Red Robin Q2 Earnings Lag Estimates, Revenues Beat

Red Robin Gourmet Burgers, Inc. RRGB posted mixed second-quarter fiscal 2024 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top line increased year over year, while the bottom line fell from the prior-year quarter's levels.

Following the results, the company's shares declined 14% during the after-hours trading session on Aug 22. Negative investor sentiments were witnessed as the company lowered its 2024 guidance on account of a broader industry slowdown.

Delving Deeper

In the fiscal second quarter, RRGB recorded an adjusted loss per share of 48 cents, wider than the Zacks Consensus Estimate of a loss of 41 cents. The company reported an adjusted loss per share of 24 cents in the prior-year quarter.

Operating Results

The restaurant-level operating profit margin was 11.8% in the fiscal second quarter (compared with 12.6% in the prior-year quarter). The figure compares to our projection of 11.9%.

In the fiscal second quarter, restaurant labor costs increased 3.9% year over year to $113.9 million. The figure compares to our projection of $112.2 million.

Other operating costs came in at $51.7 million compared with $51.8 million reported in the prior-year quarter. The figure compares to our projection of $54.3 million.

Adjusted earnings before interest expenses, income taxes, depreciation and amortization (EBITDA) in the fiscal second quarter amounted to $11.8 million compared with $15.5 million in the prior-year quarter. Our estimate for the metric was $14.1 million.

Other Financial Information

As of Jul 14, 2024, RRGB had cash and cash equivalents of $23.1 million compared with $23.6 million as of Dec 31, 2023. Long-term debt, as of Jul 14, 2024, was $162.3 million compared with $182.6 million in the prior-year quarter. Inventories in the quarter were $27.3 million compared with $27.1 million in the previous quarter.

2024 Guidance

For the fiscal 2024, the company expects total revenues to be approximately $1.25 billion compared with the previous expectation of $1.25-$1.275 billion. Restaurant-level operating profit is anticipated in the range of 11-11.5% down from the previous expectation of 12.5-13.5%. Capital expenditures are anticipated to be between $25 million and $30 million. In 2024, adjusted EBITDA is expected in the range of $40-$45 million, down from the previous expectation of $60-$70 million.

Zacks Rank

Red Robin currently has a Zacks Rank #4 (Sell).

Recent Retail-Wholesale Releases

Starbucks Corporation SBUX reported mixed third-quarter fiscal 2024 results, with earnings meeting the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line declined on a year-over-year basis. The downside was due to the competitive market dynamics in China, macro challenges and price wars.

In the fiscal third quarter, the company reported adjusted EPS of 93 cents, in line with the Zacks Consensus Estimate. The bottom line declined 7% year over year from $1.00. Quarterly revenues of $9,113.9 million missed the Zacks Consensus Estimate of $9,224 million. The top line dropped 0.6% on a year-over-year basis due to dismal international revenues. Global comparable store sales declined 3% year over year. The downside was accompanied by a decline of 5% in comparable transactions, partially overshadowed by a 2% increase in average tickets.

Chipotle Mexican Grill, Inc. CMG released impressive second-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. During the quarter, CMG benefited from successful promotions regarding Chicken Al Pastor driving significant engagement and sales. Also, the emphasis on throughput and staff training proved effective in meeting heightened demand and supported transaction growth.

During the second quarter, CMG reported adjusted EPS of 34 cents, outpacing the Zacks Consensus Estimate of 31 cents. The bottom line increased 36% from 25 cents reported in the year-ago quarter. Quarterly revenues of $2.97 billion surpassed the consensus mark of $2.94 billion by 1.3%. The top line rose 18.2% on a year-over-year basis. The upside was driven by strong comparable restaurant sales growth backed by increased transactions (8.7%) and average checks (2.4%).

McDonald's Corporation MCD reported drab second-quarter 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and the bottom line declined on a year-over-year basis. The dismal performance was caused by a pressured industry landscape and the war in the Middle East.

During the second quarter, McDonald's reported adjusted EPS of $2.97, missing the Zacks Consensus Estimate of $3.08. Moreover, adjusted earnings declined 6% year over year. Quarterly net revenues of $6,490 million lagged the consensus mark of $6,651 million. The top line dropped 0.1% year over year. Global comps declined 1% against 11.7% growth in the prior-year quarter.

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