Hamburgers have always been the backbone of the fast-food and fast-casual industries.
When Burger King and McDonald's first launched their menus, they basically offered a choice of hamburger or cheeseburger along with fries and a soda. That has, of course, changed a lot, but burgers are still core products.
Related: Burger King Menu adds new Whopper demanded by customers
Burgers sit at the heart of the menu for numerous chains, including ones like Five Guys, which has an old-school fast-food menu. Shake Shack has a slightly broader menu, but again, burgers are its core product.
The same can be said of fast-casual and casual sit-down chains. Chili's has based its recent advertising on pointing out that its new Smashburger has more meat than a Big Mac, and every player in the space has pushed its burger as a good value.
That's created incredible competition and means that a chain that has built its business model around hamburgers better have a damn good product.
One popular burger-based casual-sitdown chain says it has good burgers, but it's closing dozens of locations amid growing losses.
Image source: Shutterstock
Red Robin has struggled
Red Robin's (RRGB) fourth-quarter loss widened to $39.7 million from $13.7 million in the year-earlier quarter. Revenue fell 7.7% to $285.2 million.
The wider loss reflected an increase in one-time costs due to a store closure.
For the full year, the numbers were not encouraging either:
- Total revenues were $1.25 billion, a decrease of 4.2%
- Comparable restaurant revenue fell 1.2%.
- Net loss was $77.5 million, compared with a loss of $21.2 million during 2023.
More Food News:
- McDonald's, Starbucks targeted by rival fast-food chain's takeover
- Popular retailer unveils affordable line with unexpected brand
- Oreo celebrates 113th birthday bringing back fan favorite
Chief Executive G.J. Hart tried to put a positive spin on the numbers.
"As we look to 2025 and beyond, our team will focus on two key priorities: bringing guests back into our restaurants for moments of connection over craveable food that only Red Robin can provide and an accelerated effort to gain efficiency in our operations and deliver growth in restaurant and corporate-level profitability while maintaining the improved guest experience that we have developed over the past two years," he said.
Red Robin is closing locations
"As of December 29, 2024, the company had outstanding borrowings under its credit facility of $189.5 million and liquidity of approximately $50.7 million including cash and cash equivalents and available borrowing capacity under its credit facility," the company reported.
Red Robin plans to use restaurant closures to preserve cash and enhance operational efficiency.
"During the fourth quarter of fiscal 2024, the company closed one restaurant location upon expiration of the lease and is evaluating alternatives for approximately 70 underperforming restaurant locations, including closure upon expiration of the current lease term," it said.
In addition to closing up to 70 locations, the burger chain plans to divest itself of some company-owned locations.
Related: Popular restaurant chain unveils new spin-off concept after failure
In this quarter, Red Robin said, it expected to close the sale of three owned properties, generating gross proceeds of $5.8 million. It said in a news release that it expected to use the funds to pay down debt and for general purposes.
Red Robin currently has just under 500 restaurants in the U.S. and Canada. Select locations also offer a full Donato's Pizza menu.
