An increase in costs related to restaurant repairs, maintenance and supplies at Ruby Tuesday units led the casual-dining chain to report a net loss of $4.2 million for the first quarter.
Ruby Tuesday increased spending in those “critical areas” to ensure consistency in the customer experience, CEO J.J. Buettgen told investors Thursday. Investments such as its new inventory management system, which was rolled out during Q1, are expected to benefit future restaurant margins, keeping them aligned with guidance for the full fiscal year, he added.
Comp sales were flat during the quarter ended Sept. 1, growing 0.6 percent year over year. Ruby Tuesday’s total revenues fell 0.6 percent, to $279.5 million, largely due to a year-over-year reduction in company-owned restaurants.
The chain has seen “positive results” from targeting families, Buettgen said, noting that Ruby Tuesday has received “strong guest feedback” related to the weekly kids’ night it implemented earlier this year.
Still, guest counts declined 2.9 percent from the year-ago quarter, which he said were offset somewhat by an increase in check averages.
“Our primary goal is to drive profitable and sustainable same-restaurant guest count growth, so while the 2.9 percent decline in traffic is an improvement in traffic trends from our fiscal fourth quarter and a narrowing gap to the industry, we still have work to do,” Buettgen said. “Our four key brand transformation pillars—menu, service, communication and atmosphere—are collectively designed to drive same-restaurant sales and traffic growth.”
Ruby Tuesday said it plans to reduce its number of company-owned units by up to 14 during fiscal 2016.