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Red Robin (RRGB) Reports Q4 Business Update, Comps Decline

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Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) reported preliminary comparable restaurant sales for the fiscal fourth quarter ended Dec 27, 2020.

Preliminary Comparable Sales

Although Red Robin began fourth-quarter fiscal 2020 on an encouraging note, the momentum was negatively impacted by dining room closures and capacity limitations in key states of California, Colorado, Oregon and Washington due to rise in COVID-19 cases.

For the periods ended Nov 1, Nov 27 and Dec 27, comparable restaurant revenues fell 15.4%, 28.8% and 39.5%, respectively, on a year-over-year basis. Overall, comps declined 28.9% year over year during fiscal fourth quarter.

As of Dec 27, the company stated that 246 (or 57%) of the company-owned restaurants were operating with dining rooms open. Nonetheless, 35 dining rooms (or company-operated restaurants) have been reopened so far in 2021, with four additional re-openings in the pipeline.

In this regard, Paul J.B. Murphy III, Red Robin's president and chief executive officer, stated, “While the near-term is likely to remain volatile because of COVID-19, we are encouraged by recent state re-openings, and we expect indoor dining to be re-opened at 39 restaurants as of January 11th. We firmly believe Red Robin is well-positioned from both a sales and profitability standpoint when conditions normalize."

Off-Premise Sales a Major Growth Driver

Red Robin’s off-premise sales have more than doubled from its pre-COVID-19 levels. In fiscal fourth quarter, off-premise sales increased 132% year over year. Notably, reduction in menu items along with enhancement in online food ordering website have improved speed and accuracy of service.

Also, the company benefitted from the continuous rollout of Donatos. This led to approximately $45,000 per restaurant in incremental gross margin.

In the past three months, shares of Red Robin have surged 71.9% compared with the industry’s 5.9% growth.

Other Updates

Although the virus has triggered a catastrophe in terms of lives lost and financial impact, Red Robin is resilient enough to navigate through these uncertain times. Notably, the company has taken several actions to enhance liquidity, reduce costs and strengthen its organizational structure. As a result, cash burn in fiscal fourth quarter came in at approximately $1.5 million per week.

As on Dec 27, 2020, the company reported liquidity of approximately $128 million, inclusive of cash and borrowing capacity. However, total debt as of Dec 27 amounted to $170.6 million. Meanwhile, outstanding borrowings under its credit facility were reported at $169.8 million.

Zacks Rank & Key Picks

Red Robin currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are Jack in the Box Inc. (JACK - Free Report) , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Yum! Brands, Inc. YUM, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Jack in the Box has a three-five year earnings per share growth rate of 10.6%.

2021 earnings for Arcos Dorados and Yum! Brands are expected to rise 127.3% and 12.1%, respectively.

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