Red Robin Gourmet Burgers, Inc. · NASDAQ:RRGB
Red Robin Gourmet Burgers — ICR Conference January 2020
36 slides from Red Robin Gourmet Burgers's conference presentation, Jan 13, 2020
Slide 1: Forward-Looking Statements
Forward-Looking Statements Forward-looking statements in this presentation regarding the Company’s future performance, long term outlook, strategic plan and initiatives, operations, free cash flow, use of capital, projected financials, including EBITDA growth, revenue, off-premise sales growth costs
Slide 2: Paul Murphy, President and CEO
Paul Murphy President and CEO Red Robin Joined Noodles & Company as Executive Chairman in 2017 Led successful brand turnaround, delivering 4 consecutive quarters of comparable restaurant sales growth and EBITDA growth of ~28% in 2018 compared to 2016 Joined Del Taco Restaurants as CEO in 2009 Execut
Slide 3: Why Red Robin?
The enormous potential for Red Robin to be one of the top performing Brands in Casual Dining! Personal research and diligence The strong emotional connective tissue of guests to Red Robin Majority had a positive story or memory of a Red Robin experience While there were brand drift/service model mis
Slide 4: Red Robin at a Glance
Iconic, niche brand founded in 1969 in Seattle, WA Revenues of $1.3 billion TTM ending Q3 2019 556 casual dining restaurants in 44 states and Canada 454 company-owned locations or over 80% of portfolio The Gourmet Burger AuthorityTM with burger sales mix of ~ 66% of entrée sales One of the largest i
Slide 5: Significant Brand Affinity and Value Proposition
Ability to Provide Value Through High-Quality Menu Items Source: Technomic, Ignite consumer brand metrics data, 2019; Nation’s Restaurant News, 2019 2019 Top 5 casual dining brand for: Intent to Return Treats me Like a Valued Customer Quality of Loyalty Program Points / Rewards 2019 NRN consumer pic
Slide 6: 2019: A Year of Foundational Change
Performance improvements throughout 2019 New CEO Diagnoses of our opportunities Research and guest led Facts, no opinions Opportunities were clear Brand drift Service model missteps Mixed messaging Financial underperformance Aligned 2019 Operations priority initiatives to address areas to deliver hi
Slide 7: SSS Results Summary
Note: Comparable restaurants calculated at constant currency rates. Period traffic / PPA is US corporate units only. SSS Results Summary 2019 PPA Improving As We Unwind Discounting Topline improvement continued with Q4 2019 SSS growth of 1.3% Enterprise Sales Trends Improving -7.0% -5.0% -3.0% -1.0%
Slide 8: Our Plan
Our Plan Tell Our Story Deliver the Brand Promise Recapture Our Soul Accelerate Profitable Growth New Service Model Menu Rationalization Donatos® Investment in Technology Significant Off-Premise Growth Portfolio Optimization 4 3 2 1 Deliver long-term value creation for shareholders
Slide 9: Recapture our Soul
Recapture our Soul Flavor of Americana through Gourmet burgers and other favorites Family friendly and playful atmosphere Shareable foods including bottomless steak fries Engaged service that offers the gift of time Brand Promise: Memorable Moments of Connection 1 Note: Based on a Q1 2019 Kelton stu
Slide 10: Deliver the Promise
New service model Menu rationalization Leverage technology Staffing, retention and GM tenure in restaurant 2 Deliver the Promise
Slide 11: Foundational Initiatives in Place to Improve Execution
Foundational Initiatives in Place to Improve Execution with New Service Model Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Headsets Menu Rationalization (ongoing) Sticky Media SAMs (server POS handhelds) New Service Model 1 2 3 4 5 Implementation of core initiatives to help simplify and i
Slide 12: New Service Model
CLASSIFIED – INTERNAL USE ONLY PAGE 13 CATEGORY New Service Model 2 Note: Results are Pre/Post net of Control. Due to the small sample size of the alpha test, results carry lower statistical significance. * Lift is directional Alpha test sites experiencing increases in sales, guest counts, and gross
Slide 13: Brand and Insights-Driven Menu Rationalization
CATEGORY Brand and Insights-Driven Menu Rationalization Core product quality improvements Improve the “gift of time” Insights-driven product innovation Menu design enhancements Opportunity to grow beverage sales 2 Brand and insights-driven research will drive menu evolution
Slide 14: Investments in New Digital Platforms and Technology Solutions
Investments in New Digital Platforms and Technology Solutions Red Robin loyalty program to drive incremental visits through targeted marketing to our loyalty members based on purchasing history One of the largest loyalty programs in CDR, with more than 9 million members If 3% of all loyalty members
Slide 15: Turnover Approaching Best-in-Class Targets
Turnover Approaching Best-in-Class Targets 2 Hourly BIC: 97.4% GM BIC: 18.3% Manager BIC: 27.9% Source: TDn2K People Report as of 12/29/2019; BIC = best-in-class, or 25th percentile for casual dining 98% staffed at Manager positions with declining turnover 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% P
Slide 16: Improving Guest Satisfaction
Improving Guest Satisfaction 2 Recent Improvements in Dine-In OSAT Index, 2018: P1 = 100 2019 YTD OSAT Results Improving Note: Data reflects Red Robin USA Corporate; Extended Guest Voice OSAT n=18, 412-29, 241; Date range: P1 2018- P13 2019; US Corporate units only 94 96 98 100 102 104 106 Period 1
Slide 17: Q4 2019 Traffic, OSAT and Team Member Trends
Q4 2019 Traffic, OSAT and Team Member Trends Note: Turnover data currently based upon straight averages across each restaurant group GM Tenure and Team Member Retention Drives Compelling Results 2
