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RR

RED ROBIN GOURMET BURGERS INC (RRGB)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered revenue of $392.4M (+$3.8M YoY), comps +3.1%, GAAP diluted EPS $0.07 and Adjusted diluted EPS $0.19; restaurant-level operating margin expanded to 14.3% (+330 bps YoY), and Adjusted EBITDA more than doubled to $27.9M .
  • Against S&P Global consensus, Red Robin posted a major beat: Adjusted EPS $0.19 vs -$0.49* consensus, revenue $392.4M vs $388.8M*, and EBITDA (company-reported basis) well above EBITDA consensus ($24.6M vs $18.3M*) .
  • FY25 guidance trimmed on top-line: total revenue to $1.21–$1.23B (from $1.225–$1.250B), while restaurant-level margin (12–13%) and Adjusted EBITDA ($60–$65M) were maintained; capex raised to ~$30M .
  • Q2 2025 set-up: comps guided to ~-3% (240 bps loyalty headwind) and Adjusted EBITDA $13–$16M; management will not take further price in 2025, choosing to absorb tariff headwinds while banking on operating efficiency gains .
  • Leadership transition: Dave Pace (CEO) articulated four priorities—operational excellence, sustainable traffic growth via stronger marketing, debt reduction/free cash flow, and reinvestment in restaurants—which frame near-term catalysts and narrative shifts .

What Went Well and What Went Wrong

What Went Well

  • Labor efficiency gains arrived faster than expected, driving margin outperformance; “our operators delivered traction faster than we expected,” CFO noted, with restaurant-level operating margin at 14.3% (+330 bps YoY) .
  • Debt reduction and liquidity improved: the company repaid $17.8M and ended Q1 with ~$59.2M of liquidity (cash + revolver), strengthening its refinancing path .
  • New product momentum: the Hot Honey promotion exceeded expectations, supporting attach rates and the value narrative; management still aims to “bend the curve” on traffic through enhanced marketing .

What Went Wrong

  • Traffic down 3.5% YoY despite pricing tailwind; comps grew on net price (+6.8%) while mix and loyalty adjustments were slight headwinds .
  • Guidance tempered on macro/tariffs and traffic normalization; no further price action planned in 2025, increasing reliance on efficiency to preserve margins .
  • Selling expense fell to $9.4M vs $13.5M last year (pullback in media, overlapping a marketing test), underscoring near-term promotional/media recalibration while Q2 comps face a loyalty headwind .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Revenues ($USD Millions)$274.6 $285.2 $392.4
Restaurant Revenues ($USD Millions)$270.6 $280.6 $385.8
Net Income (Loss) ($USD Millions)$(18.9) $(39.7) $1.2
Adjusted EBITDA ($USD Millions)$2.1 $12.7 $27.9
Diluted EPS ($USD)$(1.20) $(2.48) $0.07
Adjusted Diluted EPS ($USD)$(1.13) $(0.94) $0.19
MarginsQ3 2024Q4 2024Q1 2025
Income from Operations as % of Total Revenues(4.7)% (11.8)% 2.3%
Restaurant-Level Operating Profit Margin9.0% 11.5% 14.3%
Revenue Mix ($USD Millions)Q3 2024Q4 2024Q1 2025
Restaurant Revenue$270.6 $280.6 $385.8
Franchise Revenue$3.0 $4.6 $4.5
Total Revenues$274.6 $285.2 $392.4
KPIsQ4 2024Q1 2025
Comparable Sales—Traffic YoY(3.4)% (3.5)%
Comparable Sales—Menu Price (net) YoY9.0% 6.8%
Comparable Sales—Mix YoY(1.0)% (0.1)%
Change in Unearned Loyalty Revenue YoY(1.6)% (0.1)%
Total Change in Comparable Restaurant Revenue YoY1.8% 3.1%
UnitsQ1 2025
Company-Owned—End of Period401
Franchised—End of Period90
Total Restaurants491

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Billions)FY 2025$1.225–$1.250 $1.21–$1.23 Lowered
Restaurant-Level Operating Profit (%)FY 202512.0–13.0 12.0–13.0 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$60–$65 (excl. SBC) $60–$65 Maintained
Capital Expenditures ($USD Millions)FY 2025$25–$30 ~$30 Raised (midpoint)
Comparable Restaurant Sales (%)Q2 2025N/A~ (3)% (incl. ~240 bps loyalty headwind) New
Adjusted EBITDA ($USD Millions)Q2 2025N/A$13–$16 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3’24; Q-1: Q4’24)Current Period (Q1’25)Trend
Labor efficiency and marginsMargin pressure easing by Q4; labor tools (HotSchedules) reboot; 2025 labor expected to drive margin gains Faster-than-expected labor traction supported margin beat; margin guide held at 12–13% Improving operational execution
Pricing vs valueQ4 noted ~8% price carry into Q1, rolling down to ~2% by Q4; ~1% incremental price in 2025 No further 2025 price increases; tariffs absorbed to protect value Price discipline; focus on value
Loyalty programRelaunched in 2024; membership ~14.9M; 25% new, 20% lapsed visits ~15.3M members; Q2 loyalty accounting headwind; still significant upside and learning curve Strategic lever with ongoing optimization
Marketing leadershipQ4 planned leadership enhancements and balanced tests across media channels CEO Pace onboarding Russ Klein (1-year) to build foundation; recalibrating spend Rebuild marketing engine to drive traffic
Product/innovationHot Honey platform planned for March; strong Donatos performance Hot Honey LTO exceeded expectations; attach rates healthy Positive product momentum
Tariffs/macroCommodity inflation ~3%; margin expansion driven mainly by labor Tariff headwind included in guide; no more pricing; traffic normalization embedded Macro caution; absorb cost via ops

