- G.J. Hart, CEO of Red Robin, told investors the restaurant chain has a plan to improve sales and resume net unit growth during a presentation at the ICR Conference in Orlando, Florida on Monday.
- These goals include overhauling the restaurant’s kitchen equipment, improving staffing and management, boosting food quality, rewarding successful operators and streamlining the chain’s supply system. Red Robin also shared these goals in a press release published Monday.
- Hart, who has served as president and CEO of the chain since September 2022, said Red Robin had made serious mistakes in the past five years, including under-investment in stores, changes to its labor policies and deteriorating food quality.
Even before the COVID-19 pandemic, Red Robin’s fortunes were in decline. The chain’s revenue peaked in 2017 at $1.4 billion, and its unit count peaked a year later at 573 restaurants, according to the presentation. By the end of 2019, the restaurant’s unit counts had fallen to 556 and revenue was down to $1.3 billion. The pandemic hammered the company harder. At the end of 2022, revenue had slipped to $1.26 billion — an improvement over 2021 and 2020 — and the chain closed out the year with 511 units.
Hart attributed the chain’s declines to changes in labor practices and middling food quality. A key moment, he noted, came when the company eliminated bussers in January 2018, ostensibly to save on wages. This shifted the burden of bussing tables onto servers and hurt the company’s ability to emphasize service and hospitality, Hart said. The chain also eliminated the kitchen manager position, transforming it into a general managerial role.
“Those things started to really affect the company,” Hart said. “We’re in the restaurant business. We serve food. I think it's imperative that you have kitchen managers.”
Red Robin eliminated certified training centers for restaurant operators, leaving existing managers to train new managers at their home restaurants. Hart said this decision increased managerial turnover as inexperienced GMs sometimes were left to train newly hired managers. Increased managerial turnover also worsened hourly retention.
“You can imagine what happens to those young managers, that are barely general managers, that are just barely getting to understand the restaurant; now they’re having to train the managers,” Hart said. “Of course, everything falls apart as a result of that.” These problems eroded customer satisfaction, which has been worse than the casual dining average since 2015, according to Hart’s presentation.
To turn the situation around, Hart said, Red Robin will include restaurant operators in major company decisions. One aspect of that, Hart hinted, could be creating a managing partner program similar to the one implemented during Hart’s tenure as CEO of Torchy’s Tacos. The managing partner program at Torchy’s paid restaurant managers 7% of restaurant operating profit in addition to base salary, Hart told Nation’s Restaurant News in 2020. Red Robin also will begin rewarding high-performing restaurant operators on a monthly basis. Other changes to labor will follow, with the chain reducing the number of tables assigned to individual waitstaff, though Hart did not specify if the company was bringing bussers back.
Red Robin is exploring equipment changes to boost food quality, Hart said. The chain will invest in flattop grills that can cook faster and better than the cooking surfaces currently used by Red Robin. Changing the cooking surface to a more traditional flattop grill will enable the chain to add new entrees.
While other restaurant chains are shrinking their menus, Hart said that Red Robin sees an opening to improve its offerings. Currently, all the chain’s appetizers are fried, but he wants that to change. Red Robin will offer some healthier alternatives, Hart said, though he did not specify when. These menu changes will be supported by a thorough review of the chain’s vendors to ensure that Red Robin consistently is sourcing high quality products at competitive price points.