Dive Brief:
- Red Robin has named Lynn Schweinfurth as its new executive vice president and chief financial officer, effective at the end of this month. Schweinfurth previously served as CFO, SVP and treasurer of Fiesta Restaurant Group, where she’s worked since 2012. Both companies announced the news Wednesday in separate press releases.
- At Red Robin, Schweinfurth will oversee accounting, strategic and financial planning, operations analysis, treasury and investor relations. She will also manage the 574-unit chain’s supply chain. She replaces Guy Constant in that role, who is transitioning to chief operating officer.
- According to QSR Magazine, Red Robin’s same-store sales dropped 3.4% in the third quarter. Total company revenues were down 3.5%, while guest checks were also down 1.5% and traffic was down 1.9%.
Dive Insight:
Fiesta Restaurant Group embarked upon a turnaround plan in 2017, after struggling sales at its Pollo Tropical and Taco Cabana Brands. The plan included a number of new initiatives, including store closures, a push for better quality ingredients and a transition to antibiotic-free chicken. In February, Schweinfurth noted in an earnings call that the company was encouraged by early signs of improvement, specifically in guest metrics.
The company started to see some same-sales growth during the latter part of 2018. However, last month — after missed quarterly estimates caused a 20% drop in stock prices — Fiesta announced it was closing 23 locations.
Notably, Fiesta’s issues don’t seem to be caused by the financial fundamentals overseen by Schweinfurth, but rather by continued traffic declines, which are affecting nearly the entire industry.
Schweinfurth has the right experience to help Red Robin forge a turnaround of its own, holding senior finance leadership positions at Brinker International and Yum Brands prior to Fiesta. Red Robin could use a boost after experiencing a sharp loss during Q2, driven largely by a labor-saving initiative that fell short of expectations and may have directly affected traffic, according to Restaurant Business.
Red Robin has a service plan in place to win customers back, which includes some investments that Schweinfurth could be tasked with overseeing, such as new signage and the formation of a catering sales team. A challenge she’ll face is in breaking down where the opportunities are in the chain's off-premise business. As Guy Constant, her predecessor in that role, noted during the Q2 earnings call, the company has little visibility into that data because its third-party aggregates don’t share that information.
Schweinfurth will also have to try to find a better mix on value for Red Robin, which caused too many customers to trade down during Q2. Executives noted during the company's earning call that they will shift the spotlight to higher-margin, premium burgers to rectify this issue. In doing so, Schweinfurth should have two major advantages. First, her predecessor is staying on at the company, which should provide a smoother transition. Also, as part of her responsibilities, Schweinfurth will oversee the company’s supply chain, an increasingly important role for CFOs. According to Forbes, disruptions to the supply chain resulted in an average loss of $3.4 million a year and those losses can be mitigated with the CFO’s stewardship.
