Brand transformation is well under way for Ruby Tuesday, Inc. Menu innovation and a more efficient marketing strategy led to improved trends during the casual-dining chain’s third quarter.
“We have made solid progress in a number of areas over the past eight months, and this is reflected in our improved same-restaurant sales and guest count trends,” said James J. Buettgen, chairman, president and chief executive officer, during an April 9 call with analysts. “Transforming our menu was the initial focus of our brand transformation strategy, and it is an area that we have attacked aggressively. We remain intently focused on reengineering our core menu, continuing to add innovative new products, simplifying recipes and procedures, while ensuring we have meaningful variety and strong value across a wide range of price points.”
In February, Ruby Tuesday launched three new flatbread appetizers, including black and blue steak, shrimp po’boy, and six-cheese and tomato sauce varieties. The chain also added two entrees to its core menu: the Low Country Shrimp and Grits, with jumbo shrimp and Andouille sausage, bacon, mushrooms and peppers over a six-cheese grits blend in Parmesan cream sauce; and Baked Ravioli, featuring cheese-stuffed ravioli in a light cream sauce with baby spinach and a crunchy cheese crust. The company also has simplified its recipes and procedures to improve operational execution.
“Prior to August, when we rolled out our pretzel burgers and flatbreads, it had been a number of years since Ruby Tuesday had had a meaningful amount of new product news,” Mr. Buettgen said. “And we have done a lot of work, both conceptually as well as from a recipe development perspective, of coming up with concepts and menu items that were inherently appealing to consumers, and scored high on special visit intent.”
To support the roll-out of new menu items, Ruby Tuesday also developed a more effective promotional strategy. In January, the company launched a 20 Meals Under $10 campaign, which showcased Ruby Tuesday’s value offerings, including burgers, tacos, flatbreads, new Southern-style chicken tenders and the salad bar.
“This promotion was popular with our guests and demonstrates the depth of affordable variety in our menu, with menu items to suit the appetites of guests looking for something indulgent to those that are more health-conscious,” Mr. Buettgen said.
Cost savings initiatives during the quarter included a pilot of a guest count and labor forecaster, designed to improve efficiencies during non-peak hours and increase server interaction with customers. The tool, combined with a new food waste management system, is expected to help the chain manage labor and cost of sales.
Still, Ruby Tuesday said it has a long road ahead. During the quarter ended March 4, the company posted a net loss of $7.3 million, which compared with net income of $2.2 million in the prior-year period. Total revenue for the quarter was $295.6 million, a decrease of $11.8 million from the prior year. The declines were due to a reduction of 30 company-owned restaurants since the third quarter of the prior year, as well as a 1.9% decline in same-restaurant sales, unfavorably affected by weather.
However, guest count and net check trends improved from the second quarter, driven by a favorable menu mix and the implementation of tier pricing in November. Sales and traffic showed sequential monthly improvement in the third quarter, the company said.
“We are pleased with our progress this quarter, but we realize we still have a lot of work to do,” Mr. Buettgen said. “We look forward to building our momentum, and as we close the final quarter of fiscal year 2014.”
