Q2 2024 Red Robin Gourmet Burgers Inc Earnings Call

August 22, 2024

Okay.

[music].

Operator: Good afternoon, everyone, and welcome to the Red Robin Gourmet Burgers Incorporated 2nd quarter 2024 earnings call. This conference is being recorded. During this presentation and response to your questions, they will be making forward-looking statements about public business outlook and expectations. Before we look at statements in all the statements that are not historical facts, reflect managers believe some predictions of today and therefore expect to risk uncertainty as described in the company's ATC filing. Management will also discuss non-GAAP financial measures as a part of today's conference call.

Okay.

Speaker Change: Good afternoon, everyone and welcome to the Red Robin Gourmet Burgers incorporated second quarter 'twenty 'twenty four earnings call.

Speaker Change: This conference is being recorded.

Speaker Change: During this presentation and responses to your questions.

Speaker Change: This is about.

Speaker Change: Business outlook and expectations.

Speaker Change: These forward looking statements and all of the statements that are not historical facts.

Speaker Change: Management's beliefs and predictions.

Operator: These non-GAAP measures are not just generally accepted according to planning principles, but are intended to illustrate alternative measures of the company's operating performance that may be useful. Reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in the earnings release.

Today.

Speaker Change: Go for it.

Speaker Change: The risks uncertainties.

Speaker Change: Described in the cockpit.

Speaker Change: Hi.

Speaker Change: Management will also discuss non-GAAP financial measures as a part of today's conference call.

Speaker Change: Yeah.

Speaker Change: Okay.

Operator: The company is posted in its 2nd quarter 2024 earnings release on its website at ir.redrobin.com.

Speaker Change: Generally accepted according.

Speaker Change: Principles, but are intended to illustrate alternative measures of the company's operating performance that may be useful.

Operator: Now I would like to turn the call over to Red Robin's President and Chief Executive Officer, G.J. Hart.

Speaker Change: Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in the earnings release.

Gerard Hart: G.J., please go ahead. Good afternoon, everyone, and thank you for your interest in Red Robin. Our results for the 2nd quarter and our reduced outlook for the remainder of the year are not what we expected when we last communicated in May, with the slowdown experience in the broader restaurant industry masking the substantial progress we continue to make against our North Star Plan. While we cannot control the macroeconomic environment, we hold ourselves accountable to deliver great experience to every guest through our hard quality gourmet burgers and our family friendly atmosphere. We measure multiple proof points that the initiatives we implemented over the past 20 months have elevated the guest experience.

Speaker Change: The company has posted its second quarter 2024 earnings release on its website at IR on Red Robin Dotcom.

Now I'd like to turn the call over to Red Robin's, President and Chief Executive Officer G. J Hart Jade. Please go ahead.

Operator: Good afternoon everyone and welcome to the Red Robin Gourmet Burgers Incorporated 2nd quarter 2024 earnings call This conference is being recorded During this presentation and response to your questions, they will be making forward-looking statements about public business outlook and expectations. Before we look at statements in all the statements that are not historical facts, reflect managers believe some predictions of today and therefore expect to risk uncertainty as described in the company's ATC filing.

Good afternoon, everyone and thank you for your interest in Red Robin.

Speaker Change: Our results for the second quarter and our reduced outlook for the remainder of the year are not what we expected when we last communicated in may with the slowdown experienced in the broader restaurant industry masking the substantial progress we continue to make against our North Star plan.

Operator: Before we look at statements in all the statements that are not historical facts, reflect managers believe some predictions of today and therefore expect to risk uncertainty as described in the company's ATC filing.

Speaker Change: While we cannot control the macroeconomic environment, we hold ourselves accountable to deliver a great experience to every guest through our high quality gourmet burgers and our family friendly atmosphere.

Gerard Hart: This is showcased best by guest satisfaction scores increasing to levels Red Robin has not achieved since 2016. During the past three months, comparable restaurant revenue exceeded the industry average as measured by Black Box Intelligence, and traffic returned to in line with the industry. In each of the trailing three weeks, despite the challenging environment, comparable restaurant revenue returned to marginally positive. With this progress, we continue to expect to meet or exceed the industry average on traffic through the remainder of the year.

Operator: Management will also discuss non-gab financial measures as a part of today's conference call.

Operator: Management will also discuss non-gab financial measures as a part of today's conference call. These non-gab measures are not just generally accepted according to planning principles but are intended to illustrate alternative measures of the company's operating performance that may be useful. Reconciliation of the non-gab financial measures to the most directly comparable gap measures can be found in the earnings release.

Operator: These non-gab measures are not just generally accepted according to planning principles but are intended to illustrate alternative measures of the company's operating performance that may be useful. Reconciliation of the non-gab financial measures to the most directly comparable gap measures can be found in the earnings release.

Speaker Change: We measure multiple proof points that the initiatives, we implemented over the past 20 months.

Speaker Change: Elevated the guest experience.

Speaker Change: This is showcase best buy guest satisfaction scores increasing to levels Red Robin has not achieved since 2016.

Operator: The company is posted in its 2nd quarter 2024 earnings release on its website at ir.redrobin.com.

Speaker Change: During the past three months comparable restaurant revenue exceeded the industry average as measured by Black box intelligence and traffic returned to in line with the industry.

Operator: Now I would like to turn the call over to Red Robin's president and chief executive officer, G.J.

G.J. Hart: Now I would like to turn the call over to Red Robin's president and chief executive officer, G.J. Hart. G.J., please go ahead.

Gerard Hart: Before I dive into more specifics, I'd like to extend my heartfelt thank you to all of the more than 20,000 team members across the country. Your hard work and dedication to our guests is what drives us every day to be better. We will succeed in revitalizing this beloved brand, with all of us working towards the same goals, all in this together. Starting with operations delivering a great guest experience is the backbone of our turnaround efforts. When we announced the North Star Plan, our guest satisfaction score, like the casual dining industry, by ten points, representing the widest margin in nearly a decade.

Gerard Hart: Hart.

Gerard Hart: G.J., please go ahead.

Speaker Change: In each of the trailing three weeks despite the challenging environment comparable restaurant revenue returned to marginally positive with this progress we continue to expect to meet or exceed the industry average on traffic through the remainder of the year.

Gerard Hart: Good afternoon everyone and thank you for your interest in Red Robin. Our results for the 2nd quarter and our reduced outlook for the remainder of the year are not what we expected when we last communicated in May with the slowdown experience in the broader restaurant industry masking the substantial progress we continue to make against our North Star Plan.

G.J. Hart: Good afternoon everyone and thank you for your interest in Red Robin. Our results for the 2nd quarter and our reduced outlook for the remainder of the year are not what we expected when we last communicated in May with the slowdown experience in the broader restaurant industry masking the substantial progress we continue to make against our North Star Plan. While we cannot control the macroeconomic environment we hold ourselves accountable to deliver great experience to every guest through our hard quality gourmet burgers and our family friendly atmosphere.

Speaker Change: Before I dive into more specifics I'd like to extend my heartfelt. Thank you to all of them more than 20000 team members across the country.

Gerard Hart: While we cannot control the macroeconomic environment we hold ourselves accountable to deliver great experience to every guest through our hard quality gourmet burgers and our family friendly atmosphere.

Speaker Change: Your hard work and dedication to our guests is what drives us every day to be better.

Speaker Change: We will succeed in revitalizing this beloved brand with all of US working towards the same goals all in this together.

Gerard Hart: We measure multiple proof points that the initiatives we implemented over the past 20 months have elevated the guest experience. This is showcased best by guest satisfaction scores increasing to levels Red Robin has not achieved since 2016. During the past three months comparable restaurant revenue exceeded the industry average as measured by black box intelligence and traffic returned to in line with the industry.

G.J. Hart: We measure multiple proof points that the initiatives we implemented over the past 20 months have elevated the guest experience. This is showcased best by guest satisfaction scores increasing to levels Red Robin has not achieved since 2016. During the past three months comparable restaurant revenue exceeded the industry average as measured by black box intelligence and traffic returned to in line with the industry. In each of the trailing three weeks despite the challenging environment comparable restaurant revenue returned to marginally positive. With this progress we continue to expect to meet or exceed the industry average on traffic through the remainder of the year.

Gerard Hart: It is our firm belief that a beloved brand like Red Robin should be leading in this area. At the heart of everything we do is a commitment to great hospitality, serving delicious food at a great price and creating a fun, friendly atmosphere with every visit. I'm proud that we have delivered significant gains across this area of our business. As part of these initiatives, in 2023, we added servers, allowing each to focus their effort on fewer tables and reduce false weights. We brought back hosts and busters to improve table turns and cleanliness, and we returned to a dedicated kitchen expo and management structure to provide timely and accurate delivery of orders.

Speaker Change: Starting with operations delivering a great guest experience is the backbone of our turnaround efforts.

Speaker Change: When we announced the Northstar plan, our guest satisfaction score lagged the casual dining industry by 10 points, representing the widest margin in nearly a decade.

It is our firm belief that our beloved brand like Red Robin's should be leading in this area.

Gerard Hart: In each of the trailing three weeks despite the challenging environment comparable restaurant revenue returned to marginally positive.

Speaker Change: At the heart of everything we do is our commitment to great hospitality, serving delicious food at a great price and creating a fun friendly atmosphere with every visit.

Gerard Hart: With this progress we continue to expect to meet or exceed the industry average on traffic through the remainder of the year.

Speaker Change: I'm proud that we have delivered significant gains across this area of our business.

Gerard Hart: Before I dive into more specifics I'd like to extend my heartfelt thank you to all of the more than 20,000 team members across the country.

G.J. Hart: Before I dive into more specifics I'd like to extend my heartfelt thank you to all of the more than 20,000 team members across the country. Your hard work and dedication to our guests is what drives us every day to be better. We will succeed in revitalizing this beloved brand with all of us working towards the same goals all in this together.

As part of these initiatives in 2023, we added servers, allowing each to focus their effort on fewer tables and reduce false weights, we brought back house and busters to improve table turns and cleanliness and we returned to a dedicated kitchen Expo and management structure to provide timely and accurate delivery of orders.

Gerard Hart: Importantly, we continue to see positive momentum from our efforts. Compared to the scores in the second quarter of 2023, we have seen manager visits, 13% more tables than last year. This dedication from the management team is critically important for many reasons, including that we know when a manager visits a table, engages our guests. Guests rate their experience 12% better. Our guests report a 7% improvement on pace of experience, and 3% gains in orders served on time. Weight times greater than 15 minutes are an indicator of false weights. In the second quarter of 2022, 10% of our guests reported waiting more than 15 minutes.

Gerard Hart: Your hard work and dedication to our guests is what drives us every day to be better.

Gerard Hart: We will succeed in revitalizing this beloved brand with all of us working towards the same goals all in this together.

Speaker Change: <unk>.

Speaker Change: Importantly, we continue to see positive momentum from our efforts.

Gerard Hart: Starting with operations delivering a great guest experience is the backbone of our turnaround efforts.

G.J. Hart: Starting with operations delivering a great guest experience is the backbone of our turnaround efforts. When we announced the North Star Plan our guest satisfaction score like the casual dining industry by ten points representing the widest margin in nearly a decade. It is our firm belief that a beloved brand like Red Robin should be leading in this area. At the heart of everything we do is a commitment to great hospitality serving delicious food at a great price and creating a fun friendly atmosphere with every visit.

Speaker Change: Compared to the scores in the second quarter of 2023, we have seen manager visits 13% more tables than last year. This dedication from the management team is critically important for many reasons, including that we know when a manager business a table engages our guests guests right theyre experienced 12% better.

Gerard Hart: When we announced the North Star Plan our guest satisfaction score like the casual dining industry by ten points representing the widest margin in nearly a decade.

Gerard Hart: It is our firm belief that a beloved brand like Red Robin should be leading in this area.

Gerard Hart: At the heart of everything we do is a commitment to great hospitality serving delicious food at a great price and creating a fun friendly atmosphere with every visit.

Our guests reported a 7% improvement on pace of experience and 3% gains in orders served on time.

Gerard Hart: And in the second quarter of 2023, it was reduced to 3%. And now down to 1% in the second quarter of this year. All guest measures in the off-premise portion of our business have increased, led by a 7% increase in order accuracy and taste of food, and a 6% increase in friendliness of our team. We've also made investments in our food, including flat top grills, which deliver a thicker, juicier, and more flavorful burger. Unveiled more than 20 improved gourmet burgers prepared with high quality ingredients. Expanded our bottomless menu with more than 30 items that provide unmatched value to our guests, and upgraded our bar menu to include higher quality brands that our guests know and love.

Speaker Change: Wait times greater than 15 minutes are an indicator of false weights in the second quarter of 2022, 10% of our guests reported waiting more than 15 minutes.

Gerard Hart: I'm proud that we have delivered significant gains across this area of our business. As part of these initiatives, in 2023, we added servers allowing each to focus their effort on fewer tables and reduce false weights.

G.J. Hart: I'm proud that we have delivered significant gains across this area of our business. As part of these initiatives, in 2023, we added servers allowing each to focus their effort on fewer tables and reduce false weights. We brought back hosts and busters to improve table turns and cleanliness, and we returned to a dedicated kitchen expo and management structure to provide timely and accurate delivery of orders. Importantly, we continue to see positive momentum from our efforts.

Speaker Change: And in the second quarter of 2023, it was reduced to 3% and now down to 1% in the second quarter of this year.

Gerard Hart: We brought back hosts and busters to improve table turns and cleanliness, and we returned to a dedicated kitchen expo and management structure to provide timely and accurate delivery of orders. Importantly, we continue to see positive momentum from our efforts.

Speaker Change: All guest measures in the off premise portion of our business have increased led by a 7% increase in order accuracy and taste of food and a 6% increase in friendliness of our team.

Speaker Change: We've also made investments in our food, including flat top grills, which deliver a thicker juice here and more flavorful Burger.

Gerard Hart: Compared to the scores in the second quarter of 2023, we have seen manager visits, 13% more tables than last year.

G.J. Hart: Compared to the scores in the second quarter of 2023, we have seen manager visits, 13% more tables than last year. This dedication from the management team is critically important for many reasons, including that we know when a manager visits a table engages our guests. Guests rate their experience 12% better. Our guests report a 7% improvement on pace of experience, and 3% gains in order served on time. Weight times greater than 15 minutes are an indicator of false weights.

Gerard Hart: Again, the proofs in the numbers. Looking year over year, we have seen. We've executed our bottomless promise offer to 90% of our guests, a 9% increase versus last year. Food quality scores improved by 4% according to surveys from our royalty guests, and food quality scores outperform the casual dining average by 3% according to technology. The result of these initiatives is overall guest satisfaction that has reached parity to the casual dining industry over the last two quarters for the first time in almost nine years. Importantly, the improvement in guest satisfaction is showing up through many different sources, including dining overall guest satisfaction scores of increased 6%, black box social net sentiment is up 17%, and negative guest complaints are at an all-time low, declining 29% versus the second quarter last year.

Speaker Change: Unveiled more than 20 improved gourmet burgers prepared with high quality ingredients.

Gerard Hart: This dedication from the management team is critically important for many reasons, including that we know when a manager visits a table engages our guests. Guests rate their experience 12% better. Our guests report a 7% improvement on pace of experience, and 3% gains in order served on time.

Speaker Change: Spaniard, our bottomless menu with more than 30 items that provide unmatched value to our guests.

Speaker Change: And upgraded our bar menu to include higher quality brands that our guests know and love.

Speaker Change: Again, the proofs in the numbers looking year over year, we have seen we've executed our bottomless promise offered to 90% of our guests a 9% increase versus last year.

Gerard Hart: Weight times greater than 15 minutes are an indicator of false weights.

Gerard Hart: In the second quarter of 2022, 10% of our guests reported waiting more than 15 minutes. And in the second quarter of 2023, it was reduced to 3%. And now down to 1% in the second quarter of this year.

G.J. Hart: In the second quarter of 2022, 10% of our guests reported waiting more than 15 minutes. And in the second quarter of 2023, it was reduced to 3%. And now down to 1% in the second quarter of this year. All guest measures in the off-premise portion of our business have increased, led by a 7% increase in order accuracy, and taste of food, and a 6% increase in friendliness of our team. We've also made investments in our food, including flat top grills, which deliver a thicker, juicier, and more flavorful burger.

Speaker Change: Food quality scores improved by 4% according to surveys from our royalty guests and food quality scores outperformed the casual dining average by 3%. According to Technomic. The result of these initiatives is overall guest satisfaction that has reached parity to the casual dining industry over the last two quarters.

Gerard Hart: All guest measures in the off-premise portion of our business have increased, led by a 7% increase in order accuracy, and taste of food, and a 6% increase in friendliness of our team. We've also made investments in our food, including flat top grills, which deliver a thicker, juicier, and more flavorful burger.

Speaker Change: Orders for the.

Speaker Change: First time in almost nine years.

Speaker Change: Accordingly, the improvement in guest satisfaction is showing up with many different sources, including.

Gerard Hart: Providing a great guest experience to our guests remains the single most important element to improving the performance of our business and is the largest contributing factor to liver growth and guest traffic counts. It requires a relentless pursuit of executing the fundamentals at every level, which our teams are dedicated to pushing toward every day on every shift for every guest, and we are truly proud of the significant progress that we are making on this.

Speaker Change: Dining overall guest satisfaction scores have increased 6%.

Gerard Hart: Unveiled more than 20 improved gourmet burgers prepared with high quality ingredients.

