Good morning, ladies and gentlemen, and welcome to the Red Robin Gourmet Burgers Fourth Quarter 2011 Conference Call. [Operator Instructions] As a reminder, part of today's discussion will include forward-looking statements within the meaning of Federal Securities Laws. These statements are commonly identified by words such as continue, plan, achieve, expect, will, implement, optimize, target and other terms with similar meaning. These statements will include, but will not be limited to, statements that reflects the company's current expectations with respect to the financial conditions, results of operations, plans, objectives, future performance and business, references to Project RED, including the company's traffic and revenue-driving initiatives, intentions with respect to expense management and plans for deployment of capital and other expectations discussed during the course of this call. Although the company believes that the assumptions upon which the preliminary or initial results, financial information and forward-looking statements are based, are reasonable as of today's date, these forward-looking statements are not guarantees of future performance and therefore, investors should not place undue reliance on them. Also, these statements are based on facts known and expected as of the date of this conference call, and the company undertakes no obligation to update these statements to reflect events or circumstances that might arise after this presentation. Participants on the call today should refer to the company's 10-K and other filings with the SEC for a more detailed discussion of the risks, uncertainties and other factors that could impact the company's future operating results and financial condition. The company has posted its fiscal fourth quarter 2011 press release and supplemental financial information related to the quarter's results on its website, www.redrobin.com in the Investors section. I will now turn the call over to Mr. Steve Carley, Chief Executive Officer of Red Robin.

