Delivered Second Consecutive Quarter of
Comparable Restaurant Revenue Growth
Consistent Measurable Progress Executing on
Transformation Strategy
Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) (“Red Robin” or
the “Company”), a full-service restaurant chain serving an
innovative selection of high-quality gourmet burgers in a
family-friendly atmosphere, today reported financial results for
the quarter and year ended December 29, 2019.
Fourth Quarter 2019 Financial Summary Compared to Fourth
Quarter 2018
- Total revenues were $302.9 million, a decrease of 1.2%;
- Comparable restaurant revenue increased 1.3%, the second
consecutive quarter of positive comparable restaurant revenue;
- Comparable average guest check increased 4.7%, resulting from a
1.1% increase in menu mix, a 1.8% increase in pricing, and a 1.8%
increase from lower discounting;
- Comparable restaurant guest counts decreased 3.4%;
- Off-premise sales, including catering, increased 26.9% and
comprised 13.9% of total food and beverage sales;
- GAAP loss per diluted share was $0.60 compared to $0.82;
- Adjusted loss per diluted share was $0.36 compared to adjusted
earnings per diluted share of $0.43 (see Schedule I);
- Net loss was $7.7 million compared to $10.6 million; and
- Adjusted EBITDA was $26.7 million compared to $28.4 million
(see Schedule III).
Paul J.B. Murphy III, Red Robin’s President and Chief Executive
Officer, said, “We are pleased with the continued, measurable
progress we are making to deliver on our strategic plan, as we
achieved the second consecutive quarter of comparable restaurant
revenue growth in the fourth quarter of 2019, while intentionally
unwinding significant discounting from the prior-year period.
Importantly, our comparable restaurant revenue momentum has
continued, and we expect it to accelerate in 2020, which we
attribute to the foundational enhancements we made last year. These
improvements include our focus on staffing, training, and retaining
our Team Members; our commitment to delivering exceptional dining
experiences at a compelling value; and our accentuation of brand
attributes through the ‘All the Fulls’ creative campaign.”
Murphy continued, “Having recently articulated a vision to
accelerate Red Robin’s turnaround, transform the business, and
create long-term value for our shareholders at the ICR investor
conference in January, we are now focused on successfully executing
that strategy. Today, our strategic priorities include recapturing
the essence of what makes Red Robin an iconic brand; delivering
consistent, quality execution of our brand promise; and reinforcing
emotional connections and core brand equities through our
omni-channel messaging. We are also focused on accelerating
profitable growth by beginning the rollout of Donatos® pizza in our
restaurants, implementing a new service model, growing our
off-premise platforms, and building our digital capabilities to
drive increased guest engagement and frequency. I am encouraged by
the growing momentum we continue to see across the business, and
look forward to building on this progress in 2020 and beyond as we
deliver value for Red Robin guests, shareholders, and other
stakeholders.”
Fourth Quarter 2019 Operating Results
Total revenues, which primarily include Company-owned restaurant
revenue and franchise royalties, decreased 1.2% to $302.9 million
in the fourth quarter of 2019, from $306.8 million in the fourth
quarter of 2018. Restaurant revenue decreased $4.1 million due to a
$7.8 million decrease from restaurant closures, partially offset by
a $3.7 million, or 1.3%, increase in comparable restaurant
revenue(1).
System-wide restaurant revenue (which includes franchised units)
for the fourth quarter of 2019 totaled $361.6 million, compared to
$363.1 million for the fourth quarter of 2018.
Comparable restaurant revenue(1) increased 1.3% in the fourth
quarter of 2019 compared to the same period a year ago, driven by a
4.7% increase in average guest check, partially offset by a 3.4%
decrease in guest count. The increase in average guest check
resulted from a 1.1% increase in menu mix, a 1.8% increase in
pricing, and a 1.8% increase from lower discounting. The increase
in menu mix was primarily driven by the Company’s current menu and
promotional strategy, resulting in lower Tavern burger sales and
higher Gourmet and Finest burger sales.
