Q1 2021 Red Robin Gourmet Burgers Inc Earnings Call
Good afternoon, and welcome to the Red Robin Gourmet Burgers at first quarter 2021 earnings call.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask a question to ask a question you May Press Star then 1 on your Touchtone phone.
So at withdraw your question. Please press Star then 2.
I would now like to turn the conference over to Raphael Gross Investor Relations. Please go ahead.
Good afternoon, everyone and welcome to the Red Robin Gourmet Burgers incorporated first quarter 2021 earnings call. Please note that today's call is being recorded during today's conference call management will make forward looking statements about the company's business outlook and expectations. These forward looking statements.
And all other statements that are not historical facts reflect management's beliefs and predictions as of today and therefore are subject to risks and uncertainties as described in the safe Harbor discussion found on the company's SEC filings. During today's conference call management will also discuss non-GAAP financial measures.
These non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended to illustrate an alternative 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 2021 earnings release, and supplemental financial information related to the results on its website at www Dot Red Robin Dot com in the Investor Relations section now I'd like to turn the call over to Red Robin CEO.
Oh, Paul Murphy.
Good afternoon, and thank you for joining us today here with me is Lynch wine for our Chief Financial Officer, who were on.
We view our quarterly results after my prepared remarks.
Before I provide a recap of Q1 I wanted to first welcome Donna Morris, our new Chief Information Officer, and Andrea Vornado is our newest independent director there of both strong additions to the Red Robin family and we look forward to their many contributions as we execute our.
<unk> strategy.
And position ourselves for long term success.
We believe our Q1 results are a strong indicator as to where red Robin is headed and we have tremendous confidence in the future of our brand.
During our previous call we outlined the significant groundwork we undertook to strongly position red Robin for an eventual recovery from COVID-19.
Now as the recovery begins we are realizing the benefits of our strategic initiatives and are very pleased to have delivered a strong first quarter. Despite our largest markets operating at restricted capacity of 50% or less.
Importantly by the end of Q1, 55% of company owned restaurants had positive comparable restaurant revenue compare to 2019, we.
We also had 85 comparable company owned restaurants with no capacity or social distancing restrictions, realizing an increase of comparable restaurant revenue of 5.2% compared to the same period in 2019.
While these restaurants are able to operate with no restrictions several are still operating below 100% capacity due to limited operating hours due to staffing challenges and Covid exclusions.
As of at the end of our fiscal fifth period, All company owned restaurants have reopened for indoor dining with varying levels of capacity.
Taking into account jurisdictional requirements, our average capacity of approximately 65%.
We are excited to note that this is the first time our system has had all indoor dining rooms open with varying levels of capacity since the onset of the pandemic.
During the first quarter, our average indoor dining capacity was approximately 48%.
We are continuing to offer outdoor seating as an option for guests who would prefer a more distant occasion or prefer to dine outside as we move into the warmer weather months.
Even as we welcome more guests back into our restaurants, we have sustained our momentum in terms of off premises sales demonstrating that our off premises business is highly incremental to the dine in occasion and largely serves as a different dining occasion for our guests.
Average weekly off premises sales per restaurant are more than double pre pandemic sales levels in comparable company owned restaurants able to operate at 100% indoor capacity levels.
Realizing off premise is mix of 29, 9% as of at the end of the first fiscal quarter of course, our ability to fully participate in a recovery oriented environment is only possible with the highest quality of operational execution, both dine in and off premises we continue to maintain.
A disciplined focus on execution. So our guests can trust red Robin to deliver a consistent quality of experience each and every time. They visit we are sustaining high guest satisfaction scores as we scale our operations up with the recovery of <unk>.
<unk> through a combination of our T G X hospitality program on.
Off premises enhancements and our new management labor model.
As of the end of fiscal year 2020, we were well positioned for a post pandemic operating environment with 99% restaurant manager staffing restaurant team member turnover of rates approaching industry best in class levels, and a prescriptive ready set reopened guide addressing best practice.
As for resuming operations at 100% capacity.
As the company has continued our reopening plan throughout the first fiscal quarter. We have adjusted already set reopened playbook to account for staffing headwinds driven by COVID-19 and associated macro economic factors.
