Ruby Tuesday Inc.’s efforts to put the casual back into its casual-dining restaurants, after an attempt to upscale the menu and experience, are beginning to pay off, executives said Tuesday.
The Maryville, Tenn.-based company, which also owns the Lime Fresh Mexican Grill brand, said same-store sales at company-owned units rose 0.4 percent in the June 3-ended fourth quarter and rose about 5 percent at domestic franchised locations.
James “JJ” Buettgen, Ruby Tuesday’s president, chairman and chief executive, said in a post-earnings call with analysts that the company is “encouraged” by the results and acknowledged that the brand repositioning will be a multiyear process.
“Over the five-plus years leading into fiscal 2014, partially in response to the company’s effort to move to a more upscale positioning, our guest pace had narrowed, and guest frequency had declined,” Buettgen said. “These declines were more significant with younger adults and young families, who found the experience to be too dark, too quiet and formal, and the menu lacking new news and relevant affordable choices.”
However, he noted, “Both our same-restaurant sales and our same-restaurant guest count trends improved sequentially through the second, third and fourth quarter as our brand transformation efforts began to take hold.”
Chief among those transformation initiatives has been a menu overhaul. Since August 2013, Ruby Tuesday introduced more than 40 new or reformulated menu items, such as chicken tenders, shrimp and grits and the flatbreads and pretzel burgers.
“Our guest can choose from a wide variety of fun and flavorful new foods at a range of price points that fit their budgets,” Buettgen said.
New items introduced in the fourth quarter included Thai Phoon Shrimp and Asian Spring Roll Appetizers, Hickory Bourbon Glazed Pork Chop, a Turkey BLT and pressed Cuban sandwiches.
In addition, Buettgen told analysts that guest surveys have noted the brand’s changes in atmosphere items like music and lighting and server uniforms that are more casual and colorful.
When it comes to advertising, television commercials now feature new products and variety, Buettgen said, and are aimed at “communicating the strong value and affordability offered at Ruby Tuesday.” For example, in March the brand advertised our flatbreads and Garden Bar combinations starting at less than $10, he explained.
While Buettgen admitted TV viewing patterns were changing with consumers moving to digital, the company was staying with television for the time being.
“We’re going to have to figure that out in general,” he told analysts. “In the short-term, we think there is upside to the changes we’re making to the offering and changes we’ve made to the creative so far.”
In its 2015 outlook, the company said it anticipates same-restaurant sales to be flat to an increase of 2 percent.
The company closed 36 underperforming restaurants in the past six months, which led to a revenue decrease in the fourth quarter. Revenue fell 2.8 percent, to $307.3 million, compared to $316.1 million in the prior-year period. Its net loss narrowed to $414,000, or 1 cent per share, compared to $29.1 million, or 49 cents per share, in the same period a year ago.
The company ended the quarter with 747 Ruby Tuesday restaurants, with 668 of those owned by the company, and 26 Lime Fresh Mexican Grills, 20 of which are company owned.
Contact Ron Ruggless at Ronald.Ruggless@Penton.com
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