Q1 2024 Red Robin Gourmet Burgers Inc Earnings Call

Operator: Good afternoon, everyone, and welcome to the Red Robin Gourmet Burgers Inc. first quarter 2024 earnings call. This conference is being recorded.

Good afternoon, everyone and welcome to the Red Robin Gourmet Burgers incorporated first quarter 2024 earnings call. This conference is being recorded during management's presentation and in response to your questions. They will be making forward looking statements about the company's business outlook and expectations.

Operator: During management's presentation, and in response to your questions, they will be making 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 as described in the company's SEC filings. Management will also discuss non-GAAP financial measures as part of today's conference call. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles but are intended to illustrate alternative measures of the company's operating performance that may be useful.

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 company's SEC filings management will also discuss non-GAAP financial measures as part of today's conference call. These non-GAAP measures are not prepared in accordance with generally yes.

Accepted accounting principles, but are intended to illustrate alternative measures of the company's operating performance that maybe useful reconciliations of the non-GAAP financial measures to the most directly.

Operator: Reconciliations 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 first quarter 2024 earnings release on its website at ir.redrobin.com. Now, I would like to turn the call over to Red Robin's President and Chief Executive Officer, G.J. Hart.

Comparable GAAP measures can be found in the earnings release.

The company has posted its first quarter 'twenty 'twenty four earnings release on its website at IR deck Red Robin Dot Com now I would like to turn the call over to Red Robin's, President and Chief Executive Officer G. J Hart.

Speaker Change: Good afternoon, everyone and thank you all for your interest in Red Robin.

Gerard J. Hart: Good afternoon, everyone, and thank you all for your interest in Red Robin. Almost 18 months ago, we launched our North Star Five Point Plan, grounded in a commitment to a great experience through investments in service and food quality. We expect the investments to deliver gains in sales and profits and drive long-term shareholder value. Due to the hard work and dedication of our team members, we are beginning to reap the rewards of the investments by delivering positive comparable restaurant sales in the first five weeks of our second quarter.

Almost 18 months ago, we launched our North Star five point plan grounded in our commitment to a great experience through investments in service and food quality.

Speaker Change: We expect the investments to deliver gains in sales and profits and drive long term shareholder value.

Speaker Change: Due to the hard work and dedication of our team members. We are beginning to reap the rewards of the investments by delivering positive comparable restaurant sales in the first five weeks of our second quarter.

Gerard J. Hart: We have achieved this result despite the 200 to 250 basis point headwind from the strategic removal of virtual brands last year that we will experience through the second quarter. As you've heard from others, the consumer environment is becoming more challenging, and our core consumer of hardworking families is looking for value when they choose to eat out. Our menu and our brand are centered around providing everyday value to each and every guest through our 30 bottomless items, our Tavern Burger lineup, our pizza offerings, and throughout our menu.

Speaker Change: We've achieved this result, despite the 200 to 250 basis point headwind from the strategic removal of virtual brands last year that we will experience through the second quarter.

Speaker Change: As you've heard from others, the consumer environment is becoming more challenging in our core consumer of hard working families is looking for value when they choose to eat out.

Speaker Change: Our menu and our brand are centered around providing everyday values to each and every guest through our 30 bottomless items, our tavern Burger lineup, our pizza offerings and throughout our menu.

Gerard J. Hart: We believe this brand positioning has been beneficial to our top-line trends as we continue to create moments of connection over craveable food that only Red Robin can provide. Before I dive into more specifics, I'd like to extend a heartfelt thank you to all of our more than 20,000 team members across. The success of Red Robin currently and in the future is due to your effort, and all of us working towards the same goals, all of us in this together. We've come a long way, but we still have more work to do.

Speaker Change: We believe this brand positioning has been beneficial to our top line trends as we continue to create moments of connection over craveable food that only red Robin can provide before I dive into more specifics I'd like to extend a heartfelt. Thank you to all of our more than 20000 team members across the country.

The success of Red Robin currently and in the future is due to your efforts.

Speaker Change: And all of US working towards the same goals all of us in this together.

Speaker Change: We've come a long way, but we still have more work to do.

Gerard J. Hart: I am excited for what we can accomplish over the remainder of the year. As a reminder, our North Star five-point plan consists of the following: Number one, transform into an operations-focused restaurant company. Two, elevate the guest experience.

Speaker Change: Im excited for what we can accomplish over the remainder of the year.

Gerard J. Hart: Remove Costs and Complexities for Optimized Guest Engagement and five, drive growth in comparable restaurant revenue and unit level profitability while delivering on our financial commitment. I am proud to say that we continue to make progress against all five facets of our strategic plan. Starting with operations, service is the backbone to our turnaround efforts as we work to ensure every guest has a great experience in our restaurants, rain or shine. As we have spoken about previously, we spent much of 2023 improving our operations.

Speaker Change: As a reminder, our north Star five point plan consists of the following.

Gerard J. Hart: We did this through labor investments, including adding servers so they could focus their effort on fewer tables, adding back bussers, adding a dedicated expo, and bringing back more than 250 dedicated kitchens. We also made investments in our food, including flat-top grills that deliver a thicker, juicier, and more flavorful burger, unveiled more than 20 improved gourmet burgers prepared with higher quality and more flavorful ingredients, expanded our bottomless menu, and upgraded our bar menu to include higher quality brands that our guests know and love.

Speaker Change: Number one transform to an operations focused restaurant company to elevate the guest experience three remove cost and complexity for optimized guest engagement and five drive growth in comparable restaurant revenue and unit level profitability, while delivering on our <unk>.

Speaker Change: Natural commitments.

Speaker Change: I am proud to say that we continue to make progress against all five facets of our strategic plan.

Gerard J. Hart: Additionally, as part of our operational improvements, we launched the partner compensation program for our single unit operators at the start of 2024. Through this program, the operators now see themselves as owners of the restaurants that they oversee and are rewarded based on their profits. The feedback has been positive, and we are thrilled to align the entire organization around the unified goal of driving traffic and, ultimately, profit dollars. Turning to the guest experience,

Speaker Change: <unk> with operations services, the backbone to our turnaround efforts as we work to ensure every guest has a great experience in our restaurants rain or shine.

Speaker Change: As we have spoken to previously we spent much of 2023, improving our operations. We did this through labor investments, including adding servers. So they can focus their effort on fewer tables, adding back busters, adding a dedicated expo and bringing back more than 250 dedicated kitchen managers we.

Speaker Change: <unk> made investments in our food, including flat top girls, which deliver a thicker juice here and more flavorful Burger unveiled more than 20 improve gourmet burgers prepared with higher quality and more flavorful ingredients expanded our bottomless menu and upgraded our bar menu to include higher quality brands.

Speaker Change: That our guests know and love.

Speaker Change: Additionally, as part of our operations improvements, we launched the partner compensation program for our single unit operators at the start of 'twenty 'twenty four.

Speaker Change: Through this program the operators now see themselves as owners of the restaurants that they oversee and are rewarded based on their profits.

Speaker Change: The feedback has been positive and we are thrilled to align the entire organization around a unified goal of driving traffic and ultimately profit dollars.

Speaker Change: Turning to the guest experience.

Gerard J. Hart: If we rewind several years, dining guest satisfaction scores at Red Robin began declining and lagging the industry back in 2016. Since we launched the North Star plan in January of 23, our operators have worked hard to deliver a great guest experience, and we saw their efforts translate to gains in guest satisfaction scores throughout 2023. The gains continued in the first quarter with all of these efforts leading to overall guest satisfaction that now has achieved parity with the industry. The measurement proof points align across many different sources.

Speaker Change: If we rewind several years dine in guest satisfaction scores at Red Robin began declining in lagging the industry back in 2016.

Speaker Change: Since we have launched the North Star plan in January of 'twenty, three our operators have worked hard to deliver the great guest experience and we saw their efforts translate to gains in guest satisfaction scores throughout 2023.

Speaker Change: The gains continued in the first quarter with all of these efforts leading to overall guest satisfaction that now has achieved parity to the industry.

Speaker Change: The measurement proof points align across many different sources.

Speaker Change: First.

Gerard J. Hart: From guest surveys, overall satisfaction has increased significantly over the past 18 months and is now in line with the industry average, led by an improved pace of experience, including reduced wait time and more frequent manager engagement with guests. Second, across Google, Yelp, and TripAdvisor, the overall satisfaction score has increased 13% versus the first quarter of 2023, and the attentive staff score has increased over 30%. We are further encouraged as we see first-time guest ratings are even higher than our repeat guests.

Speaker Change: From guest surveys overall satisfaction has increased significantly over the past 18 months and is now in line with the industry average led by an improved pace of experience, including reduced wait times and more frequent manager engagement with guests.

Speaker Change: Second across Google Yelp, and Tripadvisor. The overall satisfaction score has increased 13% versus the first quarter of 2023.

