Speaker 1: Welcome to Chopping It Up. I'm your host, Mike Hallen,
Speaker 1: the senior restaurant and food service analyst at Bloomberg Intelligence.
Speaker 1: Today we're joined by G. J. Hart, President and CEO
Speaker 1: of Red Robin Gourmet Bergers. Thanks for doing this, Thanks Mike.
Speaker 2: Good to be with you.
Speaker 1: Yeah, our audience can't see us, but it's good to
Speaker 1: see you. Let's let's just jump right in here. Man,
Speaker 1: what attracted you to the Red Robin job.
Speaker 2: Well, let's let's go back in time a little bit
Speaker 2: when when we were building and growing Texas Roadhouse, Red
Speaker 2: Robin was in it's really in its prime time and
Speaker 2: was really one of the premier casual dining restaurant brands,
Speaker 2: and we learned a lot in terms of what they
Speaker 2: were doing and doing it well. And the biggest thing
Speaker 2: is just how the differentiated space about kids, family, great food,
Speaker 2: great hospitality, reasonable price, and so following them, I've always
Speaker 2: had an affection form. They were phenomenal around being parts
Speaker 2: of communities, giving back to communities, all things that we
Speaker 2: were doing at Texas Roadhouse, and so roll forward over
Speaker 2: the years, I was asked if I would be interested
Speaker 2: in going on the board of Red Robin at the time,
Speaker 2: and that was in twenty nineteen and right before COVID,
Speaker 2: and I was like, you know, if I could make
Speaker 2: some difference because they were, you know, hit upon some
Speaker 2: challenging times and I thought, well, shoot, I'd like to
Speaker 2: do that. And so going on the board first. And
Speaker 2: then when the board approached me about the opportunity to
Speaker 2: take over. You know, I had been retired for about
Speaker 2: six months at the time, nine total, and I was like,
Speaker 2: I was ready. I was too young to not work
Speaker 2: and sitting boards is great and I love it, but
Speaker 2: it's not the same as operating a business. And so
Speaker 2: a lot of things lined up really, really well, and
Speaker 2: so I jumped in because I just felt like I
Speaker 2: could add some value here and really take this brand
Speaker 2: back and make it come back to its roots and
Speaker 2: make it relevant for today. So it's been an exciting run.
Speaker 2: I'm having a heck of a lot of fun.
Speaker 1: All right, good stuff. I saw some news out this week.
Speaker 1: Our friend Nicole Miller Reagan was placed on the board,
Speaker 1: which is great. Nicole's awesome. What about the senior management team?
Speaker 1: Are they in place or do you still have roles
Speaker 1: to fill there?
Speaker 2: Yeah, So we've done We've put together a phenomenal team.
Speaker 2: I'm really proud of the group that we've put together.
Speaker 2: And the one position that we have left, we've got
Speaker 2: an interim who was my former chief people officer Texas
Speaker 2: Roadhouse who retired and he came back as interim, and
Speaker 2: we're on the final stages of that search. We've actually
Speaker 2: got an offer out and there'll be an acceptance I'm
Speaker 2: pretty sure for the Chief People Office role and then
Speaker 2: we'll be totally complete. But the team is definitely ready,
Speaker 2: willing and enable, and we're high functioning and I believe
Speaker 2: that we're going to get some high performance out of them.
Speaker 1: Okay, good stuff. So just for the audience that may
Speaker 1: not be familiar, what's the store count now Red Robin
Speaker 1: and where is it strong geographically?
Speaker 2: Yeah, so the store count today is a total count
Speaker 2: of five hundred and ten restaurants. Our strongest markets are
Speaker 2: up really on the West coast. Red Robin was originally
Speaker 2: founded up in Washington State, so we've got a big
Speaker 2: pros big presence up in Washington, Oregon, California, Nevada, and
Speaker 2: of course you know on the East coast as well.
Speaker 2: We're probably a little bit lesser density in the Midwest.
Speaker 2: We've got a good presence in the Southwest, but clearly
Speaker 2: the West Coast is the predominant portion of Red robin.
Speaker 1: Oh okay, So being on the West Coast, do you
Speaker 1: think you're going to see any impact from the for
Speaker 1: the fast food wage increases that we're we're seeing in California?
