Red Robin Gourmet Burgers is shrinking its corporate workforce as it prepares to operate fewer of its own restaurants.
The casual-dining chain confirmed that it laid off a small number of employees to align with its new First Choice plan, which calls for the chain to refranchise some company-owned locations in order to pay down debt.
On a call with analysts this week, Red Robin CEO David Pace said the company is still determining just how many restaurants it will sell, but estimated it will be somewhere between 25 and 75. The transactions are expected to close next year.
The company is also planning to close up to 70 underperforming company-owned locations over the next five years, which will further reduce its corporate footprint.
Englewood, Colorado-based Red Robin currently operates about 400 of its 500 locations and said it intends to remain a largely company-owned system. But it is looking to clean up its balance sheet, which included $686 million in total liabilities as of April.
That will include cost reductions at the corporate level that are expected to save the company $10 million annually in G&A. It’s also working to lower restaurant expenses through supply chain efficiencies and technology investments.
Another phase of the First Choice plan will focus on driving traffic. On Monday, the chain is launching a $9.99 combo meal called Big Yummm that features a Red’s Double Tavern Burger, bottomless fries and a bottomless drink. It said the deal boosted traffic by a few percentage points in test markets.
First Choice builds upon Red Robin’s existing North Star plan, which began in 2023 under then-CEO G.J. Hart. Hart stepped down in April, passing the baton to Pace, who had been chairman of the board since 2019.
Hart’s initial plan had been showing signs of momentum. In the first quarter, Red Robin’s same-store sales rose 3.1%, and earnings before interest, taxes, depreciation and amortization soared by 108%.
But sales have come back to earth more recently. For the second quarter, same-store sales fell 4%, a sign that traffic remains an issue for the brand.
Still, investors are bullish on the new First Choice plan. Red Robin’s stock was up more than 13% since it was unveiled late Monday.
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