Red Robin Gourmet Burgers, Inc., (NASDAQ: RRGB), a casual dining restaurant chain focused on serving an innovative selection of high-quality gourmet burgers in a family-friendly atmosphere, today provided a marketing and development plan update for fiscal 2010.
The Company plans to include television media in support of its spring 2010 limited time offer (LTO) promotion beginning in mid-February. Based on the results, as previously disclosed, of the three-week television campaign that supported the fall 2009 promotion, the Company plans to expand its television media to advertise its new spring 2010 LTO menu promotion using national cable television, together with local television in select markets. Similar to the fall 2009 LTO promotion, the Company will be emphasizing a value message for the spring LTO promoting two new items at an attractive price point. The television media support will run over four of the eight weeks of the product promotion. The total cost to the Company of the first quarter television advertising campaign is expected to be approximately $6.7 million. Additional marketing support for the spring 2010 LTO will include on-line digital media and in-restaurant promotional materials.
Based on the results of the spring 2010 LTO promotion, television advertising may be used to support the remainder of Red Robin’s LTO promotions in 2010, but no decision on subsequent campaigns has been made. The Company and its franchisees will continue to contribute 0.25% of system-wide revenue to support a national digital media campaign in 2010. Decisions to expand the national media fund contribution after the first quarter of 2010 have not been made.
As previously announced, the Company’s board of directors has approved the development of up to 15 new company-owned Red Robin(R) restaurants in 2010. Based on the current development schedule, between 11 and 13 new company-owned Red Robin(R) restaurants are expected to open in 2010. The Company plans to fund new company-owned restaurant development with operating cash flow, while also using additional free cash flow to pay down debt. Franchisees are expected to open four to five units in 2010.
‘The commitment to utilize television advertising for the spring 2010 LTO promotion reflects our confidence in the Red Robin(R) brand, our marketing strategy to support innovative new product news and our belief that we can cost effectively capture market share and improve traffic trends by raising guest awareness and delivering on our message of value, variety and quality. In addition, we believe our development plan for 2010 represents prudent new restaurant expansion at average investment costs that are lower than we have seen in several years,’ said Dennis Mullen, Red Robin Gourmet Burgers, Inc. chairman and chief executive officer.