Speaker 1: I know there have been some people talking about how,
Speaker 1: you know, they expect maybe full service chains to have
Speaker 1: to pay a little bit more in the kitchen. Is
Speaker 1: this something that that you've discussed with the team.
Speaker 2: Yeah, we're we're paying attention to it. Clearly, there'll be
Speaker 2: some compression and there'll be some expectations. You know, generally speaking,
Speaker 2: if you think about our team members on the West Coast,
Speaker 2: particularly in places that there's no tip credit, they're they're
Speaker 2: well above that now in terms of total compensation. But
Speaker 2: at the end of the day, as you know, there's
Speaker 2: an expectation and as those positions in fast food go up,
Speaker 2: that they're going to need to go up as well.
Speaker 2: So you know, we're going to watch it real closely
Speaker 2: and see kind of what's what what's the right course
Speaker 2: of action. It's not just about just taking price because
Speaker 2: you know, as you know, the consumers ever more sensitive
Speaker 2: today to price, So we'll we'll watch it and we'll see.
Speaker 1: Okay, so who is the the Red Robin customer.
Speaker 2: Well, it's interesting our our our guest base is pretty
Speaker 2: wide and demographics pretty wide, so you get, you know,
Speaker 2: a varied income. It tends to skew a little bit
Speaker 2: more female generally, which is not surprising candidly although it
Speaker 2: being Burgers being premiere, but we do skew that way.
Speaker 2: And and it's a pretty wide spectrum from everything from
Speaker 2: your from your hard working sort of you know, Middle
Speaker 2: America high income folks to two people that are that
Speaker 2: are at the high income levels. So that's the benefit
Speaker 2: that we do have because we're so family and kid
Speaker 2: centric that it allows people to come in and as
Speaker 2: they are and feel comfortable in the Red Robin no
Speaker 2: matter what walk of life that you're in.
Speaker 1: Yeah, my son, when he was younger, you always loved
Speaker 1: the place. And I am a huge fan of the
Speaker 1: onion rings too. So uh so I was answering too. Yeah,
Speaker 1: all right, cool, why don't we talk a little bit
Speaker 1: about the guest experience improvements? You know, all good turnarounds
Speaker 1: start with better food and better service. Right, so if
Speaker 1: you could talk a little bit about the improvements that
Speaker 1: the team's made there.
Speaker 2: So we put together a plan that I really developed
Speaker 2: with all the different stakeholders, different folks around the company,
Speaker 2: just to realign ourselves on what our north star would
Speaker 2: be and what's that overall mission vision and brand promise
Speaker 2: and over our core values. And we came up with
Speaker 2: this north Star plan and the first part of that
Speaker 2: plan was was around people and culture and you have
Speaker 2: to start there. And what had happened with Red Robin
Speaker 2: over the years, and I've talked about this a lot,
Speaker 2: is there were some decisions made for whatever reason that
Speaker 2: clearly were not good for the overall guests, nor was
Speaker 2: it good for the team ember things like getting rid
Speaker 2: of bussers back in twenty eighteen and started to do
Speaker 2: away with the expo the need for a senior person
Speaker 2: in the expo window, or not having a true management complement,
Speaker 2: more generalists and not have kitchen managers or service managers,
Speaker 2: and then really challenged by COVID and staffing challenges in
Speaker 2: some of the decisions made made it verally challenging for
Speaker 2: the company, and so we really started to look back
Speaker 2: at the basics around that first started with management compliment,
Speaker 2: put back our certified training, restaurants started to go back
Speaker 2: to kitchen managers. We've put over two hundred and fifty
Speaker 2: kitchen managers in place in addition to what we already had.
Speaker 2: And when I say already had, some of the restaurants
Speaker 2: did not follow suit with some of the sort of
Speaker 2: changes that came down from the corporation. So we started there,
Speaker 2: and then we started really building up our staff. And
Speaker 2: one of the things that had happened in the hospitality
Speaker 2: model was it was more of a team approach, and
Speaker 2: in and of itself, that's fine. So you had server
Speaker 2: assistants and so servers were having many more cables and
Speaker 2: if a server assistant or you had a staffing problem,
Speaker 2: which as you know, coming through COVID was close, but
Speaker 2: then even coming back was challenging. Now all of a sudden,
Speaker 2: a server can't possibly service our guests when they have
Speaker 2: ten tables and so without the proper services. So we've
Speaker 2: gone more to a traditional model, less tables for servers,
Speaker 2: added back busters, added back to the expos stations with management.