Speaker Change: The attentive staff score increased over 30%.

Speaker Change: We are further encouraged as we see first time guest ratings are even higher than our repeat guests.

Gerard J. Hart: First-time guests rate us higher on things like the taste of food and overall value, which are key drivers of overall satisfaction. Finally, the number of guest relations complaints declined by 19% versus the first quarter of 2023 and 79% versus the first quarter of 2018, when we began tracking. Delivering a great experience to our guests is a single key to improving the performance of our business. It requires a relentless pursuit of executing the fundamentals at every level, which our teams are dedicated to pushing forward every day, on every shift, for every game.

Speaker Change: First time guests rate is higher on things like taste of food and overall value, which are key drivers to overall satisfaction.

Speaker Change: Finally, the number of guest relations complaints declined by 19% versus the first quarter of 2023, and 79% versus the first quarter of 2018, when we began tracking.

Speaker Change: Delivering a great experience to our guests as a single key to improving the performance of our business.

Speaker Change: Requires a relentless pursuit of executing the fundamentals at every level, which our teams are dedicated to pushing forward everyday on every shift for every guest.

Gerard J. Hart: We are proud of what we've accomplished so far and are energized by the road ahead. In addition to our operational improvements, our teams continue to become even more ingrained in the communities we serve. The number of fund-raising partnership events, which serve as a great way to support our local communities, while simultaneously introducing new guests to the Red Robin brand, increased relative to last year. This growth is a testament to the tremendous work of our managing partners and their teams, as well as our field marketing team, who have been traveling the country to provide our operators with the tools and know-how to become more valued partners in the communities that we serve. Following our operational and guest experience focus in 2023, 2024 is about optimizing guest engagement, and that begins with our marketing efforts.

Speaker Change: We are proud of what we've accomplished so far and are energized by the road ahead in.

Speaker Change: In addition to our operational improvements our teams continue to become even more ingrained in the communities we serve.

The number of fundraise partnership events, which serve as a great way to support our local communities communities, while simultaneously introducing new guests to the Red Robin brand increase that relative to last year.

Speaker Change: This growth is a testament to the tremendous work of our managing partner and their teams as well as our field marketing team who has been traveling the country to provide our operators the tools and know how to become more valued partners and the communities that we serve.

Speaker Change: Following our operational and guest experience focus in 'twenty to 'twenty three 'twenty 'twenty four is about optimizing guest engagement and that begins with our marketing efforts.

Gerard J. Hart: Starting in March, we began rolling out our new marketing strategy focused on reigniting visit frequency from our loyal guests, New Guest Acquisition, and Improving our Guest Engagement Capability. We began by promoting the competitive breadth and value of our 30 bottomless menu items, far more than only the bottomless steak fries many guests know.

Speaker Change: Starting in March we began rolling out our new marketing strategy focused on reigniting visit frequency from our loyal guests new guest acquisition and improving our guest engagement capabilities, we began by promoting the competitive breadth and value of our 30 bottomless menu items.

Speaker Change: Far more than only the bottomless steak fries, many guests know us for.

Gerard J. Hart: We have also highlighted our upgraded high-quality ingredients and reintroduced fun to our iconic brand. We are excited with the results we've seen so far. In May, we launched our Leave Room for Fun campaign that has been developed to take back our ownable position as the most engaging and fun experience in casual dining. We're implementing an all new tone and more contemporary design. Our new advertisement, titled Fun Guy, has been a hit with viewers, with over 1.5 million views in the first week.

Speaker Change: We've also highlighted our upgraded high quality ingredients and reintroduced fund to our iconic brand.

Speaker Change: We are excited with the results we've seen so far.

Speaker Change: In May we launched our leave it leave room for fun campaign that has been developed to take back our <unk> position as the most engaging and fun experience in casual dining or.

We're implementing an all new tone and more contemporary design.

Speaker Change: Our new advertisement title fun Guy has been a hit with viewers with over $1 5 million views in the first week.

Gerard J. Hart: After viewing the ad, we measured improvement in our brand perception with viewers across many measures, including a 15 percentage point increase in the metric that the brand is better than it used to be, a 6% point increase in intent to visit in the coming four weeks, and a nine point increase in the metric that uses high quality ingredients. We've coupled fungi with our video advertisements that connect with guests on a human level, celebrate our new burgers and bottomless promise, and tell stories around the new ingredient transformation.

Speaker Change: After viewing the AD, we measured improvement of our brand perception with viewers across many measures including.

A 15 percentage point increase in the metric of brand is better than it used to be.

Speaker Change: A 6% point increase and intent to visit in the coming four weeks and then nine point increase in the metric used as high quality ingredients.

Speaker Change: We've coupled fun guy with our video advertisements that connect with guests on a human level.

Speaker Change: Celebrate our new burgers, and bottomless promise and tell stories around the new ingredient transformation.

Gerard J. Hart: We view our creative strategy as a success, as the key message recall of viewers has centered around our better burgers, our upgraded ingredients, and the fact that we now have over 20 new and improved gourmet burgers. While we're excited by the guest reception, we're also focused on the financial returns from our investors. In March, we began testing a marketing heavy up plan in five markets. The initial results have been approximately 200 bases, point, and traffic improvement versus a control set. These early results have proven that we have the right marketing initiatives to drive traffic and sales. That said, we're never satisfied.

Speaker Change: We view, our creative strategy as a success as the key message recall, our viewers has centered around our better burgers are upgraded ingredients and the fact that we now have over 20, new and improved gourmet burgers.

Speaker Change: While we are excited by the guest reception. We're also focused on the financial returns from our investment.

Speaker Change: In March we began testing a marketing heavy up playing in five markets. These initial results have been approximately 200 basis point in traffic improvement versus a control set these.

Speaker Change: These early results have proven that we have the right marketing initiatives to drive traffic and sales gains that said we're never satisfied.

Gerard J. Hart: During the second quarter, we are testing a reconfiguration of the media mix to double down on digital streaming TV and video, including platforms such as Hulu, Peacock, and YouTube TV to further drive performance and investment. Overall, our communication and media strategy has shown promising results, and we are now in the process of optimizing it to further inform our strategy for the remainder of the year. Turning to loyalty,

Speaker Change: During the second quarter, we are testing a reconfiguration of the media mix to double down on digital streaming TV and video, including platforms, such as Hulu Peacock and Youtube TV to further drive performance and investment return overall, our communication and media strategy has shown promise.

Speaker Change: <unk> results and we are now in the process of optimizing it to further inform our strategy for the remainder of the year.

Speaker Change: Turning to loyalty.

Gerard J. Hart: The Red Robin Royalty Program is a great asset for the company that continues to grow with membership now approaching 14 million. That said, it has historically been an underutilized asset serving more as a discount program rather than driving the business. In the past year, Kevin Mayer and our marketing team have done a great job of better utilizing the program, and the proof is in the numbers. 10% member growth in the past.

The Red Robin royalty program is a great asset for the company that continues to grow with membership now approaching 14 million guests.

Speaker Change: That said it has historically been an underutilized asset serving more as a discount program rather than driving the business in the past year, Kevin Mayer and our marketing team have done a great job of better utilizing the program and the proof is in the numbers.

Speaker Change: 10% member growth in the past year.

Gerard J. Hart: Members have a $3 higher average check than non-loyalty members. They visit three times more often, and new members are visiting with much greater frequency. In 2023, only 8% of new members made their second visit in the following 12 months.

Speaker Change: Members have over a $3 higher average check than non loyalty members.

Speaker Change: Visit three times more often.

Speaker Change: And new members are visiting with much greater frequency and.

Speaker Change: In 2023, only 8% of new members made the second visit in the following 12 months in.

Gerard J. Hart: In 2024, 8% of our new members had already made a third visit in just the first 90 days. In our view, these successes are despite the format of our loyalty program, not because of it. One week ago, on May 22nd, that all changed with the launch of our revamped Red Robin Royalty Program, now featuring bottomless rewards. Under our new program, guests earn one point for every dollar spent. After earning 100 points, guests receive a $10 reward good for both dine-in as well as online orders.

Speaker Change: In 2024, 8% of our new members have already made a third visit in just the first 90 days.

Speaker Change: In our view these successes are despite the format of our loyalty program not because of it.

Speaker Change: One week ago on May 22nd that all changed with the launch of our revamped Red Robin royalty program now featuring bottomless rewards.

Speaker Change: Under our new program guests earn one point for every dollar spent.

Speaker Change: After earning 100 points guests receive a $10 reward good for both dine in as well as online orders.

Gerard J. Hart: This will allow guests to earn a reward much faster than the previous program. In addition, the redemption window for the reward allows our guests the flexibility to use it in the following 90 days. We expect the collective result of these changes will be more loyalty members visiting Red Robin with greater visit frequency.

