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Ruby Tuesday, Inc. (NYSE:RT) reported yesterday a decline in its third quarter. For its fiscal third quarter that ended February 28, 2017, company revenue declined 16.8 percent. This drop included a net reduction of 105 Company-owned Ruby Tuesday restaurants compared to the third quarter of the prior fiscal year.
The troubled chain declined in same-restaurant sales, revenues and restaurant units. Within one year, its US franchised restaurant count declined from 28 on February 28 of 2016 to 17 on March 1, 2017. Company-owned units fell from 649 to 544 (see chart).
Same-restaurant sales declined 4 percent in the quarter for Ruby Tuesday restaurants compared to only a 3.1 percent drop in the third quarter of its fiscal year before.
Restaurant bottom lines were impacted as well. The brand announced that restaurant level margin, which is its average restaurant's total revenue minus operating costs expressed as a percent of total revenue, decreased 130 basis points to 15.8 percent.
As a result, Ruby Tuesday, Inc. had a net loss for the quarter of $19.8 million compared to merely a loss of $3.1 million from the same period the year before.
Interim president and chief executive officer of Ruby Tuesday, Lane Cardwell commented how the market remains soft as price competition and discounts kick up as casual diners try to bring customers back. "Our sales trends are reflective of these conditions," said Cardwell in a press release published on his last day as interim CEO. Still, he expects improvement in the fourth quarter in same-restaurant sales from the 4 percent drop of this quarter.
Cardwell, who will remain on Ruby Tuesday's board of directors and has just been replaced by incoming CEO Jim Hyatt, stressed the positive impact to the company and chain of a recently beefed up menu. "We successfully rolled out our enhanced New Garden Bar nationwide across Ruby Tuesday locations in January, the biggest change we've made to our brand in the last decade, as a follow-up to our new core menu launched last November," said Hyatt. "We will continue to fine tune and evolve both our New Menu and New Garden Bar to value engineer our offering and showcase the everyday affordability Ruby Tuesday offers. We firmly believe our improved Garden Bar is our greatest brand differentiator because it appeals to customers seeking fresh, healthy options. Initial guest feedback validates these improvements but it will take time to drive greater frequency with our existing guests as well as attract new guests."
On March 17, Ruby Tuesday announced that it will explore strategic alternatives to lift it out of its quandary, including having another firm buy it out.