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Red Robin’s Food and Service Fuel Turnaround · Choppin’ It Up by Bloomberg Intelligence

0:19
Speaker 1: Welcome to Chopping It Up. I'm your host, Mike Hallen,
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Speaker 1: the senior restaurant and food service analyst at Bloomberg Intelligence.
0:26
Speaker 1: Today we're joined by G. J. Hart, President and CEO
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Speaker 1: of Red Robin Gourmet Bergers. Thanks for doing this, Thanks Mike.
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Speaker 2: Good to be with you.
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Speaker 1: Yeah, our audience can't see us, but it's good to
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Speaker 1: see you. Let's let's just jump right in here. Man,
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Speaker 1: what attracted you to the Red Robin job.
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Speaker 2: Well, let's let's go back in time a little bit
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Speaker 2: when when we were building and growing Texas Roadhouse, Red
0:52
Speaker 2: Robin was in it's really in its prime time and
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Speaker 2: was really one of the premier casual dining restaurant brands,
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Speaker 2: and we learned a lot in terms of what they
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Speaker 2: were doing and doing it well. And the biggest thing
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Speaker 2: is just how the differentiated space about kids, family, great food,
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Speaker 2: great hospitality, reasonable price, and so following them, I've always
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Speaker 2: had an affection form. They were phenomenal around being parts
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Speaker 2: of communities, giving back to communities, all things that we
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Speaker 2: were doing at Texas Roadhouse, and so roll forward over
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Speaker 2: the years, I was asked if I would be interested
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Speaker 2: in going on the board of Red Robin at the time,
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Speaker 2: and that was in twenty nineteen and right before COVID,
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Speaker 2: and I was like, you know, if I could make
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Speaker 2: some difference because they were, you know, hit upon some
1:39
Speaker 2: challenging times and I thought, well, shoot, I'd like to
1:42
Speaker 2: do that. And so going on the board first. And
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Speaker 2: then when the board approached me about the opportunity to
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Speaker 2: take over. You know, I had been retired for about
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Speaker 2: six months at the time, nine total, and I was like,
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Speaker 2: I was ready. I was too young to not work
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Speaker 2: and sitting boards is great and I love it, but
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Speaker 2: it's not the same as operating a business. And so
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Speaker 2: a lot of things lined up really, really well, and
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Speaker 2: so I jumped in because I just felt like I
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Speaker 2: could add some value here and really take this brand
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Speaker 2: back and make it come back to its roots and
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Speaker 2: make it relevant for today. So it's been an exciting run.
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Speaker 2: I'm having a heck of a lot of fun.
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Speaker 1: All right, good stuff. I saw some news out this week.
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Speaker 1: Our friend Nicole Miller Reagan was placed on the board,
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Speaker 1: which is great. Nicole's awesome. What about the senior management team?
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Speaker 1: Are they in place or do you still have roles
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Speaker 1: to fill there?
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Speaker 2: Yeah, So we've done We've put together a phenomenal team.
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Speaker 2: I'm really proud of the group that we've put together.
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Speaker 2: And the one position that we have left, we've got
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Speaker 2: an interim who was my former chief people officer Texas
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Speaker 2: Roadhouse who retired and he came back as interim, and
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Speaker 2: we're on the final stages of that search. We've actually
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Speaker 2: got an offer out and there'll be an acceptance I'm
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Speaker 2: pretty sure for the Chief People Office role and then
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Speaker 2: we'll be totally complete. But the team is definitely ready,
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Speaker 2: willing and enable, and we're high functioning and I believe
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Speaker 2: that we're going to get some high performance out of them.
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Speaker 1: Okay, good stuff. So just for the audience that may
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Speaker 1: not be familiar, what's the store count now Red Robin
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Speaker 1: and where is it strong geographically?
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Speaker 2: Yeah, so the store count today is a total count
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Speaker 2: of five hundred and ten restaurants. Our strongest markets are
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Speaker 2: up really on the West coast. Red Robin was originally
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Speaker 2: founded up in Washington State, so we've got a big
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Speaker 2: pros big presence up in Washington, Oregon, California, Nevada, and
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Speaker 2: of course you know on the East coast as well.
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Speaker 2: We're probably a little bit lesser density in the Midwest.
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Speaker 2: We've got a good presence in the Southwest, but clearly
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Speaker 2: the West Coast is the predominant portion of Red robin.
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Speaker 1: Oh okay, So being on the West Coast, do you
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Speaker 1: think you're going to see any impact from the for
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Speaker 1: the fast food wage increases that we're we're seeing in California?
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Speaker 1: I know there have been some people talking about how,
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Speaker 1: you know, they expect maybe full service chains to have
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Speaker 1: to pay a little bit more in the kitchen. Is
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Speaker 1: this something that that you've discussed with the team.
