Red Robin Gourmet Burgers Inc (RRGB) 2020 Q1 法說會逐字稿

Good morning, everyone, and welcome to the Red Robin Gourmet Burgers, Inc. First Quarter 2020 Earnings Call. Please note that today's call is being recorded. During today's conference call, management will be making forward-looking statements about the company's business outlook and expectations. These forward-looking statements and all other statements that are not historical facts reflect management's beliefs and predictions as of today, and therefore, are subject to risks and uncertainties as described in the safe harbor discussion found in the company's SEC filings.

During today's conference call, management will also discuss non-GAAP financial measures. These non-GAAP financial -- these non-GAAP measures are not prepared in accordance with generally accepted accounting principles, but are intended to illustrate an alternative measure of the company's operating performance that may be useful. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in the earnings release. The company has posted its fiscal first quarter 2020 earnings release and supplemental financial information related to its results on its website at www.redrobin.com in the Investor Relations section.

Now I'd like to turn the call over to Red Robin's CEO, Paul Murphy.

Good morning, and thank you for joining us. We hope that you and your families are staying safe and healthy. I'm here today with Lynn Schweinfurth, our Chief Financial Officer. After my opening remarks, Lynn will provide a snapshot of our liquidity and related matters before reviewing our quarterly financials.

The COVID-19 pandemic has presented complex challenges for families, businesses and economies across the globe. As we continue to navigate through these difficult times, our focus remains on the health and safety of our guests and team members. Our team members have done an outstanding job protecting the health and safety of our guests, while also delivering on the Red Robin brand promise. We sincerely thank them for their dedication and commitment to our communities during these difficult times. I know how eager they are to welcome our guests back into our restaurants for elevated dine-in experiences as more dining rooms reopen.

Following the onset of the COVID-19 pandemic and the shutdown of dining rooms, we quickly pivoted to an off-premise-driven operating model and are emboldened by the continued strong growth in off-premise sales since the onset of COVID-19. In addition, as dining rooms have begun to reopen, the early trends are very encouraging, and volumes have been building over the past several weeks at our reopened dining rooms.

As of June 7, we have reopened 270 dining rooms with limited occupancy and operating hours. These represent 65% of our currently opened company-operated restaurants with more reopenings to come week-by-week as state-by-state reopening thresholds are achieved. We attribute our traction in navigating through the pandemic to our ability to adapt and successfully pivot operations, while simultaneously raising the bar on our dine-out and dine-in execution. Our guests agree and have rewarded us with record satisfaction scores, which we believe will have positive implications for the Red Robin brand long after the threat of the COVID-19 pandemic subsides. I will discuss these themes in more detail shortly.

As you may recall from our February conference call, we began 2020 with great optimism on the heels of the measurable progress we have been making in accelerating Red Robin's turnaround and transforming the business. The strategic plan that we were executing against consisted of the following: recapturing the essence of what makes Red Robin an iconic brand; delivering consistent quality execution of our brand promise; reinforcing emotional connections and core brand equities to our omnichannel messaging; rolling out Donatos pizza in our restaurants; implementing a new hospitality model; growing our off-premise platforms; and building our digital capabilities to drive increased guest engagement and frequency.

Through February 23, our comparable restaurant revenue increased 3.7%, including positive guest counts of 0.9%, and we were on track to deliver not only our third consecutive quarter of comp sales growth, but, quite possibly, our best quarterly comp sales growth in at least 3 years. However, with the onset of COVID-19, the operating environment changed dramatically, and we needed to rapidly adapt. In order to strictly adhere to CDC, state and local guidelines for the benefit of Red Robin's team members, guests and communities, we enhanced health and safety protocols across the business, added emergency sick pay for hourly team members and shifted our restaurants to a 100% off-premise model. For nearly all corporate level employees, we instituted telecommuting policies.

We also took meaningful steps to preserve liquidity, reduce costs, enhance financial flexibility and strengthen our organizational structure. These steps included reducing our restaurant level and SG&A costs, including lowering executive base salaries, Board member cash retainer fees and nonfurloughed restaurant support center and restaurant supervisory team members by approximately 20%; eliminating approximately 50 restaurant support center G&A positions effective as of April 17, 2020; postponing or eliminating all nonessential spending for previously planned growth and other projects, including our continued rollout of Donatos pizza, restaurant refreshes and IT projects; evaluating our real estate portfolio, including temporarily closing approximately 35 company-operated restaurants, the majority of which are mall-based locations; and engaging in constructive discussions with landlords regarding restructuring our lease payments.