We have implemented technology enhancements to streamline the application process, which significantly reduces time to hire we also further modularize our kitchen training program to assist new team members in achieving competency and a handful of impactful test more quickly flattening of the learning curve.
Curve and setting them up to make a meaningful contribution to the shift while providing valuable assistance to our legacy team members.
Over the course of subsequent weeks the new team members are certified an additional positions 1 back of the house station at a time.
Additionally, we have recently implemented a wage progression program that targets improving retention in the critical first 6 months of a new team members on boarding including automatic wage increases over the course of their first 24 months on the teams. Our teams are doing a great job of hiring.
And training and we are on track to be fully staffed by early summer.
Let's now discuss our continued progress with respect to our transformation strategy, including the results that we're seeing from our key growth initiatives.
Our restaurants offering Donato pizza continue to outperform other restaurants by approximately 300 basis points in the fourth quarter of 2020, we added Donato us to 31 locations in the Pacific Northwest when restaurants reverted to off premise only.
Given the circumstances, we pulled back of related marketing plans, but expect to resume these plans during Q2.
We are still on track to at Donato as 2 of 120 restaurants in 2021 with approximately 40 restaurants by the end of Q2 and the remaining 80 over Q3 and Q4.
This will bring the total number of company owned restaurants that off of Dinardo 2 of approximately 200 by the end of the year.
We believe Donato us will generate annual company pizza sales of more than $60 million in profitability of more than $25 million by 2023. When do we expect to have completed our rollout to approximately 400 company owned restaurants.
You may recall that in March we announced the launch of 3 new virtual brands to build on our off premises business.
These new brands feature of mix of high quality of menu items for which red Robin is not typically known as well as offering new menu items that are variations on core products, enabling our team members to execute on these items without additional operational complexity.
All 3 brands are live on our largest delivery service partner door dash as well as additional national and regional partners and reflect the latest in our expansion into off premise dining which began 3 years ago. When we successfully launched our partnership with Donato.
As part of that partnership we've been featuring Donato as a stand alone delivery brand and third party marketplaces for over a year.
To date, we are pleased with both the feedback and performance of these virtual brands and are excited to see where they can go from here.
Early results show that 70% of guests, who have never ordered online from Red Robin before so we are activating an entirely new audience through this channel.
Used virtual brands are still in their infancy, but we look forward to sharing more as we better understand the long term impact to our overall results.
Turning to our revamped loyalty program, we have now had segmentation and targeting in place since Q4 last year, we're not only bringing back lapsed guests, but the visit frequency of our most loyal guests increased by over 10% in the first quarter compare to pre pandemic frequency.
We currently have $9.7 million Red Robin royalty members, which increased by 300000 members since Q4 last year the.
On the enhancement of this program have enabled us to drive sales through personalized targeted offers directly to our royalty members.
In the first fiscal quarter, we pivoted, our marketing to 100% digital media.
This enabled us to be nimble and targeted as restaurant capacity of all throughout the quarter.
Our digital media by over delivered on impressions driving higher reach and frequency, resulting in a 2 times return on investment.
Since implementing our search engine optimization strategy last year traffic to Red Robin Dot com driven from search has increased 66% or.
Our featured Q1 plant based L. T O items, cauliflower wings, and cauliflower pizza crust and our Donato locations also outperformed our sales expectations.
While the Red Robin guest is representative of a robust diverse and multi generational demographics. Our primary demographic includes Gen X millennials and centennial's. These guests represent approximately 2 thirds of sales and are generally much younger and more active in the digital space.
Our casual dining peers.
Our pivot to targeted digital marketing communications with this demographic, where and how they consume media driving a more effective and less expensive marketing spend.
We view ourselves as well positioned for how people want to Reengage post pandemic.
They want to resume their favorite activities, including gathering around the table with their friends and family and enjoying a meal out.
This will in turn generate higher sales and profitability, while opportunistically improving the value proposition of the Red Robin brand.
We believe that our brand promise to create memorable moments connecting family friends and fund positions us well to be a leading choice as guests returned of restaurants.