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Speaker 2: Yeah, we're we're paying attention to it. Clearly, there'll be
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Speaker 2: some compression and there'll be some expectations. You know, generally speaking,
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Speaker 2: if you think about our team members on the West Coast,
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Speaker 2: particularly in places that there's no tip credit, they're they're
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Speaker 2: well above that now in terms of total compensation. But
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Speaker 2: at the end of the day, as you know, there's
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Speaker 2: an expectation and as those positions in fast food go up,
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Speaker 2: that they're going to need to go up as well.
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Speaker 2: So you know, we're going to watch it real closely
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Speaker 2: and see kind of what's what what's the right course
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Speaker 2: of action. It's not just about just taking price because
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Speaker 2: you know, as you know, the consumers ever more sensitive
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Speaker 2: today to price, So we'll we'll watch it and we'll see.
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Speaker 1: Okay, so who is the the Red Robin customer.
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Speaker 2: Well, it's interesting our our our guest base is pretty
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Speaker 2: wide and demographics pretty wide, so you get, you know,
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Speaker 2: a varied income. It tends to skew a little bit
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Speaker 2: more female generally, which is not surprising candidly although it
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Speaker 2: being Burgers being premiere, but we do skew that way.
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Speaker 2: And and it's a pretty wide spectrum from everything from
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Speaker 2: your from your hard working sort of you know, Middle
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Speaker 2: America high income folks to two people that are that
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Speaker 2: are at the high income levels. So that's the benefit
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Speaker 2: that we do have because we're so family and kid
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Speaker 2: centric that it allows people to come in and as
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Speaker 2: they are and feel comfortable in the Red Robin no
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Speaker 2: matter what walk of life that you're in.
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Speaker 1: Yeah, my son, when he was younger, you always loved
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Speaker 1: the place. And I am a huge fan of the
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Speaker 1: onion rings too. So uh so I was answering too. Yeah,
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Speaker 1: all right, cool, why don't we talk a little bit
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Speaker 1: about the guest experience improvements? You know, all good turnarounds
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Speaker 1: start with better food and better service. Right, so if
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Speaker 1: you could talk a little bit about the improvements that
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Speaker 1: the team's made there.
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Speaker 2: So we put together a plan that I really developed
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Speaker 2: with all the different stakeholders, different folks around the company,
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Speaker 2: just to realign ourselves on what our north star would
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Speaker 2: be and what's that overall mission vision and brand promise
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Speaker 2: and over our core values. And we came up with
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Speaker 2: this north Star plan and the first part of that
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Speaker 2: plan was was around people and culture and you have
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Speaker 2: to start there. And what had happened with Red Robin
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Speaker 2: over the years, and I've talked about this a lot,
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Speaker 2: is there were some decisions made for whatever reason that
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Speaker 2: clearly were not good for the overall guests, nor was
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Speaker 2: it good for the team ember things like getting rid
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Speaker 2: of bussers back in twenty eighteen and started to do
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Speaker 2: away with the expo the need for a senior person
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Speaker 2: in the expo window, or not having a true management complement,
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Speaker 2: more generalists and not have kitchen managers or service managers,
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Speaker 2: and then really challenged by COVID and staffing challenges in
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Speaker 2: some of the decisions made made it verally challenging for
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Speaker 2: the company, and so we really started to look back
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Speaker 2: at the basics around that first started with management compliment,
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Speaker 2: put back our certified training, restaurants started to go back
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Speaker 2: to kitchen managers. We've put over two hundred and fifty
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Speaker 2: kitchen managers in place in addition to what we already had.
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Speaker 2: And when I say already had, some of the restaurants
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Speaker 2: did not follow suit with some of the sort of
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Speaker 2: changes that came down from the corporation. So we started there,
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Speaker 2: and then we started really building up our staff. And
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Speaker 2: one of the things that had happened in the hospitality
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Speaker 2: model was it was more of a team approach, and
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Speaker 2: in and of itself, that's fine. So you had server
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Speaker 2: assistants and so servers were having many more cables and
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Speaker 2: if a server assistant or you had a staffing problem,
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Speaker 2: which as you know, coming through COVID was close, but
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Speaker 2: then even coming back was challenging. Now all of a sudden,
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Speaker 2: a server can't possibly service our guests when they have
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Speaker 2: ten tables and so without the proper services. So we've
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Speaker 2: gone more to a traditional model, less tables for servers,
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Speaker 2: added back busters, added back to the expos stations with management.
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Speaker 2: So we started there and that was first and foremost,
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Speaker 2: and then we started working on the food as the
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Speaker 2: second piece of it. And on the food front, we
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Speaker 2: changed the cooking process for gourmet burgers because I asked
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Speaker 2: the question, if our brand promise is about the best
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Speaker 2: gourmet burgers, are we convinced we could do that with
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Speaker 2: the what we're doing today And the answer is no.
