WEBVTT - GJ Hart, Red Robin CEO, Talks Earnings, Comeback

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>The turnaround plan at Red Robin is underway. The historic

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<v Speaker 2>burger chain is making some big changes. Gjheart took over

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<v Speaker 2>in late twenty twenty two after a year's long slump

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<v Speaker 2>for the firm stock, and his plan is starting to

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<v Speaker 2>pay off. The company minted the best performance in the

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<v Speaker 2>last two quarters. And the changes come at a time

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<v Speaker 2>when a number of inflationary headwinds are challenging the food industry.

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<v Speaker 2>Joining us now Gjhart himself CEO of Red Robin Gourmet Burgers.

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<v Speaker 2>You know, interesting time to be navigating in your industry,

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<v Speaker 2>especially because the cost of some types of food have

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<v Speaker 2>been leading people to change course. For example, Shakeshack has

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<v Speaker 2>been warning that competitors may double down on beef and

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<v Speaker 2>chicken with egg prices surging. And if people are doubling

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<v Speaker 2>down on beef, then do beef prices get impacted? How

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<v Speaker 2>are you reacting? Are you making any changes to your

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<v Speaker 2>offerings given what's going on?

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<v Speaker 1>Well here at Red Robin. First of all, good morning,

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<v Speaker 1>Good to be with you here at Red Robin. In

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<v Speaker 1>our turnaround and just we call it a comeback here,

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<v Speaker 1>we've had a lot of fundamental blocking and tackling work

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<v Speaker 1>we've had to do, and so part of that is

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<v Speaker 1>really reinvesting into food quality, raising up to standards at

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<v Speaker 1>Red Robin, and we've done that now. So I would

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<v Speaker 1>tell you we're not changing course from our overall north

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<v Speaker 1>Star plan as we call it. But there's no question

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<v Speaker 1>that inflation in our headwinds in our industry, and the

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<v Speaker 1>consumers ever more sensitive to pricing and there's more and

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<v Speaker 1>more value out there.

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<v Speaker 3>So we do it.

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<v Speaker 1>Around appointment dining, which is taking lower volume days of

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<v Speaker 1>the week and promoting and having some price points. But

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<v Speaker 1>what our strategy is with that, it gives guests the

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<v Speaker 1>opportunity to come into Red Robin and really see what

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<v Speaker 1>we're up to and that there's a whole new Red

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<v Speaker 1>Robin here and that we're worthy of getting in their

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<v Speaker 1>consideration set.

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<v Speaker 4>It's a far more labor intensive restaurant then maybe other

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<v Speaker 4>burger chains around the US. How have labor costs been

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<v Speaker 4>and how is it managing a labor force right now?

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<v Speaker 1>Yeah, So there's no question is there's the pressure on labor,

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<v Speaker 1>particularly out in some of the high minimum wage states.

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<v Speaker 1>In our comeback strategy, it was reinvesting labor back into

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<v Speaker 1>our business so that we could provide the appropriate hospitality

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<v Speaker 1>and fund to our guests. And we've been doing that

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<v Speaker 1>and now as we enter into the third year this

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<v Speaker 1>year at twenty twenty five, we're really focused on the

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<v Speaker 1>efficiency we can gain because we've had to retrain and

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<v Speaker 1>rewrite every training manual for everything that we're doing, and

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<v Speaker 1>so now that we're through that, we can really focus

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<v Speaker 1>on becoming much more efficient and that is one of

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<v Speaker 1>our priorities this year.

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<v Speaker 2>Do you worry about labor costs moving forward as well?

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<v Speaker 2>With the immigration policies that are being put forward by

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<v Speaker 2>the Trump administration, there have been a number of a

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<v Speaker 2>restaurant companies in particular that are worried about what that

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<v Speaker 2>would mean for the cost of labor.

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<v Speaker 3>Yeah, well, it's yet to be seen.

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<v Speaker 1>One of the things that we have here at Red

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<v Speaker 1>Robin would being a fifty six year old brand. We

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<v Speaker 1>have a lot of long tenure team members all over

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<v Speaker 1>this country, and so that's a that's a good staple

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<v Speaker 1>and steady group that we have and we're pretty well

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<v Speaker 1>fully staffed around the country.

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<v Speaker 3>So we're definitely paying attention to it.

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<v Speaker 1>But I wouldn't tell you that I'm overly worried about

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<v Speaker 1>it at this point.

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<v Speaker 4>How hard is it to operate as a you know,

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<v Speaker 4>fairly old brand. I mean, you're at least as old

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<v Speaker 4>as I am.

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<v Speaker 3>In a world when.

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<v Speaker 4>These kind of smash burger trendy restaurants are are growing

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<v Speaker 4>so prolifically. How do you how do you how do

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<v Speaker 4>you keep the brand fresh?

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<v Speaker 3>Yeah?

