Restaurant-level margins expanded by 0.5%. | Photo: Shutterstock
Red Robin’s restaurant-level margins got a boost in the first quarter, and the chain gave some of the credit to ChatGPT.
The casual-dining brand launched a version of the AI chatbot companywide in the fall and has seen “meaningful adoption,” particularly among managers, CEO David Pace said during an earnings call Tuesday.
They are using the chatbot to help with things like employee scheduling and food costs, “all of which are contributing to the operational efficiencies reflected in our results,” Pace said.
Red Robin’s restaurant-level margins increased 50 basis points, to 14.8%, their highest mark in five years. Leaner labor scheduling in particular saved 130 basis points on labor costs.
Pace called out the company’s operations team for “tightening their belts” on labor, and a 1% increase in average check also contributed to the better margins. But Pace also cited managers’ use of ChatGPT.
“The AI tools, for those that have adopted it, have really helped shine a light on the opportunities for those managing partners,” he said.
And he hinted that there could be more efficiencies to come as more managers use the technology. “We’re trying to extend the comfort level with that across the system,” he said.
The tech is part of Red Robin’s multi-pronged First Choice comeback strategy, which involves efforts to drive traffic, improve finances, refresh restaurants and “win together” by creating a culture of ownership among employees.
“Technology and AI are at the forefront of that [‘win together’] discussion,” Pace said. “Our team is constantly challenging the status quo to identify ways to enhance our capabilities, reduce friction and differentiate ourselves in the marketplace.”
Englewood, Colorado-based Red Robin is one of a number of chains putting AI into the hands of employees in hopes of helping them do their jobs better. Burger King in February unveiled “Patty,” an AI assistant that can coach staff through their headsets, and Freddy’s Frozen Custard has given employees access to the Freddy’s Knowledge Base, essentially an operating manual accessible via chatbot.
At the same time, some brands are pumping the brakes on AI at the store level. Starbucks is reportedly scrapping an AI inventory tool after it made too many errors, for instance.
And few have tied their AI investments as directly to their financial performance as Red Robin did this week.
The 500-unit chain is in turnaround mode following a long stretch of traffic declines. Its efforts seem to be bearing fruit, albeit slowly: Traffic fell 1.6% year over year in the first quarter, its best result in three years. Same-store sales were down 0.6%.
As of Thursday afternoon, its stock was up more than 21% since it reported earnings Tuesday.
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