Shares of Red Robin Gourmet Burgers (NASDAQ:RRGB) Inc slipped by more than 20% during the recent trading session after a weak earnings report as well as a negative outlook for their upcoming fourth-quarter earnings report.
Although the demand for their food products was initially expected to drive sales up of the casual-dining chain company, the growing competition from mid-market eateries have led to the losses the chain suffered during the quarter.
Red Robin Gourmet Burgers shares which declined by 20.88% was attributed to the increased competition between burger chains or fast food chains that led to an earnings report for the third quarter that did not meet most analysts forecasts.
Their overall earnings were considerably lower at $2.71 million compared to their earnings of $5.03 million during the same quarter last year representing a decline of 46.1% year over year higher than analysts estimates of a 44.7% decline in their earnings.
For their earnings per share, Red Robin Gourmet Burgers posted $0.21 for the quarter compared to their earnings of $0.38 per share during the third quarter last year. However, Red Robin Gourmet Burgers’ revenue for the quarter was 2.3% higher to $304.25 million compared to their revenue of $297.31 million during the same quarter last year.
Red Robin Gourmet Burgers chief executive officer Denny Marie Post stated that despite the topline results falling short of their expectations, the company was able to significantly perform the casual dining industry on traffic for the fifth quarter in a row as Red Robin Gourmet Burgers continue to focus on compelling Every Day Value.
The chief executive officer also added that the company is making progress in growing its off-premise business as it pulls Red Robin Gourmet Burgers away from the category and has led to the company competing favorably with other top class casual dining chains.
“Although we grew our share while beginning to implement service model changes that address rising labor costs, category volatility underscores our cautious outlook for the remainder of 2017 and our intention to pause unit growth as of year-end 2018. This decision will give us needed time to test new approaches to inform future growth.”
For the upcoming fourth quarter, Red Robin Gourmet Burgers provided an earnings outlook of $0.45 to $0.60 per share for the fourth quarter which is lower than most analyst estimates of $1 per share.