Red Robin expects to close the majority of about 70 underperforming restaurants over the next five years, the company announced Wednesday.
The closures will start with about 10 to 15 locations this year. All told, the struggling restaurants account for about 14% of the company’s 500 locations.
The restaurants, all company-owned, have been a drag on Red Robin’s profits. In 2024, they generated a restaurant-level operating loss of about $6 million, which knocked more than 2 points off of the company’s total restaurant-level operating profits. Red Robin also burned about $9.5 million on the restaurants in capital expenditures and G&A last year.
The company wrote down the value of the restaurants in the fourth quarter. It expects to close the majority of them as their leases expire in the coming years.
The weeding out of weaker locations will allow Red Robin’s remaining units to shine and will free up cash that the company can reinvest and use to pay debt, CEO G.J. Hart told analysts during an earnings call Wednesday.
The news of the closures came amid an otherwise strong earnings report for Red Robin. Same-store sales rose 3.4% in the fourth quarter and have carried that momentum into the first part of this year.
The chain has had success with a new loyalty program and with a weekly rotation of value offers such as $10 Cheeseburger Tuesdays, which has driven double-digit traffic growth.
Over the course of the year, traffic increased by 6%, and customer satisfaction scores jumped 8% compared to the prior year.
Red Robin's stock soared more than 30% on Thursday morning following the positive report.
Overall, 2024 was still a down year for the chain. Total revenue decreased by $54.5 million and net income fell by $77.5 million.
But the late-year momentum is a sign that Red Robin’s three-year turnaround plan under Hart is beginning to take hold.
For 2025, Hart outlined two priorities that will help the chain continue its progress: driving traffic and boosting productivity.
On the first point, loyalty and more personalized marketing will play a big role, he said. He also highlighted a new Hot Honey menu platform launching in March and the continuation of the weekday value program.
As for productivity, employees in 2024 were given new software tools to help them operate more efficiently, including a new HotSchedules labor management system. Hart said the benefits from these tools continue to improve. This year, the chain will look to streamline operations further with new opening and closing procedures and other changes intended to drive profits.
For the year, Red Robin expects restaurant-level operating profit of 12% to 13%, which would be an increase of 120 to 220 basis points compared to 2024.
“We expect to become much more efficient with our labor costs, and this is the primary driver of our expected increase in restaurant-level operating profit,” Hart said.
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