Maryville, Tenn. — Ruby Tuesday Inc. has filed for Chapter 11 bankruptcy protection with plans to permanently close 185 restaurants that were shuttered during the COVID-19 pandemic. The company’s 236 open locations will remain operational throughout the reorganization process.
The Maryville, Tenn.-based chain is the latest restaurant group to fall victim to the economic pressures caused by the coronavirus pandemic. California Pizza Kitchen filed for Chapter 11 protection in July citing similar struggles.
“This announcement does not mean ‘Goodbye, Ruby Tuesday’ — this is ‘Hello, to a stronger Ruby Tuesday’,” says CEO Shawn Lederman in a statement Wednesday, playing off the lyrics to the popular “Ruby Tuesday” song recorded by The Rolling Stones, which was released prior to the company’s founding in 1972.
In response to the pandemic, Ruby Tuesday implemented a number of new practices including an expansion of third-party delivery and off-premise services, the introduction of a virtual kitchen initiative and the launch of ‘Ruby’s Pantry,’ an option which allows customers to purchase uncooked food, groceries and other essentials for delivery through the company’s website.
With in-store dining historically representing over 90% of the company’s total sales, these initiatives are expected to play a part in Ruby’s Tuesday’s financial recovery as the country moves through the COVID-19 pandemic. As of Wednesday, the company owed $18.8 million to landlords, utilities, employees, taxing authorities, third-party vendors, insurance premiums and other service providers.
“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,” he continues. “Our restructuring demonstrates a commitment to Ruby Tuesday’s future viability as we work to preserve thousands of team member jobs.”
Earlier this year, the company faced backlash after receiving $10 million in federal loans through the Paycheck Protection Program, billed as pandemic support for struggling small companies, according to reports by NPR.
Ruby Tuesday currently employs 7,300 workers, 7,000 of which were furloughed due to closures caused by the pandemic. The company hopes to invite many of those employees to return to active status as sales levels return.
The Wall Street Journal reports that lenders Goldman Sachs Group Inc. and TCW Group Inc. are expected to be the lead bidders as the restaurant chain seeks a buyer out of bankruptcy.
Ruby Tuesday’s advisory team includes 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.
— Katie Sloan