Ruby Tuesday Inc. is continuing its turnaround efforts at the casual-dining brand by emphasizing affordability, value and variety, company executives said Thursday.
After releasing earnings for the March 1-ended third quarter, which showed narrowed losses for the struggling brand, the Maryville, Tenn.-based company said same-store sales were improving, though still down 0.3 percent. It’s a step up from the December-ended second quarter, however, when same-store sales were down 1 percent.
Third-quarter sales trends were positive in December and January but negative in February, which executives said was largely because of inclement winter weather in the Northeast and Mid-Atlantic regions.
“As we've said before repositioning and transforming a brand is a journey,” said J.J. Buettgen, Ruby Tuesday’s CEO, president and chairman, in a call with Wall Street analysts. “It’s not accomplished in a couple of quarters and our results may not be on a straight-line trajectory.”
Guest counts for the third quarter declined 1 percent, Buettgen said. Ruby Tuesday’s check growth also lagged industry benchmarks as the brand “continued to invest in affordability and promotional efforts,” with the goal of making the restaurants useful for more occasions and for families with children, he said.
Among the value messages were Southern-style hand-breaded chicken tenders starting at $7.99 in December and promotions in January and February for “15 entrees under $10.”
“We still are pretty promotional, and we’re doing a fair amount of discounting,” Buettgen said. “But at the same time, we have started to see some early signs of moving on add-ons.”
Todd Burrowes, Ruby Tuesday’s president and chief operations officer, said the company’s strategy was focused on four areas: food, service, atmosphere and communications.
“Regarding product innovation, we launched our new limited-time offer American Rib Festival in our restaurants on March 23, supported by national TV that began airing this week,” Burrowes said. “This promotion leverages one of our guest favorites, our slow-cooked, fork-tender baby-back ribs with three innovative and exciting new flavors Hog Heaven, Ragin' Cajun and Texas Dusted. We’re pleased with the early results we’re seeing on guest satisfaction, preference list and margin improvement.”
He said the company also introduced two shareable desserts to the system: Apple Crumble Flatbread and Chocolate Goblet Sundae. And this month Ruby Tuesday launched a new kid’s menu and is testing a Tuesday night kid’s program in select markets, Burrowes said, “to increase our relevance and appeal amongst family with young kids.”
Burrowes said Ruby Tuesday in the past year has rolled out a new service platform and employee-training program.
During the quarter, for example, the brand launched add-on up-sizing of draft beers and “Living Large” cocktails, he said.
“The goals of these systems are to strengthen the guest experience while leveraging the sales skills of our team,” he said. “We’re seeing an acceleration on the key attribute of server attentiveness as well as marked improvements in add-on sales.”
The company is also doing conceptual work on a remodel program, which it plans to test and begin piloting in the first half of fiscal 2016.
In addition, chief marketing officer John Connelly and his team are working to “reshape our communication model to reach more guests more often and in ways most comfortable for guests and future guests,” Burrowes said.
Ruby Tuesday is in the process of selecting a social media agency, Burrowes said. In the fourth quarter, the company will be “aggressively experimenting with new techniques and tactics to grow our So Connected Hospitality Club, which today has over 2 million active members,” and to better engage those club members after they join, he added.
Jill Golder, Ruby Tuesday’s chief financial officer, said marketing was 4.4 percent of sales in the third quarter “and certainly that has been coming down.”
Buettgen said he foresees marketing expenditures staying in the range of 4 percent to 4.5 percent. “Our goal isn’t to drive it down to a particular number as much as to make sure that we're getting the most return for the efforts that we put in place,” he said, adding that the brand plans to experiment with new initiatives in customer relations and digital media.
In related news, Ruby Tuesday announced that Rhonda Parish had joined the company as chief legal officer. Parish most recently served as the chief legal officer of Einstein Noah Restaurant Group Inc. and earlier held a similar role at Denny’s Corp.
Ruby Tuesday Inc. has 737 Ruby Tuesday restaurants, including 658 company-owned units and 79 franchised locations, in 44 states and 13 countries. It owns 19 Lime Fresh restaurants and franchises seven units of that brand.
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