Slide 18: Tell Our Story
Tell Our Story National TV / Cinema / Digital Video Display Outdoor / Direct Mail In-Restaurant Direct Publisher Social Pattye to gr % of spend New omni-channel creative strategy and targeted marketing reinforcing Emotional Connection and Brand Equities, driving guest engagement 3
Slide 19: "All the Fulls" New Creative Campaign (Video)
“All the Fulls” New Creative Campaign (Video) 3 click the link to see the “All the Fulls” new creative campaign video https://www.youtube.com/watch?v=foRLuVNMtYA
Slide 20: Tell Our Story
Tell Our Story Pattye to gr % of spend Omni-channel messaging brand driven, not price driven Contemporized for our guests Driving compelling results Consumer Insights research effectively revealed memorable moments of connection drive guest activation 30 second spot was one of the top five strongest
Slide 21: Accelerate Profitable Growth
Accelerate Profitable Growth Growing off-premise business Catering Third Party Last Mile Menu enhancement (Donatos®) Frequency Appetizer Delivery New restaurant prototype to drive profitable development 4
Slide 22: Growing Off-Premise Business
Growing Off-Premise Business Off-Premise Sales as a % of Total Food and Beverage Sales 2019 off-premise sales grew 28% to $163 million in 2019 Significant runway to grow catering business, currently ~1.5% sales, well below the industry average for casual dining 3 major 3rd party delivery players rol
Slide 23: Introducing Donatos
Introducing Donatos® 4 An opportunity to build profitable sales with Donatos®, a high quality pizza brand, “nested” inside Red Robin (not co-branding) A new premium category offering Donatos® pizza, plus a highly incremental delivery channel will create buzz and give guests another reason to choose
Slide 24: Introducing Donatos (Video)
Introducing Donatos® (Video) 4 click the link to see why we LOVE Donatos https://youtu.be/Lngox7gk9i4
Slide 25: Donatos, A Win for Guests, Team Members and Shareholders
Donatos®, A Win for Guests, Team Members and Shareholders 4 Guest: Fulfills a guest need and is brand appropriate Strengthens Americana positioning of brand Strong satisfaction with quality pizza Overall menu appeal and value perception improves with addition of Donatos® pizza Drives incremental che
Slide 26: Added Experienced Value Creators to the Board
Pattye to gr % of spend Former President, Carrabba’s Italian Grill Former EVP & Chief Resource Officer, Bloomin’ Brands Financial, M&A, restaurant and turnaround experience Dave Pace Former CEO, Jamba Juice Former CFO, DineEquity Former CFO, KB Home Financial, M&A, restaurant and turnaround experien
Slide 27: Adjusted Capital Allocation Strategy
New $300 million facility provides capital allocation flexibility Continue to reinvest in maintaining our restaurants and infrastructure with maintenance and systems capital and restaurant refreshes Disciplined investment in growth projects including IT projects, modest development and implementing
Slide 28: Turnaround In Process
Improved topline trajectory High brand affinity and value scores 98% staffed at Manager positions Turnover approaching best-in-class targets Improved operating metrics – faster ticket times, fewer guest walkaways and shorter wait times Improved Overall Guest Satisfaction Creative campaign producing
Slide 29: 2020 Outlook
Incremental restaurant-level operating profit offset by pre-opening expenses, marketing and project (G&A) expenses associated with Donatos® expansion and other growth initiatives 2020 Outlook Note: Free cash flow = net cash provided by operating activities less net cash used in investing activities.
Slide 30: 2021 to 2023 Outlook
2020 set strong foundation for achieving long-term outlook and target Adjusted EBITDA of $150M by 2023, with margin expansion driven by G&A discipline sales leverage and other factors 2021 to 2023 Outlook Note: Free cash flow = net cash provided by operating activities less net cash used in investin
Slide 31: Our Shareholder Value Proposition
Laser focused on maximizing value for all shareholders Opportunities are clearly identified Plan in place to transform the business to accelerate our turnaround and drive growth Early indicators are positive We are confident in our future Our Shareholder Value Proposition
Slide 32: Appendix
Red Robin Gourmet Burgers Appendix ICR Conference January 2020
Slide 33: Improving Wait-Times and Walk-Aways
Improvements in Wait Times / Walk Aways Average wait time in Q4 2019 was 1:58, a decrease of 44 seconds compared to prior year Guest walk-aways decreased 1.5% compared to prior year Improving Wait-Times and Walk-Aways
Slide 34: Improving Ticket Times
Improvements in Total Ticket Times In Q4 2019, total ticket times averaged 11:51, a 48-second decrease compared to Q4 2018 Improving Ticket Times
Slide 35: 2020 Commodity Expectation
60% fixed contracts; 37% variable contracts; 3% not contracted % of Total COGS in 2020 Variable vs Fixed Pricing Ground Beef 14.6% Variable (market driven) Steak Fries 11.5% 100% fixed through 10/21 Poultry 9.1% 50% fixed though 11/20 Produce 7.8% 80% fixed through 10/21 Bread 6.1% 100% fixed throug
Slide 36: 2020 Commodity Expectation
2020 Commodity Expectation % of Total COGS in 2020 Variable vs Fixed Pricing Ground Beef 14.6% Variable (market driven) Steak Fries 11.5% 100% fixed through 10/21 Poultry 9.1% 50% fixed though 11/20 Produce 7.8% 80% fixed through 10/21 Bread 6.1% 100% fixed through 6/20 Cheese 4.9% 90% fixed through
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