Q1 2020 Red Robin Gourmet Burgers Inc Earnings Call
Good morning, everyone and welcome to the Red Robin Gourmet Burgers incorporated first quarter 2020 earnings call. Please note today's call is being recorded.
During today's conference call management, we're making forward looking statements about the company's business outlook expectations.
These forward looking statements and all other statements that are not historical facts.
<unk> beliefs and predictions as of today, and therefore subject to risks and uncertainties as described in the Safe Harbor discussion founded the company SEC filings.
During today's conference call management will also discuss non-GAAP financial measures. These non-GAAP financial discipline got measures are not prepared in accordance with generally accepted accounting principles, but are intended to illustrate and alternatives measure of the company's operating performance that may be useful a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures.
Can be found in the earnings release.
The company has posted its fiscal first quarter 2020 earnings release supplemental financial information related to its results.
Website at Www Dot Red Robin Dot Com any investor Relations section.
Now I'd like to turn the call over to Red Robins CEO Paul Murphy.
Good morning, Thank you for joining us we hope that you and your families are staying safe and healthy I'm here today with lunch wind for our Chief Financial Officer.
After my opening remarks, when will provide a snapshot of our liquidity and related matters before reviewing our quarterly financials.
The covert 19 pandemic has presented complex challenges for families businesses and economies across the globe.
As we continue to navigate through these difficult times, our focus remains on the health and safety of our gas and team members.
Our team members have done an outstanding job protecting their health and safety of our guess while also delivering on the Red Robin brand promise.
We sincerely thank them for their dedication and commitment to our communities. During these difficult times and know how eager they are to welcome our guess back into our restaurants for elevated dining experiences as more donnie rooms reopened.
Following the onset of the covert 19 pandemic and the shutdown of Donnie rooms, we Cook, we pivoted to one off premise driven operating model and our a bold and by the continued strong growth and off premise sales since the onset of covert 19.
In addition, as dining rooms have begun to reopen the early trends are very encouraging and volumes have been building over the past several weeks at our reopened Donnie rose as of June 7th we have reopen 270, Donnie rooms with limited occupancy and operating hours. These represent.
65% of are currently open company operated restaurants with more reopenings to calm week by week state by state reopening thresholds are achieved.
We attribute our traction in navigating through that pandemic to our ability to adapt and successfully PEVAR operations, while simultaneously raising the bar on our dine out and dine in execution I.
I guess agree every warranted us with record satisfaction scores, which we believe will have positive implications for the red Robin Abram long after the threat of the covert 19 pandemic subsides I will discuss these themes in more detail shortly.
As you May recall from our February conference call. We began 2020 with great optimism on the heels other measurable progress we had been making accelerating red robins turned around and transforming the business.
The strategic plan that we were executed against consisted of the following.
Recapturing the absence of what makes red Robin and iconic brand.
Delivering consistent quality execution of our brand promise.
Reinforcing emotional connections and core brand equities through our Omnichannel messaging.
Rolling out there not was pizza and our restaurants.
Yeah for many new hospitality model.
Growing our off premise platforms and building our digital capabilities to drive increased guest engagement and frequency.
Through February 23rd our comparable restaurant revenue increased 3.7%.
Including positive guest counts <unk>, 0.9%.
And we were on track to deliver not only our third consecutive quarter of comp sales growth, but quite possibly our best quarterly comp sales growth in at least three years.
However, with the onset of go with 19, the operating environment changed dramatically.
And we needed to rapidly adopt.
In order to strictly adhere to see do you see state and local guidelines for the benefit of Red Robins team members guest and communities, we enhanced health and safety protocols across the business.
Got it emergency sick pay for hourly team members and shifted our restaurants to 800% off premise model for nearly all corporate level employees, we instituted telecommuting policies.
We also took meaningful steps to preserve liquidity reduce costs enhanced financial flexibility and strengthen our organizational structure. These steps include it.
Reducing our restaurant level and asked you're in a cost, including lowering executive base salaries.
