As Red Robin Gourmet Burgers looks to turn around flagging traffic, it is getting a little help from Big Yummm.
The casual-dining chain’s new $9.99 value meal, which offers a Red's Double Tavern Burger plus a bottomless side and drink, has helped Red Robin build back traffic after it fell sharply in the second quarter.
Traffic at the 487-unit chain declined 5.5% from mid-May to mid-July, part of a 3.2% same-store sales decline. But since launching Big Yummm on July 21, traffic has improved to negative 4%.
About 9% of customers are ordering the meal, which can be upgraded with extra patties and toppings or a premium side for an additional charge. Still, it is expected to have a 2% to 3% negative impact on Red Robin’s check averages and a 1% drag on restaurant-level profit margins. And the chain is still expecting a same-store sales decline of 3% to 4% for the full year.
Value meals like Big Yummm have come to dominate restaurant menu marketing, including in casual dining, as brands try to lure consumers who have been walloped by inflation. After offering a series of specials tied to the day of the week, Red Robin determined that it needed a single, low-priced offer to “break through the noise” of competing promotions under $10, CEO David Pace said Wednesday.
Big Yummm is part of Red Robin’s new First Choice strategy, which is intended to build upon the North Star plan developed by former CEO G.J. Hart. Red Robin had been gaining momentum using the North Star playbook, but it has lost some ground more recently as competition heats up.
In addition to driving traffic, the First Choice plan will look to find money through cost savings and other measures, fix restaurants and create a high-performance culture at the company. It will involve refranchising dozens of restaurants to help Red Robin pay down debt.
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