It has been about a month since the last earnings report for Red Robin (RRGB Quick QuoteRRGB - Free Report) . Shares have lost about 23.6% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Red Robin due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Red Robin Gourmet Burgers, Inc. before we dive into how investors and analysts have reacted as of late.

Red Robin Q2 Earnings Miss Estimates, Revenues Surpass, Both Down Y/Y

Red Robin posted second-quarter fiscal 2026 results, with earnings missing the Zacks Consensus Estimate while revenues beat the same. 

Adjusted earnings of 12 cents per share missed the consensus estimate of 28 cents by 57.1%. The bottom line declined 53.8% year over year. 

Quarterly revenues of $277.64 million fell 2.1% year over year but beat the consensus mark of $276 million by 0.6%. Comparable restaurant revenues increased 1.3%, supported by a 1.5% increase in average guest check despite a 0.2% decline in traffic.

RRGB’s Q2 Revenue Performance

Restaurant revenues were $272.62 million in the fiscal second quarter compared with $279.31 million in the prior-year period. Management stated that the decline in total revenues primarily reflected restaurant closures, partly offset by higher comparable sales.

Franchise revenues increased to $3.64 million from $3.19 million a year ago. Other revenues rose to $1.38 million from $1.21 million. Management noted that the quarter marked the company’s best traffic performance since the first quarter of fiscal 2023.

Red Robin’s Q2 Operating Results

Restaurant-level operating profit was $40.08 million compared with $40.51 million in the year-ago quarter. Restaurant-level operating profit margin expanded 20 basis points to 14.7%, the highest second-quarter margin since 2022.

The margin improvement primarily reflected higher average guest check, cost savings and labor efficiencies, which helped offset inflation. Management said labor efficiency initiatives generated approximately 50 basis points of year-over-year savings while guest satisfaction remained strong.

RRGB’s Q2 Costs and Profitability

Restaurant labor costs came in at $96.97 million compared with $99.71 million in the prior-year quarter. Cost of sales declined to $64.09 million from $65.16 million, while other operating costs decreased to $48.40 million from $49.60 million. Occupancy expenses fell to $23.08 million from $24.33 million.

Selling expenses increased to $10.37 million from $6.35 million as RRGB invested behind the Big Yummm value platform and its localized First Choice marketing strategy. Adjusted EBITDA was $18.92 million compared with $22.43 million a year ago. Management attributed the decline primarily to the roughly $4 million year-over-year increase in marketing spending.

Other Financial Information of Red Robin

As of July 12, 2026, Red Robin had cash and cash equivalents of $22.85 million compared with $19.92 million as of Dec. 28, 2025. Long-term debt was $163.36 million compared with $164.74 million at fiscal 2025-end. Inventories declined to $17.01 million from $25.73 million.

Net cash provided by operating activities was $14.50 million during the first 28 weeks of fiscal 2026 compared with $29.51 million in the prior-year period. Purchases of property, equipment and intangible assets totaled $11.51 million compared with $18.50 million a year earlier.

RRGB’s Refranchising Update

During the fiscal second quarter, RRGB announced three refranchising agreements covering 116 company-owned restaurants. The transactions are expected to generate approximately $96 million in gross proceeds and are anticipated to close during the third quarter, subject to customary closing conditions.

The company plans to use the proceeds to reduce debt and strengthen its financial position. Management also continues to advance efforts to refinance its existing debt and expects the refranchising transactions to provide greater financial flexibility for its long-term strategic priorities.

Red Robin’s FY26 Guidance

Red Robin reaffirmed its fiscal 2026 guidance. Comparable restaurant revenue growth, excluding deferred loyalty revenues, is expected between 0.5% and 1.5%. Restaurant-level operating profit margin is projected at approximately 13%.

Adjusted EBITDA is anticipated between $70 million and $73 million, while capital expenditures are expected between $25 million and $30 million. The guidance excludes any impact from the announced refranchising transactions, and management expects to update the outlook following their completion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

VGM Scores

Currently, Red Robin has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock has a score of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Red Robin has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.