Thanks, Jill, and thanks, everyone, for joining us on our call today. Joining me are Eric Houseman, our President and Chief Operating Officer; Denny Post our Chief Marketing Officer, and Stuart Brown, our Chief Financial Officer. After Stuart and I deliver our prepared remarks, Eric and Denny will be available for the Q&A session of our call. So let's get started with a few financial headlines from our most recent quarterly performance. As we shared in our earnings release, and as you can see on Slides 3 and 4 of the supplemental information, during our fiscal fourth quarter this year, our restaurant revenue increased 7% to $202.5 million and total revenues increased to $206 million. Our company-owned comparable restaurant gross sales increased 4.8%, driven by a 5.6% increase in average guest check, partially offset by a 80 basis point decrease in guest counts. Our adjusted earnings per diluted share were $0.28, compared to $0.13 in the same period a year ago. On the development side, during the fiscal fourth quarter of 2011, we opened 3 new company-owned full-sized prototype restaurants and our third smaller non-traditional prototype Red Robin's Burger Works. Our restaurant-level operating profit margin increased to 19.9% from 17%, driven by better labor efficiency and lower other operating costs. This was partially offset by increases in food cost. Our restaurant-level operating profit was $40.3 million or 25.3% higher than a year ago. Finally, our cash flow from operations during the full fiscal year 2011 increased 35.5% to $95.7 million. Looking at Slides 5 through 8. You'll see our quarterly improvements and our comparable restaurant gross sales, adjusted earnings per diluted share, cash flow from operations and adjusted net income. Red Robin's 2011 fiscal fourth quarter results represents the momentum that we are achieving in strengthening our business with 6 consecutive quarters of same-store sales growth and 5 consecutive quarters of earnings growth. We're pleased with the continued success of our teams across the Red Robin organization in driving significant and consistent improvements in our financial performance. In each of our quarterly calls during 2011, we've given you updates to the key components of Project RED. So I'd like to first share some of those headlines with you and the progress we've made through the end of the year in each of these important areas. Let's look at Slide 10, driving guest sales. As you may recall on early 2011, we rolled out our Loyalty Program called Red Royalty to all of our company-owned restaurant and since then, we've launched the program in about 50 of our franchise partner restaurants. We're very pleased with the results of the first year of that loyalty. We now have a database of registered guests. It's about 1.4 million and growing. For perspective, it took almost 10 years for us to sign up 2.2 million members in our eClub. Most importantly, Red Royalty is not just an email address, but a treasure trove of guest insight. One of the things we know now that it is that a registered Red Royalty member has a 2-year profit potential more than 3x higher than a non-Red Royalty guest. So the program is doing precisely what we designed it to do, giving us valuable insights into our guest behavior and allowing us to surprise and delight guests and drive incremental business. In 2012, our goal is to build on this momentum and expand the universe of our registered guests. We also plan to keep expanding the program within our franchise system this year. By enhancing our relationships with our guests, we expect to build affinity to our brand, offer incentives that are relevant to our most loyal Red Robin fans and continue to drive profitable guest traffic. Regarding our limited time promotions. Throughout 2011, we continue to strengthen our product offerings and our media plans to support them. As a result of fall LTO, which ramped up in the fourth quarter and featured our Oktoberfest Bürger was very successful. During this promotion, we saw a significant pre to post trend improvements in both guest counts and sales. In our Jim Beam burger, which we featured around the holidays, was a big hit with our guests achieving strong sales at full margin with only social media and Red Royalty messaging support. With each new LTO promotion, we're maximizing the efficiency in our marketing spend which is one of our major goals for 2011. And in 2012, LTOs and TV media will continue to be important tactic for driving guest traffic and communicating the quality of our menu. During Q4, we continued our progress on taking back the bar, which began just before the start of 2011. We're continuing to drive increases in beverage per person average sales and alcohol beverage mix. We ramped up our beverage program early in the year and began seeing increases in overall beverages in Q2, 3, and especially in Q4. When we achieved a 90 basis points year-over-year increase in alcohol beverage sales. For the full year '11, we regained about 50 basis points of our beverage alcohol sales mix that we have lost in the previous decade. As a reminder, a 1% lift in our alcohol beverage sales represents about $6 million in EBITDA. When we began this effort, our challenge included a lack of marketing around our bar offerings, compounded by the fact that our team members did not instinctly educated our guests about our great beverages. We still have a long way to go, but talking about beverages is slowly becoming part of our team members’ vernacular and we're turning this part of our business around. Combined with the new drinks and desserts menu that we introduced in 2011, increased sales of advertisers and opportunistic promotions like our Jim day event late year, we expect to make even more progress in this area a significant profit potential in 2012. Looking at Slide 11 on expense management. You can see that despite continued pressures from commodity inflation our team members were able to capture substantial cost savings resulting in a significantly higher profit in the fourth quarter. And in fact, the reduction in restaurant cost we outlined earlier this year with Project Red had been realized even more quickly than we anticipated. Throughout 2011, we shared with you many specific examples, big and small, of how our teams are managing costs, increasing productivity and improving our restaurant operating margins. In 2011, we captured about 2/3 of our stated goal of achieving $16 million to $18 million in annualized savings by the end of 2012. And as I've said before, continuous improvement is becoming engraved in our team culture and our people are finding ways to harvest cost improvements without negatively impacting either our team members and especially without compromising our guest experience. In fact, our year-over-year top box scores for overall restaurant experience improved 5 full percentage points to end the year at about 70%. Our goal is to drive loyalty by building out this momentum and expanding the number of our restaurants that are achieving best-in-class guest satisfaction scores at the same time. Lastly, here's where we are in optimizing our capital deployment on Slide 12. We've told you that our efforts in this area are focused on establishing capital deployment strategies that allow us to both grow the brand and maximize long-term shareholder returns. To that end, in Q4, we opened the last 3 of the 12 new full-sized Red Robin restaurants planned for '11 and franchisees opened the last of their 3 new restaurants scheduled for the year. Development rate remains a highly productive use of our capital. Our new restaurants continued to perform well, with the 2010 and 2011 classes generating average weekly sales of $63,853 and generating cash on cash returns approaching 40%. In addition, the fourth quarter we opened the first location of our smaller non-traditional restaurant prototype, Red Robin's Burger Works here in Denver. This first Red Robin's Burger Works is meeting our expectations and we're planning to open a handful of other Burger Works locations, one in Ohio State campus in late March and then another locations here in Denver this year. Once we have some operating experience, these initial locations will evaluate the format and to turn on long-term plans. In the meantime, we were excited by the positive comments we're receiving from our guests on the Burger Works quality of product and speed of service. In reality, really, the only negative feedback we've received is that we're not serving bottomless Steak Fries at Burger Works. Finally, we told you the critical part of our focus on driving change in achieving our future stake was investment and revamping our IT systems. During 2011, we made substantial progress developing systems that will make our foundation stronger, help us make better in more timely decisions and give us and all our key members the grow our business well into the future. This includes progress on our IT infrastructure, improving labor scheduling and a newly interactive computer-based training system for our hourly team members and managers. So to summarize, our fourth quarter of 2011 marked a strong finish to a year of significant and meaningful progress. In the past, we have undertaken our essential to improving operations, achieving sustainable profitability and increasing shareholder value. Now I'll turn the call over to Stuart to give you a bit more color on some of our operating results and our outlook. Stuart?