G.J. Hart: Unveiled more than 20 improved gourmet burgers prepared with high quality ingredients. Expanded our bottomless menu with more than 30 items that provide unmatched value to our guests, and upgraded our bar menu to include higher quality brands that our guests know and love. Again, the proofs in the numbers. Looking year over year, we have seen. We've executed our bottomless promise offer to 90% of our guests, a 9% increase versus last year. Food quality scores improved by 4% according to surveys from our royalty guests, and food quality scores outperform the casual dining average by 3% according to technology.

Speaker Change: Black box social net sentiment is up 17% and negative guest complaints are at an all time low declining 29% versus the second quarter last year, providing.

Gerard Hart: Expanded our bottomless menu with more than 30 items that provide unmatched value to our guests, and upgraded our bar menu to include higher quality brands that our guests know and love.

Speaker Change: Providing a great guest experience to our guests remains the single most important element to improving the performance of our business and as the largest contributing factor to deliver growth in guest traffic counts.

Gerard Hart: Again, the proofs in the numbers.

Gerard Hart: Looking year over year, we have seen.

Gerard Hart: We've executed our bottomless promise offer to 90% of our guests, a 9% increase versus last year. Food quality scores improved by 4% according to surveys from our royalty guests, and food quality scores outperform the casual dining average by 3% according to technology. The result of these initiatives is overall guest satisfaction that has reached parity to the casual dining industry over the last two quarters for the first time in almost nine years.

Gerard Hart: Following the improvements we made last year, 2024 is about putting Red Robin back on the map in the minds of consumers, communicating value, and harnessing the power of our relaunched loyalty program to drive guest engagement. Starting in March, we rolled out our new marketing plan. As part of the plan, we tested multiple applications to understand the response curve for increased spending levels of targeted digital media, including the use of selective traditional TV. We began by promoting the competitive breadth and value of our 30 bottomless menu items far more than only the bottomless stake prize many guests know us for.

Speaker Change: It requires a relentless pursuit of executing the fundamentals at every level, which our teams are dedicated to pushing toward everyday on every shift for every guest and we are truly proud of the significant progress that we're making on this front.

G.J. Hart: The result of these initiatives is overall guest satisfaction that has reached parity to the casual dining industry over the last two quarters for the first time in almost nine years. Importantly, the improvement in guest satisfaction is showing up through many different sources, including dining overall guest satisfaction scores of increased 6%, black box social net sentiment is up 17%, and negative guest complaints are at an all-time low declining 29% versus the second quarter last year.

Speaker Change: Following the improvements we made last year 2024 is about putting red Robin back on the map in the minds of consumers communicating value and harnessing the power of our relaunched loyalty program to drive guest engagement.

Gerard Hart: Importantly, the improvement in guest satisfaction is showing up through many different sources, including dining overall guest satisfaction scores of increased 6%, black box social net sentiment is up 17%, and negative guest complaints are at an all-time low declining 29% versus the second quarter last year.

Speaker Change: Starting in March we rolled out our new marketing plan as part of the plan, we tested multiple applications to understand the response curve for increased spending levels of targeted digital media, including the use of selective traditional TV, we began by promoting the competitive breadth and value of our 30 bottomless menu.

Gerard Hart: We highlighted our upgraded high quality ingredients and reintroduced fun to our iconic brand. We improved guest engagement and grew our loyalty members with a focus on new member signups and communicating the great benefits of being a Red Robin fan. In May, we launched our Leave Room for Fun campaign that was developed to take back our ownable position as the most engaging and fun experience in casual dining while continuing to emphasize the quality transformation of our menu and competitive value offerings. This included contemporary new imagery, putting more humanity into our marketing, injected in a more positive and confident tone, while igniting our guest's inner child with connective new ads like Fun Guy, which garnered over 1.5 million views in the first week in market.

Gerard Hart: Providing a great guest experience to our guests remains the single most important element to improving the performance of our business, and is the largest contributing factor to liver growth and guest traffic counts.

G.J. Hart: Providing a great guest experience to our guests remains the single most important element to improving the performance of our business, and is the largest contributing factor to liver growth and guest traffic counts. It requires a relentless pursuit of executing the fundamentals at every level, which our teams are dedicated to pushing toward every day on every shift for every guest, and we are truly proud of the significant progress that we are making on this from.

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

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

Gerard Hart: It requires a relentless pursuit of executing the fundamentals at every level, which our teams are dedicated to pushing toward every day on every shift for every guest, and we are truly proud of the significant progress that we are making on this from.

Speaker Change: We improved guest engagement and grew our loyalty members with a focus on new member sign ups and communicating the great benefits of being a red Robin van.

Speaker Change: In May we launched our leave room for fund campaign that was developed to take back our <unk> position as the most engaging and fun experience in casual dining while continuing to emphasize the quality transformation of our menu and competitive value offerings.

G.J. Hart: Following the improvements we made last year, 2024 is about putting Red Robin back on the map in the minds of consumers, communicating value, and harnessing the power of our relaunched loyalty program to drive guest engagement. Starting in March, we rolled out our new marketing plan. As part of the plan, we tested multiple applications to understand the response curve for increased spending levels of targeted digital media, including the use of selective traditional TV.

Gerard Hart: We incorporated initial learnings and worked to optimize our media mix by doubling down on social and digital streaming, TV and video, including platforms such as Amazon, Hulu, and other strong partners. This targeted approach was intended to drive greater efficiency and reach among our core target guests. The test groups showcased that increased ad spend drives incremental traffic at Red Robin, and in some markets delivered results better than the casual dining segment based in black box data. In each of the two test groups, our team was able to deliver a benchmark 2% traffic lift. While it was appropriate and necessary to test higher spending levels, we also executed a test with more efficient tactics and spending levels.

Speaker Change: This included contemporary new imagery, putting more humanity into our marketing injected a more positive and confident tone, while igniting our guests inner child with connective new ads like fund Guy, which garnered over $1 5 million views in the first week in market.

Gerard Hart: We began by promoting the competitive breadth and value of our 30 bottomless menu items far more than only the bottomless stake prize many guests know us for. We highlighted our upgraded high quality ingredients and reintroduced fun to our iconic brand.

G.J. Hart: We began by promoting the competitive breadth and value of our 30 bottomless menu items far more than only the bottomless stake prize many guests know us for. We highlighted our upgraded high quality ingredients and reintroduced fun to our iconic brand. We improved guest engagement and grew our loyalty members with a focus on new member signups and communicating the great benefits of being a Red Robin fan. In May, we launched our leave room for fun campaign that was developed to take back our ownable position as the most engaging and fun experience in casual dining while continuing to emphasize the quality transformation of our menu and competitive value offerings.

We incorporated initial learnings and work to optimize our media mix by doubling down on social and digital streaming TV and video including platforms, such as Amazon Hulu and other strong partners. This targeted approach was intended to drive greater efficiency and reach among our core target guests.

Gerard Hart: We improved guest engagement and grew our loyalty members with a focus on new member signups and communicating the great benefits of being a Red Robin fan.

Speaker Change: The test groups showcase that increased AD spend drives incremental traffic at red Robin and in some markets delivered results better than the casual dining segment based and black box data.

Gerard Hart: In May, we launched our leave room for fun campaign that was developed to take back our ownable position as the most engaging and fun experience in casual dining while continuing to emphasize the quality transformation of our menu and competitive value offerings. This included contemporary new imagery, putting more humanity into our marketing, injected in more positive and confident tone, while igniting our guest's inner child with connective new ads like fun guy, which garnered over 1.5 million views in the first week in market.

Gerard Hart: Our team did a great job to deliver the same 2% lift with strategies that invested approximately $400 per restaurant per week, rather than the $3,000 per restaurant per week in the higher investment group. This efficiency was achieved with a mix of digital, social, and owned and earned channels to reach the right guests at the right time. As we look towards the remainder of 2024 and into 2025, these learnings give us great confidence in our ability to drive traffic while at the same time rationalizing our spending levels with these efficient tactics.

In each of the two test groups, our team was able to deliver a benchmark 2% traffic lift.

Speaker Change: While it was appropriate and necessary to test higher spending levels. We also executed a test with more efficient tactics and spending levels. Our team did a great job to deliver the same 2% lift with strategies that invested approximately $400 per restaurant per week, rather than the 3000 per restaurant per week.

G.J. Hart: This included contemporary new imagery, putting more humanity into our marketing, injected in more positive and confident tone, while igniting our guest's inner child with connective new ads like fun guy, which garnered over 1.5 million views in the first week in market. We incorporated initial learnings and worked to optimize our media mix by doubling down on social and digital streaming, TV and video including platforms such as Amazon, Hulu, and other strong partners.

And the higher investment group. This efficiency was achieved with a mix of digital social and owned.

Gerard Hart: We incorporated initial learnings and worked to optimize our media mix by doubling down on social and digital streaming, TV and video including platforms such as Amazon, Hulu, and other strong partners. This targeted approach was intended to drive greater efficiency and reach among our core target guests.

And earn channels to reach the right guest at the right time.

Gerard Hart: Turning to loyalty. In May, we relaunched our revamped Red Robin Royalty program. Under our new program, guests earn 1 point for every dollar spent. After earning 100 points, guests receive a $10 reward good for both dining in as well as online order. This allows guests to earn a reward much faster than in the previous program and encourages more frequent visitation to capitalize on their earned rewards. The 90-day redemption window for earned rewards provides an incentive for return visits. Guests' response during the first ten weeks of this program has exceeded our expectations. Our operatives have done a great job engaging with guests and driving enrollment in the program.

Speaker Change: As we look towards the remainder of 2024 and into 2025. These learning give us great confidence in our ability to drive traffic while at the same time rationalizing our spending levels with these efficient tactics.

G.J. Hart: This targeted approach was intended to drive greater efficiency and reach among our core target guests. The test groups showcased that increased ad spend drives incremental traffic at Red Robin and in some markets delivered results better than the casual dining segment based in black box data. In each of the two test groups, our team was able to deliver a benchmark 2% traffic lift. While it was appropriate and necessary to test higher spending levels, we also executed a test with more efficient tactics and spending levels.

Gerard Hart: The test groups showcased that increased ad spend drives incremental traffic at Red Robin and in some markets delivered results better than the casual dining segment based in black box data.

Speaker Change: Turning to loyalty.

Speaker Change: In May we relaunched our revamped red Robin royalty program under our New program guests earned one point for every dollar spent.

Gerard Hart: In each of the two test groups, our team was able to deliver a benchmark 2% traffic lift. While it was appropriate and necessary to test higher spending levels, we also executed a test with more efficient tactics and spending levels. Our team did a great job to deliver the same 2% lift with strategies that invested approximately $400 per restaurant per week, rather than the 3,000 per restaurant per week in the higher investment group. This efficiency was achieved with a mix of digital, social, and owned and earned channels to reach the right guests at the right time.

Speaker Change: After earning 100 points guests receive a $10 reward good for both dine in as well as online orders. This allows guests to earn a reward much faster than in the previous program and encourages more frequent visitation to capitalized on their earned rewards.

G.J. Hart: Our team did a great job to deliver the same 2% lift with strategies that invested approximately $400 per restaurant per week, rather than the 3,000 per restaurant per week in the higher investment group. This efficiency was achieved with a mix of digital, social, and owned and earned channels to reach the right guests at the right time. As we look towards the remainder of 2024 and into 2025, these learning give us great confidence in our ability to drive traffic while at the same time rationalizing our spending levels with these efficient tactics.

Gerard Hart: Since the launch of the new program, guest signups have increased from 60,000 to 90,000 per four-week financial period prior to the loyalty launch to an average of 160,000 cents. These signups are an increase of 156% versus the same time frame in 2023. 130,000 new members signed up and completed a transaction in the last four weeks of the second quarter of 240% from the same period last year. New loyalty members are visiting more frequently. The average time until a second visit has been reduced from 51 days to 39 days. Additionally, the number of members transacting two times or more has increased 12%, with the largest increase in members typically visiting two to five times per year.

Speaker Change: The 90 day redemption window for earned rewards provides an incentive for return visits.

Speaker Change: First response during the first 10 weeks of this program has exceeded our expectations.

Speaker Change: Our operators have done a great job engaging with guests in driving enrollment in the program.

Speaker Change: Since the launch of the new program guests sign ups have increased from 60000 to 90000 per four week financial period prior to the loyalty launch to an average of 160000.

Gerard Hart: As we look towards the remainder of 2024 and into 2025, these learning give us great confidence in our ability to drive traffic while at the same time rationalizing our spending levels with these efficient tactics.

Speaker Change: These sign ups are an increase of 156% versus the same timeframe in 2023.

Gerard Hart: Turning to loyalty.

G.J. Hart: Turning to loyalty. In May, we relaunched our revamped Red Robin royalty program. Under our new program, guests earn 1 point for every dollar spent. After earning 100 points, guests receive a $10 reward good for both dying in as well as online order. This allows guests to earn a reward much faster than in the previous program and encourages more frequent visitation to capitalize on their earned rewards. The 90-day redemption window for earned rewards provides an incentive for return visits.

Gerard Hart: In May, we relaunched our revamped Red Robin royalty program. Under our new program, guests earn 1 point for every dollar spent. After earning 100 points, guests receive a $10 reward good for both dying in as well as online order. This allows guests to earn a reward much faster than in the previous program and encourages more frequent visitation to capitalize on their earned rewards. The 90-day redemption window for earned rewards provides an incentive for return visits. Guests response during the first ten weeks of this program has exceeded our expectations.

Speaker Change: 130000, new members signed up and completed that transaction in the last four weeks of the second quarter up 240% from the same period last year, new loyalty members are visiting more frequently the average time until our second visit has been reduced from 51 days to 30.

Gerard Hart: Loyalty guests typically spend more than non-loyalty members. The total check for our loyalty guests has increased to approximately $4.40 greater than the non-loyalty guests from approximately $2.90 previously. And we have demonstrated good early success, reactivating last members to come and experience the upgrades we have made in food and hospitality. In addition, we can now utilize our new customer data capability to drive future visitation with more personalized communication to compel the next visit. As we continue to cultivate our relationship with new and existing guests alike, we're adding layers of gamification, surprise and delight, and even exclusive access to new menu items through royalty 2.0.

Speaker Change: Nine days.

Speaker Change: Additionally, the number of members transacting two times or more has increased 12% with the largest increase in members typically visiting two to five times per year.

G.J. Hart: Guests response during the first ten weeks of this program has exceeded our expectations. Our operatives have done a great job engaging with guests and driving enrollment in the program. Since the launch of the new program, guest signups have increased from 60,000 to 90,000 per four week financial period prior to the loyalty launch to an average of 160,000 cents. These signups are an increase of 156% versus the same time frame in 2023.

Loyalty guests typically spend more than non loyalty members. The total check for our loyalty guests has increased to approximately $4 40, <unk> greater than the non loyalty guests from approximately $2 90 previously.

Gerard Hart: Our operatives have done a great job engaging with guests and driving enrollment in the program.

Gerard Hart: Since the launch of the new program, guest signups have increased from 60,000 to 90,000 per four week financial period prior to the loyalty launch to an average of 160,000 cents.

Speaker Change: And we have demonstrated good early success reactivating lapsed members to come in experienced upgrades, we have made in food and hospitality.

Gerard Hart: These signups are an increase of 156% versus the same time frame in 2023.

In addition, we can now utilize our new customer data capability to drive future visitation with more personalized communication to compel the next visit.

Gerard Hart: 130,000 new members signed up and completed a transaction in the last four weeks of the second quarter of 240% from the same period last year. New loyalty members are visiting more frequently. The average time until a second visit has been reduced from 51 days to 39 days. Additionally, the number of members transacting two times or more has increased 12% with the largest increase in members typically visiting two to five times per year. Loyalty guests typically spend more than non-loyalty members. The total check for our loyalty guests has increased to approximately $4.40 greater than the non-loyalty guests from approximately $2.90 previously.

G.J. Hart: 130,000 new members signed up and completed a transaction in the last four weeks of the second quarter of 240% from the same period last year. New loyalty members are visiting more frequently. The average time until a second visit has been reduced from 51 days to 39 days. Additionally, the number of members transacting two times or more has increased 12% with the largest increase in members typically visiting two to five times per year.

Gerard Hart: With the success of the launch of the new program, our total membership is over 14.2 million guests as of the end of the second quarter, and we expect that figure will continue to grow. We are pleased with the launch and initial traction of this new loyalty program and fully expected to be a key driver of traffic for our future business.

Speaker Change: As we continue to cultivate our relationship with new and existing guests alike, we're adding layers of gamification surprise and delight and even exclusive access to new menu items through royalty to point out with.

Speaker Change: With the success of the launch of the New program. Our total membership is over $14 2 million guests.

Gerard Hart: Overall, I'm very proud of the progress we have made against our North Star Plan, as our guest experience is substantially improved. We've become more efficient and effective with how we deploy our marketing dollars, and we are in the early stages of utilizing our new loyalty program to be a driver of traffic and sales growth going forward.

Speaker Change: As of the end of the second quarter, and we expect that figure will continue to grow.

Speaker Change: We are pleased with the launch and initial traction of this new loyalty program and fully expect it to be a key driver of traffic for our future business.

G.J. Hart: Loyalty guests typically spend more than non-loyalty members. The total check for our loyalty guests has increased to approximately $4.40 greater than the non-loyalty guests from approximately $2.90 previously. And we have demonstrated good early success, reactivating last members to come and experience the upgrades we have made in food and hospitality. In addition, we can now utilize our new customer data capability to drive future visitation with more personalized communication to compel the next visit.

