Ruby Tuesday hasn’t exactly pursued a me-too strategy for the post-Recession, as Restaurant Reality Check noted six months ago. So how’s that contrarian approach working?
Not well, judging from the company’s financial results for the October-through-November period. As you might have heard, Ruby lost $2 million for the quarter, compared with a net income of $4.6 million for the same period of the prior year.
Buying restaurants from franchisees, a 180-degree departure from what most chains are doing today, helped to raise revenues by almost 6 percent. But the gain was far more than offset by debt expenses and a steeper-than-expected decline in unit sales, which came despite new service and value initiatives.
Does that mean the company is scrapping its contrarian views? Well, yes and no.
As we noted here in July, the company’s namesake chain is betting it can win more bargain-hunters by giving customers access to its salad bar without an add-on charge. It’s sticking with that more-is-lots-more approach. In a call with financial analysts, executives spoke cryptically of additional service enhancements that are currently in test at 10% of company-run Ruby units.
They didn’t reveal all the components of the new Surprise & Delight initiative, but did divulge such components as shaking martinis tableside, and having servers grate Parmesan cheese onto patrons’ entrees after they’re served.
But the biggest disclosure was a mention that Ruby plans to follow the herd for a huge savings on routine restaurant upkeep—repair & maintenance, or R&M, in industry parlance. Instead of letting each restaurant handle that function, Ruby is going to centralize control, “which a lot of the QSR chains and some of the other casual dining chains have gone to,” explained CEO Sandy Beall.
Ruby is confident it can deliver millions in savings by consolidating its expenditures for R&M. “It's approximately [a] $40 million spend a year annually, and we believe that through using a consolidated group that we can better monitor our rates and our costs on the actual parts and what have you,” said EVP and operations specialist Kimberly Grant.
“It's basically bulk buying power for the services we're participating with,” added Beall. “It's like a huge co-op, so better pricing.”
Showing posts with label Sandy Beall. Show all posts
Showing posts with label Sandy Beall. Show all posts
Monday, January 9, 2012
Wednesday, July 27, 2011
Sandy Beall's different drummer
Give one of those inaudible dog whistles a blast and see if Sandy Beall cocks an ear. The Ruby Tuesday CEO must be picking up signals other restaurant executives can’t detect. Why else would he be reading the marketplace so differently?
Almost every chain, from McDonald’s to Applebee’s, has cut back its company-run restaurants to free up capital and lower risk. Not Ruby, the operation that Beall founded while he was still in college. In the past year it’s purchased 109 stores from franchisees.
So how’s that working out? From April through June, Ruby’s net income was depressed by a 24.3% drop in franchise revenues, which typically have a profit margin just this side of legal. The offset was a 12.6% increase in revenues.
But Beall’s not budging. “No, no, no,” he told financial analysts during a conference call. “We run company-owned operations. We sure as hell wouldn't have bought them back, if we're going to refranchise them.”
That wasn’t the only time during the call that portfolio managers asked about Ruby’s recent tactics. Several wondered aloud about the direction of the chain’s menu. For direct competitors, the watch words have been value and nostalgia. Witness their reliance on burgers and their slider variants.
What’s new on Ruby’s bill of fare? Trout almondine and spaghetti squash,” which I personally find appealing,” said Jeff Omohundro, the restaurant analyst for Wells Fargo Securities. “But I just wonder if there might be some overreach relative to a broader Ruby Tuesday audience.”
Beall responded that the dishes are a choice for 3 or 4% of guests, and “it didn't hurt us to have it.”
But the analysts didn’t let the point drop. “There was a period in which you had kind of tweaked the business around, put some emphasis against appetizers and your burgers, and it seemed like the business really took off,” noted Morgan Keegan’s Robert Derrington. “Is there anything to be gained as we look back in time about that relative to your dinner house strategy?”
“We do not plan to turn back into a burger joint,” answered Beall.