Thank you, Steve. We had a terrific fourth quarter capping off a great year. Fiscal 2011 adjusted net income of $24.3 million was $13.2 million higher than 2010. Furthermore, our cash flow from operations increased to $95.7 million in 2011 or an increase of 35% year-over-year. In the quarter, adjusted net income increased $2.1 million more than double a year ago to $4.1 million. The 3 drivers underlying our performance this quarter versus a year ago were first, revenue growth of 7% with healthy comparable restaurant sales. Second, a 390 basis points reduction of operating expenses to 54.7% as a percent of restaurant revenue and third, 100 basis point increase in cost of sales as a percentage of revenue to 25.4% due to commodity inflation. Together, these resulted in restaurant-level operating profit up 19.9% in the fourth quarter or 290 basis points better than a year ago. Looking at fourth quarter sales in more detail, comparable restaurant gross sales increased 4.8% due to a 5.6% higher average gross check. The higher average check reflects our guests adding items such as appetizers and alcoholic beverages to their checks, as well as the flow of through price increases taken in April and October of approximately 2.2%. Guest count in the quarter decreased 0.8% from a year ago, which is a meaningful improvement from the third quarter when counts were negatively 3.2%. Comparable restaurant net sales increased 3.1% in the quarter versus 2010 with higher incentives mainly to the rollout of Red Royalty. The revenue increase was also helped by our accelerated store openings. As Steve mentioned, we added 13 company-owned restaurants in the year, which added approximately $8.5 million of net sales to the quarter and for the year, added over 300 operating weeks for $21.7 million of net sales. There's been a lot of discussion in the industry about the impact of inflation in general and beef in particular. During the fourth quarter, the cost of our commodity basket increased about 4% from 2010 due largely to ground beef, which represents approximately 13% of our total cost of goods sold. The market price of ground beef and we bought fresh ground beef increased about 14% in the fourth quarter over the prior year. For the year, the market price of fresh ground beef increased almost 17%. We were able to offset much of this increase in commodity costs with savings initiatives we have discussed in the past such as our new distribution agreement, changes in pack sizes, as well as the shipping of sales mix into items with higher dollar contribution although also a higher cost like seafood. As you can see on Slide 13, despite our efforts to mitigate inflation, our cost of goods sold grew to 25.4% of restaurant revenue, an increase of 100 basis points. Regarding operating expenses, the organization has made significant progress improving processes and managing purchasing to drive costs out of the business. As part of what we refer to as Project Blueprint. The savings we were able to capture in the fourth quarter exceeded our own expectation, particularly our labor costs, supplies and maintenance, which was key to our reducing operating expenses about 390 basis points. As Steve discussed, we realized cost savings of almost $12 million in 2011 toward our goal of $16 million to $18 million of savings by the end of 2012. The process we've been using to identify and implement these savings has become institutionalized across the organization and follows principles of change acceleration that General Electric and others have used over the years. These have moved from top-down initiatives to grassroots idea generation taking advantage of the knowledge and experience of our team members who serve our guests every day. We would not have collected the ideas or achieved the results without the actions and the drive of all of our team members. You have my personal thanks for their effort. The continuous improvement process has actually become a fun exercise as we conduct internal challenges and use our captive social networking sites to post and share ideas. Cost reduction initiatives arrange from reducing supply-chain costs to supply specification to the installation of energy management systems. The savings to-date were delivered well ahead of schedule and would likely surpass the $16 million to $18 million originally targeted which will continue to mitigate pressure from commodity inflation. Additional savings will likely be reinvested back into initiatives that advance our guest experience and build on our strong brand and differentiation. As shown on Slide 14, we have consistently improved the year-over-year restaurant margins. Fourth quarter restaurant-level operating profit was $40.3 million, an increase of $8.1 million or over 25%, compared to fourth quarter 2010. For fiscal year 2011, restaurant-level operating profits increased $27.6 million or 18.3% from 2010 to $178.3 million. An easy way to think about how the year unfolded is that we realized about 1% of sales growth from pricing or approximately $8.5 million, which was offset by about 3.5% of commodity inflation for the year. So the $27.6 million of higher operating profits resulted from improvements in menu and mix, as well as cost savings. Selling, general and administrative costs increased $4.1 million in the fourth quarter from a year ago due mainly to higher performance-based compensation, project costs for our new information systems and legal expenses. Selling and marketing costs in the quarter reflect compared to a year ago. As we talked about last quarter, the implementation of our new general ledger, store financials, procure-to-pay systems and human capital management tools are set to start rollout in the middle of 2012 and be complete by year-end. The total cost of this revamping our IT systems expected to be nearly $20 million. In 2011, we expensed $3.1 million and capitalized $4.8 million related to this project. In 2012, we expect to expense approximately $4.5 million and capitalize $6.5 million related to these system changes. Our 2011 tax rate came in a bit lower than we expected 6.8% for the year. This lower rate was primarily related to impairments recorded in the fourth quarter. Excluding impairments, executive transition and other adjustments in 2011, we estimate our normalized tax rate for 2011 would have been 13.8%. The impairments taken in the quarter relate primarily to one restaurant, which has been on our watch list but additional competitive openings resulted lowering of assumptions and the rate of recovery and the estimated fair value of restaurant. Turning to cash flow in our balance sheet. Cash flow from operations in 2011 as mentioned was $95.7 million, compared to $70.6 million in 2010 reflecting a strong improvement in operating results. Investments in new and existing restaurants increased as well to $44.1 million in 2011 from $35 million last year, reflecting our increased new store openings and infrastructure investments. In 2011, we repurchased 1.2 million shares for $33 million of which $2.3 million was bought back in the fourth quarter. Share repurchases represent over 7% of our shares outstanding as of the beginning of the year. And our capital position remains strong, total cash of $35 million at the end of 2011 and our $100 million credit facility undrawn. Looking ahead to 2012, as you read in our press release and as shown on Slide 15, we expect comparable restaurant sales for the year to grow low single digits over 2011 resulting from improved traffic trends, as well as pricing mix. We expect to open a net 13 to 15 new restaurants ranging from 2,000 to 6,000 square feet in the year, adding over 250 operating weeks. Based on our current outlook, we don't expect to make any meaningful price changes to our menu this year. However, the timing of our pricing changes in 2011, movement and holidays and timing of media will impact quarterly growth rates. As you recall, we increased price approximately 1.5% in April 2011 and an additional 0.9% in October. So sales growth from pricing and mix will have its greatest impact in the first quarter of 2012 with more moderate growth expected for the remainder of the year. However, revenue in the fourth quarter will obviously benefit for the impact of the 53rd week. To the continued pressure on ground, beef prices and other commodities partially offset by lower average dairy and produce prices, along with benefits from our supply chain initiatives, we expect cost of sales to increase 60 to 80 basis points over 2011 to nearly 26% in 2012. In the middle of the P&L, increases in minimum wages in many of our states will increase labor cost 20 to 30 basis point over 2011 average of 33.8% of sales. This cost pressure from wages though should be more than offset by the cost reduction initiatives in labor and other costs, as well as some additional leverage on higher sales. As a result, restaurant-level operating profit margins are expected to expand 10 basis to 20 basis from the 19.8% we generated in 2011. The margin expansion will be greatest in the first quarter and flattening out as we move through the year as we cycle against many of the cost-saving steps implemented in 2011. We are planning for selling, general and administrative costs to range from $105 million to $107 million in 2012 and selling and advertising cost rise in line with sales and general administrative costs rise 4% to 5% to the infrastructure investments in support of our increased store openings in the 53rd week. Furthermore, our tax rate will rise from our normalized 2011 rate of 13.8% to a range of 22% to 24% of pretax income due to higher earnings and the expiration of the higher act tax credit. Our investments in 2012 are expected to range between $50 million to $60 million due to the increased store openings, as well as increased investment in equipment that will improve kitchen efficiency and the increase in store remodelings. These investments include our new IT investment and other infrastructure cost of approximately $10 million. We are in the process of developing our next generation restaurant prototype and expect to test this brand refresh in a number of existing locations later in the year. We'll talk more about this on future calls. We plan to prioritize investing in the excess cash from operations in the areas where we increase value for shareholders. To the extent that those opportunities are not immediately available, we may retain cash to fund future investments, pay down balances on our term loan or buyback shares opportunistically. As we talked about in our last call, our Board has authorized $50 million of share buy backs and almost $47 million remains on that authorization. Before turning the call back over to Steve for some closing thoughts, I want to echo his comments around 2012 to build our foundation and advance our brands which provides for stronger and faster Red Robin in 2013 and beyond. Looking at Slide 16, we are making major investments in new systems. We'll begin updating our menu. We'll continue expanding our successful loyalty program. We'll test our next generation restaurant prototype and we'll expand our testing of the Burger Works concept. All while continuing to deliver superior experience for our guests and growing our new store pipeline. For 2013, this will mean better insights and operational performance and guest insights -- guest behavior having a foundation to make our guest experience more contemporary and the ability to accelerate the growth of our new restaurants. Steve?