Speaker Change: Overall I'm very proud of the progress we have made against our Northstar plan as our guest experience is substantially improved we've become more.

Todd Wilson: With that, I'll turn the call over to Todd to walk you through the financial performance before I provide some closing remarks. Thank you, GJ, and good afternoon, everyone. In the second quarter, total revenues were $300.2 million versus $298.6 million in the second quarter of fiscal 2023. Comparable restaurant revenue increased 1.4%, benefiting 220 basis points from revenue recognized related to the relaunch of our loyalty program. Excluding the benefits of the loyalty-related revenue recognition, our comparable restaurant revenue decreased 0.8%. The decline was driven by results in the second half of the quarter related to the broad-based consumer slowdown experience across the industry.

Gerard Hart: And we have demonstrated good early success, reactivating last members to come and experience the upgrades we have made in food and hospitality. In addition, we can now utilize our new customer data capability to drive future visitation with more personalized communication to compel the next visit.

Speaker Change: Our efficient and effective with how we deploy our marketing dollars and we are in the early stages of utilizing our new loyalty program to be a driver of traffic and sales growth going forward.

Speaker Change: With that I'll turn the call over to Todd to walk you through the financial performance before I provide some closing remarks.

Gerard Hart: As we continue to cultivate our relationship with new and existing guests alike, we're adding layers of gamification, surprise and delight and even exclusive access to new menu items through royalty 2.0.

G.J. Hart: As we continue to cultivate our relationship with new and existing guests alike, we're adding layers of gamification, surprise and delight and even exclusive access to new menu items through royalty 2.0. With the success of the launch of the new program, our total membership is over 14.2 million guests as of the end of the second quarter and we expect that figure will continue to grow. We are pleased with the launch and initial traction of this new loyalty program and fully expected to be a key driver of traffic for our future business.

Todd: Thank you Gigi and good afternoon, everyone in the second quarter total revenues were $302 million versus $298 $6 million in the.

Todd: Quarter of fiscal 2023.

Gerard Hart: With the success of the launch of the new program, our total membership is over 14.2 million guests as of the end of the second quarter and we expect that figure will continue to grow.

Todd: Comparable restaurant revenue increased one 4%.

Todd: <unk> 220 basis points from revenue recognized related to the relaunch of our loyalty program.

Todd Wilson: Comparable restaurant revenue in the first six weeks of the quarter increased 0.4%, then declined 1.9% in the final six weeks. Now, in the third quarter, we've seen comparable restaurant revenue results in each of the past three weeks return to marginally positive. Restaurant level operating profit as a percentage of restaurant revenue was 11.8%, a decrease of 80 basis points compared to the second quarter of 2023. The decline was primarily driven by lower guest counts and our strategic investments in labor and food quality to support hospitality and the guest experience. This investment is the foundation for improved financial performance, and we expect it to drive guests back into our restaurants and increase profitability.

Gerard Hart: We are pleased with the launch and initial traction of this new loyalty program and fully expected to be a key driver of traffic for our future business.

Excluding the benefit of the loyalty related revenue recognition, our comparable restaurant revenue decreased <unk>, 8%.

Todd: The decline was driven by results in the second half of the quarter related to the broad based consumer slowdown experienced across the industry.

Gerard Hart: Overall, I'm very proud of the progress we have made against our North Star Plan as our guest experience is substantially improved.

G.J. Hart: Overall, I'm very proud of the progress we have made against our North Star Plan as our guest experience is substantially improved. We've become more efficient and effective with how we deploy our marketing dollars and we are in the early stages of utilizing our new loyalty program to be a driver of traffic and sales growth going forward.

Todd: Comparable restaurant revenue in the first six weeks of the quarter increased 0.4%.

Gerard Hart: We've become more efficient and effective with how we deploy our marketing dollars and we are in the early stages of utilizing our new loyalty program to be a driver of traffic and sales growth going forward.

Todd: <unk> declined one 9% in the final six weeks.

Todd: Now in the third quarter, we've seen comparable restaurant revenue results in each of the past three weeks returned to marginally positive.

Todd Brooks: With that, I'll turn the call over to Todd to walk you through the financial performance before I provide some closing remarks.

Todd: Restaurant level operating profit as a percentage of restaurant revenue was 11, 8% a decrease of 80 basis points compared to the second quarter of 2023 the.

Todd Brooks: Thank you, GJ, and good afternoon, everyone.

Todd Brooks: In the second quarter, total revenues were $300.2 million versus $298.6 million in the second quarter of fiscal 2023. Comparable restaurant revenue increased 1.4%, benefiting 220 basis points from revenue recognized related to the relaunch of our loyalty program.

Todd Wilson: We experienced greater inflation than we expected in our commodity basket, particularly ground beef, chicken, and produce. Additionally, labor costs are elevated relative to our expectation, led by two primary factors. First, our newer leaders and team members are working to build mastery and efficiency in their roles, resulting in a near-term increase in labor costs that we expect to normalize in time. Second, we experienced a spike in high-dollar health insurance claims well above the actuarial norm that totaled approximately $1.5 million in the second quarter. Our claims experience today in the third quarter indicates a return to the actuarial expectation.

The decline was primarily driven by lower guest counts and our strategic investments in labor and food quality to support hospitality and the guest experience. This.

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

Todd Brooks: Excluding the benefits of the loyalty-related revenue recognition, our comparable restaurant revenue decreased 0.8%. The decline was driven by results in the second half of the quarter related to the broad-based consumer slowdown experience across the industry. Comparable restaurant revenue in the first six weeks of the quarter increased 0.4%, then declined 1.9% in the final six weeks.

Todd: We experienced greater inflation than we expected in our commodity basket, particularly ground beef chicken and produce.

Todd Wilson: The decline was driven by results in the second half of the quarter related to the broad-based consumer slowdown experience across the industry. Comparable restaurant revenue in the first six weeks of the quarter increased 0.4%, then declined 1.9% in the final six weeks. Now in the third quarter, we've seen comparable restaurant revenue results in each of the past three weeks return to marginally positive. Restaurant level operating profit as a percentage of restaurant revenue was 11.8%, a decrease of 80 basis points compared to the second quarter of 2023.

Todd: Additionally, labor costs are elevated relative to our expectation led by two primary factors first our newer leaders and team members are working to build mastery inefficiency in their roles, resulting in a near term increase in labor costs that we expect to normalize in time.

Todd Brooks: Now in the third quarter, we've seen comparable restaurant revenue results in each of the past three weeks return to marginally positive.

Todd Wilson: Our team continues to do great work pursuing and capturing thoughtful cost savings that maintain our commitment of parity or better for the guest experience. In the second quarter, we launched key new initiatives, including a reboot of our actual versus theoretical food cost measurement and reporting to assist our operators in identifying and reducing food waste. We also continue to pursue opportunities to consolidate vendors and use our scale to our advantage across multiple categories, including proteins. General and administrative costs were $16.6 million, as compared to $20.1 million in the second quarter of 2023. The reduction results primarily from reduced accrual of incentive compensation expenses.

Todd: Second we experienced a spike in high dollar health insurance claims well above the actuarial norm that totaled approximately $1 5 million in the second quarter.

Todd Brooks: Restaurant level operating profit as a percentage of restaurant revenue was 11.8%, a decrease of 80 basis points compared to the second quarter of 2023. The decline was primarily driven by lower guest counts and our strategic investments in labor and food quality to support hospitality and the guest experience.

Todd: Our claims experience to date in the third quarter indicates a return to the actuarial expectation.

Todd: Our team continues to do great work pursuing and capturing thoughtful cost savings that maintain our commitment a parity or better for the guest experience in the second quarter, we launched key new initiatives, including a reboot of our actual versus theoretical food cost measurement and reporting to assist our operators and identifying and reducing food.

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

Todd Wilson: The decline was primarily driven by lower guest counts and our strategic investments in labor and food quality to support hospitality and the guest experience. This investment is the foundation for improved financial performance, and we expect it to drive guests back into our restaurants and increase profitability. We experienced greater inflation than we expected in our commodity basket, particularly ground beef, chicken, and produce. Additionally, labor costs are elevated relative to our expectation, led by two primary factors.

Todd Brooks: We experienced greater inflation than we expected in our commodity basket, particularly ground beef, chicken, and produce. Additionally, labor costs are elevated relative to our expectation, led by two primary factors.

Todd: <unk>.

Todd: We also continue to pursue opportunities to consolidate vendors and use our scale to our advantage across multiple categories, including proteins.

Todd Wilson: Selling expenses were $12 million and increased versus the prior year of $5.3 million. The increased results primarily from an increase in guest-facing marketing activity and related production costs, and the marketing spend optimization testing we completed during the quarter. Adjusted EBITDA was $11.28 million in the second quarter of 2024. The $3.6 million decline versus the second quarter of 2023 was driven by lower guest counts, occupancy costs related to our sales stock transactions, and the increased health insurance costs I referenced earlier. We ended the second quarter with $23.1 million of cash and cash equivalents, $8 million of restricted cash, and $25 million available bar and capacity under our revolving line of credit.

Todd Wilson: First, our newer leaders and team members are working to build mastery and efficiency in their roles, resulting in a near-term increase in labor costs that we expect to normalize in time. Second, we experienced a spike in high-dollar health insurance claims well above the actuarial norm that totaled approximately $1.5 million in the second quarter. Our claims experience today in the third quarter indicates a return to the actuarial expectation. Our team continues to do great work pursuing and capturing thoughtful cost savings that maintain our commitment of parity or better for the guest experience.

Todd: General and administrative costs were $16 $6 million as compared to $20 1 million in the second quarter of 2023.

Todd Brooks: First, our newer leaders and team members are working to build mastery and efficiency in their roles, resulting in a near-term increase in labor costs that we expect to normalize in time.

Todd: The reduction resulted primarily from reduced accrual of incentive compensation expenses.

Todd Brooks: Second, we experienced a spike in high-dollar health insurance claims well above the actuarial norm that totaled approximately $1.5 million in the second quarter.

Todd: Selling expenses were $12 million, an increase versus the prior year of $5 3 million.

Todd: The increase results primarily from an increase in guest facing marketing activity and related production costs and the marketing spend optimization testing, we completed during the quarter.

Todd Brooks: Our claims experience today in the third quarter indicates a return to the actuarial expectation.

Todd Brooks: Our team continues to do great work pursuing and capturing thoughtful cost savings that maintain our commitment of parity or better for the guest experience. In the second quarter, we launched key new initiatives, including a reboot of our actual versus theoretical food cost measurement and reporting to assist our operators in identifying and reducing food waste.

Todd: Adjusted EBITDA was $11 $8 million in the second quarter of 2024.

Todd: The $3 6 million decline versus the second quarter of 2023 was driven by lower guest counts.

Todd Wilson: In the second quarter, we launched key new initiatives, including a reboot of our actual versus theoretical food cost measurement and reporting to assist our operators in identifying and reducing food waste. We also continue to pursue opportunities to consolidate vendors and use our scale to our advantage across multiple categories, including proteins. General and administrative costs were $16.6 million, as compared to $20.1 million in the second quarter of 2023. The reduction results primarily from reduced accrual of incentive compensation expenses.

Todd: Occupancy costs related to our sale leaseback transactions and the increased health insurance costs I referenced earlier.

Todd Wilson: At quarter-and-hour, outstanding principal balance under our credit agreement was $167.9 million.

Todd: We ended the second quarter with $23 $1 million of cash and cash equivalents $8 million of restricted cash and $25 million.

Todd Brooks: We also continue to pursue opportunities to consolidate vendors and use our scale to our advantage across multiple categories, including proteins.

Todd Wilson: Turning now to our 2024 guidance, we have updated our guidance to the following. Total revenue of approximately $1.25 billion. Restaurant-level operating profit of 11.0 to 11.5%, inclusive of investments in the guest experience and rent expenses related to the sale-leaseback transactions. Adjusted EBITDA of $40 million to $45 million. As a reminder, as is historical practice for Red Robin, our reported adjusted EBITDA and our adjusted EBITDA guidance do not add back non-cash stock-based compensation expenses, which we estimate will total approximately $7 million in 2024. Capital expenditures of $25 to $30 million. The largest contributing factor to our guidance reduction is a change in our underlying assumption for the casual dining and street traffic for the remainder of the year.

Todd: Billable borrowing capacity under our revolving line of credit.

Todd Brooks: General and administrative costs were $16.6 million, as compared to $20.1 million in the second quarter of 2023. The reduction results primarily from reduced accrual of incentive compensation expenses.

Todd: At quarter end, our outstanding principal balance under our credit agreement was 167 9 million.

Todd: Turning now to our 2024 guidance, we have updated our guidance to the following.

Todd Brooks: Selling expenses were $12 million and increased versus the prior year of $5.3 million. The increased results primarily from an increase in guest-facing marketing activity and related production costs and the marketing spend optimization testing we completed during the quarter.

Todd Wilson: Selling expenses were $12 million and increased versus the prior year of $5.3 million. The increased results primarily from an increase in guest-facing marketing activity and related production costs and the marketing spend optimization testing we completed during the quarter. Adjusted EBITDA was $11.28 million in the second quarter of 2024. The $3.6 million decline versus the second quarter of 2023 was driven by lower guest counts, occupancy costs related to our sales stock transactions, and the increased health insurance costs I referenced earlier.

Total revenue of approximately $1 $2 5 billion.

Todd: Restaurant level operating profit of 11.0 to 11, 5% inclusive of investments in the guest experience and rent expenses related to the sale leaseback transactions.

Todd Brooks: Adjusted EBITDA was $11.28 million in the second quarter of 2024. The $3.6 million decline versus the second quarter of 2023 was driven by lower guest counts, occupancy costs related to our sales stock transactions, and the increased health insurance costs I referenced earlier.

Todd: Adjusted EBITDA of 40 million to $45 million.

Todd: As a reminder, as is historical practice for Red Robin I'll reported adjusted EBITDA and our adjusted EBITDA guidance do not add back non cash stock based compensation expenses, which we estimate will total approximately $7 million in 2024.

Todd Brooks: We ended the second quarter with $23.1 million of cash and cash equivalents, $8 million of restricted cash, and $25 million available bar and capacity under our revolving line of credit. At quarter-and-hour outstanding principal balance under our credit agreement was $167.9 million.

Todd Wilson: We ended the second quarter with $23.1 million of cash and cash equivalents, $8 million of restricted cash, and $25 million available bar and capacity under our revolving line of credit. At quarter-and-hour outstanding principal balance under our credit agreement was $167.9 million.

Todd Wilson: While in each of the most recent three weeks, traffic trends have improved and comparable restaurant sales have been marginally positive, we are approaching our revised guidance cautiously given the choppiness in the consumer environment. We also updated our expectations for commodity inflation, labor costs, and various other inputs.

Todd: Capital expenditures of $25 million to $30 million.

Todd: The largest contributing factor to our guidance reduction is a change in our underlying assumption for the casual dining industry traffic for the remainder of the year.

Todd Brooks: Turning now to our 2024 guidance, we have updated our guidance to the following.

Todd Wilson: Turning now to our 2024 guidance, we have updated our guidance to the following. Total revenue of approximately $1.25 billion. Restaurant-level operating profit of 11.0 to 11.5% inclusive of investments in the guest experience and rent expenses related to the sale lease back transactions. Adjusted EBITDA of $40 million to $45 million. As a reminder, as is historical practice for Red Robin, our reported adjusted EBITDA and our adjusted EBITDA guidance do not add back non-cash stock-based compensation expenses which we estimate will total approximately $7 million in 2024.

Todd: While in each of the most recent three weeks traffic trends have improved and comparable restaurant sales have been marginally positive we are approaching our revised guidance cautiously given the choppiness in the consumer environment.

Todd Wilson: Our expectations for the third and fourth quarter individually are as follows. In the third quarter, we anticipate comparable restaurant traffic will decline approximately 5% in line with recent trends, and PPA will increase approximately 5%. Our PPA expectation includes the benefit of what we expect is our final menu increase of 2024 in mid-September. From a profitability perspective, the third quarter typically represents the low point of our seasonal guest traffic and sales volumes, resulting in our expectation for a minimal adjusted EBITDA contribution. In the fourth quarter, we anticipate comparable restaurant traffic will decline 4% to 5%, and PPA will increase 7% to 8%.

Todd Brooks: Total revenue of approximately $1.25 billion.

Todd Brooks: Restaurant-level operating profit of 11.0 to 11.5% inclusive of investments in the guest experience and rent expenses related to the sale lease back transactions.

Todd: We also updated our expectations for commodity inflation labor labor costs and various other inputs.

Our expectations for the third and fourth quarter individually are as follows.

Todd Brooks: Adjusted EBITDA of $40 million to $45 million. As a reminder, as is historical practice for Red Robin, our reported adjusted EBITDA and our adjusted EBITDA guidance do not add back non-cash stock-based compensation expenses which we estimate will total approximately $7 million in 2024.

Todd: In the third quarter, we anticipate comparable restaurant traffic will decline approximately 5% in line with recent trends.

Todd: And PPA will increase approximately 5%.

Todd: Our PPA expectation includes the benefit of what we expect as our final menu increase of 2024 in mid September.

Todd Brooks: Capital expenditures of $25 to $30 million. The largest contributing factor to our guidance reduction is a change in our underlying assumption for the casual dining and street traffic for the remainder of the year.

Todd Wilson: Capital expenditures of $25 to $30 million. The largest contributing factor to our guidance reduction is a change in our underlying assumption for the casual dining and street traffic for the remainder of the year. While in each of the most recent three weeks traffic trends have improved and comparable restaurant sales have been marginally positive, we are approaching our revised guidance cautiously given the choppiness in the consumer environment. We also updated our expectations for commodity inflation, labor costs and various other inputs.

