Q3 2025 Red Robin Gourmet Burgers Inc Earnings Call
Wanted.
During managements presentation.
David Pace: Thanks, Todd. The progress we've made across all pillars of our first-choice plan gives me confidence that we have the right strategy in place. Our operators are proving every day that efficiency and hospitality can coexist. Our strategic value offering is delivering the expected change in our traffic trends, and we have additional innovations under development for next year. Our data-driven marketing capabilities are being strengthened to position us to compete more effectively, and our restaurant refresh initiatives are being well received by both our team members and our guests. We're not declaring victory, but delivering a sustainable recovery requires a clear strategy, coordinated tactics, an engaged team, and disciplined execution. I've seen personally that our Red Robin team members are up to the challenge.
In addition, we'll be making forward looking statements about the company's business outlook and expectations.
These forward looking statements and all other statements that are not historical facts reflect management's beliefs and predictions as of today and therefore are subject to risks and uncertainties as described in the company's SEC filings.
Management will also discuss non-GAAP financial measures as part of today's conference call.
non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended to illustrate alternative measures of the company's operating performance that may be useful.
Conciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in the earnings release.
The company has posted its third quarter 2025 earnings release on its website at IR, the Red Robin Dot com.
David Pace: Let me close with this: we have more work ahead of us, but we're building momentum with each period, and each quarter, positioning us to create a Red Robin that our guests will choose first, our team members are proud to work for, and our shareholders can rely on for predictable and reliable returns. Before I hand it over to the operator for questions, I want to call out two organizational announcements that we made last week. First, I want to recognize the appointment of Jesse Griffith to Chief Operations Officer. As you heard today, our operations team under Jesse's leadership has been a major contributor to the progress we've seen both financially and with our guests. This is a well-deserved move that is reflective of those contributions. I'd also like to acknowledge Todd's plan to move on to another opportunity in our industry.
Now I'd like to turn the call over to Red Robin's, President and Chief Executive Officer, Dave pace.
Speaker #1: Good afternoon, everyone, and welcome to Red Robin Gourmet Burgers Incorporated's third quarter 2025 earnings call. This conference is being recorded. During the management presentation, you will hear full statements about the company's business outlook and expectations.
Good afternoon, everyone and thank you for your interest in Red Robin.
Just four months ago that we unveiled our first choice plan with a core imperative of establishing Red Robin is the first choice for guests team members and investors.
Today I am pleased to report that in the third quarter, we began to see the early fruit from our efforts.
Speaker #1: Please note that forward-looking statements and all other statements that are not historical facts reflect management's beliefs and predictions as of today and are therefore subject to risks and uncertainties, as described in the company's SEC filings.
During the third quarter, our traffic trends improved sequentially through the quarter supported by the launch of our big young promotion and growth in our off premise business.
Equally encouraging are the continued gains in our four wall operating efficiency and our team's ability to manage the middle of the P&L.
Speaker #1: Management will also discuss non-gap financial measures as part of today's conference call. These non-gap measures are not prepared in accordance with generally accepted accounting principles but are intended to illustrate alternative measures of the company's operating performance that may be useful.
David Pace: During his time with Red Robin, Todd's been an integral part and member of our executive team and has provided great leadership to the finance team and well beyond. His many contributions were greatly appreciated by all of us, and I want to thank him for all that he did and wish him well in his next role. With that, we're now happy to take your questions. Operator, please open the lines. Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press Star and then 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star and then 2 if you would like to remove your question from the queue.
Allowing us to beat our expectations for both restaurant level and corporate profitability during the quarter.
Going forward sustaining and extending this improvement requires continued execution across all aspects of our first choice plan.
Speaker #1: Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in the earnings release. The company has posted its third quarter 2025 earnings release on its website at ir.redrobin.com.
The momentum we're building reinforces my belief that we're on the right track to deliver on our goal to be the first choice for guests team members and investors.
With that let me share more detail on our progress and how we're building momentum as we move forward with this first choice plan.
Speaker #1: Now, I'd like to turn the call over to Red Robin's President and Chief Executive Officer, Dave Pace.
First let's start with hold serve.
Our operators have continued to raise the bar on performance during the quarter. Our team once again delivered labor results that beat our internal expectations.
Speaker #2: Good Good afternoon, everyone, and thank you for your interest in Red Robin. It was just four months ago that we unveiled our first-choice plan with a core imperative of establishing Red Robin as the first choice for guests, team members, and investors.
David Pace: For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the Star key. One moment, please, while we poll for questions. The first question comes from Jeremy Hamblin from Craig-Hallum. Please proceed with your questions, Jeremy. Thanks, and congrats on the strong results. I wanted to start with just some of the commentary around the Big Yum initiative and where it's mixing, just to get a sense for where that's mixing as a portion of sales. As you talked about, a little bit of an uptick here in food and beverage costs, to get a sense if you expect that to kind of stabilize in this current range or, given a little bit of pressure on beef prices as well, we should be expecting that to pick up a little bit here going forward. Yeah, thanks, Jeremy. Two parts.
It's important to point out that we're achieving this efficiency gain while maintaining guest satisfaction scores at the improved level, we established last year.
Speaker #2: Today, I'm pleased to report that in the third quarter, we began to see the early fruit from our efforts. During the third quarter, our traffic trends improved sequentially through the quarter, supported by the launch of our Big Yum promotion and growth in our off-premise business.
This demonstrates that efficiency and hospitality are not mutually exclusive and our ops team is proving every day that we can deliver both.
The numbers also tell the story.
The increased efficiency, we achieved in the third quarter drove a 90 basis point improvement year over year in restaurant level operating profit almost entirely driven by improvements in labor.
Speaker #2: Equally encouraging are the continued gains in our four-wall operating efficiency and our team's ability to manage the middle of the P&L. Allowing us to beat our expectations, for both restaurant level and corporate profitability during the quarter.
These efficiency gains are being accomplished through a healthy blend of process changes analytics and technology combined with the entrepreneurial spirit of our operators, who are finding new ways to work smarter and more efficiently.
Speaker #2: Going forward, sustaining and extending this improvement requires continued execution across all aspects of our first-choice plan. The momentum we're building reinforces my belief that we're on the right track to deliver on our goal to be the first choice for guests, team members, and investors.
While refusing to compromise the guest experience.
Our managing partner program also ensures that our partners see the benefits of their efforts and increased compensation as they share in the gains that they are achieving in their restaurants.
Speaker #2: With that, let me share more detail on our progress and how we're building momentum as we move forward with this first-choice plan. First, let's start with hold serve.
As we turn to our drive traffic initiative I want to reemphasize that we are committed to creating sustainable traffic growth that is rooted in improvements across all of the relevant consumer touch points, including compelling value for the guest.
David Pace: I'll let Todd answer the second part. The first point about mix: the Big Yum deal's mixing at about 8% of our total sales. We feel pretty good about that. That's kind of where we expected it to come in from a mix standpoint, but it's definitely having the impact that we had hoped it would. Yeah. Hey, Jeremy, on the second part of your question, just overall cost of goods, beef is certainly the most inflationary part of our basket right now. We do think the 25% that we saw in Q3, we think that's the right guide for Q4 as well. The team, we've got different measures that we're putting in place to mitigate that beef inflation, so we think we can hold that 25% through Q4. Great.
Speaker #2: Our operators have continued to raise the bar on performance. During the quarter, our team once again delivered labor results that beat our internal expectations.
Speaker #2: It's important to point out that we're achieving the sufficiency gain while maintaining guest satisfaction scores at the improved level we've established last year. This demonstrates that efficiency and hospitality are not mutually exclusive, and our ops team is proving every day that we can deliver both.
Delivering on our commitment of food quality, and great taste, and a welcoming hospitable and fun environment.
As I outlined on our last call. Our plan is to build traffic driving layers and I'm pleased with our progress.
In addressing these elements of our plan our first priority was to address our competitive positioning and price point value offers.
Speaker #2: numbers also tell the story. The increased efficiency we achieved in the third quarter drove a 90 basis point improvement year over year in restaurant-level operating profit, almost entirely driven by improvements in The labor.
The Red Robin Big Dr. Berger deal that we launched at the beginning of the third quarter has performed above our expectations.