Thanks, Stuart. In closing, we are very pleased with our results for both the fourth quarter and for the full year 2011. Our recent financial performance was a solid finish to what was a critical transitional year for Red Robin. Our business is getting stronger and our financial performance is improving and I deeply appreciate the commitment, the hard work and the sense of urgency display by team members across the organization that made all these progress possible. As you might recall, when I joined about 1.5 year ago, Red Robin faced a number of challenges. First among them was that our best-in-class peers have taken steps to compete more efficiently in what was then a very difficult economy and Red Robin had not. And there were consequences for this complacency, but as a total team, we put together a strategic plan to improve the business and ensure that Red Robin got off the sidelines this year and back into the game. As you can see on the final slide of the presentation, 2011 was the year we began the transition to strengthen our business and goes back on track to becoming the best-in-class competitor. But the hard work is not over, in fact, it's just begun. In 2012, there will be significant headwinds including an intensified competitive environment, continued cost pressures and lingering macro economic weakness. Also from a media planning standpoint, 2012 is the perfect storm with both the Olympics in the summer and the national election in the fall. So this year, we'll use the momentum we've achieved so far to begin building the foundation for long-term growth. We're making the necessary investments to build a stronger and scalable infrastructure, which once established will allow us to leverage social, mobile and other guest facing media. We are also creating culture of continuous improvement and developing robust brand strategies to make the Red Robin experience even more relevant and differentiated in the eyes of our guests. This includes a comprehensive brand refresh and a next-generation prototype. We are creating an updated look and feel that will drive great adult guest experiences without compromising our core equity with families and this will help us accelerate guest counts, build sales and grow our market shares. But make no mistake. 2012 will be another challenging year, but it will be an exciting one too. The primary accelerator that drove our success in 2011 was the powerful Red Robin culture, combined with the talent, passion and ideas of our team members. The progress we've made so far has given our team a renewed passion and enhanced confidence about our ability to be the best in casual dining. We still have a long way to go but our teams are engaged and focused like never before. We're in the game and we're laying the foundation of winning. With that, operator, we'd be happy to take questions.

