Greenwood Village, Colorado-based Red Robin Gourmet Burgers Inc. (RRGB), which currently operates 430 restaurants across the United States and Canada, is planning to open a 5,673 square foot restaurant in Bowie, Maryland. The new restaurant will seat 179 guests and open on January 10, 2011.
The burger chain already has eight restaurants in Maryland including sites in Towson and Owings Mills.The new restaurant will be opened at 15650 Excelsior Drive, located in the Bowie Towne Center. Given the strategic location of this new restaurant, we believe it is on the right track for growth in the coming days. Apart from its popular offering of gourmet burgers, entrees, salads and beverages, the menu will offer an interesting variety for children.
As part of its opening week from January 10 to 16, Red Robin is partnering with the National Center for Missing & Exploited Children (NCMEC) to host a fundraiser. Red Robin will donate 50 cents from every burger sold in the week to NCMEC to support its child safety initiatives.
We believe that with the opening of new restaurants in fiscal 2010, Red Robin is trying to regain market share, following a gradual improvement in the restaurant industry, which faced extreme challenges due to the economic turmoil that resulted in weak labor and tight credit markets as well as lower discretionary spending.
Most of the company’s peers such as BJ’s Restaurants Inc. (BJRI), California Pizza Kitchen Inc. (CPKI) and Buffalo Wild Wings Inc. (BWLD) have been on a modest expansion mode in fiscal 2010. Going forward, we believe this will intensify competition for Red Robin.
The leading casual dining restaurant chain founded in 1969 expects negative same store sales and cost inflation in the fourth quarter of 2010. We thus maintain our long-term Underperform recommendation on the stock, given eroding margins and lagging same store sales due to a decline in traffic.
BJ’S RESTAURANT (BJRI): Free Stock Analysis Report
BUFFALO WLD WNG (BWLD): Free Stock Analysis Report
CALIF PIZZA KIT (CPKI): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
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