Some of the moves seemed to have analysts doodling question marks as they listened to Beall and his team. For instance, EVP Kimberly Grant observed that most of Ruby’s recent sales decline has come during weekday dinnertimes.
Didn’t the chain run a Tuesday steak and lobster promotion to counter that trend? Is that tactic still being tried?
“No, we shifted that to being all-weekend promotion,” Beall said in response to the question.
Almost every chain, from McDonald’s to Applebee’s, has cut back its company-run restaurants to free up capital and lower risk. Not Ruby, the operation that Beall founded while he was still in college. In the past year it’s purchased 109 stores from franchisees.
So how’s that working out? From April through June, Ruby’s net income was depressed by a 24.3% drop in franchise revenues, which typically have a profit margin just this side of legal. The offset was a 12.6% increase in revenues.
But Beall’s not budging. “No, no, no,” he told financial analysts during a conference call. “We run company-owned operations. We sure as hell wouldn't have bought them back, if we're going to refranchise them.”
That wasn’t the only time during the call that portfolio managers asked about Ruby’s recent tactics. Several wondered aloud about the direction of the chain’s menu. For direct competitors, the watch words have been value and nostalgia. Witness their reliance on burgers and their slider variants.
What’s new on Ruby’s bill of fare? Trout almondine and spaghetti squash,” which I personally find appealing,” said Jeff Omohundro, the restaurant analyst for Wells Fargo Securities. “But I just wonder if there might be some overreach relative to a broader Ruby Tuesday audience.”
Beall responded that the dishes are a choice for 3 or 4% of guests, and “it didn't hurt us to have it.”
But the analysts didn’t let the point drop. “There was a period in which you had kind of tweaked the business around, put some emphasis against appetizers and your burgers, and it seemed like the business really took off,” noted Morgan Keegan’s Robert Derrington. “Is there anything to be gained as we look back in time about that relative to your dinner house strategy?”
“We do not plan to turn back into a burger joint,” answered Beall.
Some of the moves seemed to have analysts doodling question marks as they listened to Beall and his team. For instance, EVP Kimberly Grant observed that most of Ruby’s recent sales decline has come during weekday dinnertimes.
Didn’t the chain run a Tuesday steak and lobster promotion to counter that trend? Is that tactic still being tried?
“No, we shifted that to being all-weekend promotion,” Beall said in response to the question.
Saturday, October 9, 2010
Ruby Tuesday's new seafood concept
As if Ruby Tuesday didn’t have enough choices on its menu of development options, the casual-dining giant is prepping one more type of restaurant it can use to replace weak namesake stores. The company alerted investors earlier this week that it will open a “seafood health concept” later this year.
Management didn’t divulge the name or many particulars about the venture, saying only that it would be one more option for salvaging underperforming Ruby Tuesday sites. Executives lumped it together with the two replacement concepts that were identified earlier, Jim ‘n Nicks and Truffles.
Like those, they explained, the seafood restaurant could replace a played-out Ruby Tuesday at a cost of under $500,000, and generate annual revenues of more than $1 million.
CEO Sandy Beall explained that 23% of a Ruby Tuesday’s guests, or roughly one in four, already order seafood. “It’ll just be a more seafood-oriented Ruby Tuesday, really,” he said during the conference call with analysts. “And it’s very relevant based on what people are eating and their health and so forth.”
The big benefit, he said, would be differentiation from all the other so-called grill-and-bar concepts, like Chili’s, T.G.I. Friday’s and Applebee’s
An analyst voiced his concern that Ruby Tuesday would be entering a sector where even long-established brands are facing considerable challenges. “We can all think of the biggest fish in the sea who is struggling with difficult trends,” said Robert Derrington, the restaurant analyst for Morgan, Keegan. He didn’t name that brand, Red Lobster, by name.
He noted, however, that Ruby Tuesday had experience with seafood restaurants.
Yes, said Beall. The company ran the L&N Seafood Grill chain when both casual-dining brands were part of Morrison, a large contract-feeding company.