Speaker 2: So we started there and that was first and foremost,
Speaker 2: and then we started working on the food as the
Speaker 2: second piece of it. And on the food front, we
Speaker 2: changed the cooking process for gourmet burgers because I asked
Speaker 2: the question, if our brand promise is about the best
Speaker 2: gourmet burgers, are we convinced we could do that with
Speaker 2: the what we're doing today And the answer is no.
Speaker 2: And so we started looking back and Jeff Brian, our chef,
Speaker 2: and I started working on what makes the most sense,
Speaker 2: and we changed the whole system to flat top cooking.
Speaker 2: So we got rid of the nico the belt driven
Speaker 2: ovens that gives us not only a better burger, it's bigger,
Speaker 2: it's juicier, all those kind of things. It actually helped
Speaker 2: efficiency as well as it us more optionality for menu
Speaker 2: development down the road, which is a big part of
Speaker 2: our plan in the North Star plant anyway. So I'm
Speaker 2: pleased to say that in that whole process, the hospitality
Speaker 2: piece has come through. Been in the system the longest,
Speaker 2: so we've seen our overall net sentiment for service has
Speaker 2: gone up twenty eight percent. So if you serve all
Speaker 2: the social data points, I mean, twenty eight percent increase
Speaker 2: over this period of time is really I think terrific.
Speaker 2: The food is coming now. We did the change mid
Speaker 2: year for the flat tops, but we actually in the fall.
Speaker 2: We just just recently launched our full menu with where
Speaker 2: we've touched eighty five percent of the menu and we've
Speaker 2: upgraded ingredients. So we've done things like improve our bund
Speaker 2: we've improved our mayonnaise. We've improved our going from a
Speaker 2: regular tomato to a vying ripened tomato. We've improved our bacon,
Speaker 2: we've improved all of our sauces, so we've touched almost
Speaker 2: every part of it. And that was launched just a
Speaker 2: few weeks ago and that's doing really really well, and
Speaker 2: we're super excited about people really seeing the difference in
Speaker 2: our burgers and seeing the difference in our optionality on
Speaker 2: the menu because we've added clentres, meaning we've added Whiskey
Speaker 2: River barbecue ribs, we've had a tsunami shrimp, we've added
Speaker 2: a non fried appetizers with the shrimp, and then we've
Speaker 2: added Brussels sprouts and some additions like that that help
Speaker 2: us to really have more optionality, less veto vote for
Speaker 2: the guests, and so those are the type of things
Speaker 2: that we're doing. We've still got a long way to go.
Speaker 2: But first, the first hospitality service and people. Now it's
Speaker 2: going into food and we're working. We're pretty excited about
Speaker 2: what we're doing for twenty twenty four.
Speaker 1: Good stuff. And you revamped the market partner program. Can
Speaker 1: you speak to that, sure?
Speaker 2: Well, the company was had typical general managers that had
Speaker 2: a base salary and a bonus opportunity, and bonuses were
Speaker 2: changed each year based on the prior and I'm not
Speaker 2: a big fan of that because a lot of times
Speaker 2: you tend to leave out the guest experience right at
Speaker 2: the end of the day, growing guest traffic and sales
Speaker 2: as a result of people doing the right thing, and
Speaker 2: if you take care of the people, they take care
Speaker 2: of your guests. And so you know, going to a
Speaker 2: managing partner compensation program where they really get paid each
Speaker 2: month based on their success of their restaurant, to me
Speaker 2: makes sense. It gets that sense of ownership, that pride factor.
Speaker 2: They become very much involved in every aspect of their
Speaker 2: business and they become business people, not just great restaurant operators.
Speaker 2: And so we launched it for our multi unit midyear
Speaker 2: this year and it's going extremely well. And we started
Speaker 2: there so that we can learn and adjust. When you
Speaker 2: have a big restaurant count like we do having done
Speaker 2: this before. It takes a while and it's difficult to
Speaker 2: implement a system like this in a big, big number
Speaker 2: of restaurants. So we started there great learning and our
Speaker 2: plan is through and we will be rolling out the
Speaker 2: managing Partner program right after the first of the year.