Board member cash retainer fees, and non furloughed restaurant support center and restaurant supervisory team members by approximately 20%.
Eliminating approximately 50 restaurant support center Gionee positions.
Active as of April 17, 2020.
Postponing, eliminating all nonessential spending for previously planned broke and other projects, including our continue to roll out of Donato speed, So restaurant refreshes and I T projects.
Valuating, our real estate portfolio, including temporarily closing approximately 35 company operated restaurants, the majority of which are mall based locations.
And engaging a constructive discussions with landlords regarding restructuring our lease payments.
In addition, we're temporarily abating franchise partner, where ltds as we recognize our franchise partners or experiencing the same challenge as our company operated restaurants importantly, our level of collaboration has never been stronger as we work together sharing key information.
And best practices for the benefit of the Red Robin system.
No as I mentioned earlier, we're very excited by our weekly off premise sales momentum that has improved sequentially. Since late March when Tom sales were down over 70% for the weekend at March 20 seconds.
Thereafter, we experienced steady weekly improvement to almost triple pre covert 19 off premise sales levels.
And at the 270 locations with reopened Donnie rooms, we are still capturing a meaningful off premise sales demonstrated the enduring and growing popularity of red Robin for off premise occasions.
Even as more guests are able to dine in more specifically restaurants with opened dining rooms are maintaining off premise sales that are approximately one and a half to two times pretty covert 19 levels and 40% of sales mix.
The increase in our average off premise sales per restaurant has been achieved by focusing on a few key drivers are they experience taste of food ease of order placement from a new enhanced website order accuracy speed of service order packaging Isa pickup and team member friendly.
Yes, and threw a lot of hard work across the company, we have seen record high overall guest satisfaction scores.
We believe we will sustain strong incremental off premise sales, even as our donnie rooms reopened given our high quality execution, which will differentiate red Robin and the current environment.
Our execution has also been enhanced by simplified menu with one third fewer items, yielding little to no negative guest feedback.
Reducing our menu by 55 items has facilitated improved the back of the house speed and efficiency as restaurants have adjusted to reduce staffing levels and has improved food quality with consistency.
Given the success, we plan to leverage a simplified menu as part of our ongoing business plan.
Increased car side, Endo home delivery options, including Red Robin delivery, where guests order directly from Red Robin with outsourcing livery ever approved convenience to our gas and the economics of our off premise business.
Within the off premise sales categories. Our most profitable channel carry out has experienced the largest increase and now represents approximately 62% of the total well third party and Red Robin delivery currently comprise about 30 and 8% respectively.
Third party deliveries available across the entire system and Red Robin deliveries now offered across all company operated restaurants of course catering has diminished given the lack of social and business events, but we'll be ready to capitalize on this opportunity when circumstances allow these interactions to reserve.
Yeah.
Not surprisingly the restaurants that have added to novels pizza prior to the onset of pandemic have been consistently outperform the system or make comp sales standpoint by approximately 650 basis points.
These restaurants have also experienced a 3.5% higher average shot relative to restaurants that do not offer denials.
Early in 2020, we purchase or not as equipment for the Seattle market, including approximately 40 restaurants. We currently plan to resume our rollout of Donato and this legacy market by the end of the year.
We look forward to continuing to expand are done autos rollout in the future with a proven and compelling return on investment.
However in the near term we have halted additional capex investments on this project as we continue to preserve liquidity.
With reopened dining rooms across 30 states dine in sales are building week to week supported by a record high dine in guest satisfaction scores.
Notably our most recent dining room reopenings.
In in our highest concentrated Pacific northwest and West Coast markets, where we operate many of our highest sales volume restaurants.
Reopening dining rooms has been carefully choreographed with the cross functional dining room reopening task force comprised of our health and safety operations training and communications teams.
This task force has developed materials and detailed instructions that incorporate new health and safety measures. So that our team members gas suppliers and the general public are protected.
