Red Robin Revenues Up 13% in 2014
Red Robin Gourmet Burgers reported financial results for the quarter and year ended Dec. 28, 2014, compared to the quarter and year ended Dec. 29, 2013.
2014 revenues were $1.1 billion, an increase of 12.7 percent over the same period a year ago, while 2014 comparable restaurant revenue increased 3.1 percent.
Fourth quarter 2014 revenues were $282.1 million, an increase of 16.6 percent over the same period a year ago. Fourth quarter 2014 comparable restaurant revenue increased 3.6 percent.
Net income for the 12 weeks ended Dec. 28, 2014, was $3.9 million compared to $7 million for the same period a year ago. For the 52 weeks ended Dec. 28, 2014, net income was $32.6 million compared to $32.2 million for the year ended Dec. 29, 2013.
“Our commitment to providing guests with a great dining experience, combined with effective marketing and menu strategies, enabled us to continue to take market share in the fourth quarter as we capped off another successful year at Red Robin,” says Steve Carley, Red Robin CEO. “In 2015 we will build on those achievements through everyday value, menu innovation, and promotional tie-ins while remodeling at least 125 additional restaurants to our new brand standards.”
Total company revenues, which include company-owned restaurant revenue and franchise royalties, increased $40.2 million or 16.6 percent to $282.1 million in the fourth quarter of 2014 from $241.9 million in the fourth quarter of 2013. Restaurants acquired in 2014 generated $22.9 million of restaurant revenue in the fourth quarter of 2014.
System-wide restaurant revenue (including franchised units) for the fourth quarter of 2014 totaled $348 million, compared to $324.2 million for the fourth quarter of 2013 at constant currency rates.
Comparable restaurant revenue increased 3.6 percent in the fourth quarter of 2014 compared to the prior year. In the fourth quarter, guest counts increased 1.2 percent and average guest check increased 2.4 percent.
Comparable restaurants are those company-owned restaurants that have achieved five full quarters of operations during the period presented, and such restaurants are only included in our comparable metrics if they are comparable for the entirety of both periods presented.
Depreciation and amortization costs increased $2.8 million to $16.4 million in the fourth quarter of 2014 compared to $13.6 million in the fourth quarter of 2013. The increased depreciation was primarily related to restaurants acquired and opened since the fourth quarter of 2013 and restaurants remodeled under our brand transformation initiative.
General and administrative costs were $22.1 million, a decrease of $0.7 million from the fourth quarter of 2013, primarily driven by lower incentive compensation, partially offset by an increase in salaries and benefits. The fourth quarter of 2013 included a $1.6 million nonrecurring special bonus awarded by the board.
Selling expenses were $9.5 million, or 3.4 percent of total revenues, in the fourth quarter of 2014, compared to $8 million or 3.3 percent of total revenues a year ago. This increase was primarily due to increased advertising.
Pre-opening costs in the fourth quarter of 2014 totaled $1.2 million compared to $1.9 million in the comparable period a year ago. The decrease was primarily driven by fewer Red Robin restaurants opening in the fourth quarter of 2014 compared to the fourth quarter of 2013.
The company recorded asset impairment charges of $8.8 million, of which $7.6 million related to the write-off of in-development software, and $1.2 million related to impairments of three restaurants.
The company's fiscal 2014 effective tax rate was 22.2 percent, compared to 21.8 percent in fiscal year 2013.
Restaurant Development and Acquisitions
As of the end of the fourth quarter of 2014, there were 408 company-owned Red Robin restaurants, seven Red Robin Burger Works, and 99 franchised Red Robin restaurants for a total of 514 restaurants.
In the fourth quarter of fiscal 2014, the company opened six new Red Robin restaurants, opened one Red Robin Burger Works, and closed one Red Robin Burger Works. One franchise location opened in the fourth quarter.
Under our brand transformation initiative, the company has remodeled a total of 104 Red Robin restaurants to our new brand standards through fiscal year 2014.
Outlook for 2015
Red Robin’s 2015 fiscal year consists of 52 weeks and will end on Dec. 27, 2015.
In fiscal year 2015, the company expects total revenue growth of 12 percent to 13 percent including comparable restaurant revenue growth of 2 percent to 3 percent. The company plans to open 20 new Red Robin restaurants and five Red Robin Burger Works resulting in operating week growth from new locations of approximately 6 percent.
Capital investments in fiscal year 2015 are expected to total near $140 million. In addition to the new restaurant openings, the company plans to remodel at least 125 Red Robin restaurants as part of its brand transformation initiative.
Restaurant-level operating profit margins in fiscal year 2015 are expected to approach 21.4 percent.
General and administrative costs are expected to be between $97 million and $99 million, while selling expenses are expected to be approximately 3.2 percent of total revenues. Pre-opening and acquisition costs are expected to total near $7 million in fiscal 2015. Depreciation and amortization is projected to be approximately $77 million.
Interest expense is expected to be approximately $4 million while the income tax rate in fiscal year 2015 is expected to be approximately 27 percent.
The sensitivity of the company’s earnings per diluted share to a 1 percent change in guest counts for fiscal year 2015 is estimated to be $0.34 on an annualized basis. Additionally, a 10 basis point change in restaurant-level operating margin is expected to impact earnings per diluted share by approximately $08, and a change of approximately $145,000 in pre-tax income or expense is equivalent to approximately $01 per diluted share.