Sign in

You're signed outSign in or to get full access.

RR

RED ROBIN GOURMET BURGERS INC (RRGB)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $0.265B, down 3.5% YoY, but above consensus; Adjusted EPS of -$0.70 beat S&P Global consensus (-$0.78), while GAAP diluted EPS was -$1.03 . Revenue and EPS consensus from S&P Global indicated a beat on both lines for the quarter (see Estimates Context).*
  • Restaurant-level operating margin improved 90 bps YoY to 9.9% as labor efficiency gains offset beef inflation; sequential traffic improved ~250 bps vs Q2 aided by the Big YUMMM value deal .
  • FY25 guidance was raised on Adjusted EBITDA (to at least $65M) and restaurant-level operating profit (to ≥12.5%) with capex increased to ~$33M to accelerate refresh/technology—total revenue maintained at ~$1.2B .
  • Capital structure actions (credit maturity extended to Sep-2027, $40M ATM program, Jefferies engaged for refinancing) plus refranchising interest provide financing optionality—potential near-term stock catalysts include execution on ATM/refi and traffic trajectory vs Q4 -3% comp guide .

What Went Well and What Went Wrong

What Went Well

  • Restaurant-level operating margin rose to 9.9% (+90 bps YoY) “almost entirely driven by labor efficiency improvements,” with Adjusted EBITDA up to $7.6M (+81% YoY) .
  • Big YUMMM value promotion “performed above expectations,” driving ~250 bps sequential traffic improvement and resonating in mid-week lunch; off-premise reached ~25% of sales with 2.9% traffic growth .
  • FY25 guidance raised: Adjusted EBITDA ≥$65M (from $60–$65M) and restaurant-level operating profit ≥12.5% (from 12–13%) reflecting momentum in operations and targeted investments .

Quote: “Our operators also continue to raise the bar on performance, delivering a 90-basis point improvement year-over-year in restaurant level operating profit margin, almost entirely driven by labor efficiency improvements.” — Dave Pace, CEO

What Went Wrong

  • Total revenues declined 3.5% YoY in Q3 as guest traffic fell 3.0% and mix -1.1%; beef cost inflation pressured cost of goods and is expected to persist into Q4 .
  • Management cited recent traffic slowing early in Q4 due to back-loaded marketing timing and consumer impact from the government shutdown; Q4 comps guided to ~-3% .
  • Selling expenses rose YoY in Q3 due to investments in delivery platforms and channels; Big YUMMM introduces near-term margin trade-offs to drive sustainable traffic .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Total Revenue ($USD Millions)$274.6 $283.7 $265.1
GAAP Diluted EPS ($)-$1.20 $0.21 -$1.03
Adjusted Diluted EPS ($)-$1.03 $0.26 -$0.70
Restaurant-Level Operating Margin (%)9.0% 14.5% 9.9%
Income from Operations Margin (%)-4.7% 3.5% -4.6%
Adjusted EBITDA ($USD Millions)$4.2 $22.4 $7.6

Segment/Category Revenue Breakdown

Revenue Category ($USD Millions)Q3 2024Q2 2025Q3 2025
Restaurant Revenue$270.605 $279.305 $260.909
Franchise Revenue$3.007 $3.186 $3.265
Other Revenue$1.026 $1.212 $0.954
Total Revenues$274.638 $283.703 $265.128

Comparable Restaurant Revenue Components (period-over-period)

ComponentQ1 2025 (16 wks ended Apr 20)Q2 2025 (12 wks ended Jul 13)Q3 2025 (12 wks ended Oct 5)
Guest Traffic-3.5% -5.5% -3.0%
Menu Price (net)+6.8% +4.4% +2.8%
Menu Mix-0.1% -0.2% -1.1%
Deferred Loyalty Revenue-0.1% -1.9% +0.1%
Total Change+3.1% -3.2% -1.2%

Operational/Liquidity Highlights (Q3 2025)

  • Adjusted EBITDA: $7.6M (+81% YoY) .
  • Debt outstanding under credit facility: $177.7M; liquidity ~$50.7M (cash + revolver availability) .
  • Credit agreement maturity extended from Mar-2027 to Sep-2027 (Fourth Amendment) .
  • Company-owned units: ended Q3 at 390; total restaurants 480 .

