Red Robin Gourmet Burgers Inc.
) reported earnings of 24 cents per share in the third quarter of
2012, in line with the year-ago quarter adjusted earnings. The
result, however, substantially surpassed the Zacks Consensus
Estimate of 16 cents. Results in the quarter benefited from
top-line growth and margin expansion.
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RED ROBIN GOURM (RRGB): Free Stock Analysis
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Total revenue of $223.7 million in the reported quarter, climbed
up 3.4% year over year and also beat the Zacks Consensus Estimate
of $212.0 million.
During the quarter, restaurant sales jumped 3.5% from the
year-ago quarter to $209.8 million and franchise royalties and
fees revenue were flat year over year at $3.6 million.
Comparable restaurant sales crept up 1.1% year over year at
company-owned restaurants, driven by a 0.8% increase in guest
count and a 0.3% rise in average guest check.
Restaurant operating margin at company-owned restaurants enhanced
90 basis-points (bps) to 19.7%, benefiting from a drop of 70 bps
in cost of sales as food costs plunged and a drop of 90 bps in
other operating costs, partially compensated by a 60 bps spike in
labor cost and a 20 bps hike in occupancy costs.
Selling, general and administrative expenses in the quarter were
up 40 bps to 11.5%, due to higher equity-based compensation
costs, new information technology development costs and higher
costs related to gift card sales.
Red Robin ended the quarter with cash and cash equivalents of
$26.9 million, total outstanding debt of $132.0 million and
shareholders' equity of $307.1 million. During the quarter, the
company repurchased 266,000 shares for $7.9 million and
currently, has $32.0 million remaining under its share repurchase
During the quarter, Red Robin unveiled four new restaurants, two
small prototype restaurants, Red Robin's Burger Works, and closed
one company-owned restaurant. During the quarter, two franchised
restaurants closed in the prior-quarter were reopened. Red Robin
currently operates 468 restaurants, out of which 331 are
company-owned; five are Red Robin's Burger Works and the rest are
In 2012, Red Robin expects comps growth at or slightly above 0.5%
as compared to the prior-year expectation of 0.5%. Restaurant
operating margins are estimated to be 20.5%, i.e. the higher end
of its prior projection range of 20% to 20.5%, benefiting from
lower operating costs and cost of sales.
With three restaurants scheduled to open in the fourth quarter,
the casual dining restaurant operator remains on track to unveil
14 new restaurants, including four Red Robin's Burger Works in
We expect estimates to go up in the coming days based on
better-than-expected results and improved outlook. The Zacks
Consensus Estimates for 2012 and 2013 stands at $1.85 and $2.05,
We remain positive on the stock based on continuous focus on
revenue growth, expense control, enhancement of shareholders'
value and unit growth. However, lower consumer spending amid
uncertain economic environment and stiff competition remain
Red Robin Gourmet Burgers Inc. which competes with
Brinker International inc.
) currently retains a Zacks #3 Rank, which translates into a
short-term 'Hold' rating. We also have a long-term 'Neutral'
recommendation on the stock.