Red Robin Q1 results lag Wall Street, shares down

(Reuters) - Red Robin Gourmet Burgers Inc (RRGB.O) posted quarterly results that missed market expectations, hurt by lower restaurant sales in California, Arizona and Nevada, sending its shares down nearly 7 percent.

The company, which recently completed the acquisition of 15 existing Red Robin franchised restaurants, raised its fiscal 2008 outlook based on expected revenue from these operations.

For the first quarter, Red Robin, which has 258 company-owned and 135 franchised Red Robin restaurants, posted earnings of $7.3 million, or 43 cents a share. It earned $7.5 million, 44 cents a share, a year earlier.

Revenue at the casual dining restaurant chain rose 20 percent to $255.6 million.

Analysts on average expected earnings of 50 cents a share, excluding exceptional items, on revenue of $256.2 million, according to Reuters Estimates.

Same-store restaurant sales rose about 4 percent for company-owned restaurants in the quarter, driven by a 4.3 percent increase in the average guest check.

The company saw a decline of 100 basis points year-over-year in its restaurant margins primarily due to food and beverage cost increases and additional advertising contribution costs, Red Robin said during a conference call with analysts.

The company owns 56 restaurants in California, Arizona and Nevada, which represent 28 percent of the total company-owned comparable restaurants and contributed more than 30 percent of its restaurant revenue in fiscal 2007.

Red Robin said it does not expect a quick economic turnaround in these markets and will continue to see negative impact on its results throughout the rest of the year.

For the remainder of 2008, it expects additional food and beverage costs, as well as fuel surcharges above its original projections.

But the company said its plan to increase prices by about 2.7 percent to be effective in late June will offset the potential cost threats.

Red Robin said it expects the acquisition of franchised restaurants to add $25 million to $27 million of revenue and about 4 cents a share to earnings for the remainder of the year.

For fiscal 2008, it now expects earnings of $2.04 to $2.23 a share on revenue of $905 million to $918 million, up from its earlier forecast of $2.00 to $2.20 a share, on revenue of $880 million to $893 million.

Analysts were expecting a profit of $2.14 a share, before items, on revenue of $891.5 million for the year, according to Reuters Estimates.

The company, which expects to spend about $18 million to $19 million in 2008, plans to open 30 to 32 company-owned units, while franchisees are expected to open 9 to 11 restaurants in the year.

Shares of the company were trading at $36.08 after the bell. They closed at $38.69 Tuesday on Nasdaq.

(Reporting by Dilipp S. Nag in Bangalore; Editing by Amitha Rajan)