Red Robin plans to close dozens of underperforming restaurants
The company is evaluating approximately 70 locations that generated operating losses last year
February 27, 2025
Red Robin’s turnaround plan continued to gain traction during the fourth quarter, with the company reporting 3.4% same-store sales growth Wednesday after market. The company also reported sequential improvement in traffic through 2024, to the tune of 600 basis points.
“While our improvement has been substantial, we have not yet reached the potential of our iconic brand and expect to drive further traffic improvements in 2025,” chief executive officer G.J. Hart said during the company’s earnings call.
Red Robin has been focusing to get its sales back on track, mapped out on a five-point plan put into place in early 2023 when Hart came on board. That plan includes everything from operations to improving the entire menu. While 2024’s results showed some progress against the company’s goals, Red Robin is focused on several initiatives to keep its momentum going in 2025.
Perhaps the biggest impact will come from the closure of dozens of underperforming restaurants. Hart said the company is evaluating approximately 70 locations (out of about 500 total) that generated a total restaurant-level operating loss of about $6 million last year. This equated to a drag of about 210 basis points on the company’s total restaurant-level operating profit, Hart said.
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“Inclusive of capital expenditures and (general and administrative costs) burden, we estimate the total cash burn associated with these restaurants at approximately $9.5 million in 2024,” he said. “In the fourth quarter, we have pared the majority of these assets, and it is currently our base case expectation that we will close the majority of these restaurants over the next five years at their lease expiration.”
Ten to 15 restaurants are expected to close in 2025.
“We believe the expected closure of a majority of these restaurants will allow the strength of our remaining portfolio to become clear over time and free cash that we expect to reinvest in the business,” Hart said.
The portfolio restructuring could help make a dent in the company’s debt specifically. During Q4, Red Robin reported a nearly $40 million loss and $77.5 million for the year.
Red Robin’s other focus areas this year include its loyalty program and its new managing partner compensation program. The Red Robin Royalty program was revamped in May and has since added about 1.5 million members for a total of 14.9 million members. Executives shared that loyalty transactions have increased 13% since the relaunch.
“We believe our revamped loyalty program was a key driver of improved traffic throughout the year, led by a record number of new members delivering 25% of all loyalty member visits from the relaunch to the end of the year, and the return of previously lapsed guests accounting for 20% of visits,” Hart said. “We continue to be very robust in terms of our efforts around sign up and we have a big target for this year because we’re having so much success. So far, we’re on track and feel great about that.”
Related:Chi-Chi’s launches crowdsourcing initiative to offer the public a stake in the brand’s relaunch
The loyalty program also generates more guest data to facilitate personalized messaging and promotions.
“Our new program facilitates deeper guest segmentation and personalization and we’re leveraging member exclusives, gamification, and compelling content campaigns to reap the full rewards of our program, driving new member growth and continue our momentum increasing guest frequency,” Hart said. “We believe we’re only scratching the surface.”
Additionally, the new managing partner compensation program, rolled out systemwide in 2024, allows operators to function as a partner and owner of the restaurants they oversee. Hart said the organization is now aligned on a unified goal of driving traffic and profit dollars through the program.
The chain’s menu enhancements will also continue this year, starting with the launch of a new Hot Honey platform in March, which includes a chicken sandwich, wings, and pizza. More salads, burger profiles, and limited-time offers are also on deck for the summer. Red Robin will also maintain its everyday value promotions, including Monster Mondays (where customers can upgrade any burger for $2) and $10 Cheeseburger Tuesdays.
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“The $10 Cheeseburger Tuesday as an example has continued to prove successful in driving double-digit traffic growth and incremental visitation on a typically quieter day of the week,” Hart said.
Finally, Red Robin will start to realize the benefits of tools added in 2024, such as a theoretical food cost measurement system and Hot Schedules labor management platform. The company is also now streamlining its opening and closing procedures to create more labor efficiencies, while its supply chain is identifying cost savings opportunities as well.