In addition, we are temporarily abating franchise partner royalties, as we recognize our franchise partners are experiencing the same challenge as our company-operated restaurants. Importantly, our level of collaboration has never been stronger as we work together, sharing key information and best practices for the benefit of the Red Robin system. Now as I mentioned earlier, we are very excited by our weekly off-premise sales momentum that has improved sequentially since late March when comp sales were down over 70% for the week ended March 22. Thereafter, we experienced steady weekly improvement to almost triple pre-COVID-19 off-premise sales levels. And at the 270 locations with reopened dining rooms, we are still capturing meaningful off-premise sales, demonstrated the enduring and growing popularity of Red Robin for off-premise occasions, even as more guests are able to dine-in.

More specifically, restaurants with open dining rooms are maintaining off-premise sales that are approximately 1.5 to 2x pre-COVID-19 levels and 40% of sales mix. The increase in our average off-premise sales per restaurant has been achieved by focusing on a few key drivers of the experience: taste of food, ease of order placement from a new enhanced website, order accuracy, speed of service, order packaging, ease of pickup and team member friendliness. And through a lot of hard work across the company, we have seen record high overall guest satisfaction scores. We believe we will sustain strong incremental off-premise sales, even as our dining rooms reopen, given our high quality execution, which will differentiate Red Robin in the current environment.

Our execution has also been enhanced by a simplified menu with 1/3 fewer items yielding little to no negative guest feedback. Reducing our menu by 55 items has facilitated improved back-of-the-house speed and efficiency as restaurants have adjusted to reduced staffing levels and has improved food quality with consistency. Given this success, we plan to leverage a simplified menu as part of our ongoing business plan. Increased car side and home delivery options, including Red Robin Delivery, where guests order directly from Red Robin with outsourced delivery, have improved convenience to our guests and the economics of our off-premise business. Within the off-premise sales categories, our most profitable channel, carryout, has experienced the largest increase and now represents approximately 62% of the total, while third-party and Red Robin Delivery currently comprise about 30% and 8%, respectively.

Third-party delivery is available across the entire system and Red Robin Delivery is now offered across all company-operated restaurants. Of course, catering has diminished, given the lack of social and business events, but we'll be ready to capitalize on this opportunity when circumstances allow these interactions to resume. Not surprisingly, the restaurants that have added Donatos pizza prior to the onset of the pandemic have been consistently outperforming the system from a comp sales standpoint by approximately 650 basis points. These restaurants have also experienced a 3.5% higher average check relative to restaurants that do not offer Donatos.

Early in 2020, we purchased Donatos' equipment for the Seattle market, including approximately 40 restaurants. We currently plan to resume our rollout of Donatos in this legacy market by the end of the year. We look forward to continuing to expand our Donatos rollout in the future with a proven and compelling return on investment. However, in the near term, we have halted additional CapEx investments on this project as we continue to preserve liquidity. With reopened dining rooms across 30 states, dining sales are building week-to-week, supported by record high dine-in guest satisfaction scores. Notably, our most recent dining room reopenings have been in our highest concentrated Pacific Northwest and West Coast markets, where we operate many of our highest sales volume restaurants.

Reopening dining rooms has been carefully choreographed with a cross-functional dining room reopening task force comprised of our health and safety, operations, training and communications teams. This task force has developed materials and detailed instructions that incorporate new health and safety measures, so that our team members, guests, suppliers and the general public are protected. To be clear, we initially did not open each and every dining room as soon as the restrictions were lifted in a particular area, but rather when we felt we were ready and that all safety considerations were in place so that we could do so effectively. However, based on our recent experiences and health and safety readiness, we're planning to reopening dining rooms as soon as possible once restrictions are lifted.

Note that reopened dining rooms feature our new hospitality model, Total Guest Experience or TGX, as discussed in our last call, that we were planning to implement over the course of this year. This new service orientation offers elevated levels of hospitality with servers dedicating more time in the dining room, attending to and engaging with guests. Our reopening playbook involves having all team members wear PPE, including face coverings, completing daily health surveys, including submitting to mandatory temperature checks before they begin their shifts, visibly cleaning, disinfecting and sanitizing all contact areas, including dedicating one team member on each shift to front-of-house sanitation. Team members are required to frequently wash their hands and apply an alcohol-based sanitizer.

