In the last 12 months, Ruby Tuesday closed 95 restaurants in one fell swoop, sold its headquarters, laid off corporate personnel and announced that it would “explore strategic alternatives.” As expected, there wasn’t much good news in the company’s fiscal year end (5.31.17) earnings report on Monday. In short, net revenue fell below $1 billion for the first time since 2003, net losses doubled from 2016 to $106 million, and same store sales fell by 3.1% for the year, and the company’s footprint contracted to slightly over 600 units, the distribution of which you can access in the map below.
During the after-hours earnings call on Monday night, CEO Jim Hyatt announced that the strategic review, which the company announced in March, “is entering its final stage.” It has been noted that the company’s annual shareholders’ meeting has been moved from December 6 to January 22, 2018 due to the review process. It appears, then, that a decision on whether to attempt to sell the company is close and will likely be announced this fall.
As with Applebee’s and others, turning this well-worn casual ship around is a huge challenge. And unlike Applebee’s, the challenge is magnified by the fact that 88% of Ruby Tuesday’s locations are company owned and operated, a real-estate heavy model that many chains are leaving behind.
How do you differentiate a concept similar to so many, so many that are also struggling to compete? The introduction of the Garden Bar early this year is a nice touch, but as Applebee’s found when it put all its eggs in the wood-fired grill basket, it’s not enough. The well-worn value-based strategy and the new cure-all of carry out and delivery in casual dining will help, but will they be enough?