Resulting in an approximately 250 basis point sequential traffic improvement from the second quarter to the third quarter.
David Pace: Just switching gears a bit here, I wanted to understand the cost of getting the amendment to your current debt agreement, getting that extension to September 2027. What was the financial cost of that, getting the extra six months? Secondly, related to the refranchising efforts, to get a sense for how that initiative is progressing and what valuations are looking like. If you have maybe a better sense, I think you called out initially 25 to 75 potential locations. If you have winnowed that down a bit more, or what other color you might be able to share with us. Yeah. Let me take that, and I'll let Todd kind of pile on here in a sec.
Speaker #2: These efficiency gains are being accomplished through a healthy blend of process changes and analytics and technology, combined with the entrepreneurial spirit of our operators who are finding new ways to work smarter and more efficiently while refusing to compromise the guest experience.
More specifically, we entered Q3 with a traffic run rate of approximately down 7%.
And we exited the quarter with that run rate at approximately negative one 4%. A result that we are extremely pleased with.
Speaker #2: Our managing partner program also ensures that our partners see the benefits of their efforts in increased compensation, as they share in the gains that they are achieving in their restaurants.
Our big Yum deal resonated strongly with our midweek dining occasions, particularly the lunch day part and delivers on our commitment to provide our guests the gift of time.
Speaker #2: As we turn to our drive traffic initiative, I want to re-emphasize that we're committed to creating sustainable traffic growth that is rooted in improvements across all of the relevant consumer touchpoints including compelling value for the guest, delivering on our commitment of food quality and great taste, and a welcoming, hospitable, and fun environment.
On average, we're delivering a complete dining experience in under 45 minutes.
This promotion delivers exactly what we were looking for immediate market relevance and trial generation to.
To build on this momentum our team remains hard at work on new menu innovations to accelerate our competitive positioning and price point value offers and we look forward to sharing updates on our future calls.
Speaker #2: As I outlined on our last call, our plan is to build traffic driving layers, and I'm pleased with our progress. In addressing these elements of our plan, our first priority was to address our competitive positioning in price point value offers.
David Pace: In terms of the extension, it was a 50 basis point cost to us to extend for that period of time, so we thought that was reasonable given what we were looking to do and why we wanted to do it. Regarding the second point about refranchising, I guess what I'd say to you, Jeremy, is everything is going as we had expected and hoped on refranchising, so the available number of restaurants that there's interest in is in the range that we communicated originally. We have indications of interest, specific proposals put forward that we haven't really negotiated against yet. We're still in the middle of kind of vetting and kind of getting to know who's who. It is moving ahead. As I said in the remarks, it's an option for us.
That brings us to our second traffic driving layer during the third quarter, we launched our data driven marketing initiative, incorporating micro targeting capabilities that will allow us to engage guests more personally precisely and efficiently than traditional broad based messaging.
Speaker #2: The Red Robin Big Yum Burger deal that we launched at the beginning of the third quarter has performed above our expectations, resulting in an approximately 250 basis point sequential traffic improvement from the second quarter to the third quarter.
This approach to marketing is intended to more efficiently and effectively reach guess, allowing us to level, the playing field against larger more resource competitors.
Speaker #2: More specifically, we entered Q3 with a traffic run rate of approximately down 7%, and we exited the quarter with that run rate at approximately negative 1.4%, a result that we're extremely pleased with.
These unique and internally developed algorithms help us understand guest decision, making behaviors and as a result allow us to specifically target messaging and promotion in ways that resonate more directly with each guest.
Speaker #2: Our Big Yum Deal resonated strongly with our midweek dining occasions, particularly the lunch day part, and delivers on our commitment to provide our guests the gift of time.
During our initial rollout of this approach we saw outsized improvements in traffic and sales for the initial cohort of prioritized restaurants, and we do plan to expand our reach to more of our restaurants each period.
David Pace: I mean, we're going to kind of toggle all these options to figure out the best combination as we move forward on the refinancing and the whole strengthening of the balance sheet. Refranchising's still one of those options. I'd say we're where we had thought we would be, but nothing firm to announce beyond that right now. Todd, do you want to add anything? No, I think that I'd just reiterate those points. Refranchising an option, it was, I think, a good thing for the business to get the fortress amendment or the amendment with our lender across the finish line. It gives us the time to really vet through those other options and make sure we maximize value, as Dave said on the call. A good progress for us. Great. Congratulations, Todd. Best wishes on the next part of your journey. Thanks, Jeremy. Really appreciate it.
Speaker #2: On average, we're delivering a complete dining experience in under 45 minutes. This promotion delivers exactly what we were looking for: immediate market relevance and trial generation.
In addition to the progress we've seen within the four walls of the restaurant. We've also seen a dramatic increase in our off premise business driven largely through a significantly expanded approach to catering.
Speaker #2: To build on this momentum, our team remains hard at work on new menu innovations to accelerate our competitive positioning in price point value offers and we look forward to sharing updates on our future calls.
The off premise portion of our business represents approximately 25% of sales in the third quarter and delivered traffic growth of two 9% a signal that our guests love, our food and want to enjoy it in more places and just the dining room.
Speaker #2: That brings us to our second traffic driving layer, during the third quarter, we launched our data-driven marketing initiative, incorporating micro-targeting capabilities that will allow us to engage guests more personally, precisely, and efficiently than traditional broad-based messaging.
We expect to continue to aggressively grow this segment of our business as we move forward.
Next is our find money initiative.
I am pleased to report another quarter, where adjusted EBITDA beat our expectations, which continues to reinforce our confidence in the operational improvements we've implemented.
Speaker #2: This approach to marketing is intended to more efficiently and effectively reach guests allowing us to level the playing field against larger, more resourced competitors.
In addition, thanks to our corporate efficiency initiatives, we continue to expect between $3 million to $4 million benefit in G&A in 2025, with a $10 million run rate expected to be achieved in 2026.
David Pace: Thank you. The next question comes from Todd Brooks from The Benchmark Company. Please proceed with your questions, Todd. Hey, thanks for taking my questions. I'll echo Jeremy's congratulations, Todd, and also Jesse. I assume you might be in the room. Congrats on the promotion to COO, well deserved. Thank you, Todd. Wanted to lead off and thanks for dimensionalizing kind of that entry and exit traffic run rate for the business, Dave. I think Big Yum was launched third week of July, so not even a full quarter's worth of impact. I know you had spoken about working against things like upsell and kind of coaching up the front-of-house teams, how to sell the product. The mix looked pretty benign and only down 10 basis points.
Speaker #2: These unique and internally developed algorithms help us understand guest decision-making behaviors and, as a result, allow us to specifically target messaging and promotions in ways that resonate more directly with each guest.
These savings are critical as we balance our investment priorities with delivering profitability.
Speaker #2: During our initial rollout of this approach, we saw outsized improvements in traffic and sales for the initial cohort of prioritized restaurants and we plan to expand our reach to more of our restaurants each period.
Regarding our capital structure, we're exploring all elements that I discussed when I introduced our first choice plan.
This includes taking a comprehensive and proactive approach through multiple initiatives to give us optionality as we work to strengthen our balance sheet and position the company for long term success.
We've launched four primary tactics to accomplish this.
First as part of this process, we announced today a six month extension to the term of our current credit agreement.
David Pace: I guess kind of coming out of Q3, and I know you talked about a wiggle down here to start the quarter, but unlocking the Big Yum and the traffic benefit from it, my sense is there's still some fruit in front of us to drive further improvement from it? Yeah, we think there is. We think there are ways to even expand the impact of Big Yum even further, which we're working on. I think you're right. It wasn't a full quarter. It wasn't day one. It was probably three weeks, and that's probably about right, what you said. We feel good about it. It did what we had hoped it would do. It got traffic. It gave people a reason to come in. It got trial again. From a tactical standpoint, it did what we had hoped to do.
With the loan now maturing in September of 2027 as compared to March of 2027 previously.
This extension provides helpful time to optimize the value of the other efforts.
Second we have engaged Jefferies to assist us in refinancing our debt to further optimize our capital structure.
Jefferies as an industry leader in this space and we expect to work quickly and effectively with them to deliver a successful outcome on this effort as soon as practicable.
