Can Ruby Tuesday Earnings Match Up Against Darden and Red Robin?

The casual-dining chain reports earnings on Wednesday, and unlike rivals Darden and Red Robin, investors don't see Ruby Tuesday returning to a growth trajectory anytime soon. Find out why here.

Jan 6, 2014 at 11:11PM

Ruby Tuesday (NYSE:RT) will release its quarterly report on Wednesday, and investors are bracing for more potential bad news ahead. Even though the entire casual-dining industry has suffered through tough times in recent years, rivals Darden Restaurants (NYSE:DRI) and Red Robin Gourmet Burgers (NASDAQ:RRGB) have managed to set the stage for near-term future sales growth. By contrast, Ruby Tuesday continues to struggle to right its ship amid troubling trends that show few signs of reversing themselves anytime soon.

Casual-dining chains have generally had to deal with a tough competitive environment in recent years, as a sluggish recovery for Main Street America has left dining customers with less discretionary income to spend eating out. Yet even as Darden and Red Robin have found growth concepts that have succeeded in at least softening the blow of adverse conditions, Ruby Tuesday has had far less luck, and investors have very low expectations for anything other than continued plunges in sales and more net losses. What will it take to turn Ruby Tuesday around? Let's take an early look at what's been happening with Ruby Tuesday over the past quarter and what we're likely to see in its report.

Stats on Ruby Tuesday

Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$271.93 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Ruby Tuesday earnings recover this quarter?
Analysts have remained gloomy in recent months about the prospects for Ruby Tuesday earnings. They've widened their loss estimates for the November quarter by more than $0.15 per share, and they've reversed initial calls for modest profits in fiscal 2014 and 2015 with losses. The stock has kept dropping, with losses of another 16% since early October.

Ruby Tuesday's August-quarter results painted a dire picture of the restaurant chain's financial condition. Revenue dropped 11.7%, with same-store sales declining 8.4% for franchise locations and 11.4% for company-owned restaurants. CEO J.J. Buettgen blamed the economy, yet Darden's same-store sales results didn't fall nearly as much, and Red Robin actually posted solid growth for its comps in the comparable quarter. With the company's cash balance falling below $36 million, Ruby Tuesday's performance has inspired some investors to raise some early concerns about whether liquidity could eventually become a more pressing problem for the restaurant chain.

One cause for Ruby Tuesday's woes has simply been bad timing. Going into the recession, the chain had hoped to appeal to a more upscale audience, but when disposable income dried up among its customers, Ruby Tuesday found itself on the wrong end of the value spectrum. More recently, Ruby Tuesday has reversed course, appealing to value-conscious diners right at the time when many are just starting to feel the positive impacts of the economic expansion. Darden and Red Robin have largely avoided those missteps, finding their niches and serving them consistently throughout the economic cycle.

In November, Ruby Tuesday announced some organizational changes designed to cut costs as part of a broader "brand transformation strategy." Yet with two executives at the restaurant chain having left Ruby Tuesday during the quarter, it's unclear whether management has the internal backing of its key employees to execute a dramatic turnaround strategy.

In the Ruby Tuesday earnings report, watch to see if the company gives any further details on its reported hiring of consultants to explore strategic alternatives, including perhaps going private. At this point, a reasonable going-private offer might be shareholders' best exit strategy from the struggling restaurateur.

Finding growth in all the right places
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

Click here to add Ruby Tuesday to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool owns shares of Darden Restaurants. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers