America's Favorite Restaurant-Bar Chain Is Going Bankrupt
Ruby Tuesday's decline was several years in the making, becoming even more rapid during the pandemic and prompting speculations from industry insiders about the growing likelihood of a bankruptcy.
Back in April, it was reported that the company had closed about 30% of its 470 locations permanently. Closures continued into the summer, some taking place so abruptly that even the chain's employees had no idea they'd be encountering a shuttered restaurant when they showed up for their morning shifts. (Related: 9 Restaurant Chains That Closed Hundreds of Locations This Summer.)
And now it's official—Ruby Tuesday has declared bankruptcy. The Tennessee-based business had closed down almost 300 restaurants in three years (186 this year alone), and amassed a $43 million debt plus $19 million owed to landlords and vendors, according to Restaurant Business..
However, Ruby Tuesday's CEO said in a statement that the chain isn't planning on saying goodbye to customers just yet. He noted the bankruptcy filing is "an opportunity to reposition the company for long-term stability as we recover from the unprecedented impact of COVID-19," which is a typical plan for chapter 11 bankruptcy protection seekers. The company still operates about 230 restaurants.
Prior to this year, Ruby Tuesday suffered a decline in sales due to a major shift in consumer attention from casual dine-in restaurants to fast food and fast casual options. Then once the pandemic hit, their bottom line was further affected by closures of dine-in businesses. Although the chain's delivery business grew by 450% during this time, the transition away from a dine-in model wasn't as smooth as that of other restaurants with well-established delivery operations.
In recent months, the chain started using its kitchens to host other delivery-only concepts like Nathan's Famous hot dogs. While monetizing excess kitchen space may have been a creative way to generate additional revenue for the company, the biggest question now lies in whether Ruby Tuesday can make a comeback and become relevant for a new generation of customers.
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