Third today, we announced the establishment of an at the market or ATM program, which allows us to sell up to $40 million in equity open market transactions.
While we may or may not execute against this option. We put this in place. So that we have the option to generate funds if needed and to be in a position to move quickly where we may see compelling opportunities.
David Pace: Beyond that, I would tell you we're taking a much more strategic look at the entire menu and how we package it together. That's some of the pretty substantial work that's going on, which includes Big Yum and beyond. I think you'll see more. I do think there's more there. There was a little wobble coming into the quarter. For us, and I'm sure you know this, the way the fourth quarter plays out for us, October is the softest month. November picks up a little bit, starts to pick up momentum, and then December is when we really make hay. For us, we consciously shifted marketing spend from October to the back end. A little bit of it was a pullback in marketing spend purposely to backload fish when the fish are or the fish are. Great. Great.
Fourth is our Refranchising effort, we continue to have great interest and engagement from both existing and potential new franchisees developed through our partnership with Brookwood Associates. We are encouraged by the level of interest in our brand and we remain committed to a thoughtful process that maximizes value for our shareholders.
In both the short and long term.
Refranchising is yet another important option to have in our tool belt as we optimize our overall financing structure and work to strengthen our balance sheet.
We will continue to share updates as these projects progress.
Supported by the gains we've seen in our operating results through the first three quarters of the year. We believe these actions will provide us with the options and flexibility to create the best long term financing structure for Red Robin while also assisting us with resources to reinvest in the business.
David Pace: Just one follow-up there. What do you feel or what are you hearing from customers about the importance of having an everyday value platform now instead of having it be appointment dining? How important has that been in what you're hearing in feedback? I think we're seeing, look, it resonates with the guest, and it resonates, as we said, in the kind of early week, midweek, and lunch day parts. The value offering, Todd, I think, is a slightly different occasion from the weekend offering in that weekends are date night, and that's when people go out. Early week, lunch, they're kind of looking for a value opportunity to utilize us. It's part of the thing that we're working on. We think there's opportunity, but there's opportunity in the way we use it and when we use it. I don't think it's going to change.
Next let me provide you with an update to our fixed restaurant's efforts.
As I mentioned on our last call, we identified the need to invest in critical deferred maintenance to better align our restaurant atmosphere with competitive standards.
I am pleased to report that we successfully completed refreshes and 20 restaurants across four markets during the third quarter.
As a reminder, these are relatively light touch refreshes from a capital perspective, and not full re imaging projects, averaging approximately $40000 per refresh in the third quarter.
We prioritize these investments by targeting areas that we believe will directly benefit the guest experience.
This includes flooring updates internal finishings furniture repairs and lighting, coupled with exterior improvements, including signage paint lighting and landscaping all of which will directly benefit guest perception and experience.
David Pace: I do think it's going to be every day. I don't see us kind of limiting it back to certain days of the week. The reality is it does have an impact on some parts of the week more than others. Great. Dave, you also mentioned the data-driven marketing efforts and the fact that you had kind of a cohort of stores that maybe are a little bit more challenged where you saw a really outsized improvement, I think, was your actual words from these efforts. Can you talk about any way to dimensionalize the traffic improvement from the effort? You talked about a path to expand this further. Can you maybe walk us through what that looks like going into 2026? Yeah.
While results are still early we're already seeing measurable improvements in both sales and traffic performance at these 20 locations.
These results further support our thesis that well executed improvements that enhance the guest's first impression and overall dining atmosphere can deliver deliver measurable results relatively quickly.
The success of these actions has helped us fine tune our investment priorities as we look to expand the number of restaurants that we can touch.
Our goal is to offer an environment that matches the quality of food and hospitality that our teams deliver every day.
And we will continue to take a disciplined approach as we expand this initiative further across our system.
David Pace: I mean, because of the way this is set up, Todd, this is a very—and I've said this, and I've tried to kind of be as clear as I can on this, but it is a hyper-micro-targeted approach where we get into the individual restaurant and we get into the individual guests. We understand the trade area, we understand the makeup of it, we understand what pulls people in. Is it a value play, or is it a premium burger play? What is the reason for people making the shift? We can get that information down to a highly targeted level. As we went into the first cohort, as I said, we started with some. We learned as we went into this that, oh, maybe value resonates with this group, but it doesn't resonate with that group.
Lastly, let me briefly touch on our wind together plan.
As I've continued to travel the country visiting our restaurants and meeting with restaurant teams.
Im hearing increasingly positive feedback from our team members.
We see that we're delivering on the promises we made earlier this year.
Wanted to value offering and we delivered the big Yum deal.
They asked for help addressing longstanding maintenance and repair issues and we successfully refreshed 20 restaurants during the quarter with more to come.
They asked for a better technology and tools to execute more efficiently and we're continuing to rollout additional technology with more planned ahead.
It's encouraging to see that our team is embracing our guest centric culture and when combined with the strength of our operating results. We believe it is prudent to modestly raise our capex guidance for the year as we further accelerate some of these key initiatives that directly support our team members and their ability to deliver a great guest.
David Pace: Let's focus on more of a premium burger or maybe a different set of messaging. Geez, that seems to resonate more with this group. Let's kind of plus up that messaging in this cohort, plus up the value messaging in another cohort. We're kind of generating the knowledge base that we can then cluster and figure out how to deploy messaging and promotions on a highly micro-targeted basis. I mean, I'm trying to explain this without kind of showing you, but that's where we're going with that. Anyway, we started with that. We saw performance, and I'll let Todd kind of pile on top of this above the performance of the rest of the system. As we've gone out, we started with, I think, 50 restaurants. We expanded beyond. We're probably at—we got to 130.
These results further support our thesis that well-executed improvements that enhance the guests' first impression and overall dining atmosphere can deliver measurable results relatively quickly.
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Encouragingly, we've continued to see our team member turnover rates come down each period to a point, where we are now at levels below industry benchmarks.
The success of these actions has helped us fine-tune our investment priorities. As we look to expand the number of restaurants that we can touch
our goal is to offer an environment that matches the quality of food and Hospitality that our teams deliver every day,
As we look ahead, we believe this collaborative team approach will further strengthen our culture and position us favorably to attract and retain the best talent in the industry.
And we'll continue to take a disciplined approach as we expand this initiative further across our system.
Lastly, let me briefly touch on our Wind Together plan.
The almost 20000 Red Robin team members across the country I want to extend a heartfelt. Thank you for your dedication and hard work I'm proud of what we've accomplished so far and excited about what's still to come.
As I've continued to travel, the country visiting our restaurants and meeting with restaurant teams.
With that Todd will now review, our third quarter results.
David Pace: We're looking at kind of walking that out further as we get the data. The intention is to expand that across the system. How quickly we get there, we're going as quick as we can. Hey, Todd, I'll just tag on quickly here to expand on the point of the over 100 restaurants that the team's been focused on. Sequentially, there's been a significant improvement in traffic trends in those restaurants to the point that in many weeks—obviously, we're looking daily, weekly, long-term—but in many weeks and many periods, we're seeing that those restaurants are delivering positive traffic on a year-over-year basis. That's ultimately where we want to be. Now it's just a matter of, hey, we found a playbook that works in those 100 plus, and we'll work to expand that to the other restaurants, obviously. Okay. Great.
I'm here, increasingly positive feedback from our team members who see that we're delivering on the promises we made earlier this year.
Thank you, Dave and good afternoon, everyone in the third quarter total revenues were $265 1 million versus $274 6 million in the third quarter of fiscal 2024.
They wanted a value offering and we delivered the big, yum deal.
They asked for help addressing long-standing maintenance and repair issues and we successfully refreshed 20 restaurants during the quarter with more to come.
Comparable restaurant revenue beat our expectations for the quarter and are in line with last week's announcement at a decline of one 2%.
This result includes a one 7% increase in net menu price offset by a 3% decline in guest traffic.
Guest traffic trends improved sequentially through the quarter and delivered a 250 basis point trend improvement as compared to the second quarter.
