Red Robin is the latest fast-food chain planning to shut down struggling locations. Financial troubles have forced the company to reassess its operations.
On Wednesday, the chain said it might close 70 restaurants as their leases expire. One location already shut down in the fourth quarter of fiscal 2024. The company reported a $32.4 million loss, mainly due to underperforming stores.
To recover, Red Robin plans to sell three properties in early 2025. The sales should bring in $5.8 million, which will help pay off some debt.
CEO G.J. Hart admitted that 2024 results were disappointing. However, he said the company has made "substantial improvements to the guest experience" to boost traffic.
Hart told analysts last week that customer traffic improved by 600 basis points from the first to the fourth quarter. Despite this, he acknowledged the brand has yet to reach its full potential.
"While our improvement has been substantial, we have not yet reached the potential of our iconic brand and expect to drive further traffic improvements in 2025," he said.
Red Robin’s struggles reflect a broader industry trend. Many restaurant chains took on too much debt during the pandemic and are now paying the price.
The industry expected a full recovery as life returned to normal. But high inflation has kept many consumers eating at home, causing back-to-back declines in restaurant traffic.
Several chains, including TGI Friday’s, Denny’s, Ruby Tuesday, and Red Lobster, have filed for bankruptcy protection. Others have downsized to survive.
Wendy’s, for example, announced in November that it would close 140 struggling locations by the end of 2024. The move aims to improve its restaurant footprint and overall financial health.