Guests, similarly, have access to hand sanitizer stations. We have also implemented new social distancing measures by rearranging our dining rooms and posting signage and marking tables that cannot be used. With these measures in place, we are confident that we're delivering the high-quality food and great experience that Red Robin is known for in a safe manner. We're opening restaurants at a maximum of 50% capacity, which, in some cases, are more stringent than what restaurants are being mandated to do by state or local jurisdictions. Concurrently, we are completing our work around how to open dining rooms at 75% capacity with social distancing intact, so that we could open at this increased capacity with appropriate health and safety protocols.

Importantly, as of the week ended June 7, restaurants with open dining rooms generated comp sales of down 26.7% compared to comp sales generated at restaurants only offering off-premise of down 56.0%, a positive difference of 29.3 percentage points. So as you can see, we are navigating through these unprecedented times with tenacity and determination and have taken substantive actions that have positioned us well for the short and long term, when the impact of this virus subsides. The team has done an excellent job over the last few months, upholding what Red Robin truly represents and has prepared our brand to be successful in a changed environment for our industry. I am confident we will be in a strong position, both as a brand and as an organization as the recovery continues.

Not only are we operating at the highest levels of quality execution, we have restructured our organization and reduced infrastructure and other costs to be more efficient going forward. In addition, the post-COVID-19 restaurant industry backdrop may offer rationalized labor and occupancy costs and a contraction of casual dining restaurants, thereby providing an opportunity to improve our future restaurant margins and market share and resume the key pillars of our strategic plan.

Before I turn the call over to Lynn, I must again give a heartfelt thank you to our great team members. They have always been the reason why Red Robin is so special. And under these most trying conditions, they have proven themselves like never before in delivering our brand promise, while staying vigilant in their commitment to health and safety while serving the needs of our communities. We know how eager they are to welcome our guests back to Red Robin for elevated dine-in experiences as more dining rooms reopen.

Now I'll turn the call over to Lynn.

Thank you, Paul. Before I review our first quarter financials, I will discuss a few other relevant topics, starting with liquidity. On April 1, we announced that we had drawn down the remaining capacity under our $300 million credit facility. As of the fiscal quarter end on April 19, our liquidity stood at $89 million. And as of June 7, we had total liquidity of $84 million, including $30 million of cash and cash equivalents and $54 million of available borrowing capacity under our revolving line of credit.

Given current sales trends that we reported this morning, we now estimate that our average cash burn rate for the fiscal second quarter is between $1 million and $2 million per week, which includes estimated partial rent payments, reopening costs, onetime COVID-19 expenses and costs associated with finalizing the amendment of our credit facility. This cash burn rate would not have been possible without our previous efforts to preserve liquidity, reduce costs and strengthen our organizational structure. Note that beginning April 1, we have not made full lease payments under our existing lease agreements to conserve cash, but have continued to recognize expenses and liabilities for lease obligation.

Prior to April rents coming due, the company began engaging in ongoing constructive discussions with landlords regarding the potential restructuring of these lease payments. As Paul mentioned, in response to the COVID-19 pandemic, the company undertook several measures to preserve liquidity and reduce costs, some of which are meaningful, longer-term reductions to better position Red Robin for long-term recovery and growth. We intend to dedicate a significant portion of our free cash flow once achieved over the next several quarters to delevering our balance sheet.

As you know, we recently filed an 8-K disclosing an amendment to our credit facility, which has provided us covenant relief through the third quarter 2021. In addition, we filed a $75 million shelf registration statement with the SEC for the purpose of raising incremental capital as needed to satisfy a condition in our credit facility amendment of raising at least $25 million by November 13, 2020, to further support the business during this recovery period and for our ongoing needs. We are confident that we will meet the financing condition under our credit facility amendment. While we have not taken a PPP loan and do not intend to do so, we are taking advantage of the tax benefits and deferrals as allowed for by the CARES Act. More specifically, we are currently deferring payroll taxes and expect a favorable rate impact of net operating loss carrybacks, which could generate up to $12 million of cash tax refunds within the next 12 months.

Now in terms of the fiscal first quarter, Q1 2020 comparable restaurant revenues decreased 20.8% driven by a 20.9% decline in guest traffic, partially offset by a 0.1% increase in average check. Overall pricing increased 1.6%, and we also realized an additional 0.3% increase from our decision to lower discounting. Mix decreased by 1.8% driven by our operational shift to off-premise only, resulting in lower sales of beverages and finest burgers, consistent with off-premise sales mix we saw pre-COVID-19.

