Red Robin burger chain may close 70 ‘underperforming’ restaurants, joins list brands seeking to reduce footprint

Red Robin Gourmet Burgers is looking to close up to 70 underperforming locations, representing about 14% of the 498 restaurants that were operating as of the end of last year.

The company has already closed one restaurant upon lease expiration, it said in an earnings release last week, and it plans to close three additional locations within the first quarter of 2025.

Most of the 70 locations are likely to close at some point in the next five years once their leases expire, Restaurant Dive reported, with as many as 15 closing this year.

This decision follows a review of the company’s operations, which revealed that these sites are not meeting performance expectations.

Red Robin reported a net loss of $39.7 million in the fourth quarter of fiscal 2024, a sharp decline compared to the $13.7 million loss reported in the same period of 2023. Despite this, the company reported a 19% increase in adjusted EBITDA, reflecting the success of its cost-saving measures.

Highlights for Q4 and full-year 2024

• Total revenues of $1.25 billion for the year, down from $1.3 billion in 2023. Q4 revenues were $285.2 million, down $23.8 million due to one fewer operating week.
• Comparable restaurant revenue decreased 1.2% for the year, but increased 3.4% in Q4 (1.8% including deferred loyalty revenue impact).
• Net loss of $77.5 million for the year, compared to a net loss of $21.2 million in 2023. Q4 net loss was $39.7 million, impacted by $32.4 million in impairment and closure costs.
• Adjusted EBITDA of $38.8 million for the year, down 43.7%, with a 19% increase in Q4 to $12.7 million. 

Lingering optimism

While the closures mark a difficult chapter for the company, Red Robin’s leadership believes the actions taken will better position it for future growth and profitability. CEO G.J. Hart highlighted the significant improvements in customer traffic, with a 600-basis-point improvement from the first to the fourth quarter.

The company is focusing on bringing guests back into restaurants with its “North Star” plan, which aims to boost guest experience and operational efficiency. 

Red Robin has restaurants in 39 U.S. states and one Canadian province, with its largest presence in California, Washington State, and Colorado. In closing underperforming locations, it would join a growing list of dining chains including Denny’s, Wendy’s, TGI Fridays, and several others that have moved to reduce their footprint in recent months.

Shares of Red Robin stock (Nasdaq: RRGB) are down almost 24% in the last 12 months.

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