Red Robin Gourmet Burgers, Inc. · NASDAQ:RRGB
Red Robin Gourmet Burgers — Investor Day (April 2012)
86 slides from Red Robin Gourmet Burgers's investor day presentation, Apr 4, 2012
Slide 1: Future of the Burger
FUTURE OF THE BURGER APRIL 4, 2012 1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 2 Forward-looking statements in this presentation regarding our future expectations, plans and objectives, including among other things, statements about our future economic performance, restaurant growth, and operational initiatives and other statements that are not histo
Slide 3: Unbridled Acts of Kindness
UNBRIDLED ACTS OF KINDNESS Video – A Recognition of Our Unbridled Culture and the Actions of A Single Restaurant. 3
Slide 4: A Checkered Past
A CHECKERED PAST 4 Memories Of Our First Location: “In the mid-70s some of us... used to go over to the Red Robin tavern for burgers and beer – we knew we wouldn’t get carded there. The burgers were great!” “I remember sitting there with my burger, with the well-known smoky haze...” “Dad told me nev
Slide 5: A Colorful History
A COLORFUL HISTORY Video – A Historic Look At the Growth and Heritage of the Red Robin® Brand. 5
Slide 6: Red Robin Executive Team
RED ROBIN EXECUTIVE TEAM 6 Eric Houseman President Chief Operating Officer Steve Carley Chief Executive Officer Denny Post Chief Marketing Officer Senior Vice President Annita Menogan Chief Legal Officer, Secretary Senior Vice President Todd Brighton Chief Development Officer Senior Vice President S
Slide 7: Quality, Engaged Board
QUALITY, ENGAGED BOARD Pattye Moore, Chair Former Executive and Board Member of Sonic Robert B. Aiken CEO Bolder Capital (food company portfolio); Former President and CEO of U.S. Foodservice Steve Carley CEO Red Robin Lloyd L. Hill Former Chairman and CEO of Applebee’s Richard J. Howell Former Audi
Slide 8: Our Strategic Intent
OUR STRATEGIC INTENT Own “Craveable” Gourmet Burgers Comfortable for Families and Adults Full-Service Occasions Supplemented with Non-Traditional Locations Yummm® Experiences with Everyday Value Celebrate Individuality of Our Guests’ Needs Delivered with Unbridled Spirit and Culture of Our Team Memb
Slide 9: RR Value Equation
RR VALUE EQUATION STATE Current Future Price “$10.00 Cheeseburger” Barbell of Burgers Affordable-Premium Quality Good, But Uneven Best In Class Service Anecdotal Qualitative Driven Metric Driven Guest Experience One Size Fits All Thoughtfully Customized 9
Slide 10: Strategic Imperatives
STRATEGIC IMPERATIVES 10 Advancing Our Great Brand Continuously Improving Operations Building a New Foundation 10
Slide 11: Key Initiatives
KEY INITIATIVES Advancing Our Great Brand . Promise . Appeal . Environment Continuously Improving Operations . Quality and Service . Restaurant Performance . New Restaurant Openings . Team Members Building a New Foundation . Red Robin’s Burger Works™ . Restaurant Development . Technology Innovation
Slide 12: People Are Talking
PEOPLE ARE TALKING Video – Featuring Media Clips, Guests, and Team Members Talking About Red Robin 12
Slide 13: Advancing Our Great Brand
ADVANCING OUR GREAT BRAND 13
Slide 14: Advancing Our Great Brand
ADVANCING OUR GREAT BRAND Brand Promise Brand Appeal Brand Refresh All Informed by Data and Supported by Talented Resources 14
Slide 15: Brand Promise
BRAND PROMISE 15
Slide 16: Brand Promise
BRAND PROMISE 16
Slide 17: Brand Appeal
BRAND APPEAL Lunch On The Go Time Pressured Unhurried 17 Planned? Unplanned? Adult Only Kids Present Adults Only Kids Present Dinner X X -------- High Consideration------
Slide 18: Brand Appeal