Speaker Change: This will allow guests to earn a reward much faster than the previous program. In addition, the redemption window for the reward allows our guests the flexibility to use it and that's following 90 days.

Speaker Change: We expect the collective result of these changes will be more loyalty members visiting red Robin with greater visit frequency.

Speaker Change: In addition.

Speaker Change: The guest data capability in the new program will also facilitate more personalized communication and offers to members and allow us to reward our best guests.

Gerard J. Hart: The guest data capability in the new program will also facilitate more personalized communication and offers to members and allow us to reward our best. Overall, our team members are excited to reintroduce the program to every guest, and we fully expect this new program to be a driver of our business rather than just a discount program. I'd really like to extend a thank you and congratulations to Jody Lynch and our IT team, Kevin Mayer and our marketing team, and everyone at Red Robin and across our implementation partners who brought the new loyalty program to launch ahead of schedule. With that, now, I now turn the call over to Todd to walk you through the financial performance for the quarter. Thank you, G.J., and good afternoon, everyone.

Speaker Change: Overall, our team members are excited to reintroduce the program to every guest and we fully expect this new program to be a driver of our business rather than just the discount program.

Speaker Change: I'd really like to extend a thank you and congratulations to Jody lunch and our it team, Kevin Mayer and our marketing team and everyone at Red Robin and across our implementation partners, who brought the new loyalty program to launch ahead of schedule.

Speaker Change: With that now let me turn the call over to Tom to walk you through the financial performance for the quarter.

Tom: Thank you Jay and good afternoon, everyone.

Todd Wilson: In the first quarter, total revenues were $388.5 million, a decrease of $29.3 million versus the first quarter of fiscal 2023, primarily due to a decrease in comparable restaurant revenue of 6.5%. The decline was led by the difficult start to 2024 experienced by many in the industry and that we referenced on our prior earnings call. Additionally, recall we eliminated our virtual brand offerings in the third quarter of 2023.

Tom: In the first quarter total revenues were $388 $5 million, a decrease of $29 $3 million versus the first quarter of fiscal 2023, primarily due to a decrease in comparable restaurant revenue of six 5%.

Tom: The decline was led by the difficult start to 2024 experienced by many in the industry and that we referenced on our prior earnings call. Additionally.

Tom: Additionally, recall, we eliminated our virtual brand offerings in the third quarter of 2023.

Todd Wilson: Eliminating these brands comes with minimal profitability impact and significantly reduces the complexity in our restaurants, but results in a 200 to 250 basis point sales head, restaurant level operating profit as a percentage of restaurant revenue. Well, it was 11%, a decrease of 370 basis points compared to the first quarter of 2023. The decline was mostly driven by our strategic investments in labor and food quality to support hospitality and the guest experience.

Tom: Eliminating these brands comes with minimal profitability impact and significantly reduces the complexity in our restaurants, but results in a 200 to 250 basis point sales headwind.

Tom: Restaurant level operating profit as a percentage of restaurant revenue was.

Tom: Was 11% a decrease of 370 basis points compared to the first quarter of 2023.

Tom: The decline was mostly driven by our strategic investments in labor and food quality to support hospitality and the guest experience.

Todd Wilson: This investment is the foundation for improved financial performance as we expect it to drive guests back into our restaurants and increase profitability. We made the decision to maintain labor levels in the January and February periods, despite adverse weather events that make it difficult to project sales and guest counts, to ensure our guests receive a great experience when they choose to visit our restaurant. While this created near-term margin pressure, we see the benefit of that decision in our guest satisfaction scores and believe all of the investments we have made to date are beginning to pay dividends, as evidenced by our positive comparable restaurant sales increase of 0.3% in the first five weeks of the second quarter as compared to the same weeks in 2023. Inflationary pressures have generally occurred, as we expected, with a more normalized level of inflation across all cost categories as compared to recent years.

This investment is the foundation for improved financial performance as we expect it to drive guests back into our restaurants and increase profitability.

Tom: We made the decision to maintain labor levels in the January and February periods, despite adverse weather events that make it difficult to project sales and guest counts to ensure our guests receive a great experience when they choose to visit our restaurants.

Tom: While this created near term margin pressure, we see the benefit of that decision and our guest satisfaction scores and believe all of the investments. We have made to date are beginning to pay dividends as evidenced by our positive comparable restaurant sales increase of 0.3% in the first five weeks of the second quarter as compared to the same weeks in <unk>.

Tom: 2023.

Inflationary pressures have generally occurred as we expected with a more normalized level of inflation across all cost categories as compared to recent years.

Todd Wilson: For 2024, we anticipate inflation across our entire cost basket, including commodities, wages, and operating expenses, in a range of three to 4% in line with our original 2024 expectations. We also continue to seek out and capture cost savings opportunities in the P&L. In the first quarter, we captured approximately $5 million of incremental cost savings, primarily in the cost of goods. We continue to expect approximately $19 million of incremental cost savings in 2024, with $8 million from initiatives started in 2023 and $11 million of new initiatives we have or plan to implement in 2024.

Tom: For 2024, we anticipate inflation across our entire cost basket, including commodities wages and operating expenses in a range of 3% to 4% in line with our original 2024 expectations.

Tom: We also continue to seek out and capture cost savings opportunities in the P&L.

Tom: In the first quarter, we recaptured approximately $5 million of incremental cost savings primarily in cost of goods we.

Tom: We continue to expect approximately $19 million of incremental cost saves in 2024 with $8 million from initiatives started in 2023 and $11 million of new initiatives, we have or plan to implement in 2024.

Tom: General and administrative costs were $25 $8 million as compared to $26 $1 million in the first quarter of 2023.

Todd Wilson: General and administrative costs were $25.8 million, as compared to $26.1 million in the first quarter of 2023; selling expenses were $13.5 million, an increase versus the prior year of $5.2 million. The increase reflects our intentional investment to increase communication with consumers, accelerate visits, and allow guests to experience the upgrades and hospitality. Additionally, our remittance back to local organizations for their share of the fundraiser partnership events that G.J. mentioned earlier is also accounted for here and drives a portion of the income.

Tom: Selling expenses were $13 $5 million, an increase versus the prior year of $5 $2 million.

Tom: The increase reflects our intentional investment to increase communication with consumers to accelerate visits and allow guests to experience.

Tom: Upgrades in hospitality.

Speaker Change: Additionally, I'll remittance back to local organizations for their share of the fund raiser partnership events that J J mentioned earlier is also accounted for here and drives a portion of the increase.

Speaker Change: Adjusted EBITDA was $12 $2 million in the first quarter of 2024.

Todd Wilson: Adjusted EBITDA was $12.2 million in the first quarter of 2024. The decrease relative to the first quarter of 2023 was driven by three key factors. First, the strategic investments we started after the first quarter of 2023 operated at a full run rate in the first quarter of 2024. Second, top-line headwinds in the January and February financial periods, in particular, were substantial.

Speaker Change: The decrease relative to the first quarter of 2023 was driven by three key factors.

Speaker Change: First the strategic investments we started after the first quarter of 2023 operated at a full run rate in the first quarter of 2024.

Speaker Change: Second top line headwinds in the January and February financial periods in particular were substantial.

Speaker Change: Finally, the increase in selling costs supported the launch of our marketing communication to guests.

Todd Wilson: Finally, the increase in selling costs supported the launch of our marketing communication to guests. Notably, during the final eight weeks of the quarter, in the March and April financial periods, we generated the vast majority of the adjusted EBITDA for the quarter as our top line trends improved toward the modestly positive comparable restaurant sales we reported in the May period. As we mentioned on our last call, we were pleased to complete our third tranche of the sale leaseback transaction during the first quarter.

Speaker Change: Notably during the final eight weeks of the quarter and the March and April financial periods, we generated the vast majority of the adjusted EBITDA for the quarter as our topline trends improved towards the modestly positive comparable restaurant sales we reported in the May period.

Speaker Change: As we mentioned on our last call. We were pleased to complete our third tranche of sale leaseback transaction during the first quarter.

Todd Wilson: This transaction included 10 properties and generated gross proceeds of $23.9 million, with net proceeds of $21.2 million used to repay debt, bringing the total debt repayment from the three tranches to $45.1 million. We expect the third tranche transaction represents the end of our multi-unit sale leaseback effort. We are now evaluating the market for five of the properties we own for individual sale leaseback transactions.

Speaker Change: This transaction included 10 properties and generated gross proceeds of $23 $9 million with net proceeds of $21 2 million used to repay debt, bringing the total debt repayment from the three tranches to $45 $1 million.

Speaker Change: We expect the third tranche transaction represents the end of our multi unit sale leaseback efforts.

Speaker Change: We are now evaluating the market for five of the properties, we own four individual sale leaseback transactions.