It's encouraging to see that our team is embracing our guests Centric culture. And when combined with the strength of our operating results, we believe it's prudent to modestly. Raise our capex guidance for the year as we further accelerate. Some of these key initiatives that directly support our team members and their ability to deliver a great guest experience.
This improvement to the success of our Big Yawn Burger deal that launched in July and continued traffic strength in our off premise business.
David Pace: I'll wrap it up into one final question. If you take the traffic driving benefit of the Big Yum and you take the early success with the data-driven marketing, Dave, as you're thinking out to 2026, I think year to date, there's maybe been 17 restaurant closures. Thoughts on stability of the base and maybe improving kind of that bottom decile or bottom quartile of stores with the early success that you're seeing from these two initiatives? Thanks. Yeah. Good question. No question we're seeing it. No question our ops team is focused on these target restaurants to try and see. We're not in the business of closing restaurants. We're trying to keep them open and run them and make money, which we've moved a number of them kind of off the watch list, back performing where we want them to be.
Encouragingly, we've continued to see our team member turnover rates. Come down each period to a point where we're now at levels below industry benchmarks.
Restaurant level operating profit as a percentage of restaurant revenue was nine 9% an increase of 90 basis points compared to the third quarter of 2024.
As we look ahead, we believe this collaborative team approach will further strengthen our culture and position us favorably to attract and retain the best talent in the industry.
This was driven by the continued success of our operations team delivering significant gains in labor efficiency.
I would also note while cost of goods increased due in part to beef inflation that we anticipated our commitment to deliver value for the guest is also reflected with this increase with the goal that this value ultimately contributes to delivering increasing guest traffic.
To the almost 20,000 Red, Robin team members across the country. I want to extend a heartfelt. Thank you for your dedication and hard work.
I'm proud of what we've accomplished so far and excited about what's still to come.
With that Todd will now review our third quarter results.
General and administrative costs were $16 9 million as compared to $28 million in the third quarter of 2024.
Thank you, Dave, and good afternoon. In the third quarter, total revenues were $265.1 million versus $274.6 million in the third quarter of fiscal 2024.
David Pace: There's still some, as there always is, that aren't quite there yet. We'll give it a shot with them. There's probably going to be a subset of additional closures, but the list is far, far shorter than what we had talked about previously. That's great. Congrats on the progress. Thanks, Todd. Thank you. The next question comes from Mark Smith from Lake Street Capital. Please proceed with your questions, Mark. Hi guys. I just wanted to dig in a little bit more on menu mix and kind of check dynamics and consumer behavior. Big Yum seemed to mix well. Can you talk about kind of other parts of the menu, beverages, desserts, people sharing meals? Curious to hear what you're seeing in consumer behavior kind of during the quarter and even post-quarter. Hey, Mark, Todd here. I'll start. You mentioned, I think others have as well.
The reduction is primarily due to not holding a partner conference event in 2025 as we did in 2024.
Comparable restaurant Revenue, beat our expectations for the quarter and are in line with last week's announcement at a decline of 1.2%.
In 2020 for this cost was mostly offset with vendor contributions credited to other parts of the income statement.
1 percent increase in net menu. Price offset by a 3% decline in guest traffic.
Selling expenses were $6 8 million, an increase as compared to $5 5 million in the third quarter of 2024.
The increase is primarily due to additional investment in third party delivery platforms and other channels.
Adjusted EBITDA was $7 $6 million in the third quarter of 2025, an increase of $3 $4 million versus the third quarter of 2024.
We attribute this Improvement to the success of our big. Yum Burger deal that launched in July and continued traffic strength in our off-premise business.
Adjusted EBITDA increased due to cost efficiency gains, particularly in labor and the benefit of menu price increases.
Restaurant level operating profit. As a percentage of restaurant Revenue was 9.9% an increase of 90 basis points. Compared to the third quarter of 2024
This was driven by the continued success of our operations, team delivering, significant gains in labor, efficiency.
We ended the third quarter with $21 $7 million of cash and cash equivalents $9 2 million of restricted cash and $29 million available borrowing capacity under our revolving line of credit.
David Pace: We were pleased with the mixed outcome. Going into the quarter, we thought the impact of the Big Yum deal may have resulted in more of a mixed impact than we saw. Part of that is a credit to our operators. We've given the guests trade-off options, and in many cases, they have taken those, right? Many people are getting the value in the $9.99 deal, but others are trading up to add toppings, add beverages, those types of things. That helps support the overall check. In terms of other dynamics, one of the areas we always look at, add-on type trends in terms of appetizers, desserts, beverages, we've seen those hold steady. We think that's a good thing for us in this environment where we see the headlines that maybe consumers are managing their wallets a little bit more. We've seen those areas hold up.
I would also note while cost of goods increased due in part to beef inflation that we anticipated our commitment to deliver value. For the guests is also reflected with this increase with the goal that this value ultimately contributes to delivering increasing guest traffic.
Turning to our outlook, we will now provide the following guidance for 2025.
First total revenue of approximately $1 $2 billion is unchanged from our prior guidance. This.
General and administrative costs were 16.9 million as compared to 20.8 million in the third quarter of 2024.
This incorporates expectations that comparable restaurant sales will decline approximately 3% in the fourth quarter and we will end 2025 with 386 company owned restaurants in operation.
The reduction is primarily due to not holding a partner conference event in 2025, as we did in 2024.
Second restaurant level operating profit at least 12, 5% as compared to our prior guidance of 12% to 13%.
Selling expenses were 6.8 million and increase as compared to 5.5 million in the third quarter of 2024.
Third we now expect adjusted EBITDA of at least $65 million as compared to $60 million to $65 million previously.
The increase is primarily due to additional investment, in third-party delivery platforms and other channels.
David Pace: The mix that we saw, we did report, obviously, a little bit of a negative mix. Some of that was the Big Yum. Some of that is a mathematical phenomenon, I'll say, of the growth in our catering business that Dave referenced. That comes at a lower PPA, and there is just a natural dilutive effect there as that part of our business grows. We're seeing stability in appetizers, desserts, beverages, with some of the add-ons helping to mitigate the impact of the lower price point on Big Yum. Yeah, Mark, I would just add, I think I agree with everything Todd said. I think the other thing I would offer is we learned a lot going through this Big Yum deal, and we learned a lot about mix and consumer behaviors and what resonates on our menu and what we may want to look at further.
Finally, we now expect capital expenditures of approximately $33 million as compared to approximately $30 million previously as we continue to execute against the first choice plan and make investments back into our restaurants and technology.
Adjust the deba was 7.6 million in the third quarter of 2025 an increase of 3.4 million versus the third quarter of 2024.
Adjusted EBA increased due to cost efficiency gains, particularly in labor, and the benefit of menu price increases.
As added commentary on our guidance I would note the following points.
In recent weeks, we have seen guest traffic trends slow from where we exited the third quarter we.
We attribute this to intentional timing shifts in our marketing spend and the consumer impact of the government shutdown.
We ended the third quarter with 21.7 million of cash and cash equivalents 9.2 million of restricted, cash and 29 million available. Borrowing capacity, under our revolving line of credit.
Our guidance is grounded and expectation for both traffic and comparable restaurant sales to decline approximately 3% in the fourth quarter.
Turning to our Outlook. We will now provide the following guidance for 2025.
We are optimistic traffic trends will regain traction as our marketing spend levels increase and the remainder of the quarter.
David Pace: We're doing a lot of menu work right now that I think you'll see in 2026 that is an output of the learnings that we've got through the Big Yum deal. Big Yum is a very narrow, very tactical execution. I think the approach that you'll see us evolve to is a much broader, more strategic approach, including the Big Yum, but beyond that. Okay. I also wanted to ask about G&A. I know you didn't have this partners conference, but it looks really pretty good. I'm curious just how sustainable G&A is at these levels. Is it further cuts or maybe some ramp back up with more investments? Yeah, Mark, Todd here, I'll start. I'd frame it this way. When we look at our Q3 spend, we're expecting Q4 to be similar. We think it is sustainable.
First total revenue of approximately 1.2 billion dollars is unchanged from our prior guidance.
On the margin side, we expect cost of goods in the fourth quarter to be similar to the third quarter.
This incorporates expectations that comparable restaurant sales will decline approximately 3% in the fourth quarter, and we will end 2025 with 386 company-owned restaurants in operation.