We were encouraged by our improving sales trajectory entering 2020. Comparable sales for the first 8 weeks of 2020 were up 3.7%, as Paul mentioned, demonstrating our enhanced execution around our strategic plan discussed prior to the pandemic. Following the substantial early negative impact of the pandemic, we have seen our weekly sales sequentially improve initially with off-premise only and more recently as we began to reopen our dining room. Q1 total company revenues decreased 25.3% to $306.1 million, down $103.8 million from a year ago, driven by the closure of our dining rooms in response to COVID-19 pandemic.

Dine-in sales were down 34.5%, partially offset by off-premise sales growth. Our shift to an off-premise only service model drove meaningful growth in the channel, which rose 86.1% in Q1, representing 26.3% of total food and beverage sales for the quarter. This compares to off-premise sales representing 13.9% in the fourth quarter of 2019. Q1 restaurant-level operating profit as a percentage of restaurant revenue was 8.8%, down 950 basis points versus a year ago, driven primarily by the impact of sales deleverage on restaurant labor costs, other operating costs and occupancy costs, among other factors.

Cost of goods sold remained relatively flat from lower beverage mix with higher off-premise sales offsetting higher ground beef prices. General and administrative costs were $26.7 million, a decrease versus the prior year of $3.4 million, primarily driven by lower team member benefits and lower travel and entertainment and professional costs due to cost reduction initiatives post COVID-19, partially offset by higher team member salaries and wages associated with merit increases implemented prior to the initiation of our aggressive cost control measures.

Selling expenses were $14.8 million, a decrease versus the prior year of $3.2 million, primarily driven by pivoting from national media to digital media, which has proven to be an effective medium for interacting with our guests during the COVID-19 pandemic, while taking advantage of our access to the over 9 million members of our royalty program. The change in the effective tax rate is due primarily to the recognition of a valuation allowance on our tax credit, partially offset by a decrease in earnings and NOL carrybacks allowed as a result of the CARES Act.

Despite the valuation allowance we recognized for financial statement purposes, we expect to recognize the cash tax benefit for the $52 million carryforward balance within the related 20-year period. During the quarter, we recognized other charges of $119.4 million, primarily triggered by the COVID-19 pandemic. These charges included $95.4 million related to goodwill impairment, $15.5 million related to restaurant asset impairments, $0.9 million in severance and executive transition costs and $0.2 million for COVID-19-related charges, including purchasing personal protective equipment for our restaurant team members.

We also recognized $4.5 million related to litigation contingencies, $1.5 million in Board and stockholder matter costs and $1.4 million related to restaurant closures and refranchising costs. Q1 adjusted EBITDA was a loss of $10.7 million as compared to a positive adjusted EBITDA of $34.3 million in Q1 2019. Q1 adjusted loss per diluted share was $6.66 as compared to adjusted earnings per diluted share of $0.19 in Q1 2019.

Now turning to the balance sheet. During the quarter, we had net borrowings of $84 million on our revolving line of credit, resulting in a quarter end outstanding debt balance of $290 million in addition to letters of credit outstanding of $7.5 million. In early January, we refinanced our credit agreement with our lenders, securing a $300 million credit facility, which provides liquidity through early 2025. As previously mentioned, on May 29, we further amended our credit agreement to ease financial covenant requirements through the third quarter of 2021.

We ended the quarter with $89 million in cash and cash equivalents. Our weighted average interest rate was 4.7%. During the first quarter, under our share repurchase program, we bought back approximately 72.1 thousand shares for a total of approximately $1.7 million. With the onset of COVID-19, we immediately suspended this program as a liquidity preservation measure. In response to the uncertainty related to the COVID-19 pandemic, we have suspended our annual and long-term guidance as we continue to evolve our strategy to overcome the complexities of operating in a post-pandemic environment.

Before I conclude, I'd like to take a moment to thank our Red Robin team in the restaurants and at the restaurant support center for their dedication, hard work and results, having quickly adapted to a dramatically different environment, both personally and professionally. It is truly a privilege to work with such an extraordinary team. Thank you for all your significant contributions in continuing to serve our guests and take care of our fellow team members in a safe environment that embraces our Red Robin values. Importantly, we are confident that when the impact of the pandemic subsides, that the company and its strategic plan will create value for our shareholders.

