An October 18 Associated Press article quoted Ruby Tuesday's (NYSE:RT) chief executive, Samuel E. Beall III, as saying he was "sorry" that the company's stock price is down.
The shares are down more than 40% from their 52-week high. I don't think a simple "sorry" is going to cut it folks.
Beall's apology was made at the recent 2007 Wachovia (NYSE:WB) Consumer Growth Conference. In conjunction with that comment, Beall also apparently said that since May the casual restaurant chain lost at least 5% of its customer base to quick service, fast food and casual dining competitors such as Panera Bread (Nasdaq:PNRA) and Applebee's (Nasdaq:APPB). (To read the full AP story by Lauren Shepherd, see "Ruby Tuesday CEO Apologizes for Results".)
In response to the waning share price and lackluster financial results management at the company said it will cut prices on some of its appetizers and entrees, and offer combo meals for under $10. I wonder if this will really do the trick.
I mean just look at what's going on in casual dining right now. As I pointed out in a recent article, consumers aren't lining up for casual dining the way they used to. (To read my recent take on Ruby Tuesday and casual dining, check out Oh Ruby, How Low Can You Go?)
Competition is heating up, and restaurants have to get creative. For example, Applebee's offers an attractive menu for those watching their waistline; Panera Bread is offering free Wi-Fi to bring people to its locations, and McDonald's (NYSE:MCD) is beefing up its menu with the its Angus Burger and offering extended hours. I just don't know how Ruby is going to compete going forward.
True, the company has spent a lot of money over the last year remodeling its locations to keep its look fresh; however, I think you still have to ask yourself if the new Ruby Tuesday is anything special? There's nothing that inspires me to want to walk through the doors, and no real trademark meal that's going to make me a regular either. (To judge the new look for yourself, check out the Ruby Tuesday Website.)
Bottom Line
Ruby Tuesday's chief executive has apologized for the stock's drop. That's nice, but the bottom line is the company's remodeling and price breaks probably won't help its fortunes rebound anytime soon.
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