Vintage Capital Makes an Offer for Red Robin Buyout

Vintage Capital is offering Red Robin a cash bid of $461.4 million to effectively take over the company. The investor currently controls 12 percent of the company’s stock.

Earlier this month, Red Robin adopted a short-term shareholder rights plan known as a poison pill. The plan temporarily forestalls investors from acquiring full control of a company via the stock market. The move was almost certainly intended to prevent Vintage Capital Management from gaining control of the company by acquiring shares.

Former Red Robin CEO Denny Marie Post retired in April. Board Chair Pattye Moore is currently serving as the interim CEO while consulting service The Elliott Group searches for a replacement.

Vintage Capital urged Red Robin in a letter to auction the casual-dining chain, and reiterated its interest in acquiring the company. “We have very little confidence,” notes the filing, “that the current board will be able to attract a suitable new leader for the company.”

In a statement, Red Robin expressed confusion over Vintage Capital’s claims. “We were surprised by the content of the letter we received today, as Vintage has not been willing to propose any CEO candidates.” The statement concludes affirming that “The board would of course consider any bona fide offer made by Vintage.”

Red Robin has struggled to find its footing. The chain’s stock value halved over the past year. Its unit growth has been on pause since 2018, shortly after the closure of its fast casual brand Burger Works. Red Robin is known to have a “mall problem”: of the chain’s 572 units, 76 are in enclosed malls and facing serious sales concerns. And with a significant decrease in dine-in customers, the company announced in May that it will be closing ten of those restaurants.

Research by:

Paul Barron

Paul Barron

Editor-in-Chief/Executive Producer


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Which Restaurant Stocks are a Good or Bad Investment Come 2019?

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When it comes to the stock market, analysts are always trying to make predictions that will pay off.

So what will 2019 bring when it comes to restaurant stocks?

According to a recent report from “Barron’s,” analysts are recommending that traders consider investing in restaurant brands with massive growth potential, instead of the stocks that are trading at low prices.   

“We favor companies with clear same-store sales drivers and are less focused on bargain-hunting in these later stages of the cycle, as it remains a challenging environment for turnarounds, especially in full-service,” writes the Investment Banking Firm Jefferies.

Analyst Andy Barish agrees and isn’t recommending purchasing any full-service restaurant stocks. He thinks Red Robin, in particular, is a poor investment.  

Interestingly, he recommends investing in Chipotle Mexican Grill, a restaurant chain that has been slowly trying to recover from its food safety crisis of 2015.

“Chipotle, which it thinks will continue to benefit from the work undertaken by new management to drive store traffic, grow the digital business, and boost efficiency while growing same-store sales around 6%. The stock was recently about flat near $441; Jefferies’ price target is $550,” writes “Barron’s.”

Then Barish also said that the QSR chains McDonald’s and Starbucks are other restaurant stocks that are poised to perform well on this market.  

Jefferies anticipates that same-store sales for McDonald’s will spike by 3 percent over the next two years. The firm also predicts that Starbucks shares will increase to $76 from the recent $65.

Barish mentions the threat of Amazon as a reason why restaurant stocks are more attractive versus retail stock.  

““We continue to expect premium valuations for the best performers, especially as [the] supply of investable restaurant equity diminishes further...and investors continue to see value in restaurants’ relatively stable trends versus retail, and insulation from risks around tariffs and Amazon.com [AMZN],” said Barish.

Read more about why these restaurant stocks are expected to have a great 2019 at “Barron’s” now.

However, as reported by Foodable Network, Amazon’s Whole Foods is already taking a bite out of the restaurant business. Then there are Amazon’s new Amazon Go casher-less stores, which have become very popular during the week during lunchtime hours due to its grab-and-go options.

In The Barron Report episode below, Host Paul Barron outlines some of the power players including Amazon and Uber Eats that are taking away customers and revenue from restaurants.  

Red Robin on Best Practices for Restaurant Takeout and Catering Differentiation

Red Robin on Best Practices for Restaurant Takeout and Catering Differentiation
  • Erle Dardick and Valerie Killifer explore takeout and catering as two separate "channels" in your restaurant make-up.  These "channels" need to have different strategies to work effectively. 

  • Trudy Jones, Director of Alternative Platforms for Red Robin, explains the different elements to consider when taking on takeout and catering channels in your restaurant. 

Takeout and catering are completely different businesses, and the secret to making them work successfully is in the design of different consumer solutions for each channel, including unique transaction workflow, menus and product selection, packaging, centralized services, and workflow — and each have entirely different strategies. In this episode of The Takeout, Delivery, and Catering Show we speak with Trudy Jones - Director of Alternative Platforms for Red Robin, to explore the different elements required for takeout and catering, and why each one is important for delivering a brand experience that keeps customers coming back for more.

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Danny Meyer-Backed Company Partners With Amazon for Online Ordering

Danny Meyer-Backed Company Partners With Amazon for Online Ordering

In an effort to offer more food options to its Prime members, the online retail giant Amazon partnered up with Olo, a leader in the digital-food-ordering space, to beef up Amazon Restaurants and facilitate the on-boarding process of new dining establishments onto the platform. This is following a major push by Amazon to penetrate the food and retail industry with its recent purchase of Whole Foods Market.

The deal will allow Amazon Restaurants to take care of the delivery aspect and Olo will remain handling the menu and ordering side of the transaction.

“We’re thrilled to work with Amazon to provide Olo’s base of restaurant customers with a new delivery sales channel that drives increased visibility,” said Noah Glass, Founder & CEO of Olo in a press release about the partnership. “Amazon’s obsession with providing great customer and restaurant experience supports the evolving expectations and behaviors of today’s consumer. We’re excited to connect more of Olo’s restaurant brands with Amazon Restaurants.”

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Casual Dining Jumps on Online Ordering Bandwagon

Casual Dining Jumps on Online Ordering Bandwagon

As online ordering grows in popularity, especially with the millennial generation, we are seeing more brands develop ordering apps or easy to use ordering platforms on restaurant websites.

However, casual-dining establishments (and fine-dining) don’t get nearly as much take-out business as the less casual segments. This is partially because guests decide to dine in at these establishments because they offer an elevated experience with more service. The higher quality food product and a more personal service appeals to diners and this is why they often choose to dine at casual dining restaurants.

Not only have guests started to expect that restaurants offer online-ordering, but it’s a way for these brands to compete with the high-quality fast casual chains that have been stealing away their customers.

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