The combination of pent up demand and the meaningful contraction of the number of restaurants in the industry over the past year provides us with an opportunity to increase our market share and bring guests back to red Robin with increased frequency.
We are also maintaining our focus on the savings initiatives, we put in place last year as evidenced by our first quarter results.
Recall that our cost restructuring work in 2020 represents permanent savings and we are maintaining act of physical diligence and measuring ourselves against the savings initiatives put in place last year.
Excluding natural inflation in future growth initiatives.
Previously I mentioned, we had 85 comparable company owned restaurants that we're able to operate at full capacity as of the end of the quarter are.
Our fourth period restaurant level operating profit for these restaurants was 21, 1%, which is 1.5% ahead of restaurant level operating profit for these restaurants during the same period in 2019.
While we recognize that part of this margin improvement is due to the temporary impact of staffing vacancies in our restaurants. We believe this demonstrates that we are on track to deliver more than 100 basis points of enterprise level of margin improvement as we continue to operate additional dining rooms at full capacity.
Looking ahead, we have every reason to be confident in our future.
Moving through 2021 and beyond we of a number of levers we can bring to bear on the business over the next several years.
The strategic initiatives, we have in place are achievable and will provide meaningful impacts to red Robin and our shareholders.
These include.
1 continued off premises growth through operational and technology improvements, we will maintain our off premise of stickiness by continuing to implement modifications to our processes staffing floor plans and technology, enabling our team members to execute more effectively.
Thus delivering a more elevated off premises experience to improving our digital online experience with the release of a new red Robin mobile App and refined website by year end.
Research shows apps drive better order conversion and websites, while both can generate opportunities to upsell and cross sell.
These platforms will also leverage the targeting and enhancements made to our royalty program I mentioned earlier, creating an improved and engaging digital presence for our brand through.
3 delivering our brand promise in restaurants, and with consistent execution of our T Gx hospitality standards, enabling our guests to capture memorable moments of connection.
For reintroducing menu innovation, which supports check growth concurrent with a higher dine in mix as restaurants reopen this quarter. We are featuring a bacon bash lineup that we're very excited about from the sales we've seen so far these items are already outperforming our.
<unk>.
5 combined with the ongoing growth of Donato us and other virtual brands.
We see catering as a growth driver for Red Robin as people return to office environments.
Catering currently represents 1% of our sales mix, but we believe that we have the opportunity to significantly grow this sales channel over the next few years.
In summary, the enterprise improvements we made during 2020 have enhanced our brands value proposition, both to our shareholders and to our guests.
The strategic transformation of improvements represent the groundwork from which we can continue to focus on earnings and perpetuating, our guests' trust and fostering brand loyalty by delivering a consistent high quality red Robin occasion on.
Ultimately building frequency when.
When coupled with the strategic leavers I mentioned it is easy to understand our confidence in red Robin for the remainder of 2021 and beyond.
Now turn the call over to Lynn to review, our Q1 results.
Thank you Paul I share policy of excitement for our future are improving diamond sales trajectory improved business model incremental off premises sales channel and continuation of our transformation strategy together will drive meaningful long term shareholder value.
Turning to high level first quarter of results, we experienced at 10% increase in first quarter comparable restaurant revenue, primarily driven by operating our dining rooms at increasing capacity compared to the first quarter of 2019 comparable restaurant revenue was down 12, 8% our average weekly.
<unk> sales performance improved sequentially through the first quarter with comparable restaurant revenue over the final 4 weeks at where even with 2019, we sustained strong off premises sales comprising 41, 7% of total food and beverage sales of material increase from $26.
3% and 11, 6% in 2020 in 2019, respectively at approximately 80% of our off premises orders were driven through digital channel net cash provided by operating activities was $18.9 million, including the negative impact of of onetime legal settlement.
<unk> of $8.5 million, while cash used in investing activities was $5.4 million, we ended the quarter with liquidity of approximately $107 million, including approximately $22.3 million of cash and cash equivalents at.
On available borrowing capacity under our revolving line of credit.
Beyond the end of the first quarter, California, and Washington, our largest markets that are operating at restricted dining capacities at 50% or less generated positive restaurant revenue versus 2019 and the 4 weeks ended may 16th we believe further recovery of our west coast restaurants will <unk>.
