Ruby Tuesday Inc. is moving “with greater urgency” to reverse slipping sales, and will introduce new streamlined menus and service initiatives in November to boost traffic, executives said Thursday.
“We understand that we need to move with greater urgency to change the trajectory of the business,” said Lane Cardwell, Ruby Tuesday interim president and CEO, in an earnings call with analysts.
Cardwell is working with the Maryville, Tenn.-based casual-dining operator’s senior executive team to apply “our strategic initiatives at a faster pace,” he said.
Cardwell, who assumed the CEO role in September, after the resignation of James J. “JJ” Buettgen, said customer counts fell 3.1 percent and same-store sales declined 2.7 percent in the first quarter ended Aug. 30.
Ruby Tuesday was focusing on its new menu, to be introduced systemwide in November; its refreshed Garden Bar, which has been tested in several markets; and its service, he said.
“These strategies were developed to increase our appeal to our target demographic of women and families,” Cardwell said. “We continue to believe our greatest opportunity to drive significant top-line growth is to re-engage with this group without losing the support of our current customer guest base.”
The new menu was tested this summer in the Illinois, Michigan and Missouri markets, he said. It features entrée salads — some are served inside a warm baguette — as well as new appetizers, desserts and entrees, such as Crispy Chicken Mac and Cheese.
“Our new core menu will be redesigned to better communicate freshness and affordability to our guest, and better reflects our strategy and brand positioning,” Cardwell said, which will highlight “everyday affordability.” He added that the changes would likely produce a “modest reduction in our check average as we move away from price points our guest will not support.”
Cardwell said the recent promotion of a three-course meal for $12.99, which included the Garden Bar and a dessert, was popular with customers. He added that the full-size dessert in the promotion differentiated the offer from competitors. Ruby Tuesday is currently in a six-week promotion of a new $6.99 burger each week, served with endless fries.
“This promotion demonstrates once again that when we communicate relevant value and our messaging to our guests — regardless of the medium — we're able to drive traffic and increase visits frequency,” Cardwell said. “We also recently started testing a new lunch menu in seven restaurants. We reduced the number of items been offered by over 40 percent to improve guest experience, consistency and pace of meal.”
The upcoming menu rollout also reduces the number of dinner items by about 30 percent, to around 95 options, Cardwell said.
“By having fewer items, and simplified recipes and processes, our menu will be easier to execute,” he said. “This results in increasing the accuracy, consistency and throughput of our kitchens, allowing us to better serve our guests.”
Additionally, Ruby Tuesday will continue to remodel older units, he said. Eleven restaurants were remodeled in fiscal 2016, he said, and they resulted in mid- to high-single-digit lifts in sales and increased customer visits. He said the average investment in the remodeled units was about $375,000, including deferred maintenance, for each restaurant.
Ruby Tuesday expects to complete remodels in the Charlotte, N.C., and Jacksonville, Fla., markets by the end of the calendar year, and it anticipates six to eight remodels in the first half of 2017, Cardwell said.
On Thursday, Ruby Tuesday reported a first-quarter loss of $39.7 million, or 66 cents a share, compared with a loss of $4.2 million, or 7 cents a share, the previous year ago. Impairment and other expenses related to 95 restaurant closures in the quarter were $30.2 million, the company said. Revenue in the quarter fell 8.2 percent, to $256.7 million, from the previous year.
The company has 615 Ruby Tuesday restaurants in 42 states, 14 foreign countries, and Guam, with 547 locations company-owned and the remainder franchised.
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