BRAND APPEAL Solidify = Broaden = 18 Red Royalty™ From Reward Program to Relationship Driver Address Barriers to Frequency Meet More of My Needs Reach New Guests
Slide 19: Solidify = Loyalty
SOLIDIFY = LOYALTY RED. > Roe Bottomless Yummm’ 9
Slide 20: Broaden = Address Barriers
BROADEN = ADDRESS BARRIERS Affordability Rewards Food Prices Beverage Prices Deals 20 OK To Be Loud Too Loud Kid-Centricity . . X Burger Barbell Menu Occasion-Specific Options X
Slide 21: Broaden = Reach New Guests
BROADEN = REACH NEW GUESTS Segment More Effectively Use Mass Media to Create Broad Awareness of Brand Building and Deepen Relationships Use Social Media to Support Brand Building and Deepen Relationships Get Our Swagger Back in Tone, Manner and Look 21
Slide 22: Brand Promise
BRAND PROMISE 22
Slide 23: Improving Guest Experience
IMPROVING GUEST EXPERIENCE Environment Customized Experience 23
Slide 24: Taking Back the Bar
D iN PAGS RE. B G BACK THE TAKIN
Slide 25: Taking Back the Bar
TAKING BACK THE BAR Objectives: Increase Year-Over-Year Beverage PPA Boost Alcohol Sales as a % of Total Sales Deliver Great Adult Experiences in the Bar 25
Slide 26: Taking Back the Bar: Beverage Initiatives
TAKING BACK THE BAR Beverage Initiatives: Launch Happy Hour Revise our Beverage Menu Create Seasonal Promotions Innovate with Beverages And Glassware Establish Bar Optimization Team 26
Slide 27: Taking Back the Bar: Bar Environment Initiatives
TAKING BACK THE BAR Bar Environment Initiatives: Create an Adult Dining Space Enhance A/V package, Decor And Overall Bar Atmosphere Test and Learn --Colorado Tests – 3 Restaurants --25 Restaurants, 5 Markets in 2012 --Optimize and Systematize Retrofit Existing Prototypes 27
Slide 28: Taking Back the Bar
TAKING BACK THE BAR 28 Red Robin Castle Rock, CO
Slide 29: Taking Back the Bar
TAKING BACK THE BAR 29 Red Robin Castle Rock, CO
Slide 30: Taking Back the Bar: Results to Date
TAKING BACK THE BAR Results to Date: Regained 50 bps of Beverage Alcohol Sales Mix System Wide in FY 2011 Q411 Beverage Alcohol Sales Mix Up 90 bps Encouraging Guest Count, Sales Trends in CO Test Restaurants 30
Slide 31: Continuously Improving Operations
CONTINUOUSLY IMPROVING OPERATIONS 31
Slide 32: Improving Quality & Service
IMPROVING QUALITY & SERVICE Presentation – Menu Design – Plating Menu Offerings – Heart of House Capability – Keeping Menu Fresh 32
Slide 33: Next Generation Performance Management
NEXT GENERATION PERFORMANCE MANAGEMENT 33
Slide 34: Performance Management
PERFORMANCE MANAGEMENT Re-Built Balanced Scorecards Benchmark Regions, Districts and Restaurants Implications for Poor Performance Rewards for Top Performance Manual Process Today Evolving to Dashboard with System Implementations 34
Slide 35: 2012 Restaurant Scorecard Criteria
Confidential 35 Metric Green 2 Points Yellow 1 Point Red 0 Points PROCESS BER/EcoSure Pass Without Previous Fail Pass with Previous Fail Fail GUEST Guest Counts Favorable to Budget Favorable to Last Year Unfavorable to Last Year Overall Restaurant Experience 75% or Higher 66%- 74.99% Less than 66% N
Slide 36: Scorecard Criteria (continued)
T M Hourly Turnover % Current Period (Green=1, Yellow=0.5,Red=0) Less than 4.62% Current Period 4.62% to 6.92% Current Period Greater than 6.92% Current Period Hourly Turnover % 3 Period Annualized (Green=1, Yellow=0.5,Red=0) Less than 60% trailing 3 periods annualized 60% - 89.99% trailing 3 period
Slide 37: Successful New Restaurants
SUCCESSFUL NEW RESTAURANTS 37
Slide 38: New Restaurants: A Winning Recipe
