Bankrupt - Ruby Tuesday

one claims it's the company's only chance for [Music] survival Atari has filed for chapter 11 bankruptcy protection 31-year-old pwa presents the difference is filing for chapter 11 bankruptcy [Music] protection what's up guys my name is Jake and welcome to the 21st episode of bankrupt most casual chain restaurants in America have been on their way out for a while now while some have seen a slight Resurgence lately there have been many others that have collapsed in spectacular ways almost completely dissolved from most people's potential restaurant options Ruby Tuesday is one of those brands that saw Monumental rise in the 80s '90s and early 2000s staking a claim literally around the world with over 930 locations but in just a little over a decade they would dwindle down to just 200 locations following a devastating Fall From Grace so today let's take a deeper look into what happened to this once massive restaurant chain how they lost so many customers and why they ultimately declared bankruptcy this is Ruby Tuesday this episode is sponsored by nebula get a monthly annual or a lifetime membership by clicking the link in the description below it All Began in 1972 with a man named Samuel Bell II Sandy was 22 at the time and was helping a friend manage a group of Pizza Hut franchises which they had owned Sandy was essentially acting as his apprentice and that business friend ultimately passed away suddenly but literally on his deathbed he decided to leave Sandy with $10,000 telling him to start his very own restaurant Sandy took that money and along with four other friends and some additional investment he opened Ruby Tuesday along Cumberland Avenue right next to his university UN in Knoxville Tennessee he named his restaurant after the Rolling Stones iconic song by the same name and the interior sort of had a rustic old charm feeling with bold artwork mixed in it proved to be quite popular though especially with younger adults and business quickly consumed Sand's time he dropped out of college and focused solely on the Ruby Tuesday brand acting as their chief executive with cash coming in from their first location they quickly moved on to another it turns out that the decor being used in these restaurants was popular with their customers and that was great for them because it was all very cheap that meant opening new locations wouldn't be such a financial commitment and with the growing success of the chain Sandy would focus on opening more and more the brand was growing quickly garnering the interests of big investors even the former governor of Tennessee Lamar Alexander holding a 177% stake in the business before selling it off prior to assuming office locations continued to pop up across Tennessee through the 1970s with some even opening up in malls of very New Concept for the time they had also introduced the salad bar a very popular differentiation to others by 1982 the company had 15 locations each averaging around $1 million in annual sales or around $3.1 million Today Sandy was still eager for more expansion though and while all of these mall locations and some of their existing leases were relatively cheap to build he knew that in order to get to the next level serious Capital would need to be injected into the company to fuel this ambition so Sandy began exploring the option of a sale and he actually found a buyer that being Morris and Inc they were a company already experienced in the food and beverage business and they acquired Ruby Tuesday for $15 million or close to $50 million Today Sandy would continue to oversee the company's interest though being appointed to a highlevel position within Morrison essentially a role that would Overlook the entire brand as well as the creation of others but expansion for Ruby Tuesday was still key and they first started with the opening of a large restaurant in the newly renovated l&n station which was finished just in time for the 1982 World's Fair in Knoxville Sandy made sure that authentic tiffany lamps and handmade stained glass were installed at this location definitively making it the most premium Ruby Tuesday in the chain in just 3 years the company would double the amount of locations already these restaurants were accounting for a massive percentage of Morrison's annual revenue bolstering the parent company's bottom line Sandy was well-liked within this new parent company and quickly raised through the ranks becoming the president and Chief Operating Officer by 1985 meanwhile Ruby Tuesday was accelerating in growth opening new locations across America these restaurants were a hit too with customers and journalists praising their extensive menu elegant decorations unlimited salad bar and fair prices by the end of the 1980s Ruby Tuesday had more than 125 locations since the restaurant vision of Morrison was accounting for more than half of their overall profit the company was renamed to Morrison restaurants Inc in the early 990s though by 1986 shareholders and the board agreed to dissolve Morrison and split off its core businesses into separate companies Ruby Tuesday being one of them Sandy decided to split away with his company now becoming the CEO of Ruby Tuesday Inc and things were looking very good for the brand that year saw over 300 locations now open AC across the United States and a licensing deal was Inked to bring the brand overseas to the asia-pacific region the first International Ruby Tuesday opened in Hong Kong despite some increased competition the company was becoming a Cornerstone in American casual dining and the brand was generating hundreds of millions of dollars each quarter in 1997 they set up a new division to oversee franchise growth outside of the United States they also for the first time allowed private entities to start their own franchise domestically this this was a big departure from their strategy of all locations being corporately owned this was going to be a way to accelerate growth and to Executives that was the way they would win the heating up restaurant Wars in America they ended 1997 with 655 million in Revenue making a $25 million profit this new era of franchise growth supercharged the number of Ruby Tuesday restaurants and by the early 2000s the company was now up to 575 locations making it the seventh largest casual dining chain in America they were seeing incredible year-over-year growth fueled by the brand new location springing up by 2004 the company had reached an incredible Milestone crossing the $1 billion Mark in sales uniquely with the company's founder and CEO still at the helm it was an impressive 30-year climb to this height and there was still no sign of