Red Robin’s Q2 results were received positively by investors, as the company exceeded Wall Street expectations for both revenue and adjusted profit despite ongoing sales challenges. Management credited operational improvements—specifically labor efficiency and cost discipline—for the margin recovery, with CEO Dave Pace highlighting the company’s “270 basis point improvement year-over-year in restaurant level operating profit margin…driven by 300 basis points of labor improvements.” The launch of the Big Yummm value promotion and a deliberate pullback in marketing spend were also noted as key factors influencing traffic and sales trends during the quarter.
Is now the time to buy RRGB? Find out in our full research report (it’s free).
Red Robin (RRGB) Q2 CY2025 Highlights:
- Revenue: $283.7 million vs analyst estimates of $279.6 million (5.5% year-on-year decline, 1.5% beat)
- Adjusted EPS: $0.26 vs analyst estimates of -$0.06 (significant beat)
- Adjusted EBITDA: $22.43 million vs analyst estimates of $17.99 million (7.9% margin, 24.7% beat)
- The company dropped its revenue guidance for the full year to $1.2 billion at the midpoint from $1.22 billion, a 1.6% decrease
- EBITDA guidance for the full year is $62.5 million at the midpoint, below analyst estimates of $64.72 million
- Operating Margin: 3.5%, up from -1.5% in the same quarter last year
- Locations: 487 at quarter end, down from 503 in the same quarter last year
- Same-Store Sales fell 3.2% year on year (-0.8% in the same quarter last year)
- Market Capitalization: $119.3 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Red Robin’s Q2 Earnings Call
- Todd Morrison Brooks (Benchmark Company) focused on the sustainability of labor efficiency and how Big Yummm impacts margins; CEO Dave Pace and CFO Todd Wilson explained ongoing labor improvements and a 1% expected margin drag from the promotion.
- Alexander Russell Slagle (Jefferies) asked about near-term actions to improve guest experience; Pace described a holistic approach including facility updates, new technology, and incremental marketing investment.
- Slagle (Jefferies) followed up on marketing cadence; Wilson clarified that increased spend will be split evenly between the next two quarters to support value messaging and drive traffic.
- Jeremy Scott Hamblin (Craig-Hallum Capital) inquired about franchisee performance and margin improvements; Pace noted franchisees are strong operators and are participating in promotions, with company stores closing the margin gap.
- Mark Eric Smith (Lake Street Capital) questioned pricing flexibility and the impact of commodity inflation; Wilson stated no further menu price hikes are planned in 2025, with future strategies focused on menu optimization rather than broad price increases.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) whether value-driven promotions like Big Yummm can consistently improve traffic without eroding margins, (2) the rollout and early results of data-driven marketing initiatives, and (3) the impact of targeted restaurant refreshes on guest satisfaction and sales. Progress on refranchising and ongoing cost management will also be critical signposts.
Red Robin currently trades at $6.61, up from $5.98 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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