Management Commentary

  • “We’re far from claiming victory… priorities: retain/extend operational progress, return to sustainable traffic growth with the right marketing leader/strategy, strengthen financial position by reducing debt and generating free cash flow, and reinvest back into restaurants.” — Dave Pace, CEO .
  • “Our operators delivered traction faster than we expected… Adjusted EBITDA increased due to cost-efficiency gains throughout the P&L, particularly in labor, and benefit of menu price increases.” — Todd Wilson, CFO .
  • “We are not planning any menu price increases in the remainder of 2025… we anticipate absorbing the current expected impact of tariffs as we prioritize maintaining value for our guests.” — Todd Wilson, CFO .
  • “Server handhelds” and continued tech upgrades were flagged by operators as next helpful tools, alongside facility reinvestment and compelling messaging to drive traffic — management .

Q&A Highlights

  • Margin durability: Guidance held at 12–13% despite Q1 upside; main headwinds are tariffs and softer traffic assumptions. Labor efficiency is the primary driver of margin improvements .
  • Pricing cadence: Q1 ~7% contribution to check growth; modeled ~4% in Q2/Q3 and ~2% in Q4; no further 2025 pricing .
  • Loyalty program efficacy: ~22% of visits from lapsed users and ~20% from new guests; management sees “significant upside” in program usage and personalization .
  • Portfolio actions: Expect ~14 closures in 2025; timing relatively even across the year; some restaurants on the closure list have improved performance, which could alter timing .
  • Media and selling expenses: ~$30M for 2025 maintained; near-term “breathing space” for new marketing leadership to refine plan; quarter-to-quarter spend broadly consistent .
  • Balance sheet/refi: Four owned properties remain post Q1 monetization; optimistic about term loan refinance progress following stronger quarter .

Estimates Context

MetricConsensus (S&P Global)Actual
Q1 2025 Revenue ($USD Millions)$388.8*$392.4
Q1 2025 Adjusted EPS ($USD)$(0.49)*$0.19
Q1 2025 EBITDA ($USD Millions)$18.3*$24.6 (EBITDA)
Q2 2025 Revenue ($USD Millions)$279.2*$283.7 (reported later)
Q2 2025 Adjusted EPS ($USD)$(0.06)*$0.26 (reported later)
FY 2025 Revenue ($USD Billions)$1.205*Company guide: $1.21–$1.23

Values with asterisks were retrieved from S&P Global. Company “Adjusted EPS” may differ from consensus methodologies; EBITDA comparison uses company-reported EBITDA (not adjusted).

Key Takeaways for Investors

  • Q1 print was a clean operational beat (EPS, EBITDA, margin) with comps positive and traffic still negative; efficiency gains, not pricing, drove upside .
  • Near-term setup is mixed: Q2 comps guided down ~3% on loyalty accounting and softer traffic, but EBITDA expected at $13–$16M as labor efficiencies persist .
  • Strategic pivot under new CEO centers on marketing capability rebuild (Russ Klein), debt reduction/free cash flow, and targeted reinvestment—key for sustainable traffic recovery and valuation re-rating .
  • No further 2025 price increases and tariff absorption elevate execution risk; watch for margin resilience vs macro pressures and any commodity/tariff changes .
  • Balance sheet improving (debt repayment, liquidity); refinancing the 2027 term loan is a recurring catalyst, aided by consistent EBITDA delivery .
  • Product innovation (Hot Honey) and appointment dining/value platforms are supporting dine-in traffic and attach rates; sustained narrative on everyday value remains central .
  • Street models should raise near-term EPS/EBITDA on Q1 beat while trimming FY revenue and comp assumptions to reflect guidance and macro/tariff headwinds .

Earnings Call Themes & Trends Expanded

TopicPrevious Mentions (Q-2 and Q-1)Current PeriodTrend
Technology initiativesHotSchedules reboot; data dashboards; third-party digital algo focus Operators want server handhelds; continued tech upgrades Build-out continues
Supply chain/COGSBasket inflation ~3%; beef up; efficiencies via supplier consolidation Tariff headwinds baked into guide; offset via ops savings Manageable with ops
Tariffs/macroMacro caution; price carry rolling down through 2024/25 Tariffs absorbed, no price increase; prudence in outlook Cautious stance
Product performanceDonatos outperformer; new menu in March Hot Honey exceeded expectations Positive
Regional trendsWeather impacts early Q1; West Coast comps dynamic Q1 front half stronger; normalizing thereafter Normalization
Regulatory/legalLitigation contingencies flowed through non-GAAP adjustments in prior periods Non-GAAP excludes SBC starting in 2025; reconciliations provided Cleaner non-GAAP
R&D/executionCulinary upgrades; hospitality improvements; managing partner program Maintain guest satisfaction; reinvest in facilities Execute and reinvest

Notes on non-GAAP adjustments: Beginning Q1 2025, Adjusted EBITDA and Adjusted Net Income exclude noncash stock-based compensation; prior periods were revised for comparability .

Appendix: Additional Relevant Press Releases (Q1 2025 Context)

  • Leadership transition: Dave Pace appointed CEO; Anthony Ackil becomes Chair; first-quarter comps expected ~+3% and Adjusted EBITDA to exceed prior Q1 outlook .
  • Hot Honey collaboration (Mike’s Hot Honey): new LTO items launched March 24, supporting innovation and value proposition .