For the other operating cost categories, we expect marginal improvement in the fourth quarter as compared to the third as we leveraged fixed costs with higher seasonal sales in the fourth quarter.
Second restaurant, level operating process of at least 12.5% as compared to our prior guidance of 12 to 13%.
Overall, we are very pleased with our progress capturing cost efficiencies, while delivering a great guest experience, we have made significant gains increasing restaurant level profitability, reducing debt and growing EBITDA.
Third, we now expect adjusted EBITDA of at least $65 million, as compared to the previous expectation of $60 to $65 million.
Initial results from the launch of the Big <unk> are encouraging and we look forward to the great value at Red Robin delivering growing guest counts.
In closing I'd like to offer a tremendous thank you to our operators our restaurant teams and the team at the restaurant support Center. This great progress in the business as a result of your hard work and I'm excited for what's next.
Finally, we now expect Capital expenditures of approximately 33 million as compared to approximately 30 million previously, as we continue to execute against the First Choice, plan and make investments back into our restaurants and Technology.
As added commentary on our guidance, I would note the following points.
David Pace: It reflects some of the efficiencies that we have put in place and started to capture this year. We're certainly pleased with that. As we look at just Q4 as an example, we expect Q4 to be similar to Q3. Yeah. Look, I think we expect it to—we expect it to hold, Mark, but I think we're looking at some other opportunities in the future. I mean, I'm not worried about it. I don't have anything to signal yet, but I think there are some opportunities that we can not only hold, but maybe expand a little further. Excellent. Last one for me, Todd. I apologize, but I missed some of your comp guidance here for Q4. If you can walk through that and kind of the thought process behind where you're at for kind of comp expectation. Yeah, Mark, happy to.
In recent weeks, we have seen guest traffic Trends, slow from where we exited the third quarter.
I'll now turn the call back to you.
Thanks Todd.
Progress we've made across all pillars of our first choice plan gives me confidence that we have the right strategy in place.
We attribute this to intentional timing, shifts in our marketing spend, and the consumer impact of the government shutdown.
Our operators are proving every day that efficiency in hospitality can coexist.
Our strategic value offering is delivering the expected change in our traffic trends and we have additional innovations under development for next year.
While our guidance is grounded, in expectation, for both traffic and comparable, restaurant sales, the decline 3% in the fourth quarter, we are optimistic traffic Trends. Will regain traction as our marketing spend levels increase in the remainder of the quarter.
Our data driven marketing capabilities are being strengthened position us to compete more effectively in a restaurant refresh initiatives are being well received by both our team members and our guests.
On the margin side, we expect costs of goods in the fourth quarter to be similar to the third quarter.
We're not declaring victory, but delivering a sustainable recovery requires a clear strategy coordinated tactics and engaged team and disciplined execution.
For the other operating cost categories, we expect marginal Improvement and the fourth quarter as compared to the third as we leverage fixed costs with higher seasonal sales in the fourth quarter.
David Pace: The commentary in the prepared remarks, I talked about both same-store sales and traffic expectation for Q4 down 3%. The traffic, I think, is straightforward. That's frankly exactly what we ran in Q3 in total, at least, and we think is achievable, especially to today's point with the backloaded marketing. The sales being equal to traffic is obviously a couple of puts and takes. We do have a little bit of what I'll call gross menu price increase in place, meaning we have some year-over-year benefit from menu price increases. That becomes a lesser level in Q4 than it was in Q3, and we expect mix will basically negate those menu price changes. No net check, just the benefit or the impact of traffic flowing through to the comp number if you follow me through all that. Yep. Perfect. Thank you. You got it. Thanks, Mark. Thank you.
Seen personally that our red Robin team members are up to the challenge.
Let me close with this.
We have more work ahead of us, but we're building momentum with each period in each quarter positioning us to create a red Robin that our guests will choose first our team members are proud to work for and our shareholders can rely on for predictable and reliable returns.
Overall we are very pleased with our progress, capturing cost efficiencies while delivering a great guest. Experience we have made significant gains increasing restaurant, level profitability, reducing debt and growing de initial results from the launch of the big. Yum are encouraging and we look forward to the Great Value at Red, Robin delivering growing, guest counts,
Before I hand, it over to the operator for questions I want to call out two organizational announcements that we made last week.
First I want to recognize the appointment of Jesse Griffith to Chief operations Officer.
This great progress in the business is a result of your hard work and I'm excited for what's next?
Dave, I will now turn the call back to you.
As you heard today, our operations team under <unk> leadership has been a major contributor to the progress we've seen both financially and with our guests.
Thanks Todd.
This is a well deserved move that is reflective of those contributions.
The progress we've made across all pillars of our. First choice plan gives me confidence that we have the right strategy in place.
I'd also like to acknowledge <unk> planned to move on to another opportunity in our industry.
Our operators are proving every day that efficiency and Hospitality can coexist.
During his time with Red Robin Todd has been an integral part and member of our executive team and has provided great leadership to the finance team and well beyond.
Our strategic value offering is delivering the expected change in our traffic Trends and we have additional Innovations on development for next year.
David Pace: Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to turn the call back to Mr. Dave Pace for closing remarks. Thank you, sir. Okay. Just quickly, thanks everybody for joining the call. We appreciate it, and we look forward to giving our next update after the fourth quarter. Thanks, everyone. Talk to you soon. Thank you. Ladies and gentlemen, that does conclude today's conference for today. Thank you very much for joining us. You may now disconnect your line.
His many contributions were greatly appreciated by all of us.
Our data driven marketing capabilities are being strengthened to position us to compete more effectively in our restaurant. Refreshing issues are being well received by both our team members and our guests.
I want to thank him for all that he did and wish him well in his next role.
With that we're now happy to take your questions. Operator, please open the lines.
We're not declaring Victory but delivering a sustainable recovery requires a clear, strategy coordinated tactics and engaged team and disciplined execution.
Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please.
I've seen personally that our Red Robin team members are up to the challenge.
Let me close with this.
And then one key pad.
A confirmation tone will indicate your line is in the question queue. You May Press Star and then if you.
I would like to remove your question from Q4.
For participants using speaker.
We have more work ahead of us, but we're building momentum with each period and each quarter positioning us to create a red robin that our guests will choose. First, our team members are proud to work for and our shareholders can rely on for predictable and reliable returns.
Maybe safety pick up your handset before pressing the.
Stocks.
One moment, please when we pull for questions.
Before I hand it over to the operator for questions, I want to call out two organizations that we made last week.
Okay.
First, I want to recognize the appointment of Jesse Griffith to Chief Operations Officer.
Our first question comes from Jeremy Hamblin from page. Please proceed with your question.
As you heard today our operations team under Jesse's leadership, has been a major contributor to the progress. We've seen both financially and with our guests.
Thanks, and congrats on the strong results.
I wanted to start with just some of the commentary around.
This is a well-deserved move. That is reflective of those contributions.
I'd also like to acknowledge Todd's plan to move on to another opportunity in our industry.
The Big Yum initiative, and where it's mixing.
Just to get a sense for where that's mixing as a portion of sales.
And then as you talked about a little bit of an uptick here in food and beverage costs to get a sense. If you expect that to kind of stabilize in this current range or given a little bit of pressure on beef prices as well.
During his time with Red Robin, Todd has been an integral part and member of our executive team, providing great leadership to the finance team and well beyond.
his many contributions were greatly appreciated, by all of us.
And I want to thank him for all that he did and wish him well in his next role.
With that.
We should be expecting that to to quick up a little bit here.
We're now happy to take your questions. Operator, please open the line.
Thank you.
You know going forward.
Thanks, Jeremy.
Two parts I'll, let Todd answer the second part the first point.
About mix or the big up deals mixing at about 8% of our total sales.
So we feel pretty good about that that's kind of where we expected it to come in from a mix standpoint.
And we'll be conducting a question and answer session. If you would like to ask a question, please press star and then 1 on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You may press star and then 2. If you would like to remove your question from the queue,
But it's definitely having the impact that we had hoped it would.
So, participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys.
Yeah, Hey, Jeremy on the second part of your question just overall cost of goods beef is certainly the most inflationary part of our basket right now.
