By Alex Dixon | April 2017 | Chain Restaurants
After another quarter of declining sales and traffic, Ruby Tuesday is turning to a new president and CEO while focusing on its garden bar offerings in an attempt to turn the brand around.
The company named former Church’s Chicken CEO James F. Hyatt, II, as its president and CEO Thursday, to replace interim president and CEO Lane Cardwell. Cardwell had led the company since James “JJ” Buettgen resigned last September, and the brand shrunk its unit counts while consolidating operations during that time.
Hyatt served as the CEO of Church’s Chicken from 2011 through 2016, where he implemented a strategy to revitalize the brand. Prior to Church’s Chicken, Hyatt was the president and CEO of Cosí.
“With passion and commitment, we plan on determining the right course to move forward and position the company for future success,” Hyatt said in a conference call Thursday. “I've been both a fan and customer of the brand for many years, and I look forward to working with the board, senior management, and team members as would lead the company through its next chapter.”
In Q3, Ruby Tuesday’s revenue dropped nearly 17 percent to $225.7 million, and same-restaurant sales declined 4 percent, compared to a 3.1 percent decrease in Q3 a year ago. During the quarter, Ruby Tuesday closed two company-owned restaurants.
The brand rolled out its new endless garden bar in January as part of its “Fresh Start” initiative, expanding the number of items offered to 58 from 36, and adding eight new house-made dressings. Menu items have been reduced by 30 percent as the brand attempts to improve throughput and remove underutilized options.
“As our biggest brand differentiator, we are confident that our customers are seeing a noticeable difference in our new garden bar offering, which should be a catalyst for greater guest frequency both with our current and target guests,” Cardwell says. “We expect that our Fresh Start initiative should build further momentum and bring greater and more profitable traffic to our restaurants on a go-forward basis.”
About half of Ruby Tuesday customers choose the garden bar when dining, either as an add-on or main course, and Cardwell says that while this is about the same ratio as before the launch, there has been a small shift toward guests choosing it as an add-on.
“[This] benefits us because it's an area that we had been giving away for several years and now for those substituting for a side have a modest charge attached to that,” he says.
Ruby Tuesday also completed 13 remodels for locations in Charlotte, North Carolina, and Jacksonville, Florida, and says it has a seen a mid-single digit lift in same-restaurant sales at these locations. However, the remodeling program remains on hold as the company explores strategic alternatives, including a potential sale or merger.
“We are confident that the key strategies of our Fresh Start initiatives will drive greater guest engagement and frequency as we better position Ruby Tuesday to achieve top-line growth and higher operating profitability,” Cardwell says.