Here we are another quarter later, and Ruby Tuesday
With fiscal first-quarter results in the books now, perhaps things will start to get better. For the quarter that was, total revenue rose by more than 15% despite same-store sales falling 3.9% at company-owned locations. Management again cited the impact of coupon promotions, which they believe caused roughly a 5%-6% decline in same-store performance.
That sounds like an excuse, doesn't it? But I think there's something to this. First of all, same-store sales improved sequentially through the three months of the quarter. What's more, comp sales for September (which no longer includes those coupon promotions) were actually positive, despite a very poor start caused by the impact of Hurricane Katrina.
Ruby is also starting to see results from its decision to alter the menu toward a more burger-centric approach. Burgers represented about a third of sales in the quarter, up from roughly a quarter or so in the year-ago period. Now, burgers are certainly competitive in their own right (from the likes of Steak 'n Shake
I'll be curious to see what this stock does over the next 12 months. Despite its operational flaws of late, the company still has a pretty good return on equity relative to the industry. The stock also happens to look cheapish according to metrics like P/E or enterprise value-to-EBITDA. Last but not least, the company is looking ahead to a year of easier comparisons, given that year-ago results were nailed by that ill-fated coupon promotion. So while the cash flow picture isn't so impressive to me, I can see how pieces may be falling into place for Ruby Tuesday to sparkle a bit more in the months to come.
For more restaurant Takes made to order:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).