NEW RESTAURANTS A WINNING RECIPE Created: New Restaurant Operations Department in 2008 – The Team – Director of New Restaurant Operations – Three Regional Operating Directors – The Objective – Create a Strategic and Scalable Process for Training and Development of Leadership –Deliver Great Guest and
Slide 39: New Restaurants Leadership Platform
NEW RESTAURANTS LEADERSHIP PLATFORM Strategic and Scalable Process for Training and Development of Leadership. – General Managers Identified One Year Before Restaurant Opening – Must Be Existing Red Robin GM with One Year Experience Greatest Correlation to a Restaurant’s Success: A GM’s Tenure in th
Slide 40: New Restaurants: Raising the Bar
NEW RESTAURANTS RAISING THE BAR Proven Track Record of Driving Profitability Through NROs – Increased Restaurant Level Margins 510 bps from the 2008 Class to the 2011 Class 40 14.5% 17.9% 22.4% 19.6% 2008 2009 2010 2011 Restaurant Profit Margins* * Restaurant level profit for 1st year open. Except f
Slide 41: New Restaurants: Value Creating
NEW RESTAURANTS VALUE CREATING Compelling NRO Economics – Strengthened Cash on Cash Returns from 18% for the 2008 Class to 37% for the 2011 Class 41 18.0% 22.9% 41.7% 37.1% 2008 2009 2010 2011 Cash on Cash Returns* * Cash on cash return for 1st year open. Except for 2011 which is annualized.
Slide 42: Building a New Foundation
BUILDING A NEW FOUNDATION 42
Slide 43: Red Robin's Burger Works
RED ROBIN’S BURGER WORKSTM43
Slide 44: RR's Burger Works Is Different
RR’S BURGER WORKS IS DIFFERENT Fresh, Fire-Grilled Burgers – Our Famous Burgers – Build Your Own Creation Red Robin Culture and Service – Deliver to Your Table – Clear Your Table – Free Drink Refills Contemporary Atmosphere 44
Slide 45: Other All Stars
OTHER ALL STARS All-Natural Chicken Breast, Hand-Breaded Tenders Portabella Burger Fresh Salads with Grilled or Crispy Chicken Sweet Potato Fries Onion Straws Hand-Spun Shakes 45
Slide 46: Don't Take Our Word For It
“bringing a taste of gourmet” “modern décor and upbeat music” “surprised to see a variety of choices” OSU. The Lantern, 3/29/12 “Grade: A” “The biggest difference between Red Robin’s Burger Works and Five Guys is the service” DON’T TAKE OUR WORD FOR IT 46 “My burger wasjuicy, the toppings were crisp
Slide 47: Denver Stapleton
48 Denver Stapleton
Slide 48: AN Wi
Ne AN Wi
Slide 49: Limited Test, Great Potential
LIMITED TEST, GREAT POTENTIAL Expect 5 RR’s Burger Works by End 2012 – Lifestyle Center – College Campus – Downtown Evaluate Performance Metrics – Guest Feedback – Sales – Margins – Returns – Menu Potential? Time Will Tell 50 The Ohio State Univ
Slide 50: Restaurant Development
RESTAURANT DEVELOPMENT 51 Confidential
Slide 51: Department Overview
DEPARTMENT OVERVIEW Corporate Site Selection and Leasing – Due Diligence – Real Estate Committee Approval Process Red Robin’s Burger Works™ Development Franchisee Site Approval Restaurant Entitlement, Design and Construction Capital Purchasing Facilities Management Licensing Property Management Real
Slide 52: Development History
DEVELOPMENT HISTORY 53 1 3 18 46 137 306 327 1 39 98 118 133 137 - 50 100 150 200 250 300 350 400 450 500 1969 1979 1989 1999 2004 2009 2011 Corporate Franchised 464 439 255 144 57 4 1
Slide 53: Popularity Fuels 40+ Years of Growth
POPULARITY FUELS 40+ YEARS OF GROWTH Over 460 Restaurants In U.S. and Canada . Corporate . Franchise 54
Slide 54: Superior, Convenient Locations
55 SUPERIOR, CONVENIENT LOCATIONS Located In or Near High-Traffic Malls & Shopping Centers Superior Trade Area Demographics Median Household Income of $69,000 Within 3 Miles Average Trade Area Population of 72,000 Great Relationships with Developers, Landlords, Retailers
Slide 55: Restaurant Prototypes
