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Red Robin's (RRGB) Q4 Earnings & Revenues Miss, Margin Falls

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Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) reported its fourth-quarter fiscal 2022 results, with both earnings and revenues missing the Zacks Consensus Estimate.

Earnings & Revenue Discussion

In the fiscal fourth quarter, Red Robin reported an adjusted loss per share of $1.35, wider than the Zacks Consensus Estimate of a loss of 66 cents per share. In the year-ago quarter, the company reported an adjusted loss of $1.03 per share.

Quarterly revenues of $290.1 million missed the consensus mark of $293 million. The top line however increased 2.4% year over year. The upside was primarily driven by favorable guest check and increased menu mix and pricing.

During the quarter under review, comparable restaurant revenues rose 2.5% year over year, primarily driven by an 8.8% rise in guest check.  However, average guest count declined 6.3%. The rise in guest check can be attributed to a 7.3% increase in pricing, a 2.2% improvement in menu mix and a 0.7% decline in discounts.

Operating Results

The restaurant-level operating profit margin was 11.4% in the fiscal fourth quarter compared with 13% reported in the prior-year quarter.

During the fiscal fourth quarter, restaurant labor costs (as a percentage of restaurant revenues) increased 50 basis points (bps) year over year to 34.6%. The increase was primarily due to labor inflation.

Meanwhile, other operating costs declined 40 bps year over year to 17.9%. During the quarter under review, cost of sales increased 120 bps year over year to 24.9%. Occupancy costs fell 20 bps year over year to 7.7%.

Adjusted earnings before interest expenses, income taxes, depreciation and amortization (EBITDA) during the fiscal fourth quarter amounted to $8.9 million, unchanged from the year-ago quarter.

Other Financial Information

As of Dec 25, 2022, Red Robin had cash and cash equivalents of $48.8 million compared with $22.8 million as of Dec 26, 2021. Long-term debt as of Dec 25, 2022 was $203.2 million compared with $167.3 million as of Dec 26, 2021. Inventories during the quarter were $26.4 million, compared with $25.2 million in the year-ago period.

Fiscal 2022 Highlights

In fiscal 2022, total revenues increased 9% to $1.3 billion from fiscal 2021. Comparable restaurant revenues increased 9.2% year over year.

Operating costs as a percentage of restaurant revenues increased 130 bps to 87% in fiscal 2022.

Adjusted EBITDA declined to $52.8 million in fiscal 2022 from $63.5 million in fiscal 2021.

2023 Guidance

For 2023, the company expects total revenues to be approximately $1.3 billion.

Restaurant-level operating profit is anticipated to be at least 13%.

The selling, general and administrative costs are expected in the range of $120-$125 million. Capital expenditures are anticipated to be between $35 million and $40 million.

Adjusted EBITDA is expected in the range of $62.5-$72.5 million.

Zacks Rank & Key Picks

Red Robin currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the Zacks Retail-Wholesale sector are:

Chuy's Holdings, Inc. (CHUY - Free Report) currently sports a Zacks Rank #1. CHUY has a trailing four-quarter earnings surprise of 19.1%, on average. Shares of CHUY have increased 60.8% in the past six months.

The Zacks Consensus Estimate for CHUY’s 2023 sales and EPS suggests growth of 10.8% and 16.1%, respectively, from the corresponding year-ago period’s levels.

Arcos Dorados Holdings Inc. (ARCO - Free Report) carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth rate of 11.6%. Shares of the company have increased 13% in the past six months.

The Zacks Consensus Estimate for ARCO’s 2023 sales and EPS suggests growth of 8.1% and 4.2%, respectively, from the year-ago period’s levels.

Brinker International, Inc. (EAT - Free Report) carries a Zacks Rank #2. EAT has a long-term earnings growth rate of 7.1%. The stock has increased 47.3% in the past six months.  

The Zacks Consensus Estimate for EAT’s fiscal 2024 sales and EPS suggests growth of 3.9% and 36.5%, respectively, from the year-ago period’s reported levels.

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