Net loss was $7.7 million for the fourth quarter of 2019
compared to a net loss of $10.6 million for the same period a year
ago. Adjusted net loss (a non-GAAP financial measure) was $4.7
million for the fourth quarter of 2019 compared to adjusted net
income of $5.4 million for the same period a year ago (see Schedule
I).
Restaurant-level operating profit as a percentage of restaurant
revenue (a non-GAAP financial measure) was 18.9% in the fourth
quarter of 2019 compared to 19.4% in the same period a year ago.
Cost of sales as a percentage of restaurant revenue decreased 60
basis points primarily due to lower pork and steak fry costs,
partially offset by higher ground beef costs. Restaurant labor
costs as a percentage of restaurant revenue decreased 20 basis
points due to lower group insurance costs, partially offset by
increased wage rates and higher levels of staffing at the
restaurant manager level. Other restaurant operating costs
increased 110 basis points primarily due to an increase in
third-party delivery fees driven by higher off-premise sales
volume, and higher restaurant technology costs compared to a
favorable adjustment in the prior year. Occupancy costs increased
20 basis points primarily due to higher general liability costs,
partially offset by lower rent expense due to restaurant closures.
Schedule II of this earnings release defines restaurant-level
operating profit, discusses why it is a useful metric for
investors, and reconciles this metric to income from operations and
net income, in each case under GAAP.
(1)
Comparable restaurants are those
Company-owned restaurants that have operated five full quarters
during the period presented, and such restaurants are only included
in the comparable metrics if they have operated for the entirety of
both periods presented.
Restaurant Revenue Performance
Q4 2019
Q4 2018
Average weekly sales per unit:
Company-owned – Total
$
52,983
$
51,701
Company-owned – Comparable
$
53,256
$
52,579
Franchised units – Comparable
$
58,228
$
58,726
Total operating weeks:
Company-owned units
5,601
5,819
Franchised units
1,145
1,080
Other Results
Depreciation and amortization costs decreased to $20.7 million
in the fourth quarter of 2019 from $22.0 million in the fourth
quarter of 2018.
General and administrative costs were $19.3 million, or 6.4% of
total revenues, in the fourth quarter of 2019, compared to $18.3
million, or 6.0% of total revenues, in the same period a year ago.
The increase was primarily driven by increased Team Member salaries
and benefits, partially offset by decreases in miscellaneous
corporate expenses.
Selling expenses were $16.5 million, or 5.4% of total revenues,
in the fourth quarter of 2019, compared to $17.4 million, or 5.7%
of total revenues, during the same period a year ago. The decrease
was primarily driven by a reduction in local media spend.
Other charges in the fourth quarter of 2019 included $1.4
million in restaurant closure and refranchising costs, $1.0 million
in asset impairments, $0.8 million of board and stockholder matter
costs, $0.5 million in executive transition and severance, and $0.4
million in executive retention.
Tax expense was $7.3 million in the fourth quarter of 2019,
compared to a tax benefit of $7.3 million during the same period in
the prior year. The decrease in the Company’s 2019 effective tax
benefit is attributable to a decrease in tax credits and an
increase in the valuation allowance related to Canada, primarily
driven by closing and refranchising all remaining Company-operated
restaurants in Canada in the fourth quarter of 2019.
Loss per diluted share for the fourth quarter of 2019 was $0.60
compared to loss per diluted share of $0.82 in the fourth quarter
of 2018. Excluding costs per diluted share included in Other
charges of $0.08 related to restaurant closure and refranchising
costs, $0.06 related to asset impairments, $0.04 for board and
stockholder matter costs, $0.03 for executive retention, and $0.03
for executive transition and severance, adjusted loss per share for
the fourth quarter ended December 29, 2019, was $0.36. Excluding
charges per diluted share of $1.07 for asset impairment, $0.14 for
smallwares disposal, and $0.04 for litigation costs, adjusted
earnings per diluted share for the fourth quarter ended December
30, 2018, was $0.43. See Schedule I for a reconciliation of
adjusted net income and adjusted earnings per share (each, a
non-GAAP financial measure) to net income and earnings per
share.