Speaker 2: And we're excited about it because, you know, we think
Speaker 2: it's really going to move the brand forward with that
Speaker 2: sense of ownership and pride.
Speaker 1: Yeah, very cool. And you mentioned that customer experience is
Speaker 1: included in there, so you know a lot of these
Speaker 1: programs people are comped out based on sales, so it
Speaker 1: sounds like you have some customer service scores involved in
Speaker 1: the compensation structure.
Speaker 2: No, it'll be solely around guest traffic, sales, and profitability. However,
Speaker 2: you can't drive sales or profitability or traffic without really
Speaker 2: having a great guest experience. So the idea is you
Speaker 2: share all these operators, share best practices from it, what's working,
Speaker 2: what's not, and they tend to be competitive with each
Speaker 2: other in terms of things like guest satisfaction scores. But
Speaker 2: all of it flows back that it's about being running
Speaker 2: a business, and you know, Mike if you're running your
Speaker 2: own business, if you take care of your people, they're
Speaker 2: going to take care of your business. So that's that's
Speaker 2: the idea here.
Speaker 1: Yeah, for sure, you know, customer service scores and speed
Speaker 1: of service and all that stuff is so closely linked
Speaker 1: to traffic obviously, totally, totally, all very cool. And so
Speaker 1: you're also going to implement the single unit operator program.
Speaker 1: Is that going to be similar to what you implemented
Speaker 1: at Texas Roadhouse and Torches?
Speaker 2: It will be similar. All the dynamics are different for
Speaker 2: each brand, but yes, it would very much be similar
Speaker 2: to that.
Speaker 1: Okay, great, And you're making some changes to the loyalty program.
Speaker 1: A lot of people in the restaurant industry are making
Speaker 1: some changes right now, So can you speak to that
Speaker 1: a little bit?
Speaker 2: Sure, Well, we do have a big, big loyalty base.
Speaker 2: It's they're about thirteen and a half million members, and.
Speaker 1: Yeah, that's strong for them.
Speaker 2: It is strong, and we're still gaining. The loyalty platform
Speaker 2: has historically in my pay and being focused on maybe
Speaker 2: not the right thing to me. Loyalties about rewarding your
Speaker 2: most loyal guests for frequency and for being loyal to
Speaker 2: the brand versus trying to acquire new and then give
Speaker 2: them ongoing discounts and ongoing promotional activities. So we're going
Speaker 2: to flip that and really start to reward our most
Speaker 2: loyal guests. And we're going to go to a point
Speaker 2: based system versus what we have today where you've got
Speaker 2: to get nine, you get to ten free. So the
Speaker 2: points where it's more in real time and we think
Speaker 2: makes more sense for our guests going down. And we'll
Speaker 2: get that launched and sort of the first half of
Speaker 2: next year, and we're super excited about it. What we've
Speaker 2: learned is the company was really messaging mostly discount promotionals
Speaker 2: to the loyalty base. And what we want to do
Speaker 2: is start just having a dialogue and start to individualize
Speaker 2: that communication that we can do with our guest base.
Speaker 2: That'll tap longer term into how we can communicate on
Speaker 2: an individual basis. So we're super excited. It is a
Speaker 2: big asset of the company. We think it's we can
Speaker 2: lever it the right way, tell our story more successfully
Speaker 2: that way, and I'm really liking the path that we're on. Great.
Speaker 1: So you know, on your earnings call, you mentioned that
Speaker 1: you saw a shift and that from September to October
Speaker 1: and results had improved despite student loan repayments resuming, And
Speaker 1: we kind of saw the same thing industry wide. You
Speaker 1: may have your improvement may have been larger than the industry,
Speaker 1: but we did see some improvement in October industry wide
Speaker 1: that we we thought was a little bit surprising. What
Speaker 1: do you you know, what are you seeing as there?
Speaker 1: You know, and what did you think was the main
Speaker 1: reason for that improvement in October?
Speaker 2: Yeah, So in our case, we're making a lot of
Speaker 2: changes we just talked about, from management, hospitality to food.