Todd Wilson: Due to the nature of the potentially single-unit transactions, we expect this effort may require more time than the first three multi-unit tranches, but it is an effort that we plan to act on if the economics are compelling. We ended the first quarter with $30.6 million of cash and cash equivalents, $8 million of restricted cash, and $25 million available borrowing capacity under our revolving line of credit. At quarter end, our outstanding principal balance under our credit agreement was $167.9 million, a reduction of $21.2 million as compared to the end of fiscal 2023 due to repayment of debt from the sale leaseback transaction proceeds.

Speaker Change: Due to the nature of the potentially single unit transactions. We expect this effort may require more time than the first three multi unit tranches, but it is an effort that we plan to act on if the economics are compelling.

Speaker Change: We ended the first quarter with $36 million of cash and cash equivalents $8 million of restricted cash and $25 million available borrowing capacity under our revolving line of credit.

Speaker Change: At quarter end, our outstanding principal balance under our credit agreement was $167 $9 million a reduction of $21 2 million as compared to the end of fiscal 2023 due to repayment of debt from the sale leaseback transaction proceeds turning now to our 2020 for guidance.

Todd Wilson: Turning now to our 2024 guidance. We reiterate all aspects of our previously issued guidance for 2024, total revenue of $1.25 billion to $1.275 billion, including comparable restaurant revenue of a low single-digit percentage decline, restaurant level operating profit of 12.5% to 13.5%, inclusive of investments in the guest experience and rent expenses related to the sale leaseback transaction. Adjusted EBITDA of $60 million to $70 million and capital expenditures of $25 million to $35 million.

Speaker Change: We reiterate all aspects of our previously issued guidance for 2024.

Speaker Change: Total revenue of 1.25 billion to $1 $2 75 billion.

Speaker Change: Including comparable restaurant revenue of a low single digit percentage decline.

Restaurant level operating profit of 12, 5% to 13, 5% inclusive of investments in the guest experience and rent expenses related to the sale leaseback transactions.

Speaker Change: Adjusted EBITDA of $60 million $70 million.

Speaker Change: And capital expenditures of 25 million to $35 million.

Todd Wilson: The $65 million midpoint of our adjusted EBITDA range represents a modest increase year over year when adjusting for the benefit of the 53rd week in 2023 and the additional rent we will incur in 2024 due to the sale leaseback transaction. As added color for our 2024 financial guidance, we expect the following factors to influence our results. We will revert back to a 52-week fiscal year in 2024 as compared to 53 weeks in 2023.

Speaker Change: The $65 million midpoint of our adjusted EBITDA range represents a modest increase year over year when adjusting for the benefit of the 50 <unk> week in 2023 and the additional rent we will incur in 2024 due to the sale leaseback transactions and compound annual growth of approximately 12%.

Speaker Change: Relative to 2022, the starting point of the North Star plan.

Speaker Change: As added color for our 2024 financial guidance, we expect the following factors to influence our results.

Speaker Change: We will revert back to a 52 week fiscal year in 2024 as compared to 53 weeks in 2023.

Todd Wilson: We expect this will result in an approximate $25 million reduction in restaurant sales and $3 million reduction in adjusted EBITDA as compared to 2023. In the second quarter, we expect to generate modestly positive, comparable restaurant sales and a modest sequential improvement in adjusted EBITDA, which would represent a continuation of the monthly EBITDA trends we saw in the second half of the first quarter. This is driven by improved top-line trends and a sequential improvement in restaurant-level operating profit margin, partially offset by the investments we are making in selling expenses.

Speaker Change: We expect this will result in an approximate $25 million reduction in restaurant sales and $3 million reduction in adjusted EBITDA as compared to 2023.

Speaker Change: In the second quarter, we expect to generate modest fleet positive comparable restaurant sales and a modest sequential improvement in adjusted EBITDA, which would represent a continuation of the monthly EBITDA trends, we saw in the second half of the first quarter.

Speaker Change: This is driven by improved top line trends and a sequential improvement in restaurant level operating profit margin, partially offset by the investments, we are making and selling expense.

Todd Wilson: We expect to adjust EBITDA in the third and fourth quarters to be more than that of the first and second quarters driven by the aggregate sequential benefit of the initiatives we have put in place and including an expectation of positive traffic growth in each of the third and fourth quarters.

Speaker Change: We expect adjusted EBITDA in the third and fourth quarter.

Speaker Change: To be more than that of the first and second quarter driven by the aggregate sequential benefit of the initiatives, we have put in place and including an expectation for positive traffic growth in each of the third and fourth quarter.

Gerard J. Hart: In summary, we've made significant progress on all points of our North Star plan. We remain on track to achieve our targets and are building this brand to be successful over the long term. With that, I will turn the call back over to G.J. Thank you, Todd.

Speaker Change: In summary, we've made significant progress over all points of our North Star plan.

Speaker Change: We remain on track to achieve our targets and are building this brand to be successful over the long term.

Speaker Change: With that I will turn the call back over to T. J.

Speaker Change: Thank you Todd.

Gerard J. Hart: Our comeback journey has not been easy, but what we've accomplished to date has been substantial. Through the continued execution of our team members in operations, utilization of our new marketing strategy, and the relaunch of our loyalty program, we believe we have the levers in place to drive sustainable, long-term growth and return this beloved brand to prominence in our industry. We are excited by the progress we've seen so far, but I can assure you that we are only scratching the surface of our potential.

Todd Morrison Brooks: Our comeback journey has not been easy, but what we've accomplished to date has been substantial.

Todd Morrison Brooks: Through the continued execution of our team members and operations utilization of our new marketing strategy and the relaunch of our loyalty program. We believe we have the levers in place to drive sustainable long term growth and return this beloved brand to prominence in our industry.

Todd Morrison Brooks: We are excited by the progress we've seen so far but I can assure you that we're only scratching the surface of our potential.

Gerard J. Hart: I believe in the strategy we have in place, that it's working, and I'm thrilled to bring guests back into our restaurants for moments of connection over craveable food that only Red Robin can provide. And with that, we are now happy to open up and take questions. Operator, please open the line.

Todd Morrison Brooks: I believe in the strategy, we have in place that it's working and I am thrilled to bring guests back into our restaurants for moments of connection over craveable food that only red Robin can provide.

Todd Morrison Brooks: And with that we are now happy to open up and take questions.

Speaker Change: Operator, please open the lines.

Speaker Change: Okay.

Speaker Change: Thank you at this time, we will be conducting a question and answer session.

Operator: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.

Speaker Change: I would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Tom.

Speaker Change: As in the question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may.

Speaker Change: Necessarily pick up your handset before pressing the star.

Archie.

Speaker Change: Our first question comes from the line of Mark Smith with Lake Street Capital. Please proceed with your question.

Mark Smith: Hi, guys.

Mark Smith: Hi guys. First question for me: just wondering if you can give any more breakdown on the comps here for the first couple of weeks in Q2, just traffic, price, you know. Any additional color you can give us would be great.

Mark Smith: First question for me just wondering if you can give any more breakdown on the comps here in the first couple of weeks.

Mark Smith: To just traffic price you know any additional color you can give us would be great.

Todd: Hey, Mark Todd here.

Todd Wilson: Hey Mark, Todd here. Appreciate you joining us here. Yeah, the color I think we should give it is that we've seen sequential improvement in our same store sales throughout the entire course of 2024. And that's true of traffic as well. So the improvement that we've noted in positive same-store sales to start the quarter is on the back of improved traffic. We're, we reported about 5% price increase in the first quarter, and that has ticked up a bit. And so there's some benefit of price, but I would be clear that there's a benefit from traffic as well that continues to improve sequentially.

Speaker Change: I appreciate you joining us here.

Speaker Change: Yes, the color I think we'd give us.

Speaker Change: We've seen sequential improvement in our same store sales throughout the entire course of 2024 and Thats true of traffic as well. So the the improvement that we've noted the positive same store sales to start the quarter is on the back of improved traffic.

Speaker Change: Were we reported about 5% price in the first quarter.

Speaker Change: That has ticked up a bit and so there is some benefit of price, but I would be clear of theres a benefit from traffic as well that continues to improve sequentially.

Speaker Change: Perfect.

Todd Wilson: Perfect. And then just look at the labor costs.

Speaker Change: Then just looking at it.

Speaker Change: <unk> costs.

Speaker Change: Is that came up as a percent of sales here in the quarter any breakdown you can give us those.

Speaker Change: Much of that was planned as you guys have been investing in that that's bearing fruit here versus you know any incremental pressures that you maybe saw in this quarter, such as minimum wage hikes or pressure in 90 certain states.

Todd Wilson: Yeah, hey, Mark, it's TJ here. I too agree with Todd. Thanks for joining us today. A couple of things I would call out, and Todd can add color to this as well, but as we stated in the prepared remarks, the investment was at a full run rate after the first quarter of 2023. And so, as we mentioned all the things about guest satisfaction and performance and sequential improvement with traffic, we believe those benefits will continue to accrue to us over time.

