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ENGLEWOOD, Colo. - Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB), currently trading at $5.63 and rated as fairly valued according to InvestingPro analysis, announced its new "First Choice" strategic plan on Monday while updating its second quarter financial outlook.
The casual dining chain now expects second quarter comparable restaurant sales to decrease approximately 4%, slightly worse than previously forecasted 3% decline. Despite the sales shortfall, the company anticipates Adjusted EBITDA will exceed its prior expectation of $13 million to $16 million. According to InvestingPro data, three analysts have recently revised their earnings expectations downward, with the company expected to remain unprofitable this year.
Red Robin’s newly introduced "First Choice" plan aims to build on foundations established under its previous North Star initiative. The strategy focuses on five key areas: maintaining operational efficiencies, driving traffic, managing expenses, improving restaurant facilities, and creating a high-performance work environment.
"The opportunity for Red Robin is significant, and we’ve put in motion an integrated plan to make us the ’First Choice’ for guests, team members, and investors," said Dave Pace, Red Robin’s President and Chief Executive Officer, in the press release.
The company plans to reduce debt through tactical refranchising of select company-owned restaurants and markets, a crucial move given its substantial $552.72 million debt burden. It also intends to address deferred maintenance needs and invest in new technology to improve the dining experience. InvestingPro subscribers can access 13 additional key insights about Red Robin’s financial health and future prospects through the comprehensive Pro Research Report.
Todd Wilson, Red Robin’s Chief Financial Officer, noted that the Adjusted EBITDA expected in the first half of 2025 has already surpassed full-year 2024 results, attributing the improvement to operational excellence and cost efficiency measures.
Red Robin operates nearly 500 locations across the United States and Canada, including franchised restaurants, generating annual revenue of $1.25 billion. The company plans to report its complete second quarter results on August 13, 2025.
In other recent news, Red Robin Gourmet Burgers reported a significant earnings surprise for the first quarter of 2025, with earnings per share reaching $0.19, contrasting sharply with the anticipated loss of $0.39. The company’s revenue for the quarter was $392.4 million, slightly below the expected $395.4 million but still above the consensus estimate of $389 million. The restaurant-level operating margin was 14.3%, surpassing the forecast of 11.7% and marking the highest quarterly result in the past eight quarters. Despite these positive results, Red Robin revised its full-year revenue guidance downward by $15 million to $20 million, citing a projected decline in guest traffic by nearly 100 basis points. Benchmark maintained its Buy rating and a $12 price target for Red Robin, reflecting confidence in the company’s fiscal year 2025 restaurant-level operating margin and adjusted EBITDA estimates. The firm noted improved labor efficiency and stable costs as key contributors to the better-than-expected profitability. Red Robin’s leadership emphasized a focus on technology upgrades and operational efficiency, with no further menu price increases planned for 2025.
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