With that, I will turn the call back over to Paul.

Thank you, Lynn. Let me conclude with one key message. I am extremely confident in Red Robin's ability to move through and past the current environment and in the process emerge stronger as an organization and as a brand. All of our team members have stepped up to the challenges we face and turn them into opportunities to enhance everything we do in serving our guests and communities. Our guests have validated these efforts with record satisfaction scores. And as we move forward, we will build on what we have already accomplished in bolstering our off-premise sales and bringing new and loyal Red Robin guests back into our restaurants as conditions allow.

Thank you for your time today and interest in Red Robin, and we would now be happy to take your questions.

(Operator Instructions) And our first question is coming from the line of Alex Slagle with Jefferies.

So how should we think about the cadence from here for dining room reopenings? And also interested in how you're balancing the 6-foot spacing restrictions with the broader capacity limits? And do you have enough space here to get to 50% in all cases? And any more comments on what you think needs to happen to get to 75%.

Alex, this is Paul. And I know it's a bit early on the West Coast, so appreciate you joining so early. But we -- all of the -- basically, all the dining rooms that are reopened are at 50% capacity, and we have been able to do that relatively easily, in fact. And we are currently working on that for the 75% model. And I do not anticipate any issues with that. As to kind of the cadence of it, right now, we're a bit over 60%. With the dining rooms reopened, we feel like over the next 40 to 45 days that number will move up to a bit over 80% of the dining rooms being reopened. I think the great news on that is that the majority of the locations that are just now coming online for us are on the West Coast and in the Pacific Northwest, and those are our higher-volume restaurants. So we're extremely excited about that.

Frankly, every day, we're more and more encouraged with the sales. I think as an example, this past Monday, restaurants with the dining rooms reopened, and even at a 50% capacity, we were only negative just a titch over 17% in those locations. So we are seeing the business continuing to build. We feel like that as we get into the end of July, early August, substantially, we should be close to the 100% level at 50% and then beginning to move certain localities up to 75% as they start to ease their restrictions and feel comfortable with that. And also something that we've heard a little bit about, we're feeling just great about our ability to staff the restaurants at the 50%, at the 75% and even 100%. I know there's been a lot of concern about would the team members be coming back, and we're seeing that being -- we have local issues in a couple of areas, but for the most part, that has been a real plus for the brand. And I think it just shows the strength of the Red Robin team members and their connection, not only at the restaurants, but the communities.

That's great. And then I had a question on the productivity initiatives and how the current environment opened your eyes to additional opportunities or ways to operate more efficiently and profitably? It sounds like the menu changes represent one immediate opportunity. If you could comment on anything else you're seeing?

Well, I think also the implementation of the Total Guest Experience model. It's -- as I look back on my career, the rollout of TGX, the new service or hospitality model, we did it virtual with our restaurants. And in the restaurant industry, it's typically been -- we think that, that has to be very hands on, and somebody has to -- we have to have these big team meetings or area meetings and people flying around the country. And I think there's some great learning from that -- was our training team and our operations team, together with IT, did just a fantastic job of getting that rolled out virtually to the restaurants. I think that's going to enable us over time to rethink how we do those things that are far more cost efficient. You did mention the simplified menu. Certainly helps on a lot of fronts. We're seeing it really impact the guest experience from faster cook times, higher quality food, the food is frankly hotter, but it's impacted our waste. We're seeing a reduction on the waste side, and we believe that over time it will help us on the supply chain side as we have less SKUs that we're having to manage and worry about the velocity through the distribution houses.

Our next question comes from the line of John Glass with Morgan Stanley.

Two questions. First, just on as you reopen the dining rooms, how are consumers behaving? In other words, are you full at 50% capacity all week long? Or is this still primarily your capacity on the weekends, but the weekdays are lighter? And you've seen, obviously, a sales improvement as dining rooms reopen. Other casual diners, I think, have seen a greater improvement over the same -- similar weeks, and the data is scant still, but to the extent we can see it, it has been. Do you think it's something different about Red Robin, maybe because of the family-oriented business, maybe there's some hesitancy -- more hesitancy from your customers to go back? Any comments around that.