To be clear, we initially did not open each and every dining room as soon as the restrictions were lifted and in particular area, but rather when we felt we were ready and that all safety considerations were in place. So that we could do so effectively.
However, based on our recent experiences and health and safety readiness, we're planning to reopening dining rooms as soon as possible once restrictions are lifted.
No that reopened dining rooms feature our new hospitality model total guest experience or TJX as discussed in our last call that we were planning to implement over the course of this year.
This new service orientation offers elevated levels of hospitality with service dedicating more time, the dining room attending to an engaging with guess.
Our reopening playbook involves having all team members were pp, including face coverings, completing daily health surveys, including submitting to mandatory temperature chuck's before they begin their shifts.
Physically, claiming disinfecting and sanitizing, all contact areas, including dedicating one team member on each shift to front of house sanitation.
Team members are required to frequently wash their hands and applying to alcohol based sanitizer.
Yes, Similarly have access to hand sanitizer stations.
We have also implemented new social distancing measures by rearranging, our dining rooms, and posting signage and marketing tables that cannot be used with these measures in place. We're confident that we're delivering high quality food and great experience that red Robin is known for in a safe manner. We.
Opening restaurants at a maximum 50% capacity, which in some cases more stringent then what restaurants are being mandated to do by state or local jurisdictions concurrently we are completing our work right how to open danya rooms at 75% capacity with social dispensing and Todd So.
We can open up this increased capacity with appropriate health and safety protocols.
Importantly, as other weekend a June seven restaurants opened donnie rooms generated comp sales of down 26.7%.
Compared to comp sales generated at restaurants, only offering off premise of down 56.0% a positive difference of 29.3 percentage points.
So as you can see we're navigating through these unprecedented times with tenacity and determination and I've taken substantial of actions that have positioned us well for the short and long term when the impact of this virus upsides. The team has done an excellent job over the last few months a poll.
I mean, what red Robin truly represents in his prepared our brand to be successful in a change environment for our industry.
I am confident we will be in a strong position both as a brand and as an organization as the recovery continues.
Not only are we operating at the highest levels of quality execution, we have restructured our organization and reduce infrastructure and other costs to be more efficient going forward.
In addition, the post cover 19 restaurant industry backdrop may offer rationalize labor and occupancy costs and it contraction of casual dining restaurants, thereby providing an opportunity to improve our future restaurant margins and market share and resumed the key pillars of our strategic plan.
Before I turn the call over to Lynn I must again give a heartfelt. Thank you talked a great team members. They have always been the reason why red Robin is so special and under these most trying conditions they have proven themselves like never before and delivering our brand promise, while staying vigilant and their commitment to health and safety.
While serving the needs of our communities, we know how eager they are to welcome I guess back to Red Robin for elevated dining experiences as more danya rooms reopen.
Now I'll turn the call over to land.
Thank you Paul before I review, our first quarter financial I will discuss a few other relevant topics starting with liquidity on April 1st we announced that we had drawn down the remaining capacity under our 300 million dollar credit facility as of the fiscal quarter end on April 19th our liquidity stood at eight.
$89 million and as of June 7th we had total liquidity of $84 million, including $30 million of cash and cash equivalent and $54 million that's available borrowing capacity under our revolving line of credit.
Given current sales trend that we reported this morning, we now estimate that our average cash burn rate for the fiscal second quarter is between one and $2 million per week, which included estimated parcel rent payment reopening car onetime covered 19 expenses and cost.
Associated with finalizing the amendment of our credit facility.
This cash burn rate would not have been profitable without our previous effort to preserve liquidity reduce cost and strengthen our organizational structure. There no. Beginning April 1st we have not made foley's payments under our existing lease agreement to conserve cash but have continued to recognize expenses.
Liability for lease obligation prior to April rent coming to the company began engaging and ongoing constructive discussions with landlords regarding the potential restructuring of these lease payment.
Hi, Paul mentioned in response to the Coven 19, Ken dynamic the company undertook several measures to preserve liquidity and reduce cost.
