Executive Summary

Q2 2025 delivered profitable execution despite softer top line: revenues $283.7M (-5.5% YoY), GAAP diluted EPS $0.21 (vs. -$0.61 YoY), adjusted diluted EPS $0.26, and adjusted EBITDA $22.4M (+64% YoY), driven by labor efficiency and lower selling spend; restaurant-level operating profit margin expanded 270 bps to 14.5% .
Versus S&P Global consensus, Red Robin posted a material beat: EPS -$0.06 est vs $0.26 actual; revenue $279.2M est vs $283.7M actual; EBITDA $18.0M est vs $20.7M actual; all three beats were significant, aided by ~4.4% net menu pricing and labor gains offsetting a 5.5% traffic decline .*
Guidance: FY25 total revenue trimmed to approximately $1.2B (from $1.21–$1.23B), restaurant-level margin and adjusted EBITDA maintained (12–13%; $60–$65M), capex maintained (~$30M; now the higher end), comps expected -3% to -4% for the remainder of FY25 .
Near-term catalyst: “Big Yummm” $9.99 value deal launched July 21 is improving traffic vs Q2 exit rate and will be supported by increased H2 marketing; refranchising interest is building with updates expected on the November call, both seen as traffic and balance sheet catalysts .

What Went Well and What Went Wrong

What Went Well

Margin expansion and profitability: restaurant-level operating profit margin rose to 14.5% (+270 bps YoY), adjusted EBITDA rose 64% YoY to $22.4M, and GAAP net income improved to $4.0M from a $9.5M loss, reflecting strong labor efficiency and disciplined marketing spend .
Debt reduction and improved leverage: $20.3M of debt repaid YTD; management cites ~2x net debt to adjusted EBITDA TTM leverage, positioning refinancing discussions well ahead of the 2027 maturity .
Early traction on First Choice plan/value strategy: "Since launching our Big YUMMM Burger Deal in July, we have seen meaningful improvement in traffic compared to our second quarter exit rate," CEO Dave Pace said, reinforcing the strategic value-led layer to rebuild sustainable traffic .

What Went Wrong

Traffic and comps pressure: comparable restaurant revenue fell 3.2% in Q2 (traffic -5.5% partially offset by 4.4% net pricing); guest traffic decelerated through the quarter amid competitive promotions and intentionally reduced selling expenses during the marketing transition .
Top-line softness and lowered revenue guide: total revenues declined $16.5M YoY, and FY25 total revenue guidance was reduced to approximately $1.2B (from $1.21–$1.23B) given expected comps declines in H2 .
Cost headwinds ahead: management flagged a $2–$3M H2 commodity headwind (ground beef, poultry) and noted a near-term ~1% drag to restaurant-level profitability from the Big Yummm value offering (approx. half in labor), pressuring COGS into the “24s” percent range from low-23% .

Financial Results

Quarterly Financials (reported)

Metric	Q4 2024	Q1 2025	Q2 2025
Total revenues ($USD Millions)	$285.2	$392.4	$283.7
GAAP diluted EPS ($)	-$2.48	$0.07	$0.21
Adjusted diluted EPS ($)	-$0.94	$0.20	$0.26
Restaurant-level operating profit margin (%)	11.5%	14.3%	14.5%
Income from operations as % of total revenues	-11.8%	2.3%	3.5%
Adjusted EBITDA ($USD Millions)	$12.7	$27.9	$22.4

Q2 2025 vs Prior Year and vs Estimates

Metric	Q2 2024	Q2 2025	Consensus (Q2 2025)	Actual vs Est
Total revenues ($USD Millions)	$300.2	$283.7	$279.2*	Beat
GAAP diluted EPS ($)	-$0.61	$0.21	N/A	N/A
Adjusted diluted EPS ($)	-$0.38	$0.26	-$0.06*	Beat
EBITDA ($USD Millions)	$8.9 (EBITDA)	$21.2 (EBITDA)	$18.0*	Beat

Note: SPGI “actual” EBITDA for Q2 2025 shows $20.7M*, which may reflect dataset conventions; company-reported EBITDA was $21.2M and adjusted EBITDA $22.4M .*
Values retrieved from S&P Global.*

Revenue Mix (Q2)

Revenue Component ($USD Thousands)	Q2 2024	Q2 2025
Restaurant revenue	$294,457	$279,305
Franchise revenue	$4,287	$3,186
Other revenue	$1,410	$1,212
Total revenues	$300,154	$283,703

KPIs and Comp Drivers

KPI (% change vs prior year)	Q1 2025 (16w)	Q2 2025 (12w)	YTD 2025 (28w)
Guest traffic	-3.5%	-5.5%	-4.3%
Menu price (net)	6.8%	4.4%	6.3%
Menu mix	-0.1%	-0.2%	-0.7%
Deferred loyalty revenue impact	-0.1%	-1.9%	-0.9%
Total comp change	+3.1%	-3.2%	+0.4%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total revenue	FY 2025	$1.21–$1.23B	~$1.20B	Lowered
Restaurant-level operating profit	FY 2025	12%–13%	12%–13%	Maintained
Adjusted EBITDA	FY 2025	$60–$65M	$60–$65M	Maintained
Capital expenditures	FY 2025	~$30M	~$30M (higher end)	Maintained (upper end)
Comparable restaurant sales	H2 FY 2025	N/A	-3% to -4%	Newly provided (decline)
Selling expenses	FY 2025	N/A	~$32M	Newly provided
G&A expense	FY 2025	~$87M (incl. ~$10M SBC)	~$80M (incl. ~$8M SBC)	Lowered