Investors also heard the Ruby’s plan to use several young concepts as its expansion vehicles. It recently secured rights to develop units of Lime Fresh Mexican Grill, a fast-casual chain that currently has six stores open.
“As far as the economics go, it's really very, very similar to Chipotle,” said chief marketing officer Mark Young.
Wok Hay, a fast-casual brand that Ruby’s acquired several years ago and subsequently upgraded into a full-service operation, wasn’t mentioned. Ruby had cited it several months ago as a possible replacement concept for tired Ruby Tuesday outlets. It also cited it at that time as a restaurant that could be built on new sites.
Meanwhile, management noted that the first Jim ‘n Nicks is open and generating sales that should top $1.5 million on an annual basis.
They said Ruby’s first Truffles, an upscale casual format, would open next month.
Management didn’t divulge the name or many particulars about the venture, saying only that it would be one more option for salvaging underperforming Ruby Tuesday sites. Executives lumped it together with the two replacement concepts that were identified earlier, Jim ‘n Nicks and Truffles.
Like those, they explained, the seafood restaurant could replace a played-out Ruby Tuesday at a cost of under $500,000, and generate annual revenues of more than $1 million.
CEO Sandy Beall explained that 23% of a Ruby Tuesday’s guests, or roughly one in four, already order seafood. “It’ll just be a more seafood-oriented Ruby Tuesday, really,” he said during the conference call with analysts. “And it’s very relevant based on what people are eating and their health and so forth.”
The big benefit, he said, would be differentiation from all the other so-called grill-and-bar concepts, like Chili’s, T.G.I. Friday’s and Applebee’s
An analyst voiced his concern that Ruby Tuesday would be entering a sector where even long-established brands are facing considerable challenges. “We can all think of the biggest fish in the sea who is struggling with difficult trends,” said Robert Derrington, the restaurant analyst for Morgan, Keegan. He didn’t name that brand, Red Lobster, by name.
He noted, however, that Ruby Tuesday had experience with seafood restaurants.
Yes, said Beall. The company ran the L&N Seafood Grill chain when both casual-dining brands were part of Morrison, a large contract-feeding company.
Investors also heard the Ruby’s plan to use several young concepts as its expansion vehicles. It recently secured rights to develop units of Lime Fresh Mexican Grill, a fast-casual chain that currently has six stores open.
“As far as the economics go, it's really very, very similar to Chipotle,” said chief marketing officer Mark Young.
Wok Hay, a fast-casual brand that Ruby’s acquired several years ago and subsequently upgraded into a full-service operation, wasn’t mentioned. Ruby had cited it several months ago as a possible replacement concept for tired Ruby Tuesday outlets. It also cited it at that time as a restaurant that could be built on new sites.
Meanwhile, management noted that the first Jim ‘n Nicks is open and generating sales that should top $1.5 million on an annual basis.
They said Ruby’s first Truffles, an upscale casual format, would open next month.
Friday, July 23, 2010
Ruby Tuesday to become a multi-concept co. again
About two years ago, the CEO of Ruby Tuesday was asked during a financial conference call about Wok Hay, a fast-casual Asian concept the full-service chain had purchased as what it later termed an experiment. The executive, Sandy Beall, confessed that he didn’t know what the questioner was talking about; he’d forgotten that Ruby even owned the brand, which apparently never grew beyond two stores. It was all but forgotten since then.
But now the concept’s getting a green light. Beall told investors yesterday that Ruby will turn a unit or two of its namesake restaurants into Wok Hay outlets. A few more Ruby Tuesdays will be recast as branches of Jim ‘N Nick's BBQ or Truffles, two groups that recently signed Ruby as a licensee.
Longer term, "whether we convert 20 or 50 or 300, I don't know," Beall said during yesterday's conference call.
Alabama-based Jim ‘N Nick's appears the more downscale of Ruby’s new partners. The most expensive item on the menu of the 27-unit chain is the ribeye steak, at $16.99, baked potato and salad included. Much of the menu consists of sandwiches, salads and burgers, most priced under $10, and everything is made from scratch.
