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Red Robin Expanding Fast-Casual Burger Works

Filed under Advertising, Business, Fast Casual, LTO, Marketing, Pricing

Red Robin Gourmet Burgers plans to open four more locations for its Red Robin’s Burger Works fast-casual concept this year, the company announced today. These will include a location on the Ohio State University campus while others will be in the Denver area, where the first Burger Works opened last year.

Burger Works has more-limited service, a smaller footprint and a smaller menu of lower-price burgers (beginning at $4.99). The traditional Red Robin menu prices burgers from $8.99 to $10.39.

Red Robin CEO Steve Carley announced positive results for its Q4 and for the fiscal year ended Dec. 25, 2011. Comparable sales at company owned were up 2.9% for the year and 4.8% for the quarter. The company plans to open nine to 11 full-size Red Robin stores in 2012. A “next generation” restaurant design prototype will be tested this year.

Burger Works' $4.99 Tavern Double

Although a 14% year-over-year increase in ground-beef prices helped add a full percentage point to Red Robin’s overall food costs, the chain isn’t backing away from burgers. EVP-Chief Marketing Officer Denny Post said the chain plans to broaden its menu but that it will not relinquish its marketplace status as “burger authority.” That broader menu is likely to mean addition of lower-price items, lesson learned from Burger Works’ popularity. More “value” offers at lunch will be added as well.

Red Robin took price increases of 1.5% in April 2011 and 0.9% in October. But the chain hopes to hold the line on menu-price increases this year in spite of high prices for many foods, SVP-CFO Stuart Brown told analysts.

Red Robin will back off a bit from its LTO promotional-pricing strategy. For example, Red Robin’s Oktoberfest burger was initially priced at $6.99 when introduced last September. But the price for the limited-time item jumped to $9.99 when advertising support ended. Post said 2012 LTO promotions might be of longer total duration but with shorter promotional-price periods.

One Response to Red Robin Expanding Fast-Casual Burger Works

  1. J.B.

    This looks good, I think it will do very well.