Speaker 2: We're doing so much that we think that we're going
Speaker 2: to see and are seeing effects of that as a
Speaker 2: result of our change. The current bigger picture or macro environment,
Speaker 2: it's hard to say and ascertain exactly, you know, how
Speaker 2: much is coming from where given all the change that
Speaker 2: we've got, But nevertheless, we'll take it right and so
Speaker 2: so feeling good about that. And Mike, you may have read,
Speaker 2: you know, we had negative comp for the quarter. We
Speaker 2: signaled that it was within expectations because again we were
Speaker 2: making some decisions to get ourselves out of virtual brands,
Speaker 2: because to focus on the brand long term. The Red
Speaker 2: Robin brand we think that's the right decision. Well, that's
Speaker 2: you know, that definitely comes at at a price. We
Speaker 2: have gone away from all this deep discounting in every
Speaker 2: channel to be and focused on brand development long term
Speaker 2: in providing our guests and experience they can count on
Speaker 2: day in, day out, and that comes with the price.
Speaker 2: So we had all those things on top of, you know,
Speaker 2: within all this noise. So there's just a lot in
Speaker 2: terms of us analyzing, you know, just the macro environment
Speaker 2: in and of itself. What I would say to you though, is,
Speaker 2: you know, I've been pretty pretty surprised how resilient the
Speaker 2: overall consumer has been and continues to be, because you know,
Speaker 2: if you really look at some of these economic trends,
Speaker 2: you know, we feel certain things and things are not
Speaker 2: necessarily perfect, but generally speaking, people have more money and
Speaker 2: more disposable money to spend. So I've been pretty surprised
Speaker 2: at how resilient they've been. So hopefully that continues and
Speaker 2: and and then as we make our changes, we'll benefit
Speaker 2: and really be able to grow our business.
Speaker 1: Yeah, and it looked like investors were happy with with
Speaker 1: the earnings report even though you know, same sort of sales.
Speaker 1: One thing went down, So it seems like they're they're
Speaker 1: bullish on you know, these changes that you're making and
Speaker 1: the direction that Red Robin is moving in. Back in August,
Speaker 1: last time I saw you at the prosper conference, you know,
Speaker 1: you know, we were chatting it up and I was
Speaker 1: telling you how I was surprised how find dining results
Speaker 1: had been so poor this year. That was probably the
Speaker 1: biggest surprise I've had, you know, throughout the industry. Is
Speaker 1: there anything that's surprising you about the US consumer outside
Speaker 1: of it being resilient, you know, and whatever else you
Speaker 1: had already spoken about.
Speaker 2: Now, you know America, American consumers like to spend right,
Speaker 2: So at the end of the day, I don't know
Speaker 2: that I'm surprised, I say it. You know, I'm a
Speaker 2: little bit surprised, as I just pointed out, But at
Speaker 2: the end of the day, that's good news. So yeah,
Speaker 2: you know, if there was an overriding concern, I think
Speaker 2: it's really centered around more of the geopolitical situation and
Speaker 2: just you know, how does that because it definitely affects
Speaker 2: people at home, and I think that that that worries
Speaker 2: me a bit. There's obviously nothing I can do about it,
Speaker 2: but it is something that h that that they do
Speaker 2: think about. But at the end of the day, now
Speaker 2: there's no no huge surprises of the then how resilient
Speaker 2: they are?
Speaker 1: Okay, good stuff and uh you like another one of
Speaker 1: your h casual dining competitors made the move to cut
Speaker 1: back on discounting, and I think that's important. I don't
Speaker 1: think you want to train your customers to only come
Speaker 1: to your restaurant when you're offering some sort of a discount.
Speaker 1: So can you talk about how that's gone and how
Speaker 1: it's going, and you know how this maybe uh you
Speaker 1: know might impact your your decision to about how you're
Speaker 1: going to deploy marketing spend and if you're going to
Speaker 1: increase it or to decrease it over the next year.
Speaker 2: Well, let me let me unpack that a little bit.
Speaker 2: And in terms of how it's going, it's going fine.
Speaker 2: I think to the to build a brand successfully over time,
Speaker 2: you need to provide guests uh uh, the ability to
Speaker 2: know exactly what they're going to get when they're that
Speaker 2: every time they come in they're going to get that
Speaker 2: same type of experience. And sure there's times you want
Speaker 2: to promote certain things, but not just to come in
Speaker 2: as a result of some discount. So it's going fine. Guys,
Speaker 2: we just talked about you know, we felt it in
Speaker 2: terms of sales and traffic a little bit, but we're
Speaker 2: going to roll over that. And last year the company
Speaker 2: was really throwing a lot at all the different channels
Speaker 2: and really discounting significantly. So as we roll over that,
Speaker 2: we'll get through that. And I do believe with the
Speaker 2: changes that we're making, people are experience. We're seeing it
Speaker 2: and the feedback that we're seeing as I just mentioned
Speaker 2: some of the consumer sentiment data, some of the overall
Speaker 2: experience data that we're getting is showing that they see that.