Todd: From a profitability perspective, the third quarter typically represents the low point of our seasonal guest traffic and sales volumes, resulting in our expectation for a minimal adjusted EBITDA contribution.

Todd Wilson: The increase in PPA results from the September menu increase being effective for the full fourth quarter. This pricing action is preemptive to legislative labor increases that are effective in many states on January 1st, and we anticipate PPA increases will then moderate through 2025. From a profitability perspective, seasonal guest traffic and sales volumes typically increase in the holiday season, resulting in greater adjusted EBITDA contribution in the fourth quarter relative to the third. We expect total selling expenses of approximately 38 million dollars in 2024, driven by a re-optimized allocation of funds based on our efficiency and effectiveness learnings from the first half of the year.

In the fourth quarter, we anticipate comparable restaurant traffic will decline 4% to 5%.

Todd Brooks: While in each of the most recent three weeks traffic trends have improved and comparable restaurant sales have been marginally positive, we are approaching our revised guidance cautiously given the choppiness in the consumer environment.

And PPA will increase 7% to 8% the.

Todd: The increase in PPA results from September menu increase being effective for the full fourth quarter.

Todd Brooks: We also updated our expectations for commodity inflation, labor costs and various other inputs.

This pricing action is preemptive to legislated labor increases that are effective in many states on January one.

Todd Brooks: Our expectations for the third and fourth quarter individually are as follows. In the third quarter, we anticipate comparable restaurant traffic will decline approximately 5% in line with recent trends and PPA will increase approximately 5%. Our PPA expectation includes the benefit of what we expect is our final menu increase of 2024 in mid-September.

Todd Wilson: Our expectations for the third and fourth quarter individually are as follows. In the third quarter, we anticipate comparable restaurant traffic will decline approximately 5% in line with recent trends and PPA will increase approximately 5%. Our PPA expectation includes the benefit of what we expect is our final menu increase of 2024 in mid-September. From a profitability perspective, the third quarter typically represents the low point of our seasonal guest traffic and sales volumes, resulting in our expectation for a minimal adjusted EBITDA contribution.

And we anticipate PPA increases will then moderate through 2025.

Todd: From a profitability perspective seasonal guest traffic and sales volumes typically increase in the holiday season, resulting in greater adjusted EBITDA contribution in the fourth quarter relative to the third.

Todd Wilson: We currently expect these learnings will result in some expenses of approximately 30 million dollars in 2025. We expect GNA expenses will pre-be approximately 81 million dollars in 2024, reduced from our initial expectations due to a dissipated lower incentive compensation expenses and other cost savings measures.

We expect total selling expenses of approximately $38 million in 2024, driven by our re optimize the allocation of funds based on our efficiency and effectiveness learnings from the first half of the year.

Todd Brooks: From a profitability perspective, the third quarter typically represents the low point of our seasonal guest traffic and sales volumes, resulting in our expectation for a minimal adjusted EBITDA contribution. In the fourth quarter, we anticipate comparable restaurant traffic will decline 4% to 5%, and PPA will increase 7% to 8%. The increase in PPA results from the September menu increase being effective for the full fourth quarter. This pricing action is preemptive to legislative labor increases that are effective in many states on January 1st, and we anticipate PPA increases will then moderate through 2025. From a profitability perspective, seasonal guest traffic and sales volumes typically increase in the holiday season, resulting in greater adjusted EBITDA contribution in the fourth quarter relative to the third.

Todd: We currently expect these learnings will result in selling expenses of approximately $30 million in 2025.

Todd Wilson: In the fourth quarter, we anticipate comparable restaurant traffic will decline 4% to 5%, and PPA will increase 7% to 8%. The increase in PPA results from the September menu increase being effective for the full fourth quarter. This pricing action is preemptive to legislative labor increases that are effective in many states on January 1st, and we anticipate PPA increases will then moderate through 2025. From a profitability perspective, seasonal guest traffic and sales volumes typically increase in the holiday season, resulting in greater adjusted EBITDA contribution in the fourth quarter relative to the third.

Todd Wilson: Finally, as we have shared previously, our fiscal calendar reverts to a 52-week fiscal year in 2024, as compared to 53 weeks in 2023. 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.

Todd: We expect G&A expenses will be approximately $81 million in 2020 for reduced from our initial expectations due to anticipated lower incentive compensation expenses and other cost savings measures.

Todd: Finally, as we have shared previously our fiscal calendar reverts to a 52 week fiscal year in 2024 as compared to 53 weeks in 2023.

Todd Wilson: Now moving to our credit agreement. On August 21st, we executed an amendment to the credit agreement. Most notably, and among other items, the amendment increases our compliance leverage ratios and expands the revolver from $25 million to $40 million from the third quarter of fiscal 2024 through the third quarter of fiscal 2025. The additional financial flexibility supports our efforts executing the North Star Plan. We appreciate the great partnership from our lender group led by Fortress and thank you to everyone who contributed to completing this work.

Todd: 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: Now moving to our credit agreement on.

Todd Brooks: We expect total selling expenses of approximately 38 million dollars in 2024 driven by a re-optimized allocation of funds based on our efficiency and effectiveness learnings from the first half of the year.

Todd Wilson: We expect total selling expenses of approximately 38 million dollars in 2024 driven by a re-optimized allocation of funds based on our efficiency and effectiveness learnings from the first half of the year. We currently expect these learnings will result in some expenses of approximately 30 million dollars in 2025. We expect GNA expenses will pre-be approximately 81 million dollars in 2024, reduced from our initial expectations due to a dissipated lower incentive compensation expenses and other cost savings measures.

Speaker Change: On August 21, we executed an amendment to the credit agreement.

Speaker Change: Most notably in among other items the amendment increases our compliance leverage ratios and expands the revolver from 25 million to $40 million from the third quarter of fiscal 2024 through the third quarter of fiscal 2025.

Todd Brooks: We currently expect these learnings will result in some expenses of approximately 30 million dollars in 2025. We expect GNA expenses will pre-be approximately 81 million dollars in 2024, reduced from our initial expectations due to a dissipated lower incentive compensation expenses and other cost savings measures.

Gerard Hart: With that, I will turn the call back over to TJ. Thank you, Todd. While we expect it may be a dynamic consumer environment in the near term, our teens are focused on executing our strategic plan each and every day to position Red Robin for long-term success. We see measurable proof points from our guests that the initiatives we put in place over the past 20 months have strengthened our operations, improved our food offerings, and created experience, guests, and joy. We are committed to taking prudent action to rationalize our cost structure through the changes in selling and G&A expenses, and we've created helpful financial flexibility with our amended credit agreement.

Speaker Change: The additional financial flexibility supports our efforts executing the Northstar plan.

Speaker Change: We appreciate the great partnership from our lender group led by fortress and thank you to everyone who contributed to completing this work.

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

Todd Brooks: Finally, as we have shared previously, our fiscal calendar reverts to a 52-week fiscal year in 2024 as compared to 53 weeks in 2023. 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.

Todd Wilson: Finally, as we have shared previously, our fiscal calendar reverts to a 52-week fiscal year in 2024 as compared to 53 weeks in 2023. 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.

Thank you Todd.

T. J.: While we expect it may be a dynamic consumer environment and the near term.

T. J.: Our teams are focused on executing our strategic plan each and every day to position Red Robin for long term success.

We've seen measurable proof points from our guests that the initiatives we put in place over the past 20 months have strengthened our operations improved our food offerings and creative experience guests enjoy.

Gerard Hart: As we look to the coming years, we believe 2024 will be a trap for our financial performance that then rebounds on the back of these efforts in 2025 and beyond. Collectively, the actions we are taking and the great feedback we continue to receive from guests and team members give us great confidence we are on the path to long-term success for this beloved friend.

Todd Brooks: Now moving to our credit agreement.

Todd Wilson: Now moving to our credit agreement.

Todd Brooks: On August 21st, we executed an amendment to the credit agreement. Most notably and among other items, the amendment increases our compliance leverage ratios and expands the revolver from $25 million to $40 million from the third quarter of fiscal 2024 through the third quarter of fiscal 2025. The additional financial flexibility supports our efforts executing the North Star Plan.

Todd Wilson: On August 21st, we executed an amendment to the credit agreement. Most notably and among other items, the amendment increases our compliance leverage ratios and expands the revolver from $25 million to $40 million from the third quarter of fiscal 2024 through the third quarter of fiscal 2025. The additional financial flexibility supports our efforts executing the North Star Plan. We appreciate the great partnership from our lender group led by Fortress and thank you to everyone who contributed to completing this work.

We are committed to taking prudent action to rationalize our cost structure through the changes in selling and G&A expenses.

T. J.: And we've created helpful financial flexibility with our amended credit agreement.

T. J.: As we look to the coming years.

T. J.: We believe 2024 will be a trough or our financial performance.

Operator: We are now happy to take questions, so operator, please open up the lines. Certainly, when I'll be conducting a question and a succession, if you'd like to be placed in the question queue, please press star one on your telephone keypad. You may press star two if you'd like to remove a question from the queue. Once again, that star one to be placed in the question queue.

That then rebounds on the back of these efforts in 2025 and beyond.

Todd Brooks: We appreciate the great partnership from our lender group led by Fortress and thank you to everyone who contributed to completing this work.

T. J.: Collectively the actions, we are taking and the great feedback we continue to receive from guests and team members give us great confidence we're on the path to long term success for this beloved brand.

Gerard Hart: With that, I will turn the call back over to TJ.

G.J. Hart: With that, I will turn the call back over to TJ. Thank you, Todd. While we expect it may be a dynamic consumer environment in the near term, our teens are focused on executing our strategic plan each and every day to position Red Robin for long term success.

Gerard Hart: Thank you, Todd.

Gerard Hart: While we expect it may be a dynamic consumer environment in the near term, our teens are focused on executing our strategic plan each and every day to position Red Robin for long term success.

Speaker Change: We are now happy to take questions. So operator, please open up the lines.

Jeremy Hamblin: Our first question is coming from Jeremy Hamlin from Craig Hall. On your line. Is that live? Good evening, thanks for taking the questions. So I wanted to start with the change in the EBITDAG guide, lowered 20 million to 25 million, and just understand the components of that change versus what you expected at the end of May as your revenue guide is only really at the lower end of your prior range. If the restaurant level margins are going to be 150 to 200 basis points lower, could you help us kind of break down the component parts to get to that 150 to 200 basis point change?

Speaker Change: Certainly, we'll now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad you May press star two if you'd like to remove your question from the queue. Once again Thats star one to be placed in the question queue. Our first question is coming from Jeremy Hamblin from Craig Hallum. Your line is now live.

Gerard Hart: We see measurable proof points from our guests that the initiatives we put in place over the past 20 months have strengthened our operations, improved our food offerings and created experience guests and joy.

G.J. Hart: We see measurable proof points from our guests that the initiatives we put in place over the past 20 months have strengthened our operations, improved our food offerings and created experience guests and joy. We are committed to taking prudent action to rationalize our cost structure through the changes in selling in G&A expenses and we've created helpful financial flexibility with our amended credit agreement.

Gerard Hart: We are committed to taking prudent action to rationalize our cost structure through the changes in selling in G&A expenses and we've created helpful financial flexibility with our amended credit agreement.

Jeremy Hamblin: Good evening, thanks for taking the questions. So I wanted to just start with the change in the EBITDA Guide.

Speaker Change: Lowered $20 million to $25 million.

Gerard Hart: As we look to the coming years, we believe 2024 will be a trap for our financial performance that then rebounds on the back of these efforts in 2025 and beyond.

G.J. Hart: As we look to the coming years, we believe 2024 will be a trap for our financial performance that then rebounds on the back of these efforts in 2025 and beyond. Collectively, the actions we are taking and the great feedback we continue to receive from guests and team members give us great confidence we are on the path to long term success for this beloved friend.

Speaker Change: And just understand.

Jeremy Hamblin: The components of that that change versus what you expected at the end of May as your revenue guidance only.

Todd Wilson: Hey, Jeremy Todd here. Happy to walk through that. I think a couple of headlines that bridge that for you. First, as you alluded to, if you go back to our guidance at the end of the prior quarter, we thought we saw a path, and frankly, we were on the path to returning the positive traffic in the third and the fourth quarters. And with the shift that we saw in the consumer environment in the middle of the second quarter, it felt right, given the trends that we were seeing, to pair that back. And so I talked about the traffic in our Q3 and Q4 guide in a down 4 to 5 range.

Speaker Change: Really at the lower end of your prior range. So.

Gerard Hart: Collectively, the actions we are taking and the great feedback we continue to receive from guests and team members give us great confidence we are on the path to long term success for this beloved friend.

Speaker Change: If your restaurant level margins are going to be 150 to 200 basis points lower could you help us kind of breakdown the component parts to get to that.

Operator: We are now happy to take questions so operator, please open up the lines.

Operator: We are now happy to take questions so operator, please open up the lines. Certainly, when I'll be conducting a question and a succession, if you'd like to be placed in the question queue, please press star one on your telephone keypad. You may press star two if you'd like to remove a question from the queue. Once again, that star one to be placed in the question queue.

That 150 to 200 basis point change.

Operator: Certainly, when I'll be conducting a question and a succession, if you'd like to be placed in the question queue, please press star one on your telephone keypad.

Todd: Hey, Jeremy Todd here happy to walk through that I think a couple of headlines that bridge that for you.

Todd: First as you alluded to if you go back to.

Operator: You may press star two if you'd like to remove a question from the queue.

Speaker Change: Our guidance at the end of the prior quarter, we thought we saw a path and frankly, we were on the path to returning to positive traffic in the third and the fourth quarters and with the shift that we saw in the consumer environment in the middle of the second quarter.

Operator: Once again, that star one to be placed in the question queue.

Jeremy Hamblin: Our first question is coming from Jeremy Hamlin from Craig Hall on your line.

Jeremy Hamblin: Our first question is coming from Jeremy Hamlin from Craig Hall on your line. Is that live?

Todd Wilson: So it's a roughly 6% reduction in our traffic expectation and the balance of the year. That's about $15 million of the EBITDA change. The other two components I call out; we saw some of the impact in Q2. One is on commodities. Ground beef, chicken, and produce have run higher in terms of cost and inflation than we previously expected. That's about $3 million, and we've baked in about $3 million for some of the labor pressures that we saw and that I talked to in Q2 as well. And so there's obviously other puts and takes within the model, but those are the big three in terms of the EBITDA.

Jeremy Hamblin: Is that live?

Jeremy Hamblin: Good evening, thanks for taking the questions.

Todd Wilson: Good evening, thanks for taking the questions. So I wanted to start with the change in the EBITDAG guide, lowered 20 million to 25 million, and just understand the components of that change versus what you expected at the end of May as your revenue guide is only really at the lower end of your prior range. If the restaurant level margins are going to be 150 to 200 basis points lower, could you help us kind of break down the component parts to get to that 150 to 200 basis point change?

Jeremy Hamblin: So I wanted to start with the change in the EBITDAG guide, lowered 20 million to 25 million, and just understand the components of that change versus what you expected at the end of May as your revenue guide is only really at the lower end of your prior range.

Speaker Change: Felt right given the trends that we're seeing to pare that back.

Speaker Change: So I talked about the traffic in our Q3 and Q4 guide.

Speaker Change: <unk>, 4% to five range. So it's a.

Speaker Change: Roughly 6% reduction in our traffic expectation in the balance of the year, that's about $15 million of the EBITDA change. The other two components I call out we saw some of the impact in Q2, one is on commodities.

Todd Brooks: If the restaurant level margins are going to be 150 to 200 basis points lower, could you help us kind of break down the component parts to get to that 150 to 200 basis point change?

Speaker Change: Beef chicken and produce have run higher in terms of cost inflation that we previously expected that's about $3 million and we've baked in about $3 million for some of the labor pressures that we saw in that I talked to in Q2 as well and so there's obviously other puts and takes within the model.

Jeremy Hamblin: So just to clarify, the traffic reduction is the majority of the difference that you're seeing that's kind of spread evenly across your line items, or it's more of the leveraging in occupancy and other operating expenses. It's certainly the leveraging those fixed costs, as you allude to, just to make sure I was clear on that. In our prior guidance, we had traffic of roughly plus one in the balance of the year, and we're now seeing a more current trend of down four to five. We certainly, you know, we commented on it in the prepared remarks. You know, we certainly taken approach that we recognize it's obviously a big change.

Todd Brooks: Hey, Jeremy Todd here.

Todd Wilson: Hey, Jeremy Todd here. Happy to walk through that. I think a couple headlines that bridge that for you. First as you alluded to, if you go back to our guidance at the end of the prior quarter, we thought we saw a path and frankly we were on the path to returning the positive traffic in the third and the fourth quarters. And with the shift that we saw in the consumer environment in the middle of the second quarter, it felt right given the trends that we were seeing to pair that back.

Todd Brooks: Happy to walk through that.

Todd Brooks: I think a couple headlines that bridge that for you.

Todd Brooks: First as you alluded to, if you go back to our guidance at the end of the prior quarter, we thought we saw a path and frankly we were on the path to returning the positive traffic in the third and the fourth quarters. And with the shift that we saw in the consumer environment in the middle of the second quarter, it felt right given the trends that we were seeing to pair that back.

Speaker Change: But those are the big three in terms of the EBITDA change.

