Red Robin Gourmet Burgers Inc. dismissed its CEO on Thursday after the restaurant chain said an internal probe had determined he misused charter airplanes and corporate expense accounts.
Michael J. Snyder will retire as chairman, chief executive and president of the company, but is expected to serve as a consultant during a transition period. Red Robin said the top management change follows a special committee investigation that identified various expenses by Snyder that were inconsistent with company policies, or “lacked sufficient documentation.”
Red Robin said Snyder agreed to reimburse the company for such expenses following completion of the review. He took control of the company after merging his Snyder Group Co. — which controlled 14 franchises — with the parent company in 2000. The company conducted a successful initial public offering three years ago.
“The board of directors of Red Robin responded to the issues raised by our internal investigation, and the board’s response reflects our commitment to do what is in the best interests of our stockholders and our brand,” Dennis Mullen, who was named the company’s new chairman and CEO, said in a statement. “We have taken appropriate steps to ensure consistent adherence to company policies and to allow for a smooth and effective transition in management.”
Separately, Red Robin reported its second-quarter profit increased 31 percent and surpassed Wall Street projections due to a lift in sales throughout the chain. However, the company issued weaker-than-expected full-year and third-quarter guidance, further pressuring the stock.
Quarterly profit rose to $7.4 million, or 45 cents per share, up from $5.7 million, or 35 cents, last year. The results beat Wall Street projections for earnings of 42 cents per share, according to analysts polled by Thomson Financial.
Revenue increased 23 percent to $114.1 million from $92.5 million last year, but fell short of Wall Street’s target of $115.1 million in sales.
Founded in 1969, Red Robin owns and franchises more than 260 restaurants in the U.S. and Canada.