- Red Robin has hired Paul J.B. Murphy III as president, CEO and a member of the board, effective Oct. 3, succeeding interim CEO Pattye Moore, according to a press release. Moore has served in her position since April following the retirement of Denny Marie Post.
- Murphy previously served as executive chairman for two years at Noodles & Company where he helped lead a business turnaround that resulted in four consecutive quarters of positive comparable same-store sales. Before this position, he served as CEO of Del Taco for eight years and also held various positions at Einstein Noah Restaurant Group, where he worked for 11 years.
- The board of directors also unanimously rejected on Thursday an unsolicited, conditional proposal made by Vintage Capital to acquire the company for $40 per share, saying that the offer undervalues Red Robin and isn't in the best interest of shareholders, according to a separate press release.
A new CEO will be welcome news to shareholders, who have waited several months for the board to fill the position and leaving many to wonder about the future of the troubled casual chain. In addition to a new CEO, the company appointed three new board members in August. While it's not likely out of rough waters yet, a CEO with brand transformation experience and a refreshed board could help the brand focus on its future.
"Paul brings a multi-decade-long track record of substantial shareholder value-creation, as well as a unique combination of operational, brand-positioning and turnaround expertise, making him ideally suited to lead Red Robin," Moore said in a statement.
During his tenure at Noodles & Co., the restaurant rolled out its plant-based Zoodles and pickup shelving, as well as invested more toward a rewards program and digital marketing. Murphy is leaving Noodles & Company in solid same-store sales territory, reporting nearly 5% company-wide comparable same-store sales growth during Q2, in addition to a two-year growth rate of 9.8% and restaurant-level margins of 17.1%.
Red Robin has already been making similar moves. Its five strategic priorities for the year include building its to-go and catering business, stabilizing dine-in revenue by reinforcing the brand's value proposition and rolling out more digital platforms and tech. The company rolled out Impossible Burgers earlier this year and is testing a partnership with Donatos Pizza to add pizza to its delivery menu.
The company claims its strategic priorities have already yielded results, with the company reaching its strongest comparable restaurant revenue in five quarters and incremental growth from the previous quarter. Customer satisfaction scores are up as well, and by the end of the second quarter manager staffing levels reached 99.4%.
Even with this positive momentum, Murphy will face challenges that are quite different from the fast casual segment, which has not had as many troubles as casual dining. The casual dining segment is keenly focused on growing off-premise sales following declines in dine-in traffic. But beyond off-premise, casual dining is facing bloated menus, increased competition from the growing eatertainment segment and lags behind in terms of innovation.
These will be difficult challenges for a new CEO to try and overcome. After the board rejected Vintage Capital's offer to buy the business, Murphy will need to maintain the current progress that Red Robin has gained to try to prove the company is finally on the right footing.