Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) Q3 2023 Earnings Call Transcript

Alex Slagle: So anything on the California?

G.J. Hart: Yes. I’ll take that. Look, at the end of the day, the California situation there will be some of that affects us. We’re not quite sure how much of that yet. We’ve obviously sized that up. Candidly, we’re going to have to really evaluate that if we need to take additional price in the state of California or not, which we’re not alone in that. But – so we’re watching it very close, and we do expect a little bit of creep.

Alex Slagle: Got it. Thank you.

Operator: Thank you. The next question is from Andrew Wolf of CJ King. Please go ahead.

Andrew Wolf: Hi. Thank you. CL King actually. Just wanted to – on the same store on the traffic improvement you’ve had so far in this quarter, the 300 basis points in traffic is that, did check hold the same. So that also could we also assume that the same-store sales sequentially from September to October improved about the same 3%?

Todd Wilson: Andy, that’s a fair way to think about it. We’re very focused on traffic internally, and so that’s part of the reason we framed it up that way. But that’s the right assumption is both traffic and sales have seen the improvement.

Andrew Wolf: Okay, thank you. And I don’t know if you went over this, but in terms of like cadence, how would that 3% compare to the numbers you gave us? The very detailed information you gave on the quarter? In other words, was September much lower or similar to the quarter? So we could try to translate that to sort of what your comp is running at.

Todd Wilson: Yes, I think I’d frame it this way, Andy. Within Q3, the – G.J. referenced it. The back half of the quarter was the softer part of the quarter.

Andrew Wolf: Yes.

Todd Wilson: As we look at that 300 basis point improvement, that has us better than the Q3 result. And we are very optimistic when we look at especially the multi-year trends of where the quarter could end up. I imagine that the group can triangulate what we think from Q4 from some of the guidance figures. But we think that there’s a path to flat to potentially even positive same-store sales within Q4.

Andrew Wolf: And that would be somewhat the comparisons against last year’s promotionality easing and also, obviously, all the changes you’ve done for the guest experience?

Todd Wilson: That’s right. The comparisons versus 2022 are lighter. When we look at the comparisons versus 2019, we feel very comfortable with that track there. And then you add on the incremental investment, the sequential investment from Q3 to Q4, all of those, we believe, point to that type of outcome.

Andrew Wolf: Kind of last thing I just wanted to ask was focusing on the selling expense. And I’m not saying in a guidance way because we’re in not a great period for the industry. But if we were in a normal period, what are you guys thinking about for like a normal selling expense annualized? Or do you like where it’s at or do you think there’s more – should it be higher in a better environment where you can fund it internally? Or I guess option three is are you going to find out as you sort of test things in the market?

G.J. Hart: It’s really option three. And sorry to be that way about it. But we’re going to learn here and we definitely need to get our news out there in a creative way and to be able to generate some excitement. So we’re going to learn here and we are going to test different ways and different levels to really see what makes the most traction and the most success for us.