Red Robin is the latest in the growing number of fast food eateries planning to close low-performing locations following the high financial difficulties.
The chain on Wednesday announced it was weighing the possibility of 70 locations closing once the lease expires. The company had already closed one location in the fourth quarter of 2024, recording a loss of $32.4 million in the quarter, largely from “low-performing restaurant reviews.”
The company plans to sell three properties in the first quarter of fiscal year 2025. The sale of these locations is expected to generate $5.8 million.
While the 2024 financial results were “far below” the company's original expectations, CEO GJ Hart said the company has made “significant improvements to the guest experience” in order to try to get traffic back to the restaurant.
During a revenue call last week, Hart told analysts that the company saw a 600 basis points improvement in the fourth traffic trend from the first quarter of the year.
However, “While our improvements have been significant, we have not yet reached the potential of the iconic brand and do not expect to promote further traffic improvements in 2025,” he continued.
The story of Red Robin is not unique. More and more restaurants have names that have struggled after accumulating too much debt during the pandemic.
The industry had hoped that consumer spending at restaurants would return to pre-pandemic levels once things returned to normal. However, the Quick-Service sector began to face slower traffic over consecutive quarters as inflation consumers continued to eat at home more frequently.
TGI Friday, Denny, Ruby Tuesday, Rubio Coastal Grill and Red Lobster have filed for protection in bankruptcy court. However, others, including those who did not file for bankruptcy protection, have significantly reduced their footprint to better position themselves in their current environment.
For example, Wendy's announced that it would be closing 140 shortages by the end of 2024 as it seeks to improve its “restaurant footprint and overall system health.”