“Past examples of this included switching from a 10-pound case of hamburgers to 20-pound cases to deliver the exact same hamburger patty to our guests, while saving on our per case distribution fees,” Hart said. We expect to continue to harvest opportunities to consolidate suppliers and streamline distribution to continue to generate savings in 2025.”
Red Robin Q4 by the numbers
Total revenues are $285.2 million, a decrease of $23.8 million primarily due to the fourth quarter of fiscal 2024 including 12 operating weeks compared to 13 operating weeks in the fourth quarter of fiscal 2023
Same-store sales increased 3.4% excluding the impact of a change in deferred loyalty revenue. Including this impact, Comparable restaurant revenue increased 1.8%
Net loss is $39.7 million, as compared to a net loss of $13.7 million during the same period of 2023. The net loss in the fourth quarter of fiscal 2024 includes $32.4 million in impairment and net closure costs
Adjusted EBITDA is $12.7 million, a 19% increase
Fiscal year 2024 by the numbers
Total revenues are $1.25 billion, a decrease of $54.5 million
Same-store sales decreased 1.2%
Net loss is $77.5 million, as compared to a net loss of $21.2 million during 2023
Adjusted EBITDA is $38.8 million, a 43.7% decrease
Contact Alicia Kelso at Alicia.Kelso@informa.com
Read more about:
Alicia Kelso
Executive Editor, Nation’s Restaurant News
Alicia Kelso is the executive editor of Nation’s Restaurant News. She began covering the restaurant industry in 2010 for QSRweb.com, FastCasual.com and PizzaMarketplace.com. When her son was born, she left the industry to pursue a role in higher education, but swiftly returned after realizing how much she missed the space. In filling that void, Alicia added a contributor role at Restaurant Dive and a senior contributor role at Forbes.
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American casual dining chain Red Robin Gourmet Burgers has reported total revenue of $285.2m in the fourth quarter (Q4) of 2024, a decrease of $23.8m from $309m in the same period of the previous year.
The loss is mainly due to Q4 fiscal 2024 having 12 operating weeks compared to 13 in Q4 fiscal 2023. In 2024, total revenue was $1.25bn, down $54.5m.
Net loss for Q4 was $39.7m, compared to $13.7m in Q4 2023. For the full year, net loss increased to $77.5m from $21.2m in 2023.
Adjusted EBITDA [earnings before interest, taxation, depreciation and amortisation] for Q4 was $12.7m, up 19%, while full-year adjusted EBITDA was $38.8m, down 43.7%.
Comparable restaurant revenue rose 3.4% in Q4, excluding deferred loyalty revenue changes, or 1.8% including the impact. For the full year, it declined by 1.2%.
The company had $189.5m in outstanding credit facility borrowings and $50.7m in liquidity, including cash and available borrowing capacity, as of 29 December 2024.
The company closed one restaurant in Q4 fiscal 2024 and is reviewing 70 underperforming locations for potential closure. It incurred $32.4m in asset impairments and closure charges.
It plans to sell three properties for $5.8m in Q1 fiscal 2025, using the proceeds for debt repayment and general corporate purposes.
These properties are classified as assets held for sale as of 29 December 2024.
For fiscal 2025, the company expects total revenue between $1.225bn and $1.250bn, with a restaurant-level operating profit of between 12% and 13%.
Adjusted EBITDA (excluding stock-based compensation) is projected at between $60m and $65m, with capital expenditure of $25m to $30m.
Red Robin president and CEO GJ Hart said: “The last two years have been transformational years for Red Robin, and I’m proud to say we began to see the benefit of our work as we progressed through 2024, culminating in a 600-basis point improvement in traffic trends from the first quarter of the year to the fourth.
“We also gained traction in our cost-saving initiatives to translate our top-line momentum during the fourth quarter into a 19% increase in adjusted EBITDA.”
“While financial results for 2024 fell well below our original expectations, we’ve made substantial improvements to the guest experience and believe we still have a significant opportunity ahead of us to reach the full potential of our iconic brand.”
“Red Robin Gourmet Burgers reports revenue drop in Q4 FY24” was originally created and published by Verdict Food Service, a GlobalData owned brand.
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