Red Robin Gourmet Burgers, Inc., a casual dining restaurant chain focused on serving an innovative selection of high-quality gourmet burgers in a family-friendly atmosphere, today announced that it is pursuing a test of a smaller prototype restaurant as a complement to its current 5,600-square-foot casual dining format. The square footage of the smaller prototype restaurant will be between 2,000 and 4,000 square feet and allows for additional flexibility, including a modified menu and service format. Over time, the reduced footprint could enable Red Robin to accelerate development into non-traditional locations that have not been previously available based on space requirements of the current prototype, as well as further leverage its brand as the gourmet burger experts.
In addition to the 10 full-sized restaurants that the Company has previously announced it plans to open in fiscal 2011, the Company expects to have at least one smaller prototype location open before the end of the year. Several locations suitable for the smaller prototype have already been identified, primarily in the Denver area. The Company will evaluate the operating performance and unit level economics of this smaller prototype before deciding on expansion plans.
As disclosed on the May 19th earnings conference call, the Company plans to continue the growth of its casual dining restaurants using the current 5,600-square-foot format. The Company is pleased with the recent performance of its new restaurant opening results, and therefore is in the process of considering the expansion of its fiscal 2012 development plans. The Company plans to provide a fiscal 2012 development update on its second fiscal quarter 2011 earnings conference call on August 11, 2011.
Based on the ongoing review of the Company’s capital allocation strategy, which includes investment in new restaurant development, opportunistic repurchases of the Company’s stock, and the paydown of debt, the Company does not anticipate further reductions, beyond scheduled amortization payments, in the outstanding balance of the Company’s term loan for the remainder of fiscal 2011. Accordingly, the Company expects to record approximately $1.5 million of interest expense per quarter for the balance of fiscal 2011, excluding any interest income recorded on available cash balances.
As of May 15, 2011, the Company held $34.6 million in cash and cash equivalents and had a total outstanding debt balance of $161.1 million, including $150.0 million of borrowings under its $150 million term loan, no borrowings under its $150 million revolving credit facility and $11.1 million outstanding for capital leases. There were $7.0 million of letters of credit issued under its revolving credit facility.