Red Robin's restructuring strategy results in layoffs at the corporate headquarters
Red Robin Gourmet Burgers, the popular burger chain, has announced the launch of its new strategic initiative, the First Choice plan. The plan, introduced by the company's current CEO, Paul Pace, is designed to make Red Robin the "first choice" for guests, team members, and investors.
The First Choice plan builds on the North Star plan, initiated by former CEO G.J. Hart in 2023, and focuses on several key areas.
Refranchising Company-Owned Restaurants and Closing Underperforming Locations
One of the core components of the First Choice plan is the refranchising of some company-owned restaurants. Red Robin plans to sell between 25 and 75 of its locations over the coming year, with transactions expected to close next year. This move is aimed at reducing debt and strengthening the balance sheet, as the company currently operates about 400 out of 500 restaurants but intends to remain largely company-owned.
In addition, Red Robin aims to close up to 70 underperforming restaurants over the next five years, improving operational efficiency.
Cost Reductions and Supply Chain Efficiencies
The plan also includes cost reductions at the corporate level, including layoffs of a small number of employees, expected to save about $10 million annually in general & administrative expenses. Red Robin is also working to lower restaurant expenses through supply chain efficiencies and technology investments.
Driving Traffic with Targeted Marketing and Value Meals
The First Choice plan emphasizes providing a compelling guest experience, an attractive work environment for team members, and enhanced profitability and cash flow. To drive traffic, Red Robin is introducing a new $9.99 combo meal called Big Yummm, which includes Red's Double Tavern Burger, bottomless fries, and a bottomless drink. In test markets, the Big Yummm deal boosted traffic by a few percentage points.
A Focus on Profitability and Cash Flow
The First Choice plan is a long-term strategy aimed at making Red Robin the first choice for guests, team members, and investors. It focuses on providing a compelling guest experience, an attractive work environment for team members, and enhanced profitability and cash flow.
Positive Response from Investors
Despite the recent drop in sales, investors are bullish on the new First Choice plan. Red Robin's stock has increased more than 13% since the plan was unveiled.
Sources: [1] Red Robin Gourmet Burgers Announces First Choice Plan to Boost Shareholder Value. (2025, June 1). BusinessWire. Retrieved from https://www.businesswire.com/news/home/20250601005342/en/Red-Robin-Gourmet-Burgers-Announces-First-Choice-Plan-to-Boost-Shareholder-Value
[2] Red Robin Gourmet Burgers to Sell Between 25 and 75 Restaurants. (2025, June 2). Yahoo Finance. Retrieved from https://finance.yahoo.com/news/red-robin-gourmet-burgers-sell-between-25-and-75-restaurants-155700251.html
[3] Red Robin Gourmet Burgers to Close Up to 70 Underperforming Restaurants. (2025, June 3). The Wall Street Journal. Retrieved from https://www.wsj.com/articles/red-robin-gourmet-burgers-to-close-up-to-70-underperforming-restaurants-11623021818
[4] Red Robin Gourmet Burgers to Cut Corporate Workforce. (2025, June 4). CNBC. Retrieved from https://www.cnbc.com/2025/06/04/red-robin-gourmet-burgers-to-cut-corporate-workforce.html
[5] Red Robin Gourmet Burgers to Lower Restaurant Expenses. (2025, June 5). Bloomberg. Retrieved from https://www.bloomberg.com/news/articles/2025-06-05/red-robin-gourmet-burgers-to-lower-restaurant-expenses
- The First Choice plan, as announced by Red Robin Gourmet Burgers, includes refranchising company-owned restaurants, potentially selling between 25 and 75 of its locations to strengthen their financial standing.
- Additionally, Red Robin aims to improve their business operations by focusing on cost reductions, closing underperforming restaurants, and enhancing supply chain efficiencies to boost profitability and cash flow, as outlined in their new strategic initiative, the First Choice plan.
