Just over a year ago CEO Denny Marie Post made the comment that Red Robin doesn’t intend to fall behind in the digital race for consumers. The company had recently announced a partnership with Olo to bring online ordering to the brand and was a few months into its deal with DoorDash to offer delivery from 70-plus locations, along with testing Grubhub and Amazon.
“Our goal is for it to complement or expand our reach, not take the place of in-restaurant dining,” said Post at the time they added online ordering. “But, ultimately, if our guests are going there, we have to be there. It’s pretty simple—you’re going to be out of business if you’re not there.”
Red Robin is seeing results from its investment in digital technology. Its off-premise sales rose nearly 40 percent in the first quarter, to 9.4% of total sales, up from 6.3% the previous year. During the earnings call Post said Red Robin’s Q1 results were a “mixed bag,” noting that while sales fell short (same-store sales declined 0.9%), “we made great strides on our off-premise business, and as a result, we did take some share from others, despite their heavily advertised, short-term deep discounting.”
The hamburger franchisor offers delivery from about 70 percent of its 570 restaurants, with to-go orders and catering also integral to the growth in off-premise dining, something Post said is a key building block as the brand moves from “being only a destination to a complete source of craveable, customizable burgers.
The company is also testing its own delivery program and last November opened a delivery-only Red Robin Express test unit in one of its closed Burger Works fast-casual locations in Chicago. A mix of Red Robin employees and third-party services handle deliveries.
When it comes to the overall margin profile of Red Robin’s off-premise channels, CFO Guy Constant said the most profitable transaction is when guests order online and pick up their food in the restaurant, “because we save the front of the house labor and we don’t incur the commission charge that we would pay the aggregator.”
A drawback of third-party delivery services, said Constant, is they often don’t pass on the customer data, “so it’s hard for us to keep track of the guests.” Which led them to test the self-delivery proposition, “because we believe not only is it cheaper than using an aggregator, but it gives us access to the data as well.”
Who owns that customer data, the restaurant or the delivery provider, is a constant debate. At the Food On Demand Conference in March, Jim Collins, CEO of virtual kitchen developer Kitchen United, gave his opinion: “I truly believe that the platform that acquires the customer should own the data. If GrubHub has acquired your customer, they should own the data,” and he urged operators to change their mindset.
As more and more restaurants, like Red Robin, start testing the delivery waters, the debate will stay heated.
