Red Robin is the latest fast-food chain considering major cuts to its restaurant footprint.
The company announced plans to potentially close up to 70 locations after leases expire, aiming to reduce costs and improve profitability.
The decision follows a reported $32.4 million loss in the fourth quarter of fiscal 2024, largely due to a review of struggling restaurants.
Key closures and asset sales already underway
Red Robin has already closed one location during the final quarter of 2024.
The company also plans to to sell three restaurant properties in early fiscal 2025, with expected proceeds of $5.8 million.
Tough financial year for Red Robin
Red Robin’s fiscal 2024 results missed initial targets, according to CEO G.J. Hart.
However, Hart highlighted “substantial improvements to the guest experience” and some signs of recovery in customer traffic.
During an earnings call, Hart said traffic trends improved by 600 basis points from the first quarter to the fourth.
Still, Hart acknowledged the brand’s turnaround is far from complete.
He said:
“We have not yet reached the potential of our iconic brand and expect to drive further traffic improvements in 2025.”
Red Robin’s footprint and challenges
The chain operates more than 500 restaurants across the United States.
Like many casual dining and fast-food chains, Red Robin has struggled to recover from the impact of the pandemic.
Many restaurant operators expected a full rebound in customer spending once restrictions lifted.
Instead, rising inflation and economic uncertainty have made customers more cautious. Many diners opt to eat at home rather than spend on casual dining experiences.
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Industry-wide struggles for casual dining brands
Red Robin’s story reflects a wider trend across the restaurant industry.
- TGI Fridays, Denny’s, Ruby Tuesday, Rubio’s Coastal Grill, and Red Lobster all faced severe financial difficulties in recent years.
- Some of these companies filed for bankruptcy protection, while others downsized significantly to cut costs.
Even stronger brands are trimming their networks. Wendy’s announced in late 2024 that it would close 140 underperforming locations to improve its overall financial health.
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What’s next for Red Robin?
Red Robin’s leadership says they are focused on revitalizing the brand and improving performance at remaining locations.
Key priorities for 2025 include:
- Enhancing guest experience to drive customer loyalty.
- Reducing debt through asset sales.
- Reassessing underperforming sites to avoid further losses.
While the brand’s future remains uncertain, Red Robin’s struggles highlight ongoing challenges for casual dining chains in a rapidly changing restaurant landscape.
