Maryville, Tenn.-based casual-dining restaurant chain Ruby Tuesday on Wednesday filed for Chapter 11 bankruptcy protection, citing the “unprecedented impact” of the COVID-19 on their business.
The NRD Capital Management-owned chain will be closing 185 stores that had been temporarily shuttered during the pandemic, or almost one third of the restaurant chain’s unit portfolio. The remaining 236 company-owned restaurants will operate as usual while Ruby Tuesday uses the filing to “strengthen its business by reducing liabilities and emerge a stronger organization built for the future.” As of Wednesday, the company also had 7,000 company-wide furloughed employees as a result of the store closures.
“This announcement does not mean ‘Goodbye, Ruby Tuesday,’” Shawn Lederman, Ruby Tuesday’s CEO, 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.”
At the time of the merger with NRD Capital Management in 2017, the company owned 541 stores, and has since “struggled in an increasingly competitive and challenging business environment” including the shift from casual to fast-casual dining. In 2019, in response to these challenges, the company closed underperforming stores and sold or leased back 189 restaurants and accelerated their plan to improve to-go and online ordering.
The onset of the pandemic in March 2020 added another set of challenges for the struggling brand. Like many chains, Ruby Tuesday expanded third-party delivery (which has since grown 450%) and introduced a virtual kitchen as well as a Ruby’s Pantry option for customers to order groceries. Despite these improvements and solutions, Ruby Tuesday’s performance remained pressured.
“Our restructuring demonstrates a commitment to Ruby Tuesday’s future viability as we work to preserve thousands of team member jobs,” Lederman said in a statement. “Our guests can be assured that during the Chapter 11 process, we will continue to deliver welcoming service and provide a safe environment for guests and team members, while serving fresh, signature products that only Ruby Tuesday can offer. With this critical step in our transformation for long-term financial health — this is ‘Hello,’ to a stronger Ruby Tuesday.”
Ruby Tuesday is advised by Pachulski Stang Ziehl & Jones LLP as legal counsel, CR3 Partners, LLC, as financial advisor, FocalPoint Securities, LLC, as investment banker, and Hilco Real Estate, LLC, as lease restructuring advisor.