The encyclopedia · Strategy & Leadership · Financial decision · 2017–2020
Ruby Tuesday closed 185 restaurants and filed Chapter 11 in the same week
A chain of 541 in 2017 became 250 by October 2020: Ruby Tuesday filed Chapter 11 on 7 October, and the 185 restaurants shut since March never reopened.
Ruby Tuesday · 2020-10
What happened
Ruby Tuesday was founded in 1972 in Knoxville, Tennessee, and grew into a national casual-dining chain. NRD Capital took it private in 2017 with about 541 restaurants; by March 2020 there were 420, and the pandemic did the rest.
The chain relied on dine-in for more than 90 percent of sales, had fallen out of compliance with loan covenants before the pandemic, and had sold and leased back the real estate of 189 locations. On 7 October 2020 Ruby Tuesday filed for Chapter 11 with about $43 million of senior debt and $19 million of other liabilities, and said the 185 restaurants shut since March would never reopen.
What remained was 236 company-owned locations and a handful run by franchisees, out of roughly 7,300 employees, 7,000 of them furloughed. The chain began running its kitchens as ghost kitchens for other concepts — a 1972 sit-down brand rebuilt around delivery, which had grown 450 percent during the pandemic.
Why it happened
- Dine-in dependence was the exposure: over 90% of sales sat in rooms that regulation closed.
- The balance sheet was already strained: sale-leasebacks and covenant breaches meant the pandemic hit a chain with no slack.
- Casual dining's squeeze predated the virus: fast-casual competition and mall traffic declines had shrunk the chain by a fifth already.
The lesson
Ruby Tuesday entered the pandemic already breaching its loan covenants; Chapter 11 took 185 stores at once — dine-in dependence is leverage debt against the wrong crisis.
Aftermath
The restructuring kept about 250 restaurants alive under court protection. Ruby Tuesday remains one of casual dining's clearest pandemic-reckoning cases.
Sources
- USA Today, 7 October 2020 — Ruby Tuesday closing 185 restaurants, files Chapter 11 bankruptcy (filed early Wednesday 7 October 2020; permanently closing 185 restaurants shut during pandemic; 236 company-owned locations plus franchisee groups remain; defaulted on debts in two quarters before the pandemic; founded 1972 Knoxville; went private 2017 to NRD Capital with ~541 restaurants; ~7,300 employees with 7,000 furloughed; over 90% of sales dine-in)
- Restaurant Business Online, 7 October 2020 — Ruby Tuesday declares bankruptcy (closed nearly 300 locations in three years; 185 restaurants will not reopen; sold real estate of 189 locations and leased back; ~$43M senior debt plus $19M other liabilities; delivery +450% and takeout nearly doubled during pandemic; 541 locations 2017, 420 March 2020, 250 at filing; out of loan covenant compliance for past two years; ghost kitchens for other concepts)
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