Casual dining restaurant operator
Red Robin Gourmet Burgers Inc.'
) third-quarter 2013 earnings of 32 cents per share breezed past
the Zacks Consensus Estimate of 27 cents by 18.5% and the
year-ago quarter's earnings of 24 cents per share by 33.3%.
Earnings were boosted by decent top-line growth and margin
Red Robin recorded an 8.1% year-over-year rise in revenues to
$230.7 million in the third quarter. Higher comparable restaurant
sales (comps) and various sales-driving initiatives benefited the
top line during the quarter. Revenues also came ahead of the
Zacks Consensus Estimate of $227 million.
Behind the Headline Numbers
During the quarter, company-owned restaurant revenues grew 8.1%
year over year to $226.8 million, fueled by both higher operating
weeks and higher comps. Franchise royalties and fee revenues were
up 5.5% to about $3.8 million.
Company-owned restaurants' comps grew 5.7%, mainly benefiting
from higher average guest check (up 4.6%). Also, a 1.1%% increase
in traffic helped drive the expansion in comps.
Restaurant operating margin expanded 70 basis points (bps) to
20.4% thanks to the increased average check that made up for
higher food and beverage costs.
During the quarter, 6 company-owned Red Robin restaurants and 2
franchised units were unveiled. At the end of the third quarter,
Red Robin has 345 restaurants. Of this, 5 are Red Robin's Burger
Works restaurants, 135 units are franchised and the rest are
For fiscal 2013, Red Robin raised its expectation for comps and
restaurant operating margin.
The company now expects comps to grow nearly 4% as against its
prior expectation of 3% owing to better-than-expected performance
in the first half. The company had earlier raised the comps
guidance from the range of 2.5%--3.0% in the second quarter.
Restaurant operating margin is now projected to be 21.7%, up from
the previous estimate of 21.3%. Red Robin has been increasing its
margin guidance for three quarters in a row thanks to the
continued sales leverage.
The casual dining restaurant operator intends to unveil 21 Red
Robin units and remodel 20 restaurants in full year 2013.
Red Robin's continuous top-line growth, margin expansion and
increased guidance are quite impressive. Some of the its
operational strategies such as cost savings and its guest loyalty
program - Red Robin Royalty - have been the strength of this
Zacks Rank #2 (Buy) stock. Also, its foray into the smaller
prototype - Red Robin's Burger Work -- is another positive for
Some other players in the restaurant industry, which are
similarly placed and look attractive at current levels, include
Bob Evans Farms, Inc.
Cracker Barrel Old Country Store, Inc.
) and B
urger King Worldwide Inc.
), all carrying a Zacks Rank #2.
BURGER KING WWD (BKW): Free Stock Analysis
CRACKER BARREL (CBRL): Free Stock Analysis
RED ROBIN GOURM (RRGB): Free Stock Analysis
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