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Speaker 2: And so we started looking back and Jeff Brian, our chef,
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Speaker 2: and I started working on what makes the most sense,
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Speaker 2: and we changed the whole system to flat top cooking.
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Speaker 2: So we got rid of the nico the belt driven
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Speaker 2: ovens that gives us not only a better burger, it's bigger,
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Speaker 2: it's juicier, all those kind of things. It actually helped
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Speaker 2: efficiency as well as it us more optionality for menu
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Speaker 2: development down the road, which is a big part of
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Speaker 2: our plan in the North Star plant anyway. So I'm
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Speaker 2: pleased to say that in that whole process, the hospitality
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Speaker 2: piece has come through. Been in the system the longest,
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Speaker 2: so we've seen our overall net sentiment for service has
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Speaker 2: gone up twenty eight percent. So if you serve all
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Speaker 2: the social data points, I mean, twenty eight percent increase
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Speaker 2: over this period of time is really I think terrific.
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Speaker 2: The food is coming now. We did the change mid
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Speaker 2: year for the flat tops, but we actually in the fall.
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Speaker 2: We just just recently launched our full menu with where
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Speaker 2: we've touched eighty five percent of the menu and we've
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Speaker 2: upgraded ingredients. So we've done things like improve our bund
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Speaker 2: we've improved our mayonnaise. We've improved our going from a
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Speaker 2: regular tomato to a vying ripened tomato. We've improved our bacon,
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Speaker 2: we've improved all of our sauces, so we've touched almost
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Speaker 2: every part of it. And that was launched just a
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Speaker 2: few weeks ago and that's doing really really well, and
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Speaker 2: we're super excited about people really seeing the difference in
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Speaker 2: our burgers and seeing the difference in our optionality on
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Speaker 2: the menu because we've added clentres, meaning we've added Whiskey
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Speaker 2: River barbecue ribs, we've had a tsunami shrimp, we've added
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Speaker 2: a non fried appetizers with the shrimp, and then we've
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Speaker 2: added Brussels sprouts and some additions like that that help
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Speaker 2: us to really have more optionality, less veto vote for
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Speaker 2: the guests, and so those are the type of things
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Speaker 2: that we're doing. We've still got a long way to go.
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Speaker 2: But first, the first hospitality service and people. Now it's
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Speaker 2: going into food and we're working. We're pretty excited about
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Speaker 2: what we're doing for twenty twenty four.
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Speaker 1: Good stuff. And you revamped the market partner program. Can
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Speaker 1: you speak to that, sure?
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Speaker 2: Well, the company was had typical general managers that had
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Speaker 2: a base salary and a bonus opportunity, and bonuses were
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Speaker 2: changed each year based on the prior and I'm not
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Speaker 2: a big fan of that because a lot of times
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Speaker 2: you tend to leave out the guest experience right at
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Speaker 2: the end of the day, growing guest traffic and sales
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Speaker 2: as a result of people doing the right thing, and
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Speaker 2: if you take care of the people, they take care
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Speaker 2: of your guests. And so you know, going to a
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Speaker 2: managing partner compensation program where they really get paid each
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Speaker 2: month based on their success of their restaurant, to me
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Speaker 2: makes sense. It gets that sense of ownership, that pride factor.
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Speaker 2: They become very much involved in every aspect of their
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Speaker 2: business and they become business people, not just great restaurant operators.
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Speaker 2: And so we launched it for our multi unit midyear
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Speaker 2: this year and it's going extremely well. And we started
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Speaker 2: there so that we can learn and adjust. When you
11:43
Speaker 2: have a big restaurant count like we do having done
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Speaker 2: this before. It takes a while and it's difficult to
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Speaker 2: implement a system like this in a big, big number
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Speaker 2: of restaurants. So we started there great learning and our
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Speaker 2: plan is through and we will be rolling out the
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Speaker 2: managing Partner program right after the first of the year.
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Speaker 2: And we're excited about it because, you know, we think
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Speaker 2: it's really going to move the brand forward with that
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Speaker 2: sense of ownership and pride.
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Speaker 1: Yeah, very cool. And you mentioned that customer experience is
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Speaker 1: included in there, so you know a lot of these
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Speaker 1: programs people are comped out based on sales, so it
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Speaker 1: sounds like you have some customer service scores involved in
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Speaker 1: the compensation structure.
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Speaker 2: No, it'll be solely around guest traffic, sales, and profitability. However,
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Speaker 2: you can't drive sales or profitability or traffic without really
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Speaker 2: having a great guest experience. So the idea is you
12:41
Speaker 2: share all these operators, share best practices from it, what's working,
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Speaker 2: what's not, and they tend to be competitive with each
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Speaker 2: other in terms of things like guest satisfaction scores. But
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Speaker 2: all of it flows back that it's about being running
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Speaker 2: a business, and you know, Mike if you're running your
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Speaker 2: own business, if you take care of your people, they're
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Speaker 2: going to take care of your business. So that's that's
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Speaker 2: the idea here.