Well, John, we've been doing research as we've been going through the pandemic. So about every 2 or 3 weeks, we actually have been out there doing research. We have over 9 million members in our royalty program. So we've been engaging with them and really asking them, what are they looking for from Red Robin to feel comfortable and ready to come back into the dining rooms? And we, frankly, have seen kind of 3 classifications of guests. And in terms of their attitudes, kind of the first 20% or so, they're not as concerned about the COVID. And whether it's Red Robin or restaurants in general, they would just be going out. And we think that's certainly been driving some of the business across the industry.

What we are seeing is that we're now entering into that 60% kind of large middle group, that is a bit more reticent. They pay closer attention to your health and safety protocols and the procedures. And it's certainly my belief that as a brand at Red Robin, we've done some of the best work out there, and we're hearing that from not only team members, but our guests out there. So we're just now seeing entering into that kind of phase of the consumers and how they're dealing with it. And we're getting really strong feedback from our guests that we are doing the things that are making them comfortable.

And I think that's standing out, I think, as we look into the future and how guests are going to want to interact with restaurants. Health and safety, obviously, has moved up the priority list. I think it's going to stay there for a while as the pandemic -- as we go through this recovery. But from a standpoint of what makes Red Robin special with that, the one thing that we hear is people actually are calling out Red Robin for that they're feeling safe bringing their families to Red Robin at this time versus some other brands out there. So we believe that's going to continue to be a strength and, frankly, enable us to take market share as we go through this pandemic and come out the other side.

So obviously, a lot of people are saying, yes, there might be 20% or 30% less outlets out there, but I also think that the brands that do this right, that understand and listen to their guests and do the things that they want us to do to feel safe are going to take market share as we get to the back end of this. So I believe that we're handling in the right fashion. We're listening to our guests and doing what they're asking us to do to feel safe and comfortable. And it's paying off in the sales that we're seeing and the growth that we're seeing. And we couldn't be more excited about beginning to open up our higher-volume restaurants. And we've seen over the last few days some excellent sales results coming out of those restaurants.

Could I just follow-up just one? Lynn, on the break -- what is the comp decline that's required or AUV required to get to breakeven at the restaurant level? Understanding the first quarter was a bit mix between sales results, so maybe that's not the right benchmark. So where do you think you can breakeven on a comp decline or average unit volume in the current cost environment, things you're doing to go mix, et cetera, say in the second or third quarter?

Yes. I would say in the current cost environment, 20% to 25%. But with fully loaded cost, it gets down to the lower end of that range.

So 20% at the restaurant level, maybe down 25 -- I'm sorry, so say that again?

No. Thank you for the clarifying question. That's at the enterprise level. So right now, at down 30%, we believe we're cash flow positive in the current environment.

At the restaurant level. At the enterprise level, as Lynn mentioned, it's high teens, low 20s that we will get the enterprise level there, and we're approaching that.

(Operator Instructions) The next question is from the line of Greg Francfort with Bank of America.

I just had a couple. The first is, by my math, from what you said, I think you're doing -- I think one thing people are looking for is kind of how much of your off-premise gains that you got over the past couple of months are going to stay with us sort of post-COVID. And my math is that you're retaining like 2/3 of your off-premise sales that you had in those reopened stores. Is that the right number? And I guess how are you calculating it, if it's not?

Yes. I think for the restaurants that we have dining rooms opened at, those are running about 40% of their sales as off-premise. Now when we look at the system on a consolidated basis, what's been encouraging is we've seen our off-premise sales actually peak at about 3x pre-COVID levels, but as we've been opening up dining rooms, it's been between 1.5 to 2x.

Okay. And then just in terms of the corporate positions, I think you talked about removing 50 positions. How many of those do you expect to be permanent versus as things open back up maybe adding back some of those positions?

Well, we were very strategic (technical difficulty) organization, certainly because of the circumstance. But based on how we thought through our organization and our infrastructure, we are planning for those positions to be permanently eliminated. Now as business comes back, there will be business needs, and we'll adjust accordingly, but that's really the intention today.

And then just on the loyalty program. I've been trying to think through what changes could be permanent to the business. And besides off-premise, I'm curious. I think you said the loyalty program was around 9 million members. I think that was similar to where it had been running. But have you seen any inflection or change in terms of signups in that program around people kind of shifting online?

Well, I didn't hear the last part.

People -- sorry, Greg...

Just if you've seen any sort of acceleration in the loyalty program growth or loyalty program base as people have shifted towards digital. I'd be curious.