Speaker Change: So just to clarify the traffic reduction is.

Speaker Change: Is.

Speaker Change: Which is the majority of the difference that youre seeing thats kind of spread evenly across your line items are.

Speaker Change: It's more deleverage in occupancy and other operating expenses.

Todd Brooks: And so I talked about the traffic in our Q3 and Q4 guide in a down 4 to 5 range. So it's a roughly 6% reduction in our traffic expectation and the balance of the year. That's about $15 million of the EBITDA change.

Todd Wilson: And so I talked about the traffic in our Q3 and Q4 guide in a down 4 to 5 range. So it's a roughly 6% reduction in our traffic expectation and the balance of the year. That's about $15 million of the EBITDA change. The other two components I call out, we saw some of the impact in Q2. One is on commodities. Ground beef, chicken and produce have run higher in terms of cost and inflation that we previously expected.

Speaker Change: Theres, certainly deleveraging and those fixed costs as you allude to.

Just to make sure I was clear on that in our prior guidance, we had traffic of roughly plus one and the balance of the year and we're now seeing a more current trend of down four to five we certainly we commented on it in the prepared remarks.

Todd Wilson: Our thought process is if we're going to take the number down, we only want to do it once and then work our way back up. So we certainly hope that that proves to be conservative. But you certainly are seeing the leveraging in the restaurant-level profits from the fixed costs, as you allude to. Got it. That's helpful.

Todd Brooks: The other two components I call out, we saw some of the impact in Q2.

Todd Brooks: One is on commodities. Ground beef, chicken and produce have run higher in terms of cost and inflation that we previously expected.

Speaker Change: We certainly taken approach that we recognize it's obviously a big change our thought process is if we're going to take the number down and we only want to do it once and then work our way back up so we certainly hope that proves to be conservative, but you certainly are seeing the deleveraging in the restaurant level profits.

Todd Brooks: That's about $3 million and we've baked in about $3 million for some of the labor pressures that we saw and that I talked to in Q2 as well.

Todd Wilson: That's about $3 million and we've baked in about $3 million for some of the labor pressures that we saw and that I talked to in Q2 as well. And so there's obviously other puts and takes within the model, but those are the big three in terms of the EBITDA. So just to clarify, the traffic reduction is the majority of the difference that you're seeing that's kind of spread evenly across your line items or it's more of the leveraging in occupancy and other operating expenses.

Jeremy Hamblin: And then just want to understand in terms of the GNA expense on a go forward basis. As you think about that, you know, moving into 2025, how would you assess where you expect that level to be on a continuing basis, assuming that your restaurant base is roughly the same as where it's going to end 24? Yeah, Jeremy, as we think about it right now, and obviously we'll come back with more holistic 25 guidance later this year. But as we think about it right now, you know, if you rewind, we came into this year anticipating roughly $90 million of expense.

Todd Brooks: And so there's obviously other puts and takes within the model, but those are the big three in terms of the EBITDA.

Speaker Change: From the fixed cost as you allude to.

Todd Brooks: So just to clarify, the traffic reduction is the majority of the difference that you're seeing that's kind of spread evenly across your line items or it's more of the leveraging in occupancy and other operating expenses.

Speaker Change: Got it that's helpful. And then just want to understand in terms of the G&A expense on a go forward basis.

Speaker Change: Do you think about.

Speaker Change: That.

Speaker Change: Moving into 2025, how would you assess.

Todd Brooks: It's certainly the leveraging those fixed costs as you allude to just to make sure I was clear on that.

Todd Wilson: It's certainly the leveraging those fixed costs as you allude to just to make sure I was clear on that. In our prior guidance, we had traffic of roughly plus one in the balance of the year and we're now seeing a more current trend of down four to five. We certainly, you know, we commented on it in the prepared remarks. You know, we certainly taken approach that we recognize it's obviously a big change.

Where you expect that.

Speaker Change: At that level to be on a continuing basis.

Speaker Change: Assuming that your.

Todd Brooks: In our prior guidance, we had traffic of roughly plus one in the balance of the year and we're now seeing a more current trend of down four to five.

Speaker Change: Your revenue or your.

Speaker Change: Restaurant base is roughly the same as where it is.

Todd Wilson: Now, some of the favorability in this year's number is due to incentive compensation that we would expect to reload next year, so to speak. But we see more like an $85 million run rate going forward into 2025. Got it. That's helpful.

Speaker Change: And 'twenty four.

Speaker Change: Yes, Jeremy as we think about it right now and obviously, we will come back with with more holistic 25 guidance later this year.

Todd Brooks: We certainly, you know, we commented on it in the prepared remarks.

Todd Brooks: You know, we certainly taken approach that we recognize it's obviously a big change.

Speaker Change: But as we think about it right now if you rewind we came into this year anticipating roughly $90 million of expense.

Todd Brooks: Our thought process is if we're going to take the number down, we only want to do it once and then work our way back up.

Todd Wilson: Our thought process is if we're going to take the number down, we only want to do it once and then work our way back up. So we certainly hope that that proves to be conservative. But you certainly are seeing the leveraging in the restaurant level profits from the fixed costs as you allude to. Got it.

Todd Brooks: So we certainly hope that that proves to be conservative.

Jeremy Hamblin: That's helpful.

Now some of the favorability in this year's <unk>.

Todd Brooks: But you certainly are seeing the leveraging in the restaurant level profits from the fixed costs as you allude to.

Number is due to incentive compensation that we would expect to reload next year, so to speak but.

Jeremy Hamblin: And then just last one is really on the kind of the consumer response here in the loyalty program. Definitely been a shift, I think, across the restaurant category to more value-based options. And, you know, just wanted to get an understanding of how you're thinking about pivoting potentially the lineup of offerings that you have, or potentially LTOs, as we progress through the rest of this year.

Speaker Change: But we see.

Todd Brooks: Got it.

Speaker Change: More like an $85 million run rate going forward into 2025.

Todd Brooks: That's helpful.

Jeremy Hamblin: And then just want to understand in terms of the GNA expense on a go forward basis.

Speaker Change: Got it.

Jeremy Hamblin: As you think about that, you know, moving into 2025, how would you assess where you expect that that level to be on a continuing basis, assuming that your restaurant base is roughly the same as where it's going to end 24?

Speaker Change: That's helpful. And then just last one is really on the kind of.

Speaker Change: Sumer response here in the loyalty program.

Speaker Change: Definitely been a shift I think.

Speaker Change: Across the restaurant category to more value based.

Gerard Hart: Yeah, hey, Jeremy, it's DJ. Well, you know, as we've been going through this year, the real focus around bottomless and 30 bottomless items. And that's really picked up steam, given people really only knew us for bottomless fries. So that's number one. Number two, the Tabernburger, which is a lower price option on our menu today. We've been featuring it, and it's been getting quite distracting as well. And then we are sporadically, you know, we came off of a lot of deep discounting that the company was doing prior to my arrival here and trying to get off of that.

Options and.

Speaker Change: Just wanted to get an understanding of how you're thinking about pivoting potentially the the lineup of offerings that you have or potentially <unk>.

Todd Brooks: Yeah, Jeremy, as we think about it right now, and obviously we'll come back with more holistic 25 guidance later this year. But as we think about it right now, you know, if you rewind, we came into this year anticipating roughly $90 million of expense. Now, some of the favorability in this year's number is due to incentive compensation that we would expect to reload next year, so to speak.

Jeremy Hamblin: Yeah, Jeremy, as we think about it right now, and obviously we'll come back with more holistic 25 guidance later this year. But as we think about it right now, you know, if you rewind, we came into this year anticipating roughly $90 million of expense. Now, some of the favorability in this year's number is due to incentive compensation that we would expect to reload next year, so to speak. But we see more like an $85 million run rate going forward into 2025. Got it. That's helpful.

Speaker Change: As we progress through the rest of this year.

Yeah, Hey, Jeremy It's D J.

Speaker Change: Well.

We've been going through this year, the real focus around bottomless and 30 bottomless items and Thats really picked up steam given people really only newest four bottomless fries. So that's number one number two the tavern Burger which is.

Todd Brooks: But we see more like an $85 million run rate going forward into 2025.

Gerard Hart: And we've done a good job doing that. And then to your point about value now, really focusing on those two items. In addition to that, trying to find some other times, like in the lower or the earlier part of the week, where we do lower volumes. Can we run some promotional activity? We run a $10 two-state that we just rolled out that is doing very well for us. We're doing some add-on promotional activity called Monster Mondays for shakes, margaritas, and that's doing well. So we're sporadically putting that in there. But what we don't want to do is go back to the deep, deep discounting.

Speaker Change: A.

Speaker Change: Lower priced option on our menu today, we've been featuring it and it's been getting quite detraction as well and then we are sporadically.

Jeremy Hamblin: Got it.

Jeremy Hamblin: That's helpful.

Jeremy Hamblin: And then just last one is really on the kind of the consumer response here in the loyalty program.

Speaker Change: We came off of a lot of deep discounting that the company was doing prior to my arrival here and trying to get off of that and we've done a good job doing that and then to your point about value now really focusing on those two items. In addition to that trying to find some other times like in the lower or the URL.

Jeremy Hamblin: Definitely been a shift, I think, across the restaurant category to more value-based options.

Jeremy Hamblin: And, you know, just wanted to get an understanding of how you're thinking about pivoting potentially the lineup of offerings that you have, or potentially LTOs, as we progress through the rest of this year.

G.J. Hart: And, you know, just wanted to get an understanding of how you're thinking about pivoting potentially the lineup of offerings that you have, or potentially LTOs, as we progress through the rest of this year. Yeah, hey, Jeremy, it's DJ. Well, you know, as we've been going through this year, the real focus around bottomless and 30 bottomless items. And that's really picked up steam given people really only knew us for bottomless fries. So that's number one.

Speaker Change: Part of the week, where we do lower volumes.

Speaker Change: Can we run some promotional activity, we run a $10 Tuesday that we just rolled out that is doing very well for us.

Jeremy Hamblin: We think that we are offering quite the value. In fact, our value scores are good at this point. And we are seeing traction, as Todd and I pointed out in the comments earlier that we are seeing a nice lift. So we feel like we're in the right direction and feel like we really are screaming value. Got it.

Speaker Change: Doing some add on promotional activity called Monster Mondays for shakes Margarita is in.

Gerard Hart: Yeah, hey, Jeremy, it's DJ.

Gerard Hart: Well, you know, as we've been going through this year, the real focus around bottomless and 30 bottomless items.

Speaker Change: That's doing well so were sporadically putting that in there, but what we don't want to do is go back to the deep deep discounting. We think that we are offering quite the value impact are our value scores are good at this point and we are seeing traction as Todd and I pointed out.

Gerard Hart: And that's really picked up steam given people really only knew us for bottomless fries.

Gerard Hart: So that's number one.

G.J. Hart: Number two, the Tabernburger, which is a lower price option on our menu today. We've been featuring it, and it's been getting quite distraction as well. And then we are sporadically, you know, we came off of a lot of deep discounting that the company was doing prior to my arrival here and trying to get off of that. And we've done a good job doing that. And then to your point about value now, really focusing on those two items.

Operator: Thanks for taking the questions. Best wishes. Thank you.

Todd Brooks: Next question is coming from Todd Brooks from the Benchmark Company. Your line is now live. Thanks for taking my questions. First on loyalty, if we can. It sounds like the relaunch, outstrip to your expectations, and GJ you've talked about. The loyalty being the key driver of the last piece of the traffic recovery that the brand should experience based on all the work that you've done over the past 18 months. I know we've got a macro level, level overwhelm of some of the benefits in the near term, but if you think about the early performance of loyalty, just what type of contribution do you see that?

Gerard Hart: Number two, the Tabernburger, which is a lower price option on our menu today.

Todd: The comments earlier that we are seeing a nice lift so we feel like we're in the right direction.

Gerard Hart: We've been featuring it, and it's been getting quite distraction as well.

Todd: Feel like we really are a screaming value.

Speaker Change: Got it thanks for taking the questions and best wishes.

Sharon: Thanks Sharon.

G.J. Hart: In addition to that, trying to find some other times like in the lower or the earlier part of the week where we do lower volumes. Can we run some promotional activity? We run a $10 two-state that we just rolled out that is doing very well for us. We're doing some add-on promotional activity called Monster Mondays for shakes, margaritas, and that's doing well. So we're sporadically putting that in there. But what we don't want to do is go back to the deep, deep discounting.

Sharon: Thank you. Your next question is coming from Todd Brooks from the Benchmark Company. Your line is now live.

Todd Brooks: Hey, Thanks for taking my questions.

Todd Brooks: First on loyalty, if we can it sounds like the relaunch.

Jay: Outstripped your expectations and Jay you've talked about.

Jay: Loyalty being the key driver of.

Jay: The last piece of the traffic recovery that the brand should experience based on all the work that you've done over the past 18.

Gerard Hart: Program being to driving traffic as you start to get out to fiscal 25 and beyond.

Jay: 18 months.

Speaker Change: I know, we've got a macro level level overwhelm of some of the benefits in the near term, but you should think about.

Gerard Hart: And then we are sporadically, you know, we came off of a lot of deep discounting that the company was doing prior to my arrival here and trying to get off of that.

Gerard Hart: Yeah, hey Todd, is your question relative to how much of a traffic driver compared to the overall business, or? Yeah, I'm trying to think about, okay, if there's going to be a return to traffic and you've seen improvement in really every metric, operationally and satisfaction-wise. If I start to think about Red Robin specific traffic drivers in 25 versus industry, what do you see that delta being given that the program seems to be outperforming even your initial expectations? Yeah, so yeah, you are right. It is definitely outfacing what we would have expected. We are very, very pleased with that.

Gerard Hart: And we've done a good job doing that.

G.J. Hart: We think that we are offering quite the value. In fact, our value scores are good at this point. And we are seeing traction as Todd, and I pointed out in the comments earlier that we are seeing a nice lift. So we feel like we're in the right direction and feel like we really are screaming value. Got it. Thanks for taking the questions. Best wishes. Thank you.

Gerard Hart: And then to your point about value now, really focusing on those two items.

Speaker Change: The early performance of <unk>.

Gerard Hart: In addition to that, trying to find some other times like in the lower or the earlier part of the week where we do lower volumes.

Loyalty.

Speaker Change: What type of contribution do you see that program being to driving traffic as you start to get out to fiscal 'twenty five and beyond.

Gerard Hart: Can we run some promotional activity?

Todd Brooks: Yeah, Hey, Todd.

Todd Brooks: Is your question relative to how much of a traffic driver compared to the overall business or.

Todd Brooks: Right.

Speaker Change: Yes, Im sorry, Im trying to think about okay, if theres going to be a return to traffic and <unk> seen improvement in really every metric operationally and satisfaction wise.

Todd Brooks: Next question is coming from Todd Brooks from the Benchmark company. Your line is now live. Thanks for taking my questions.

G.J. Hart: First on loyalty, if we can. It sounds like the relaunch, outstrip to your expectations, and GJ you've talked about. The loyalty being the key driver of the last piece of the traffic recovery that the brand should experience based on all the work that you've done over the past 18 months. I know we've got a macro level, level overwhelm of some of the benefits in the near term, but if you think about the early performance of loyalty, just what type of contribution do you see that?

Todd Brooks: If I start to think about red Robin specific traffic drivers and <unk> 25 versus the industry. What do you see that delta being given that the program seems to be outperforming even your initial expectations.

Gerard Hart: We run a $10 two-state that we just rolled out that is doing very well for us. We're doing some add-on promotional activity called Monster Mondays for shakes, margaritas, and that's doing well.

Gerard Hart: We are seeing, as we pointed out, with the kind of membership, the new members with the 130,000 new members signed up that transacted in the last four weeks, that's telling us this is going to be a big portion of our guest recovery perspective. But I was short of putting a number on that, Todd. I will tell you something else is that we've been going out to last users as well. And we're seeing phenomenal take, take back on that as well coming back into the restaurants and course with our overall guest satisfaction scores going up like they have.

Gerard Hart: So we're sporadically putting that in there.

So yes.

Speaker Change: Yes, you are right. It is definitely outpacing what we would've expected. We are very very pleased with that we are seeing as we pointed out with the kind of membership to new members with the 130 130000, new members signed up that transacted in last four weeks, that's telling us this is going to be a big portion of our.

Gerard Hart: But what we don't want to do is go back to the deep, deep discounting.

Speaker Change: Of our guests recovery perspective.

Gerard Hart: We think that we are offering quite the value. In fact, our value scores are good at this point. And we are seeing traction as Todd, and I pointed out in the comments earlier that we are seeing a nice lift.

G.J. Hart: Program being to driving traffic as you start to get out to fiscal 25 and beyond. Yeah, hey Todd, is your question relative to how much of a traffic driver compared to the overall business or? Yeah, I'm trying to think about okay, if there's going to be a return to traffic and you've seen improvement in really every metric operationally and satisfaction wise. If I start to think about red Robin specific traffic drivers in 25 versus industry, what do you see that delta being given that the program seems to be outperforming even your initial expectations?

Gerard Hart: We fully anticipate that that's going to continue to drive guest counts as well. And then, of course, to spend the overall check is higher, as we pointed out, significantly higher. We're very pleased with that. So, for all those reasons, I would tell you that even as bullish as I was before, that I'm more bullish now in terms of how it drives. Is our business. So I'm not giving you the exact, because I don't really have the number, but we fully anticipate it to lead away. Great.

Speaker Change: But.