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Speaker 1: Yeah, for sure, you know, customer service scores and speed
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Speaker 1: of service and all that stuff is so closely linked
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Speaker 1: to traffic obviously, totally, totally, all very cool. And so
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Speaker 1: you're also going to implement the single unit operator program.
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Speaker 1: Is that going to be similar to what you implemented
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Speaker 1: at Texas Roadhouse and Torches?
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Speaker 2: It will be similar. All the dynamics are different for
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Speaker 2: each brand, but yes, it would very much be similar
13:28
Speaker 2: to that.
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Speaker 1: Okay, great, And you're making some changes to the loyalty program.
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Speaker 1: A lot of people in the restaurant industry are making
13:39
Speaker 1: some changes right now, So can you speak to that
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Speaker 1: a little bit?
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Speaker 2: Sure, Well, we do have a big, big loyalty base.
13:47
Speaker 2: It's they're about thirteen and a half million members, and.
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Speaker 1: Yeah, that's strong for them.
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Speaker 2: It is strong, and we're still gaining. The loyalty platform
13:58
Speaker 2: has historically in my pay and being focused on maybe
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Speaker 2: not the right thing to me. Loyalties about rewarding your
14:05
Speaker 2: most loyal guests for frequency and for being loyal to
14:08
Speaker 2: the brand versus trying to acquire new and then give
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Speaker 2: them ongoing discounts and ongoing promotional activities. So we're going
14:18
Speaker 2: to flip that and really start to reward our most
14:21
Speaker 2: loyal guests. And we're going to go to a point
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Speaker 2: based system versus what we have today where you've got
14:27
Speaker 2: to get nine, you get to ten free. So the
14:30
Speaker 2: points where it's more in real time and we think
14:34
Speaker 2: makes more sense for our guests going down. And we'll
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Speaker 2: get that launched and sort of the first half of
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Speaker 2: next year, and we're super excited about it. What we've
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Speaker 2: learned is the company was really messaging mostly discount promotionals
14:51
Speaker 2: to the loyalty base. And what we want to do
14:54
Speaker 2: is start just having a dialogue and start to individualize
14:56
Speaker 2: that communication that we can do with our guest base.
15:00
Speaker 2: That'll tap longer term into how we can communicate on
15:03
Speaker 2: an individual basis. So we're super excited. It is a
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Speaker 2: big asset of the company. We think it's we can
15:08
Speaker 2: lever it the right way, tell our story more successfully
15:12
Speaker 2: that way, and I'm really liking the path that we're on. Great.
15:19
Speaker 1: So you know, on your earnings call, you mentioned that
15:22
Speaker 1: you saw a shift and that from September to October
15:26
Speaker 1: and results had improved despite student loan repayments resuming, And
15:35
Speaker 1: we kind of saw the same thing industry wide. You
15:37
Speaker 1: may have your improvement may have been larger than the industry,
15:40
Speaker 1: but we did see some improvement in October industry wide
15:44
Speaker 1: that we we thought was a little bit surprising. What
15:48
Speaker 1: do you you know, what are you seeing as there?
15:50
Speaker 1: You know, and what did you think was the main
15:52
Speaker 1: reason for that improvement in October?
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Speaker 2: Yeah, So in our case, we're making a lot of
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Speaker 2: changes we just talked about, from management, hospitality to food.
16:03
Speaker 2: We're doing so much that we think that we're going
16:07
Speaker 2: to see and are seeing effects of that as a
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Speaker 2: result of our change. The current bigger picture or macro environment,
16:16
Speaker 2: it's hard to say and ascertain exactly, you know, how
16:21
Speaker 2: much is coming from where given all the change that
16:23
Speaker 2: we've got, But nevertheless, we'll take it right and so
16:26
Speaker 2: so feeling good about that. And Mike, you may have read,
16:31
Speaker 2: you know, we had negative comp for the quarter. We
16:33
Speaker 2: signaled that it was within expectations because again we were
16:36
Speaker 2: making some decisions to get ourselves out of virtual brands,
16:39
Speaker 2: because to focus on the brand long term. The Red
16:42
Speaker 2: Robin brand we think that's the right decision. Well, that's
16:44
Speaker 2: you know, that definitely comes at at a price. We
16:48
Speaker 2: have gone away from all this deep discounting in every
16:52
Speaker 2: channel to be and focused on brand development long term
16:56
Speaker 2: in providing our guests and experience they can count on
16:59
Speaker 2: day in, day out, and that comes with the price.
