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New Red Robin Burgers Test Premium Pricing

May 23rd, 2013
Posted: 22 May 2013 12:23 PM PDT

Red Robin Gourmet Burgers is about to learn how high it can price a burger before it loses customer acceptance. Next week the chain will begin in-store testing of new “premium” burgers in a select few restaurants near its Greenwood Village, Colo., headquarters. The company won’t say at what price it will begin gauging customer sensitivity but it will be above its current $11 ceiling on burgers.

5 Alarm Burger Close-Up











The 5 Alarm Burger is Red Robin’s current LTO.

The premium line—which SVP-CMO Denny Marie Post said is intended to be permanent and not an LTO—balances the Tavern Double, introduced last year at a low entry price of $6.99.

Additionally, a new summer menu that arrives at Red Robin on June 3 will include “an innovative and mouthwatering new burger, a new Tavern Double style and from the bar, some first-to-market cocktails and other refreshing beverages that you’ll only find at Red Robin,” CEO Steve Carley told analysts during this week’s first-quarter earnings call. This new burger is not expected to be either Honey Mustard Chicken Burger or the Santa Fe Burger, two former LTOs that the chain has pledged to return to the menu as a result  of its “Bring My Burger Back” promotion last year. The currently featured 5 Alarm Burger was thee winner of that promotion.

Carley also said that three of a new mid-size, 4,000-square-foot Red Robin restaurant prototype have opened. “The smaller units have a number of advantages, including greater flexibility in site selection as we expand with a much lower construction cost while still providing operating capacity for very healthy volumes,” Carley said. Of the 20 new company units opening this year, seven will be mid-size locations.

A rebounding economy is making Red Robin’s expansion of its Burger Works fast-casual concept more difficult than expected because of competition for good sites. “One of the things we’re learning in the real estate market, which is no news to those guys who also cover fast casual, is this 2,000-, 2,200-square-foot box in a great trade area as an end cap is the hottest piece of real estate in the country right now,” Carley said. “Everybody wants that exact piece. We find that we’re somewhere between 6 and 10 folks talking to a landlord on that particular piece of property. And so going after those is a little more problematic.”