slowing down growth was happening in new international markets as well with Ruby Tuesday locations opening up in countries like Greece Chile Iceland India Mexico Honduras and a few others by 2007 between franchise corporate owned and international restaurants the chain had over 930 restaurants with over 40,000 staff this was an enormous company with a huge brand presence especially across the us but then again so were other brands like Applebee's TGI Fridays and cracker barel they also had enormous growth over the last few decades and economists were noting that Ruby Tuesday wasn't always at the top of consumers Minds the turn in the economy brought on by the recession also wasn't helping at this point and sales year-over-year growth and net income were all starting this Slide the chain was also embarking on a massive rebranding campaign changing their logo and investing in a new in store look according to their CEO Sandy they would be switching to interiors that are warmer and welcoming with Decor that is clean and uncluttered it was quite the departure from the original look and one that would modernize the entire chain each restaurant would see a $100,000 investment and this new interior look would be first showcased in their flagship store in Time Square despite this new appearance however things weren't changing for the better financially the company acknowledged that they may have hit the ceiling for growth as they potentially expanded Beyond consumer demand locations were beginning to close by this point and the financial losses kept mounting really the company was in pretty good condition through the early 2000s with impressive earnings and minimal long-term debt but the company was engaging in stock buyback programs and along with other liabilities like all those store Renovations within just a few years the company added another $300 million to their longterm debt obligations their stock was also at its lowest point since the early 1980s meanwhile Ruby Tuesday was embarking on a pretty large marketing campaign to further signal the sign of change honestly there was a pretty good one where they created a a viral marketing campaign where they accidentally blew up a different restaurant than their own to show how much they've changed but then they started airing some commercials of a guy just destroying the iconic tiffany lamps that the brand was identified with and all of that just honed in on their new Direction this was a big departure and it did alienate some of their longtime customers to go along with the new aesthetic changes they also raised some of their prices to reflect this new upscale Vibe and this likely lost a good number of customers regardless in the immediate term finances were improving and by 2012 longtime founder and CEO Sandy Bell had stepped down from his position the brand was now positioning itself more towards a refined and Polished casual experience that would feature better quality food in fact by 2013 they rolled out sweeping changes to their menu revamping many items and introducing new sandwich ideas like pretzel buttons and they pushed this pretty hard making the new Ruby Tuesday sound like a special night out and a place you'll actually want to spend your time in reality consumers weren't really responding to these changes like they'd hoped and the company continued to see a drop in the number of customers and inore spending it turns out that 2011 would be the last time the company would turn a profit and every subsequent fiscal year Ruby Tuesday would post heavy losses 2017 not only saw their most significant loss yet at $17 million but they would now be down to 605 restaurants and had dropped below the $1 billion amican sales from the public perspective they decided to go scorched Earth with the most annoying commercials but the financial pressure was building and after announcing they would be closing 133% of their restaurants their CEO had stepped down after only 4 years in the rle as sales continued to Tumble the company publicly announced their intention which interestingly was the possibility of putting the company up for sale and they got exactly that as in October of 2017 nrd Capital Management announced the $146 million acquisition of the Ruby Tuesday company that sale price was based on just $240 a share which is quite the fall from the $33 a share it used to ride at back in 2004 in fact if the company was sold then at the equivalent valuation the deal would have been close to $2 billion in total value this was seen as a good thing though as taking the company private under the wing of a well-funded private Equity Group was seen as the only way it could survive stores continued to close through 2019 and as 2020 rolled in along with the pandemic as you probably guessed the company was not in a position to handle that well with all of their restaurants closed across the country the brand was presumably hemorrhaging money and even when everything opened back up in store dining was likely far lower than it used to be to try and offset some of those losses some of the restaurants started up ghost kitchens under the name pasta Americano among others things were getting bad and in September of 2020 Business Insider reported that the company told Banks to stop paying over a 100 retirees pensions it would be just a few weeks later on October 7th when the company officially declared chapter 11 bankruptcy with debts ranging from 100 to $500 million while in bankruptcy the company began its major restructuring with the goal to find a way to turn the dying restaurant chain into a business that has any chance of generating positive cas cash flow they would try and achieve this by cutting down enormously closing over 150 locations and laying off thousands of employees some of those store closures were done with literally no notice to their employees which the company has a history of doing like this location in 2019 staff got an email that they had lost their job a day before the location closed and despite employees who had been with the company for over 20 years they were given just $169 in Severance r rby Tuesday ultimately emerged from their bankruptcy in early 2021 now with just a little over 200 locations left the actual number of restaurants isn't really public and it's hard to narrow down the exact number between the franchise stores both domestic and international as well as the corporately owned ones but regardless it's a massive fall from the over 900 locations just a little over a decade ago post bankruptcy the reach Ruby Tuesday has in the marketplace has declined drastically despite still having over 200 locations their social media