Ruby Tuesday has filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the District of Delaware. The casual dining chain cited the impacts of the COVID-19 pandemic.
In a statement, the company said it had reached an understanding with secured lenders to support its restructuring.
“This announcement does not mean ‘Goodbye, Ruby Tuesday,'” chief executive officer Shawn Lederman said. “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. With this critical step in our transformation for long-term financial health – this is ‘Hello’, to a stronger Ruby Tuesday.”
In October 2017, the restaurant chain was sold for $2.40 a share, or $146 million, to a fund managed by private equity firm NRD Capital. It closed at least 118 stores between 2017 and 2019. In 2018, its sales fell 13% to $721 million, according to the research firm Technomic.
In recent months it has negotiated leases and loan agreements while reducing costs. Over the summer, it stopped paying pensions for some employees. It reportedly defaulted on its debts in the two quarters before the COVID-19-related restaurant closures began in March. It moved to expand delivery and take-out options and launch virtual kitchens, but sit-down dining accounted for more than 90% of its sales.
In its court filing, Lederman said the company was permanently closing 185 restaurants that had been shut down during the pandemic and 7,000 of its 7,300 employees have been furloughed. It listed both assets and liabilities in the range of $100 million to $500 million. With the closures, it will have 236 company-owned and operated locations, as well as an undisclosed number of locations run by 10 franchisee groups.
Raymond Boyd/Getty Images