Speaker 2: So I think all in all, we're feeling really good
Speaker 2: about the progression that we're making and the progress that
Speaker 2: we've seen so fully intent and we're optimistic about the
Speaker 2: future here in terms of marketing spend, let me just
Speaker 2: do with that. One of the things I want to
Speaker 2: just say about marketing spend is we're really unpacking and
Speaker 2: really taking a look at how do we how do
Speaker 2: we use our dollars to be more effective than maybe
Speaker 2: what we've been in the past, being very laser focused,
Speaker 2: being more community oriented, really targeting as We just talked
Speaker 2: about loyalty and using those platforms to make our dollars
Speaker 2: work that much harder for us, and we think we
Speaker 2: can do that. So at the end of the day,
Speaker 2: will we need to spend a little bit more. We've
Speaker 2: talked about that, We've been asked quite a bit of that.
Speaker 2: We're going to make the right decision because we need
Speaker 2: to bust through to get people to understand it. There's
Speaker 2: a new day here at Red Robin and this comeback
Speaker 2: is real. We're bringing it relevant to today and just
Speaker 2: come give us a shot. So we're kind of figuring
Speaker 2: out exactly how best to do that, and then from there,
Speaker 2: what's the level of investment. It's not going to be
Speaker 2: significantly different than what we've done this year, but you know,
Speaker 2: this year we've we've cut back the marketing spend to
Speaker 2: focus on operations. Get that right. First, you've invested a
Speaker 2: tremendous amount back into the business and we've talked about
Speaker 2: that on our last earnings call. How many millions of
Speaker 2: dollars we've invested back into the company with all the
Speaker 2: food investments, in the labor investments and all those things.
Speaker 2: So more to come on that, but at the end
Speaker 2: of the day, we think marketing dollars, we can spend
Speaker 2: a lot more effectively.
Speaker 1: Okay, great, Now, are you you shifting your mix of
Speaker 1: traditional versus digital ad spending in the next year or two?
Speaker 2: Yeah, you know, clearly, you know the whole we're going
Speaker 2: to have less traditional and more digital. You know, I
Speaker 2: think that's the way of the way it is today.
Speaker 2: Long term, it's how do we communicate and understand enough
Speaker 2: about each individual guest to be able to communicate them
Speaker 2: on a one on one level. We're not there yet,
Speaker 2: but we think longer term we can get there with
Speaker 2: some of those changes, and that's when they real magic
Speaker 2: can happen. Is Hey, Mike, you came in, you know,
Speaker 2: last week and you got X, Y and Z. Would
Speaker 2: you know, would you like to try the same thing
Speaker 2: or would you like to try something new? And you know,
Speaker 2: those kinds of relations and hips will be important and
Speaker 2: through the total guest experience, people want to know, want
Speaker 2: to feel special, and we need to be able to
Speaker 2: do that in a fun environment where they can come
Speaker 2: as they are, and that's what we're going to do.
Speaker 1: Okay, great. Also, uh, you know, you got you have
Speaker 1: a lot of a lot of moving pieces. Man, you
Speaker 1: have an ambitious plan. It's it's great because it's all
Speaker 1: stuff that makes a lot of sense and seems to
Speaker 1: be gaining some uh, gaining some steam. But can you
Speaker 1: talk about the renovation plans a little bit? I mean,
Speaker 1: what what what percentage of the stores do you expect
Speaker 1: to touch and how long do you expect it to take?
Speaker 2: Yeah, the when when you talk renovation, why don't we
Speaker 2: just say this coming out of COVID as many restaurant
Speaker 2: companies struggle to keep up with just general maintenance.
Speaker 1: And oh yeah, R and M is up for all
Speaker 1: my companies, this yere.
