Ruby Tuesday Inc. will close about 15 percent of its company-owned restaurants by September, the company said Thursday.
“Ruby Tuesday recently completed a comprehensive review of its corporate-owned restaurant portfolio and determined that it was in the company’s best interest to close approximately 95 underperforming restaurants,” the Maryville, Tenn.-based casual-dining operator said in an earnings release Thursday.
The locations will close by September, Ruby Tuesday said in a statement, and “followed a rigorous unit-level analysis of sales, cash flows and other key performance metrics, as well as site location, market positioning and lease status.”
As of the end of the fourth quarter, Ruby Tuesday had 646 company-owned restaurants in its system of 724 units.
"The decision to close restaurants is a difficult but necessary step as we take aggressive actions to strengthen our organization,” said JJ Buettgen, Ruby Tuesday chairman, president and CEO in a statement.
“Performance at each of these locations, despite the loyalty of valued guests and the efforts of our dedicated employees, was not meeting expectations,” Buettgen said. “Full-time and part-time employees impacted by closures will be offered positions in nearby restaurants where possible.”
Ruby Tuesday said in June that it had sold the remainder of its Lime Fresh Mexican Grill restaurants after closing 11 units of that brand last November.
Last month, an Illinois Ruby Tuesday franchisee closed 11 units in that state.
The company said same-store sales in the fourth quarter ended May 31 declined 3.7 percent, lapping a 1.7-percent decline in the same quarter a year ago.
Fourth-quarter earnings swung to a loss of $27.6 million, or 46 cents a share, from a profit of $4.3 million, or 7 cents a share, in the same period last year. Revenue fell 5.9 percent, to $279.3 million, from $296.8 million the previous year.
“Our fourth quarter was impacted by softness in the casual-dining industry and increased promotional activity by our peers,” Buettgen said. “Given that we expect the macro environment to remain challenging for some time, we are taking the necessary steps to change the trajectory of our business.”
He said the so-called “Fresh Start” initiative would include improvement in food and beverage offerings, dining environment, service and use of media.
“Through our goal of attracting more women and young families, as well as increasing visits from our current Ruby Tuesday guests, we believe we can return to positive same-restaurant sales, expand restaurant level margins and increase operating profit,” Buettgen said.
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