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Red Robin is one of the most recent fast-food restaurant chains that may have to close underperforming locations due to financial issues. This week, the chain said that it is considering closing dozens of its sites in the United States.
Up to 70 underperforming locations, roughly 14% of the 498 restaurants that were open as of the end of the previous year, are to be closed. This choice was made after an analysis of the business' operations showed that these locations were not performing up to par. As early as the fourth quarter of fiscal 2024, the corporation had already closed one location.
According to a March 6 article by Fox 29, CEO G.J. Hart stated:
"While financial results for 2024 fell well below our original expectations, we've made substantial improvements to the guest experience and believe we still have a significant opportunity ahead of us to reach the full potential of our iconic brand.”
Since August 2019, G.J. Hart has been a member of the Red Robin Board of Directors and has been the company's President and CEO since September 2022. G.J. has almost 35 years of experience in the restaurant business, including time spent with both public and private companies.
Red Robin Burger chain is reportedly facing some losses
From 2018 until 2021, G.J. was the CEO of Torchy's Tacos, a privately held fast-casual restaurant chain. From 2011 to 2018, he served as California Pizza Kitchen's Executive Chairman and Chief Executive Officer.
During that time, he oversaw the company's Next Chapter of expansion through a program that gave it a fresh menu and increased average sales and profitability per store. G.J. was also the President of Texas Roadhouse Holdings from 2000 to 2011 and CEO and board member from 2004 to 2011.
G.J. also formerly held executive roles with Shenandoah Valley Poultry, TriFoods International, Al Copeland Investments, and the New Zealand Lamb Company. Now, he is the President and the CEO G.J. Red Robbin.
Hart stated during a Wednesday, March 5 call that the restaurants in question, which had already closed down, experienced operational losses of roughly $6 million last year, which had a negative impact on the company's restaurant-level operating profit.
Additionally, as per the same Fox report, the "review of underperforming restaurants" was a major factor in the $32.4 million loss it posted for the quarter, which is a significant drop from the $13.7 million loss recorded during the same time in 2023.
As per a USA Today report from the same day, Hart further said during the meeting call:
“2025 is off to a good start with the comparable restaurant revenue momentum we had exiting the fourth quarter, continuing through the first eight weeks of the first quarter.. With the strategy we have in place, we believe we are well positioned to deliver significant value to our guests and shareholders alike."
Hart further informed analysts during last week's earnings call that the company's traffic trends improved significantly between the first and fourth quarters of the year.
According to Hart, more than 300 Red Robin-owned locations are still doing well, thus the company's faltering eateries are not typical of the entire network. He further said that the anticipated closures will free up funds that may be used for debt repayment or firm reinvestment while also strengthening the causal chain's remaining portfolio.
Nevertheless, despite the loss, the company's adjusted EBITDA increased by 19%, demonstrating the effectiveness of its cost-cutting initiatives. In fiscal 2025, Red Robin intends to sell three homes in the first quarter. The company expects to utilize the $5.8 million it will make from the sale of those locations, in part to pay off its debt.
Additionally, through its "North Star" plan, which aims to improve operational efficiency and the guest experience, the corporation is concentrating on getting customers to return to its restaurants.
After two years of implementing Hart's North Star plan, Red Robin reported an increase in traffic from Q1 2024 to Q4 2024. Comparable restaurant revenue increased 1.8% when deferred loyalty revenue was taken into account. Comparable revenue, however, decreased 1.2% for the year.
However, Red Robin did not disclose which restaurant locations would close down.