Short of putting a number on that Todd I will tell you something else is that we've been going out to lapsed users as well and we're seeing phenomenal take take back on that as well coming back into the restaurants and of course with our overall guest satisfaction scores going up like they have we fully anticipate that that's going to continue to drive guest <unk>.

Gerard Hart: So we feel like we're in the right direction and feel like we really are screaming value.

Jeremy Hamblin: Got it.

Speaker Change: As well so.

Jeremy Hamblin: Thanks for taking the questions.

Speaker Change: And of course, the spend that the overall check is higher as we pointed out significantly higher.

Todd Brooks: Thanks, Drew Dre.

Todd Wilson: And then Todd, a follow-up for you, and I'll jump back in cue. Can you walk us through the thinking and the process behind seeking out the amendment? My sense was that it may be out of, like, a focus on real kind of security around liquidity versus need. And can you give us any color? I know you went from a variable pricing grid to a more so-for-plus type of model here. Just a cost of the amendment and maybe where this pushes us out now for a longer term rework to the credit facility. Thanks. Yeah, I appreciate the questions.

Speaker Change: Very pleased with that.

Speaker Change: So for all those reasons.

Speaker Change: All you that even as bullish as I was before that I'm more bullish now in terms of how it drives our business.

Jeremy Hamblin: Best wishes.

G.J. Hart: Yeah, so yeah, you are right. It is definitely outfacing what we would have expected. We are very, very pleased with that. We are seeing, as we pointed out, with the kind of membership, the new members with the 130,000 new members signed up that transacted in last four weeks, that's telling us this is going to be a big portion of our guest recovery perspective. But I was short of putting a number on that Todd.

Operator: Thank you.

Speaker Change: So I am not giving you the exact.

Speaker Change: I don't really have the number but we fully anticipate to lead the way.

Todd Brooks: Next question is coming from Todd Brooks from the Benchmark company.

Todd Brooks: Your line is now live.

Speaker Change: Great. Thanks, T J and then.

Speaker Change: Todd a follow up for you and I'll jump back in queue can you walk us through.

Speaker Change: The thinking and the process behind seeking out the amendment my sense was.

It may be out of line.

Todd Brooks: Thanks for taking my questions.

Our focus on real kind of security around liquidity versus need and can you give us any color I know you went from a variable pricing grid to a more so for plus type of model here just.

Todd Brooks: First on loyalty, if we can.

G.J. Hart: I will tell you something else is that we've been going out to last users as well. And we're seeing phenomenal take, take back on that as well coming back into the restaurants and course with our overall guest satisfaction scores going up like they have. We fully anticipate that that's going to continue to drive guest counts as well. And then of course to spend the overall check is higher as we pointed out, significantly higher.

Todd Wilson: The thinking was a couple of things, Drew, that obviously we saw the change in the consumer in the middle of the second quarter. And I'm sure you have, but for everyone, the credit agreement, as it was structured when we entered into it back in 2022, had progressive step downs in the compliance leverage ratios. And I would point out we were fully in compliance at the end of the second quarter. Obviously, we just executed the amendment yesterday, but it was really those step downs that, as we looked forward, we felt like to make sure that we have the time and the flexibility to let the North Star Plan really play out.

Todd Brooks: It sounds like the relaunch, outstrip to your expectations, and GJ you've talked about.

Speaker Change: The cost of the amendment may be where this pushes us out now for a longer term rework to the credit facility.

Todd Brooks: The loyalty being the key driver of the last piece of the traffic recovery that the brand should experience based on all the work that you've done over the past 18 months.

Todd Brooks: I know we've got a macro level, level overwhelm of some of the benefits in the near term, but if you think about the early performance of loyalty, just what type of contribution do you see that?

Speaker Change: Yeah I appreciate the questions.

Speaker Change: The thinking was a couple of things drove that obviously, we saw the change in the consumer in the middle of the second quarter and I am sure you have but for everyone.

Todd Brooks: Program being to driving traffic as you start to get out to fiscal 25 and beyond.

G.J. Hart: We're very pleased with that. So for all those reasons, I would tell you that even as bullish as I was before, that I'm more bullish now in terms of how it drives, is our business. So I'm not giving you the exact, because I don't really have the number, but we fully anticipate it to lead away.

Todd Brooks: Yeah, hey Todd, is your question relative to how much of a traffic driver compared to the overall business or?

Todd Brooks: Great. Thanks, Drew Dre. And then Todd, a follow-up for you and I'll jump back in cue.

Speaker Change: The credit agreement as it was structured when we entered into it back in 2022 had progressive step downs and the compliance leverage ratios and I would point out we were fully in compliance at the end of the second quarter. Obviously, we just executed the amendment yesterday, but it was it was really those step downs that as we look forward.

Todd Brooks: Yeah, I'm trying to think about okay, if there's going to be a return to traffic and you've seen improvement in really every metric operationally and satisfaction wise.

Todd Brooks: If I start to think about red Robin specific traffic drivers in 25 versus industry, what do you see that delta being given that the program seems to be outperforming even your initial expectations?

Todd Wilson: We wanted to create some room to maneuver there. And so this creates additional room out through the third quarter of 2025, both on covenants and on the revolver. And so that's really what spurred it to really just being proactive to look forward and making sure that we can operate the business and execute the overall plan.

Gerard Hart: Yeah, so yeah, you are right.

Gerard Hart: It is definitely outfacing what we would have expected.

Gerard Hart: We are very, very pleased with that.

Todd Wilson: Can you walk us through the thinking and the process behind seeking out the amendment? My sense was that it may be out of, like, a focus on real kind of security around liquidity versus need. And can you give us any color? I know you went from a variable pricing grid to a more so-for-plus type of model here. Just a cost of the amendment and maybe where this pushes us out now for a longer term rework to the credit facility.

Speaker Change: We felt like to make sure that we have the time and the flexibility to let the North Star plan really play out we wanted to create some room to maneuver there and so this creates additional room out through the third quarter of 2025, both on covenants and on the revolver and so that's really what spurred it really just being proactive to look.

Todd Wilson: And the cost of the asset part, I'm sorry, Todd. Just the cost of the amendment as far as rates go and how it's changing, maybe our timing of reworking the full agreement. Yeah, a few comments there, Todd. You know, we, we, the interest rate does take a tick, tick up. It's always been a variable rate. It was previously plus 650 basis points. This does move us to plus 750, but we felt like that was a market price for the flexibility that we were looking for. In terms of the refinance that we've talked about in the past, you know, we thought of a few things there.

Speaker Change: Forward and making sure that we can operate the business and execute the overall plan.

Speaker Change: And the call forgiven as part.

Todd Brooks: I am sorry, Todd.

Todd Wilson: Thanks. Yeah, I appreciate the questions. The thinking was a couple of things, Drew, that obviously we saw the change in the consumer in the middle of the second quarter. And I'm sure you have, but for everyone, the credit agreement, as it was structured when we entered into it back in 2022, had progressive step downs in the compliance leverage ratios. And I would point out we were fully in compliance at the end of the second quarter.

The cost of the amendment as far as rates go and how it's changing maybe or timing of reworking the formal agreement.

Gerard Hart: We are seeing, as we pointed out, with the kind of membership, the new members with the 130,000 new members signed up that transacted in last four weeks, that's telling us this is going to be a big portion of our guest recovery perspective. But I was short of putting a number on that Todd.

Gerard Hart: I will tell you something else is that we've been going out to last users as well.

Todd Brooks: Yeah, a few comments there Todd.

Todd Brooks: We.

Speaker Change: The interest rate does take a tick tick up it's always been a variable rate. It was previously plus 650 basis points. This does move us to plus 750, but we felt like that was a a market price for the flexibility that we were looking for in terms of the refinance that we've talked about in the past.

Todd Wilson: You know, one while there is a tick up in the rates, we are optimistic that we get some relief in terms of overall interest rates in the base rate. And that that helps to different some of that that cost. And secondary, you know, realistically, the current credit agreement matures in 2027. And so, you know, natural timing both for the improvement in the business that we expect over the coming year, as well as getting ahead of that maturity. We would expect to be doing something next year anyway. And so, we felt like it was a short-term price to pay for the additional flexibility.

Gerard Hart: And we're seeing phenomenal take, take back on that as well coming back into the restaurants and course with our overall guest satisfaction scores going up like they have.

Gerard Hart: We fully anticipate that that's going to continue to drive guest counts as well.

Todd Wilson: Obviously, we just executed the amendment yesterday, but it was really those step downs that as we looked forward, we felt like to make sure that we have the time and the flexibility to let the North Star Plan really play out. We wanted to create some room to maneuver there. And so this creates additional room out through the third quarter of 2025, both on covenants and on the revolver. And so that's really what spurred it to really just being proactive to look forward and making sure that we can operate the business and execute the overall plan.

We thought of a few things there.

Speaker Change: One while there is a tick up in the rate we are optimistic that we get some relief in terms of overall interest rates in the base rates and that that that helps to defray some of that cost and secondary.

Gerard Hart: And then of course to spend the overall check is higher as we pointed out, significantly higher.

Gerard Hart: We're very pleased with that.

Speaker Change: Realistically the current credit agreement matures in 2027, and so natural timing both for the improvement in the business that we expect over the coming year as well as getting ahead of that maturity. We would expect to be doing something next year anyway, and so we felt like it was a short term price to pay for.

Gerard Hart: So for all those reasons, I would tell you that even as bullish as I was before, that I'm more bullish now in terms of how it drives, is our business.

Todd Wilson: Okay, great. Thank you both.

Alex Legal: Thank you. Next question. Today is coming from Alex Legal from Jeffries, you're right. There's not a lot. All right. Thanks. Hey, guys.

Gerard Hart: So I'm not giving you the exact, because I don't really have the number, but we fully anticipate it to lead away.

Todd Wilson: And the cost of the asset part, I'm sorry Todd. Just the cost of the amendment as far as rates go and how it's changing, maybe our timing of reworking the full agreement. Yeah, a few comments there Todd. You know, we, we, the interest rate does take a tick tick up. It's always been a variable rate. It was previously plus 650 basis points. This does move us to plus 750, but we felt like that was a market price for the flexibility that we were looking for.

Gerard Hart: Hey, I want to just kind of ask, I guess, just all the upgrades you've made to the guest experience. And I mean, I realize it's a bit of a stew with so many components, but I mean, what do you think to date? Like, what have been the biggest needle movers for you and then just sort of how to think about the lag before? We see these improved metrics translated into traffic in a bigger way, and I know every turn around sort of different, so it's hard to point to past experience. But, you know, it sounds like you're expecting 20, 25 to be a bit better where things come together. But maybe you can kind of talk through that a little bit.

Todd Brooks: Great.

Speaker Change: The additional flexibility.

Speaker Change: Okay, great. Thank you both.

Todd Brooks: Thanks, Drew Dre.

Speaker Change: Thank you. Your next question today is coming from Alex Slagle from Jefferies. Your line is now live.

Todd Brooks: And then Todd, a follow-up for you and I'll jump back in cue.

Todd Brooks: Can you walk us through the thinking and the process behind seeking out the amendment?

Alex Slagle: Alright, Thanks, Hey, guys.

Todd Brooks: My sense was that it may be out of, like, a focus on real kind of security around liquidity versus need.

Alex Slagle: Hey, Alan.

Todd Brooks: And can you give us any color?

Alan: Good morning.

Alex Slagle: Asking I guess installed the upgrades you've made to the guest experience and I realize it's a bit of a stew with so many components, but what do you think to date.

Todd Brooks: I know you went from a variable pricing grid to a more so-for-plus type of model here.

Todd Wilson: In terms of the refinance that we've talked about in the past, you know, we, we thought of a few things there. You know, one while there is a tick up in the rates, we are optimistic that we get some relief in terms of overall interest rates in the base rate. And that that helps to different some of that that cost. And secondary, you know, realistically, the current credit agreement matures in 2027.

Alex Slagle: What have been the biggest needle movers for you and then just sort of how to think about the lag before we see.

Todd Brooks: Just a cost of the amendment and maybe where this pushes us out now for a longer term rework to the credit facility.

Gerard Hart: Sure. So first of all, I would say that the lag, I don't want to just comment on, you know, we saw, as we pointed out in the first part of the second quarter, comps being more emotionally positive, and then it seemed like around July 5th because we had a good strong July 4th. July the 5th, things sort of fell apart for a while in the industry, and you know, remember all this time, as we pointed out in our comments, we continue to make great improvements. In fact, you know, we're now, you know, continuing to make better improvements against the industry and so, you know, things went a little bit south there from July 5th until really the end of July. Since that time, now we're seeing an uptick from even the beginning so of that quarter. So, you know, and I think that's a reaction of us really continuing to stay the course and to this first part of your question was around what are the ski drivers?

Speaker Change: These improved metrics translate into traffic in a bigger way and I know every turnaround story to a different so it's hard to point to past experience, but yes.

Todd Brooks: Thanks.

Todd Brooks: Yeah, I appreciate the questions.

Speaker Change: Yes, it sounds like Youre expecting 2025 to be.

Todd Wilson: And so, you know, natural timing both for the improvement in the business that we expect over the coming year, as well as getting ahead of that maturity. We would expect to be doing something next year anyway. And so, we felt like it was a short term price to pay for the additional flexibility. Okay, great. Thank you both.

Speaker Change: It better where things come together, but maybe you can kind of talk through that a little bit.

Speaker Change: Sure.

Speaker Change: Bob.

Bob: So first of all I would say that.

Bob: The the lag I'm going to just comment on.

Bob: <unk>.

We saw as we pointed out in the first part of the second quarter comps being marginally positive and then it seemed like around July the fifth because we had a good strong July 4th July 5th things sort of fell apart for a while in the industry.

Alex Legal: Thank you next question. Today is coming from Alex Legal from Jeffries, you're right. There's not a lot. All right. Thanks.

Alex Legal: Hey, guys.

Alex Legal: Hey, I want to just kind of ask, I guess, just all the upgrades you've made to the guest experience. And I mean, I realize it's a bit of a stew with so many components, but I mean, what do you think to date? Like, what have been the biggest needle movers for you and then just sort of how to think about the lag before?

Bob: And remember all this time as we pointed out in our comments we continue to make.

Bob: Great improvements in fact, we're now.

<unk> to make better improvements against the industry.

Bob: So things went.

Bob: A little bit out there from July 5th until really the end of July and since that time now we're seeing an uptick from even beginning so of that quarter. So.

Todd Brooks: The thinking was a couple of things, Drew, that obviously we saw the change in the consumer in the middle of the second quarter.

G.J. Hart: We see these improved metrics translated into traffic in a bigger way and I know every turn around sort of different So it's hard to point to past experience, but you know, it sounds like you're expecting 20, 25 to be a bit better where things come together but maybe you can kind of talk through that a little bit Sure, so first of all, I would say that the the lags I want to just comment on you know, we saw as we pointed out in the first part of the second quarter, comps being more emotionally positive and then it was seemed like around July the 5th because we had a good strong July for July the 5th things sort of fell apart for a while in the industry and you know, remember all this time as we pointed out in our comments, we continue to make great improvements. In fact, you know, we're now, you know, continuing to make better improvements against the industry and so[inaudible] tell you that number one is manager table visits, manager presence, manager being out in the dining room and really helping us control the flow of people which then secondly goes the host stand in terms of false weights are basically non-existent and we continue to see people in a very orderly fashion and they're happy with that.

Gerard Hart: I would tell you there's a whole bunch of them that we pointed out in terms of metrics, but I would tell you that number one is manager table visits, manager presence, manager being out in the dining room and really helping us control the flow of people, which then secondly goes to the host stand in terms of false weights are basically non-existent, and we continue to see people in a very, very orderly fashion, and they're happy with that. So, those two are sort of tied together. The second one is our execution on food on multiple fronts: the quality of delivery of the food and, secondly, the timing of the food.

Bob: And I think that says a reaction of us really continuing to stay the course and to this first part of your question was around what are the key drivers I would tell you.

Bob: There's a whole bunch of them that we pointed out in terms of metrics, but I would tell you that number one is manager table visits manager presence manager being out in the dining room, and really helping us control the flow of people, which then secondly goes to the host stand in terms of.

Gerard Hart: So we're getting food out on time, and the quality is there, as we notice on economic we continue to do very well against the industry, above the industry in terms of overall food quality, so our guests tell us. So we feel like those are the key drivers here that will really move the needle. And I would just go back to the point that, you know, look, we're cautiously optimistic as we go into the third and fourth quarter here with what we're seeing. But as you can imagine, I'm sure we're not the only ones that from July 5th to July 31st it was sort of like, oh shit, squeeze my language, what's happening to this business. So it's, you know, it's changed again.

Speaker Change: False weights basically nonexistent.

Speaker Change: And we continue to see people in a very orderly fashion and they are happy with that so those two are sort of tied together with the second one is our execution on food on multiple fronts to quality of delivery of the food and secondly, the timing of the food.

Todd Brooks: And I'm sure you have, but for everyone, the credit agreement, as it was structured when we entered into it back in 2022, had progressive step downs in the compliance leverage ratios.

Speaker Change: So we're getting food out on time and the quality is there as we as we notice on Technomic, we continue to do very well against the industry well above the industry in terms of overall food quality esol, our guests tell us. So we feel like those are the key drivers here that will really move the needle and I would just go back to the point that.

Gerard Hart: So we're feeling like what we're doing is right, and we feel like that the overall reaction is starting to gain traction here, and these things do take time. It's not like we've been at this forever, and we do feel like that things are taking hold.

