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Heard on the call: Ruby Tuesday Inc.

Company cites promotions, licensing deals as new growth drivers

Ruby Tuesday Inc. said it will look to its younger concepts and licensing deals to spur growth, as well as a continuation of turnaround efforts at its namesake casual-dining chain, including menu promotions.

Ruby Tuesday owns or franchises 650 Ruby Tuesday restaurants and is a licensee of such brands as Lime Fresh Mexican, Wok Hay, Jim ’N Nick’s BBQ and Truffles.

Sandy Beall, the chief executive at Maryville, Tenn.-based Ruby Tuesday, said the company would continue to convert underperforming, corporate-owned Ruby Tuesday locations to other concepts in its stable.

“We’ve spent a significant amount of time with the board discussing low-risk ways to grow our business,” he said. “What we want is low-risk, high-return and [to] maintain a lot of free cash flow. We now have all the pieces and personnel in place and have started to execute on our long-range plan.”

“We’re assessing which brands are best suited for the local market concept,” he said, “[what] can do the most volume at [the] best street corner, versus just trying to have Ruby Tuesdays everywhere.”

Beall addressed investors and analysts on Wednesday, after the company reported improved earnings results for the first quarter, which ended Aug. 31. Ruby Tuesday reported net income of $12.4 million, or 19 cents per share, compared with earnings of $6.1 million, or 11 cents per share, in the same quarter a year ago. Latest-quarter revenue rose 0.7 percent to $302.7 million. Same-store sales rose 1.2 percent.

Beall cited Ruby Tuesday’s new bar program, ‘Sunday Brunch,’ ‘Tuesday Steak and Lobster’ and ‘Gimme a Mini’ promotions as “game changers,” or “innovative and enhanced product offerings” that helped drive results. It was the best sales performance in four years.

During the next three to five years, Beall and the rest of the company’s management team plans to focus on the following initiatives to enhance the Ruby Tuesday brand’s performance:

  • Continue to roll out innovative products and promotions
  • Invest in various labor initiatives to enhance the overall dining experience
  • Offer a $25 high-quality casual-dining experience for $15

“We’re very excited to see that the momentum which began in our brand last year has continued to strengthen,” Beall said. “We continue to strengthen our brand in the high-quality, casual-dining sector from both the food and service standpoint.”

Contact Elissa Elan at [email protected].

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