Yes. I don't know if we've seen a measurable difference. However, what we have seen and we're very encouraged about is our dining room royalty members shifted to off-premise, many for the first time. So we certainly saw their loyalty in terms of when the dining rooms were closed. And so now we've introduced another occasion for those guests.

Yes, Greg, this is Paul. One thing I would say is that having a program of that size, really, it enabled us to quickly pivot and, through the digital world, engage with them. We were able to work with the third-party delivery companies to incent the off-premise behavior very quickly. So my view is that we had built an audience that we were able to do a great job of. So these were heavily dine-in guests that now we think are excited to be able to use us not only for dine-in in the future, but we are now a strong off-premise alternative. My view is that what the pandemic has done is it's taught people how to use off-premise. It's teaching people how to effectively order, pay, use delivery for, in a sense, almost a meal replacement. So we're -- we think that the size of the program -- and now with the dine-in, it's easier to -- as they are reopening it's easier to start to add new members to that program. But from our perspective, we think it's actually a built-in advantage for Red Robin in having a constituency that we can speak to almost each and every day in a cost-effective fashion.

(Operator Instructions) The next question comes from the line of Brian Vaccaro with Raymond James.

So just circling back on your comments regarding consumer attitudes. I'm curious if your data is on a regional or state basis across your restaurants. And if so, are you seeing significant variability in terms of the consumer appetite to return to dine-in?

It's a little regional, but what we're seeing is across the regions, it does fall into the 3 groups I mentioned. So I'm just giving you rough percentages. 20% or so that -- quite frankly, they just would come in anyway. Then about 60% in the middle of that want to understand your protocols, your safety procedures. What we heard out of that group is they don't want just to read it or hear about it. They want to see it in action in the restaurants. And that's certainly one of the reasons that we have a team member on each shift that's just dedicated to sanitizing the public spaces, the door handles at the front door, the restroom areas. And then there's that back-end, 20% or 25%, that have said, "Hey, it's going to take us a bit of time to feel comfortable again using a dining room. Still going to participate in the off-premise world, but it's going to take us a little bit longer."

What we do see is regionally, there are some regions that, that first group is a little larger than in other areas, I would say, maybe the Southeast has been a little larger than what we've seen initially in attitudes, maybe like in the Northwest or the West Coast. However, we're so far in the reopenings out there seeing very strong results. But people are more in that 60% group than maybe in the 20% group in some of the areas that, frankly, have been more impacted by the COVID-19 virus. So there is a bit of regionality to it, but we see that basically people fall into one of those 3 groups.

All right. That's helpful. And I wanted to clarify your comment on G&A. We obviously had to make some difficult decisions during COVID in streamlining the organization. But what is the current G&A run rate, weekly or monthly, currently? And can you also ballpark. Where do you see normalized G&A settling out in a post-COVID world?

Well, Brian, obviously, there's a few moving pieces here. But roughly, I would say we see G&A in roughly maybe a 7% neighborhood on a normalized basis, but we're kind of reintroducing some costs over time in our current projections for 2020.

Brian, I think also another way to look at the question is, we certainly, as we've been going through this, especially with the telecommuting, there's a bit of kind of reimagination organizationally of how is this going to work post-COVID as we look at not only office routines at the restaurant support center, but just also some of the routines that we have in the field. So I don't see us, from where we are today, adding -- really adding to the G&A line that we have today for the -- except -- I mean, obviously, we took a salary -- temporary salary cut of approximately 20%. So we certainly will be dealing with that as we move forward. But obviously, the leverage that we would obtain by the increase in sales should minimize that impact.

All right. Great. And then I also just wanted to clarify the rent situation. And can you help us with what percent of rent payments have been deferred and over what period? And then when do you expect to return to paying full rent as you reopen dining rooms? Can you just help us with that dynamic?

Yes. Of course. Thanks, Brian, for the question. So before April rent payments were due, we actually reached out to our landlords to proactively start discussions around restructuring leases. So in April and May, we provided only partial rent payments, similar to June. Now as we've been having additional conversations with landlords, we are expecting the actual occupancy cost going out to be higher starting in July. And then once we fully negotiate our leases, we should be at a full understanding and 100% payments based on those understandings really in the back half of the year.

Ladies and gentlemen, that concludes our conference call for this morning. We thank you for your participation, and have a great day.

Great. Thank you.

Thank you.