Which are meaningful longer term reduction to better position red Robin for long term recovery and grow we intend to dedicate a significant portion of our free cash flow once achieved over the next several quarters to delevering our balance sheet. As you know, we recently filed an 8-K.
Causing an amendment to our credit facility, which has provided us having it really through the third quarter 2021.
In addition, we filed a $75 million shelf registration statement with the FCC for the purpose of raising incremental capital as needed to satisfy a condition in our credit facility amendment of raising at least $25 million by November 13th 2020 to further support the bid.
During this recovery period and for our ongoing need.
We're confident that we will meet the financing condition under our credit facility Amendment.
Well, we have not taken a P.P.P. loan and do not intend to do so we are taking advantage of the tax benefits and deferrals as allowed for by the cares Act more specifically we are currently deferring payroll taxes and expect to favorable rate impact of net operating loss carry back which could generate.
Right up to $12 million, a cash tax refunds within the next 12 months.
Now in terms of the fiscal first quarter Q1, 2020 comparable restaurant revenues decreased 20.8% driven by a 20.9% decline in guest traffic, partially offset by 8.1% increase in average check overall pricing increased one.
0.6% and we also realized and additional 0.3% increased from our decision to lower discounting.
Mix decreased by 1.8% driven by our operational shift to off premise only resulting in lower sales of beverages and finest burgers consistent with off premise sales next we saw pre cobot 19.
We were encouraged by our improving sales trajectory entering twentytwenty comparable sales for the first eight weeks of 2020 were up 3.7% as Paul mentioned, demonstrating our enhanced execution around our strategic plan discussed prior to the pandemic following the substantial early negative impact.
Back to the pandemic, we have seen our weekly sales sequentially improve initially with off premise only and more recently as we began to reopen hard diagram.
Q1, total company revenue revenue decreased 25.3% to $306.1 million down $103.8 million from a year ago, driven by the closure of our dining rooms in response to the Kogut 19 pandemic dine in sales were down 34.5%.
Partially offset by off premise to outgrow our shift to an off premise only service model drove meaningful growth in the channel, which rose 86.1% in Q1, representing 26.3% of total food and beverage sales for the quarter. This compares to off premise sales representing 13.9.
First that in the fourth quarter of 2019.
Q1 restaurant level operating profit as a percentage of restaurant revenue was 8.8% down 950 basis points versus a year ago, driven primarily by the impact that fail to leverage on restaurant labor cost other operating cost and occupancy.
Among other factors.
Cost of goods sold remain relatively flat from lower beverage Max with higher off premise sales offsetting higher ground beef price.
General and administrative costs were $26.7 million decrease versus the prior year, a $3.4 million, primarily driven by lower team member benefit and lower travel and entertainment and professional costs due to cost reduction initiatives host coven 19, partially offset by.
Higher team members salaries and wages associated with merit increases implemented prior to the initiation of our aggressive cost control measures.
Selling expenses were $14.8 million decrease versus the prior year of $3.2 million, primarily driven by pivoting from National media to digital media, which has proven to be an effective medium for interacting with our gas during the coated 19 pandemic, while taking advantage of our access.
To the over 9 million members of our royalty program.
The change in the effective tax rate is due primarily to the recognition of a valuation allowance on our tax credit partially offset by a decrease in earnings and Ano while carry backs allowed.
With that despite the valuation allowance, we recognize for financial statement purposes, we expect to recognize the cash tax benefit for the 52 million dollar carry forward balance within the related 20 year period.
During the quarter, we recognized other charges of $119.4 million, primarily triggered by the Kogan 19 pandemic. These charges included $95.4 million related to goodwill impairment.
$10.5 million related to restaurant asset impairment.
$9 million and severance and executive transition costs and point $2 million for coated 19 related charges, including purchasing personal protective equipment for our restaurant team members. We also recognized $4.5 million related to litigation contingencies one point.