Speaker 2: And and so to be candid, we're actually, I won't
Speaker 2: say they're all renovations, but we're spending the bulk of
Speaker 2: our capital dollars going back to get our restaurants where
Speaker 2: we need them to be just day to day operationally
Speaker 2: and looking right. And so we're spending tremendous, tremendous amounts
Speaker 2: of dollars. Having said that, we also know, as we've
Speaker 2: got an aging an aging fleet, we need to think
Speaker 2: about what does that remodel look like. And we've announced
Speaker 2: that we were going to do a few restaurants in
Speaker 2: a couple of markets to see kind of what level
Speaker 2: of investment we need to make and what kind of
Speaker 2: returns that we can get a good return. So we haven't.
Speaker 2: We're actually doing the plans now. We will actually do
Speaker 2: some of the work for those renovations in the first
Speaker 2: part of next year and then we'll monitor those aside
Speaker 2: from there. But again, there's so many uses of our capital.
Speaker 2: We're trying to be really effective here, and so the
Speaker 2: remodel program in the way you're thinking about it will
Speaker 2: take numerous years for us to do as we earn more.
Speaker 2: It's like I tell people, this is we need to
Speaker 2: earn our way, and that's what we're doing and reinvesting
Speaker 2: that capital to make sure that we're not just doing
Speaker 2: it and just food quality. We're also making sure the
Speaker 2: facilities are right and giving our team members the assets
Speaker 2: and something that they can work with.
Speaker 1: Yeah, you're doing it the right way, because you know,
Speaker 1: if you spend a lot of money on ads and
Speaker 1: renovating your stores before you get the operations nailed and
Speaker 1: the food improved, what's the point, right, So yeah, that
Speaker 1: makes a whole lot of sense. Do you do your
Speaker 1: stores employee server handhelds and are there any other tech
Speaker 1: enhancements that that you're interested in implementing.
Speaker 2: So again, it's sort of back to basics here, and
Speaker 2: we do use handhelds, but to be to be candid,
Speaker 2: we're upgrading all of our restaurants. Will have done here
Speaker 2: very shortly where we'd have Wi Fi in every restaurant
Speaker 2: and so metch of the handhelds that we currently are
Speaker 2: using our radio frequency and kind of the old way.
Speaker 2: And we are working now to plan to uh to
Speaker 2: have handhelds with with Wi Fi and the restaurants. And
Speaker 2: we're currently taking our infrastructure and updating all of it
Speaker 2: so that we can be so in this century, if
Speaker 2: you will. And so I tell people, first things first,
Speaker 2: and that's what we're doing. First. Are there plenty of
Speaker 2: bells and whistles we can do down the road to
Speaker 2: achieve some of the things I've talked about that individual
Speaker 2: relationship with guests. We are, but we've got to do
Speaker 2: this first. First things first, and so this infrastructure is
Speaker 2: really important and the handhelds will be a big part
Speaker 2: of that.
Speaker 1: Okay, cool, And what about the sale, lease back traction transactions?
Speaker 1: Excuse me, still not recovered from Las Vegas and R FDC.
Speaker 1: So if you could give us an update on the
Speaker 1: on the cell least back and what do you plan
Speaker 1: on doing with the cash.
Speaker 2: Sure, So, we've completed two tranches of it's nineteen restaurants
Speaker 2: at this point. We've got one more trench that we're
Speaker 2: looking to do and with the two we've actually invested
Speaker 2: it back into business. We've paid down some debt, we
Speaker 2: talked about that at our earnings release as well, and
Speaker 2: we bought back a little bit of stock. So so
Speaker 2: our plan with if we get the third trunch completed,
Speaker 2: which we're currently working on, then that would go to
Speaker 2: reduce debt and at the end of the day, we're
Speaker 2: using it to strengthen our balance sheet.
Speaker 1: All right, great, where does where does the leverage ratio stand?
Speaker 2: Well, what we we hope to do, you know, sort
Speaker 2: of getting down to a leverage less than two to one.
Speaker 2: So we think we'll have that completed by the end
Speaker 2: of this year.
Speaker 1: Okay, great, And I heard Red Robin was on the
Speaker 1: tonight show and something you mentioned something about a burger
Speaker 1: teeny What can you talk a little bit about that.
