Revenue, Same-Store Sales Down at Red Robin
Red Robin Gourmet Burgers Inc. today reported financial results for the 12 and 40 weeks ended October 4, 2009.
-- Chain Leader, 11/6/2009 8:17:00 AM
PRESS RELEASE: GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Red Robin Gourmet Burgers, Inc., (NASDAQ: RRGB), a casual dining restaurant chain focused on serving an innovative selection of high-quality gourmet burgers in a family-friendly atmosphere, today reported financial results for the 12 and 40 weeks ended October 4, 2009.
Financial and Operational Results
Results for the 12 weeks ended October 4, 2009, compared to the 12 weeks ended October 5, 2008, include the following:
* Total revenues decreased 10.4% to $187.0 million.
* Restaurant revenue decreased 10.4% to $183.9 million.
* Company-owned comparable restaurant sales decreased 14.9%.
* Restaurant-level operating profit decreased 20.1% to $30.4 million.
* GAAP diluted earnings per share were $0.37 vs. $0.40 in the same period a year ago.
* One new franchised Red Robin restaurant opened during the third quarter 2009.
As of the end of the fiscal third quarter of 2009, there were 304 company-owned and 132 franchised Red Robin(r) restaurants.
"While Red Robin's financial results for our fiscal third quarter reflected continued softness in the casual dining industry and in the macroeconomic climate as a whole, we are encouraged by the results we are beginning to see from our targeted initiatives to drive Guest traffic and retention, as well as the progress our teams continue to make in managing controllable costs," said Dennis B. Mullen, Red Robin Gourmet Burgers, Inc., chairman and chief executive officer. "Despite the challenging operating environment, we believe we are focused on the right strategies for the long-term strength and growth of our business. We will continue to concentrate on making further progress on improving productivity and leveraging the success that our recent marketing strategies have had in building awareness for the quality, variety and value that Red Robin offers our Guests."
Fiscal Third Quarter 2009 Results
Comparable restaurant sales decreased 14.9% for company-owned restaurants in the fiscal third quarter of 2009 compared to the fiscal third quarter of 2008, driven by a 13.8% decline in guest counts and 1.1% decrease in the average guest check. Average weekly comparable sales from the 269 company-owned comparable restaurants were $51,964 in the fiscal third quarter of 2009, compared to $62,182 for the 233 company-owned comparable restaurants in the fiscal third quarter of 2008. Average weekly sales for the 35 non-comparable company-owned restaurants were $49,385 in the fiscal third quarter of 2009, compared to $56,111 for the 44 non-comparable restaurants in the fiscal third quarter a year ago. For all company-owned restaurants, average weekly sales were $51,667 from 3,648 operating weeks in the fiscal third quarter of 2009 compared to $60,974 from 3,433 operating weeks, in the fiscal third quarter of 2008.
Total Company revenues, which include company-owned restaurant sales and franchise royalties and fees, decreased 10.4% to $187.0 million in the fiscal third quarter of 2009, versus $208.6 million last year. Franchise royalties and fees decreased 8.0% to $3.0 million in the fiscal third quarter of 2009 compared to $3.3 million in the same period a year ago.
For the fiscal third quarter of 2009, the Company's U.S. franchise restaurant sales of $64.6 million were lower compared to $71.6 million in the prior year period. Comparable sales in the fiscal third quarter of 2009 for franchise restaurants in the U.S. decreased 14.4% and for franchise restaurants in Canada decreased 0.2% from the fiscal third quarter of 2008. Average weekly comparable sales for the U.S. franchised restaurants were $47,998 from the 101 comparable restaurants in the fiscal third quarter of 2009, compared to $56,749 for the 94 comparable restaurants in the fiscal third quarter of 2008. Average weekly sales in the fiscal third quarter of 2009 for the Company's 18 comparable franchise restaurants in Canada were C$52,908 versus C$53,008 in the same period last year. Canadian results are in Canadian dollars.
Restaurant-level operating profit margins at company-owned restaurants were 16.5% in the fiscal third quarter of 2009 compared to 18.5% in the fiscal third quarter of 2008. As a percentage of restaurant revenue, fiscal third quarter 2009 restaurant-level operating profit margins were negatively impacted by a 1.6% increase in labor costs and 1.0% higher occupancy costs largely due to sales deleveraging, partially offset by an approximately 0.3% decrease in food and beverage costs and 0.3% lower operating costs.
The Company's restaurant-level operating profit metric does not represent income from operations or net income calculated in accordance with generally accepted accounting principles ("GAAP"). Schedule I of this earnings release reconciles restaurant-level operating profit to income from operations and net income for all periods presented.
General and administrative expense was $12.1 million in the fiscal third quarter of 2009 and $15.7 million in the fiscal third quarter of 2008, which were 6.5% and 7.5% of total revenue, respectively.
