Red Robin CEO talks navigating consumer spending slowdown

According to a LendingTree survey, 78% of consumers believe dining out is a luxury. Red Robin Gourmet Burgers (RRGB), a casual dining chain, reported earnings and acknowledged that inflation's impact on consumers has affected the company's margins. Red Robin CEO G.J. Hart joins Wealth! to discuss the company's strategy amid changing consumer behavior.

Hart notes that Red Robin is "in the middle of a comeback," undergoing a strategic plan to enhance operations. While consumers have been trading down, he mentions that they have continued to add on items like desserts and appetizers, saying "it's given us some confidence" in the consumer's willingness to spend.

"We think it's better to be 52 weeks a year in providing value to our guests," Hart told Yahoo Finance, emphasizing that the company is "focusing on fundamentals" to improve customer experiences and offer consistent value throughout the year.

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This post was written by Angel Smith

Video Transcript

Consumers are stretched.

80% of people think fast food is a luxury according to a lending tree survey.

And that's hitting companies mcdonald's Starbucks and KFC parent company Yum brands all report seeing consumers pull back.

And this week Red Robin Gourmet Burgers reported earnings where the company is saying that inflation is weighing on its diners to break down how consumers are faring GJ Hart, who is the Red Robin Gourmet Burger Ceo is here with us.

Thanks so much for hopping on.

You gotta break down some of what you're seeing among consumers here for us.

GJ.

Sure.

First of all, good morning to you, Brad, great to be with you.

And uh uh thanks for having me on, you know, we're in the middle of a, a comeback is what we call it and, and uh in what we call our strategic plan is the North Star plan.

And so we see a little different than, than the backdrop of what's going on in the overall economy because we're really driving back to some fundamentals of this iconic brand.

And so what we're seeing right now is we're seeing a great uh uh take rate of our gourmet burgers, which by the way, we've improved 85% of our menu with higher ingredients.

And we're seeing a great take on the, the upper end of that, that uh, menu pricing are um, more value oriented tavern burgers.

We're also seeing a great take.

Great.

So we're seeing some trade down to tavern bur burgers, but that's ok because, you know, again, we have great value with 30 bottomless sides.

So, um, we're, we're seeing that and then at the same time, we're seeing things like add ons and salads and, and uh appetizers, desserts.

We're seeing those hold steady.

So I'm not sure quite what that says.

But what I will say for us, it's just given us some confidence that uh and as we reported positive sales for the first, uh five weeks of the second quarter, we feel some good momentum.

But again, I think it's a little different for us because we are in this comeback.

I mean, you have companies out there competitors in this landscape that are saying, hey, we'll throw avocados on the burger.

Hey, we'll throw, you know, crispy onions on the burger.

We'll, you know, Tinker with our fresh never frozen beef patties.

All of these things that are really the jousting efforts in your industry is it's just becoming harder to innovate on top of the burger, especially in an environment where consumers are looking for value.

Well, innovation is a key part of any restaurant brand, you have to have that to, to stay relevant.

But so and at Red Robin, we've been known for burger innovation for many, many years.

So for us, I wouldn't say that's hard.

Um But what I will say is that we have a value.

Our check average is a little over $17 and it's a full service experience.

It's not fast food or fast casual.

So it's, you get the whole experience, it's a fun environment.

So for 17 bucks, we think that's still a good value.

In addition to that, we have 30 bottomless sides that most consumers don't even realize because if you talk about bottomless, they think bottomless fries, well, we have 30 items that are bottom, which is everyday value versus just, you know, price promotions one after another, like many of our competitors are doing.

We think it's better to be 52 weeks a year and providing value to our guests.

So, you know, when you, when you look at it that way, we think that ultimately again, our, our consumer saying that with what we're seeing in the momentum of our, of our comp store sales.

So, um we think we're doing the right thing.

All right, I'm about to come post up at a Red Robin and uh bake in some of those Bob newest fries to my financial planning.

For sure.

Here GJ, you know, as you, as you think about what you're hearing from your franchisee partners as well.

What are they looking for?

From Red Robin and its leadership as they're trying to continue to keep the pulse of the consumer and engage across so many different regions.

Well, first of all, it's open communication, transparent communication, aligning around our mission, vision and values and what our North Star plan is trying to achieve.

We have a really great group of franchise partners.

They're great partners and they operate phenomenal restaurants.

And so, you know, making sure that we're totally aligned and communicate their desires are again to, for us to continue to be out there promoting value, innovating, value, innovating uh the you all the time, but also staying the course, staying the course where historically, the company hasn't always done that.

And so, you know, with us and this North Star plan, we're staying true to which what we're doing, which candidly, you know, that's investing in more labor.

It's providing better hospitality, better, better experiences for our guests.

It's, it's improving our burgers.

As I said, 85% of our menu has been improved.

We are continuing to focus on those fundamentals that get us back to the to the essence of what this iconic brand has done for so many years to be in a place where we've got over 500 restaurants all over America.

So I think that's what they're asking for.

And, and again, I think more than anything is that open communication and listening to what their needs are and responding to those appropriately GJ Hart, Red Robin Gourmet Burger Ceo.

All right, I'm officially hungry, so we gotta leave things there.

Thanks so much.

I love to have you.

Absolutely.

Absolutely.

Thanks so much.