Embedded Files
RRGB Profitability Analysis
Introduction to RRGB's Outlook
This post offers a comprehensive analysis of Red Robin Gourmet Burgers performance in comparison to three competitors and the overall industry, based on data derived from S&P Capital IQ. The restaurant industry is a very competitive space, with consumers having many sources of alternatives such as supermarkets and other food retailers. Overall, RRGB fails to match the level of profitability as compared to its competitors.
Performance Compared to Competitors
Red Robin has had consistent gross profit margins over the last five years, with a slight dip in 2020 as the pandemic reduced profits. Overall, the company has underperformed its competitors, with the exception of Chuy's.
Red Robin has had a negative return on assets for the past five years. This is a result of the company carrying large amounts of debt year to year.
Red Robin has had a negative net profit margin for the past five years. This negative value is correlated with the company's high cost of goods sold, selling general & admin expenses which lead to a negative net income, along with a deteriorating total revenue.
The company's return on equity has been catastrophic over the past five years as well. This is because Red Robin's total equity has decreased every year since 2018 due to a decrease in retained earnings each year, along with a negative net income each year.
RRGB Return on Equity
Red Robin has had an extremally negative ROE since 2018. This is mainly correlated with the company's failure to produce a positive profit margin over the past five years, along with a high equity multiplier as a result of Red Robin's high levels of debt with a small amount of equity. Large amounts of debt eat at the ability for a company to utilize profits generated.
Conclusion
Nonetheless, Red Robin Gourmet Burgers has severely underperformed, and mismanaged their profits. The company carries high amounts of debt, which take away from their profits and net income. As a result of this large debt value, negative net profit margins, and equity being outweighed by debt, Red Robin's financial performance has been extremely sluggish. In a very competitive sub industry such as the restaurant industry, it is very difficult for a company in this space to outperform competitiors with these negative factors impacting their financials. As a result, Red Robin Gourmet Burgers has failed to produce profits as compared to it's competitiors over the last five years.
Link To Excel File
Page updated
Report abuse