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Red Robin reported same-store sales declines of 3.3 percent in the first quarter of fiscal 2019.

Red Robin Closes a Restaurant After Positive E. Coli Reports

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The burger chain believes the incident is isolated.
By Danny Klein July 2019 Chain Restaurants

Red Robin’s management voluntarily closed a restaurant in Westminster, Colorado, this week after an adult and two children tested positive for the bacteria E. coli. On July 9, local health officials inspected the restaurant following tips from the Colorado Department of Public Health and Environment. The inspection discovered multiple food safety violations, leading to Red Robin’s decision to temporarily shutter the unit.

Two of the three people were hospitalized, according to a release from the Tri-County Health Department.

Red Robin released a statement to the Denver post, saying, “We recently became aware of a health issue at our Orchard Town Center location in Westminster. We believe this is an isolated incident and are working with the Tri-County Health Department to conduct a thorough investigation at this location.”

Some of the health violations included improper employee washing of hands, improper cleaning and sanitizing of food preparation surfaces, and cross contamination between raw meats and other prepared foods. The restaurant was cited with five critical health violations. Red Robin set to cleaning and sanitizing the unit, as well as training employees on food safety and testing food handlers. Tri-County said it would conduct food safety training to ensure violations were corrected before a reopening.

Red Robin said in a release that its first priority is the well-being of customers and employees and that it takes the concerns seriously. Also, that restaurants “maintain rigorous food safety standards and procedures nationwide.”

Tri-County identified the E. coli strain as O157:H7. The department did not determine the source of the outbreak.

The three individuals who tested positively are not related and all visited the location on different nights in late June.

Here was Red Robin’s full statement, also sent to FOX31, among other outlets:

“Red Robin's first and foremost priority is the well-being of our guests and team members. We recently became aware of a health issue at our Orchard Town Center location in Westminster, Colorado. We believe this is an isolated incident and are working with the Tri County Health Department to conduct a thorough investigation at this location. We take these concerns very seriously and as a precaution, have voluntarily closed the location to work with our Team Members to reinforce our food handling and safety protocols. We maintain rigorous food safety standards and procedures nationwide, which comply with the most recent FDA Food Code."

Red Robin has faced its share of challenges lately. The burger brand is taking heat from activist investor Vintage Capital, which holds 1.5 million shares or about 12 percent of the company’s stock. It’s offered to buy the rest of Red Robin for $461.4 million ($40 per share), noting concerns over the company’s recent sales slump as well as its search for a CEO following Denny Marie Post’s retirement in April.

READ MORE: Red Robin lays out comeback plan

Red Robin reported same-store sales declines of 3.3 percent in the first quarter of fiscal 2019, driven by a 5.5 percent drop in traffic. Net income sank 85.4 percent, year-over-year to $639,000 and revenues of $409.87 million compared unfavorably to last year’s $421.52 million figure. According to Zacks Consensus Estimate, Red Robin has underperformed revenue estimates for four consecutive quarters.

Red Robin also announced in Q1 it was closing 10 underperforming units—seven of which were enclosed mall stores. Mall units have lagged the system for some time, and fell behind corporate units by roughly 300 basis points last quarter. Heading into the end of fiscal 2018, Red Robin’s mall sales pushed downward for three straight quarters. They closed the year down 5.5 percent, a difference of about 3.6 percent for non-mall locations.

Additionally, Red Robin is actively working with The Cypress Group on a refranchising initiative targeting about 100 locations for sale. At quarter’s end, 483 of the company’s 579 locations were corporate run.