Red Robin Gourmet Burgers Inc. (NASDAQ:RRGB) Q2 2017 Earnings Conference Call - Final Transcript

Aug 08, 2017 • 05:00 pm ET

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Red Robin Gourmet Burgers Inc. (NASDAQ:RRGB) Q2 2017 Earnings Conference Call - Final Transcript

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Operator
Operator

Good afternoon, ladies and gentlemen. Welcome to the Red Robin Gourmet Burgers, Inc. Second Quarter 2017 Earnings Conference Call. Please note that the content of this call are being recorded.

And I would now like to turn the call over to Terry Harryman, Vice President of Finance, Planning and Investor Relations. Please go ahead, Mr. Harryman.

Executive
Terry D. Harryman

Good afternoon, everyone. During the course of this conference call, we may make forward-looking statements about our business outlook and expectations. These forward-looking statements and all other statements that are not historical facts, reflect our beliefs and predictions as of today. And therefore, are subject to risks and uncertainties as described in the Safe Harbor discussion found in the company's SEC filings.

During the call, we will also discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles, but are intended to illustrate an alternative measure of our operating performance that may be useful. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release available on our website.

We have posted our fiscal second quarter 2017's earnings release and supplemental financial information related to the results on our website at www.redrobin.com in the Investors section.

Now, I'd like to turn the call over to our Chief Executive Officer, Denny Post.

Executive
Denny Marie Post

Thank you, Terry. Good afternoon, everyone, and thank you for joining me and our Chief Financial Officer, Guy Constant, today. We are pleased to be back in positive sales and traffic territory, with same-store sales up 0.5% and traffic up 1%, putting us 360 basis points above casual dining peers.

First of all, we outperformed our peer set in 10 of 11 Black Box regions, representing all but two comparable corporate locations. When we entered negative territory on both sales and traffic in Q4, 2015, we set out to understand what was driving the decline by doing research with our most loyal guests, our Red Robin Royalty members who had lapped in their visits.

We learned that four key things that contributed to this downturn. The first was the experience in our restaurants had declined mostly and speed-to-table. Secondly, guests perceived we had become more expensive, because we have been emphasizing our Finest line over either our Gourmet or Tavern. Our advertising was not breaking through was the third point. And last, we were not a player in carryout or a delivery, which have become more important to our guests. We were well behind the competition in mix and capability.

The Red Robin team took on all four issues and we have begun to see the benefit. Our operations team dramatically improved their level of service, raising the Net Promoter Score or NPS to a consistent 70 or better, in large part by reducing those often vocal detractors to 7% or less. They accomplished this by honing in on those days and shifts where we fell short through our win the weekend tracking and coaching. We remain focused