17:02
Speaker 2: So we had all those things on top of, you know,
17:04
Speaker 2: within all this noise. So there's just a lot in
17:07
Speaker 2: terms of us analyzing, you know, just the macro environment
17:10
Speaker 2: in and of itself. What I would say to you though, is,
17:14
Speaker 2: you know, I've been pretty pretty surprised how resilient the
17:18
Speaker 2: overall consumer has been and continues to be, because you know,
17:22
Speaker 2: if you really look at some of these economic trends,
17:25
Speaker 2: you know, we feel certain things and things are not
17:27
Speaker 2: necessarily perfect, but generally speaking, people have more money and
17:31
Speaker 2: more disposable money to spend. So I've been pretty surprised
17:37
Speaker 2: at how resilient they've been. So hopefully that continues and
17:41
Speaker 2: and and then as we make our changes, we'll benefit
17:43
Speaker 2: and really be able to grow our business.
17:46
Speaker 1: Yeah, and it looked like investors were happy with with
17:50
Speaker 1: the earnings report even though you know, same sort of sales.
17:52
Speaker 1: One thing went down, So it seems like they're they're
17:54
Speaker 1: bullish on you know, these changes that you're making and
17:57
Speaker 1: the direction that Red Robin is moving in. Back in August,
18:01
Speaker 1: last time I saw you at the prosper conference, you know,
18:04
Speaker 1: you know, we were chatting it up and I was
18:06
Speaker 1: telling you how I was surprised how find dining results
18:09
Speaker 1: had been so poor this year. That was probably the
18:12
Speaker 1: biggest surprise I've had, you know, throughout the industry. Is
18:16
Speaker 1: there anything that's surprising you about the US consumer outside
18:20
Speaker 1: of it being resilient, you know, and whatever else you
18:23
Speaker 1: had already spoken about.
18:25
Speaker 2: Now, you know America, American consumers like to spend right,
18:28
Speaker 2: So at the end of the day, I don't know
18:30
Speaker 2: that I'm surprised, I say it. You know, I'm a
18:35
Speaker 2: little bit surprised, as I just pointed out, But at
18:37
Speaker 2: the end of the day, that's good news. So yeah,
18:41
Speaker 2: you know, if there was an overriding concern, I think
18:45
Speaker 2: it's really centered around more of the geopolitical situation and
18:50
Speaker 2: just you know, how does that because it definitely affects
18:52
Speaker 2: people at home, and I think that that that worries
18:56
Speaker 2: me a bit. There's obviously nothing I can do about it,
18:58
Speaker 2: but it is something that h that that they do
19:01
Speaker 2: think about. But at the end of the day, now
19:03
Speaker 2: there's no no huge surprises of the then how resilient
19:06
Speaker 2: they are?
19:08
Speaker 1: Okay, good stuff and uh you like another one of
19:13
Speaker 1: your h casual dining competitors made the move to cut
19:18
Speaker 1: back on discounting, and I think that's important. I don't
19:22
Speaker 1: think you want to train your customers to only come
19:26
Speaker 1: to your restaurant when you're offering some sort of a discount.
19:29
Speaker 1: So can you talk about how that's gone and how
19:31
Speaker 1: it's going, and you know how this maybe uh you
19:36
Speaker 1: know might impact your your decision to about how you're
19:41
Speaker 1: going to deploy marketing spend and if you're going to
19:43
Speaker 1: increase it or to decrease it over the next year.
19:47
Speaker 2: Well, let me let me unpack that a little bit.
19:49
Speaker 2: And in terms of how it's going, it's going fine.
19:51
Speaker 2: I think to the to build a brand successfully over time,
19:56
Speaker 2: you need to provide guests uh uh, the ability to
20:01
Speaker 2: know exactly what they're going to get when they're that
20:04
Speaker 2: every time they come in they're going to get that
20:06
Speaker 2: same type of experience. And sure there's times you want
20:09
Speaker 2: to promote certain things, but not just to come in
20:11
Speaker 2: as a result of some discount. So it's going fine. Guys,
20:15
Speaker 2: we just talked about you know, we felt it in
20:17
Speaker 2: terms of sales and traffic a little bit, but we're
20:20
Speaker 2: going to roll over that. And last year the company
20:22
Speaker 2: was really throwing a lot at all the different channels
20:25
Speaker 2: and really discounting significantly. So as we roll over that,
20:29
Speaker 2: we'll get through that. And I do believe with the
20:31
Speaker 2: changes that we're making, people are experience. We're seeing it
20:34
Speaker 2: and the feedback that we're seeing as I just mentioned
20:37
Speaker 2: some of the consumer sentiment data, some of the overall
20:40
Speaker 2: experience data that we're getting is showing that they see that.