[Operator Instructions] And our first question today's comes from Joe Buckley with Bank of America Merrill Lynch.

Just a couple of questions. The same-store sales picked up and traffic improvement in the fourth quarter. I know you mentioned selling and marketing expenses were basically flat year-over-year, but did you utilize the loyalty program more? Is that one of the drivers and there's been a lot of talk about favorable weather for the industry. I don't know if that was as big factor for you given your geographic footprint in December, but if you would comment on that to, that would be helpful.

Hey Joe, this is Denny. I can certainly speak to the differences in the marketing program. When the Oktoberfest Bürger was extremely successful for us, our second best selling LTO of the last few years and almost as successful as one that we did in '10 when we rolled over dark media, so I will say the Oktoberfest Bürger really delivered for us, gave us great momentum coming into the quarter. And then we also added an LTO in December, the Sweet Jim Beam Bacon Burger which is the first-time LTO what we call golden times or holiday in quite some time and it was also extremely successful in full margin with the exception of our one social media fun day around Jim day when we gave the burger away. So I would say it was a combination of really successful LTOs, the way we spend our media, the dollars and how we spend it, we got more impact than we had in prior years and we'll continue to take that learning into this year. But I'd say for the most part, it was earned. With regards to Red Royalty, absolutely. Red Royalty is an engine that's working for us. It is helping us on a number of fronts and driving, I think, and we know some frequency amongst those Red Royalty registered members and the growth in Red Royalty in Q4 was significant as Steve shared, we are now up over 1.4 million members.

Okay. And just one other question on the share repurchase. It seems sort of modest in the fourth quarter and just kind of curious how you're thinking about it going forward as you evaluate other potential uses of capital?

Hi Joe, good morning, this is Stuart. Yes, we, obviously, sometime we talk about regularly with our Board. As we review with them going into the fourth quarter, excess cash we will retain the opportunity to buy back shares opportunistically, but we are at the same time cautious of the volatility in the economy both in terms of what that may do operationally, as well as was that doesn't in the share price. So we're going basically continue to sort of be disciplined and make sure that we've got -- keep our strong balance sheet, keep capital invest this year. So something that obviously, the tool in the toolbox and something we'll keep looking at but in terms of more detail and that, we're probably not going to be giving a lot.

And our next question comes from Bryan Elliott with Raymond James.

