Ruby Tuesday’s chairman and chief executive said the chain’s five-year repositioning strategy — which includes the introduction of a new format — has left the once-struggling casual dining operator in much better financial shape with positive same-store sales and good cash flow.
Speaking to attendees at the Wells Fargo Securities conference in New York on Wednesday, Sandy Beall also said the company’s future success lies in providing customers with relevant, high-quality options at value-oriented prices while pursuing investments that offer little to no capital risk.
Beall pointed to the company’s strategy of branching out into the fast-casual segment with the licensing of existing brands like Lime Fresh Mexican earlier this month.
“As we look forward, we’ve really shifted from a defensive strategy to an offensive strategy,” Beall said. “We are continuing to invest heavily in the brand to strengthen Ruby Tuesday and its brand position, and we’re investing in quality still.”
However, he told attendees the company would continue to focus on its core casual-dining concept. He cited Ruby Tuesday’s recent introduction of a high-quality Sunday brunch and the debut of such menu items as lobster and jumbo lump crabmeat. He noted that other changes, including a revamp of the chain’s salad bar to include more fresh vegetables, also have been favorably received.
“We just introduced our highest value menu,” he said. “I think it has the lowest overall price points on it we’ve had. We also have things like our Tuesday night Steak and Lobster [promotion], which is only $13.99. It’s all about quality and value. We’ve done all this while continuing to enhance the guest experience.”
Beall said the chain is attempting to grow its alcohol sales by offering value-priced premium cocktail programs as well as additional bar food menu items.
“We have heavily invested in the last year and a half in premium drink programs at great prices,” he said. “We have $5 cocktail programs, and we only serve quality liquor. We’re trying to sell more food in the bar and more drinks in the dining room.”
Beall said the Maryville, Tenn.-based company is looking to maximize space in existing restaurants and has plans to downsize new locations.
“Our goal is not to build big boxes out there,” he said. “We’re going to be building small, very efficient, 3,000-square-foot stores.
In addition to focusing on its core brand, Beall said Ruby Tuesday is diversifying into the fast-casual segment as part of a licensing agreement it signed with Lime Fresh Mexican. The plan, he said, has low risks and potentially high rewards.
He said the company plans to convert its underperforming Ruby Tuesday units into Lime Fresh Mexican restaurants at a cost of about $400,000 per conversion.
“[My] job is to take [our] capital and invest it in the lowest risk way possible and create the most value for the amount of risk tolerance you want to have,” he said. “In that process, we came up with these conversions. Fast casual — that’s where we think there is great opportunity.”
Lime Fresh is the third foodservice brand Ruby Tuesday has agreed to license this year. Earlier, the company said it would convert some underperforming units to the Jim ‘N Nicks Bar-B-Q brand, a 28-unit chain based in Birmingham, Ala.
Ruby Tuesday also holds development rights to the Hilton Head, S.C.-based Truffles Café, a three-unit upscale-casual concept reportedly owned by Sandy Beall’s brother, Price.
In addition, Ruby Tuesday purchased the now two-unit, fast-casual Wok Hay Fresh Asian Diner concept about three years ago.
Read more: Ruby Tuesday plans to open fast-casual outlets
He did not rule out an acquisition of the Lime Fresh brand in the future, however.
“It’s like I tell the board: ‘Be happy; it’s a great deal for us,’” he said. “It could happen later, but I don’t plan on it. I’m very happy paying 2 percent or 3 percent royalties and making plenty of return and not having the capital risk, not tying up capital that way. It could always be another opportunity, but not in the next three years though.”
Contact Elissa Elan at [email protected].