Red Robin To Focus On Donatos Pizza, Digital Upgrades In 2021

Shares of restaurant chain Red Robin Gourmet Burgers, Inc. RRGB shares were pulling back Friday after adding more than 7% in Thursday's session.  

The price action comes in the wake of Red Robin's announcement of a growth initiative that focuses on generating new revenue streams outside of the core hamburger business.

Betting On Pizza: Red Robin's partnership with pizza chain Donatos expanded over the year to include a pizza oven inside a Red Robin kitchen.

Management expects Donatos will generate pizza sales of more than $60 million for Red Robin and generate more than $25 million in profit by 2023.

Red Robin expects to add Donatos' pizza menu at 120 new restaurants in 2021, bringing its total to around 200 restaurants by the end of the year.

Restaurants with Donatos pizza are expected to drive incremental flow-through of $45,000 in the second year and generate a three-to four-year payback period, the company said.

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Digital Initiatives: Red Robin has several new mobile and digital initiatives ready to launch in 2021, including an improved website and app.

These improvements represent cost-effective channels to better engage with clients on a more personalized level, according to the restaurant chain. 

Red Robin expects its investments in digital improvements will translate to higher-order conversion, increased guest frequency and higher revenue per order.

2021 Objectives: Management opted against providing any financial guidance for 2021 amid the COVID-19 pandemic.

But the company did say it expects: 1) a recovery in its Western markets, 2) generate incremental growth of mid-to-high single-digit comparable restaurant revenue in 2021 and beyond and 3) make capital expenditures of $45 million to $55 million.

RRGB Price Action: Red Robin shares were down 3.77% at $32.66 at last check.