8-K
RED ROBIN GOURMET BURGERS INC (RRGB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 9, 2023
RED ROBIN GOURMET BURGERS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-34851 | 84-1573084 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) |
10000 E. Geddes Avenue, Suite 500
Englewood, Colorado 80112
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (303) 846-6000
Not Applicable
(Former name or former address, if changed since last report.)
___________________________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | |
|---|---|---|---|
| Common Stock, $0.001 par value | RRGB | Nasdaq | (Global Select Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 2.02 Results of Operations and Financial Condition
On January 9, 2023, Red Robin Gourmet Burgers, Inc. issued a press release describing selected preliminary unaudited financial results for the fourth fiscal quarter of 2022. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Item 2.02, including the information set forth in Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
ITEM 7.01 Regulation FD Disclosure
On January 9, 2023, the Company is making an investor presentation that includes the slides furnished as Exhibit 99.2 to this Current Report on Form 8-K. The slides contained in Exhibit 99.2 are also posted on the Company’s website at www.redrobin.com.
The information in this Item 7.01, including the information set forth in Exhibit 99.2, shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Red Robin Gourmet Burgers, Inc. Press Release dated January 9, 2023 |
| 99.2 | Red Robin Gourmet Burgers, Inc. Investor Presentation dated January 9, 2023 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: January 9, 2023
RED ROBIN GOURMET BURGERS, INC.
| By: | /s/ Todd Wilson |
|---|---|
| Name: | Todd Wilson |
| Title: | Executive Vice President and Chief Financial Officer |
2
Document
Exhibit 99.1
Red Robin Gourmet Burgers, Inc. Releases “North Star” Five-Point Plan to Drive Long-Term Shareholder Value
Reports Preliminary Revenue Results for the Fourth Quarter Ended December 25, 2022
Announces Evaluation of Sale-Leaseback Transaction
Hosting Fireside Chat at the 25th Annual ICR Conference at 10:00 AM Eastern Time Today; Participating at the Jefferies 12th Annual Winter Restaurant, Foodservice, Gaming, Lodging & Leisure Summit on January 23-24
Englewood, CO – January 9, 2023 – Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) ("Red Robin" or the "Company"), a full-service restaurant chain serving an innovative selection of high-quality gourmet burgers and American favorites in a family-friendly atmosphere, today released its “North Star” five-point plan to drive long-term shareholder value. The Company also reported preliminary, unaudited revenue results for the fourth quarter ended December 25, 2022 and announced it is evaluating a Sale-Leaseback transaction.
G.J. Hart, Red Robin’s President and Chief Executive Officer said, “We are excited to release our ‘North Star’ five-point plan, designed to drive long-term shareholder value and enhance Red Robin’s competitive positioning. With our menu of gourmet burgers and American favorites, attractive atmosphere, and playful environment that connects friends and family, the brand not only carries great memories for our most loyal guests but also appeals to a broad demographic. While the business has faced challenges in recent years due to the impact of COVID and at times execution that has not met our standards, we are committed to taking bold action through new executive leadership to deliver long term sustainable growth. We are thankful to have an excellent team of dedicated General Managers and team members and are committed to providing them with the resources necessary to ensure a great experience for guests and strong business results for their restaurants. We have identified multiple levers to build sales and increase profitability and are now moving to aggressive implementation to drive our success in 2023 and beyond.”
The “North Star” Five-Point Plan Consists of the Following:
Transform to an operations focused restaurant company:
•Empower decision making by Operators at the unit level
•Incent and reward Operators to drive business growth and results
•Restructured support organization
Elevate the guest experience:
•Invest in People, food quality, and the restaurant facility
•New cooking platform to fully deliver on our commitment of Gourmet Burgers
•Menu refresh adding variety of both offerings and price points
Remove costs and complexity:
•Optimize the supply chain to reduce costs and ensure consistent delivery of high-quality product
•Evaluate vendors for need, performance, and competitive costs
•Implement ongoing process to reduce costs through actions that uphold our commitment to a great guest experience
Optimize guest engagement:
•Engage with and support the local communities in which we operate
•Enhance the off-premise experience
•Further build and engage with guests through Red Robin Royalty® loyalty program
Drive growth in comparable restaurant revenue & unit level profitability, and deliver financial commitments:
•Regain credibility with the investment community
•Drive performance in the existing base of restaurants, earning the right to resume new unit growth
•Deliver financial guidance commitments
Hart continued, “The North Star initiatives will guide our efforts over the next 3 years, and we believe present an opportunity to more than double Adjusted EBITDA margin. In conjunction with our announcement to evaluate a Sale-Leaseback transaction, we are committed to building a successful and sustainable business, and creating value for shareholders.”
