Ruby Tuesday Inc. cited severe weather for a 10-percent drop in net income and negative same-store sales for the third quarter.
During the quarter, the more than 900-unit company also opened the first branch of its new seafood concept, Marlin & Ray’s, in a converted Ruby Tuesday restaurant in its headquarters city of Maryville, Tenn.
Ruby Tuesday reported Wednesday net income of $16 million, or 25 cents per share for the March 1-ended quarter, compared with earnings of $17.8 million, or 28 cents per share, in the year-ago period.
Revenue in the third quarter rose 3.8 percent to $319 million, which Ruby Tuesday attributed to the acquisition of franchise restaurants. Same-store sales fell 1.2 percent at domestic corporate restaurants and rose 0.4 percent at domestic franchised branches.
The company said severe winter weather in its core markets hurt earnings by 3 cents to 4 cents per share and impacted same-store sales by 1.5 percent to 2 percent.
“While our earnings per share trailed the prior-year results, excluding the winter weather impact which hit us harder than most of our peers since approximately 90 percent of our company-owned restaurants are concentrated in the eastern U.S., we would have been in line with our prior-year results, even after absorbing the investments we have made this year,” Sandy Beall, Ruby Tuesday’s founder, chairman and chief executive officer, said in a statement.
Ruby Tuesday closed seven restaurants and did not open any new branches of its flagship brand in the quarter, but said it did convert two existing restaurants, including the new Marlin & Ray’s on March 1 and its first Truffles in the Atlanta Buckhead region on Dec. 8.
The company acquired the development rights for Truffles and another brand, Jim ‘N Nicks Bar-B-Q, last year, saying it planned to convert some of its underperforming restaurants to those concepts, along with its new Marlin & Ray’s seafood brand.
In its earnings report Wednesday, Ruby Tuesday said it expects to complete four to six conversions this year.
“All of our conversion brands have a unique positioning and are aligned with our overall brand strategies of freshness and quality,” Beall said. “We will continue to evaluate each of the concepts and make decisions based on the ones we believe we can grow with ease that will generate high returns, while preferably leveraging our existing team talent, technology, and purchasing systems.”
Looking forward, Ruby Tuesday said it expects corporate restaurant sales to range from flat to up 1 percent for the year because of the bad winter weather and slower sales in the bar-and-grill segment caused by higher fuel costs.
Franchisees are expected to open six to eight restaurants, including as many as three in international markets.
Ruby Tuesday owns and operates 742 restaurants, while domestic franchisees operate 56 and international franchisees operate 57.
Contact Alan Snel at [email protected].