Provides significant revenue increases at our dining room capacities increase.
We are continuing to take advantage of the tax benefits and deferrals as allowed by the cares Act more specifically as of at the end of the FERC quarter, we have deferred approximately $18 million in payroll taxes to be paid back in early fiscal 2022, and 2023 and we currently expect to generate additional.
No cash tax refunds of approximately $16 million during 2021 from net operating loss carry backs. We are nearing conclusion on our lease negotiation.
Binding the success of our lease restructuring work permanent cost savings initiatives and restaurant closures, we are emerging from the pandemic with a much healthier restaurant portfolio.
Additionally, we are confident in the future of Red Robin and we continue to execute on our transformation strategy and initiatives that we discussed during our Q4 call. We are prioritizing our strategic initiatives that deliver strong financial returns, while maintaining our diligence on cost management and liquidity at.
At the restaurant industry begins to recover we intend to dedicate our free cash flow over the next several quarters to delevering, our balance sheet, while maintaining flexibility to pursue our strategic growth initiatives.
Now turning to some of the specifics related to the fiscal first quarter Q1, 2021 comparable restaurant revenues increased 10% driven by a 4.4% increase in guest traffic and of 5.6% increase in average check the increase in average guest check resulted from of 3.
7% increase in pricing, a 1.3% increase in menu mix and a 6% increase from lower discount fares.
First quarter total company revenues increased 6.6% to $326.3 million at $20.2 million from a year ago, driven by operating our restaurants at increased capacities in Q1.
Total company revenues decreased by 22% compared to the same period in 2019.
<unk> sales were down 12, 8%, partially offset by off premises sales growth. Our continued focus on our off premises service model of technology and incremental sales initiatives allowed us to capture meaningful growth in the channel, which was 75, 5% in the first quarter.
<unk>, representing 41, 7% of total food and beverage sales as I mentioned previously this compares to pre pandemic off premises sales mix of approximately 11, 6% in the first quarter of 2019.
Restaurant level operating profit at the percentage of restaurant revenue was 15, 7% an improvement of 690 basis points compared to 2020, primarily due to the following restaurant revenue increased by 5.7% due to favor of bulk guest counts pricing and sales mix.
Cost of goods sold decreased by 170 basis points, primarily driven by favorable commodity cost and rebates labor costs decreased by 430 basis points, primarily driven by our more efficient management labor structure staffing shortages and simplifying our menu resulting in reduced.
<unk> kitchen labor hours, partially offset by higher wage rates at their operating expenses increased by 80 basis points, primarily driven by higher third party delivery commissions and supply costs due to higher off premises sales and occupancy costs decreased by 180 basis points primarily.
Driven by savings from permanently closed restaurants, and the restructuring of lease payments and rent concession.
Restaurant level operating profit as a percentage of restaurant revenue was 18, 3% in Q1, 2019 and higher than 2021 by 250 basis points, primarily driven by higher restaurant revenue of almost $82 million that more than offset a more efficient cost structure.
Our established during the pandemic general and administrative costs were $22.3 million of decreased versus the prior year of $4.5 million, primarily driven by a decrease in travel and entertainment costs and a reduction in force in 2020, partially offset by higher team member.
Cost of.
General and administrative costs were $30.1 million in 2019, selling expenses were $8.4 million of decreased versus the prior year of 6.4 million, primarily driven by reduced marketing due to capacity limitations and a shift to an all digital marketing strategy, which has enabled.
US to communicate with our guests in a more compelling and cost effective way selling expenses were $18 million in 2019, we recognized a tax expense of <unk> $1 million in the first quarter and our effective tax rate for the quarter was 6% the company will be able to carry back.
Federal and state net operating losses that are expected to generate approximately $16 million of cash tax refunds during 2021.
During the quarter, we recognized other charges of $5.5 million, primarily triggered by the COVID-19 pandemic. These charges included $2.4 million related to restaurant closures $1.2 million related to restaurant asset impairment driven by the decision to permanently close 10 of the 12 <unk>.
<unk> temporarily closed locations $1.1 million related to litigation contingencies $6 billion for COVID-19 related costs, including purchasing personal protective equipment for our restaurant team members and guests and providing emergency sick pay to our restaurant team members.
