Red Robin Gourmet Burgers completed the sale and refranchising of 108 company-owned restaurants, generating approximately $89.4 million in gross proceeds, with eight additional restaurants expected to close by fiscal year-end after liquor-license transfers, potentially raising the total to 116 restaurants and $96 million. The 108 completed locations represented nearly 29% of the 375 company-owned restaurants reported as of July 12, and the restaurants will continue operating under the Red Robin brand through long-term franchise agreements. Red Robin reported $167.2 million of credit-facility borrowings as of July 12, making the $89.4 million of gross proceeds equivalent to more than half of that balance before adjustments and transaction costs, and the company reported a 13.5% weighted-average effective interest rate during the fiscal second quarter. Red Robin intends to use net proceeds primarily to repay credit-facility borrowings and support refinancing priorities, though it has said refranchising will reduce total revenue because restaurant sales will be replaced by royalties and advertising contributions calculated as percentages of franchisee sales. Red Robin reported a 14.7% company-defined non-GAAP restaurant-level operating profit margin in the fiscal second quarter, but profitability for the sold restaurants was not provided, preventing a direct comparison between forgone operating profit and expected franchise income.
Red Robin Gourmet Burgers IncCompletes $89.4M refranchising of 108 restaurants, using proceeds to repay credit-facility borrowings and support refinancing priorities.
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