I was wanting to ask Denny, maybe for an update on the work that she's been doing since she joined the company and then kind of what you're thinking about more strategically from potential marketing and merchandising, branding efforts going forward.

Terrific glad to update. I just crossed my 6-month anniversary. In fact, it's still on the stage our Leadership Summit. So it's a great way to celebrate 6 months in the brand. Then digging in, learning a lot about both our marketing and our menu. I have the opportunity to lead both sides of that. And I would say we have already begun to optimize our marketing mix, our messaging, our plans this year for LTOs, et cetera, social media. We've begun to really, I think, make some real progress there. We've got a lot of fans Red Robin fans that are eager to support this brand and, of course, our continued growth of Red Royalty be critical. But specifically to some of the observations and opportunities, we continue to look to broaden our range of burgers, not just through LTOs, but to broaden the menu. It's very clear that a lot of folks out there would particularly at lunch occasions and perhaps some other locations are just different types of guests would like to enjoy a smaller, less expensive burgers and there's also a market for some really strong premium burgers. So we're going to be looking at building out as we call it, the barbell. No specific announcements regarding that but we are working hard on broadening our range. We are going to be America's best burgers, we need a broader range of sizes, prices and types of burgers to be able to offer our guests. So I'd say that is a primary focus in terms of growth. As Steve alluded to, we still have a lot of room to grow in our beverage PPA, happy hour, et cetera, our drinks and desserts menu has worked hard for us but we continue to look for opportunities to up our beverage PPA and see tremendous opportunities in that this year. And also to better target specific daypart offers without using mass media again, social media and Red Royalty, we have the opportunity to begin to really target and segment our guest base in a way that we haven't been able to before. So there's a lot of opportunity here.

And we'll go next to Will Slabaugh, Stephens.

Wanted to ask about the evolution of the check and how you see this most recent 5% or so move we see in the past 2 quarters just playing out over time. This as it relates to customers trying more advertisers, drinks, desserts, et cetera, which is how you see that playing out quarter-over-quarter because I know sort of seen this 3 quarters of this now and just how you're picturing that throughout 2012?

This is Stuart, again. So if you look you mentioned last 3 quarters and that really reflective of some of the menu changes that we made last April and also bringing out the drinks and desserts menu. As Steve alluded to, the increase in alcohol beverage sales have been continuing to build as we move through the year. So those are the things that we're going to keep emphasizing. And as Denny touched on, we will keep looking at optimizing the items on our menu and maybe making a few additional refreshers there. So we will keep building on the momentum that we have. And then from a pricing standpoint, again, it's the greatest in play, impact of that really in the first quarter and then it will start to drop down over the year as we cycle against the April increase and the October increase.

Okay, and just lastly for me on traffic. again a nice sequential improvement there, but with that number still being slightly negative I know you've highlighted a lot of things you're doing there for LTO perspective from Red Royalty, et cetera, I'm just wondering if there's anything else you would add there that it takes to get that number to a more sustainably positive number or if you think it's more of an economic tailwind that you need or just kind of comments around traffic.

Well, I certainly never going to count on tailwind to drive us forward because you can't predict that. I do see segmented we've seen more of a drop off in lunches many of our competitors, people are falling away a little bit more lunch, we have an opportunity to target that daypart specifically to reinforce that and then again, I think broadening the range of items in our menu will have an impact over time continuing to drive awareness of other ways to enjoy Red Robin, such as happy hour. There's a lot of evidence out there that when people chose to come in happy hour, sometimes make that the meal and we certainly see that opportunity as well. So it's continuing to push on all of the things we've got and really beginning to segment daypart.

We'll go next to Destin Tompkins with Morgan Keegan.

Just a couple of clarifications. I guess, first of all, on the sales trends, I know there -- I think there was a question earlier about if you felt like there was a weather benefit to the fourth quarter and I think we've seen some companies discuss it as well early on in 2012. Just be curious if you feel like that's helping in certain areas and if so, if you had any -- if you would be willing to quantify what that benefit might be?

Dennis, this is Steve. I think that clearly, with restaurants in 40-plus states across the country and a little bit milder, fourth quarter, there was a modest benefit from a weather standpoint. And there's numbers indicate, there was a very modest uptick on how the consumers felt and there were buoyancy traffic across the whole industry. But I would refer back to comment by both Stuart and Denny, that if that was a factor, it was probably the smallest factor in our performance.

