Ruby Tuesday Followup

In April 2008 I posed the question, Is Ruby Tuesday solving the right problem?. At that time Ruby Tuesday announced a $50 million restaurant and brand makeover. I did a simple estimate based on Ruby Tuesday’s own goal of increasing cash flow by 3% and did not include the economic problems. The quick analysis showed the investment to be net negative.

The fiscal second quarter results announced last week point to the restaurant’s woes stemming from the economic crisis. Ruby Tuesday suffered more than the restaurant groups due to its high makeover expense that did not payoff and due to fall in traffic to malls where many of its restaurants are located.¬† The WSJ reports,

While most large restaurant chains are struggling, Ruby Tuesday has had a particularly difficult time. Since 2007, the company has invested heavily in a brand overhaul to make its food and atmosphere more contemporary, but the effort hasn’t reversed the slide in same-store sales. During the past year, its shares have fallen 82%.

The answer to the original question is an absolute No.

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