In a statement issued Wednesday, the company announced its plans to close most of about 70 failing restaurants over the next five years.
Now, 10-15 restaurants will go under for sure this year. Collectively, these troubled restaurants are responsible for roughly 14% of all of the 500 Red Robin restaurants in operation.
Financial Impact of Struggling Locations in 2024
All of them were company-owned restaurants that worked against Red Robin’s slumping profit. In 2024, they garnered a restaurant-level operating loss of $6 million, costing the company a loss of 2.1 points of the restaurant-based profit in total. Besides, Red Robin paid off around 9.5 million dollars in capital and fixed costs for them all last year.
The company took impairment charges on the restaurants in Q4. It expects to begin closing down most of them, as their leases expire over the next few years.
The need to close down the weaker sites then frees the remaining units up to even bigger potential and provides cash that the firm can reinvest back and apply on the debt, as stated by G.J. Hart, the CEO during an earnings call on Wednesday.
These closures come amid an otherwise strong earnings report from Red Robin. Same-store sales rose 3.4% in the fourth quarter and maintained that momentum into the early weeks of this year.
The chain has had success with a new loyalty program and by rolling out weekly value offers such as $10 Cheeseburger Tuesdays that have driven double-digit traffic growth.
In a year, traffic pressure rose again by 6%, and customer satisfaction scores were boosted by an impressive 8% compared to last year.
Work on turnaround and operational improvement.
On the morning of December, Red Robin’s stock skyrocketed more than 30 percent after such optimistic disclosures.
Overall, 2024 was still a down year for the chain. Total revenue decreased from $54.5 million, while net profit fell from $77.5 million.
The end-of-year momentum suggests that Red Robin’s three-year sometimes forgotten reboot under Hart is starting to bear fruit.
In 2025, Hart has made two real plans for progress: increasing traffic and upping productivity.
The first involved loyalty and personalized marketing, he said. Also noted was the introduction in March of a new hot-honey menu platform and the continuation of the weekday value program.
On the productivity side of the equation, employees in 2024 were given new software tools to help them work more efficiently including a new HotSchedules labor management system. Hart said the efficiencies yielded by these tools improved into the current calendar year. Among the chain’s goals is streamlining operations further with new opening and closing procedures and other changes meant to drive profits.
Red Robin anticipates the restaurant-level operating profit for the year to be about 12% to 13%, which indicates an increase of about 120 to 220 points in comparison with those of 2024.
We are expecting to become much more efficient, and that would be the biggest contributor to increased restaurant-level operating profit,” Hart said.
Strengthening the Portfolio and Future Goals
Hart said Red Robin’s ailing restaurants don’t represent the entire system — more than 300 company-owned units are still doing nicely. And critical closures would strengthen the casual chain’s remaining portfolio, filling up cash flowing either to be reinvested in the company or used to pay down debt, he said. The company may also look at other avenues to accelerate this process, and an update on that will be provided shortly.
Red Robin has embarked on its two-year North Star plan since Hart’s establishment and realized a 600-basis point improvement in traffic from Q1 2023 to Q4 2023. Including the deferred royalty revenue impact, comparable restaurant revenue grew by 1.8%. For the year, however, it fell by 1.2%.
Red Robin’s comparable restaurant revenue from Q1 2023 to Q4 was unpredictable under the scheme of January’s North Star Plan.
“Despite falling well short of expectations in 2024, we’ve made tremendous improvements in the customer experience and we still believe there are opportunities ahead to fully realize the potential of this iconic brand,” said Hart in a news release.
In sales, the company has made gains. Operators broke 1400 sales records over the past two years. The relaunch of Red Robin Royalty attracted 1.5 million new members within the year for a total of 14.9 million members and, as a result, drove traffic with both new and lapsed customers, Hart said.
