Red Robin Gears Up for Q2 Earnings: Key Factors to Note

Red Robin Gourmet Burgers, Inc. RRGB is scheduled to report second-quarter fiscal 2025 results on Aug. 13, after the closing bell. In the last reported quarter, the company delivered a positive earnings surprise of a whopping 133.3%.

RRGB’s Q2 Estimates

The Zacks Consensus Estimate is pegged at a loss of 25 cents per share. In the prior-year quarter, RRGB reported an adjusted loss per share of 48 cents.

The consensus mark for revenues is pegged at $285.2 million, indicating a 5% decline from the year-ago quarter's figure.

Factors at Play Ahead of RRGB’s Q2 Results

Red Robin's second-quarter fiscal 2025 top line is likely to have been hurt by the larger macro and consumer climate. Along with the low traffic growth, which has been consistent for the last few months, it is anticipated to continue for the remaining year. 

However, the company showed growth in comparable restaurant revenue and unit-level profitability in the last two quarters, and the trend is likely to have continued in the second quarter of 2025. On the other hand, Red Robin is focusing on being more efficient and productive with operating costs, mainly by reducing its labor costs. We expect comparable restaurant revenues to increase 7.5 % year over year. 

RRGB’s emphasis on the managing partner program to deliver solid financial results and strategic initiatives to drive growth is likely to have aided its performance. Additionally, the emphasis on digital projects and menu innovation is promising.

Over the last two years, the company has made calculated investments to improve hospitality and food quality, which has resulted in long-term increases in customer satisfaction. Consistently high satisfaction ratings show that these initiatives have been appreciated by customers.

For the second quarter of fiscal 2025, our model predicts restaurant revenues to decrease 3% year over year to $285.5 million.

Margins

During the quarter to be reported, the bottom line is expected to have declined year over year due to the cost disadvantage based on the new tariff. For the second quarter, our model expects total costs of sales to increase year over year by 5.2% to $73.1 million. 
 
For the quarter to be reported, our model predicts Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) to expand year over year by 10.7% to $15.1 million and Adjusted EBITDA margin to increase by 70 basis points (bps) year over year to 5.2%.

What the Zacks Model Unveils for RRGB

Our proven model predicts an earnings beat for Red Robin this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is exactly the case here.

RRGB’s Earnings ESP: Red Robin has an Earnings ESP of +67.35%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

RRGB’s Zacks Rank: Red Robin currently has a Zacks Rank #3.

Other Stocks With the Favorable Combination

Here are some other companies in the Zacks Retail-Wholesale sector that, according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported.

Dillard's DDS presently has an Earnings ESP of +23.90% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s earnings beat estimates in three of the trailing four quarters, and missed on one occasion, the average surprise being 12.7%. DDS’s earnings for the second quarter of 2025 are expected to decrease by 17.4%.

Abercrombie & Fitch ANF currently has an Earnings ESP of +2.62% and a Zacks Rank of 3. 

The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 11.2%. ANF’s earnings for the second quarter of 2025 are expected to decrease by 9.2%.

Bath & Body Works, Inc. BBWI presently has an Earnings ESP of +4.59% and a Zacks Rank of 3.

The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 4.74%. BBWI’s earnings for the second quarter of 2025 are expected to decrease by 2.7%.

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This article originally published on Zacks Investment Research (zacks.com).

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