5 million <unk> million dollars to inboard and stockholder matter car and $1.4 million related to restaurant closures and Refranchising car.
Q1, adjusted EBITDA was a loss of $10.7 million as compared to a positive adjusted EBITDA of $34.3 million in Q1 2019.
When adjusted loss per diluted share was $6 in 66 cents as compared to adjusted earnings per diluted share of 19 cents in Q1 29 team.
Now turning to the balance sheet during the quarter, we had net borrowings of $84 million on our revolving line of credit, resulting in the quarter and outstanding debt balance of $290 million vision to letters of credit outstanding of $7.5 million in early January we refinanced our credit.
Agreement with our lenders to hearing a 300 million dollar credit facility, which provides liquidity early 2025 as previously mentioned on May 29, we further amended our credit agreement to eat financial covenant requirements through the third quarter 2021.
We ended the quarter with $89 million in cash and cash equivalent our weighted average interest rate was 4.7% during the first quarter under our share repurchase program. We bought back approximately 72.1 thousand shares for a total of approximately $1.7 million with.
Onset of covert 19, we immediately suspended this program as the liquidity preservation measure in response to the uncertainty related to the covered 19 pandemic, we had suspended our annual and long term guidance as we continue to evolve our strategy to overcome the complexities of operating income.
Post pandemic environment.
Before I conclude I'd like to take a moment to thank our red Robin team in the restaurant, but at the restaurant support center for their dedication hard work and resolve having quickly adapt it to a dramatically different environment, both personally and professionally.
It is truly a privilege to work with such an extraordinary team. Thank you for all your significant contributions in continuing to serve our gas and take care of our fellow team members in a safe environment that embraces our red Robin value.
Importantly, we are confident that when the impacted the pandemics upside that the company and its strategic plan will create value for our shareholders with that I will turn the call back over to Paul.
Thank you Glenn let me conclude with one key message I am extremely confident in red Robins ability to move through in past the current environment and in the process emerge stronger as an organization and as a brand.
All of our team members have stepped up to the challenges, we face and turn them into opportunities to enhance everything we do in serving our guests and communities. Our guests have validated these efforts with record satisfaction scores and as we move forward, we will build on what we have already accomplished and bolstering our offering.
The sales and bringing new and loyal Red Robin guess back into our restaurants as conditions allow.
Thank you for your time today and interest in Red Robin and we would now be happy to take your questions.
Thank you.
This time will now be conducting a question and answer session. If you like to ask a question today. Please press star one on your telephone keypad and a confirmation telephone indicate your line is in the question Q.
You mean first start to if you like to move your question from the Q.
I'm just consider using speaker equipment, it may be necessary to pick up your handset before pressing the star. He's one moment. Please what we poll for questions.
Thank you and your first question is coming from the line of Alex Slagle with Jefferies. Please proceed with your question.
Hi, Thank you good morning.
Good morning, I want us to view.
So how should we how should we think about the cadence from here for dining room Reopenings and also interested in how you're balancing that six foot spacing restrictions that the broader capacity limits and do you have enough space.
Here, it yeah and to get to 50% in all cases in any more comments on what you think needs to happen to get to 75%.
Alex This is Paul and I know, it's a bit early on the West coast. So appreciate you joining me.
Early.
But.
You know we.
All of the basically all the dining rooms that are reopened our at 50% capacity and.
We have been able to do that.
Relatively easily in fact in we're currently working on that for the 75% model and I do not anticipate.
Any issues with that.
As to kind of the cadence of it.
Right now, we're a bit over 60% with the dining rooms, reopen we feel like over the next.
40 to 45 days that number will allow we will move up to a bit over 80% of the dining rooms have been reopened.
I think the great news on that is that.
The majority of the locations that are just now coming online for us or.
On the West coast and in the Pacific Northwest.
Those are higher volume a restaurant so we're extremely excited about that.
Frankly every day, we're more and more encouraged.
With the sales I think as an example, this past Monday restaurants, with the dining rooms, reopen and even at a 50% capacity we were only negative just a touch over 17%.