Todd Morrison Brooks: Yes, Hey, Mark it's T J here I agree.

Todd: I agree with Todd Thanks for joining us today.

Speaker Change: Couple of things I would call out and Todd can add color to this as well but.

Speaker Change: As we stated in the prepared remarks, the investment was at a full run rate. After the first quarter of 2023, and so that continued to stay the course and so as we mentioned on all of the things with guest satisfaction and performance and sequential improvement with traffic. We believe those benefits will continue to.

Speaker Change: Crude hub to us all the time, but I will call out it was $1 $8 million that were.

Todd Wilson: But I will call out there was $1.8 million that were extraordinary expenses that went back for workman's comp claims back to 2018 and beyond. And, and then secondarily, we had a pretty high claim rate on our health insurance program. So that 1.8 million we don't plan to have recurring. And so that was a big change.

Speaker Change: Extraordinary expenses that go back for Workmen's comp claims back to 2018 and beyond.

And then secondarily, we had a pretty high claim rate on our health insurance programs. So that $1 8 million, we don't plan to have recurring and so that was a big change.

Speaker Change: And the numbers.

Speaker Change: Perfect that's helpful.

Speaker Change: And then last one for me just just curious as we look at menu mix and maybe changes sequentially. During the quarter. We know January was obviously a really tough.

Speaker Change: And any thoughts on kind of how your consumer is doing today.

Speaker Change: And especially insights into maybe managing check in houses.

Speaker Change: Rumors maybe doing today versus early in Q1.

Todd Wilson: Sure, Mark, let me start by saying that a couple of things that we've noticed. And just as we hear others in the industry and some of the comments that they're making, in our particular case, we are seeing our value-oriented tavern burgers click up a bit. So you can certainly assume that some of the folks are managing their checks.

Mark Smith: Sure Mark Let me, let me start by saying that a couple of things that we've noticed and just as we hear others in the industry and some of the comments that they are making in our particular case, we are seeing.

Mark Smith: Our value oriented tavern burgers click up a bit.

Mark Smith: So you can certainly assume that some of the folks who are managing their checks however, our promotional.

Todd Wilson: However, our promotional activity around some of our premium burgers has really increased the usage of those as well. And then when you start to look at add-ons and appetizers, sides, et cetera, desserts, they've held steady. So we're actually feeling pretty good about where our overall consumer is, but again, we're watching it every day to see, but at this point in time, we feel pretty good.

Mark Smith: Activity around some of our premium burgers have really increased the usage of those as well and then when you start to look at add ons and <unk>.

Mark Smith: <unk> sites et cetera, desserts. They step held steady so we're actually feeling pretty good about where our overall consumer is but again, we're watching it every day to see but at this point in time, we feel pretty good.

Mark Smith: Excellent. Very helpful. Thank you, guys.

Speaker Change: Excellent very helpful. Thank you guys.

Alexander Russell Slagle: Thank you. Our next question comes from the line of Alex Slagle with Jefferies. Please proceed with your question.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Alex Slagle with Jefferies. Please proceed with your question.

Alexander Russell Slagle: Okay. Thanks.

Alexander Russell Slagle: Thanks, thanks guys. Congratulations on the comp progress here recently, definitely a nice, notable shift here, and I just wanted to follow up on that a little bit first, just maybe on monthly comparisons, if you could provide any color there through the first quarter and second quarter, just to get a better sense for like the two-year trend. But I know there was a lot of variability last year, reducing some of the false weights and other dynamics, but any other color there, and if there's any other things to consider like calendars or whatnot.

Alexander Russell Slagle: Thanks, guys congrats on the comp progress here recently.

Alexander Russell Slagle: Definitely a nice notable shift here and just wanted to follow up on that.

Speaker Change: A little bit first maybe on.

Speaker Change: Monthly comparisons if you could provide any color there through the first quarter and second quarter, just to get a better sense for like the two year trend and I know theres a lot of variability last year.

Speaker Change: Or do you think some of the false weights and other dynamics, but any.

Any other color there and if there's any other things to consider like calendars or whatnot.

Todd: Yeah, Alex this is Todd.

Todd Wilson: Yeah, Alex. Hey, this is Todd.

Todd: We've looked at I would say all of the above we've looked at the two year stack, we've looked at multi year stacks.

Speaker Change: And I think you're aware as I'm sure. The group as you know the industry broadly had a very strong quarter in the first quarter of 2023 that was certainly true for Red Robin We posted an eight 6% same store sales number in Q1 of last year, and so certainly lapping that I think proved to be difficult.

Speaker Change: But I think most encouraging as we look at our trends, we do see the sequential improvement.

Speaker Change: And especially on a multi year basis, we believe the progress that we're seeing on traffic rift.

Speaker Change: It reflects a true stabilization of the business that hadn't been present for many years and so that's only the first step is to stabilize the business. Obviously the next step is to grow it with things like loyalty and the marketing efforts that Jay talked about but that's how we assessed the collective is yes. There were some difficult compares in Q1, but overall we see.

Speaker Change: Much more stabilization in the business and especially the traffic line. Most importantly that gives us the confidence that this will continue to build.

Speaker Change: That's great.

Speaker Change: The new marketing platform.

Speaker Change: If you could just talk a little bit more about that what you saw kind of early feedback.

Speaker Change:

Speaker Change: Yes.

Speaker Change: Anything on.

Speaker Change: How this marketing support maybe ramped up through the first quarter into second quarter.

Speaker Change: Sensitive.

Speaker Change: Look for there.

Todd Wilson: You know, we've looked at, I'd say all of the above, we've looked at the two-year stack, we've looked at the multi-year stack. And, you know, as I'm sure the group is, the industry broadly had a very strong quarter in the first quarter of 2023. That was certainly true for Red Robin; we posted an 8.6% same store sales number in Q1 of last year. And so certainly, lapping that, I think, proved to be difficult.

Speaker Change: Hey, Alex.

Speaker Change: Good to hear from you.

Speaker Change: Yes, so as we mentioned we saw a 200 basis points improvement in the markets that we were very active in and we're still as we test and learn and continue to improve a very targeted message.

Todd Wilson: But I think most encouraging, as we look at our trend, we do see sequential improvement. And especially on a multi-year basis, we believe the progress that we're seeing on traffic reflects a true stabilization of the business that hadn't been present for many years. And so that's only the first step to stabilize the business. Obviously, the next step is to grow it with things like loyalty and the marketing efforts that GJ talked about.

Speaker Change: We learned is that we need to be a little bit more targeted and go more towards as I mentioned sort of the video assets and really learning from our guests and remember you tie into that with our ability now to segmentation segmentation around our loyalty program granted it just launched a revamped but we're going to be able to be much more targeted so.

Todd Wilson: But that's how we assess the collective. Yes, there were some difficult comparisons in Q1. But overall, we see much more stabilization in Q2. In the business, and especially in the traffic line, most importantly, that gives us the confidence that this will continue to build.

Speaker Change: While the results of 2% may not be exactly what we wanted they still were good improvement and that's why we're very encouraged in terms of going into the future here.

Gerard J. Hart: Great. And the new marketing platform, if you could just talk a little bit more about that, what you saw in terms of kind of early feedback, I guess, anything on how this marketing support may be ramped up through the first quarter into the second quarter. Just a sense of what to look for there.

Speaker Change: Remember our marketing campaign is kind of a three pronged approach right. The first one was is it more of a brand halo and really that human element of that affection for red Robin and make room for fun that whole campaign is is getting noticed and it's different than what's out there and we feel great about that as an overview and then underneath of that.

Gerard J. Hart: Hey Alex, good to hear from you. Yeah, so, you know, as we mentioned, we saw 200 basis points of improvement in the markets that we were very active in. And we're still, as we test and learn, and continue to improve, delivering a very targeted message. What we learned is that we need to be a little bit more targeted and go more towards, as I mentioned, sort of the video assets and really learn from our guests.

Gerard J. Hart: And remember, you tie into that with our ability now to segmentation around our loyalty program. Granted, it just launched, but we're going to be able to be much more targeted. So while the results of 2% may not be exactly what we wanted, they still were a good improvement.

Speaker Change: We screened value with our 30 bottomless sides and with what we learned from that Alex is that you know our consumers know us for bottomless, but they know us for bottomless fries and now that they realize that we have 30 menu items that our bottomless, we're getting great feedback from our guests both existing and new guests in terms of that response.

Speaker Change: And it's very well needed in fact, we're seeing huge improvements in guest satisfaction. Once we fulfill that bottomless promise and so that's really good and then the third component is all about the upgraded ingredients and bringing that innovation that red Robin has been known for for many years, bringing it to the forefront with great value great.

Speaker Change: Great.