20:44
Speaker 2: So I think all in all, we're feeling really good
20:48
Speaker 2: about the progression that we're making and the progress that
20:51
Speaker 2: we've seen so fully intent and we're optimistic about the
20:54
Speaker 2: future here in terms of marketing spend, let me just
20:59
Speaker 2: do with that. One of the things I want to
21:01
Speaker 2: just say about marketing spend is we're really unpacking and
21:05
Speaker 2: really taking a look at how do we how do
21:07
Speaker 2: we use our dollars to be more effective than maybe
21:11
Speaker 2: what we've been in the past, being very laser focused,
21:14
Speaker 2: being more community oriented, really targeting as We just talked
21:17
Speaker 2: about loyalty and using those platforms to make our dollars
21:21
Speaker 2: work that much harder for us, and we think we
21:23
Speaker 2: can do that. So at the end of the day,
21:26
Speaker 2: will we need to spend a little bit more. We've
21:28
Speaker 2: talked about that, We've been asked quite a bit of that.
21:30
Speaker 2: We're going to make the right decision because we need
21:32
Speaker 2: to bust through to get people to understand it. There's
21:35
Speaker 2: a new day here at Red Robin and this comeback
21:38
Speaker 2: is real. We're bringing it relevant to today and just
21:41
Speaker 2: come give us a shot. So we're kind of figuring
21:44
Speaker 2: out exactly how best to do that, and then from there,
21:49
Speaker 2: what's the level of investment. It's not going to be
21:50
Speaker 2: significantly different than what we've done this year, but you know,
21:54
Speaker 2: this year we've we've cut back the marketing spend to
21:56
Speaker 2: focus on operations. Get that right. First, you've invested a
22:00
Speaker 2: tremendous amount back into the business and we've talked about
22:04
Speaker 2: that on our last earnings call. How many millions of
22:06
Speaker 2: dollars we've invested back into the company with all the
22:10
Speaker 2: food investments, in the labor investments and all those things.
22:12
Speaker 2: So more to come on that, but at the end
22:16
Speaker 2: of the day, we think marketing dollars, we can spend
22:18
Speaker 2: a lot more effectively.
22:19
Speaker 1: Okay, great, Now, are you you shifting your mix of
22:22
Speaker 1: traditional versus digital ad spending in the next year or two?
22:26
Speaker 2: Yeah, you know, clearly, you know the whole we're going
22:30
Speaker 2: to have less traditional and more digital. You know, I
22:33
Speaker 2: think that's the way of the way it is today.
22:35
Speaker 2: Long term, it's how do we communicate and understand enough
22:38
Speaker 2: about each individual guest to be able to communicate them
22:42
Speaker 2: on a one on one level. We're not there yet,
22:44
Speaker 2: but we think longer term we can get there with
22:47
Speaker 2: some of those changes, and that's when they real magic
22:49
Speaker 2: can happen. Is Hey, Mike, you came in, you know,
22:52
Speaker 2: last week and you got X, Y and Z. Would
22:54
Speaker 2: you know, would you like to try the same thing
22:57
Speaker 2: or would you like to try something new? And you know,
22:59
Speaker 2: those kinds of relations and hips will be important and
23:01
Speaker 2: through the total guest experience, people want to know, want
23:04
Speaker 2: to feel special, and we need to be able to
23:06
Speaker 2: do that in a fun environment where they can come
23:09
Speaker 2: as they are, and that's what we're going to do.
23:12
Speaker 1: Okay, great. Also, uh, you know, you got you have
23:16
Speaker 1: a lot of a lot of moving pieces. Man, you
23:18
Speaker 1: have an ambitious plan. It's it's great because it's all
23:21
Speaker 1: stuff that makes a lot of sense and seems to
23:24
Speaker 1: be gaining some uh, gaining some steam. But can you
23:28
Speaker 1: talk about the renovation plans a little bit? I mean,
23:31
Speaker 1: what what what percentage of the stores do you expect
23:34
Speaker 1: to touch and how long do you expect it to take?
23:39
Speaker 2: Yeah, the when when you talk renovation, why don't we
23:42
Speaker 2: just say this coming out of COVID as many restaurant
23:46
Speaker 2: companies struggle to keep up with just general maintenance.
23:51
Speaker 1: And oh yeah, R and M is up for all
23:53
Speaker 1: my companies, this yere.
23:55
Speaker 2: And and so to be candid, we're actually, I won't
24:00
Speaker 2: say they're all renovations, but we're spending the bulk of
24:03
Speaker 2: our capital dollars going back to get our restaurants where
24:06
Speaker 2: we need them to be just day to day operationally
24:09
Speaker 2: and looking right. And so we're spending tremendous, tremendous amounts
24:15
Speaker 2: of dollars. Having said that, we also know, as we've
24:18
Speaker 2: got an aging an aging fleet, we need to think
24:23
Speaker 2: about what does that remodel look like. And we've announced
24:26
Speaker 2: that we were going to do a few restaurants in
24:28
Speaker 2: a couple of markets to see kind of what level
24:32
Speaker 2: of investment we need to make and what kind of
24:34
Speaker 2: returns that we can get a good return. So we haven't.