Financial Highlights for the 52 Weeks Ended December 29, 2019
Compared to the 52 Weeks Ended December 30, 2018
Total revenues for the 52 weeks ended December 29, 2019, were
$1.3 billion, a decrease of 1.8% from the 52 weeks ended December
30, 2018, primarily due to restaurant closures. GAAP loss per
diluted share was $0.61 compared to GAAP loss per diluted share of
$0.49 in the prior year, and adjusted earnings per diluted share
was $0.62 compared to $1.73 in the prior year (see Schedule I for
the reconciliation between GAAP loss per share and non-GAAP
adjusted earnings per share). Off-premise sales, including
catering, increased 28% during 2019, now comprising 12.4% of total
food and beverage sales. For the 52 weeks ended December 29, 2019,
comparable restaurant revenue(1) decreased 0.6% and comparable
restaurant guest counts decreased 4.7% compared to 2018.
(1)
Comparable restaurants are those
Company-owned restaurants that have operated five full quarters
during the period presented, and such restaurants are only included
in the comparable metrics if they have operated for the entirety of
both periods presented.
Restaurant Portfolio
The following table details restaurant unit data for
Company-owned and franchised locations for the periods
indicated:
Twelve Weeks Ended
Fifty-two Weeks Ended
December 29, 2019
December 30, 2018
December 29, 2019
December 30, 2018
Company-owned:
Beginning of period
471
485
484
480
Opened during the period(1)
—
—
—
8
Sold to franchisees
(12)
—
(12)
—
Closed during the period
(5)
(1)
(18)
(4)
End of period
454
484
454
484
Franchised:
Beginning of period
90
89
89
86
Opened during the period
—
—
1
3
Acquired from corporate
12
—
12
—
End of period
102
89
102
89
Total number of restaurants
556
573
556
573
Balance Sheet and Liquidity
As of December 29, 2019, the Company had cash and cash
equivalents of $30.0 million and total debt of $206.9 million. The
Company funded capital expenditures with cash flow from operations
and made net draws of $18.0 million on its credit facility during
the fourth quarter of 2019. As of December 29, 2019, the Company
had outstanding borrowings under its credit facility of $206.0
million, in addition to amounts issued under letters of credit of
$7.5 million. Amounts issued under letters of credit reduce the
amount available under the credit facility but are not recorded as
debt.
The Company’s lease adjusted leverage ratio was 4.72x, and it
was in compliance with all covenants as of December 29, 2019. On
January 10, 2020, the Company replaced its credit facility with a
new five-year Amended and Restated Credit Agreement which provides
for a $161.5 million revolving line of credit and a $138.5 million
term loan for a total borrowing capacity of $300 million. The
Credit Agreement is included as Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed with the SEC on January 13,
2020.
Outlook for 2020
The Company currently expects the following in 2020:
- Comparable restaurant revenue growth in the low single
digits;
- Incremental restaurant-level operating profit expected to be
offset by pre-opening expenses, marketing expenses, and project
expenses associated with growth initiatives;
- Net income of at least $2 million, including a tax benefit of
$10 million to $12 million;
- Adjusted EBITDA, a non-GAAP financial measure, of at least flat
compared to approximately $101 million in 2019; and
- Capital expenditures of $50 million to $60 million, including
restaurant support center and systems; restaurant maintenance,
refreshes and remodels; introduction of Donatos®; technology; and
other investments to support growth initiatives.
Guidance Policy
The Company provides guidance as it relates to selected
information related to the Company’s financial and operating
performance, and such measures may differ from year to year.
Investor Conference Call and Webcast
Red Robin will host an investor conference call to discuss its
fourth quarter 2019 results today at 5:00 p.m. Eastern Time. The
conference call number is (201) 689-8560. The financial information
that the Company intends to discuss during the conference call is
included in this press release and will be available in the
“Company” section of the Company’s website at www.redrobin.com by
selecting the “Investor Relations” link, then the “Calendar of
Events” link. Prior to the conference call, the Company will post
supplemental financial information that will be discussed during
the call and live webcast.
To access the supplemental financial information and webcast,
please visit www.redrobin.com and select the “Company” section,
then the “Investor Relations” link, then the “Presentations” link.
A replay of the live conference call will be available from two
hours after the call until midnight on Tuesday, March 3, 2020. The
replay can be accessed by dialing (412) 317-6671. The conference ID
is 13698036.
Red Robin Management to Present at Raymond James &
Associates Annual Investor Conference
On Monday, March 2, 2020, Red Robin will present at the Raymond
James & Associates 41st Annual Institutional Investors
Conference at the JW Marriott Orlando Grande Lakes in Orlando,
Florida and hold investor meetings. The presentation will begin at
1:05 p.m. Eastern Time.
About Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB)
Red Robin Gourmet Burgers, Inc. (www.redrobin.com), a casual dining restaurant
chain founded in 1969 that operates through its wholly-owned
subsidiary, Red Robin International, Inc., and under the trade name
Red Robin Gourmet Burgers and Brews, is the Gourmet Burger
Authority™, famous for serving more than two dozen craveable,
high-quality burgers with Bottomless Steak Fries® in a fun
environment welcoming to guests of all ages. At Red Robin, burgers
are more than just something guests eat; they’re a bonding
experience that brings together friends and families, kids and
adults. In addition to its many burger offerings, Red Robin serves
a wide variety of salads, soups, appetizers, entrees, desserts, and
signature beverages. Red Robin offers a variety of options behind
the bar, including its extensive selection of local and regional
beers and cocktails. It’s now easy to take Red Robin anywhere with
online ordering for to-go and Gourmet Burger Bar catering. There
are more than 550 Red Robin restaurants across the United States
and Canada, including those operating under franchise agreements.
Red Robin… YUMMM®! Connect with Red Robin on Facebook, Instagram,
and Twitter.
Forward-Looking Statements
Forward-looking statements in this press release regarding the
Company’s future performance, comparable restaurant revenue,
restaurant-level operating profit, pre-opening expenses, marketing
expenses, project expenses, net income, adjusted EBITDA, capital
expenditures, and statements under the heading “Outlook for 2020”,
and all other statements that are not historical facts, are made
under the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements are based on
assumptions believed by the Company to be reasonable and speak only
as of the date on which such statements are made. Without limiting
the generality of the foregoing, words such as “expect,” “believe,”
“anticipate,” “intend,” “plan,” “project,” “will” or “estimate,” or
the negative or other variations thereof or comparable terminology
are intended to identify forward-looking statements. Except as
required by law, the Company undertakes no obligation to update
such statements to reflect events or circumstances arising after
such date and cautions investors not to place undue reliance on any
such forward-looking statements. Forward-looking statements involve
risks and uncertainties that could cause actual results to differ
materially from those described in the statements based on a number
of factors, including but not limited to the following: the
effectiveness of the Company’s strategic initiatives, including
alternative labor models, service, and operational improvement
initiatives; the ability to train and retain the Company’s
workforce for service execution, including the complexities related
to growth of multiple revenue streams within the restaurants; the
effectiveness of the Company’s marketing strategies and promotions;
menu changes, including the anticipated sales growth, costs, and
timing of the Donatos® expansion; the implementation and rollout of
new technology solutions in the restaurants and timing thereof; the
ability to increase off-premise sales; the ability to achieve
revenue and cost savings from these and other initiatives; the
Company’s franchise strategy; competition in the casual dining
market and discounting by competitors; the cost and availability of
key food products, distribution, labor, and energy; general
economic conditions; the cost and availability of capital or credit
facility borrowings; the adequacy of cash flows or available debt
resources to fund operations and growth opportunities; limitations
on the Company’s ability to execute stock repurchases at all or at
the times or in the amounts the Company currently anticipates or to
achieve anticipated benefits of a share repurchase program; the
impact of federal, state, and local regulation of the Company’s
business; and other risk factors described from time to time in the
Company’s Form 10-K, Form 10-Q, and Form 8-K reports (including all
amendments to those reports) filed with the U.S. Securities and
Exchange Commission.
RED ROBIN GOURMET BURGERS,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Twelve Weeks Ended
Fifty-two Weeks Ended
December 29, 2019
December 30, 2018
December 29, 2019
December 30, 2018
Revenues:
Restaurant revenue
$
296,757
$
300,897
$
1,289,521
$
1,316,209
Franchise and other revenue
6,188
5,882
25,493
22,354
Total revenues
302,945
306,779
1,315,014
1,338,563
Costs and expenses:
Restaurant operating costs (exclusive of
depreciation and amortization shown separately below):
Cost of sales
68,285
71,112
303,404
313,504
Labor
102,476
104,449
456,778
456,262
Other operating
43,594
40,779
186,476
182,084
Occupancy
26,378
26,047
111,798
114,146
Depreciation and amortization
20,703
22,036
91,790
95,371
General and administrative
19,345
18,335
90,446
84,087
Selling
16,507
17,408
65,532
62,371
Pre-opening costs and acquisition
costs
—
—
319
2,092
Other charges
4,110
21,708
21,598
39,131
Total costs and expenses
301,398
321,874
1,328,141
1,349,048
Income (loss) from operations
1,547
(15,095
)
(13,127
)
(10,485
)
Other expense:
Interest expense, net and other
1,907
2,838
9,110
10,925
Loss before income taxes
(360
)
(17,933
)
(22,237
)
(21,410
)
Income tax expense (benefit)
7,342
(7,299
)
(14,334
)
(14,991
)
Net loss
$
(7,702
)
$
(10,634
)
$
(7,903
)
$
(6,419
)
Loss per share:
Basic
$
(0.60
)
$
(0.82
)
$
(0.61
)
$
(0.49
)
Diluted
$
(0.60
)
$
(0.82
)
$
(0.61
)
$
(0.49
)
Weighted average shares outstanding:
Basic
12,931
12,974
12,959
12,976
Diluted
12,931
12,974
12,959
12,976
RED ROBIN GOURMET BURGERS,
INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share amounts)
December 29, 2019
December 30, 2018
Assets:
Current Assets:
Cash and cash equivalents
$
30,045
$
18,569
Accounts receivable, net
22,372
25,034
Inventories
26,424
27,370
Prepaid expenses and other current
assets
26,646
27,576
Total current assets
105,487
98,549
Property and equipment, net
518,013
565,142
Right of use assets, net
426,248
—
Goodwill
96,397
95,838
Intangible assets, net
29,975
34,609
Other assets, net
61,460
49,803
Total assets
$
1,237,580
$
843,941
Liabilities and Stockholders’
Equity:
Current Liabilities:
Accounts payable
$
33,040
$
39,024
Accrued payroll and payroll related
liabilities
35,221
37,922
Unearned revenue
54,223
55,360
Current portion of lease obligations
42,699
786
Accrued liabilities and other
29,403
38,057
Total current liabilities
194,586
171,149
Deferred rent
—
75,675
Long-term debt
206,875
193,375
Long-term portion of lease obligations
465,435
9,414
Other non-current liabilities
10,164
11,523
Total liabilities
877,060
461,136
Stockholders’ Equity:
Common stock; $0.001 par value: 45,000
shares authorized; 17,851 shares issued; 12,923 and 12,971 shares
outstanding
18
18
Preferred stock, $0.001 par value: 3,000
shares authorized; no shares issued and outstanding
—
—
Treasury stock 4,928 and 4,880 shares, at
cost
(202,313
)
(201,505
)
Paid-in capital
213,922
212,752
Accumulated other comprehensive loss, net
of tax
(4,373
)
(4,801
)
Retained earnings
353,266
376,341
Total stockholders’ equity
360,520
382,805
Total liabilities and stockholders’
equity
$
1,237,580
$
843,941
Schedule I
Reconciliation of Non-GAAP Results to GAAP
Results (In thousands, except per share data, unaudited)
In addition to the results provided in accordance with Generally
Accepted Accounting Principles (“GAAP”) throughout this press
release, the Company has provided non-GAAP measurements which
present the twelve and fifty-two weeks ended December 29, 2019 and
December 30, 2018, net income and basic and diluted earnings per
share, excluding the effects of executive transition and severance,
board and stockholder matter costs, asset impairments, litigation
contingencies, asset disposals, restaurant closure and
refranchising costs, reorganization costs, executive retention
costs, and related income tax effects. The Company believes the
presentation of net income and earnings per share exclusive of the
identified item gives the reader additional insight into the
ongoing operational results of the Company. This supplemental
information will assist with comparisons of past and future
financial results against the present financial results presented
herein. Income tax effect of reconciling items was calculated based
on the change in the total tax provision calculation after
adjusting for the identified item. The non-GAAP measurements are
intended to supplement the presentation of the Company’s financial
results in accordance with GAAP.