1 moment, please while we pause for questions.
We do think that 25% that we saw in Q3, we think thats the right guide for Q4 as well.
The team we've got different measures that we're putting in place to mitigate that beef inflation. So we think we can hold that 25% through the fourth quarter.
Great.
And then just switching gears a bit here I wanted to understand the cost of <unk>.
Uh thanks and congrats on the strong results. Um I wanted to start with um just some of the commentary around um the big yum initiative um and and where it's mixing.
Getting the amendment to your current debt agreement getting that extension to September 2027.
What was the financial cost of that getting the extra six months.
And then secondly.
Related to the Refranchising efforts to get a sense for how that initiative is progressing.
Um, just to get a sense for where that's mixing as a portion of sales. And then, as you talked about a little bit of an uptick here in, you know, food and beverage costs, you know, to get a sense. If you expect that to, um, kind of stabilized in this current range or, you know, given a little bit of pressure on beef prices as well. We should be expecting that to to click up a little bit here. Um, you know, going forward.
And what you know valuations are looking like.
Yeah, thanks Jeremy. Um
If you have maybe a better sense I think you've called out initially.
25% to 75 potential locations, if you have winnowed that down a bit more or what other color you might be able to share with us.
Two parts. I'll let Tata answer the second part. The first point, um, about mix—our big young deals are mixing at about 8% of our total sales. Um, so we feel pretty good about that. That's kind of where we expected it to come in from a mix standpoint, um, but it's definitely having the impact that we had hoped it would.
Yes, So let me take that and I'll, let Todd kind of pile on here in the sector.
In terms of the extension it was a 50 basis point cost to us.
To extend for that period of time, so we thought that was reached.
Reasonable given what we were looking to do and why we wanted to do it.
Regarding.
The second point about Refranchising.
I guess, what I'd say to you Jeremy is everything is going as we had expected and hoped on refranchising. So the available number of restaurants that theres interest in is in the range that we communicated originally.
Yeah. Hey, Jeremy on the second part of your question, just overall cost of goods. You know, beef is certainly the the most inflationary part of our basket right now. Um, we do think the 25% that we saw in Q3, we think that's the right guide for Q4 as well. Um, you know, the team we've got different measures that we're putting in place to to mitigate that beef inflation. So we think we can hold that 25% uh through the fourth quarter.
We have.
Indications of interest specific proposals put forward that we haven't really negotiated against yet we're still in the middle of kind of vetting and getting to know who's who.
That uh, getting this extra 6 months.
and then, secondly, um,
And so it's moving ahead.
As I've said in the remarks, it's an option for us.
Kind of toggle all of these options to figure out the best combination as we move forward on the refinancing the whole strengthening its balance sheet.
Refranchising is still one of those options I would say where we're at.
We had thought we would be.
You know, related to the reranch efforts, uh, to get a sense for how that initiative is progressing. And what, you know, valuations are looking like um, you know, if you have maybe a better sense, I think you called out initially. Uh you know, 25 to 75 uh potential locations, if you have, you know, winnowed that down a bit more um or what other color you might be able to share with us.
And I.
But nothing firm to announce beyond right now how do you want to add anything.
I think I'd just reiterate those points.
Refranchising that option. It was I think a good thing for the business to get the fortress amendments there or the amendment with our lender across the finish line. It gives us the time to really vet through those other options and make sure we maximize value as Dave said on the call. So a good progress for us.
Yeah, so let me take that and I'll let Todd kind of pile on here in a sec. Um, in terms of the extension, it was a 50 basis point cost to us, um, to extend for that period of time. So we thought that was
reasonable given. What we were looking to do and why we wanted to do it. Um,
you know, regarding um,
Great Congratulations Todd best wishes on your next part of your journey.
Thanks, Jeremy really appreciate it.
Okay.
Thank you. The next question comes from Todd Brooks from Benchmark Stone Inc. Please proceed with your question.
You know, the the second point about refrigerating, you know, I I would, I guess, I would say to you. Jeremy is everything is going as we had expected and hoped on refran. So that the available number of restaurants that there's interest in is in the range that we communicated originally. Um, we have
Hey, Thanks for taking my questions and I'll Echo Jeremy Congratulations Todd and also Jesse I assume you might be in the room congrats on the promotion well.
Well deserved.
Um, indications of interest specific proposals put forward that we haven't really negotiated against yet. We're still in the middle of kind of vetting and getting to know who's who.
Thanks Todd.
Wanted to lead off and kind of taken thanks for Dimensionalize in kind of that entry and exit traffic run rate.
For the business Dave.
I think big you almost launched third week of July so not even a full quarter's worth of impact and I know you spoken about working against things like upsell and kind of coaching up.
Um and so it's it's moving ahead, it's as as I said in the remarks, it's an option for us. I mean we we're going to kind of toggle all these options to figure out the best combination as we move forward on the refinancing and the whole you know strengthening of the balance sheet.
The front of house teams, how to sell the product and the mix look pretty benign and only down 10 basis points. So I guess kind of coming out of Q3, and I know you talked about a wiggle down here to start the quarter, but unlocking the big Yum and the traffic benefit from that my sense is is there still some.
And re-rating still 1 of those options. I'd say we're where we had thought we would be. Um,
And I, you know, but nothing confirmed to announce beyond that right now.
Todd, do you want to add anything?
Fruit in front of us to drive further improvement from it.
Yes, we think there is and we think there are ways to even expand the impact of big Yelp, even further which we're working on.
No, I think that I just reiterate those points, um, you know, re-ringing that option it. It was, uh, I think a good thing for the business to get the Fortress Amendment. Uh, there are the amendment with our lender across the Finish Line. It gives us the time to really vet through those other options and make sure we maximize value as Dave said on the call. Um, so a good progress for us.
Great. Congratulations, Todd. Uh, best wishes on your next part of your journey.
I think youre right. It wasn't it wasn't a full quarter wasn't day, one it was probably probably three weeks and that's probably about right. What you said.
Thanks Jeremy. Really appreciate it.
Thank you. The next question comes from Todd Brooks from Benchmark, stomach.
please proceed with your
So we feel good about it came it did what we had hoped it would do it got traffic gave people a reason to come in.
But trial again.
So from a tactical standpoint, it did what we had hoped to do beyond that I would tell you. We're taking a much more strategic look at the entire menu and how we package it together.
Hey thanks for taking my questions and I'll Echo Jeremy. Congratulations Todd. And also Jesse, I assume you might be in the room congrats on the promotion, the co well-deserved. So
Thank you, Todd. Uh,
So that's some of the pretty substantial work that's going on which includes.
wanted to lead off, and, and kind of take and thanks for dimensionalizing, kind of that entry and exit, uh, traffic run rate, uh, for the business, Dave,
<unk>.
Beyond so I think youll see more.
I do think there's more there there was a little wobble coming into the quarter, but for US sure. You know this the way the fourth quarter plays out for US October is the softest month November picks up.
I think Big was launched the third week of July, so not even a full quarter's worth of impact. I know it's been spoken about working against things like upsell and kind of coaching up.
A little bit starts to pick up momentum and then December is when we really make hay. So for us we consciously shifted marketing spend from October to the back yet and so a little bit of it was.
Uh, the front of house teams, uh, how to sell the product, and the mix looked pretty benign. It was all the way down 10 basis points, so I guess kind of coming out of Q3. And I know you talked about a wiggle down here to start the quarter, but unlocking the big yum and the traffic benefits from it. My sense is there is still some, uh, fruit in front of us to drive further improvement from it?
Pullback in marketing spend purposely to back load fish with the Fisher for the Fisher upgrades.
Great and just one follow up there.
What do you what do you feel or what are you hearing from customers about the importance of having an everyday value platform now instead of having it be appointment banking how important is that what.
What youre hearing your feedback.
I think we're seeing.
Yeah, we think there is and we we think there are ways to even expand the impact of big yum, even further which we're working on. Um, you know, I think you're right. It wasn't, it wasn't a full quarter, it wasn't day 1, it was probably probably 3 weeks and that's probably about right what you said. Um, so we feel good about it, it came you know, did what we had hoped it would do it got traffic, it gave people a reason to come in. It got, you know, trial again.