And a $1 million of board and stockholder matter costs.
First quarter, adjusted EBITDA was $27.4 million as compared to adjusted EBITDA losses of $10.7 million in Q1, 2020 Q1 adjusted loss per diluted share was <unk> 30, as compared to adjusted loss per diluted share of $6.66 in.
In Q1.2020, adjusted EBITDA was $34.3 million in the first quarter of 2019 and adjusted earnings per diluted share were at <unk> 19.
At quarter end of our outstanding debt balance was $164.2 million and letters of credit outstanding were $8.6 million guidance for 2021 is as follows we expect capital expenditures of $45 million to $55 million, including continued investment in maintaining.
Of our restaurants in infrastructure with maintenance and systems capital did not us expansion to approximately 120 restaurants, including approximately 40 restaurants in our second fiscal quarter and approximately 80 in our third and fourth fiscal quarters digital guest and operational technology solutions.
And off premises execution enhancements.
We also currently expect our full year effective tax rate to be between 1% and 5%. We expect low single digit commodity inflation throughout the remainder of 2021, driven primarily by rising protein prices before I conclude I'd like to thank our entire red Robin team for the results they are generated.
We are confident in our ability to deliver long term value for all of our stakeholders with that I will turn the call back over to us.
Thank you Lynn, let me wrap up things with a few thoughts before we take your questions.
The strategy that we developed and implemented last year is now paying dividends as we move into the recovery phase and we believe that the growth drivers in place, we'll continue providing us with business momentum for the foreseeable future.
Well Red Robin has always offered a differentiated proposition and unique casual dining experience our understanding of our guests how we interact with them both within our restaurants and through digital channels and what they expect of us from their experience has never been greater.
What we have to offer a playful family friendly atmosphere, enabling people to connect while enjoying gourmet burgers and other mainstream favorites or enjoying are of great food outside of our restaurants is exactly what we can all US right now after the challenges we have faced this past year.
We are now able to accelerate our profitability in a manner that was not previously possible and we are determined to create and grow long term value for our shareholders.
On a great team is of course, the reason why we've been able to accomplish everything that we have and I sincerely appreciate their efforts in getting us to at this point.
Let's now open the call for questions.
Yeah.
We will now begin the question and answer session to ask a question you May Press Star then 1 on your Touchtone phone.
If you are using speaker phone please pick up your handset before pressing the keys to withdraw your question. Please press Star then 2.
Our first question today comes from Alex Slagle with Jefferies.
Okay. Thank you.
At a question on the staffing shortages and I know you were preparing and training and hiring well ahead of debt. So it is notable and imagine you're not alone in this but I'm just kind of wondering if you could talk about kind of where you're seeing the most significant challenges and has this issue of been broadening over the course of the last few weeks.
Trying to us.
Think about what the next 4 weeks at look like and if it's fair to think that we'll see another step down in <unk>.
Average weekly sales similar to what you.
You saw from April 18th of May 16th or or whether the training program changes and.
The retention efforts at <unk>.
Outlined are going to kick in to offset that.
Well Alex this is Paul you're correct part of already set reopened plan.
It was geared towards.
The staffing.
<unk> actually to see sales slope up.
To give you an average we're right now looking to us.
About 6 more.
Team members per restaurant combination between heart of the house on the front of the house. So it is not.
It's not as dire as maybe you are hearing from some other brands in any form of fashion.
No.
And of frankly part of the impact.
As you look at for the April number was not only some of the staffing issues, but also we had an uptick in COVID-19 exclusions.
That we are now.
Seeing that starting to decline also so that was really a combination of them, both but you know us.
As we said a little earlier I feel very confident at AR.
In short order, we're going to get to staffing.
Put to bad debt has stabilized.
At the things that we've done the technology enhancements too.
Really get the on boarding on quicker getting people trained and productive inside of 2 or 3 days and then the wage progression of our all things that we're seeing already beginning to have an impact on our ability to staff the restaurants, Alex I would just add you know.
As we look out into the future I think you probably saw on the press release, our West Coast markets are performing incredibly strong and as we're able to increase capacities in California, as we're staffing up.