24:39
Speaker 2: We're actually doing the plans now. We will actually do
24:42
Speaker 2: some of the work for those renovations in the first
24:44
Speaker 2: part of next year and then we'll monitor those aside
24:47
Speaker 2: from there. But again, there's so many uses of our capital.
24:51
Speaker 2: We're trying to be really effective here, and so the
24:55
Speaker 2: remodel program in the way you're thinking about it will
24:58
Speaker 2: take numerous years for us to do as we earn more.
25:02
Speaker 2: It's like I tell people, this is we need to
25:04
Speaker 2: earn our way, and that's what we're doing and reinvesting
25:07
Speaker 2: that capital to make sure that we're not just doing
25:10
Speaker 2: it and just food quality. We're also making sure the
25:12
Speaker 2: facilities are right and giving our team members the assets
25:17
Speaker 2: and something that they can work with.
25:19
Speaker 1: Yeah, you're doing it the right way, because you know,
25:22
Speaker 1: if you spend a lot of money on ads and
25:24
Speaker 1: renovating your stores before you get the operations nailed and
25:28
Speaker 1: the food improved, what's the point, right, So yeah, that
25:32
Speaker 1: makes a whole lot of sense. Do you do your
25:36
Speaker 1: stores employee server handhelds and are there any other tech
25:42
Speaker 1: enhancements that that you're interested in implementing.
25:47
Speaker 2: So again, it's sort of back to basics here, and
25:49
Speaker 2: we do use handhelds, but to be to be candid,
25:53
Speaker 2: we're upgrading all of our restaurants. Will have done here
25:56
Speaker 2: very shortly where we'd have Wi Fi in every restaurant
25:59
Speaker 2: and so metch of the handhelds that we currently are
26:02
Speaker 2: using our radio frequency and kind of the old way.
26:05
Speaker 2: And we are working now to plan to uh to
26:08
Speaker 2: have handhelds with with Wi Fi and the restaurants. And
26:11
Speaker 2: we're currently taking our infrastructure and updating all of it
26:17
Speaker 2: so that we can be so in this century, if
26:21
Speaker 2: you will. And so I tell people, first things first,
26:26
Speaker 2: and that's what we're doing. First. Are there plenty of
26:28
Speaker 2: bells and whistles we can do down the road to
26:31
Speaker 2: achieve some of the things I've talked about that individual
26:33
Speaker 2: relationship with guests. We are, but we've got to do
26:36
Speaker 2: this first. First things first, and so this infrastructure is
26:40
Speaker 2: really important and the handhelds will be a big part
26:42
Speaker 2: of that.
26:43
Speaker 1: Okay, cool, And what about the sale, lease back traction transactions?
26:48
Speaker 1: Excuse me, still not recovered from Las Vegas and R FDC.
26:54
Speaker 1: So if you could give us an update on the
26:56
Speaker 1: on the cell least back and what do you plan
26:58
Speaker 1: on doing with the cash.
27:00
Speaker 2: Sure, So, we've completed two tranches of it's nineteen restaurants
27:07
Speaker 2: at this point. We've got one more trench that we're
27:09
Speaker 2: looking to do and with the two we've actually invested
27:13
Speaker 2: it back into business. We've paid down some debt, we
27:15
Speaker 2: talked about that at our earnings release as well, and
27:17
Speaker 2: we bought back a little bit of stock. So so
27:20
Speaker 2: our plan with if we get the third trunch completed,
27:23
Speaker 2: which we're currently working on, then that would go to
27:27
Speaker 2: reduce debt and at the end of the day, we're
27:29
Speaker 2: using it to strengthen our balance sheet.
27:32
Speaker 1: All right, great, where does where does the leverage ratio stand?
27:36
Speaker 2: Well, what we we hope to do, you know, sort
27:39
Speaker 2: of getting down to a leverage less than two to one.
27:43
Speaker 2: So we think we'll have that completed by the end
27:46
Speaker 2: of this year.
27:48
Speaker 1: Okay, great, And I heard Red Robin was on the
27:51
Speaker 1: tonight show and something you mentioned something about a burger
27:55
Speaker 1: teeny What can you talk a little bit about that.
27:57
Speaker 2: Yeah, so we were working with a celebrity bartender group
28:01
Speaker 2: that was that's a reality star that wanted it that
28:05
Speaker 2: came to us and our PR team have been working
28:07
Speaker 2: hard and came with this idea doing a burgertini, martine
28:10
Speaker 2: and burgertini and basically taking burger juice and a bunch
28:14
Speaker 2: of ingredients and making a martini and and UH. Anyway,
28:19
Speaker 2: so then there's this this this UH program called Chainfest,
28:24
Speaker 2: which is a Michelin star chef out in California in
28:27
Speaker 2: LA that really likes chains and then takes and really
28:31
Speaker 2: romanticizes eight brands items to something that he thinks was cool.