Speaker Change: Look we're cautiously optimistic as we go into the third and fourth quarter here with what we're seeing but as you can imagine I'm sure. We're not the only ones that from July to July 31st It was sort of like Oh <expletive> excuse my language, what's happening to this business. So.

Gerard Hart: Hopefully, that's helpful.

Alex Legal: Yeah, that is helpful, and it has been a bit of whiplash for many out there, so good managing to row it. I guess efforts on just removing costs and complexity, and you've highlighted the targeted savings for 24. I know you're always looking for opportunities, but where do you think you'll find the next opportunity out there? Are there certain processes that still look too complex or other big areas of inefficiency that you want to dig into?

Speaker Change: It's changed again, so we're feeling like what we're doing is right.

Speaker Change: Feel like that the.

Speaker Change: The overall reaction is starting to gain traction and these things do take time, it's not like we've been at this forever and we do feel like that things are taken hold hopefully that's helpful. Yes that is helpful and it hasn't yet.

Todd Brooks: And I would point out we were fully in compliance at the end of the second quarter.

G.J. Hart: So those two are sort of tied together. The second one is our execution on food on a multiple fronts, the quality of delivery of the food and secondly the timing. [inaudible] It still looks too complex or other big areas of inefficiency that you want to dig into. Yeah, Alex, I highlighted the actual versus theoretical APERS-T, I'm sure you know that term. We've always had that system. If I'm honest, I don't know that it was his fine tune and that it was his helpful to our operators as it needs to be.

Todd Brooks: Obviously, we just executed the amendment yesterday, but it was really those step downs that as we looked forward, we felt like to make sure that we have the time and the flexibility to let the North Star Plan really play out.

Speaker Change: Been a whiplash for many out there so.

Speaker Change: Good managing through it.

Todd Brooks: We wanted to create some room to maneuver there.

Speaker Change: And.

Speaker Change: Todd I guess efforts on just removing costs and complexity and you highlighted the targeted savings for 24, and I know youre always looking for opportunities but.

Gerard Hart: Yeah, Alex, I highlighted the actual versus theoretical APERS-T. I'm sure you know that term. We've always had that system.

Todd Brooks: Where do you think youll find the next opportunity out there there are certain processes are.

Gerard Hart: If I'm honest, I don't know that it was his fine tune and that it was his helpful to our operators as it needs to be. And that's the work that the operations team, our supply chain team, has done over the last six months to really refine that. So, you know, we think that's a pretty big opportunity. I also comment on the supply chain and just using our scale. But whether it's consolidating vendors, you know, we've talked in the past about our distribution contract that comes up for renewal next year. You know, we've done a really good job, in my opinion, capturing the savings.

Speaker Change: It's still a too complex or other big areas of inefficiency that you want to dig into.

Alex Slagle: Yes, Alex I highlighted the actual versus theoretical Avr's T. I'm sure you know that term.

Alex Slagle: We've always had that system if I may.

Speaker Change: Honest I don't know that it was as fine tune and that it was as helpful to our operators as it needs to be and that's the work that.

Speaker Change: The operations team our supply chain team has done over the last six months to really refine that so we think thats a pretty big opportunity.

Gerard Hart: But I think more importantly to your question, as we look forward, they're still playing in front of us. That well has plenty to continue to produce. And the team's done a great job capturing those things.

I'll also comment on the supply chain and just using our scale, but whether it's consolidating vendors we've talked in the past about our distribution contract that comes up for renewal next year.

Gerard Hart: I would add to Alex, just one more thing, is that I've been taught commented on this from a labor perspective. As you know, we've added a lot of investment back into labor. Well, getting those folks from managers all the way down to hourly team members, both front and back, getting them trained, getting them used to executing at the level that we require and get more proficient at it. That's going to help drive our labor cost to be more efficient and to drive labor cost down. And so we feel like we're better staff than we've been in a long, long time.

Speaker Change: We've done a really good job in my opinion, capturing the savings, but I think more importantly to your question as we look forward, there's still plenty in front of us.

Speaker Change: That well has plenty to continue to produce and the team's done a great job capturing those things.

Todd Brooks: I would add to Alex just one more thing is that Todd commented on this from a labor perspective as you know we've added a lot of investment back into labor, while getting those folks for managers all the way down to hourly team members, both front and back getting them trained getting them used to executing at the level that we require.

Todd Brooks: And so this creates additional room out through the third quarter of 2025, both on covenants and on the revolver.

Gerard Hart: We feel like we've got much better quality staff, and that that will also pay dividends in 2025.

Todd Brooks: And so that's really what spurred it to really just being proactive to look forward and making sure that we can operate the business and execute the overall plan.

Todd Brooks: And the cost of the asset part, I'm sorry Todd.

Todd Brooks: Here and expect and get more proficient at it that's going to help drive our overall labor cost to be more efficient and will drive labor costs down.

Alex Legal: Good point. Thank you.

G.J. Hart: And that's the work that the operations team, our supply chain team has done over the last six months to really refine that. So, you know, we think that's a pretty big opportunity. I also comment on the supply chain and just using our scale. But whether it's consolidating vendors, you know, we've talked in the past about our distribution contract that comes up for Renewal next year. You know, we've done a really good job in my opinion, capturing the savings. But I think more importantly to your question, as we look forward, they're still playing in front of us. That well has plenty to continue to produce. And the team's done a great job capturing those things.

Andrew Wolf: Next question today is coming from Andrew Wolf from CLK.

Todd Brooks: So we feel like.

Andrew Wolf: Your line is not live. Oh, thanks. Good afternoon. I follow up. Well, I want to follow up to the labor question. And I'm just asked, you know, I mean, you know, you staffed up and trained up and, you know, and yet the industry environment, you know, guests aren't coming to the degree expected. So how do you kind of philosophically think about, you know, taking care of the financials for companies as leverage as you guys are and, you know, making sure you don't kind of backslide on labor. Because I think it, you know, it's clearly, you know, obviously things change in the environment.

Todd Brooks: We're better staffed than we've been in a long long time, we feel like we've got much better quality staff and that that will that will also pay dividends into 2025.

Todd Brooks: Just the cost of the amendment as far as rates go and how it's changing, maybe our timing of reworking the full agreement.

Speaker Change: Yeah. Good point thank you.

Speaker Change: Thank you. Your next question today is coming from Andrew Wolf from C. L. King Your line is now live.

Todd Brooks: Yeah, a few comments there Todd.

Todd Brooks: You know, we, we, the interest rate does take a tick tick up.

Andrew Wolf: Thanks, Good afternoon.

Andrew Wolf: A follow up I wanted to follow up to the labor question.

Todd Brooks: It's always been a variable rate. It was previously plus 650 basis points.

Speaker Change: Can I just ask I mean.

Todd Brooks: This does move us to plus 750, but we felt like that was a market price for the flexibility that we were looking for.

You're staffed up and trained up.

Todd Brooks: In terms of the refinance that we've talked about in the past, you know, we, we thought of a few things there.

G.J. Hart: I would add to Alex, just one more thing, is that I've been taught commented on this from a labor perspective. As you know, we've added a lot of investment back into labor. Well, getting those folks from managers all the way down to hourly team members both front and back, getting them trained, getting them used to executing at the level that we require and get more proficient at it. That's going to help drive our labor cost to be more efficient and of drive labor cost down. And so we feel like we're better staff than we've been in a long, long time. We feel like we've got much better quality staff and that that will also pay dividends in 2025. Good point.

Speaker Change: And yet the industry environment.

Speaker Change: No.

Speaker Change: Guests coming to the degree you expect it so how do you.

G.J. Hart: Thank you.

Speaker Change: Kind of philosophically thinking about.

Gerard Hart: So I assume you're tightening up labor a little, but your point, you're now got some trained people who can actually deliver what you want to the guest. So just wondering how you, your puts and takes on that and how much risk you're willing to take on losing good staff versus, you know, the financial side of the thing. Yeah, sure I'll give a shot at that as best I can here. When I said that we fully expect 25 to get better because our folks are trained. Remember one thing: this industry still has 100 plus percent turnover.

Speaker Change: Taking care of the financials for company as Levered as you guys are.

Speaker Change: And.

Speaker Change: Sure.

Hi back slide on labor.

Speaker Change: Because I think it's clearly.

Speaker Change: Obviously things change in the environment, So I assume youre tightening up labor a little but your point you are now got some trained people who can actually deliver what you want to the gas. So I'm just wondering how you.

Speaker Change: Your puts and takes on that and how much risk youre willing to take on losing good staff versus.

Gerard Hart: Even though our turnover continues to come down and we're doing I think really well against the industry from a turnover perspective. You're constantly training. So it's really incumbent upon our training teams, our trading center restaurants, as well as our men. and the managers, all that we put in place, members over 300, kitchen managers in 2023 and now into 2024 that we added on. it takes a while before they get up to speed and that's really where we're going to start to see that leverage. I've been at this a long time, and I'll just tell you that at the end of the day, you have to deliver on the promise to our guests on food quality, execution on hospitality.

Andrew Wolf: Next question today is coming from Andrew Wolf from CLK. Your line is not live. Oh, thanks.

Speaker Change: No.

Speaker Change: The financial side of things.

Andrew Wolf: Good afternoon. I follow up. Well, I want to follow up to the labor question. And I'm just asked, you know, I mean, you know, you staffed up and trained up and, you know, and yet the industry environment, you know, guests aren't coming to the degree expected. So how do you kind of philosophically think about, you know, taking care of the financials for companies as leverage as you guys are and, you know, making sure you don't kind of backslide on labor.

Speaker Change: Yes, sure I'll give a shot at that is.

Speaker Change: As best I can here when I said that weeks fully expect 25 to get better because of our folks are trained remember one thing. This industry still has 100 plus percent turnover, even though our turnover continues to come down and we're doing I think really well against the industry from a turnover perspective youre constantly training so it's really incumbent.

Todd Brooks: You know, one while there is a tick up in the rates, we are optimistic that we get some relief in terms of overall interest rates in the base rate.

Andrew Wolf: Because I think it, you know, it's clearly, you know, obviously things change in the environment. So I assume you're tightening up labor a little, but your point, you're now got some trained people who can actually deliver what you want to the guest. So just wondering how you, your puts and takes on that and how much risk you're willing to take on losing good staff versus, you know, you know, the financial side of the thing.

Todd Brooks: And that that helps to different some of that that cost.

Speaker Change: While our training teams are trading center, our restaurants as well as our managers.

Speaker Change: And the managers with all that we put in place members over 300.

Rich: Rich and managers in 2023.

Todd Brooks: And secondary, you know, realistically, the current credit agreement matures in 2027.

And now into 2024 that we've added on it takes a while before they get up to speed and that's really where we're going to start to see that level of leverage.

Gerard Hart: It takes a certain amount of investment to do that, and the company had really, as you know, when we've talked about, had declined on both of those, and that investment we've put back in. Every metric that we've delivered messages on today are positive signs of a growing business that traffic is going to follow. And again, as I pointed out, you know, that during that short window, mid July to the end of July, we really started to see the uplift, and now we're seeing that again. Hopefully, that will continue. And so we feel like staying; of course, every metric is positive, that as we get better and better at this, that it's the right business decision.

Todd Brooks: And so, you know, natural timing both for the improvement in the business that we expect over the coming year, as well as getting ahead of that maturity.

Rich: I've been at this a long time and.

Todd Brooks: We would expect to be doing something next year anyway. And so, we felt like it was a short term price to pay for the additional flexibility.

Rich: I'll just tell you that at the end of the day you have to deliver on the promise to our guests on food quality execution on hospitality.

Rich: It takes a certain amount of investment to do that and the company had really.

Todd Brooks: Okay, great.

Andrew Wolf: Yeah, sure I'll give a shot at that as best I can here when I said that we fully expect 25 to get better because our folks are trained. Remember one thing this industry still has 100 plus percent turnover. Even though our turnover continues to come down and we're doing I think really well against the industry from a turnover perspective. You're constantly training. So it's really incumbent upon our training teams, our trading center restaurants, as well as our men, and the managers, all that we put in place, members over 300, kitchen managers in 2023 and now into 2024 that we added on, it takes a while before they get up to speed and that's really where we're going to start to see that leverage.

Rich: As you know and we've talked about had declined on both of those and that investment we've put back in every metric that we've delivered.

Todd Brooks: Thank you both.

Rich: Messages on today are positive signs of a growing business that traffic is going to follow and again as I pointed out that during that short window mid July to the end of July.

Operator: Thank you next question.

Alex Legal: Today is coming from Alex Legal from Jeffries, you're right.

Gerard Hart: Now look, at the end of the day, if the world fell apart, of course we were going to think about the world differently. But right now, I've been doing this a long time; I think we're doing the right things. And if I didn't see the signals, like I am with just things like overall satisfaction scores, our team member engagement has, over year over year, is just phenomenal improvements. So we've got a good culture out there; we've got people feeling generally good about what we're doing. They're the ones executing it; our guests are responding with all the positive metrics that they were seeing.

Alex Legal: There's not a lot.

Rich: We really started to see the uplift and now we're seeing that again, hopefully that will continue and so we.

Alex Legal: All right.

Rich: We feel like staying the course every metric is positive that as we get better and better at this that it's the right. The right business decision now look at the end of the day. After oil fell apart of course, we are going to think about the world differently, but right now the newness of long time, I think we're doing the right things and if it wasn't seem to signals like I am.

Alex Legal: Thanks.

Andrew Wolf: I've been at this a long time and I'll just tell you that at the end of the day you have to deliver on the promise to our guests on food quality, execution on hospitality. It takes a certain amount of investment to do that and the company had really, as you know, when we've talked about, had declined on both of those and that investment we've put back in. Every metric that we've delivered messages on today are positive signs of a growing business that traffic is going to follow.

Rich: With just things like overall satisfaction scores.

Gerard Hart: So we think we're doing the right things for the shareholders and for the brand long term.

Rich: Our team member engagement has.

Andrew Wolf: Okay, thank you. I appreciate that explanation.

Alex Legal: Hey, guys.

Andrew Wolf: And again, as I pointed out, you know, that during that short window mid July to the end of July, we really started to see the uplift and now we're seeing that again, hopefully that will continue. And so we feel like staying, of course, every metric is positive that as we get better and better at this, that it's the right business decision. Now look, at the end of the day, if the world fell apart, of course we were going to think about the world differently.

Rich: Year over year is just phenomenal improvements. So we've got a good culture out there we've got people feeling generally good about what we're doing they are the ones executing at our guests are responding with all the all of the positive metrics.

Todd Wilson: And just this might be for Todd, kind of a housekeeping. The 2.2% the content of it from the loyalty change. Is that in the actual sales of the restaurant line? Is that in the $6 million plus number in sale? Yeah, Andy, you're interpreting that right? The rationale that Red Robins always had, I think this makes sense. When the revenue is deferred, it comes out of that line, so to speak. And so when there is breakage, it goes back into that restaurant revenue line. Okay, so it's a pure flow through down to the profits. Correct, that's the right way to think about it.

Gerard Hart: Hey, I want to just kind of ask, I guess, just all the upgrades you've made to the guest experience.

So we think we're doing the right thing for the shareholders and for the brand long term.

Speaker Change: Okay. Thank you I appreciate that explanation and just this might be for kind of a housekeeping the.

Gerard Hart: And I mean, I realize it's a bit of a stew with so many components, but I mean, what do you think to date?

Speaker Change: The two 2% the comp benefit from the.

Speaker Change: The loyalty change.

Speaker Change: Is that in the actual sales rep.

Gerard Hart: Like, what have been the biggest needle movers for you and then just sort of how to think about the lag before?

Speaker Change: The restaurant line was that in the <unk>.

Speaker Change: $6 million plus number.

Andrew Wolf: Yes, Andrew.

Speaker Change: You are interpreting that right the rationale that red Robin has always had and I think this makes sense when the revenues deferred it comes out of that line so to speak.

Todd Wilson: Okay, thank you.

Gerard Hart: We see these improved metrics translated into traffic in a bigger way and I know every turn around sort of different So it's hard to point to past experience, but you know, it sounds like you're expecting 20, 25 to be a bit better where things come together but maybe you can kind of talk through that a little bit Sure, so first of all, I would say that the the lags I want to just comment on you know, we saw as we pointed out in the first part of the second quarter, comps being more emotionally positive and then it was seemed like around July the 5th because we had a good strong July for July the 5th things sort of fell apart for a while in the industry and you know, remember all this time as we pointed out in our comments, we continue to make great improvements.

Mark Smith: Thank you. Next question is coming from Mark Smith from the Street Capital. Your line is that line? Hi guys, first question for me: just housekeeping. Let's just walk us through again the kind of outlook on selling expense this year. And I think he gave some 20, 25 outlook as well. Yeah, Mark, we're still expecting to get right around $38 million on selling. You know, obviously that's if you look at the first half of the year and the second half of the year, it's a step down in terms of run rate in the second half of the year, but that's supported by what GJ walked through in the prepared remarks on the efficiency that the marketing team was able to achieve.

Gerard Hart: In fact, you know, we're now, you know, continuing to make better improvements against the industry and so[inaudible] tell you that number one is manager table visits, manager presence, manager being out in the dining room and really helping us control the flow of people which then secondly goes the host stand in terms of false weights are basically non-existent and we continue to see people in a very orderly fashion and they're happy with that. So those two are sort of tied together.

Andrew Wolf: But right now, I've been doing this a long time, I think we're doing the right things. And if I didn't see the signals like I am with just things like overall satisfaction scores, our team member engagement has over year over year is just phenomenal improvements. So we've got a good culture out there, we've got people feeling generally good about what we're doing. They're the ones executing it, our guests are responding with all the positive metrics that they were seeing. So we think we're doing the right things for the shareholders and for the brand long term.