A "Jim & Nick's will do $2.5 million on a bad day," Beall commented, apparently meaning a bad year.
Truffles appears to be Truffles Cafe, a fairly up-market concept with two locations.
There’s also a single Truffles Grill, a tonier variation, on Hilton Head Island. On the concept’s Facebook page, a fan named Sandy Beall has posted his opinion that it’s the “best on Hilton Head.”
It was not clear from the conference-call transcripts if Ruby Tuesday will develop both Truffles brands.
It’s not the first time that Ruby Tuesday has operated a variety of concepts. It once owned the Tia’s Tex-Mex chain, the brainchild of Chili’s founder Larry Lavine.
It’s not the first time that Ruby Tuesday has operated a variety of concepts. It once owned the Tia’s Tex-Mex chain, the brainchild of Chili’s founder Larry Lavine.
It also came about a pen stroke away from buying Pizzeria Uno at one point.
For awhile, through a merger with Morrison’s, Ruby was part of a veritable restaurant empire, with concepts that ranged from cafeterias to contract feeding operations and buffet places. When the parent spun of Ruby as a separate company, the casual chain took several sister concepts with it, including Mozzarella’s, Silver Spoon Café and L&N Seafood Grill.
Each was subsequently sold off, paring back the company to Ruby once again.
Beall, who co-founded Ruby Tuesday while still in college, didn’t explain why he’s resorting back to multiple concepts, other than to cryptically note, "we don't want to manage young brands."
But he did note that a Ruby Tuesday can be converted to any of the three alternative concepts for about $400,000, and that each reborn store should take in about $1 million more annually than the format it replaced.
But now the concept’s getting a green light. Beall told investors yesterday that Ruby will turn a unit or two of its namesake restaurants into Wok Hay outlets. A few more Ruby Tuesdays will be recast as branches of Jim ‘N Nick's BBQ or Truffles, two groups that recently signed Ruby as a licensee.
Longer term, "whether we convert 20 or 50 or 300, I don't know," Beall said during yesterday's conference call.
Alabama-based Jim ‘N Nick's appears the more downscale of Ruby’s new partners. The most expensive item on the menu of the 27-unit chain is the ribeye steak, at $16.99, baked potato and salad included. Much of the menu consists of sandwiches, salads and burgers, most priced under $10, and everything is made from scratch.
A "Jim & Nick's will do $2.5 million on a bad day," Beall commented, apparently meaning a bad year.
Truffles appears to be Truffles Cafe, a fairly up-market concept with two locations.
There’s also a single Truffles Grill, a tonier variation, on Hilton Head Island. On the concept’s Facebook page, a fan named Sandy Beall has posted his opinion that it’s the “best on Hilton Head.”
It was not clear from the conference-call transcripts if Ruby Tuesday will develop both Truffles brands.
It’s not the first time that Ruby Tuesday has operated a variety of concepts. It once owned the Tia’s Tex-Mex chain, the brainchild of Chili’s founder Larry Lavine.
It’s not the first time that Ruby Tuesday has operated a variety of concepts. It once owned the Tia’s Tex-Mex chain, the brainchild of Chili’s founder Larry Lavine.
It also came about a pen stroke away from buying Pizzeria Uno at one point.
For awhile, through a merger with Morrison’s, Ruby was part of a veritable restaurant empire, with concepts that ranged from cafeterias to contract feeding operations and buffet places. When the parent spun of Ruby as a separate company, the casual chain took several sister concepts with it, including Mozzarella’s, Silver Spoon Café and L&N Seafood Grill.
Each was subsequently sold off, paring back the company to Ruby once again.
Beall, who co-founded Ruby Tuesday while still in college, didn’t explain why he’s resorting back to multiple concepts, other than to cryptically note, "we don't want to manage young brands."
But he did note that a Ruby Tuesday can be converted to any of the three alternative concepts for about $400,000, and that each reborn store should take in about $1 million more annually than the format it replaced.
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