In order to boost its business, several U.S.-based restaurateurs are focused on unit expansion. Casual dining restaurant operator, Red Robin Gourmet Burgers Inc. (RRGB - Analyst Report), is also on an expansion spree for quite some time. With the resurgence of consumer confidence, management has accelerated its unit openings and plans to unveil another 20 units in 2013, half of which have already been opened.
Recently, Red Robin has declared that it will unveil a restaurant in Paramus, N.J., shortly. With this opening, the company will step into Paramus. The restaurant, positioned at the Bergen Town Center, will attract customers with its premium offerings and the contemporary ambience.
In order to avoid market saturation, Red Robin is establishing its presence in several untapped locations in the domestic market. The New Jersey market is newer for the company with only 10 units, as compared with California where it operates 70 restaurants.
As per the National Restaurant Association, New Jersey’s restaurants are expected to record $14.2 billion in sales in 2013. High demand and high spending ability of the state are favorable to its restaurant sector’s growth, which, we believe, has caught the attention of Red Robin.
This Colorado-based restaurateur recently unveiled a restaurant in St. Petersburg, Fla., another underserved market, where it operates only 13 units. We believe these openings will give a boost to the company’s sales.
Moreover, the company, which currently has more than 470 restaurants across the U.S. and Canada, is keen on expanding its smaller prototype restaurants — Red Robin’s Burger Works. These restaurants will likely accelerate its growth in non-traditional locations and also improve return on invested capital, going ahead.
Red Robin holds a Zacks Rank #1 (Strong Buy). Other players in the restaurant industry that look attractive at the current levels include AFC Enterprises Inc. , Jack in the Box Inc. (JACK - Analyst Report) and CEC Entertainment Inc. . All these stocks carry a Zacks Rank #2 (Buy).
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