We are upgrading our rating on Red Robin Gourmet Burgers, Inc., a casual dining restaurant chain, to Outperform from Neutral.
The rating upgrade is based on solid first quarter 2011 earnings, which were well ahead of the Zacks Consensus Estimate, primarily driven by top-line and bottom-line growth. Additionally, for fiscal 2011, the company intends to turn around its business by Project RED, which focuses on revenue growth, expense control and capital deployment. The project is progressing quite successfully, thereby boosting the outlook for sales and margins.
To drive revenues, the company implemented a guest loyalty program called Red Royalty with a goal of increasing customer frequency, repositioning the bar business by attracting adult guests and improving beverage sales. More.