So in Washington, and some of the other states there is really going to be an upward trajectory in our sales as we move for us and while we're focused on the staffing challenges currently it's a priority that we do believe they're temporary in nature.
Okay. That's helpful.
Is there an impact on the restaurant level margin looking ahead at <unk> that we should think about just sort of balancing you know.
Yeah.
Some of that at the lower labor cost end.
Yes, we did see lower labor costs as a result of some of our staffing challenges so as you're thinking about modeling the company I would increase some of your labor expense line items above the current run rate.
Okay.
Thank you.
Okay.
And again, if you have a question. Please press Star then 1.
Our next question comes from Brian Vaccaro with Raymond James.
Hi, Thanks, and good evening I wanted to ask about the recent sales trends youre seeing and it's obviously very encouraging to be well back into that low to mid 50000 of week range and I don't want to be overly nitpick, but I did want to ask about may I am just trying to sort through the moving pieces because it looks like average weekly sales still strong.
Decelerated a bit versus April and that's despite dining capacity increasing in some of the strength you noted in California, and Washington, Obviously, so it is at our normal seasonality or some other dynamic you'd highlight there just curious to get your take on the cadence you're seeing in recent weeks and months.
Sure.
What I would say Brian is in May we did see a little bit of a downward trajectory and we attribute that to a few things 1 is from seasonality. We believe effecting our business and then we did have to reduce some operating hours associated with the exclusions and the staffing shortages and we've been experiencing.
<unk> and so again as we start to see capacities opened in conjunction with staffing.
On that trajectory will certainly start to improve.
Okay. That's helpful and end on that staffing shortage impact is there a way to quantify sort of at the impact to your operating hours or even your ability to see.
At full sections, if you will up to the capacity limits is there any way to quantify that how much that's constraining sales to a degree.
Well I don't think we're prepared to quantify it today, but certainly there will be an increase in expenses as we move forward a portion of which is management labor around shift supervisors as well as some of our team members in the restaurants.
Okay and on the labor inflation wage inflation front, sorry, if I missed it in your prepared remarks, but what was wage inflation in <unk> and what's your expectation for the rest of the year.
Yes, it was actually fairly modest we saw wage inflation between 1 and 1.5% in the first quarter.
We also saw the impact of higher off premise sales, which carries higher wage rates in the front of house.
We do expect wage inflation to increase from that point through the balance of the year and we expect it to fall somewhere in the low single digits.
Okay, Great Great and then I guess my last 1 just on the on the marketing front I. Appreciate the success that you've been seeing in the digital channels.
I'm curious to get your view on on what role you think TV and other traditional channels will ultimately play and of post Covid environment is and if you tie it all together.
Where do you see your advertising or selling costs settling out ultimately versus pre COVID-19 levels.
Brian This is Paul where we see that going on.
Obviously as we stated at very pleased.
Pleased with the results at the digital pivot in Q1 did.
Did produce for the company, we believe that there is a role for broadcast for.
National broadcast as we go into the future.
More specifically as we bring donato us into a market that we would introduce at with some broadcast medium just because we switched to <unk>.
Digital doesn't mean that we're not doing video, we're just doing it on different mediums, where we're seeing basically of higher take rate and it's more more targeted.
The great thing about the.
The digital approach that we take now that we're able to do at on a quarterly basis, if we need to bring in some national broadcast we can make that decision and make it happen I would say that from a selling expense side I would see that move forward through the year as capacity increases.
Especially as the West coast.
Is able to come online and now we're starting to get.
So I'm real good indications at by mid June a lot of the West coast is going to begin to.
Ease their restrictions and so as we mentioned with Donato as we waited until we could get the capacity youre going to see the selling costs definitely move up as we move through the.
The years, but still be at a are.
A reduced level as we end up the year.
Yeah.
Understood. Okay. Thank you I'll pass it along.
Right.
Our next question comes from Jon Tower with Wells Fargo.
Yes.
Great. Thanks, hopefully you can hear me okay.
I was just curious.
From a sales mix that you had during the period very strong in.
Looking good at it seems like Youre hitting on all cylinders with respect to the Carryout and net third party delivery and some of the virtual brand. So I was hoping maybe you could break down.
