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Ruby Tuesday, Inc. Message Board

  • jsmithxx07 jsmithxx07 Oct 21, 2009 10:10 PM Flag

    No Bickering... Just My Opinion

    This board seems to be more of a battlefield than a message board. It would be nice to see some actual analysis. Looking over this company's earnings and call notes, it's not hard to see that this is nothing more than smoke and mirrors. Let's look at some facts.

    - Company has closed close to 10% of it's restaurants the last 2 years. This will continue as their real estate continues to become outdated and sales decrease.

    - Company's average restaurant volumes are disimal. Backed up by personal experience. Go on a Friday night and they are the restaurant not on a wait. Direct reflection of operations.

    - This company has changed identies so many times it doesn't have one anymore. It is in need of a niche or it will continue to die off.

    - The company remodeled it's restaurants, but the real estate they own is old and off the beaten path. I think they forgot that you can't relocate restaurants. The "upscale" restaurants next to the run down truck stop fit right in... sarcasm.

    - Franchise growth is virtually none. Company owned growth is none.

    - Opened for another meal period to try and pad sales. Opening for breakfast is never a good thing... screams desperation.

    - Last and perhaps the worst.... This company is using coupons as their sole marketing plan. The problem with that is that they are still down year over year meaning that they will have to continue to increase coupons every year just to keep pace.

    JMO good luck i'm short at 8.30 looking for a price target in Q1 of < 5.00

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    • Let's take them one at a time:

      - Company has closed close to 10% of it's restaurants the last 2 years. This will continue as their real estate continues to become outdated and sales decrease.

      10% per year will not continue, but they will continue to close underperforming stores. While this will hurt revenue, it will enhance profit, as they will no longer subsidize losses there. RT isn't any different than anyone else, so how does this make them a short? It's good business. You can't hit home runs at every site, amigo.

      - Company's average restaurant volumes are disimal. Backed up by personal experience. Go on a Friday night and they are the restaurant not on a wait. Direct reflection of operations.

      Blanket statement clearly does not apply to every restaurant, so this is worthless.

      - This company has changed identies so many times it doesn't have one anymore. It is in need of a niche or it will continue to die off.

      Who cares? Cash is king.

      - The company remodeled it's restaurants, but the real estate they own is old and off the beaten path. I think they forgot that you can't relocate restaurants. The "upscale" restaurants next to the run down truck stop fit right in... sarcasm.

      Tell me Applebees and Chilis are better located. You can make generalizations everywhere. Some are outdated, but I'll tell you this...they can sell each site for an average $1 to $1.5 million, outdated or not. $1 million on the low end.

      - Franchise growth is virtually none. Company owned growth is none.

      Well, yeah...notice the economy? How is this different than any other restaurant? I defy to to name one that is expanding MATERIALLY.

      - Last and perhaps the worst.... This company is using coupons as their sole marketing plan. The problem with that is that they are still down year over year meaning that they will have to continue to increase coupons every year just to keep pace.

      They used to advertise quite a bit in my market...which is one of the top three in the US. TV will come back as they pay down debt. Debt is first priority.

      These are the bear arguments? LOL. Thanks for repeating the news from 2008. Yet another rear-view investor.

      Here's the only bear view that makes any sense to me...they'll have $200 million come due in debt in 2011/2012. Paying down $20 mill/quarter gets you there somewhat, but that's at minimal capex spending. When they ramp capex up again, that will not be the case. So assume they have to come up with $100 million...where does that come from?

      Could sell 100 locations. That can be very dilutive. Could issue equity...dilutive.

      That's really the only concern I have as a long, but what do I know? I just do this for a living.

      Regards,

      Raven

    • ruby tuesday in morehead city, nc has waiting lines all the time--well managed -well maintain-well runed. why can't all of them be this way. the manager is the key to good business.

    • In my area there has been growth. RT has opened several new restaurants and they are popular. I have not tried brunch so I do not know if it is busy.

      I made a boatload on the run from $1.00 to $8.00 earlier this year. I sold and now buy in before earnings and sell after earnings.

    • I apologize for my part in the battle. Your analysis is entirely qualitative and some numbers around units and real estate value would be welcome. I read that they own nearly 700 parcels and that each was worth around $1M. A respected real estate professional also said that if Applebee’s hadn’t sold many of their parcels for less than they were worth, RT’s real estate would be worth $1.5 each. I would be interested to hear your opinion on that. I agree with almost everything you said except maybe the Sunday brunch. I think it could be a good idea, but going back to your point, it requires another change in identity since the menu never included breakfast. People think of Bob Evans types for brunch, and they do a good business with the after church crowd.

      • 1 Reply to jamison59
      • From the 10Q for Q209 company owned restaurants dropping from 721 to 670 or a (7.1%) decrease. Additionally you can do the math on the 300m in sales across the 670 some restaurants and you will see that sales/week (common restaurant measure) is < $34K. Thats down from $40K 3 years ago(10Q 2007). It continually declines. Factor into that the coupon driven sales and they are very close to a true sub $30K average. Its all available on their investors site. Intersting that they don't have this listed as a risk. Scary.

        Do the math on any competitor(appl,OG,Chili) and you will see the average in the mid to upper 40s.

        Again JMO

 
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