Last month, Ruby Tuesday (NYSE:RI) lowered its first-quarter earnings outlook, citing a 2.7% drop in same-store sales at company-owned units and the timing of Labor Day weekend (a common complaint among many), figures for which won't be tallied until the second quarter. As a result, the Tennessee-based casual dining chain trimmed forecasts of 22% earnings growth back to 19%.

Yesterday, the company posted first-quarter numbers in line with the reduced outlook, announcing that earnings rose 19% to $0.44 ($29.3 million) from $0.37 the year before on a 7.1% increase in revenues to $267.5 million. Unfortunately, first-quarter weakness is now expected to spill over into the rest of fiscal 2005, and the pessimism had shares tumbling more than 15% lower in morning trading to a new 52-week low.

Earlier guidance projecting a 16%-to-17% jump in full-year earnings on a 1% improvement in same-store sales has been toned down to 12% to 14%, with a 2%-to-3% decline in comps. For the current quarter, same-store sales are expected to drop 4% to 6% (reflecting a hurricane-impacted 9% fall in September), with flat earnings.

Overall, consumer spending patterns have been weak for casual diners, and Ruby Tuesday isn't the only company to report current softness or troubles on the horizon. Late last month, Darden's (NYSE:DRI) Red Lobster chain posted a 6.2% drop in revenues amid a double-digit decline in traffic and shrinking average check prices. Comps for Brinker's (NYSE:EAT) flagship Chili's chain dropped 2.7% in September, and the company has cautiously scaled back its 2005 earnings guidance twice in the past few weeks.

Meanwhile, however, rival Applebee's (NASDAQ:APPB) has issued an optimistic long-term outlook, calling for earnings growth in the mid-teens and annual same-store sales improvements of 3% to 4% over the next three to five years. Ambitious expansion is also in the works, with the number of restaurants expected to double to 3,000. Ruby Tuesday, on the other hand, is anticipating a more modest 55 to 60 company-owned restaurants to open this year, along with another 35 to 40 franchise-owned units.

Ruby Tuesday is in the midst of a marketing shift away from promotional coupons -- which drove $6 million in redemptions during last year's second quarter -- and toward more traditional media/television advertising. Thus far, the transition seems to have made little headway but may have a greater impact after operating conditions go back to being more favorable.

Nevertheless, the company achieved record revenues and earnings last year of $1 billion and $1.64 per share, respectively, and has consistently grown earnings in the 20% range with only marginal same-store sales gains. Furthermore, it maintains operating margins that are among the highest in the industry and trades at a reasonable PEG ratio of only 0.76. If management can become less reliant on expansion and generate more growth out of the existing restaurant base, few investors may be willing to say goodbye to Ruby Tuesday.

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Fool contributor Nathan Slaughter is not a huge Rolling Stones fan, although he is fond of that catchy Ruby Tuesday song. He owns none of the companies mentioned.