Twelve Weeks Ended
Fifty-two Weeks Ended
December 29, 2019
December 30, 2018
December 29, 2019
December 30, 2018
Net loss as reported
$
(7,702
)
$
(10,634
)
$
(7,903
)
$
(6,419
)
Executive transition and severance
492
—
3,450
—
Board and stockholder matter costs
798
—
3,261
—
Asset impairment
1,030
18,483
15,094
28,127
Litigation contingencies
—
795
—
4,795
Smallwares disposal
—
2,430
—
2,936
Restaurant closures and refranchising
costs
1,430
—
(1,187
)
—
Reorganization costs
—
—
—
3,273
Executive retention
360
—
980
—
Income tax effect of reconciling items
(1,069
)
(5,644
)
(5,615
)
(10,174
)
Adjusted net (loss) income
$
(4,661
)
$
5,430
$
8,080
$
22,538
Basic net (loss) income per share:
Net loss as reported
$
(0.60
)
$
(0.82
)
$
(0.61
)
$
(0.49
)
Executive transition and severance
0.04
—
0.26
—
Board and stockholder matter costs
0.06
—
0.25
—
Asset impairment
0.08
1.43
1.16
2.17
Litigation contingencies
—
0.06
—
0.37
Smallwares disposal
—
0.19
—
0.22
Restaurant closures and refranchising
costs
0.11
—
(0.09
)
—
Reorganization costs
—
—
—
0.25
Executive retention
0.03
—
0.08
—
Income tax effect of reconciling items
(0.08
)
(0.43
)
(0.43
)
(0.78
)
Adjusted (loss) earnings per share -
basic
$
(0.36
)
$
0.43
$
0.62
$
1.74
Diluted net (loss) income per share:
Net loss as reported
$
(0.60
)
$
(0.82
)
$
(0.61
)
$
(0.49
)
Executive transition and severance
0.04
—
0.26
—
Board and stockholder matter costs
0.06
—
0.25
—
Asset impairment
0.08
1.43
1.16
2.16
Litigation contingencies
—
0.06
—
0.37
Smallwares disposal
—
0.19
—
0.22
Restaurant closures and refranchising
costs
0.11
—
(0.09
)
—
Reorganization costs
—
—
—
0.25
Executive retention
0.03
—
0.08
—
Income tax effect of reconciling items
(0.08
)
(0.43
)
(0.43
)
(0.78
)
Adjusted (loss) earnings per share -
diluted
$
(0.36
)
$
0.43
$
0.62
$
1.73
Weighted average shares outstanding
Basic
12,931
12,974
12,959
12,976
Diluted(1)
12,931
13,033
13,049
13,057
____________________________________
(1)
For the 52 weeks ended December 29, 2019
and the 12 and 52 weeks ended December 30, 2018, the impact of
dilutive shares is included in the calculation as the adjustments
for the quarter resulted in adjusted net income. For diluted shares
reported on the consolidated statement of operations, the impact of
dilutive shares is excluded due to the reported net loss for the
fiscal year.
