Red Robin to Debut in Portland - Analyst Blog
March 15 2012 - 9:30AM
Zacks
Red Robin Gourmet Burgers
Inc. (RRGB), a chain of casual dining restaurants, is set
to debut its first unit in Portland area, Maine, shortly. The new
restaurant will be at 800 Gallery Blvd. across from the new
Walmart, and will offer gourmet burgers served with Bottomless
Steak Fries, a variety of salads, entrees, soups and wraps made
with the fresh ingredients.
Given customers’ inclination toward
organic and fresh food these days, we believe integrity in
ingredients will be a crucial factor for traffic growth. Apart from
this, there will be other sales enhancement initiatives like a
guest loyalty program called Red Royalty.
However, Colorado-based Red Robin
will likely face stiff competition in that area because of the
presence of several renowned eateries including Chipotle
Mexican Grill Inc. (CMG).
Red Robin currently operates 464
restaurants across the United States and Canada. The company is
also expanding through its franchise strategy, as it reduces
capital requirement and ensures a stable growth profile. Currently,
the restaurant base is 70% company operated and 30% franchised. To
further encourage franchising, the company will also charge less
franchisee fees from existing franchisees if they build new
restaurants.
The company expects to roll out 13
to 15 restaurants in 2012, including both full-sized restaurants
and smaller prototype units. Small-size restaurants will likely
drive growth in non-traditional locations and also improve return
on invested capital.
Red Robin targets investment in the
range of $50–$60 million in 2012 toward unit development. It also
plans to increase investments in equipment and in store
remodeling.
Red Robin currently has a Zacks #2
Rank, which implies a Buy rating over the short term. We reiterate
our long-term Outperform recommendation on the stock.
CHIPOTLE MEXICN (CMG): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
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