Look it resonates with the guest.
It resonates.
As we said in the kind of early week mid week and lunch day parts.
The value offering.
Todd is I think is a slightly different occasion from the weekend offering and that we.
So, you know, from a tactical standpoint, it did what we had hoped to do beyond that. I would tell you we're taking a much more strategic look at the entire menu and how we package it together. And so, that's some of the pretty substantial work that's going on, which includes?
Weekends or date night, and that's when people go out early week.
<unk>, they're kind of looking for a value opportunity to utilize us. So it's part of the thing that we're working on is we think theres opportunity, but there is opportunity in the way we use it.
Big yum and beyond. So, I think you'll see more. Um, I do think there's more there. There was a little wobble coming into the quarter, but for us, and
And when we use it I don't think it's going to change I do think it's going to be every day.
You'll see us kind of limiting it back to certain days of the week, but the reality is it does have an impact on some parts of the week more than others.
Great.
You also mentioned the data driven marketing efforts and the fact that you had.
Kind of a cohort of stores that maybe are a little bit more challenge, where you saw really.
When we really make. Hey, so for us we we consciously shifted marketing, spend from October to the back end and so a little bit of it was a pullback in marketing spend purposely to you know, backload fish, when the fish are where the fish are great.
Great, and just one follow-up there. Um,
Outsized improvement I think what's your actual actual words from these efforts can you talk about.
Any way you dimensionalize the traffic improvement from the effort and then you talked about the path to expand those further can you maybe walk us through what that looks like going into 'twenty six.
What do you feel, and what are you hearing from customers about the importance of having an everyday value platform? Now, instead of having it be appointment dining, how important has that been and what feedback are you receiving?
I think we're seeing.
Sure.
Yeah, I mean because of the way. This is set up Todd This is Susan.
look it resonates with
This is a very I've said this I've tried to be as clear as I can on this but it is a hyper micro targeted approach, where we get into the individual restaurants, and we get into the individual guests we understand the trade area. We understand the makeup of it we understand what pulls people in is it a value play.
The guests, and it resonates in, as we said in the kind of early week, midweek, and lunch day parts.
Or is the premium Burger play what is the reason for people, making the shift and we can get that information down to a highly targeted level. So as we went into the <unk>.
First cohort as I said, we started with some we learned as we went into this call maybe value resonates with this group, but it doesn't resonate with that group, let's focus on more of a premium burger or maybe a different set of messaging cheese that seems to resonate more with this group, let's kind of plus up that messaging.
The value offering is Todd is is I think is a slightly different occasion from The Weeknd offering and that, you know, we weekends are date night and that's when people go out early Week lunch they're kind of looking for a value opportunity to to utilize us. So we you know, it's part of the thing that we're working on is we we think there's opportunity but there's opportunity in the way. We we use it. Um and when we use it I don't think it's going to change. I do think it's going to be every day. Um, I don't see us kind of limiting it back to certain days of the week, but the, the reality is, it does have an impact on some parts of the week, more than others.
In this cohort.
Plus up the value messaging in another cohort and so we're kind of generating the knowledge base that we can then cluster and figure out how to deploy messaging in promotions.
Great. Uh, Dave, you also mentioned the uh, dad driven marketing efforts and the fact that you you had a a kind of a cohort of stores that maybe are a little bit more challenged where you saw a really um,
outsized Improvement. I think was your actual actual words from these efforts. Can you talk about
At a highly micro targeted basis.
I'm trying to explain without kind of.
any way dimensionalized, the traffic improvement from the effort and then you talked about a path to expand this further. Can you maybe walk us through what that looks like going into 26.
Showing you, but that's that's where we're going with that so anyway. We started with that we saw performance I'll, let Todd kind of.
Pile on top of this.
The performance of the rest of the system.
So as we've gone out we started with I think.
50, restaurants, we expanded beyond where probably we got to a 130.
We're looking at kind of walking that out further as we get the data.
And so the intention is to expand that across the system.
How quickly we get there we're going to as quick as we can.
Hey, Todd I'll I'll just tag on quickly here.
To expand on the point of the over 100 restaurants that the team has been focused on.
Yeah, I mean because of the way this is set up, T. This is a very, and I've said this and I've tried to kind of be as clear as I can on this, but it is a hyper micro-targeted approach, where we get into the individual restaurant and we get into the individual guests. We understand the trade area, we understand the makeup of it. We understand what pulls people in; is it a value play or is it a premium burger play? What is the reason for people making the shift? And we can get that information down to a highly targeted level. So, as we went into the...
Sequentially Theres been a significant improvement in traffic trends in those restaurants to the point that in and many weeks. Obviously, we're looking daily weekly long term, but in many weeks in many periods. We're seeing that those restaurants are delivering positive traffic on a year over year basis and that that's ultimately where we want to be.
And so now it's just a matter of Hey, we found a playbook that works in those hundred plus and we'll work to expand that to the other restaurants obviously.
Okay, great and I'll wrap it up into one final question if you take.
The traffic driving benefit of the Biggie arm and you take the early success with the data driven marketing.
First cohort, as I said, you know, we started with some we learned as we went into this that oh, maybe value resonates with this group but it doesn't resonate with that group. Let's focus on more of a premium burger or maybe a different set of messaging geez that seems to resonate more with this group. Let's kind of plus up that messaging in this cohort you know, plus up the value messaging in another cohort and so we're we're kind of generating the knowledge base that we can then cluster and figure out how to deploy messaging and promotions um on a on a highly micro-targeted basis.
I I mean, I'm I'm trying to explain this without kind of
David Youre thinking out to 2006, I think year to date, there has maybe been 17.
Restaurant closures.
showing you, but it's that's that's where we're going with that. So anyway, we started with that we saw performance. Now let Todd kind of
Thoughts on stability of the base and may be improving kind of that bottom decile or bottom quartile of stores with the early success that you're seeing from these two initiatives.
<unk>.
Yes. Good question no no question, we're seeing it no question. Our ops team is focused on on these target restaurants to try and see if we're not in the business closing restaurants, we're trying to keep them open and run them and make money.
Pile on top of this, you know, above the performance of the rest of the system. And so, as we've gone out, we started with, I think, you know, 50 restaurants. We expanded beyond—we're probably, you know, we got to 130. You know, we're looking at kind of walking that out further as we get the data. Um, and so we're, you know, the intention is to expand that across the system. You know, how quickly we get there, we're going as quick as we can.
Which we've moved a number of them kind of off the watch list back performing where we want them to be theres still some as there always is that aren't quite there yet.
We'll give it a shot with them, they're probably going to be a subset additional closures, but the list is far shorter than what we had talked about previously.
That's great congrats on the progress.
Thanks Todd.
Thank you. The next question comes from Mark Smith from Lake Street Capital. Please proceed with your question Mark.
Hey Todd. I'll just tag on quickly here of uh, the to expand on the point of the, the over a 100 restaurants, that the team's been focused on, you know, sequentially. There's been a significant Improvement in traffic Trends in those restaurants to the point that in in many weeks, obviously we're looking daily, weekly long term, but in many weeks and many periods, uh, we're seeing that. Those restaurants are delivering positive traffic on a year-over-year basis and that that's ultimately where we want to be. Um and so now it's just a matter of hey we we found a A playbook that works in those hundred plus and we'll work to expand that to to the other restaurants obviously.
Okay, great. And I'll wrap it up into 1 final question. If you take
Hey, guys I, just wanted to dig in a little bit more on menu mix and kind of check dynamics in consumer behavior.
The traffic driving benefit of the big young, and you take the early success with the data driven marketing.
Hey, John.
Mix, well, but can you talk about kind of other parts of the menu.
Beverages desserts people sharing mill I was curious to hear what youre seeing in consumer behavior kind of during the quarter and even post quarter.
Um Dave is you're thinking out to to 26, I think year to date, there's maybe been 17 um, restaurant closures.
Hey, Mark Todd here I'll start.
With the base and maybe improving kind of that bottom decile or bottom quartile of stores with the early success that you're seeing from these 2 initiatives. Thanks.
It too you mentioned and I think others have as well.
We were pleased with the mix outcome.
