Red Robin Gourmet Burgers Inc.
reported earnings of 71 cents per share in the first quarter of
2012, breezing past the Zacks Consensus Estimate of 66 cents as
well as the year-ago quarter adjusted earnings of 58 cents per
share. Results in the quarter benefited from cost improvement
resulting in margin expansion.
The company reported total revenue of $299.5 million in the
first quarter, up 4.4% year over year but below the Zacks Consensus
Estimate of $307.0 million.
During the quarter, restaurant sales leaped 4.7% from the
year-ago quarter to $294.6 million but franchise royalties and fees
revenue slipped 8.8% to $4.8 million.
Comparable restaurant sales inched up 0.5% year over year at
company-owned restaurants in the reported quarter, driven by a 4.1%
increase in average guest check, partially offset by a 3.6% dip in
guest count. The guest count suffered due to the failure of its
promotional activities and hefty discounting environment.
Restaurant operating margin at company-owned restaurants
expanded 140 bps to 21.2%, due to a drop of 90 bps in labor costs
and a decline of 110 bps in other operating costs, partially
compensated by a 50 bps increase in food and beverage cost and 20
bps hike in occupancy costs.
Selling, general and administrative expenses in the quarter
climbed 5.9% year over year to $32.0 million, due to higher
equity-based compensation costs, new information technology
development costs and higher costs related to gift card sales,
partially offset by a decrease in severance costs.
Red Robin ended the quarter with cash and cash equivalents of
$38.0 million, total outstanding debt of $137.9 million and
shareholders' equity of $308.5 million. During the quarter, the
company did not repurchase any shares, but repaid $18.8 million of
During the quarter, Red Robin opened three full-size prototype
restaurants and its second small prototype restaurantRed Robin's
Burger Works. The company also closed one company-owned restaurant
during the first quarter. Red Robin currently operates 466
restaurants, out of which 330 are company owned and the rest
In 2012, Red Robin expects comps to grow 1% and restaurant
operating margin to expand 20% year over year, benefiting from
lower operating costs and cost of sales.
In 2012, the casual dining restaurant operator expects to open
13 new company owned restaurants, including 4 additional Red
Robin's Burger Works.
Red Robin's Project RED initiative, which focuses on revenue
growth, expense control and capital deployment is progressing quite
well and going forward will continue to focus on these areas to
increase the profitability of the company. We expect movement in
estimates to remain unclear in the coming days, as the company
reported mixed results. The Zacks Consensus Estimates for 2012 and
2013 stands at $1.88 and $2.18, respectively.
However, we remain cautious on the stock based on cost
inflation, lower consumer spending and intense competition from
Brinker International inc.
Domino's Pizza Inc. (
with respect to price, service, location and concept in order to
The company retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We also have a long-term Neutral
recommendation on the stock.
DOMINOS PIZZA (DPZ): Free Stock Analysis Report
BRINKER INTL (EAT): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis
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