28:35
Speaker 2: And they're doing these big events coming up I think
28:38
Speaker 2: in early December, and we're one of the restaurant companies.
28:42
Speaker 2: And and last night on the on the Late night show,
28:47
Speaker 2: they had had a mission star chef on there and
28:51
Speaker 2: a couple of the items and most of it was
28:53
Speaker 2: around Red Robin and and our burgers and UH and
28:56
Speaker 2: the burgertini. It was a lot of fun. It was
28:58
Speaker 2: it was a good piece, you know. And look, at
29:00
Speaker 2: the end of the day, we're anywhere where we can
29:02
Speaker 2: start to tell people there's a new day here at
29:04
Speaker 2: Red Robin. We're trying to do and these are just
29:07
Speaker 2: fun little events that if we have people talking about us,
29:09
Speaker 2: they're gonna hopefully give us a shot.
29:12
Speaker 1: Yeah, it's cool, and I feel like Red Robin has
29:14
Speaker 1: some of that like experimental, like innovative type stuff in
29:19
Speaker 1: its DNA.
29:20
Speaker 2: Right.
29:20
Speaker 1: I remember the uh, you know, the first time I
29:23
Speaker 1: ever saw like beer floats, you know, with Sam Adams
29:26
Speaker 1: beer and a milkshake was at Red Robin. Right.
29:31
Speaker 2: Yeah, so we're known for those those first of all
29:35
Speaker 2: in beverage innovation for sure, and we've got a great
29:37
Speaker 2: team working on things now. You know, we need to
29:40
Speaker 2: come back and one of the things we're trying to
29:42
Speaker 2: use his own shakes again to your point, come up
29:44
Speaker 2: with some cool creative shakes. We're the non alcoholic beverage
29:48
Speaker 2: we continue to lead away and freckled lemonade is still
29:52
Speaker 2: you know, our most popular drink and and so yeah,
29:55
Speaker 2: we're known for that. And the same thing with burger,
29:56
Speaker 2: you know, gourmet burger innovation. And so you're going to
29:59
Speaker 2: see some really cool things coming. We have a Lava
30:02
Speaker 2: Burger coming, which is going to be a really cool
30:04
Speaker 2: kind of experience at the table. And yeah, that's the
30:09
Speaker 2: beauty and that's the history of this fifty four year
30:11
Speaker 2: old brand, iconic brand that it's been known for that
30:14
Speaker 2: and we want to bring those fun elements back to
30:17
Speaker 2: this brand. We brought our mascot back, Red, as you know.
30:22
Speaker 2: I have to tell you, Mike that we had our
30:24
Speaker 2: town hall where after our earnings, we get our whole
30:26
Speaker 2: teams together, and we had Red there and we had
30:29
Speaker 2: a we do a lot with Make a Wish Foundation
30:32
Speaker 2: and the family. The fifteen year old son was the
30:38
Speaker 2: wish recipient, but they had his brother was a young
30:41
Speaker 2: little kid and stall Red and we had a couple
30:44
Speaker 2: hundred people in this room and I watched this little
30:46
Speaker 2: kid just walk all the way to follow Red and
30:48
Speaker 2: then just literally put his hands up in the air
30:50
Speaker 2: for Red to pick him up. And it was just priceless,
30:53
Speaker 2: you know. And that's kind of what you want.
30:54
Speaker 1: Yeah, that is cool. Yeah, and you know it makes
30:58
Speaker 1: your job a little more fun. It sounds like can
31:00
Speaker 1: I could tell the passion you have in your voice
31:03
Speaker 1: and you talk about the brand. That's great, man. So
31:05
Speaker 1: uh yeah, it's on my list. Man. This weekend, me
31:08
Speaker 1: and Jake are gonna make it over to the Seacaucus.
31:10
Speaker 1: Red Robin. I'm looking forward to it. So thanks again
31:14
Speaker 1: for doing this. Where can the rest of the members
31:16
Speaker 1: of the audience find their nearest restaurant, and uh, you
31:20
Speaker 1: know where can they find Red Robin on social media?
31:23
Speaker 2: Well, any of the social media redrobin dot com, and
31:26
Speaker 2: they can find us and there'll be a restaurant near
31:30
Speaker 2: them for sure.
31:31
Speaker 1: All Right, thanks man, This is it's a great story
31:33
Speaker 1: and I'm looking looking forward to continuing to follow it.
31:37
Speaker 1: And you know, I wish your success, all right, my friend.
31:40
Speaker 1: Thanks all right, and thanks to the audience for tuning in.
31:43
Speaker 1: If you liked the episode, please share with your friends
31:45
Speaker 1: and colleagues.