With over 700 locations, and a track record that goes back to 1920, Ruby Tuesday (RT) is a staple in American dining. Recently however casual dining restaurants, including Darden Restaurant's (DRI 0.46%) Olive Garden and Red Lobster, have lost market share to fast-casual chains like Chipotle Mexican Grill (CMG 0.40%), and Noodles & Company (NDLS -7.14%). Ruby Tuesday's first quarter earnings showed steep declines, and investors are anxious to see if this American icon can stop the bleeding.

The company is fast approaching another critical earnings report, investors should watch these three critical factors to see if Ruby Tuesday is turning the corner.

Re-focused efforts paying off?
In its most recent quarter, Ruby Tuesday saw same-restaurant sales plunge a staggering 11% at company-owned locations. CEO J.J. Buettgen was hired last year to usher a turnaround, and his strategy is refocusing the brand. In the last quarter Buettgen told us that Ruby Tuesday had exited its non-core brands like Wok Hay, and was aiming to improve its namesake brand with a new, refocused menu. 

So, clearly, a big question will be how has the refocused approach worked, and are the new menu items paying off? Management shouldn't be shooting for sales growth, or new locations anytime soon. Yet, if we can get a sense that this refocused effort is stabilizing comparable sales, it would be a good sign. 

No more excuses
In Ruby's most recent quarter, CEO Buettgen made the dreaded decision to blame the economy for Ruby Tuesday's woes. This has been a recent tactic of restaurant CEO's ranging from McDonald's, to Olive Garden, when results are bad. 

It was a patently ridiculous statement. As we all know, GDP and consumer spending have been growing, but forget that, restaurant sales are doing particularly well right now. The National Restaurant Association just reported that both restaurant traffic, and same-store sales, recently hit a five month high in North America. These CEO's seem to be viewing the world through a different set of goggles. 

What frustrates me, is that when a CEO mentions this on a call, the analysts usually don't ask any follow up questions. Here's hoping Buettgen doesn't make excuses, but if he does, an analyst should ask: "if the economy stinks, why are comparable-sales rising for the industry as a whole?"

Does Ruby Tuesday have a systemic problem?
There's an interesting shift happening in the restaurant industry right now. Traffic in the fast-casual sector has grown 8% over last year, while some casual chains have suffered.

Even as Ruby Tuesday slumps, the public has gravitated toward Chipotle and Noodles & Company. In its most recent quarter, Chipotle grew net income 15%, and revenue 18%. Even more impressive was same-store sales growth of 6.2%. Noodles & Company beat its first earnings target, and is projected to grow EPS at rates of 30% over the next two years. 

Fast-casual is clearly taking market share, and higher-end dining is actually doing pretty well too. So here's my question: are casual chains like Ruby Tuesday getting stuck in "no-man's land?"

There's evidence to suggest they are. Just look at Darden Restauarants closely. Casual brands like Red Lobster and Olive Garden showed recently comparable sales declines, of 4.5% and 0.6% respectively. Yet, the rest of their brands, including the up-scale Capital Grille, have done very well, prompting investors to push for a casual "spin-off" of Red Lobster.

Is this a systemic problem, or a short-term trend? I'm not sure, but I feel that management should address it on the earnings call. It may be that Ruby Tuesday needs to "attack" a market, either higher end or lower, because the "middle" clearly isn't working.

Accountability is the key to success 
Ruby Tuesday is in the midst of a transformation project of sorts, and investors should try to determine if it's for real. This quarter demands more of your attention and scrutiny than most, given the state of this business.

We need to see if Ruby Tuesday can stop the bleeding.

Watch for these three keys, they'll tell you if Ruby Tuesday's management is "getting it."