Preliminary Revenue Results for the Fourth Quarter, as Compared to the Prior Year as Applicable, Included the Following:
•Total revenue of approximately $290.2 million increased 2.4% compared to the fourth quarter of 2021
◦Red Robin Royalty® membership is approximately 11.3 million members, an increase of approximately 0.3 million
•Comparable restaurant revenue(1) increased 2.5% compared to the fourth quarter of 2021
◦This is the 8th consecutive quarter of positive comparable restaurant revenue(1) growth.
◦Comparable restaurant revenue(1) in the fourth quarter of 2022 includes a benefit of approximately $2.8 million due to the Company's assessment of breakage related to its Red Robin Royalty® program. Excluding this benefit, comparable restaurant revenue(1) would have increased 1.5% compared to the fourth quarter of 2021.
(1) Comparable restaurant revenue represents revenue from Company-owned restaurants that have operated five full quarters as of the end of the period presented.
◦Comparable restaurant revenue(1) at restaurants with Donatos® outperformed restaurants without Donatos® by 6.2% in the fourth quarter of 2022 as compared to 2019. 247 restaurants offer Donatos® as of the end of fiscal 2022.
The above results are preliminary and subject to year-end closing adjustments.
Hart concluded, “The continued growth in comparable restaurant revenue demonstrates our brand strength and provides a strong foundation to support revenue and Adjusted EBITDA growth in 2023.”
Evaluation of Sale-Leaseback Transaction
Red Robin also announced it is evaluating a Sale-Leaseback transaction related to up to 35 owned properties. The Company has engaged CBRE Group to lead the process and anticipates the proceeds will be used to repay debt, fund capital investments, and repurchase shares of company stock, subject to the terms of the Company's Credit Agreement and approval by the Board of Directors. Red Robin expects the evaluation process to be complete in the first quarter of 2023 and if pursued, a transaction to be finalized in the first or second quarter of 2023.
ICR Conference and Jefferies Summit Participation
Red Robin is hosting a fireside chat at the 25th Annual ICR Investor Conference at the JW Marriott Orlando Grande Lakes today at 10:00 AM Eastern Time. The Company will also be participating in a pre-recorded fireside chat at the Jefferies 12th Annual Winter Restaurant, Foodservice, Gaming, Lodging & Leisure Summit, which will be available for on-demand viewing beginning on January 21, 2023. These webcasts will be available from the Company's website at ir.redrobin.com/news-events/ir-calendar. Red Robin will be meeting with institutional investors at both conferences – January 9-10, 2023 and January 23-24, 2023, respectively.
About Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB)
Red Robin Gourmet Burgers, Inc. (www.redrobin.com), is a casual dining restaurant chain founded in 1969 that operates through its wholly-owned subsidiary, Red Robin International, Inc., and under the trade name, Red Robin Gourmet Burgers and Brews. We believe nothing brings people together like burgers and fun around our table, and no one makes moments of connection over craveable food more memorable than Red Robin. We serve a variety of burgers and mainstream favorites to guests of all ages in a casual, playful atmosphere. In addition to our many burger offerings, Red Robin serves a wide array of salads, appetizers, entrees, desserts, signature beverages and Donatos® pizza at select locations. It's now easy to enjoy Red Robin anywhere with online ordering available for to-go, delivery and catering, or you can download our new app for easy customization, access to the Red Robin Royalty® dashboard and more. There are more than 520 Red Robin restaurants across the United States and Canada, including those operating under franchise agreements. Red Robin… YUMMM®!