Non-GAAP note: Beginning in FY25 Q1, Adjusted EBITDA and Adjusted EPS exclude noncash stock-based compensation; prior periods recast for comparability .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025Approximately $1.2B Approximately $1.2B Maintained
Restaurant-Level Operating Profit (%)FY 202512.0%–13.0% At least 12.5% Raised (floor)
Adjusted EBITDA ($M)FY 2025$60–$65 At least $65 Raised (floor)
Capital Expenditures ($M)FY 2025~$30 ~$33 Raised
Comparable Restaurant Sales (%)Q4 2025Remainder FY25: -3% to -4% ~-3% Narrowed/tightened

Additional guidance color: cost of goods in Q4 expected similar to Q3; other operating costs to improve marginally on seasonal leverage; early Q4 traffic softness attributed to marketing timing shift and government shutdown impact .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Value platform (Big YUMMM)Launched July 21; ~9% guest selection; baseline near-term margin trade-off to drive traffic Performed above expectations; ~250 bps sequential traffic improvement; mid-week/lunch resonance; ~8% of sales mix Positive traction; expanding initiatives
Data-driven marketingTo roll out late Q3; micro-targeting to level playing field Initial cohort showed outsized traffic/sales; expanding to >100 restaurants with many delivering positive YoY traffic weeks Scaling systemwide
Off-premise & cateringFocus area; building capabilities Off-premise ≈25% of sales; traffic +2.9% Growing contribution
Labor efficiencySignificant gains; YoY restaurant margin +270 bps in Q2; focus to maintain Drives +90 bps restaurant margin YoY in Q3; maintaining guest satisfaction Sustained improvements
Commodity inflation (beef/poultry)Back-half headwind $2–$3M; COGS drifting from low-23% to mid-24% on value offering + commodities Beef inflation ~25% in Q3; guide similar in Q4; mitigation measures in place Persistent pressure
Capital structureFY25 deleveraging; refi planning for 2026 Credit maturity extended to Sep-2027; $40M ATM program; Jefferies engaged for refi Increased optionality
Restaurant refreshPilot ~20 units ahead of First Choice marketing 20 refreshes completed (~$40k per); early measurable sales/traffic improvements Accelerating
RefranchisingInterest from franchisees via Brookwood; updates expected Nov call Active indications of interest; refranchising remains an option in financing toolkit Progressing
Macro (gov’t shutdown)N/AEarly Q4 traffic slowed; attributed partly to shutdown and marketing timing shift Temporary headwind

Management Commentary

  • “Big YUMMM promotion performed above expectations and helped deliver a sequential traffic improvement of approximately 250 basis points from the second quarter…” — Dave Pace, CEO .
  • “Restaurant-level operating profit… almost entirely driven by labor efficiency improvements.” — Dave Pace, CEO .
  • “Adjusted EBITDA was $7.6 million… increase of $3.4 million versus Q3 2024” — Todd Wilson, CFO .
  • “We announced… a six-month extension… loan now maturing in September of 2027… engaged Jefferies… and… an at-the-market… up to $40 million” — Dave Pace, CEO .
  • “In recent weeks, we have seen guest traffic trends slow… due to intentional timing shifts in our marketing spend and the consumer impact of the government shutdown.” — Todd Wilson, CFO .

Q&A Highlights

  • Big YUMMM mix and cost: Mixing at ~8% of sales; beef inflation ~25% in Q3 expected similar in Q4, with mitigation underway .
  • Credit amendment cost: ~50 bps cost to extend maturity to September 2027 .
  • Data-driven marketing impact: Significant sequential traffic improvement across >100 targeted restaurants; many weeks showing positive YoY traffic .
  • Unit base and closures: Watch list shrinking; some accelerated closures via landlord negotiations; goal to stabilize and improve underperformers .
  • Q4 comps and G&A: Q4 same-store sales and traffic guided to ~-3%; G&A expected similar to Q3, supported by corporate efficiency initiatives .

Estimates Context

MetricConsensus (S&P Global)*Actual
Revenue ($USD)$256.746M*$265.128M
Primary EPS ($)-$0.7775*-$0.70 (Adjusted Diluted EPS)
# of EPS Estimates4*—
# of Revenue Estimates4*—

Values retrieved from S&P Global.*
Note: Company reports GAAP diluted EPS of -$1.03 and Adjusted diluted EPS of -$0.70; consensus “Primary EPS” aligns with adjusted/non-GAAP EPS basis .

Key Takeaways for Investors

  • Execution on value (Big YUMMM) and micro-targeted marketing is improving traffic sequentially; watch how these scale systemwide through Q4 into 2026 .
  • Margin story remains intact: labor efficiencies drove +90 bps YoY restaurant margin in Q3; the near-term value investment and beef inflation temper margins but set up for traffic-led leverage .
  • Guidance raised on EBITDA and restaurant-level margin with capex uplift—signals confidence in operational momentum and returns on refresh/technology .
  • Capital structure optionality (Sep-2027 maturity, ATM $40M, Jefferies refi, refranchising interest) reduces financing risk and could catalyze multiple compression if deleveraging continues .
  • Near-term monitoring: Q4 -3% comp guide amid marketing back-loading and macro noise; cost of goods expected similar to Q3; sequential performance and off-premise growth are key .
  • Non-GAAP changes excluding stock-based comp improve comparability of Adjusted EBITDA/EPS; ensure models reflect revised definitions from Q1 2025 onward .
  • Potential stock catalysts: ATM execution/refi progress, realization of data-driven traffic gains, refranchising announcements, and holiday demand vs Q4 comp guide .