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024)	Previous Mentions (Q1 2025)	Current Period (Q2 2025)	Trend
Traffic & marketing strategy	Momentum into early Q1; loyalty relaunch; focus on guest value	Emphasis on finding the right marketing leader/strategy; sustainable traffic growth priority	“Big Yummm” launched; micro-targeted First Choice marketing roll-out in late Q3; increased H2 selling spend	Improving near-term setup (value + spend)
Labor efficiency	Operational enhancements gaining efficiency	Extend efficiency gains; 14.3% RLOP margin	300 bps labor improvement drives margin expansion; operators “hold serve” on execution	Positive
Commodities (beef/poultry)	Cost variability noted	Not highlighted materially	$2–$3M H2 headwind; COGS to creep into “24s” with value mix	Negative near term
Value offering & PPA	Drive value perception	Preparing for value-led tactics	Big Yummm at $9.99; ~9% mix; ~2–3% PPA drag; ~1% restaurant-level margin drag	Near-term pressure, long-term traffic
Portfolio optimization	Evaluating ~70 underperforming units; impairments	Closed/sold properties; debt paydown	Year-end company-owned units to 386; accelerated exits at low cost; refranchising outreach seeing interest	Balanced progress
Balance sheet & refinancing	Leverage and liquidity profile outlined	Debt reduced; further deleveraging targeted	~2x net debt/Adj. EBITDA TTM; aim to refinance in 2026	Improving
Technology & operations	Operational enhancements	Reinforce food and hospitality upgrades	New tech implementations; potential handhelds/tabletops; tools to support operators	Building

Management Commentary

“Our operators continued to deliver exceptional performance in the second quarter, achieving a significant increase in restaurant-level operating profit margin.” — Dave Pace, President & CEO .
“Initial guest reception has been strong with approximately 9% of guests choosing the Big Yum! Deal… Our guidance incorporates current traffic trends and a negligible change in PPA versus last year.” — Todd Wilson, CFO .
“We strongly believe the strategy we put in place will turn the ship around… our First Choice plan gives me tremendous confidence.” — Dave Pace .
“Through the first two quarters, we repaid approximately $20 million of debt… ~two times leverage on a trailing twelve month basis.” — Todd Wilson .

Q&A Highlights

Labor efficiency trajectory: continuous improvement without compromising guest experience; no hard target to avoid service risk .
Big Yummm impact: ~9% mix; ~2–3% PPA drag; ~1% restaurant-level margin drag (half labor); baseline early Q3 traffic down ~4% with intent to improve via messaging .
Marketing cadence: H2 selling expense roughly $16M (~$8M per Q3/Q4), up $2–$2.5M YoY per quarter, supporting Big Yummm and First Choice .
Unit closures/portfolio: improved performance moved ~20 restaurants off the “watch” list; accelerated exits negotiated with landlords; YE company-owned units expected at 386 .
Franchisee participation and performance: franchisees participating in promotions; historically operate at higher margins; company narrowing the gap .
Commodities and cost of sales: beef and poultry pressure implies $2–$3M H2 headwind; COGS likely into “24s” given value mix .
Refinancing timeline: target action in 2026, optimizing debt level and interest terms through lender discussions .

Estimates Context

Red Robin beat Wall Street consensus on EPS, revenue, and EBITDA for Q2 2025, reflecting stronger-than-anticipated labor efficiency and disciplined selling expenses despite traffic declines and a value mix shift. The breadth of the beat suggests estimates may need to rise for profitability while revenue expectations remain cautious due to guided comps declines .*

Metric	Consensus (Q2 2025)	Actual (Q2 2025)	Result
Primary EPS Consensus Mean ($)	-0.06*	0.26	Beat
Revenue Consensus Mean ($USD)	279,166,000*	283,703,000	Beat
EBITDA Consensus Mean ($USD)	17,993,330*	20,684,000*	Beat

Values retrieved from S&P Global.*
Note: Company-reported EBITDA was $21.2M and adjusted EBITDA was $22.4M, which differ from SPGI “actual” conventions .*

Key Takeaways for Investors

Execution is improving: margin expansion and adjusted EBITDA growth underscore operational leverage once traffic inflects .
Strategy pivot to value plus precision marketing should stabilize traffic; near-term PPA/margin drag is an investment for sustainable gains in 2026+ .
Revenue outlook reset lower to ~$1.2B with comps -3% to -4% in H2; expect cautious top-line through year-end even as profitability targets are maintained .
Cost pressures (beef/poultry) likely offset some operational gains in H2; watch COGS mix evolving with value offers .
Balance sheet de-risking continues: leverage ~2x and debt paydown support refinancing optionality in 2026; refranchising interest could add capital flexibility .
Near-term trading lens: strong EPS/EBITDA beat vs consensus and value-led traffic improvements are positive; lowered revenue guide and commodity headwinds temper enthusiasm. Monitor traffic trajectory under increased H2 marketing and November refranchising update .
Medium-term thesis: if First Choice plan delivers durable traffic and marketing ROI, structural margin gains plus deleveraging can drive multi-year EPS/FCF compounding despite competitive casual dining backdrop .

RED ROBIN GOURMET BURGERS INC (RRGB)·Q2 2025 Earnings Summary