Red Robin Replaces COO in Effort to Regain 'Operational Edge'
On the heels of a challenging quarter, where same-store sales dropped 2.6 percent and guest counts fell 0.7 percent, Red Robin announced Tuesday afternoon that it’s making a C-suite change. The 572-unit burger chain said it is replacing chief operating officer Carin Stutz with Guy Constant. Constant currently serves as chief financial officer and will remain in the role until Red Robin finds a successor—a move the company expects to take place by early 2019. CEO Denny Marie Post will assume interim COO duties.
Stutz has held the executive vice president and COO job at Red Robin since April 2016. She’s leaving the position, effective immediately. Before joining Red Robin, Stutz was president of McAlister’s Deli and previously led Cosi as CEO. She was also president of global business development for Brinker International. Additionally, Stutz clocked time with Wendy’s and Applebee’s in senior operations positions.
In a Securities and Exchange Commission filing, Red Robin said Stutz “was terminated without cause.”
“We are grateful for the many contributions Carin Stutz made to rebuilding our fundamentals during the past two years and wish her the very best,” Post said in a statement.
Constant will also direct supply chain, facilities, and development in 2019, Post added.
Red Robin brought on Constant as EVP and CFO in December 2016. He arrived with more than 20 years of leadership in corporate finance, including more than a decade in the restaurant industry. Most recent to the hire, Constant was CFO and EVP of finance and treasurer for Rent-A-Center Inc. Previously he served in various executive roles at Brinker, including EVP and CFO, president of Chili’s global restaurant division, senior vice president and vice president of finance, and senior director of executive compensation.
“As we look ahead to what Red Robin needs in operations leadership for the next stage of our business, we look forward to leveraging the considerable skills and experience of Guy Constant,” Post said. “He is the perfect person to lead our operations team forward and to partner with me as we pivot to a new future. He is highly strategic and clearly understands the challenges we face, as well as how to capitalize on our considerable opportunities. Guy’s experience includes serving as international division president for a major casual dining brand, overseeing both franchised and company-owned locations, and he is looking forward to filling the operations leadership role here at Red Robin.”
Operations are a focal issue for Red Robin as it wrestles declining metrics across several areas of its business. Notably, Post revealed last quarter that Red Robin’s total ticket times out of the kitchen and wait times were up about a minute on average. Red Robin witnessed an alarming 85 percent lift, year-over-year, in walkaways in Q2. Revenue fell 0.6 percent to $315.4 million. The company reported a loss in the quarter of $1.9 million, or 14 cents per share, from a profit of $6.9 million, or 53 cents per share, in the year-ago period.
Among other factors, Post credited the drop to growing complexity in Red Robin’s business thanks to the addition of off-premises orders and the continued labor challenge. Hosts are being asked to help with to-go orders and Red Robin is working to improve ticket times measured by a kitchen display system it invested in two years ago. It went to a team service system model earlier in the year that required servers to bus as they go, which Red Robin “did not execute this well at all,” Post said. All of these operational challenges added up to Red Robin taking a significant hit during peak periods. “We have seen both our wait times and the number of people walking away without being seated increase year-over-year. Our operations teams are now fully woke to the issues, and they have narrowed their focus to improving those ticket times and table turns day-by-day, week-by-week through year-end. We will be measuring progress weekly,” Post said, adding that the company is planning targeted investments in peak hour labor to satisfy waiting customers.
Post said Tuesday that Red Robin is “is committed to recapturing our momentum and to regaining our operational edge in this increasingly complex and competitive environment.”
“Fortifying our leadership team will help us address current and future challenges, which is key to a financially sustainable future,” she said.