Red Robin appears to have struck a chord with consumers holding their wallets tight.
The chain made a big value play this summer with its $9.99 Big Yummm Burger Deal, which features a Red’s Double Tavern Burger, a bottomless side, and a bottomless drink. The meal surpassed expectations and grew traffic in Q3 compared to Q2. Red Robin entered the quarter with negative 7 percent traffic and exited at negative 1.4 percent. The offer, which mixes around 8 percent, helps draw crowds during the weekdays, particularly for the lunch daypart. It also helps the chain fulfill its goal of orchestrating a complete dining experience in under 45 minutes.
“We feel good about it,” CEO David Pace said during Red Robin’s Q3 earnings call. “It did what we had hoped it would do. It got traffic. It gave people a reason to come in. It got trial again. So from a tactical standpoint, it did what we had hoped to do.”
The belief is that the meal offer will develop into something bigger in 2026.
“We’re doing a lot of menu work right now that I think you’ll see in 2026 that is an output of the learnings that we’ve got through the Big Yummm deal,” Pace said. “Big Yummm is a very narrow, very tactical execution. I think the approach that you’ll see us evolve to is a much broader, more strategic approach, including the Big Yummm, but beyond that.”
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An added bonus—the Big Yummm Deal didn’t have a significant impact on menu mix. CFO Wilson credited restaurant operators, who have clearly laid out trade-up options for customers.
Orders of appetizers, desserts, and drinks are helping mitigate the lower price point.
“We think that’s a good thing for us in this environment where we see the headlines that maybe consumers are managing their wallets a little bit more,” Wilson said. “We’ve seen those areas hold up.”
With the help of the meal deal, same-store sales fell 1.2 percent in Q3, including a 1.7 percent increase in net menu price, offset by a 3 percent decline in guest traffic. The comps were a sequential improvement from the 3.2 percent decrease in the second quarter.
The value offer is part of Red Robin’s overall “First Choice” strategy, installed earlier this year when Pace entered the CEO role. The chain will continue to use the deal to drive visits, along with its off-premises business, which mixed 25 percent in Q3 and delivered 2.9 percent traffic growth.
Red Robin wants to target guests differently too. The company has a new data-driven marketing initiative allowing the brand to personalize messages to customers instead of a “spray and pray” type of communication. The chain launched this approach in Q3 and was met with “outsized” increases in traffic and sales among a cohort of over 100 restaurants. In many cases, these stores are seeing positive traffic on a year-over-year basis.
“It is a hyper-micro targeted approach where we get into the individual restaurant and we get into the individual guests,” Pace said. “We understand the trade area. We understand the makeup of it. We understand what pulls people in. Is it a value play? Or is it a premium burger play? What is the reason for people making the shift? And we can get that information down to a highly targeted level.”
Red Robin is also beating operational expectations. The company said it achieved notable labor efficiencies in the quarter, leading to 9.9 percent restaurant-level operating profit, or a 90-basis-point improvement year-over-year. Pace attributed the gains to process changes, analytics, and technology, in combination with the “entrepreneurial spirit” of restaurant operators. Red Robin implemented these efficiencies without impacting guest satisfaction scores.
In addition to upgraded operations, Red Robin wants to welcome guests with better-looking restaurants. After identifying a need to invest in deferred maintenance, the company completed 20 store refreshes across four markets in the third quarter, costing around $40,000 per location. Pace emphasized that these are “light touch refreshes” and not “full reimaging projects.” Examples include new flooring, interior finishes, furniture repairs, updated lighting and signage, fresh paint, and landscaping improvements. Thus far, these units have seen “measurable improvements” in sales and traffic, Pace said.
Another focus of the First Choice plan is finding money. Red Robin is reducing overhead costs, starting with $3–$4 million in savings in 2025, ramping up to $10 million in recurring annual savings by 2026. Additionally, the chain is strengthening its balance sheet through four key initiatives: extending its credit agreement by six months to September 2027, engaging investment bank Jefferies to help refinance its debt and optimize its capital structure, establishing a $40 million at-the-market equity program to provide financial flexibility, and pursuing a refranchising strategy with strong interest from current and prospective franchisees.
On that last point, Red Robin ended Q3 with 480 restaurants systemwide, 90 of which were franchised—a number that may go up soon.
“We have indications of interest, specific proposals put forward that we haven’t really negotiated against yet,” Pace said. “We’re still in the middle of kind of vetting and kind of getting to know who’s who. And so it’s moving ahead.”
Although Red Robin experienced momentum in Q3, trends have slowed in Q4. The chain attributes the dip to the government shutdown and a shift in marketing spend toward the back end of the quarter. The brand expects traffic and same-store sales to both drop 3 percent in the fourth quarter and that traffic will turn around once marketing levels increase.
