Ruby Tuesday Favors Remodels Over New Units

MARYVILLE, TN-Ruby Tuesday will slow new unit openings in favor of renovating existing restaurants as it continues its rebranding as a higher-quality casual dining chain, executives said at the restaurant company’s first-quarter conference call.

By the end of March, all of the company-owned restaurants will be remodeled to the new look, said Sandy Beall, founder and CEO, with a relaunch to be held in the spring. Some franchises also will incorporate elements of the new look.

“We want to be thought of as the high-quality casual restaurant,” Beall said. “We’ll have a fresh new brand for a fresh new launch.”

The remodels are part of a two-year strategic plan to reposition the brand toward a higher-quality image that also includes revising menus, new advertising, some price cuts and service initiatives. The 50-odd units that have already been remodeled have shown major traffic increases and sales increases of about 2%.

Meanwhile, the chain will slow its expansion, opening 20 to 25 company owned units, down from 65 last year, to avoid “distracting” the company from its focus on improving existing restaurants. In addition, franchisees will open 20 to 25 new units.

During the first quarter, the opened four new Ruby Tuesday restaurants and purchased eleven restaurants from its West Palm Beach, Florida franchisee. Four restaurants were closed during the quarter. Domestic and international franchisees opened three new Ruby Tuesday restaurants during the quarter and closed one.

Ruby Tuesday reported net income of $11.1 million for the quarter, compared to net income of $21.6 million for the same period last year. Total revenue increased 2.4% over the previous year with sales at domestic and international franchise Ruby Tuesday restaurants of $113,371,000 and $117,154,000, respectively. Same-restaurant sales at company-owned Ruby Tuesday restaurants decreased 4.8%, while same-restaurant sales at domestic franchise Ruby Tuesday restaurants decreased 2.9%.

As of September 4, 2007, Ruby Tuesday, Inc. owned and operated 691 restaurants, while domestic and international franchisees (including Hawaii) operated 190 and 54 restaurants, respectively, in 45 states, the District of Columbia, Puerto Rico, and 12 foreign countries.