Okay, great. And then on the comp number, the 4.8 I know you mentioned that was the gross comp number and I think you've provided net number of 3.1 just curious, is that spread -- has that grown, because assuming it has grown, but is that driven by the loyalty incentive? And I guess, as a look back at the last quarter's release, I don't remember you're reporting the net number being mostly growth number. So can you kind of help, is it just a function of kind of changing marketing and you're trying to provide apples-to-apples from a marketing perspective what the difference is and as we look at some of the past numbers was that the spread quite as large as it was in the fourth quarter?

Destin, this is Stuart. So, the spread, historically, within Red Robin prior to the roll out of Red Royalty was pretty steady quarter-over-quarter and year-over-year. And obviously that's grown as we've increased the Red Royalty registration up to 1.4 million users as we've had some incentives upfront with the free appetizers upon registration and things like that. We've done some things on purpose to drive registrations. And so that's why that is continued to grow. However, over time, the year-over-year change will moderate as we think probably be able to pull back on some of the sort of registration incentives, but then we'll be able to get too much more targeted incentives to particular users, particular markets for different dayparts or to try new items and to surprise and delight as Steve mentioned. So historically, it hadn't been that big a spread but it has grown during the year which is why I continued to pointed out and we will evaluate going forward whether it make sense to keep reporting both, but right now, historical reported gross will keep you both numbers.

Let me just add to the investment for the long-term health of the brand we would much rather spend this to reward loyalty than to broadly discount and that is not our intent. We're also looking to really grow the Red Royalty program from purely reward to more relationships. We're seeing the ability with Red Royalty to extend the impact of the promotions like LTOs by inviting them first to the availability of the new products, new menu items as well as the opportunity extend and give them special opportunities to enjoy them beyond the time that we're on-air. So we're finding in a really, really strong tool and again, we'll see it moving over time from reward to relationship, the more and more refine we can get about targeting.

And our next question comes from Peter Saleh with Telsey Advisory Group.

So my question is on menu changes, it sounds like you will make menu changes in 2012. Just wondering if you're testing anything already in terms of either the barbell, or more value type items and what kind of results you are seeing if you are these items?

We are developing them. We're not -- we don't want to reveal any test results yet, but we are working very hard on the much broader menu platform. We're also using a lot of our guest insights to drive that than we have in the past, screening concepts. We just opened our Yum U Innovation Center where we have now dedicated kitchen facilities, sensory facilities, focus group facilities, things that we just never had and so it's going to be a strong development for our pipeline to be able to have access to that type of development.

Great. And just on the franchisee development. Where we stand for 2012 franchisees be opening units as well, and where is the health of the system right now?

Yes, the help of the system is fine. They will -- there'll be some franchise growth in 2012, probably very modest growth. They are, as we have said in future calls, we've developed a 4,000 square foot prototype that the franchisees very much want to see us get some road results behind. But they are actively -- they're actually developing, but very modest right now with the capital markets.

And we'll go next to Brad Ludington with KeyBanc Capital Markets.

I want to get clarification on one thing. Did you say on the alcohol mix that the fourth quarter was up 90 basis points year-over-year and the full year was up 50?

Yes.

Okay, good, I wanted to make sure I heard those numbers correctly. Now moving on to your focusing on limited time offer, going forward, is that something that -- I guess 2 questions, is that the strategy that you think should continue long-term or is there goal to move to maybe everyday value message in the future and then also, is there thoughts about going around a lunch offer as well?

Well, I think a limited time offers provide an interesting later to appeal to a certain guests was really driven by news an exciting new kind of menu offerings. It continues to help us stay on the leading edge of interesting recipes and burger authority. It's not the sole strategy though so we need to layer that over some of the fundamental changes that we've alluded to with regard to broader range of offerings in our menu, more of a barbell strategy. So that when a guest comes in, perhaps driven by the news of an LTO, they also discover a number of reasons to come back and join us again. And then beyond that, I do think we have the opportunity, as I said, to segment menu and value with regards to dayparts and lunch is one of our key targets this year.

Okay, and finally just on menu innovation, is there an expectation that you will, I think you talked about it before, maybe expand the menu a little bit throughout the year and will see some new products and maybe product categories coming out this year? .

Certainly, that is one of our priorities is to begin to expand. Again, but remember that we stand for burger authority so in terms of categories, our first opportunity is to expand our burger range.

We'll go next to Phillip Juhan with BMO Capital Markets.

Stuart, your SG&A for the quarter came in at about $1.2 million higher than your prior guidance adjusted and I know you mentioned higher performance base comp. And perhaps additional IT spending, but can you quantify the variance of the plan?