Schedule II
Reconciliation of Non-GAAP Restaurant-Level
Operating Profit to Income from Operations and Net Income (In
thousands, unaudited)
The Company believes restaurant-level operating profit is an
important measure for management and investors because it is widely
regarded in the restaurant industry as a useful metric by which to
evaluate restaurant-level operating efficiency and performance. The
Company defines restaurant-level operating profit to be restaurant
revenue minus restaurant-level operating costs, excluding
restaurant impairment and closure costs. The measure includes
restaurant-level occupancy costs that include fixed rents,
percentage rents, common area maintenance charges, real estate and
personal property taxes, general liability insurance, and other
property costs, but excludes depreciation related to restaurant
equipment, buildings and leasehold improvements. The measure
excludes depreciation and amortization expense, substantially all
of which is related to restaurant-level assets, because such
expenses represent historical sunk costs which do not reflect
current cash outlay for the restaurants. The measure also excludes
selling, general, and administrative costs, and therefore excludes
costs associated with selling, general, and administrative
functions, and pre-opening costs. The Company excludes restaurant
closure costs as they do not represent a component of the
efficiency of continuing operations. Restaurant impairment costs
are excluded, because, similar to depreciation and amortization,
they represent a non-cash charge for the Company’s investment in
its restaurants and not a component of the efficiency of restaurant
operations. Restaurant-level operating profit is not a measurement
determined in accordance with GAAP and should not be considered in
isolation, or as an alternative, to income from operations or net
income as indicators of financial performance. Restaurant-level
operating profit as presented may not be comparable to other
similarly titled measures of other companies in our industry. The
table below sets forth certain unaudited information for the twelve
and fifty-two week periods ended December 29, 2019 and December 30,
2018, expressed as a percentage of total revenues, except for the
components of restaurant-level operating profit that are expressed
as a percentage of restaurant revenue.
Twelve Weeks Ended
Fifty-two Weeks Ended
December 29, 2019
December 30, 2018
December 29, 2019
December 30, 2018
Restaurant revenues
$
296,757
98.0
%
$
300,897
98.1
%
$
1,289,521
98.1
%
$
1,316,209
98.3
%
Restaurant operating costs(1):
Cost of sales
68,285
23.0
%
71,112
23.6
%
303,404
23.5
%
313,504
23.8
%
Labor
102,476
34.5
%
104,449
34.7
%
456,778
35.4
%
456,262
34.7
%
Other operating
43,594
14.7
%
40,779
13.6
%
186,476
14.5
%
182,084
13.8
%
Occupancy
26,378
8.9
%
26,047
8.7
%
111,798
8.7
%
114,146
8.7
%
Restaurant-level operating profit
56,024
18.9
%
58,510
19.4
%
231,065
17.9
%
250,213
19.0
%
Add – Franchise royalties, fees and other
revenue
6,188
2.0
%
5,882
1.9
%
25,493
1.9
%
22,354
1.7
%
Deduct – other operating:
Depreciation and amortization
20,703
6.8
%
22,036
7.2
%
91,790
7.0
%
95,371
7.1
%
General and administrative expenses
19,345
6.4
%
18,335
6.0
%
90,446
6.9
%
84,087
6.3
%
Selling
16,507
5.4
%
17,408
5.7
%
65,532
5.0
%
62,371
4.7
%
Pre-opening & acquisition costs
—
—
%
—
—
%
319
—
%
2,092
0.2
%
Other charges
4,110
1.4
%
21,708
7.1
%
21,598
1.6
%
39,131
2.9
%
Total other operating
60,665
20.0
%
79,487
26.0
%
269,685
20.5
%
283,052
21.2
%
Income (loss) from operations
1,547
0.5
%
(15,095
)
(4.9
)%
(13,127
)
(1.0
)%
(10,485
)
(0.8
)%
Interest expense, net and other
1,907
0.6
%
2,838
0.9
%
9,110
0.7
%
10,925
0.8
%
Income tax expense (benefit)
7,342
2.4
%
(7,299
)
(2.4
)%
(14,334
)
(1.1
)%
(14,991
)
(1.1
)%
Total other
9,249
3.1
%
(4,461
)
(1.5
)%
(5,224
)
(0.4
)%
(4,066
)
(0.3
)%
Net loss
$
(7,702
)
(2.5
)%
$
(10,634
)
(3.5
)%
$
(7,903
)
(0.6
)%
$
(6,419
)
(0.5
)%
______________________________________
(1)
Excluding depreciation and amortization, which is shown separately.
