Hamburgers have always been the backbone of the fast-food and fast-casual industries.
When Burger King and McDonald’s first launched their menus, they basically offered a choice of hamburger or cheeseburger along with fries and a soda. That has, of course, changed a lot, but burgers are still core products.
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Burgers sit at the heart of the menu for numerous chains, including ones like Five Guys, which have an old-school fast-food menu. Shake Shack has a slightly broader menu, but burgers are its core product.
The same can be said of fast-casual and casual sit-down chains. Chili’s has based its recent advertising on pointing out that its new Smashburger has more meat than a Big Mac, and every player in the space has pushed its burger as a good value.
That created incredible competition and means that a chain that has built its business model around hamburgers better have a damn good product. One popular burger-based casual sitdown chain believes it has good burgers, but it’s closing dozens of locations amid growing losses.
Red Robin has a burger-heavy menu and offers unlimited fries.
Image source: Shutterstock
Red Robin has struggled
Red Robin RRGB saw its revenue drop by $23.8 million in the fourth quarter to $285.2 million. It als saw it loss increase to $39.7 million, up from a $13.7 million loss in the year-ago quarter.
That increase in loss in the fourth quest does reflect an increase in one-time costs due to a store closure.
For the full year, the numbers were not encouraging either:
Total revenues are $1.25 billion, a decrease of $54.5 million.Comparable restaurant revenue( decreased 1.2%.Net loss is $77.5 million, as compared to a net loss of $21.2 million during 2023.
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CEO G.J. Hart tried to put a positive spin on the numbers.
“As we look to 2025 and beyond, our team will focus on two key priorities: bringing guests back into our restaurants for moments of connection over craveable food that only Red Robin can provide and an accelerated effort to gain efficiency in our operations and deliver growth in restaurant and corporate-level profitability while maintaining the improved guest experience that we have developed over the past two years,” he said.
Red Robin closing locations
“As of December 29, 2024, the company had outstanding borrowings under its credit facility of $189.5 million and liquidity of approximately $50.7 million including cash and cash equivalents and available borrowing capacity under its credit facility,” the company shared.
Red Robin plans to use restaurant closures to preserve its cash and enhance its operational efficiency.
“During the fourth quarter of fiscal 2024, the company closed one restaurant location upon expiration of the lease and is evaluating alternatives for approximately 70 underperforming restaurant locations, including closure upon expiration of the current lease term,” it shared.
In addition to closing up to 70 locations, the burger chain plans to divest itself of some company-owned locations.
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“The Company anticipates it will complete a transaction to sell three owned properties during the first quarter of fiscal 2025. The transaction is expected to generate gross proceeds of $5.8 million which the company anticipates will be used to repay debt and for general corporate purposes,” Red Robin shared in a press release.
Red Robin currently has just under 500 restaurants in the U.S. and Canada. Select locations also offer a full Donato’s Pizza menu.
