Maryville, TN (RestaurantNews.com) As announced in the Company’s first quarter earnings release, the Company has undertaken a comprehensive review of its cost structure. As a first step in this process, the Company has restructured corporate support services and reduced operating expenses through workforce reduction. The restructuring eliminates 50 positions at the Maryville, TN Restaurant Support Center. These initial changes to the Company’s cost structure are expected to produce a reduction to selling, general and administrative (SG&A) expenses on an annual basis of $6.0 million starting in fiscal 2015. Exclusive of an expected charge of approximately $2.2 million for transition-related costs in second quarter fiscal 2014 in conjunction with this action, the impact to the second-half of the Company’s current fiscal 2014 year is expected to be $2.5 million in reduced SG&A expenses.
In addition to the corporate workforce reductions, the Company is working with a leading enterprise improvement consulting firm to assist with additional cost reduction initiatives focused on cost of goods sold, restaurant operating costs, and other general and administrative costs. An update as to the progress of this initiative will be provided in the Company’s second quarter earnings release in early January.
JJ Buettgen, Chairman, President and CEO, commented, “Restructuring is difficult, and we greatly appreciate the contributions of the teammates that have been affected. These organizational changes were implemented to ensure we are strongly positioned to invest in brand repositioning initiatives, and we are aggressively focused on lowering our cost structure with no dilution to the guest experience. I am confident in our brand transformation strategy, and in the ability of our talented teams in Operations and the Restaurant Support Center to successfully execute our plans.”
About Ruby Tuesday
Ruby Tuesday, Inc. has 778 Company-owned and/or franchise Ruby Tuesday brand restaurants in 45 states, the District of Columbia, 11 foreign countries, and Guam, in addition to 29 Company-owned and/or franchise Lime Fresh brand restaurants in six states, the District of Columbia, and one foreign country. As of September 3, 2013, we owned and operated 703 Ruby Tuesday restaurants and franchised 75 Ruby Tuesday restaurants, comprised of 33 domestic and 42 international restaurants. We also owned and operated 21 Lime Fresh restaurants and franchised eight Lime Fresh restaurants, comprised of six domestic and two international restaurants. Our Company-owned and operated restaurants are concentrated primarily in the Southeast, Northeast, Mid-Atlantic, and Midwest of the United States, which we consider to be our core markets.
Ruby Tuesday, Inc. is traded on the New York Stock Exchange (Symbol: RT).
Special Note Regarding Forward-Looking Information
This press release contains various forward-looking statements, which represent our expectations or beliefs concerning future events, including one or more of the following: future financial performance and restaurant growth (both Company-owned and franchised), future capital expenditures, future borrowings and repayments of debt, availability of financing on terms attractive to the Company, compliance with financial covenants in our debt instruments, payment of dividends, stock and bond repurchases, restaurant acquisitions, and changes in senior management and in the Board of Directors. We caution the reader that a number of important factors and uncertainties could, individually or in the aggregate, cause our actual results to differ materially from those included in the forward-looking statements (such statements include, but are not limited to, statements relating to cost savings that we estimate may result from any programs we implement, our estimates of future capital spending and free cash flow, our targets for annual growth in same-restaurant sales and average annual sales per restaurant, and the benefits of our television marketing), including, without limitation, the following: general economic conditions; changes in promotional, couponing and advertising strategies; changes in our customers’ disposable income; consumer spending trends and habits; increased competition in the restaurant market; laws and regulations affecting labor and employee benefit costs, including further potential increases in state and federally mandated minimum wages, and healthcare reform; customers’ acceptance of changes in menu items; changes in the availability and cost of capital; potential limitations imposed by debt covenants under our revolving credit facility; mall-traffic trends; weather conditions in the regions in which Company-owned and franchised restaurants are operated; costs and availability of food and beverage inventory; our ability to attract and retain qualified managers, franchisees and team members; customers’ acceptance of our development prototypes and remodeled restaurants; impact of adoption of new accounting standards; impact of food-borne illnesses resulting from an outbreak at either one of our restaurant concepts or other competing restaurant concepts; effects of actual or threatened future terrorist attacks in the United States; and significant fluctuations in energy prices.