Interest expense was $1.3 million in the fiscal third quarter of 2009, compared to $2.0 million in the fiscal third quarter of 2008.
In the fiscal third quarter of 2009, the Company realized a reduction in the effective tax rate to 16.3 % compared to 21.6 % for the fiscal third quarter of 2008.
Net income for the fiscal third quarter of 2009 was $5.7 million, or $0.37 per diluted share, as compared to net income of $6.2 million, or $0.40 per diluted share, in the fiscal third quarter of 2008. Included in fiscal third quarter 2008 results were asset impairment charges of $0.05 per diluted share after tax.
Schedule II of this earnings release reconciles the impact on the net income and diluted earnings per share as reported on a GAAP basis in the fiscal third quarter of 2009 and 2008 to adjusted amounts excluding certain acquisition costs.
Outlook
Since the end of the fiscal third quarter 2009, the Company opened the last two of the 15 company-owned restaurants planned for fiscal 2009. One new franchised restaurant scheduled to open in mid December is expected to be the last of five new franchised restaurant openings during fiscal 2009.
The Company continues to expect that guest counts will be negative for the full fiscal year 2009. In addition to the general macroeconomic pressures, the extent of the traffic declines have also been impacted by prior-year marketing activities, which create more difficult comparisons during certain periods. As a result of the impact of deleveraging on restaurant margins from decreased restaurant sales and the year-over-year cost pressures from select food and minimum wage increases, as well as some recent advertising expenses, the Company expects restaurant-level operating margins could decline by 150 to 160 basis points for the fiscal year 2009. For every 10 basis point change in restaurant level operating profit during fiscal year 2009, diluted earnings per share are estimated to be impacted by approximately $0.04.
Investor Conference Call and Webcast
Red Robin will host an investor conference call to discuss its third quarter 2009 results today at 5:00 p.m. ET. The conference call number is (888) 417-8516. To access the webcast, please visit www.redrobin.com and select the "Investors" link from the menu. The quarterly financial information that the Company intends to discuss during the conference call is included in this press release and will be available on the "Investors" link of the Company's website at www.redrobin.com prior to the conference call.
About Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB)
Red Robin Gourmet Burgers, Inc. (www.redrobin.com), a casual dining restaurant chain founded in 1969 that operates through its wholly-owned subsidiary, Red Robin International, Inc., serves up wholesome, fun, feel-good experiences in a family-friendly environment. Red Robin(r) restaurants are famous for serving more than two dozen insanely delicious, high-quality gourmet burgers in a variety of recipes with Bottomless Steak Fries(r), as well as salads, soups, appetizers, entrees, desserts, and signature Mad Mixology(r) Beverages. There are more than 430 Red Robin(r) restaurants located across the United States and Canada, including company-owned locations and those operating under franchise agreements.
Forward-Looking Statements:
Certain information and statements contained in this press release, including those under the heading "Outlook," are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements regarding our expectations, beliefs, intentions, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements which are other than statements of historical facts. These statements may be identified, without limitation, by the use of forward-looking terminology such as "believe," "continue," "expects," "anticipates," "will" or comparable terms or the negative thereof. All forward-looking statements included in this press release are based on information available to the Company on the date hereof. Such statements speak only as of the date hereof and we undertake no obligation to update any such statement to reflect events or circumstances arising after the date hereof. These statements are based on assumptions believed by us to be reasonable, and involve known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: the downturn in general economic conditions including severe volatility in financial markets and decreasing consumer confidence, resulting in changes in consumer preferences, or consumer discretionary spending; potential fluctuation in our quarterly operating results due to economic conditions, seasonality and other factors; changes in availability of capital or credit facility borrowings to us and to our franchisees; the adequacy of cash flows generated by our business to fund operations and growth opportunities; our ability to achieve and manage our planned expansion, including both in new markets and existing markets; changes in the cost and availability of building materials and restaurant supplies; the concentration of our restaurants in the Western United States and the associated disproportionate impact of macroeconomic factors; changes in the availability and costs of food; changes in labor and energy costs and changes in the ability of our vendors to meet our supply requirements; labor shortages, particularly in new markets; the effectiveness of our initiative to normalize new restaurant operations; lack of awareness of our brand in new markets; the effectiveness of our advertising strategy; higher percentage of operating weeks from non-comparable restaurants; concentration of less mature restaurants in the comparable restaurant base which impacts profitability; the ability of our franchisees to open and manage new restaurants; the effect of increased competition in the casual dining market and discounting by competitors; health concerns about our food products and food preparation; our ability to protect our intellectual property and proprietary information; the impact of federal, state or local government regulations relating to our team members or the sale of food or alcoholic beverages; our franchisees' adherence to our practices, policies and procedures; and other risk factors described from time to time in the Company's 10-Q and 10-K filings with the SEC.
