Ruby Tuesday 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.”
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.
