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Red Robin Outlook Takes Bite on Shares

Red Robin shares trade down on high volume as restaurant chain posts weaker profits and reduced outlook.

GREENWOOD VILLAGE, Colo. (

TheStreet

) -- Shares of

Red Robin Gourmet Burgers

(RRGB) - Get Report

traded lower on high volume Friday after the fast-casual restaurant posted weaker quarterly profits and reduced its outlook.

Nearly 470,000 Red Robin shares changed hands halfway through the day's session compared with their trailing 30-day average volume of just 315,000. The higher-than-normal volume wasn't exactly beneficial to Red Robin; the stock traded down 5% to $18.68.

Red Robin said comparable same-store sales, or sales at stores open at least one year, fell 1.2% in its fiscal second quarter, due to a 2.1% drop in average guest check, partially offset by a 0.9% uptick in guest counts. The figure was a marked improvement from year-earlier comps declines of 11.5%. U.S.-based comps fell 2% while stores in Canada grew comps by 0.8%.

A roster of fast casual restaurants also reported quarterly results recently, offering up a mixed bag of same-store sales results. Chili's operator

Brinker International

(EAT) - Get Report

said its

comps decreased 3.4% year-over-year

, including a 4.1% decrease at Chili's and a 1.3% increase at Maggiano's Little Italy restaurants.

>>Fast Food Stocks Deliver Mixed Bag

Sector darling

Chipotle Mexican Grill

(CMG) - Get Report

reported an 8.7% jump in year-over-year comps.

>>Chipotle Leading the Pack

Buffalo Wild Wings

(BWLD)

said last month its

comps decreased 0.1%

at company-owned restaurants last quarter, and 0.7% at franchised locations, though the decline managed to top expectations.

The Cheesecake Factory

(CAKE) - Get Report

grew comps 1.6% last quarter at its namesake restaurants.

Ruby Tuesday

(RT)

managed

TST Recommends

to grow comps just 0.3%

.

Red Robin said total revenue in the 12 weeks ended July 11 edged up 0.1% to $201.3 million. Profits fell 32.8% to $4.2 million, or 28 cents per share, however, compared with year-earlier earnings of $6.4 million, or 41 cents per share.

Both top- and bottom-line figures missed analysts' consensus call earnings of $5.8 million, or 36 cents per share, on revenue of $207.6 million.

Weak results were attributed to soft sales at Red Robin's California and Arizona locations where 25% of the company's restaurants are located. Those two states have been consistently plagued by higher-than-average unemployment rates.

The Colorado-based company reduced its forecast for fiscal 2010 revenue to a range between $866 million and $873 million, down from its previous forecast for sales in a range between $872 million and $880 million. Analysts expect full year revenue of $871.4 million.

Earnings guidance was also revised downward to a range between 90 cents and $1.10 per share, from its prior estimate of $1.10 to $1.30 earnings per share. Analysts expect 94 cents per share.

Comps will be between negative 0.5% and positive 0.5% for the year, Red Robin said. The chain plans to step up its national ad campaign and open 11 new company-owned restaurants and 4 to 5 franchised restaurants.

Separately, Red Robin also said Friday CEO Dennis Mullen will be replaced by Stephen Carley, a former chief executive of

El Pollo Loco

, effective September 13.

Red Robin Gourmet Burger's Stock Rating Report (RRGB) Rating and Financial Analysis

-- Reported by Miriam Marcus Reimer from New York.

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