The mix between those channels right the traditional carryout versus third party delivery of just Red Robin.
The legacy brand versus how much of some of the mix today is from these virtual granted at just come on line.
Well I'll give you some key categories and then maybe we can touch on virtual brands at a slightly different manner.
So our traditional Carryout on ran about 21% for the first quarter third party, 17.5% catering with only 1% of I think Paul mentioned in his opening remarks in our last mile category was at about 2% and we are very early on in our view.
Actual brands until at this point, we'd like to see a little bit more experience or time before we start to share.
Results and expectations going forward.
Okay.
Yes.
Oh, sorry, I don't know if youre going to say anything John I think the thing I would emphasize on on the virtual brands.
Is that as I mentioned, 70%.
Of the orders are coming from people, who have not engaged from red Robin in a online ordering capacity before so we see that over time being incremental but as Lynn mentioned, it's very early.
Where we are on the carousel, we'd like to just to see where does that stabilize.
Okay, and just similar question of our line of thinking in the Carryout channel itself.
That you do have I think it's north of $9 million.
Loyal of royalty members.
In the loyalty program.
Is there a weighted to determine how the off premise customer is switching back and forth to an in store occasion.
I'm just trying to understand.
How sticky those customers are in that off premise channel as these stores reopen are you seeing greater frequency of use of both channels from these customers or these pivoting back to stores.
<unk> rooms reopened.
Yeah, I mean, it's something that we find fairly interesting at least on our data is that.
Dining guests are actually fairly loyal to dine in they don't.
Don't really cross pollinate.
Pollinate too much to off premise, however off premise guests to utilize both dine in and off premise end.
What we have seen as a higher of visitation frequency out of our off premise guests.
At at least from my perspective, it's indicates that the off premise occasion is an incremental occasion to the dine in visit and us capacity in the dine in.
Arena continues to accelerate for Red Robin We think it just has a multiplier effect for us.
Got it and end.
Just 1 last 1 on virtual brands themselves does that extend operating hours for the stores at all or are they still within the same.
Existing operating hours for the stores today.
Presently there within the same operating hours.
Kind of an interesting fact out of the virtual brands as we.
We see them playing really well.
At least 2 of the other 3 brands actually planed stronger and the lunchtime.
Slot. So if you look at the fresh set of the chicken sandwich had been more of the lunch, which we are pleased about the wing Department does play a little bit more in the late at night. So we haven't had to make.
Adjustment of the restaurant store hours.
Okay, Great and then just lastly on the unit growth side of the question of are you on that side of the equation. The 10 stores that are permanently closed anyway.
Offer insight on how much those those stores may have weighed on us.
Aggregate store margins or how they performed relative to the system say in 2019 from an average weekly sales standpoint, and then.
Looking at the rest of the system do you feel like the company side of the portfolio is really were optimized for where you want it to be for future growth.
Yes at the restaurants that we've permanently clouds, where our margin outperformance for the company. So you would want a model of them you know lower than the average in 2019.
And then yes, I think we believe our restaurant portfolio is at a place right now we're at very healthy and we've got these incremental sales channels that we're generating and we think that will certainly.
On the tide will rise for us.
Of all of the restaurants, and again I'm, a healthier restaurant portfolio as of resolve yes.
Yes, John I believe that the closures that we did end the work we did on the portfolio as a whole from a.
<unk> renegotiating. The terms is really set of portfolio for a strong future and address some of the things that we had mentioned back in January of 2020.
I thought it would take much much longer but obviously at the pandemic offered us the opportunity to have those discussions and frankly get done on a year that may of taking 2 or 3 years.
Great. Thank you very much for taking the questions I appreciate it.
Thank you John.
This concludes our question and answer session and I'd like to turn the call back over to management for any closing remark.
Well, thanks, everybody for participating in the.
The first quarter 2021 call are certainly on our end, we're very pleased with the results I think it really shows the work that we did in 2020 has.
Set the company up for a strong future Q.
Q1 really as indicated.
The things we did over at the right things for the brand and the results of showing at and when and I look forward to speaking with you again on the Q2 call have a good rest of your day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.