What Can Ruby Tuesday do to Turn Things Around and Restore Brand Loyalty?

What do we make of a new CEO (Jim Hyatt) at Ruby Tuesday and its Board of Directors’ decision to explore strategic alternatives to maximize shareholder value and better position the company for future success?

What’s more, Ruby Tuesday’s third-quarter numbers are extremely forgettable:

Total revenue fell nearly 17 percent, to $225.7 million

Same-restaurant sales decreased 4.0 percent

Net loss was $19.8 million

What can Ruby Tuesday do to turn things around and ignite brand loyalty?

“We are in the midst of a strategic and financial review, but no assurance can be given to its outcome or timing,” former Ruby Tuesday interim CEO Lane Cardwell said during the company’s third-quarter earnings call. “We do not have any further information to share at this time and we will provide an update when appropriate or necessary upon completion of the process.”

Sounds fairly mysterious?

Newly appointed CEO Hyatt most recently held the same post at Church's Chicken, where he implemented a multi-tiered strategy to revitalize the brand, centering on the total guest experience, including a focus on product consistency and innovation, speed of service, facility management, unit profitability and operator engagement, along with rolling out a global reimage standard for the brand, Cardwell said.

“His skill set will be essential to strengthening our great brand as we determine the course forward by evaluating all strategic options,” Cardwell said. “We started the quarter with a focus on values with the continuation of our three-course meal promotion, which began in Q2 before shifting our focus to the launch of our New Garden Bar. We successfully rolled out our enhanced Garden Bar nationwide across Ruby Tuesday locations in mid-January, the biggest change we have made to our brand in the last decade. I applaud our team members with their hard work and dedication to making the execution of this initiative a success. It has been almost three months since our launch and we are receiving positive customer feedback and our marketing efforts are gaining traction.”

Cardwell expects the Fresh Start initiative to “build further momentum and bring greater and more profitable traffic to our restaurants on a go forward basis. With that in mind, I would like to now provide an update on the progress we're making on our New Menu, New Garden Bar and Fresh Experience. As a reminder, these strategies were developed to increase our appeal to our target demographic of women and family. Re-engaging with this group represents our greatest opportunity to drive significant topline growth without losing the support of our current guest space. Our New Menu was launched in mid-November with a redesign showcasing great tasting food along with the affordability and value that Ruby Tuesday offers every day. As part of this, we continued our focus on highlighting value in our promotions.”

Cardwell said the New Garden Bar is Ruby Tuesday’s central strategy to enhance its food offering and reconnect with its target guests: Women and families.

“The garden bar is a key brand differentiator that sets us apart from our competition and has been the main focus of our efforts over the past year,” Cardwell said. “As a reminder, approximately half our guests utilize the Garden Bar when they dine with us, either as an add-on or as a main course. Initial guest feedback validates these improvements, but it will take time to drive greater frequency with our existing guests as well as attract new guests.”

Chirpify CEO Chris Teso told Loyalty360 that he would like to see Ruby Tuesday officials focus on how the brand plans to re-invigorate loyalty among its key customers.

“For example, its Fresh Start initiative could include a Fresh Experience element that brings its loyalty program to all touch points where its customers spend their time–from mobile to social and beyond,” Teso explained. “Notably, three-quarters of American women interact with a brand digitally multiple times a week, most often on their smartphones, making it clear that there is a large opportunity to use social media as a mechanism to turn the smartphone into a key component of the Ruby Tuesday loyalty program.”

Meanwhile, Evan Magliocca, brand marketing manager for Baesman Insights & Marketing, told Loyalty360 that he believes Ruby Tuesday is “clearly hurting” with some staggering losses to revenue and same-restaurant sales.

“Clearly, part of its model is no longer connecting with customers,” Magliocca said. “It’s promising that leadership is taking the long-term approach to review their standing and market share and not making short-term changes that could hurt their current customer base. The new Garden Bar is a step in the right direction, specifically since 50 percent of guests utilize that service. Company officials still need to find a way to drive more traffic to restaurants, though, so they have a long road ahead. I’m not confident the Garden Bar alone will be enough.”

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