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<v Speaker 1>Well, first I would say that Red Robin has been

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<v Speaker 1>known as the burgerth or really mixing different flavors with

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<v Speaker 1>burgers and doing some very unique and different things like

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<v Speaker 1>our lava Caeso burger or our mad Love Burger or

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<v Speaker 1>Jalapeno heat wave, things like that, And so we continue

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<v Speaker 1>down the path of innovation and being really the leader

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<v Speaker 1>around being the burger authority on gourmet burgers. But there's

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<v Speaker 1>no question that some of the more fast casual concepts,

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<v Speaker 1>they're growing fast and certainly have some intrusion and competition

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<v Speaker 1>to us.

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<v Speaker 5>But remember we are a full service experience here at

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<v Speaker 5>Red Robin and what we call casual dining, and so

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<v Speaker 5>if you want a great experience for a night out

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<v Speaker 5>with your family, we're the place to go.

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<v Speaker 1>And oh, by the way, we really will give you

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<v Speaker 1>some unique opportunities.

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<v Speaker 3>To try different products that have.

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<v Speaker 1>Unique flavors, and so from that aspect, we're a little

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<v Speaker 1>bit different than most of those other folks.

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<v Speaker 4>I wonder about New York City. I don't believe there's

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<v Speaker 4>a Texas Roadhouse here, which you know is your previous employer.

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<v Speaker 4>And I know there's no Robin here because I was

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<v Speaker 4>looking for one all day yesterday. So why it's not

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<v Speaker 4>just you? Why do a lot of you know, nationwide

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<v Speaker 4>restaurant brands skip New York City.

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<v Speaker 1>Well, I think, well, listen, and we don't have anything

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<v Speaker 1>in New York City. We do have plenty in New Jersey.

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<v Speaker 1>Part of it is just in an economic model. In

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<v Speaker 1>the restaurant business, occupancy costs are a key component, and

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<v Speaker 1>in places like Manhattan or New York City, it's super

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<v Speaker 1>super expensive and there is a ton of competition, and

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<v Speaker 1>so there's so many and if you're a casual brand

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<v Speaker 1>like US, there's just so much white space around the

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<v Speaker 1>United States.

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<v Speaker 3>We're a community brand. We want to be part.

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<v Speaker 1>Of communities, and so you know, it's pretty tough to

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<v Speaker 1>be part of Manhattan as a you know, one restaurant

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<v Speaker 1>in a big sea of other folks.

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<v Speaker 3>So I think that's part of it.

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<v Speaker 1>And if you really want to put it as a

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<v Speaker 1>showcase things like Times Square, lots of people will do that.

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<v Speaker 1>Certainly you can do that, but you need to be

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<v Speaker 1>willing to understand that that's going to have cost ramifications

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<v Speaker 1>and be pretty tough to make money.

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<v Speaker 2>I want to go back to something you were talking

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<v Speaker 2>about a little earlier, where consumers really are cost conscious,

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<v Speaker 2>and in your industry in particular, there have been a

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<v Speaker 2>lot of value offers out there. Five dollar value offers

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<v Speaker 2>in particular, that seems to be a golden number. I

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<v Speaker 2>know you offer that ten dollars cheeseburger Tuesday, for example.

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<v Speaker 2>Do you think that you need to go lower in

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<v Speaker 2>price point because of what you're seeing from fast casual, Well, we.

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<v Speaker 1>Have a very varied menu, so we have a lot

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<v Speaker 1>of value on our menu with our tavern lineup of burgers,

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<v Speaker 1>and again.

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<v Speaker 3>We're full service experience.

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<v Speaker 1>So when you combine that fact, we think we are

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<v Speaker 1>very very value arned from that aspect. In fact, all

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<v Speaker 1>of our consumer sentiment and our scores from a guest

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<v Speaker 1>satisfaction show us that our value continues to improve. That said,

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<v Speaker 1>when you start to have price points, particularly in the

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<v Speaker 1>fast food or fast casual folks that are that cheap.

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<v Speaker 1>Certainly people wonder, but at the end of the day,

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<v Speaker 1>we think we're hitting the right mark. So we have

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<v Speaker 1>our Monster Mondays, which is essentially where you can get

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<v Speaker 1>a dollar or two off five items and you can

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<v Speaker 1>really get a lot of value there. As you mentioned

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<v Speaker 1>cheeseburger Tuesdays, we're getting double digit growth there. So certainly

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<v Speaker 1>those are lower volume days of the week and we

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<v Speaker 1>think that that helps get people and we're seeing their

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<v Speaker 1>frequency on the weekends is higher now as a result

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<v Speaker 1>of that, and our guest satisfaction scores again reflect that

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<v Speaker 1>we've hit all time highs and guest satisfaction scores since

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<v Speaker 1>we've been tracking with Technomic and with smg our current partners.

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<v Speaker 3>So it's telling us that I think we're doing all

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<v Speaker 3>the right things.

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<v Speaker 1>But clearly this value message hopefully will start to dissipate

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<v Speaker 1>for the industry as we go through twenty twenty five,

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<v Speaker 1>because it's a tough one.

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<v Speaker 4>All right, GJ, thanks very much for joining us. Look

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<v Speaker 4>forward to attempting to get one of your burgers sometime soon.

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<v Speaker 4>J hert there of Red Robin Gourmet Burgers