Speaker Change: So when there is breakage it goes back into that restaurant revenue line.

Gerard Hart: The second one is our execution on food on a multiple fronts, the quality of delivery of the food and secondly the timing.

Andrew Wolf: Okay, thank you appreciate that explanation.

Speaker Change: Okay. So.

Speaker Change: So it's a pure flow through down to.

Speaker Change: Profits.

Speaker Change: Correct, that's the right way to think about it.

Speaker Change: Thank you.

Gerard Hart: [inaudible] It still looks too complex or other big areas of inefficiency that you want to dig into.

Speaker Change: Okay.

Speaker Change: Thank you. Your next question is coming from Mark Smith from Lake Street Capital. Your line is now live.

Gerard Hart: Yeah, Alex, I highlighted the actual versus theoretical APERS-T, I'm sure you know that term.

Mark Smith: Hi, guys first question for me just housekeeping Todd can you just walk us through again, the kind of outlook on selling expense. This year and I think you gave some some 2025 outlook as well.

Gerard Hart: We've always had that system.

Gerard Hart: If I'm honest, I don't know that it was his fine tune and that it was his helpful to our operators as it needs to be.

Todd Wilson: And just this might be for Todd kind of a housekeeping. The 2.2% the content of it from the loyalty change. Is that in the actual sales of the restaurant line? Is that in the $6 million plus number in sale? Yeah, Andy, you're interpreting that right? The rationale that Red Robins always had, I think this makes sense. When the revenue is deferred, it comes out of that line, so to speak. And so when there is breakage, it goes back into that restaurant revenue line. Okay, so it's a pure flow through down to the profits. Correct, that's the right way to think about it.

Andrew Wolf: Okay, thank you.

Speaker Change: Yes, we're still expecting to get right around $38 million on selling.

Todd Wilson: So think of 38 million in terms of total year. And as we think about it now, we think that's probably split pretty evenly between Q3 and Q4. Building though on that, we did share a perspective on 2025 that again, we'll fine-tune this as we get closer to next year, but we see a path to $30 million next year. Again, based on those efficiency learnings that give us confidence that we can still drive traffic based on what we proved in the first half of the year, but at a much more efficient cost.

Speaker Change: Obviously thats if you look at the first half of the year in the second half of the year.

Speaker Change: Step down in terms of run rate in the second half of the year, but that's supported by what G. J walked through in the prepared remarks on the efficiency that the marketing team was able to achieve.

Speaker Change: So think of $38 million in terms of total year and as we think about it now we think that's probably split pretty evenly between Q3 and Q4.

Speaker Change: Building, though on that we did share our perspective on 2025 that again, we'll fine tune. This as we get closer to next year, but we see a path to $30 million next year.

Gerard Hart: Okay, and my second question maybe fits in with that as well. Just as we look at the competitive environment, maybe the other casual diners hitting similar price points, especially in kind of burger, you know, or they're still lovers that you can pull within kind of that marketing to drive that traffic and kind of how are you telling the story and can continue to tell that story to really differentiate, you know, to yourself from, you know, peers that are maybe hitting similar price points. Hey Mark, well, one of the things that we have been working on and talking about is being much more targeted in our communication to our guests.

Mark Smith: Thank you, next question is coming from Mark Smith from the Street Capital, your line is that line? Hi guys, first question for me, just housekeeping. Let's just walk us through again the kind of outlook on selling expense this year. And I think he gave some 20, 25 outlook as well. Yeah, Mark, we're still expecting to get right around $38 million on selling. You know, obviously that's if you look at the first half of the year and the second half of the year, it's a step down in terms of run rate and the second half of the year, but that's supported by what GJ walked through in the prepared remarks on the efficiency that the marketing team was able to achieve.

Speaker Change: Again based on those efficiency learnings that give us confidence that we can still drive traffic based on what we proved in the first half of the year, but at a much more efficient cost.

Speaker Change: Okay.

My second question, maybe fits in with that as well just as we look at the competitive environment, maybe other casual diners hitting similar price points, especially in kind of Burger.

Speaker Change: Are there still levers that you can pull within Canada that marketing.

Speaker Change: To drive that traffic and kind of how are you telling the story and can continue to tell that story to really differentiate.

Gerard Hart: And so, as we revamp the loyalty platform, we now have a better way to communicate on a regular basis to our loyalty members, what's going on, what are the latest LTOs, what's the surprise in the white, all on and on and on. In fact, we longer term want to be very personalized, knowing what they, how they died with us, what their expectations are, and we could be much more targeted. And that's a very efficient way to be able to do it. We continue to be involved in the communities where Robin was built up, being a local store marketer, and we are gaining really, really good traction by being able to communicate.

Speaker Change: Yourselves from.

Speaker Change: Peers that are maybe hitting similar crush plants.

Mark Smith: So think of 38 million in terms of total year. And as we think about it now, we think that's probably split pretty evenly between Q3 and Q4. Building though on that, we did share a perspective on 2025 that again, we'll fine tune this as we get closer to next year, but we see a path to $30 million next year. Again, based on those efficiency learnings that give us confidence that we can still drive traffic based on what we proved in the first half of the year, but at a much more efficient cost.

Speaker Change: Hey, Mark or one of the things that we have been working on and talking about as being much more targeted in our communication.

Speaker Change: To our guests.

Mark Smith: And so as we revamp the loyalty platform, we now have a better way to communicate on a regular basis to our loyalty members, what's going on what are the latest <unk> whats the surprise and delight on and on and on in fact, we longer term, we want to be very personalized knowing what they how they dine with us who want their.

Gerard Hart: It granted, it's a longer term view, but this company has done that well for many, many years, went away from it. We brought it back, and we're seeing great traction there. And of course, as we pointed out in our different media tests, you know, this targeted approach of social digital and search, along with LSM and PR, what's not forget PR because we are getting a lot of PR these days, are all good ways to be able to move the business forward. And so, with the tests, we feel really good about being able to do that.

Mark Smith: Patients are and we can be much more targeted and that's a very efficient way to be able to do it. We continue to be involved in the communities Red Robin was built up in a local store marketer.

Todd Wilson: Okay, and my second question maybe fits in with that as well, just as we look at the competitive environment, maybe the other casual diners hitting similar price points, especially in kind of burger, you know, or they're still lovers that you can pull within kind of that marketing to to drive that traffic and kind of how are you telling the story and can continue to tell that story to really differentiate, you know, to yourself from, you know, peers that are maybe hitting similar price points. Hey Mark, well one of the things that we have been working on and talking about is being much more targeted in our communication to our guests.

Mark Smith: And we are gaining really really good traction by being able to communicate granted it's a longer term view, but this company has done that well for many many years went away from it we brought it back and we're seeing great traction there.

Mark Smith: And of course, as we pointed out in our different media test this targeted approach of social digital.

Gerard Hart: And again, that's the way we're thinking about it today. We'll continue to inform that as we move forward depending on what we're seeing right now, and again point out the fact that we're feeling good about the direction today of what we've seen here in a near term.

Serge: And Serge along with Alice and PR, let's not forget PR, because we are getting a lot of PR. These days.

Gerard Hart: And that's the work that the operations team, our supply chain team has done over the last six months to really refine that.

Serge: Are all good ways to be able to move the business forward.

Gerard Hart: So, you know, we think that's a pretty big opportunity.

Todd Wilson: And so as we revamp the loyalty platform, we now have a better way to communicate on a regular basis to our loyalty members, what's going on, what are the latest LTOs, what's the surprise in the white, all on and on and on. In fact, we longer term want to be very personalized knowing what they, how they died with us, what their expectations are and we could be much more targeted. And that's a very efficient way to be able to do it.

Serge: So with the tests, we feel really good about being able to do that.

Mark Smith: Excellent. Thank you.

And again Thats.

That's the way we're thinking about it today, we will continue to inform that as we move forward depending on what we're seeing right now and again pointed out the fact that we're feeling good about the direction today and what we've seen here in the near term.

Operator: We reshed up our question and answer session, and I just turn the floor back over for you for further closing comments. Well, thank you guys very much for being with us tonight, and we look forward to next quarter and reporting out to you, and appreciate your time today. Thank you.

Gerard Hart: I also comment on the supply chain and just using our scale.

Gerard Hart: But whether it's consolidating vendors, you know, we've talked in the past about our distribution contract that comes up for Renewal next year.

Excellent. Thank you.

Gerard Hart: You know, we've done a really good job in my opinion, capturing the savings.

Todd Wilson: We continue to be involved in the communities where Robin was built up being a local store marketer, and we are gaining really, really good traction by being able to communicate. It granted it's a longer term view, but this company has done that well for many, many years, went away from it. We brought it back and we're seeing great traction there. And of course, as we pointed out in our different media tests, you know, this targeted approach of social digital and search along with LSM and PR, what's not forget PR because we are getting a lot of PR these days are all good ways to be able to move the business forward.

Speaker Change: Thank you we reached end of our question and answer session I'd like to turn the floor back over for any further or closing comments.

Operator: That does conclude today's telecovers, and we disconnect your line up this time and have a wonderful day. We thank you for your participation today.

Speaker Change: Well. Thank you guys very much for being with US Tonight, and we look forward to.

Gerard Hart: But I think more importantly to your question, as we look forward, they're still playing in front of us.

Speaker Change: Next quarter and reporting out to you and appreciate your time today. Thank you.

Gerard Hart: That well has plenty to continue to produce.

Gerard Hart: And the team's done a great job capturing those things.

Speaker Change: Thank you that does conclude today's teleconference. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.

Gerard Hart: I would add to Alex, just one more thing, is that I've been taught commented on this from a labor perspective.

Todd Wilson: And so with the tests, we feel really good about being able to do that. And again, that's the way we're thinking about it today. We'll continue to inform that as we move forward depending on what we're seeing right now and again point out the fact that we're feeling good about the direction today of what we've seen here in a near term.

Gerard Hart: As you know, we've added a lot of investment back into labor. Well, getting those folks from managers all the way down to hourly team members both front and back, getting them trained, getting them used to executing at the level that we require and get more proficient at it.

G.J. Hart: Excellent. Thank you.

Gerard Hart: That's going to help drive our labor cost to be more efficient and of drive labor cost down.

Gerard Hart: And so we feel like we're better staff than we've been in a long, long time. We feel like we've got much better quality staff and that that will also pay dividends in 2025.

G.J. Hart: We reshed up our question and answer session and I just turn the floor back over for you further a closing comments. Well, thank you guys very much for being with us tonight and we look forward to next quarter and reporting out to you and appreciate your time today. Thank you.

Gerard Hart: Good point.

Gerard Hart: Thank you.

Andrew Wolf: Next question today is coming from Andrew Wolf from CLK.

Andrew Wolf: Your line is not live.

Operator: That does conclude today's telecovers and we disconnect your line up this time and have a wonderful day. We thank you for your participation today.

Andrew Wolf: Oh, thanks.

Andrew Wolf: Good afternoon.

Andrew Wolf: I follow up.

Andrew Wolf: Well, I want to follow up to the labor question.

Andrew Wolf: And I'm just asked, you know, I mean, you know, you staffed up and trained up and, you know, and yet the industry environment, you know, guests aren't coming to the degree expected.

Andrew Wolf: So how do you kind of philosophically think about, you know, taking care of the financials for companies as leverage as you guys are and, you know, making sure you don't kind of backslide on labor.

Andrew Wolf: Because I think it, you know, it's clearly, you know, obviously things change in the environment.

Andrew Wolf: So I assume you're tightening up labor a little, but your point, you're now got some trained people who can actually deliver what you want to the guest.

Gerard Hart: So just wondering how you, your puts and takes on that and how much risk you're willing to take on losing good staff versus, you know, you know, the financial side of the thing.

Gerard Hart: Yeah, sure I'll give a shot at that as best I can here when I said that we fully expect 25 to get better because our folks are trained.

Gerard Hart: Remember one thing this industry still has 100 plus percent turnover.

Gerard Hart: Even though our turnover continues to come down and we're doing I think really well against the industry from a turnover perspective.

Gerard Hart: You're constantly training.

Gerard Hart: So it's really incumbent upon our training teams, our trading center restaurants, as well as our men, and the managers, all that we put in place, members over 300, kitchen managers in 2023 and now into 2024 that we added on, it takes a while before they get up to speed and that's really where we're going to start to see that leverage.

Gerard Hart: I've been at this a long time and I'll just tell you that at the end of the day you have to deliver on the promise to our guests on food quality, execution on hospitality.

Gerard Hart: It takes a certain amount of investment to do that and the company had really, as you know, when we've talked about, had declined on both of those and that investment we've put back in.

Gerard Hart: Every metric that we've delivered messages on today are positive signs of a growing business that traffic is going to follow.

Gerard Hart: And again, as I pointed out, you know, that during that short window mid July to the end of July, we really started to see the uplift and now we're seeing that again, hopefully that will continue.

Gerard Hart: And so we feel like staying, of course, every metric is positive that as we get better and better at this, that it's the right business decision.

Gerard Hart: Now look, at the end of the day, if the world fell apart, of course we were going to think about the world differently.

Gerard Hart: But right now, I've been doing this a long time, I think we're doing the right things.

Gerard Hart: And if I didn't see the signals like I am with just things like overall satisfaction scores, our team member engagement has over year over year is just phenomenal improvements.

Gerard Hart: So we've got a good culture out there, we've got people feeling generally good about what we're doing. They're the ones executing it, our guests are responding with all the positive metrics that they were seeing. So we think we're doing the right things for the shareholders and for the brand long term.

Andrew Wolf: Okay, thank you appreciate that explanation.

Andrew Wolf: And just this might be for Todd kind of a housekeeping.

Andrew Wolf: The 2.2% the content of it from the loyalty change.

Andrew Wolf: Is that in the actual sales of the restaurant line?

Todd Brooks: Is that in the $6 million plus number in sale?

Todd Brooks: Yeah, Andy, you're interpreting that right?

Todd Brooks: The rationale that Red Robins always had, I think this makes sense.

Todd Brooks: When the revenue is deferred, it comes out of that line, so to speak.

Todd Brooks: And so when there is breakage, it goes back into that restaurant revenue line.

Todd Brooks: Okay, so it's a pure flow through down to the profits.

Todd Brooks: Correct, that's the right way to think about it.

Andrew Wolf: Okay, thank you.

Mark Smith: Thank you, next question is coming from Mark Smith from the Street Capital, your line is that line?

Mark Smith: Hi guys, first question for me, just housekeeping.

Todd Brooks: Let's just walk us through again the kind of outlook on selling expense this year.

Todd Brooks: And I think he gave some 20, 25 outlook as well.

Todd Brooks: Yeah, Mark, we're still expecting to get right around $38 million on selling. You know, obviously that's if you look at the first half of the year and the second half of the year, it's a step down in terms of run rate and the second half of the year, but that's supported by what GJ walked through in the prepared remarks on the efficiency that the marketing team was able to achieve. So think of 38 million in terms of total year.

Todd Brooks: And as we think about it now, we think that's probably split pretty evenly between Q3 and Q4. Building though on that, we did share a perspective on 2025 that again, we'll fine tune this as we get closer to next year, but we see a path to $30 million next year.

Todd Brooks: Again, based on those efficiency learnings that give us confidence that we can still drive traffic based on what we proved in the first half of the year, but at a much more efficient cost.

Mark Smith: Okay, and my second question maybe fits in with that as well, just as we look at the competitive environment, maybe the other casual diners hitting similar price points, especially in kind of burger, you know, or they're still lovers that you can pull within kind of that marketing to to drive that traffic and kind of how are you telling the story and can continue to tell that story to really differentiate, you know, to yourself from, you know, peers that are maybe hitting similar price points.

Gerard Hart: Hey Mark, well one of the things that we have been working on and talking about is being much more targeted in our communication to our guests. And so as we revamp the loyalty platform, we now have a better way to communicate on a regular basis to our loyalty members, what's going on, what are the latest LTOs, what's the surprise in the white, all on and on and on.

Gerard Hart: In fact, we longer term want to be very personalized knowing what they, how they died with us, what their expectations are and we could be much more targeted.

Gerard Hart: And that's a very efficient way to be able to do it.

Gerard Hart: We continue to be involved in the communities where Robin was built up being a local store marketer, and we are gaining really, really good traction by being able to communicate.

Gerard Hart: It granted it's a longer term view, but this company has done that well for many, many years, went away from it. We brought it back and we're seeing great traction there.

Gerard Hart: And of course, as we pointed out in our different media tests, you know, this targeted approach of social digital and search along with LSM and PR, what's not forget PR because we are getting a lot of PR these days are all good ways to be able to move the business forward.

Gerard Hart: And so with the tests, we feel really good about being able to do that.

Gerard Hart: And again, that's the way we're thinking about it today.

Gerard Hart: We'll continue to inform that as we move forward depending on what we're seeing right now and again point out the fact that we're feeling good about the direction today of what we've seen here in a near term.

Mark Smith: Excellent.

Mark Smith: Thank you.

Operator: We reshed up our question and answer session and I just turn the floor back over for you further a closing comments.

Gerard Hart: Well, thank you guys very much for being with us tonight and we look forward to next quarter and reporting out to you and appreciate your time today.

Operator: Thank you.

Operator: That does conclude today's telecovers and we disconnect your line up this time and have a wonderful day.

Operator: We thank you for your participation today.

Q2 2024 Red Robin Gourmet Burgers Inc Earnings Call

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