Red Robin (NASDAQ:RRGB) Misses Q1 Revenue Estimates, But Stock Soars 7.7%

Anthony Lee /
2024/05/29 4:16 pm EDT

Burger restaurant chain Red Robin (NASDAQ:RRGB) missed analysts' expectations in Q1 CY2024, with revenue down 7% year on year to $388.5 million. On the other hand, the company's outlook for the full year was close to analysts' estimates with revenue guided to $1.26 billion at the midpoint. It made a non-GAAP loss of $0.80 per share, down from its profit of $0.26 per share in the same quarter last year.

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Red Robin (RRGB) Q1 CY2024 Highlights:

  • Revenue: $388.5 million vs analyst estimates of $392.7 million (1.1% miss)
  • EPS (non-GAAP): -$0.80 vs analyst estimates of -$0.62
  • The company reconfirmed its revenue guidance for the full year of $1.26 billion at the midpoint (also maintained adjusted EBITDA guidance)
  • Gross Margin (GAAP): 13.2%, down from 17% in the same quarter last year
  • Same-Store Sales fell 6.5% year on year (slight miss vs. expectations of down 6.2% year on year)
  • (8.6% in the same quarter last year)
  • Market Capitalization: $106.7 million

Known for its bottomless steak fries, Red Robin (NASDAQ:RRGB) is a chain of casual restaurants specializing in burgers and general American fare.

Sit-Down Dining

Sit-down restaurants offer a complete dining experience with table service. These establishments span various cuisines and are renowned for their warm hospitality and welcoming ambiance, making them perfect for family gatherings, special occasions, or simply unwinding. Their extensive menus range from appetizers to indulgent desserts and wines and cocktails. This space is extremely fragmented and competition includes everything from publicly-traded companies owning multiple chains to single-location mom-and-pop restaurants.

Sales Growth

Red Robin is larger than most restaurant chains and benefits from economies of scale, giving it an edge over its smaller competitors.

As you can see below, the company's revenue was flat over the last five years as it closed restaurants.

Red Robin Total Revenue

This quarter, Red Robin missed Wall Street's estimates and reported a rather uninspiring 7% year-on-year revenue decline, generating $388.5 million in revenue. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months.

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Same-Store Sales

Same-store sales growth is a key performance indicator used to measure organic growth and demand for restaurants.

Red Robin's demand within its existing restaurants has been relatively stable over the last eight quarters but fallen behind the broader sector. On average, the company's same-store sales have grown by 1.5% year on year. Given its declining physical footprint over the same period, this performance stems from increased foot traffic at existing restaurants, which is sometimes a side effect of reducing the total number of locations.

Red Robin Year On Year Same Store Sales Growth

In the latest quarter, Red Robin's same-store sales fell 6.5% year on year. This decline was a reversal from the 8.6% year-on-year increase it posted 12 months ago. We'll be keeping a close eye on the company to see if this turns into a longer-term trend.

Key Takeaways from Red Robin's Q1 Results

We liked that Red Robin beat analysts' gross margin expectations this quarter. We were also glad its full-year revenue and adjusted EBITDA guidance was maintained and came in higher than Wall Street's estimates. On the other hand, the quarter itself was mediocre, with revenue and EPS missing analysts' expectations. Overall, this was a mixed quarter for Red Robin. The stock is up 7.7% after reporting and currently trades at $7.28 per share.

So should you invest in Red Robin right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.