Forward-Looking Statements
Forward-looking statements regarding the Company's future performance; “North Star” strategic plan; preliminary results including revenue; Adjusted EBITDA projections; potential Sale-Leaseback transactions, timing and anticipated uses of proceeds including potential share repurchase; capital expenditures including investment in our restaurants and systems, new restaurant growth; pricing expectations; our ability to mitigate cost inflation; and all other statements that are not historical facts are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions believed by the Company to be reasonable and speak only as of the date on which such statements are made. Without limiting the generality of the foregoing, words such as "expect," "believe," "anticipate," "intend," "plan," "project," "could," "should," "will," "outlook" or "estimate," or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements based on a number of factors, including but not limited to the following: the effectiveness of the Company's strategic initiatives, including labor and service models, and operational improvement initiatives and our ability to execute on such strategic initiatives; our ability to recruit, staff, train, and retain our workforce; the impact of COVID-19 and new variants on our results of operations, staffing levels, supply chain, and liquidity; the effectiveness and timing of the Company's marketing strategies and promotions; menu changes and pricing strategy; the implementation, rollout, and timing of technology solutions; our ability to achieve revenue and cost savings; competition in the casual dining market and discounting by competitors; changes in consumer spending trends and habits; changes in the availability and cost of food products, labor, and energy; general economic and operating conditions, including changes in consumer disposable income, weather conditions, and other events affecting the regions where our restaurants are operated; the adequacy of cash flows and the cost and availability of capital or credit facility borrowings; changes in federal, state, or local laws and regulations affecting the operation of our restaurants, including minimum wage and tip credit regulations, consumer and occupational health and safety regulations, health insurance coverage and other benefits, nutritional disclosures, and employment eligibility-related documentation requirements; costs and other effects of legal claims by Team Members, franchisees, customers, vendors, stockholders, and others, including negative publicity regarding food safety or cyber security; and other risk factors described from time to time in the Company's Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the U.S. Securities and Exchange Commission.
For media relations questions:
Joanna Kaufman, Red Robin Gourmet Burgers, Inc.
jkaufman@redrobin.com
(410) 458-2308
For investor relations questions:
Raphael Gross, ICR
investor@redrobin.com
(203) 682-8253
exhibit992investorpresen
ICR 2023
Copyright 20232 Proprietary and confidential FORWARD LOOKING STATEMENTS Forward-looking statements regarding the Company's future performance; “North Star” strategic plan; preliminary results including revenue; Adjusted EBITDA projections; potential Sale-Leaseback transactions, timing, and anticipated uses of proceeds including potential share repurchases; capital expenditures including investment in our restaurants and systems, new restaurant growth; pricing expectations; our ability to mitigate cost inflation; and all other statements that are not historical facts are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions believed by the Company to be reasonable and speak only as of the date on which such statements are made. Without limiting the generality of the foregoing, words such as "expect," "believe," "anticipate," "intend," "plan," "project," "could," "should," "will," "outlook" or "estimate," or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those described in the statements based on a number of factors, including but not limited to the following: the effectiveness of the Company's strategic initiatives, including labor and service models, and operational improvement initiatives and our ability to execute on such strategic initiatives; our ability to recruit, staff, train, and retain our workforce; the impact of COVID-19 and new variants on our results of operations, staffing levels, supply chain, and liquidity; the effectiveness and timing of the Company's marketing strategies and promotions; menu changes and pricing strategy; the implementation, rollout, and timing of technology solutions; our ability to achieve revenue and cost savings; competition in the casual dining market and discounting by competitors; changes in consumer spending trends and habits; changes in the availability and cost of food products, labor, and energy; general economic and operating conditions, including changes in consumer disposable income, weather conditions, and other events affecting the regions where our restaurants are operated; the adequacy of cash flows and the cost and availability of capital or credit facility borrowings; changes in federal, state, or local laws and regulations affecting the operation of our restaurants, including minimum wage and tip credit regulations, consumer and occupational health and safety regulations, health insurance coverage and other benefits, nutritional disclosures, and employment eligibility-related documentation requirements; costs and other effects of legal claims by Team Members, franchisees, customers, vendors, stockholders, and others, including negative publicity regarding food safety or cyber security; and other risk factors described from time to time in the Company's Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the U.S. Securities and Exchange Commission.
