On Wednesday, casual dining chain Ruby Tuesday filed for Chapter 11 bankruptcy protection after dealing with long-term challenges stemming from the COVID-19 pandemic.
The company is hopeful it can utilize the debt-cutting process to improve its financial status and stay in business. The restaurant chain said in a statement that it had “reached an understanding with its secured lenders to support its restructuring.”
However, CEO Shawn Lederman stated in a court filing the company has permanently closed 185 restaurants. The chains shut their doors amid the national pandemic. 236 company-owned and operated locations remain, as well as an undisclosed number of locations run by 10 franchisee groups.
“We do not anticipate any additional restaurant closures at this time,” said Ruby Tuesday chief marketing officer Jenifer Boyd Harmon. “We remain committed to providing our guests with safe, quality experiences at all our current locations.”
The Decline of Ruby Tuesday
The bankruptcy follows many other sit-down restaurants that have struggled during the pandemic. Public restrictions including social distancing have reduced dine-in seating capacities and scared away many patrons.
However, Ruby Tuesday has faced issues for years with increased competition from fast-food and fast-casual companies. Additionally, reduced traffic to its mall-based locations and an increase in food delivery options hurt them as well, Lederman said.
The chain specializes in ribs, steaks, seafood, chicken, appetizers and a garden bar. The Maryville, TN-based company employs around 7,300 people, including 7,000 who have been temporarily furloughed.
“This announcement does not mean ‘Goodbye, Ruby Tuesday,'” Lederman said in a statement. “Today’s actions will allow us an opportunity to reposition the company for long-term stability as we recover from the unprecedented impact of COVID-19.”
In 1972, Ruby Tuesday was founded in Knoxville, TN near the campus of the University of Tennessee. After years of success and expansion, business gradually declined before plummeting in recent years.
In 2017, with about 541 operating restaurants, the company went private in a sale to private-equity firm NRD Capital Management. It quickly ran into trouble as sales began to drop. Before the outbreak in March, Ruby Tuesday defaulted on its debts in the two quarters before the COVID-19 pandemic.
In recent months, the company made moves to try to avoid bankruptcy, according to a court filing. The moves included Ruby Tuesday renegotiating leases and loan agreements, and slashing corporate costs.
Yet, the company could not adapt quickly enough to the pandemic and the changing landscape of dining. Ruby Tuesday relied on sit-down dining for more than 90% of its sales. Despite moves to expand delivery and takeout, launch “virtual kitchens,” and sell raw food through its website, the restaurant couldn’t make ends meet.
[H/T USA Today]