Gerard J. Hart: And that's why we're very encouraged in terms of going into the future here. Remember, our marketing campaign is kind of a three-pronged approach, right? The first one is more of a brand halo and really that human element of that affection for Red Robin and making room for fun. That whole campaign is getting noticed, and it's different than what's out there.

Speaker Change: You take that three pronged approach and we feel really really good about where we're taking this and then you layer on the loyalty platform and what we're seeing there when you start talking about 8% of our get all of our new guests that have signed up have been on a third visit within 90 days that gives you a lot of reason to believe and so so.

Gerard J. Hart: And we feel great about that as an overview. And then, underneath that, we screen value with our 30 bottomless sides. And what we learned from that, Alex, is that our consumers know us for bottomless, but they know us for bottomless fries. And now that they realize that we have 30 menu items that are bottomless, we are getting great feedback from our guests, both existing and new guests, in terms of that response.

Gerard J. Hart: And it's very much needed. In fact, we're seeing huge improvements in guest satisfaction once we fulfill that bottomless promise. And then the third component is all about the upgraded ingredients and bringing that innovation that Red Robin has been known for for many years, bringing it to the forefront with great value and great ingredients. So you take that three-pronged approach, and we feel really, really good about where we're taking this.

Gerard J. Hart: And then you layer on the loyalty platform and what we're seeing there. You know, when you start talking about 8% of our new guests that are signed up have been on a third visit within 90 days, that gives you a lot of reason to believe. And so again, there's lots of other indicators here, but that hopefully gives you some breakdown of how we're thinking.

Speaker Change: Again, there's lots of other indicators here, but that's hopefully give you some breakdown of how we're thinking about it.

Alexander Russell Slagle: Thanks, TJ. I'll pass it along.

Speaker Change: Thanks P J I'll pass it along.

Speaker Change: Thank you.

Andrew Paul Wolf: Thank you. Our next question comes from the line of Andrew Wolf with CL King. Please proceed with your question.

Speaker Change: Our next question comes from the line of Andrew Wolf with C. L. King. Please proceed with your question.

Andrew Paul Wolf: Thank you. Congratulations on getting the... [inaudible] I just wanted to ask about sequential improvement and profitability into the second half, and really specifically in the third quarter, which I think seasonally is, I think, the lowest quarter of the year. So, I mean, I guess you have a couple things going on. You know, you're going to cycle out of the virtual brands. But they may not have been as profitable as they were creative to be in the same store sale, so. And then, obviously. So what is the leverage in the P&L that's going to, you know, help the third quarter be sequentially stronger from a profitability point of view than the second quarter, despite the seasonality headwind?

Speaker Change: Thank you.

Speaker Change: So I'm getting the.

Andrew Paul Wolf: Comps positive I just wanted to ask about.

Speaker Change: The sequential improvement in profitability into the second half.

Speaker Change: And really specifically in the third quarter, which I think seasonally.

Speaker Change: I think the lowest quarter of the year.

Speaker Change: So I.

Speaker Change: I mean is.

Speaker Change: I guess you have a couple of things going on.

Speaker Change: Cycle out of the virtual brands.

Speaker Change: They may not have been as profitable as they were accretive to.

Speaker Change: And the same store sales so.

Speaker Change: And then obviously.

Speaker Change: Our plans are.

Speaker Change: Prove the traffic so wondering what is the leverage.

Speaker Change: In the P&L.

Speaker Change: No.

Speaker Change: Health in the third quarter would be sequentially stronger from profitability point of view.

Speaker Change: In the second quarter, despite the seasonality.

Speaker Change: <unk> headwinds.

Hey, Andy Todd here.

The way, we're thinking about it and the reason that we do as we said on the call. We expect the EBITDA or the adjusted EBITDA in Q3, and Q4, two certainly outpace the first half of the year.

Todd Wilson: I would expect EBITDA or adjusted EBITDA in Q3 and Q4 to certainly outpace the first half of the year. And you're correct, you know, the third quarter is typically a more seasonal soft period for us, but the year-over-year growth we still think is very much a realistic expectation. Yeah, I think the way I'd think about it is, while some of the traffic headwind has been due to the virtual brands that, as you know, have minimal profit impact, there has been just a legacy traffic headwind that Red Robins has experienced for many years at this point. And when you value that, that's been a headwind that we've been fighting, you know, since GJ and I and this leadership team joined, you know, roughly 18 months ago.

Speaker Change: And you're correct. The third quarter is typically a more seasonal soft period for us, but the year over year growth. We still think is very much.

A realistic expectation, yes, I think the way I would think about it as well.

Speaker Change: While some of the traffic headwind has been due to the virtual brands that as you know to have minimal minimal profit impact. There has been just a legacy traffic headwind that robbed Robbins experienced for many years at this point.

Speaker Change: And when you value that that's been a headwind that we've been fighting.

Since G J and I and this leadership team joined roughly 18 months ago, and so as we see a track back to flat traffic that headwind goes away and as we said on the call we actually do expect.

Todd Wilson: And so as we see a track back to flat traffic, that headwind goes away. And as we said on the call, we actually do expect modestly positive traffic in the second half of the year. And so you get a combination of a headwind going away and then a little bit, actually, of a traffic benefit is what we expect. And so that's really the key lever, if you will, that we see driving the second half of the year. Okay, thank you.

Speaker Change: Modestly positive traffic in the second half of the year and so you get a combination of a headwind going away and then a little bit actually of a traffic benefit is what we expect and so that's really the key lever. If you will that we see driving the second half of the year.

Speaker Change: Okay. Thank you.

Andrew Paul Wolf: Okay, thank you. And just a quick follow up on your mentioning that there might be a little more menu price increase. Increase in, quarter to date, were the mix and discount factors pretty similar? We want to get a little way back to where the guest traffic went so far this quarter.

Speaker Change: And just a quick follow up on your.

Speaker Change: Mentioning that there might be a little more menu price increase.

Speaker Change: The quarter to date.

Speaker Change: Where the mix and discount factors pretty similar.

Speaker Change: You'll learn way back where the guest traffic.

Speaker Change: I went to.

Speaker Change: So far this quarter.

Andy: Yeah, I think I follow you there Andy I think what I'd say is we actually expect mix as you know.

Todd Wilson: We actually expect mixes to be less negative as we progress in Q2 and Q3. All the factors that GJ mentioned, we do anticipate some of that continuing, but many of the changes we laped from menu changes a year ago. So I think mix will be a less negative factor in Q2 and Q3. And so I think that's the headline there. Great, thank you.

Speaker Change: It will be less negative.

Speaker Change: As we progress in Q2 and Q3, all the factors that J J mentioned, we do anticipate some of that continuing but.

Speaker Change: Many of the changes we lapped from from menu changes a year ago. So I think mix will be a less negative factor in Q2 and Q3.

Speaker Change: And so I.

Speaker Change: I think that's the headline there.

Andrew Paul Wolf: Great. Thank you. I appreciate it.

Speaker Change: Great. Thank you I appreciate it.

Speaker Change: Yeah.

Speaker Change: Thank you.

CJ DeVolino: Our next question comes from the line of CJ DeVolino with Craig Hallam Capital Group. Please proceed with your question.

Speaker Change: Our next question comes from the line of C. J.

Speaker Change: Definitely with Craig Hallum Capital Group. Please proceed with your question.

Speaker Change: Hey, everyone C J dip lino on for Jeremy Hamblin.

CJ DeVolino: Hey everyone, C.J. DiPolino on for Jeremy Hamlin tonight.

CJ DeVolino: Just wanted to touch base or just want to ask about comps real quick. So, relative to May, do June and July get a little bit easier, a little bit harder? I'm just thinking about the rest of Q2.

Speaker Change: Just wanted to touch just wanted to ask about comps real quick.

Speaker Change: So relative to May to June and July to get a little bit easier a little bit harder I'm, just thinking about the rest of Q2.

Speaker Change: Yeah.

Todd: Yes C J Todd here I'd say, the really the comparisons in the balance of the year get progressively easier now part of that is the virtual brands that we eliminated in the second half of last year, but we don't foresee any unusual hurdles and the balance of the quarter.

Todd Wilson: I'd really say the comparisons and the balance of the year get progressively easier. Part of that is the virtual brands that we eliminated in the second half of last year, but we don't foresee any unusual hurdles in the balance of the quarter.

Speaker Change: Okay, great. Thank you that's helpful.

CJ DeVolino: Okay, great. Thank you. That's helpful. And then if you could just touch on what you're doing to drive membership in the loyalty program, both for new members and, you know, getting some of those dormant accounts to reactivate. Sure.

Speaker Change: And then if you could just.

Speaker Change: Touch on what Youre doing to drive membership in our loyalty program, both new members in.

Speaker Change: Getting some of those.

Speaker Change: Gentlemen accounts too to reactivate.