In those locations so.
We are seeing the business continuing to build.
We feel like that.
As we get into the end of July early August substantially we should be close to the 100% level at 50% and then beginning to move certain localities up to 75% as they start to ease their restrictions and feel comfortable with that and also a something that we've heard a little bit of.
We're feeling just great about our ability to staff the restaurants at the 50% at the 75% uneven hundred.
I know there's been a lot of concern about where the team members becoming backend.
We're seeing that Dana we have local issues in a couple areas, but for the most part that has been a.
A real plus for the brand and I think it just shows the strength of the.
The Red Robin team members and their connection on at the restaurants, but the communities.
That's great and then had a question on the productivity initiatives and how the current environment open your eyes to additional opportunities there are ways to operate more efficiently and profitably.
Sounds like the menu changes.
Represent one immediate opportunity if you could comment on on anything else you're saying.
Well I think also the implementation of the total guest experience model.
You know, it's as I look back on my career.
The rollout of Pgx, the new service, our hospitality model, we did it virtual with our restaurants, so and in the restaurant industry is typically been we think that that has to be very hands on and somebody has to we have to have these big team meetings or area meetings and people fly.
Ryan around the country and I think to some great learning from that was our our training team and our operations team together with ICTI, There's just a fantastic job of getting that rolled out virtually to the restaurants, I think thats going to enable us overtime to rethink.
How we do those things that are for far more cost efficient.
You did mention the the simplified menu certainly helps on a lot of France.
We're seeing it really impact the guest experience from faster Cook times higher quality food. The food is frankly hotter, but it's impacted a ways. We're seeing a reduction on the way side and we believe that overtime. It will help us on the supply chain side as we have less SK use that we're having.
Into manage and worry about the velocity through the distribution houses.
Makes sense. Thank you.
Thank you Alex.
Our next question comes from the line of John Glass with Morgan Stanley This issue.
Thanks, and good morning.
Two questions first just on as you we opened the dining rooms.
Our consumer is behaving in other words are you full at 50% capacity all week long or is this still primarily you're at capacity in the weekends, but the weekdays are.
Lighter and you've seen it obviously sales improvement it's anyone's reopened other casual diners I think I think you've seen a greater improvement over the same similar weeks and the data as you know scant still that but but to the extent we can see it has been do you think it's something different about red Robin need because the family oriented business, maybe there's some hesitancy more hesitancy from your customers to go back.
And any comments around that.
Well John.
We've been doing research as we've been going.
Through the pandemic so about every two or three weeks, we actually have been.
There are doing research no we have over 9 million members in our royalty program. So we've been engaging with them in and really asking them what are they looking.
For from Red Robin to feel comfortable and ready to come back into the the dining rooms, and and we frankly have seen kind of three classifications of guest and in terms of their attitudes.
The first or 20% or so.
Where they're not as concerned about the cove, it and you know whether its red Robin our restaurants in general they would just be going out.
And we think Thats certainly.
Is there have been driving some of the business across the industry. What we are seeing is that we're now entering into that that 60% kind a large middle group.
That is a bit.
No more reticent, they pay close attention to your health and safety protocols and procedures and.
It certainly my belief that as a brand at Red Robin.
We've done some of the best work out there and we're hearing that from not only team members, but but our guest out there. So we're just now seen.
Entering into that can a phase of the the consumers and how they're dealing.
Dealing with it and we're getting.
Really strong feedback from our guests that we're doing the things that are making them comfortable I think thats standing out I think as we look into the future and how guests are going to want to interact with restaurants health and safety. Obviously has moved up the priority list I think it's going to stay there.
For a while as the pandemic as we go through this.
Recovery.
But from a.
Standpoint of what makes red Robin special with that.
The one thing that we hear is people actually are calling out red robin for that they're feeling safe, bringing their families to red Robin at this time versus some other brands out there. So we believe that's going to continue to be shrink and frankly enable us to take market share as we go.