Copyright 20233 Proprietary and confidential RRGB OVERVIEW 1) Represents total system, including Company owned and Franchise locations 2) Comparable Company-owned restaurants as of 10/2/2022 3) Total Company-owned restaurants 4) Adjusted EBITDA is a non-GAAP measure. See appendix for reconciliation to TTM Q3’22 Net Loss of $54.9M. FOUNDED/HEADQUARTERS 1969/DENVER, CO GEOGRAPHICAL PRESENCE1 44 STATES 1 CANADIAN PROVINCE RESTAURANTS1 511 RESTAURANTS RESTAURANT PROFILE MIX1 81% COMPANY-OWNED 19% FRANCHISE-OWNED Q3’22 RED ROBIN ROYALTY® MEMBERSHIP 11M Q3’22 RESTAURANT SALES MIX3 72% DINE-IN 28% OFF-PREMISES Q3’22 DINE-IN/OFF-PREMISE AVERAGE GUEST CHECK3 $37.43/$30.49 TTM Q3’22 TOTAL REVENUE1 $1.3B TTM Q3’22 ADJUSTED EBITDA4 $53M TTM Q3’22 RESTAURANT MARGIN3 13.4% TTM Q3’22 AVERAGE UNIT VOLUME2 $2.9M AVERAGE RESTAURANT SIZE3 6,300 SQ. FT. LISTED EXCHANGE NASDAQ Global Select Market Alaska British Colombia
Copyright 20234 Proprietary and confidential RISE TO SUCCESS ▪ Red Robin founded in 1969 ▪ IPO in 2002 ▪ Achieved significant growth throughout early 2000s ▪ Delivered a compelling brand promise of family and friends connecting over awesome American food and bottomless fun ▪ Developed competitive advantages: ▪ High value ▪ Unbridled hospitality ▪ Family friendly, fun and lively atmosphere ▪ Iconic brand with broad appeal allowed unit expansion into national footprint ▪ Large and loyal fan base
Copyright 20235 Proprietary and confidential TOTAL REVENUE AND RESTAURANT COUNT GREW THROUGH 2017 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Restaurants Total Revenue Total Revenue (1,000s) $486 $619 $763 $869 $841 $864 $915 $977 $1,017 $1,146 $1,258 $1,296 $1,388 $1,339 $1,315 $869 $1,162 $1,267* Number of Restaurants (End of Year) 299 347 384 423 439 450 464 472 495 514 538 551 566 573 556 546 531 511 Total Revenue Source: Company 10-K filing *Preliminary. Subject to year end closing adjustments
Copyright 20236 Proprietary and confidential CD Avg 100 103 99 96 96 97 94 93 94 96 93 94 102 102 104 99 97 92 93 85 91 92 90 84 75 80 85 90 95 100 105 110 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YTD CD Avg Red Robin Overall Rating: Top Box Index Better than Casual Dining Average Worse than Casual Dining Average AFTER HAVING ONCE BEEN A LEADER IN GUEST SATISFACTION IN THE INDUSTRY, WE HAVE SEEN A STEADY DECLINE CLASSIFIED – INTERNAL USE ONLY | PAGE 6 Source: Technomic, All Data Indexed to CD Avg. In 2011c
Copyright 20237 Proprietary and confidential Degradation of food quality Labor reductions that impacted the Guest experience Under investment in the business AFTER MANY YEARS OF GROWTH, COST-CUTTING DECISIONS THAT WERE WELL INTENDED BUT POORLY EXECUTED DIMINISHED BOTH THE GUEST EXPERIENCE AND OUR RESULTS
Copyright 20238 Proprietary and confidential WHEN WE EXECUTE ON OUR PROMISE, GUESTS GIVE US A LOT OF CREDIT ▪ Burgers: gourmet burgers, creative take on traditional burgers, we do burgers great ▪ Bottomless Steak Fries and Sides ▪ Fun and Lively Atmosphere: that allows people to be themselves ▪ Family Friendly Environment: food kids really like, welcoming to kids ▪ Environment that Fosters Connection: where Guests can catch up or connect with others Source: Kantar custom field study research among current and prospective Guests
