Red Robin Gourmet Burgers, Inc. Q3 FY2025 earnings call

• Launched the "First Choice" plan with goals to be the first choice for guests, team members, and investors. Traffic trends improved in Q3 due to Big Yummm promotion and off-premise growth.
• Achieved labor efficiency gains while maintaining guest satisfaction, driving a 90 basis point improvement in restaurant level operating profit.
• Big Yummm burger deal performed above expectations, resulting in a 250 basis point sequential traffic improvement.
• Launched data-driven marketing initiative with microtargeting capabilities to engage guests better.
• Off-premise business grew, representing 25% of sales in Q3 with 2.9% traffic growth.
• Explored capital structure initiatives including extending credit agreement term, engaging Jefferies for debt refinancing, establishing an ATM program, and refranchising efforts.
• Successfully completed refreshes in 20 restaurants across 4 markets, seeing measurable improvements in sales and traffic.
• Modestly raised CapEx guidance for 2025 to accelerate key initiatives supporting team members and guest experience.

In the third quarter, traffic trends improved sequentially supported by the Big Yummm promotion and off-premise growth. Restaurant level operating profit improved 90 basis points year-over-year, driven almost entirely by labor efficiency. Off-premise business represented approximately 25% of sales in Q3 and delivered traffic growth of 2.9%. Comparable restaurant revenue declined 1.2% in Q3, with a 1.7% increase in net menu price offset by a 3% decline in guest traffic. Restaurant level operating profit as a percentage of restaurant revenue was 9.9%, up 90 basis points year-over-year. Adjusted EBITDA was $7.6 million in Q3 2025, up $3.4 million from Q3 2024 due to cost efficiency gains and menu price increases.

• Total revenue expected to be approximately $1.2 billion, unchanged from prior guidance, with comparable restaurant sales expected to decline ~3% in Q4 and ending 2025 with 386 company-owned restaurants.
• Restaurant-level operating profit expected to be at least 12.5%, up from prior guidance of 12%-13%.
• Adjusted EBITDA expected to be at least $65 million, up from prior guidance of $60 million-$65 million.
• Capital expenditures expected to be approximately $33 million, up from prior guidance of $30 million as part of executing the "First Choice" Plan.

• Market uncertainties and competition could impact traffic and sales.
• Fluctuations in cost of goods, particularly beef inflation, could affect profitability.
• Execution risks related to implementing the "First Choice" Plan initiatives, including refranchising and debt refinancing, may not proceed as expected.

Q: About the Big Yummm initiative, what's the mix as a portion of sales and future potential?

A: Big Yummm mixes at about 8% of sales. There's still fruit in front of us to drive further improvement, with plans to expand its impact.

Q: On G&A sustainability, how is it and future expectations?

A: G&A is sustainable at current levels, expected to hold, with potential for further expansion of opportunities.

Q: Comp guidance for Q4, thought process behind it?

A: Q4 comp expected to be down 3% due to traffic and mix considerations, with backloaded marketing and menu price factors influencing the expectation.