Certain percentage amounts in the table
above do not total due to rounding as well as the fact that
components of restaurant-level operating profit are expressed as a
percentage of restaurant revenue and not total revenues.
Schedule III
Reconciliation of Net Income to EBITDA and
Adjusted EBITDA (In thousands, unaudited)
The Company defines EBITDA as net income before interest
expense, benefit for income taxes, and depreciation and
amortization. EBITDA and adjusted EBITDA are presented because the
Company believes investors’ understanding of our performance is
enhanced by including these non-GAAP financial measures as a
reasonable basis for evaluating our ongoing results of operations
without the effect of non-cash charges such as executive transition
and severance, board and stockholder matter costs, asset
impairments, litigation contingencies, asset disposals, restaurant
closure and refranchising costs, reorganization costs, executive
retention costs, and related income tax effects. EBITDA and
adjusted EBITDA are supplemental measures of operating performance
that do not represent and should not be considered as alternatives
to net income or cash flow from operations, as determined by GAAP,
and our calculation thereof may not be comparable to that reported
by other companies in our industry or otherwise. Adjusted EBITDA
further adjusts EBITDA to reflect the additions and eliminations
shown in the table below. The use of adjusted EBITDA as a
performance measure permits a comparative assessment of our
operating performance relative to our performance based on our GAAP
results, while isolating the effects of some items that vary from
period to period without any correlation to core operating
performance. Adjusted EBITDA as presented may not be comparable to
other similarly-titled measures of other companies, and our
presentation of adjusted EBITDA should not be construed as an
inference that our future results will be unaffected by excluded or
unusual items. We have not provided a reconciliation of our
adjusted EBITDA outlook to the most comparable GAAP measure of net
income. Providing net income guidance is potentially misleading and
not practical given the difficulty of projecting event-driven
transactional and other non-core operating items that are included
in net income, including asset impairments and income tax valuation
adjustments. The reconciliations of adjusted EBITDA to net income
for the historical periods presented below are indicative of the
reconciliations that will be prepared upon completion of the
periods covered by the non-GAAP guidance.
Twelve Weeks Ended
Fifty-two Weeks Ended
December 29, 2019
December 30, 2018
December 29, 2019
December 30, 2018
Net loss as reported
$
(7,702
)
$
(10,634
)
$
(7,903
)
$
(6,419
)
Interest expense, net
2,245
2,550
10,141
10,675
Income tax expense (benefit)
7,342
(7,299
)
(14,334
)
(14,991
)
Depreciation and amortization
20,703
22,036
91,790
95,371
EBITDA
$
22,588
$
6,653
$
79,694
$
84,636
Executive transition and severance
$
492
$
—
$
3,450
$
—
Board and stockholder matter costs
798
—
3,261
—
Asset impairment
1,030
18,483
15,094
28,127
Litigation contingencies
—
795
—
4,795
Smallwares disposal
—
2,430
—
2,936
Restaurant closures and refranchising
costs
1,430
—
(1,187
)
—
Reorganization costs
—
—
—
3,273
Executive retention
360
—
980
—
Adjusted EBITDA
$
26,698
$
28,361
$
101,292
$
123,767
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200225005977/en/
For media relations questions contact: Danielle
Paleafico, Coyne PR (973) 588-2000 For investor relations
questions contact: Raphael Gross, ICR (203) 682-8253
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