Red Robin Gourmet Burgers Inc.
(
RRGB
), a chain of casual dining restaurants, is set to debut its first
unit in Miami area, Florida, shortly. The new restaurant will be
located at The Falls and will offer gourmet burgers served with
Bottomless Steak Fries, a variety of salads, entrees, soups and
wraps made with fresh ingredients. In Florida, the company already
has six more restaurants.
Given customers' inclination toward a fresh organic menu as well
as concerns about nutrition these days, we believe integrity in
ingredients will be a crucial factor for traffic growth. Apart from
this, there will be other sales enhancement initiatives like a
guest loyalty program called Red Royalty.
However, Seattle-based Red Robin will likely face stiff
competition in that area because of the presence of several
renowned eateries like
Panera Bread Co.
(
PNRA
), T.G.I. Friday's, and
PF Chang's China Bistro Inc.
(
PFCB
).
Red Robin currently operates more than 460 restaurants across
the United States and Canada. The company is also expanding through
its franchise strategy. Currently, the restaurant chain is 70%
company operated and 30% franchised.
The company expects to roll out 13 to 15 restaurants in 2012,
including both full-sized restaurants and smaller prototype units.
Small-size restaurants will likely drive growth in non-traditional
locations and also improve return on invested capital. Red Robin's
units are mostly located in California, Colorado, North Carolina,
Ohio, Virginia, and Washington. The company expects to open around
50% of its targeted restaurants in 2012 in these states. While the
company seems comfortable expanding in familiar ground, we also
foresee management expanding in relatively new markets to avoid
market saturation.
Red Robin targets investment in the range of $50-$60 million in
2012 toward unit development. It also plans to increase investments
in equipment and store remodeling.
Red Robin currently has a Zacks #1 Rank, which implies a Strong
Buy rating over the short term. We reiterate our long-term
Outperform recommendation on the stock.
PF CHANGS CHINA (
PFCB
): Free Stock Analysis Report
PANERA BREAD CO (
PNRA
): Free Stock Analysis Report
RED ROBIN GOURM (
RRGB
): Free Stock Analysis Report
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