RESTAURANT PROTOTYPES Full-Size Mid-Size Burger Works Square Feet 5,800 4,025 ± 2,500 Seats 200± 140 70 Avg. Investment ($m) 1.8m 1.2m 0.5m-0.6m Approximate Sales ($m) 2.8-3.1m 2.3-2.6m 1.1-1.4m 56
Slide 56: Site Selection Considerations
SITE SELECTION CONSIDERATIONS Types of Sites Vary – Regional Malls – Big Box Power Centers – Life Style Centers Prototype Flexibility Diverse Customer Base – Population Density – Day-Part Population – Income Levels Availability of Prime Locations/Relationships with Real Estate Developers 57
Slide 57: 2012 Development Plan
58 2012 DEVELOPMENT PLAN Open 7-8 Prototype, 2-3 Mid-Size, and 4 RR Burger Works (plus 2 relocations) Regional, Targeted Market Expansion Continue to Fill Pipeline of Potential Deals to Facilitate 15- 20 Openings Beyond 2012 – Further Explore Non-Traditional Locations – Mixture of Full-Size Prototyp
Slide 58: 2012 Development Plan, Cont.
59 2012 DEVELOPMENT PLAN, CONT. Utilized Birchwood Resultants to Validate Selection Criteria and Evaluate Potential Sites Selecting Sites Opportunistically Versus Limiting Certain Markets for Only Corporate or Franchise Development Test Brand Refresh in Existing Facilities and Complete Design Work f
Slide 59: 2012 Expected Openings
2012 EXPECTED OPENINGS Under Lease or Negotiation – Florida: 4 – New York/New Jersey: 2-3 new plus 1 franchisee acquisition – Washington: 2 – California: 2 – Colorado: 2 (RRBW) – Ohio: 1 (RRBW) – Maine: 1 Other – Relocations/conversions: Tustin, CA and Boulder, CO (RRBW) Close: Two Locations 60
Slide 60: Other Initiatives
61 61 OTHER INITIATIVES Rebranding with Lippincott Energy Management System Facilities Management System Non Traditional Locations Sourced for 2013 and Beyond Value Engineering Productivity Advantage
Slide 61: Maryland Market Study
MARYLAND MARKET STUDY Maryland market has been developed over past 12 years on a “project driven” basis, taking into account the undeveloped trade areas in the market when opportunities arose for expansion Measured development over time allowed for development of seasoned managers in future stores A
Slide 62: Maryland Market Map
Confidential 63 MARYLAND MARKET MAP
Slide 63: Maryland Market Timeline
MARYLAND MARKET TIMELINE DATE OPENED RESTAURANT DEAL TYPE 1-31-2000 Owings Mills Pad 6-11-2001 Annapolis Mall 9-4-2001 Lake Forest Mall 4-15-2001 Germantown Pad 3-31-2003 Columbia Crossing Purchase 11-8-2004 Waldorf Pad 11-14-2004 Towson Pad 9-22-2008 Bel Air Mall 8-23-2010 Lexington Park Full raw s
Slide 64: New Jersey Market Development
NEW JERSEY MARKET DEVELOPMENT DATE OPENED RESTAURANT DEAL TYPE 10-10-2005 Hamilton Pad 6-26-2006 South Plainfield Pad 3-30-2009 May’s Landing Pad 11-22-2010 Rockaway Pad 65
Slide 65: Florida Market Development
FLORIDA MARKET DEVELOPMENT DATE OPENED RESTAURANT DEAL TYPE 8-13-2007 Gulf Coast TC End Cap 3-9-2009 Panama City End Cap 3-16-2009 Pensacola Mall 3-15-2010 Daytona Beach End Cap 8-30-2010 Citrus Park (Tampa) Mall 11-15-2010 Wiregrass (Tampa) Pad 66
Slide 66: Development Potential
DEVELOPMENT POTENTIAL Continued Growth for Mid-Size and Full-Size Prototype Restaurants15-20 Annually Growth for RRBWTBD Remodel of all Restaurants Over Next 3-4 Years with Initial 25 to be Completed in 2012 Confidential 67
Slide 67: Innovation: 2012 & Beyond
INNOVATION: 2012 & BEYOND 68
Slide 68: Innovation Goals
INNOVATION GOALS Build a Culture of Innovation and Change Focus on Continuous Improvement and Guest-Facing Experience-Builders Drive Strategy with Unique Information Insights Empower Team Members to be Best-In-Class with Relevant Development Programs and Dynamic Best-In-Class Tools 69
Slide 69: What Does This Look Like?
