Red Robin Gourmet Burgers, Inc. RRGB posted mixed results in the second quarter of fiscal 2024, with earnings falling short of the Zacks Consensus Estimate while revenues surpassed expectations. The revenue growth was positive year over year, but the profitability was weaker compared to the same period in the prior year.
After the earnings release, the company’s stock plunged by 14% during after-hours trading on Aug 22. This negative investor reaction followed the company’s downward revision of its 2024 guidance due to the prevailing industry slowdown.
Exploring the Numbers
In the second quarter, RRGB reported an adjusted loss per share of 48 cents, wider than the Zacks Consensus Estimate of a 41 cents loss. This was lower than the adjusted loss per share of 24 cents in the previous year’s quarter.
Red Robin Gourmet Burgers, Inc. Price, Consensus and EPS Surprise
Red Robin Gourmet Burgers, Inc. price-consensus-eps-surprise-chart | Red Robin Gourmet Burgers, Inc. Quote
The company reported quarterly revenues of $300.2 million, exceeding the consensus estimate of $296 million. The revenue increased by 0.5% compared to the previous year. Moreover, comparable restaurant revenues grew by 1.4% year over year in the same quarter.
Operational Performance
The restaurant-level operating profit margin was reported at 11.8% in the second quarter of fiscal 2024, down from 12.6% in the prior-year quarter, slightly missing the projected 11.9% margin.
During the quarter, restaurant labor costs rose by 3.9% year over year to $113.9 million, slightly above the estimated $112.2 million. Other operating costs were recorded at $51.7 million, marginally lower than the projected $54.3 million figure.
Adjusted EBITDA for the quarter was $11.8 million, a decline from $15.5 million reported in the same period last year and below the estimated $14.1 million.
Financial Highlights
As of Jul 14, 2024, Red Robin had $23.1 million in cash and cash equivalents, a slight decrease from $23.6 million as of Dec 31, 2023. Long-term debt was at $162.3 million compared to $182.6 million in the prior-year quarter. Inventories stood at $27.3 million in the quarter, up from $27.1 million in the previous quarter.
Future Guidance for 2024
In its fiscal 2024 outlook, Red Robin anticipates total revenues to reach approximately $1.25 billion, slightly adjusted from the previous guidance range of $1.25-$1.275 billion. The company expects a restaurant-level operating profit in the range of 11-11.5%, lower than the previous forecast of 12.5-13.5%. Capital expenditures are projected to be between $25 million and $30 million, with adjusted EBITDA ranging from $40-$45 million, down from the earlier forecast of $60-$70 million.
Market Rank
Red Robin currently holds a Zacks Rank #4 (Sell).
Comparison with Other Industry Players
Chipotle Mexican Grill, Inc. and McDonald’s Corporation also recently released their quarterly earnings, showcasing a mixed performance landscape across the sector.
Chipotle impressed investors with its second-quarter 2024 results, surpassing both earnings and revenue expectations. The fast-casual chain attributed its success to strategic promotions and operational efficiency, supporting transaction growth.
On the contrary, McDonald’s performance in the same period was lackluster, missing estimates due to industry challenges and global conflicts impacting its financials.
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