Yes, probably again about my head probably half of that is due to performance-based incentive and the rest of is due to a little bit higher expensing of some of the IT costs in terms of the timing of that regarding the infrastructure and we are little bit I think $300,000 of higher legal expenses quarter as well, than expected regarding some claims that we have.

Okay, and then as we look forward to the first half of next year, I know there were some onetime items particularly around the proxy contest last year. Can you quantify perhaps what those costs were in the first and second quarters of '11?

Yes. In terms of the total cost, I don't think we disclosed the total cost is, but obviously, in the guidance range we've given what we expected SG&A to sort of come out in 2012. We've taken into account the rolling away.

And our next question comes from John Glass with Morgan Stanley.

[Operator Instructions] We'll go next to Conrad Lyon with B. Riley and Company.

A question about your restaurant-level margin. Clearly, you're getting up there, best-in-class type levels. My question surrounds this and potentially a good problem. Do you see potentially the guest experience or how do you preserve the guest experience keeping those margins up and I say that in relation to -- I know COGS are going to be challenging this year and I suspect you probably try to cut costs elsewhere, will the guest experience necessarily, perhaps, get a little softer and that's my question.

Conrad, it's Houseman here. Two really question I think Steve alluded, if you look at even the $12 million that we took out at the middle of the P&L in 2011, we saw our top box guest restaurant overall satisfaction scores move from 65% to 70%, which is getting close to best-in-class from a guest experience standpoint. Steve and Stuart really didn't go into a lot of the details around blueprint on this earnings calls as we have in the past, but a lot of the savings that you're seeing as we call back to the 200 basis points in the middle of the P&L are really not guest facing. Let me just give your real simple 1 or 2. We used to purchase a presliced onion with a very high-cost. Well, we were able to source a piece of equipment for $200 that pre-peels the onions that allows us to bring in peeled onions. Now just that savings alone, now the guest sitting at Table 52 doesn't know that coming in pre-peeled, post-peeled, so we are able to do that. That savings alone is $800,000 for the system. We made a spec change. We went from a different -- we were -- we changed the specs in our lemon cases so we actually increased the size of our lemons. We didn't change the lemon, just increased the amount of the case pack that came. That alone was a $400,000 savings. So if you kind see where I'm going here, these savings are not about increasing section sizes, getting away from buzzers, changing our standard on ticket times so that we run with fewer cooks. This is really about taking cost out that the guests don't see as well, is becoming more efficient. We went through a very elaborate time and motion study that allowed us to identify just low hanging fruit that we were able to tighten up. So we always any of these ideas that are coming in from our team members and our managers and team members here at the home office. We always weigh against the us this distract from the team member or guest experience and if it does, then it really doesn't make the cut.

Got you, I know that. Okay, nice explanation there. Different question regarding marketing. It's a -- from a marketing perspective, it really sounds like you're trying to putt kind of the gourmet back in the gourmet of your brand and expand the burger range. Is -- how deep is the pipeline? Are you looking, say, with LTOs, 12 months out, 24 months out? Can you give me color to that regard?

With regard to the prices that we taking now in terms of screening, certainly, we're well over a year out at this point.

Okay. And in terms of let's say potential LTOs that come with any type of discounting, I've always had the thought that there's an opportunity to continue to do that, but at a lesser rate. Is that kind of the sense going forward that you'll be able to do that and increase the average check as a result of that?

Yes. And I think we learned that in Q4 with both the Oktoberfest where we took the $6.99 price only during the time that we were on air and return to the regular menu price of $9.99 when we were off air, of course, that Sweet Jim Beam bacon burger which we promoted over the holiday times with full margin the entire time. So I think you'll see us being more extending availability of these LTOs. We can drive awareness, but minimizing the amount of time that they are at lower-priced.

Got you. Okay, last question. I don't know if you discussed this at all regarding the same-store sales for the year low single digits. Can you talk about what the embedded traffic is in that?

Conrad, this is Stuart. Yes, probably I can give specific traffic guide lines. I mean if you look overall the market prognosticators, they basically expect a flat market next year, so we are doing everything we can to take more than our fair share of market, but obviously the 1% to 3% would probably have some improvements over traffic trends that we had in 2011.

[Operator Instructions] We'll go next to David Dorfman with Morgan Stanley.

[Technical Difficulty]

And we have no more questions in the queue.

We appreciate your interest in Red Robin, and have a great day.

This concludes today's call. We thank you for your participation.