WHAT DOES THIS LOOK LIKE? 70 Video – A Look at Some Potential Technologies and Applications to Enhance the Total Red Robin Experience
Slide 70: Innovation Investments
INNOVATION INVESTMENTS ap E oYummmv, | ~ == it
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Slide 72: Transactional, Operational and Insights Data
73 Transactional: Point of Sale, Red Royalty – Sales, Guest Count, Mix, PPA, etc. Operational: Operations Standards – Ticket Times, Wait Times, etc. Insights: Guest Voice, Social Media, Consumer Data
Slide 73: Yummm U
YUMMMU. 74
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Slide 75: Improving Returns to Shareholders
IMPROVING RETURNS TO SHAREHOLDERS 76
Slide 76: Our Financial Priorities
OUR FINANCIAL PRIORITIES Realize Organic Growth Opportunities Pursue New Unit Growth with Focus on ROIC Capitalize on External Growth Opportunities Improve Margins by Leveraging G&A Maintain Strong Financial Position Return Excess Cash to Shareholders Transparency and Communication 77
Slide 77: Priorities Tied to Strategy
PRIORITIES TIED TO STRATEGY 78 Advancing Our Great Brand Continuously Improving Operations Building a New Foundation 78
Slide 78: Investment Cycle
3 TO 5 YEAR INVESTMENT CYCLE Maintenance; Information and Other Systems 79 Maintenance Capital Organic Growth Expansion Investments New Units; RR Burger Works; Franchising Item Development and Kitchen Equipment; Red Royalty; Remodeling with Brand Refresh
Slide 79: Prepared for a Tough Environment
PREPARED FOR A TOUGH ENVIRONMENT Economic Growth Slow and Uneven Consumer Sentiment Fickle Competition Intense Commodity Inflation Continuing 80
Slide 80: Leverage Our Assets
LEVERAGE OUR ASSETS 81 Brand Capabilities Culture Quality and Differentiation “Yummm” Family Consideration Customer Segment National Footprint UBA – Culture of Caring Guest Service Team Member Support Relationships Menu Development Red Royalty System Development Business Transformation Financial Pos
Slide 81: Target Growth Model
TARGET GROWTH MODEL 82 Balanced Predictable EBITDA and ROIC Growth 2012 1 2013 2014 New Unit Growth Red Robin 9 to 11 15 to 20 20 to 25 New Unit Growth Burger Works 4 5 to 10 ? Comparable Restaurant Sales Growth Low Single Digits Low Single Digits Low Single Digits Franchise Royalty Growth ~ 3% 3%-4
Slide 82: Investing Accretively
INVESTING ACCRETIVELY Organic Growth Expansion Other Opportunities Manage Cost of Capital and Leverage 84 Return Excess Cash to Shareholders ADJUSTED DEBT to EBITDAR Red Robin 3.9X Casual Dining Peers (average) 3.2X Goldman Sachs, March 2012
Slide 83: Poised for Next Cycle
POISED FOR NEXT CYCLE Secure, Long-Term Growth Adding Truly Best-In-Class Business Intelligence Preparing Foundation with Brand and Facilities Development Financial Condition to Capture Opportunities 85
Slide 84: Wrap Up
WRAP UP 86
Slide 85: A Long Runway for Growth
A LONG RUNWAY FOR GROWTH Potential 200+ Domestic RRGBs over 5 years RRBW Non-Traditional Potential (Colleges/Airports/Stadiums/Urban) Franchising International Food Truck Licensing (Sauces/Seasoning/Dressings) Technology (Business Info/Op Efficiency/Guest Facing) Merchandising Carry-Out/To-Go Cateri
Slide 86: Questions?
QUESTIONS? 88
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