JJ: Sure JJ here.

Gerard J. Hart: Sure, it's G.J. here. First of all, what we started doing was, actually, when a new member signs up, either on a website or in a restaurant, we'll send them a welcome email back to tell them what the program is all about. We weren't doing that before, and so that has gotten a great response. The second thing I would tell you is that throughout the organization, this is a huge initiative, and so all the way down to our team members and servers, really talking about and understanding where we're going with our new loyalty platform has been super beneficial as well.

JJ: First of all what we started doing was actually went out of new member signs up either on our website or in a restaurant, we will send them a welcome email back to to tell them. All the what the program is all about we were not doing that before and so that has gotten a great response the SEC.

JJ: Thing I would tell you is that throughout the organization. This is a huge initiative and so all the way down to our team members and servers really talking about and understanding where we're going with our new loyalty platform has been super beneficial as well.

Gerard J. Hart: And then thirdly, just everything that we're doing, all of our communication strategy is coming into play as well. So I just might add, I think I mentioned it in the prepared remarks, you know, we've seen significant improvement in the numbers, up almost 10% for the year to date. So our teams are doing a great job bringing people into the program as well as having it on the website and really making it prominent where it wasn't connecting with our website before. So all those factors are really helpful.

JJ: And then thirdly, just in everything that we're doing.

JJ: But by all of our communication strategy are coming into play as well. So I'd just might add I think I mentioned it on the prepared remarks, we've seen a significant.

JJ: Improvement in the numbers up almost 10% for the year to date so.

JJ: Our teams are doing a great job, bringing people into the program as well as having it on the website and really making a prominent ware as well it wasn't connecting with our website before so all those factors are really helping us.

Speaker Change: Okay got it. Thank you and then one more if you don't mind could you maybe speak to some of the new menu items you introduced this year and kind of the initial reaction from customers.

CJ DeVolino: Okay, got it. Thank you. And then one more, if you don't mind, could you maybe speak to some of the new menu items you introduced this year and the kind of initial reaction from customers?

Speaker Change: Well, we bought the Mad Love Burger back we've added shrimp to the menu both had an appetizer and entree, we brought back our sorry put ribs on the menu again in that whole barbell menu strategy that we've had so we're not just targeting just burgers and historically red Robin has had a more barbell approach to the menu.

Gerard J. Hart: Well, we brought the Mad Love Burger back. We've added shrimp to the menu, both as an appetizer and an entree. We brought back, or sorry, put ribs on the menu again in the whole barbell menu strategy that we've had. So we're not just targeting just burgers. And historically, Red Robin has had a more barbell approach to the menu. And so those things have really gained traction. We've added some other appetizers, and Brussels sprouts have been received incredibly well, and our chips and salsa have been received really well as well. So the other thing is just by bringing back some of the old burgers and with our new ingredients, they have been received incredibly well as well.

Speaker Change: And so those things really gained traction we've added some other appetizers.

Speaker Change: With Brussels Sprouts has been received incredibly well with our.

Speaker Change: Chips and salsa.

Speaker Change: Been received really well as well so the other thing is just by bringing back some of the old burgers and with our new ingredients have been received incredibly well as well.

Speaker Change: Okay. That's great to hear that's all for me good luck with the rest of the year.

CJ DeVolino: Okay, that's great to hear. That's all for me. Good luck with the rest of the year.

Speaker Change: Thank you. Thank you.

Speaker Change: Thank you.

Todd Morrison Brooks: Our next question comes from the line of Todd Brooks with The Benchmark Company. Hey, thanks for joining us.

Speaker Change: Our next question comes from the line of Todd Brooks with Benchmark Company. Please proceed with your question.

Todd Morrison Brooks: Hey, thanks for taking my question and congrats on getting Loyalty Live early and inflecting the Sam's Store sales back to positive. Thanks, Todd.

Todd Morrison Brooks: Hey, Thanks for taking my question and congrats on getting a royalty for Hawaii and collecting the same store sales back positive.

Speaker Change: Thanks Todd.

Todd Morrison Brooks: I'm going to ask a question on the marketing side and the efficacy and kind of working with the mix going forward. How do you feel like Bottomless is responding in a world where there are so many specific price point advertisements on TV? I know you're pleased with the fun, focused campaign kind of grabbing eyeballs and cutting through the clutter, but is Bottomless doing the same thing for Red Robin?

Speaker Change: I'll ask a question on the marketing side, and the efficacy and kind of working with the mix going forward.

Speaker Change: How do you feel like bottomless is resonating in a world where there's so much specific price point advertisement on TV I know Youre pleased with the fund focused campaign kind of grabbing eyeballs and cutting through the clutter, but it's bottomless doing the same thing for Red Robin.

Speaker Change: Yes, So let me give you a couple of stats here and some of these are new.

Gerard J. Hart: Yeah, so let me give you a couple of stats here. Some of these are new questions that we're asking. So a lot of this data is relatively new.

Speaker Change: <unk> that were asking so a lot of this data is relatively new.

Speaker Change: But I will tell you. This is that in the in the work that we've done 79% of our guests really appreciate bottomless and want to utilize bottomless and of those if where we're executing in call. It 80, 485% take level. What we're seeing is our overall value scores go through there.

Gerard J. Hart: But I'll tell you this, in the work that we've done, 79% of our guests really appreciate bottomless and want to utilize it. And of those, if we're executing, call it, at an 84%, 85% take level, what we're seeing is our overall value scores go through the roof. I mean substantially through the roof.

Speaker Change: <unk>.

Speaker Change: I mean substantially through the roof and then when you take a look at from a value perception and some of the top box questions that we've made.

Gerard J. Hart: And then when you take a look at, from a value perception perspective and some of the top box questions that we made, we're finding that the satisfaction level when bottomless is executed is 84%, and we're seeing 60% value scores, which are really, really high for us. And as you know, value is probably what they rate the toughest on, and so we've seen really, really good numbers here. So what it's telling us is that our guests want it.

Speaker Change: That we're finding that the satisfaction level when bottomless is executed.

Speaker Change: At 84% that we're seeing this 60% value.

Speaker Change: Scores, which are really really high for us and as you know Val.

Speaker Change: Value is probably what they rate the toughest on and so we've seen really really good numbers here. So what it's telling us is our guests want it there.

Gerard J. Hart: They're surprised, significantly surprised that there are 30 items that are bottomless, which I don't think we've done a good job in the past communicating. And so that's being received, and they take great pride in that as improving all the time.

Speaker Change: Surprise significantly surprised at their sturdy items that our bottomless, which I don't think we've done a good job in the past communicating and so that's been received and the take rate on that is improving all the time.

Speaker Change: That's great good to hear switching to loyalty.

Gerard J. Hart: That's great and good to hear. Switching to loyalty. I know the design of the reward tiers or the reward hurdles is lowered. I mean, depending on how much you spend, you can probably get there in three visits versus having to visit 10 times before for the reward prior. I'm hearing from others that have kind of lowered reward tiers that it's having an outsized frequency benefit and driving redemption, but also driving behaviors that would point to improved frequency from a more attainable award structure.

Speaker Change: I know the design of the reward tiers or the reward hurdles is lowered I mean, depending on how much you spend you could probably get there.

Speaker Change: Three visits versus having to visit 10 times before for the.

Speaker Change: For the reward prior I'm hearing from others that have kind of lowered reward tiers that it's having an outsized.

Speaker Change: Frequency benefit in driving.

Speaker Change: Retention, but also driving.

Speaker Change: [noise] behaviors that would point to improved frequency from.

Speaker Change: From a more attainable award structure, I know where weekend and it sounds like the conversion went well and.

Gerard J. Hart: I know we're in the weekend, and it sounds like the conversion went well and you've got people on there, but kind of executing against it now at the store level in the second half, and what type of duration do you need before you know about the frequency benefit of the new structure?

Speaker Change: You've got people in there, but kind of executing against it now at the store level in the second half and what type of duration do you need before you know about the frequency benefit that the new structure.

Speaker Change: Yeah. So I think as I stated earlier, 8% of our new members that have signed up.

Gerard J. Hart: Yeah, so I think, as I stated earlier, 8% of our new members that have signed up, the data tells us it's early days yet, that 8% of those new members are on their third visit within the first 90 days, compared to 8% of our members in the same period last year that were only on their second visit in a year. So that gives us incredible reason to believe that this program is really going to work.

Speaker Change: The data tells US it's early granted.

Speaker Change: That 8% of those new members.

Speaker Change: Are on their third visit within the first 90 days compared to 8% of our members and the.

Speaker Change: The same period last year.

Speaker Change: Our only on their second visit in the year. So that's that gives US incredible reason to believe that this program is really going to work.

Gerard J. Hart: And in terms of execution, as I stated, the numbers just tell us our guests want it. It screams value to them. In fact, in some surveys, they'll tell you it's more important than burgers. So I think that just speaks light years to what it is we're doing. Great.