Speaker 2: Yeah, so we were working with a celebrity bartender group
Speaker 2: that was that's a reality star that wanted it that
Speaker 2: came to us and our PR team have been working
Speaker 2: hard and came with this idea doing a burgertini, martine
Speaker 2: and burgertini and basically taking burger juice and a bunch
Speaker 2: of ingredients and making a martini and and UH. Anyway,
Speaker 2: so then there's this this this UH program called Chainfest,
Speaker 2: which is a Michelin star chef out in California in
Speaker 2: LA that really likes chains and then takes and really
Speaker 2: romanticizes eight brands items to something that he thinks was cool.
Speaker 2: And they're doing these big events coming up I think
Speaker 2: in early December, and we're one of the restaurant companies.
Speaker 2: And and last night on the on the Late night show,
Speaker 2: they had had a mission star chef on there and
Speaker 2: a couple of the items and most of it was
Speaker 2: around Red Robin and and our burgers and UH and
Speaker 2: the burgertini. It was a lot of fun. It was
Speaker 2: it was a good piece, you know. And look, at
Speaker 2: the end of the day, we're anywhere where we can
Speaker 2: start to tell people there's a new day here at
Speaker 2: Red Robin. We're trying to do and these are just
Speaker 2: fun little events that if we have people talking about us,
Speaker 2: they're gonna hopefully give us a shot.
Speaker 1: Yeah, it's cool, and I feel like Red Robin has
Speaker 1: some of that like experimental, like innovative type stuff in
Speaker 1: its DNA.
Speaker 2: Right.
Speaker 1: I remember the uh, you know, the first time I
Speaker 1: ever saw like beer floats, you know, with Sam Adams
Speaker 1: beer and a milkshake was at Red Robin. Right.
Speaker 2: Yeah, so we're known for those those first of all
Speaker 2: in beverage innovation for sure, and we've got a great
Speaker 2: team working on things now. You know, we need to
Speaker 2: come back and one of the things we're trying to
Speaker 2: use his own shakes again to your point, come up
Speaker 2: with some cool creative shakes. We're the non alcoholic beverage
Speaker 2: we continue to lead away and freckled lemonade is still
Speaker 2: you know, our most popular drink and and so yeah,
Speaker 2: we're known for that. And the same thing with burger,
Speaker 2: you know, gourmet burger innovation. And so you're going to
Speaker 2: see some really cool things coming. We have a Lava
Speaker 2: Burger coming, which is going to be a really cool
Speaker 2: kind of experience at the table. And yeah, that's the
Speaker 2: beauty and that's the history of this fifty four year
Speaker 2: old brand, iconic brand that it's been known for that
Speaker 2: and we want to bring those fun elements back to
Speaker 2: this brand. We brought our mascot back, Red, as you know.
Speaker 2: I have to tell you, Mike that we had our
Speaker 2: town hall where after our earnings, we get our whole
Speaker 2: teams together, and we had Red there and we had
Speaker 2: a we do a lot with Make a Wish Foundation
Speaker 2: and the family. The fifteen year old son was the
Speaker 2: wish recipient, but they had his brother was a young
Speaker 2: little kid and stall Red and we had a couple
Speaker 2: hundred people in this room and I watched this little
Speaker 2: kid just walk all the way to follow Red and
Speaker 2: then just literally put his hands up in the air
Speaker 2: for Red to pick him up. And it was just priceless,
Speaker 2: you know. And that's kind of what you want.
Speaker 1: Yeah, that is cool. Yeah, and you know it makes
Speaker 1: your job a little more fun. It sounds like can
Speaker 1: I could tell the passion you have in your voice
Speaker 1: and you talk about the brand. That's great, man. So
Speaker 1: uh yeah, it's on my list. Man. This weekend, me
Speaker 1: and Jake are gonna make it over to the Seacaucus.
Speaker 1: Red Robin. I'm looking forward to it. So thanks again
Speaker 1: for doing this. Where can the rest of the members
Speaker 1: of the audience find their nearest restaurant, and uh, you
Speaker 1: know where can they find Red Robin on social media?
Speaker 2: Well, any of the social media redrobin dot com, and
Speaker 2: they can find us and there'll be a restaurant near
Speaker 2: them for sure.
Speaker 1: All Right, thanks man, This is it's a great story
Speaker 1: and I'm looking looking forward to continuing to follow it.
Speaker 1: And you know, I wish your success, all right, my friend.
Speaker 1: Thanks all right, and thanks to the audience for tuning in.
Speaker 1: If you liked the episode, please share with your friends
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