Ruby Tuesday's decline was several years in the making, becoming even more rapid during the pandemic and prompting speculations from industry insiders about the growing likelihood of a bankruptcy.
Back in April, it was reported that the company had closed about 30% of its 470 locations permanently. Closures continued into the summer, some taking place so abruptly that even the chain's employees had no idea they'd be encountering a shuttered restaurant when they showed up for their morning shifts. (Related: 9 Restaurant Chains That Closed Hundreds of Locations This Summer.)
And now it's official—Ruby Tuesday has declared bankruptcy. The Tennessee-based business had closed down almost 300 restaurants in three years (186 this year alone), and amassed a $43 million debt plus $19 million owed to landlords and vendors, according to Restaurant Business..
However, Ruby Tuesday's CEO said in a statement that the chain isn't planning on saying goodbye to customers just yet. He noted the bankruptcy filing is "an opportunity to reposition the company for long-term stability as we recover from the unprecedented impact of COVID-19," which is a typical plan for chapter 11 bankruptcy protection seekers. The company still operates about 230 restaurants.
Prior to this year, Ruby Tuesday suffered a decline in sales due to a major shift in consumer attention from casual dine-in restaurants to fast food and fast casual options. Then once the pandemic hit, their bottom line was further affected by closures of dine-in businesses. Although the chain's delivery business grew by 450% during this time, the transition away from a dine-in model wasn't as smooth as that of other restaurants with well-established delivery operations.
In recent months, the chain started using its kitchens to host other delivery-only concepts like Nathan's Famous hot dogs. While monetizing excess kitchen space may have been a creative way to generate additional revenue for the company, the biggest question now lies in whether Ruby Tuesday can make a comeback and become relevant for a new generation of customers.
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