Through this pandemic and come out the other side. So obviously a lot of people are saying, yes, there might be 20 or 30% less.
Outlets out there, but I also think that the brands that do this right that understand and listen to their.
There are guest and do the things that they wanted us to do to feel safe or going to take market share as we get to the back into this so I believe that we're handling the right fashion, we're listening to our guests and doing what they're asking us to do to feel safe uncomfortable and is paying off in the.
In the sales that were seeing and and the growth that we're seeing and we couldn't be more excited about beginning to open up. The are you know there are higher volume restaurants. So we've seen over the last few days some excellent sales results coming out of those restaurants.
Good I just thought just one on the break or what is the comp decline.
Required or or easy required to get to breakeven restaurant level understanding the first quarter was a bit mix between sales results, maybe that's not right benchmark. So where do you think you can break even on a comp decline or average unit volumes in the current cost environment things, you're doing that could go mix et cetera.
Since the second or third quarter.
Yeah, I would say in the current cost environment, 20% to 25%.
But with fully loaded costs it gets down to the lower end of that range.
So 20, or so 20% at the restaurant level, maybe down 20, <unk> I'm, sorry sent out there that you know that Oh. Thank you for the clarifying question. That's at the enterprise level. So right now at down 30, we believe we're where cash flow positive in the current environment at the restaurant level.
Got the enterprise level as.
Glenn mentioned its high teens low twentys that we will get the enterprise level, there and we're approaching that.
Got it okay. Thank you.
Thanks, John.
Thank you as a reminder to ask a question today you May press star one from your telephone keypad.
The next question is from the line of Greg Francfort with Bank of America. Please proceed with your question.
Hey, Thanks, Thanks for the question I I just had a couple of the first is.
By my math from what you said I think you're doing.
I think one thing people are looking for is kind of how much of your off premise gains that you got over the past.
Couple of months are going to stay with us sort of post coded and my my math is that you're retaining like two thirds of years of your off premise sales that you did you had in those reopens towards that the right number and I guess, how are you calculating it if it's not.
Yeah, I think for the restaurants that we have dining rooms open at those are running about 40% of their sales as as off premise.
Now when we look at the system on a consolidated basis, what's been encouraging as.
See you know our off premise sales actually peaked at about three times pre co bid level, but as we've been opening up dining rooms, and between one and a half to two times.
Okay, and then just in terms of the corporate positions I think you talked about removing 50 position.
How many of those do you expect to be to be permanent versus as things open back up maybe adding back some of those are some of those positions.
Well, we were very strict.
The organization certainly you know because that's the circumstance, but based on how we thought through our organization and our infrastructure. We are planning for those positions to be permanently eliminated.
Now as business comes back there will be business needs and we'll adjust accordingly, but that's really the intention today.
And then I'm.
Just on the loyalty program <unk> I've been trying to think through.
What changes could be permanent to the business and besides off premise I'm curious I think you said the loyalty program was around 9 million members I think that was similar to where it had been running but have you seen any inflection or change in terms of I noticed in that program around people kind of shifting online.
Well I Didnt hear the ways people I am sorry, Greg.
Just if you've seen any sort of acceleration in in the loyalty program growth there will be program base.
As people have shifted towards digital.
I'd be curious.
Yeah, I don't know if we've seen a measurable difference however, what we have seen and we're very encouraged about is our dining room royalty members shifted the off premise.
Many for the first time, so we certainly saw their loyalty in terms of when the dining rooms were closed and so now we've introduced another occasion for those gas yeah. Greg. This is Paul one thing I would say is that.
Having a program of that size.
Really it enabled us to quickly pivot and through the digital world.
Engage with them, we were able to work with the.
Third party delivery companies to Incent the.
Off premise behavior very quickly now so.
My view is that we had a built in audience that we were able to do a great job of so these were heavily dine in I guess that now we think.
Our excited to be able to use us not only for dine in and the future, but we're now a strong off premise alternative.