Going into the quarter, we thought the impact of the Big Yum deal May have resulted in more of a mix impact that we saw part of that is a credit to our operators.
We've given the guest trade up options and in many cases, they have taken those right. So many people are getting the value and the 1999 deal, but others are trading up to add toppings add beverages those types of things so that helped support the overall check.
In terms of other dynamics one of the areas. We always look at add on type trends in terms of appetizers desserts beverages.
Yeah, good question. No, no question. We're seeing it. No question or Ops team is focused on on these, um, Target restaurants to try and see, you know, we're not in the business of closing restaurants. We're trying to keep them open and run them and make money, um, which we've moved a number of them, kind of off the watch list, back performing where we want them to be. There's still some, you know, as there always is that that aren't quite there yet. Um we'll we'll give it a shot with them there. There's probably going to be a subset of additional closures but the list is far. Far shorter than what we had talked about previously.
That's great. Congrats on the progress.
Thanks to.
We've seen those hold steady.
And so we think that's a good thing for us in this environment, where where we see the headlines that maybe consumers are managing their wallet is a little bit more we've seen those areas hold up so the mix that we saw we did report obviously a little bit of a negative mix. Some of that was the big young some of that is a mathematical phenomenon I'll say of the growth in our key.
Thank you. The next question comes from
Please proceed with your questions, Mark.
During business that Dave referenced.
That comes at a lower PPA and so there's just a natural dilutive effect there as that part of our business grows, but we are seeing stability and appetizers desserts beverages with.
Hi, guys. I I just wanted to dig in a little bit more on on menu, mix and kind of check Dynamics and consumer Behavior. Can't get, you know, seem to mix well, but can you talk about kind of other parts of the menu, you know, beverages desserts, you know, people sharing Mills curious to hear what you're seeing in consumer behavior and during the quarter and even post quarter?
Some of the add ons, helping too to mitigate the impact of the lower price point on big young.
Hey, Mark Todd here. I'll, I'll start. Um,
Yes, Mark I would just add I think I agree with everything Todd said I think the.
The other thing I would offer is we learned a lot going through this big up deal and we learned a lot about mix in consumer behaviors.
And what resonates on our menu and what we may want to look at further and so we're doing a lot of menu work right now that I think you will see in 2026 that is an output of the learnings that we've got through Big L. D.
Deal.
<unk> was a very narrow.
Very tactical execution, I think the approach that youll see us evolve to is a much broader more strategic approach, including the big yawn, but beyond that.
You to you mentioned, I think others have as well, you know, we, we were pleased with the mix outcome, um, you know, going into the quarter. We thought the impact of the, the big yum deal may have resulted in, in more of a mixed impact than we saw. Part of that, is a credit to our operators. Um, you know, we we've given the guest trade-up options and in many cases, they, they have taken those, right? So many people are getting the value in the 9999 deal, but others are trading up to add toppings, add beverages, those types of things so that helps support the overall check. Um, you know, in terms of other Dynamics, you know, 1 of the the areas we always look at you know add-on type Trends in terms of appetizers desserts beverages um we've seen those Hold Steady. Um
Okay.
I also wanted to ask about G&A I know you didn't have this partners conference.
Looks pretty good I'm curious just how sustainable.
G&A is at these levels is further cuts or maybe some some ramp back up with more investments.
Yes, Mark Tanya I'll start.
I'd frame it this way.
When we look at our Q3 spend.
We're expecting Q4 to be similar so we think it is sustainable.
Flex some of the efficiencies that we have put in place and started to capture this year and so we're certainly pleased with that but as we look at just Q4 as an example, we expect Q4 to be similar to Q3.
And so, you know, we think that's a good thing for us in this environment where where we see the the headlines that maybe consumers are managing their their wallets a little bit more. We've seen those areas, hold up. So the mix that we saw, we did report, obviously a little bit of a negative mix. Some of that was the big, yum. Some of that is a, a mathematical phenomenon and I'll say of the growth in our catering business that they've referenced, um, that comes at a lower PPA. And so there's a just a natural dilute of effect there as that part of our business grows. Um, but we're seeing stability in appetizers, desserts beverages um with some of the add-ons helping to uh to mitigate the impact of the lower price point on big yum.
Yes look I think we expect it to we.
We expect it to hold Mark, but I think there is.
We're looking at some other opportunities in the future.
Yes.
Not worried about it I don't I don't have anything to signal yet, but I think there are some opportunities that we can we can not only hold but maybe expand a little further.
Excellent and then last one for me I apologize, but I missed some of your comp guidance here for Q4, if you could walk through that and kind of the thought process behind your effort kind of comp expectation.
Very tactical execution. I think the approach that you'll see us evolve to is a much broader, more strategic approach, including the big young, but but beyond that,
Yes, Mark happy too so.
The commentary in the prepared remarks, I talked about both same store sales and traffic expectation for Q4 down 3%.
The traffic I think straightforward.
Frankly, exactly what we ran in Q3.
Okay, then I I I also want to ask about GNA. I know you didn't have this Partners conference, but it, it looks very pretty good. I'm, I'm curious just how sustainable. Um, you know, GNA is at these levels is a further Cuts, or maybe some some ramp back up. But for more Investments,
In total at least and we think is achievable, especially today's point with the back loaded marketing.
<unk>.
The sales being equal to traffic is obviously a couple of puts and takes.
We do have a little bit of what I'll call gross menu price increase in place, meaning we have some year over year benefit from menu price increases.
That becomes a lesser level in Q4 than it was in Q3 and so we expect mix will basically in the gate those menu price changes so no net check.
Yeah, Mark, Todd. Here, I'll start. Yeah. As I, I'd frame it this way, um, when we look at our Q3 spend, you know, we're expecting Q4 to be similar. So we we think it is sustainable. Um, it reflects, some of the efficiencies that we have put in place and started to capture this year and so we're certainly pleased with that. Uh, but as we look at, you know, just a Q4, as an example, we expect
Q4 to be similar to Q3.
Yeah. Look I think we expected to we. We expected to hold Mark. But I, I think there's
Just the benefit or the the impact of traffic flowing through that comp number. If you followed me throw all of that.
Yes.
Great. Thank you.
Got it thanks Mark.
We're looking at some other opportunities in the future. I mean, I I I'm not worried about it. I don't I don't have anything to signal yet, but I think there are some opportunities that we can. We can not only hold, but maybe expand a little further.
Thank you ladies and gentlemen, we have reached the end of our question and answer session and I would like to turn the call back to Mr. Payne for closing remarks. Thank you Paul.
Okay. Just quickly thanks, everybody for joining the call we appreciate it.
We thought I apologize but I I I missed some of your your comp guidance. Uh here for, for Q4, if you can walk through that and kind of the the thought process behind where you're at, for kind of complex expectation.
yeah, Mark happy to, um,
And we look forward to giving our next update after the fourth quarter. So thanks, everyone talk to you soon.
Thank you, ladies and gentlemen that does conclude today's conference for today. Thank you very much for joining US you may now disconnect your lines.
Yeah.
So the the commentary and the prepared remarks, I talked about, uh, both same store sales and traffic expectation for Q4 down 3%. The, the traffic I think is straightforward. You know, that's uh, frankly exactly what we ran in Q3, uh, and in total at least and we think is is achievable, especially today's point with the back loaded marketing. Um,
The the sales being equal to traffic is obviously a couple puts and takes. Um we do have a little bit of what I'll call Gross menu price, increase in place. Meaning we we have some year-over-year benefit from menu price increases that, uh, becomes a lesser level in Q4 than it was in Q3. And so we expect to mix. Well, basically negate, uh, those menu price changes. So no net check. Uh, just the benefit or the uh, the impact of of traffic flowing through the comp number. If you followed me through all that,
You got it. Thanks Mark.
Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to turn the call back to Mr. Dave, pace for closing remarks. Thank you, sir.
Okay, just quickly. Thanks everybody for joining the call. We appreciate it. Uh, and we look forward to giving our next update after the fourth quarter. So, thanks everyone. Talk to you soon.
Thank you, ladies and gentlemen, that does conclude today's conference for today. Thank you very much for joining us. You may now disconnect your line.