platforms are ghost towns and any recent news on the brand is almost non-existent it's hard to get a good idea on how the company is doing since it's behind the cover of a private management firm so we don't know how many locations are left and how the brand is doing financially but there's a good chance that restaurants continue to close and money is still going out the door at least faster than it's coming in and while this massive decline may have seen sudden and uncalled for I think the market was always trending that way their Mall locations for example made up a decent portion of their entire portfolio they were obviously going to feel the decline of shoers it's a fact on how retail has changed in America and it's something that we've talked about many times it seems like company leadership didn't know what the path forward looked like and after their founder Sandy had left the company was experimenting with changes that just didn't work from blandl looking restaurants to unappealing new menu items and really annoying marketing there just wasn't a big draw to their locations Ruby Tuesday was not at the top of most potential customers minds and their brand perception only got worse over time following the recession in 2008 people were a lot more conscious about how they spend their money and the company never really recovered from that as a new health conscious generation began eating out they were more interested in higher quality food at better convenience places like Chipotle or Panera Bread just offer better quality food in a better atmosphere with better convenience people don't want or have time to sit down at a bland corporate chain restaurant and wait for very mediocre food that was made from lowquality ingredients even if it is cheaper than most Alternatives but even those economics are a bit questionable like say you want ribs and you're in Jacksonville Florida you can get a half rack of ribs at Ruby Tuesday for $19 they'll probably be okay both in quality and in size or you can go to any of the Fantastic barbecue places in town like the bearded Pig which has some of the best barbecue I've ever had and has a half rack of ribs for $20 I think the comparisons continue on and on like you can find burgers that are probably better for $13 I don't think the famous salad bar is enough to attract new customers and after years of negatively received changes even the longtime customers are ditching the brand I mean really apart from the salad bar what differentiates Ruby Tuesday well since I was making this video I wanted to try it out for myself and see if I could answer that question so I made the trip out to the only Ruby Tuesday left left in Canada this location was the first and only to open in Canada back in 2002 I for some reason thought it would be a good idea to get the New Orleans Seafood dish and Emmy got the top sirloin both of these dishes were just okay emy's steak was cooked well but the meat was very chewy and my fish tasted pretty gross also like one or two of the pieces of my broccoli tasted like soap for some reason it didn't help that in the end it came to $73 Canadian before tip now to be fair this is likely because it's in niagar Falls and adjusted for the exchange rate it looks like it's about 24% more expensive than a regular Ruby Tuesday though this was a weird restaurant that looked like it hadn't been updated since the 2007 Reaper it even says on their menu that there are nearly 500 locations across America which just hilariously is not the case anymore it's also below a travel lodge and when you walk down the corridor to the bathroom you enter a new plane of existence it's a really weird limal space that will eventually spit you out into to the entrance of a carnival maze so I came out with not only a stomach ache but no reason why I would ever want to go back so it's not a surprise to me that chain restaurants like this are dying they feel soulless and lowquality like relics from another time but the Ruby Tuesday of the past did have a bit of a soul to it the unique theming and atmosphere really was a differentiation from other restaurants of the time it reminds me a lot of how the Old Spaghetti Factory is themed today but Ruby Tuesday in the end was more interested in capturing as many people as possible and growing as large as they possibly could they later wanted to chase a market that they would never attract thinking they could turn their brand and restaurants into an upscale dining establishment and turn all of their locations into rather generic restaurants that look like every other chain it is impressive to see the humble beginnings literally off another person's deathbed and it's great that Sandy Bell built such a popular brand but it's transition into the modern restaurant space hasn't been graceful and after poor decisions and a lack of innovating it's now a shell of its former self and one that ultimately declared bankruptcy if you want to see videos like this a few days early and AD free well I should let you know that you can do that over on nebula nebula is a Creator made platform where you can find highquality original shows from your favorite online creators one which I really love is real life lore's modern conflicts it's a show that thoroughly and thoughtfully breaks down how and why modern conflicts start it's been very helpful for me to better inform myself on the world I truly love this show and it's something you won't be able to find anywhere but nebula in addition to all of this there's nebula classes a great place to learn directly from your favorite creators so right now and for a limited time nebula is offering lifetime memberships for just $300 that's all the great content you can find on nebula for as long as you and the the platform exist and for a limited time through the holidays you can even gift a lifetime membership but of course if that's not for you you can always just get an annual subscription which is 40% off the normal price if you click my special link in the description below anyway guys my name is Jake and thank you very much for [Music] watching [Music] a

Channel: Bright Sun Films

Views: 664,500

Keywords: ruby tuesdays, ruby tuesday, bankruptcy, rolling stones, rolling stones ruby tuesday song, vintage ruby tuesday, histroy, histroy of ruby tuesday, ruby tuesday restaurant, TGIF Fridays, Applebees, abandoned restaurant, bankrupt chain, bankrupt company, failure, what happened, creepy, bankrupt store, bright sun films, jake williams, 2023, 2024, story of bankrupt, shoneys, chain restaurant, bad food, HD, clean, family friendly

Id: VibGtsOJp2w

Length: 19min 50sec (1190 seconds)

Published: Fri Dec 01 2023