Copyright 20239 Proprietary and confidential OVERALL SATISFACTION IS HIGHEST IN OUR TOP PERFORMING COMPARABLE RESTAURANT SALES RESTAURANTS 84 86 88 90 92 94 96 98 100 102 Bottom 10% Fourth 25% Third 25% Second 25% Top 25% Top 10% Overall Satisfaction Company Owned Restaurants, Grouped by Comparable Restaurant Sales Indexed to Top 10%=100 We grouped restaurants by YTD P12.2022 comparable restaurant sales and overlayed Guest satisfaction scores (OSAT)
Copyright 202310 Proprietary and confidential 38% 32% 7% 6% 67% 41% 0% 10% 20% 30% 40% 50% 60% 70% 80% SSS % Traffic % OSAT % Headcount vs Par GM Tenure in Role (Years) GM Tenure at RRGB (Years) Top Quartile vs. Bottom Quartile Variance Top Quartile vs Bottom Quartile Restaurants: ▪ SSS: 38% better ▪ Traffic: 32% better ▪ OSAT: 7% better ▪ 6% better staffed (vs. Par) ▪ GM in role 67% longer ▪ GM with RRGB 41% longer Company Owned Restaurants, Grouped by Comparable Restaurant Sales WHEN WE EXECUTE THE BRAND, WE WIN!
Copyright 202311 Proprietary and confidential OUR NORTH STAR Transform to an Operations Focused Restaurant Company: ▪ Empower decision making by Operators at the unit level ▪ Incent and reward Operators to drive business growth and results ▪ Restructured support organization Elevate the Guest Experience: ▪ Invest in People, food quality, and the restaurant facility ▪ New cooking platform to fully deliver on our commitment of Gourmet Burgers ▪ Menu refresh adding variety of both offerings and price points
Copyright 202312 Proprietary and confidential OUR NORTH STAR (CONT.) Remove Costs and Complexity: ▪ Optimize the supply chain to reduce costs and ensure consistent delivery of high-quality product ▪ Evaluate vendors for need, performance, and competitive costs ▪ Implement ongoing process to reduce costs through actions that uphold our commitment to a great Guest experience Optimize Guest Engagement: ▪ Engage and support local communities in which we operate ▪ Enhance the off-premises experience ▪ Further build and engage Guests through Red Robin Royalty® loyalty program Drive Growth in Comparable Restaurant Revenue & Unit Level Profitability, and Deliver Financial Commitments: ▪ Regain credibility with the investment community ▪ Drive performance in the existing base of restaurants, earning the right to resume new unit growth ▪ Deliver financial guidance commitments
Copyright 202313 Proprietary and confidential January 9-11 ICR Conference January 22-24 Jefferies Winter Restaurant, Foodservice, Gaming, Lodging & Leisure Summit February Q4 and 2022 Earnings Release, Including 2023 Guidance INVESTOR RELATIONS 2023 CALENDAR
THANK YOU!
Copyright 202315 Proprietary and confidential APPENDIX: NON-GAAP RECONCILIATION (in thousands, unaudited) Fifty Two Weeks Ended 10/2/2022 Net loss as reported (54,918) Interest expense, net 18,870 Income tax provision (benefit) 629 Depreciation and amortization 78,378 EBITDA 42,959 Asset impairment 18,743 Gain on sale of restaurant property (9,204) Change in accounting estimate, gift card breakage (5,246) Executive transition 1,954 Other financing costs 1,392 COVID-19 related charges 599 Restaurant closure costs (gains) 1,284 Closed corporate office, net of sublease income 267 Litigation contingencies 47 Adjusted EBITDA 52,795