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ENGLEWOOD, Colo. - Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) reported second-quarter earnings that surpassed analyst expectations, but shares fell 2.5% as revenue declined and the company warned of continued sales challenges ahead.
The casual dining chain posted adjusted earnings of $0.26 per share for the second quarter, significantly beating the analyst estimate of -$0.13. However, total revenue fell to $283.7 million, a decrease of $16.5 million or 5.5% compared to the same period last year, though still slightly above the consensus estimate of $281.9 million.
Comparable restaurant revenue decreased 3.2% year-over-year, with guest traffic dropping 5.5%. The company managed to offset some of this decline with a 4.4% increase in menu prices.
"We have begun executing on the strategic elements of our First Choice plan and are already seeing encouraging results," said Dave Pace, Red Robin’s President and CEO. "Since launching our Big YUMMM Burger Deal in July, we have seen meaningful improvement in traffic compared to our second quarter exit rate."
Despite the revenue decline, Red Robin’s profitability improved significantly. The company reported net income of $4.0 million, compared to a net loss of $9.5 million in the same quarter last year. Adjusted EBITDA increased 64% to $22.4 million.
Restaurant-level operating profit margin expanded to 14.5% from 11.8% in the prior-year period, reflecting the company’s cost management efforts.
Looking ahead, Red Robin maintained its fiscal 2025 guidance for adjusted EBITDA of $60 to $65 million but warned that comparable restaurant sales will likely decline approximately 3% to 4% for the remainder of the fiscal year.
The company also reported progress on debt reduction, having repaid $20.3 million of debt year-to-date.
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