Ruby Tuesday, Inc. (RT)

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Ruby Tuesday, Inc. (RT)

UBS Global Consumer Conference

March 14, 2013 2:20 pm ET

Executives

James J. Buettgen - Chief Executive Officer and President

Michael O. Moore - Chief Financial Officer and Executive Vice President

Analysts

David Palmer - UBS Investment Bank, Research Division

Presentation

David Palmer - UBS Investment Bank, Research Division

David Palmer, UBS Restaurant and Packaged Food analyst. I'm pleased and honored to welcome Ruby Tuesday. J.J. Buettgen, President and CEO; Michael Moore, CFO; and Greg Ashley, who's over here in the front row, VP of Finance and Investor Relations. J.J. was appointed President and CEO of the company November of this last year, following the previously announced retirement of founder Sandy Beall as Chairman, President and CEO. Before joining Ruby Tuesday, J.J. served in several key roles at Darden restaurants, including Senior VP of New Business Development at Darden and as President of the Smokey Bones chain. Michael Moore was hired in April 2012 as the next CFO to replace Marguerite Duffy, who previously announced she would retire from her position as CFO as of June 2012. Previously, Michael has served as the CFO of Pamida stores, Advance Auto Parts, and the Cato Corporation and Bloomingdale's. Welcome and thanks again gentlemen. Over to you, J.J.

James J. Buettgen

Thank you, David. And good afternoon, everybody. I'm glad you could join us today, and we enjoyed spending time with many of you earlier today. David's already introduced our team. I would like to take just a couple of minutes to give you a little bit more sense of my background since I'm new to the organization and many of you don't know much about me. I've been -- had about 24 years of experience in the consumer space, in a number of different industries, starting with packaged goods in General Mills, worked in the entertainment industry for a while for the Walt Disney Company and Hollywood Entertainment. And I've been in the restaurant space in 2 different stints over -- for a combined period of about 14 years. So I've done everything from run advertising and marketing for the Olive Garden to, I was the Head of Marketing for Brinker. I ran a small concept for Brinker, and then I was recruited back to Darden back in 2004, when Joe Lee retired. I was brought in to back fill Clarence Otis, when he was made CEO of the company to run Smokey Bones. Ran that for a couple of years and then headed up new business development for a number of years, and I know new business development means different things at different times for different companies, so in my case, there was a series of major projects I worked on, one of which was to retool and upgrade the insights organization for Darden, to use that as a competitive intelligence hub for new business. Did a lot of work in terms of consumer analysis of acquisition targets and portfolio work, led the development of what Darden refers to as the synergy restaurant, which is essentially a co-brand, small-market expansion vehicle. And then, also, was the person who took Darden international for the first time, signing deals with partners in the Middle East, Mexico and other places in South America. And then over the last year and a half served as the Chief Marketing Officer for Darden, prior to coming to Ruby Tuesday.

So the reason I bring that up is a wealth of experience with perception and perspectives from a lot of different industries, and I've had the chance to see how a number of blue-chip companies attack marketing and strategy, which has given me a good sense of what great looks like, whether that's around strategy and branding, whether that's the processes required to develop great advertising, great positioning or the talent and tools it takes to bring those ideas to life. And those are things that I'm very excited about bringing to Ruby Tuesday.

So as David mentioned, I was hired in November. I've been with the company since December, and really excited about the opportunity for the company and what we have in front of us.

So before we get started with today's presentation, let me remind you of our forward-looking statement, which you can read in our most recently filed 10-Q.

So with that out of the way, I'd like to start by providing an overview of Ruby Tuesday, Inc. The company has consolidated revenue of $1.3 billion, and a market cap of approximately $440 million. As of our most recent quarter end, December, we had 786 Ruby Tuesday restaurants, with 709 of those being company-owned and 77 franchised.

Ruby's has an average restaurant volume of approximately $1.75 million, and the Ruby Tuesday concept represents approximately 98% of our total revenue, and is our primary focus as a management team.

Our Lime Fresh Mexican casual -- Fast Casual concept, which we acquired in April of 2012, had 15 company-owned units and 5 franchised Lime locations, as of our December 2012 quarter end.

As we look at the company today, our #1 priority is to stabilize and grow same restaurant sales of the Ruby Tuesday brand. We currently have approximately a 40% to 45% EBITDA flow-through on our incremental sales, given our tight cost structure, and our annual CapEx needs are approximately $20 million to $25 million a year.

While we do feel we have opportunities to enhance the brand position in ways that do not require a large capital investment, and I'll share some of those with you today. Our Lime Fresh brand is well positioned in the exciting and high-growth fast casual concept segment, and we believe this brand offers an attractive unit growth opportunity over time. The capital investment is low, and the concept has compelling unit economic levels, if we can achieve our targeted sales volume.

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