Customers turn away from sharply higher menu prices
The recent Q214 guest count decline at Red Robin Gourmet Burgers (NASDAQ:RRGB) of another 250 basis points (bps) should signal the end of solidly higher prices. After compounding annualized price/mix increases from the past 18 months (including the June 2014 hike) of 4-5% year-over-year (yoy), its high average check (currently around $12.70), has now resulted in nearly 20% fewer customers at its restaurants over this current restaurant industry cycle (i.e., since 2007).
Softer menu pricing to impact future profits
Profit margins (operating, 4.5%; net, 3% in 2013) are already easily the lowest of the 12 US restaurant stocks I follow, and less than half the c. 9.5% level of 2004-05,...
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