Speaker Change: And.

Speaker Change: In terms of execution as I stated by the numbers. It just tell us that our guests want it.

<unk> value to them in fact in some surveys that will tell you it's more important than burgers.

Speaker Change: So I think that just speaks light years to what it is we're doing here.

Speaker Change: Okay, great and two more if I could slide demand Todd you talked about the.

Gerard J. Hart: Great. And two more if I could just slide them in.

Todd Morrison Brooks: Todd, you talked about the first half and second half nature of profitability which came over the vast majority, I think, of the EBITDA generated in the second half of Q1. The maintenance of the EBITDA guidance and just tying it back to what was generated in the second half as trends normalized, where we don't know what the vast majority necessarily equates to, where does that kind of get us to fall if we annualize it over the next three quarters as far as that 60 to 70 million range?

Speaker Change: The first half second half nature of the profitability with <unk>.

Speaker Change: Remember it was vast majority I think of the EBITDA generated in the second half of Q1.

Speaker Change: The maintenance of the EBITDA guidance and just tying it back to what was generated in the second half as trends normalized.

Speaker Change: Where we are we don't know what vast majority necessarily equates to where does that kind of get us to fall if we.

Speaker Change: If we annualize that over the next three quarters as far as that 60 to 70 million range.

Speaker Change: Todd I'm digesting your question a bit.

Todd Wilson: Todd, I'm digesting your question a bit. Yeah, I think, hopefully this if I don't address it, please let me know but, the way we get comfortable with not only our Q2 commentary but also the full year is really looking at that run rate in the second half of the first quarter. You know, really, if you extrapolate that, that gets us to our expectations for Q2 in particular. Now, as you said, we didn't disclose exactly what those were.

Speaker Change: Yes, I think.

Speaker Change: Hopefully those if I if I don't address it please let me know but.

Speaker Change: The way, we get comfortable with not only our Q2 commentary, but also the full year is really looking at that run rate.

Speaker Change: In the second half of the first quarter really if you extrapolate that that that gets us to our expectations for Q2 in particular now as you said, we didn't disclose exactly what that was we don't disclose that level of detail intra quarter.

Todd Wilson: We don't disclose that level of detail intra-quarter, but that's how we're thinking about the second quarter. If you continue to extrapolate that, in addition to what I referenced earlier of traffic trends continuing to improve, that's really what gets us comfortable with that guide of $60-$70 million. So, I'll pause there, but that's the headline, at least, of how we're thinking about it.

Speaker Change: But that's how we're thinking about the second quarter.

Speaker Change: Continue to extrapolate that in addition to what I referenced earlier of traffic trends continuing to improve.

Speaker Change: That's really what gets us comfortable with that guide of $60 million to $70 million. So.

Speaker Change: I'll pause there, but that's a headline or at least how we're thinking about it.

Todd Wilson: Yeah, no, it makes sense. So it sounds like Q2 isn't a lift from the kind of trends that we saw in the second half of Q1, and then we get to the back half of the year, and if we get traffic back to slightly positive, that's where you get the additional lift on top of the trends that you saw in the second half of the quarter.

Speaker Change: No. It makes sense so it sounds like Q2.

Speaker Change: Isn't the lift from the kind of trends that we saw in second half of Q1, and then we get to the back half of the year and if we get traffic back.

Speaker Change: Turning slightly positive that's where you get the additional lift.

Speaker Change: On top of the trends that you saw in the second half of the quarter then.

Todd Wilson: Yes, that is good clarification, and I appreciate that. Q2 is really a continuation of what we saw in the second half of Q1. It is Q3 and Q4 that we expect traffic to continue to make progress, and that is what we expect will drive those periods.

Speaker Change: Yes that is a good clarity and I appreciate that of Q2 was really a continuation of what we saw in the second half of Q1. It is Q3 and Q4 that we expect traffic to continue to make progress and that is what we expect will drive those periods.

Todd Morrison Brooks: Okay, great. And then the final one, G. J. Gis.

Speaker Change: Okay, Great and then the final one GJ just.

Gerard J. Hart: The partner program at the general manager level has been rolled out for a little over five months now or about five months. What behaviors are you seeing a driver digestion period at the start but now kind of leaning into it and understanding? business owner versus just the manager of a unit and the behaviors that you're getting on the cost and then the revenue lift side. Any improvement that you're seeing and when we should be looking for the full benefits of the program implementation will be helpful. Thank you.

Speaker Change: The partner program at the general manager level its been rolled out for.

Speaker Change: Little over five months now or about five months.

Speaker Change: What would behave years are you seeing it drive the digestion period at the start, but now kind of leaning into it and understanding.

Speaker Change: Business owner versus just the manager of a unit.

Speaker Change: Behaviors that youre getting on the cost and then the revenue lift side.

Speaker Change: The improvement that Youre seeing and when we should be looking for the full benefits of the program implementation would be helpful. Thank you sure sure Todd <unk>.

Gerard J. Hart: Thank you. Sure. Sure, Todd.

Gerard J. Hart: Well, first of all, they're super excited. I just finished a tour around the country and the rallies that we do every year, and I can tell you just from my experience that the morale, the attitude, and the belief in where we're going as a result of us having enough faith to put a partner program in place is huge. That's number one.

Speaker Change #100: Well first of all they're Super excited I just finished.

Speaker Change: A.

Tour around the country in neurology that we do every year and I can tell you just from my experience the the morale the attitude and the belief in where we're going as a result of us having enough faith to put a partner program in place is huge that's number one number two what we're seeing is just the involvement in terms of.

Gerard J. Hart: Number two, what we're seeing is just the involvement in terms of their P&Ls, going the extra mile to be there on the shifts that are appropriate. We're seeing huge behavioral changes. We're seeing our turnover numbers go down pretty dramatically. We're seeing the questions to our accounting teams go through the roof. We expected that, but that's exactly what happened.

Speaker Change: Theyre p&l's going the extra mile to be there on the shifts that are appropriate we're seeing huge behavior changes relative to that we're seeing our turnover numbers go down pretty dramatically we're seeing.

Speaker Change: The questions into our accounting teams go through the roof, we expected that but that's exactly what happens like they care about every little thing on that P&L. It's early as you point out it's for four months and soon to be five months into this program.

Gerard J. Hart: Like, they care about every little thing on that P&L. It's early, as you point out. It's four months in, soon to be five months into this program. And, you know, we are holding up some of those folks in the bottom 25% of our restaurants, but you know, they continue to lean in.

Speaker Change: And.

Speaker Change: We are holding up some of those folks on the bottom 25% of our restaurants, but they continue to lean in we continue to have them share practices best practices amongst each other and so to help each other and so I fully anticipate it will continue to to grow in the result.

Gerard J. Hart: We continue to have them share practices and best practices amongst each other to help each other. And so I fully anticipate that it will continue to grow, and the results will continue to improve. If you ask me the question a year from now, we will have a measurement in terms of what the real impact has had. So it's a little early to give you some of those numbers, but I am hugely optimistic about where we're headed. That's great. Thanks.

Speaker Change: We will continue to improve.

Speaker Change: You asked me that question a year from now we'll be able to we will have a measurement in terms of what real impacted it half. So it's a little early to give you some of those numbers, but I am hugely optimistic about where we're headed with this.

Todd Morrison Brooks: That's great. Thanks for taking all my questions, guys.

Speaker Change #101: That's great. Thanks for taking all my questions guys.

Speaker Change #102: Absolutely Thanks Todd.

Speaker Change #103: Thank you.

Gerard J. Hart: Thank you, and we have reached the end of the question and answer session, and therefore, I'll turn the call back over to G.J. Hart for a closed comment.

Speaker Change #104: We have we see in the question and answer session and therefore, I will turn the call back over to D. J Hart for closing remarks.

Speaker Change #105: Thank you very much I appreciate everybody joining us here today.

Operator: Thank you very much. Hey, I appreciate everybody joining us here today. It's an exciting time here at Red Robin. We look forward to reporting on our results next quarter. Thanks for joining us, and we'll see you or hear from you the next time. Take care.

Operator: And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Speaker Change #106: An exciting time here at Red Robin we look forward to.

Speaker Change #107: Reporting on our results next quarter, thanks for joining us and we'll see you or hear from you. The next time take care.

Speaker Change #106: Yeah.

Speaker Change #108: And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.

Speaker Change #106: Yeah.

Speaker Change #106: Okay.

Speaker Change #106: Hum.

Speaker Change #106: Okay.

Speaker Change #106: [music].

Speaker Change #106: Yeah.

Speaker Change #106: Okay.

Speaker Change #106: Okay.

Speaker Change #106: Hum.

Speaker Change #106: Yes.

Speaker Change #106: Okay.

Speaker Change #106: Yes.