Ruby Tuesday has committed 4% of its sales to the media buys. "We're going to advertise with the big guys," says Ruby Tuesday Chairman and CEO Sandy Beall.He adds that the chain plans to spend $55 million in 2006 on media buys, which is $25 million to $30 million more than it spent during fiscal 2005. "It's a huge number," he says, "we are spending heavily on advertising."
Beall adds: "By investing 4% we can definitely compete in the marketplace." Specifically, he expects first quarter 2006 same store sales to be down just 4% asthe chain transitions from coupons to television advertising.
During the company's fourth quarter company-owned same-store sales dipped by 8.9%, while franchise stores experienced an even bigger decrease of 11.1% for the same period. "We're very disappointed," Beall says. Nonetheless, "we are more optimistic about the first quarter than we were six to nine months ago."
Beall attributes Ruby Tuesday's poor performance to its focus on coupons. "Couponing is not a good strategy to grow the business… we make no excuses, butin the last months we have finalized programs (to grow the business)," he says. "We are back. Call it a transition or even call it a turnaround."
Moreover, during the fourth quarter, total operating revenue increased 7.2% over the same period last year, primarily because 20 new Ruby Tuesday restaurants opened during the quarter and the company acquired nine Ruby Tuesday restaurants from a franchisee. The company currently owns and operates 579 units in the US and abroad, while franchisees run 188 restaurants in 38 markets.
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