Red Robin Details COVID-19 Action Plan

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Brand cuts executive pay by 20%, closes dining rooms and continues with to-go, delivery and catering options.

Red Robin Details COVID-19 Action Plan

By Anna Wolfe - 04/03/2020

As dining rooms remain closed during the COVID-19 pandemic, Red Robin Gourmet Burgers Inc. continue to serve guests through to-go, delivery and catering.

 “We have shifted our restaurants to an off-premise model and are strictly adhering to CDC, state and local guidelines,” said Paul J.B. Murphy III, Red Robin’s President and Chief Executive Officer, in a statement.

With stay at home orders for most of the US in place until May 1 and with third-party delivery providers suspending fees, many restaurants are pivoting towards off-premise including Red Robin. 

Doubling Sales

“We are encouraged by our continuing off-premise sales momentum, which has more than doubled over the past two weeks compared to our trends before the impact of COVID-19. This will help mitigate the decline in comparable restaurant revenues due to the closure of dine-in services at substantially all Red Robin-operated restaurants and enable us to focus on optimizing the execution of our off-premise channels both during and following the crisis.”

The brand had already taken steps to improve its online ordering, to-go and delivery execution and expand its delivery options. In January Red Robin corporate stores began offering delivery.

"Guests order directly from Red Robin, but the deliveries outsourced to a third-party. And this offers us three advantages: one, the economics are favorable; two, we retain guest data; and three, guests can use the Red Robin Royalty program, which is particularly important as 30% of our business is driven through the loyalty program," explained Murphy in a February 28 call with analysts. 

To help mitigate the impact of COVID-19, Red Robin has also

  • Implemented enhanced health and safety protocols across the business, emergency sick pay for hourly team members and telecommuting policies for nearly all corporate level employees
  • Reduced restaurant level costs and selling, general and administrative expenses, including reducing executive base salaries by 20%, effective March 30, and reducing board member cash retainer fees by 20%, while continuing to market off-premise opportunities primarily through digital channels;
  • Postponed or eliminated all non-essential spending, including capital expenditures including restaurant refreshes and IT projects

In light of the ongoing uncertainty regarding the duration and impact of the COVID-19 pandemic, Red Robin is among restaurant brands withdrawing their 2020 and long-term financial outlook.  

Murphy remains optimistic for the brand’s future. “We are confident the actions we are taking will ultimately provide us ample liquidity and allow Red Robin to emerge in an even stronger position when the recovery begins. We look forward to resuming normal operations at the appropriate time,” he said.