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Red Robin Stock Gains 12% on Dining Rooms Reopening Plan

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Red Robin Gourmet Burgers, Inc. (RRGB - Free Report) recently announced that it expects to reopen approximately 270 dining rooms with limited capacity by Jun 7, 2020. This is likely to represent approximately 65% of currently open company-operated restaurants. Following the announcement, the company’s shares gained 11.8% during the trading hours on Jun 3.

President and CEO Paul J.B. Murphy III stated, “To build on the momentum we are experiencing in off-premise and dine-in sales, we are now re-opening restaurants in our largest and highest volume markets in the Pacific Northwest and West Coast.”

On May 29, the company provided an operational update, whereby comparable restaurant revenues witnessed sequential weekly improvement. Notably, this was supported by continued strong growth in off-premise sales along with early traction in dine-in sales. Moreover, the company’s off-premise sales had tripled from its pre-COVID-19 levels. 

Markedly, management intends to bank on the strong growth momentum to improve its sales figure in the upcoming periods. Even though the company seems optimistic about the results, further details regarding the business update are expected on Jun 10, when the company announces its financial results for the first quarter ended Apr 19, 2020. So far this year, shares of Red Robin have plummeted 53.9% compared with the industry’s decline of 4.1%.

 

Strategic Measures to Tide Over The Global Pandemic

Although the virus has triggered a catastrophe in terms of lives lost and financial impact, the company appears resilient enough to navigate through these uncertain times. Notably, Red Robin has taken several actions to enhance liquidity, reduce costs and strengthen its organizational structure. Apart from suspending share repurchases, the company has withdrawn its previously announced 2020 outlook.

As of May 29, the company has liquidity of $80 million, inclusive of cash and borrowing capacity. In fact, it finalized an amendment to its credit facility, which provides further financial flexibility during the pandemic.

Red Robin — which shares space with Domino’s Pizza Inc. (DPZ - Free Report) , Papa John’s International, Inc. (PZZA - Free Report) and Yum China Holdings, Inc. (YUMC - Free Report) in the Zacks Retail - Restaurants industry — has a Zacks Rank #3 (Hold), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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