As the spending power of American consumers continues to dwindle, some casual dining restaurants are handling that reality better than others.
Under its new CEO, Red Robin’s (RRGB) decision to complicate its grilling process and add labor costs is having an adverse effect on traffic.
“It’s not working, and you can see this in the traffic data,” explains Howard Penney in this clip from The Call @ Hedgeye. “It’s sequentially down every month this year. Whatever he’s doing, it's not adding to the traffic in the stores.”
Brinker (EAT) has fared better revitalizing Chili's. But given the macro backdrop, Penney is tempering his expectations, even for companies making wise marketing moves.
“Their turnaround plan is actually working,” Penney says of Chili’s. “They’ve had sequentially better traffic since turning on advertising in late March/early April. They’re on my Long Bias list. I’m concerned about the cycle and that's why it's not a Best Idea Long.”
Penney will discuss these names (and many more) during his Casual Dining Black Book call with institutional subscribers at 10:00am ET this Thursday.