Red Robin diversifies with 3 delivery-only brands

Dive Brief:

Red Robin recently started a national rollout of three new delivery-only brands, Chicken Sammy's, The Wing Dept. and Fresh Set, Paul Murphy, Red Robin president and CEO, said in an email to Restaurant Dive.
The brands offer items from Red Robin and new products not available on the menu, Murphy said. The company plans to invest in these virtual brands and introduce more menu items in the future.
The launch of virtual brands follows its partnership with Donatos Pizza, which began in 2018 and will continue to be rolled out at Red Robins across the country this year. As part of that partnership, the company has also offered Donatos as a delivery brand in third-party marketplaces for over a year, Murphy said.

Dive Insight:

Red Robin has built a strong foundation for growth in delivery-only brands based on its partnership with Donatos. The company expects annual company pizza sales of over $60 million and profitability of over $25 million by 2023 when the company has rolled it out to about 400 company-owned restaurants, Murphy said during the company's Q4 earnings call.

This year, the company is introducing additional third-party delivery partners and will improve its platforms with website enhancements and a new mobile app, Murphy said during the call.

Red Robin has also made improvements to its off-premise execution, which included process and technology upgrades, as well as the implementation of an accuracy program in which each order is checked three times before it is given to the guest, Murphy said during the call. This initiative led to a 40% increase in order accuracy and a 50% increase in overall guest satisfaction, he said.

These improvements will help Red Robin execute its new brands, which are being prepared inside its restaurants, according to Oregon Live.

The company also has seen strong off-premise growth with sales making up nearly 44% of its food and beverage sales during Q4 2020 compared to 14% of sales in Q4 2019, Red Robin CFO Lynn Schweinfurth said during the earnings call. Eighty percent of these orders were driven by digital channels, she said. This growth is particularly meaningful with dine-in sales down 53.5% during the quarter.

Many casual brands, including Bloomin' Brands, Applebee's, Chili's and Denny's rolled out their own delivery-only options within the last 12 months. With casual dining restaurants facing steep double-digit declines last year, these off-premise-focused brands are providing a way to diversify and build back lost sales. Chili's parent company Brinker expects its It’s Just Wings brand to generate $150 million in annualized sales, for example.