 2018 while its franchisees also plan to open two new Red Robin locations in the period.
Going forward, the company expects that earnings for the fiscal year will be between $1.80/share and $2.20/share while revenue is expected between $1.350 bln and $1.365 bln. Comparable restaurant sales are expected to decline between 1.0% and 2.0% during the fiscal year, with third quarter results coming in near the bottom of that range.
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