My view is that what the pandemic has done is its top people how to use off premise is teaching people how to effectively order pay use delivery.
For.
In a sense almost a meal replacement so were.
We think that the size of the program and now with the dine in its easier to as their reopening is easier to start to.
Add new members, so that program, but from our perspective, we think it's actually a built in advantage for red Robin and having a constituency that we can speak to almost each and everyday in a cost effective fashion.
Thank you guys thoughts.
Okay, great. Thanks.
Once again as reminding me press star one to ask a question today.
The next question comes from the line of Brian Vaccaro with Raymond James. Please proceed with your question.
Hi, good morning.
Just just wondering what back on your.
Good morning, So just circling back on your comments regarding consumer attitudes I'm curious if your data is on a regional or state basis across your restaurants, and if so are you seeing significant variability in terms of the consumer appetite to return to dine in.
It's it's a little regional but what we're seeing is.
Across the regions that does fall into the three groups I mentioned.
So I'm, just giving you rough percentages, the 20% or so that you know.
Quite frankly, they just would come in any way then about 60% in the middle that want to understand your protocols. Your safety procedures, what we heard out of that group is.
They don't want just to read it or hear about it they want to see it in action in the restaurants and that's certainly one of the reasons that we have a team member on each shift as she is dedicated to sanitizing the public spaces no. The door handles at the front door. The restroom areas and then there is that backend 20 are.
25% those said hey, this kind of take us a bit of time to feel comfortable again, using a dining room still going to participate in the off premise world, but it's going to take us a little bit longer what we do see is regionally.
You know there some regions that that first group is a little larger than in other areas I would say maybe the southeast has been a little larger than what we've seen.
Initially and attitudes.
Maybe like in the northwest or the West Coast. However were no. So far in the Reopenings out there seem very strong results, but people are more in that 60% group than maybe in the 20% group in some the areas that frankly have been more impacted by the co.
With 19.
19 virus. So there is a bit of regionality to it but we see the basically people fall into one of those three groups.
All right. Thanks helpful and wanted to clarify your comment on DNA is obviously had to makes it difficult decisions during coded and streamlining the organization, but what does the current gionee run rate weekly or monthly currently and can you also ballpark, where do you see normalized DNA settling out in a poll.
Coded world.
Well, Brian obviously, there's a few few moving pieces here, but but roughly you know I would say, we see gionee and roughly maybe a 7%.
Neighborhood on a normalized basis.
But were kind of reintroducing some costs over time in our current projections for 2020.
Hi, Brian I think also another way to look at the.
Question is we certainly as we've been going through this especially with a telecommuting theres a bit of.
And on Reimagination organizationally of.
How how is this going to work postcode that you know as as we look at not only.
Office routines at the restaurant support center, but just also some of the routines that we have in the field. So I don't see us.
No from where we are today, adding a.
Really adding to the gene a.
Line that we have today for the except I mean, obviously, we took a salary.
A temporary salary cuts approximately 20%. So we certainly will be dealing with that as we move forward, but obviously the leverage that we would obtained by the increase in sales should.
Should minimize that impact.
Alright, Great and then I'd also just wanted to clarify the rent situation that can you help us with what percent of rent payments have been deferred and over what period and then when do you expect to return to paying full rent as you reopen dining rooms can you just help us would that dynamic.
Yes.
Thanks, Brian for the question so before April rent payments, where do we actually reached out to our landlords to proactively.
Start discussions around restructuring Lee said.
So in April and May we provided only parcel rent payments.
Similar to June now as we've been having additional I'm conversations with landlords, we are expecting the actual occupancy cost going out to be higher starting in July.
And then once we fully negotiate our leases we should be at you know a full understanding and 100% payments based on those understanding really in the back half the year.
Okay I'll pass it along thank you.
Okay. Thank you Brian.
Thank you.
Ladies and gentlemen that concludes our conference call for this morning, we thank you for your participation and.
Have a great day.
Great. Thank you. Thank you.