Ruby Tuesday files for bankruptcy, citing pandemic's 'unprecedented impact'

Ruby Tuesday files for bankruptcy, citing pandemic's 'unprecedented impact'
© Business Wire

American restaurant chain Ruby Tuesday became the latest company on Wednesday to file for Chapter 11 bankruptcy, citing the “unprecedented impact of COVID-19."

The Tennessee-based restaurant chain said it plans to use the bankruptcy as a chance to strengthen its business by reducing debt. It said restaurants will continue to operate “business as usual” through the reorganization process. 

In court filings Wednesday, Ruby Tuesday’s CEO Shawn Lederman said the “complete elimination of in-store dining, which has historically represented over 90% of the Company’s total sales, struck at the heart of the Company’s business model.” 

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He added that government actions such as mandated restaurant and mall closures, shelter-in-place orders, and self-quarantining orders “created a situation whereby the Company’s revenues dropped so substantially that it could no longer sustain its normal operating costs.” 

However, he recognized that the company had been struggling in recent years, particularly with the decline of mall traffic and increase in food delivery options. 

Ruby Tuesday plans to permanently shut down the 185 restaurants it closed due to the pandemic, according to the documents. It still has 236 dining rooms that are currently offering full dining services. The company employed about 7,300 employees, a majority of which it was forced to furlough. 

“This announcement does not mean ‘Goodbye, Ruby Tuesday,’” Lederman said in a statement. “With this critical step in our transformation for long-term financial health – this is ‘Hello’, to a stronger Ruby Tuesday.”

Other chains that have filed for bankruptcy due to the pandemic include Sizzler USA, California Pizza Kitchen and Chuck E. Cheese.