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Ruby Tuesday, Inc. (NYSE:RT)

F3Q09 Earnings Call

April 7, 2009 4:30 pm ET

Executives

Steve Rockwell - Vice President, Finance

Samuel E. Beall - Chairman of the Board, President and Chief Executive Officer

Marguerite N. Duffy - Chief Financial Officer and Senior Vice President

Mark Young - Senior Vice President, Marketing

Kimberly M. Grant - Executive Vice President, Operations

Analysts

Jeff Omohundro - Wachovia Capital Markets

Brad Ludington - KeyBanc Capital Markets

Joseph Buckley - BAS-ML

Karen Holthouse - Credit Suisse

Bryan Elliott - Raymond James

Tom Forte - Telsey Advisory Group

Howard Penny - Research Edge

Operator

Greetings and welcome to the Ruby Tuesday, Inc. third quarter earnings call. (Operator Instructions)

It is now my pleasure to introduce your host, Steve Rockwell, VP of Finance for Ruby Tuesday. Thank you. You may begin.

Steve Rockwell

Thank you, [Joe], and thanks to all of you for joining us this evening for our third quarter earnings call. With me today are Sandy Beall, Ruby Tuesday Chairman and CEO, Margie Duffy, Chief Financial Officer, Mark Young, our Senior VP of marketing, and Kimberly Grant, our Executive VP of Operations.

I'd like to remind you that there are likely to be forward-looking statements in our comments and I refer you to the note regarding forward-looking information in our press release and most recently filed Form 10-Q. We plan to release fourth quarter fiscal '09 earnings in early July; our third quarter earnings were released today after the market closed. A copy of our press release can be found on the Investor Relations section of our website at RubyTuesday.com, and it is also available on Business Wire, First Call and other wire services.

Our format today includes an overview of our third quarter fiscal 2009 financial results, our updated fiscal 2009 outlook, and a review of our plans and strategies. At the conclusion of our prepared remarks we will open the lines up for questions.

I'll now turn the call over to Sandy.

Samuel E. Beall

Thank you, Steve, and thanks to all of you all for listening in this afternoon.

The decisive actions that we've undertaken this fiscal year are really beginning to gain traction. We are encouraged by our third quarter results and we experienced excellent progress in several key areas. Our same-store sales trends improved and are now in line with [Nav Track]. Our pre-tax profit, while down on a GAAP basis, increased for the first time in two years when we back out closures and impairments and nonrecurring items.

We paid down nearly $40 million of debt this quarter, bringing the year-to-date total to $80 million. Debt-to-earnings before interest, taxes, depreciation, amortization and rent - EBITDAR - one of our key bank ratios, probably the most important one, declined quite a bit. We were in compliance with our debt covenants despite a steep stepdown in the maximum allowable debt-to-EBITDAR ratio. And we continue to operate our restaurants at high levels of guest satisfaction.

While the near-term economic environment is expected to remain under pressure, we are doing everything we can to finish our fiscal year with strength and carry the momentum we gained in the third quarter over to our next fiscal year. Third quarter results began to benefit from many of the actions we have taken to reposition the brand, revitalize sales and improve cash flow. Specifically, we have significantly increased the quality of food, service, and the look and feel of our restaurants. We evolved our marketing to a more entrepreneurial focus and over the last 18 months we have identified cost reductions of $60 to $85 million annualized, with $45 to $50 million in the last two quarters alone.

I will provide an overview of the key achievements in the quarter, specifically our same restaurant sales trends, debt paydown and position relative to our bank covenants. Margie will give you more detail on the operating results for the quarter, and then Mark Young will give you a heads up on our marketing area and Kimberly will review some of the programs that we have in place to continue our momentum.

We experienced meaningful improvement in same-store sales trends. You saw that. Same restaurant sales for the company were down 6.8% compared to a 10.8% rate of decline in the first and second quarters, but on a monthly basis we just improved every quarter. I think we did a wonderful job there - 9% in December, 5.9% in January, and down to 5.1% decline in February. We attribute the slower rate of decline primarily to the fact that guests are responding to our sales building programs, our market-by-market approach that last quarter included a combination of TV, Internet, print, menu and community based value promotions. Same restaurant sales for our domestic franchisees were only down 5.1% for the quarter.

We're also encouraged that our gap to [NAP] - [NAP] gap - narrowed considerably during the quarter. For the quarter as a whole, our change in same restaurant sales averaged 1.4% - and that's for the entire quarter - below those of [NAP], but improved throughout the quarter. The key point is we don't have a check increase - actually, a slight check decrease  and that's unlike most of our competitors, who have a nice check increase. We continue to focus on compelling value and thus the check explanation. But this is considerably better than the mid to high single-digit underperformance earlier in the year.

Our customer traffic performed even better. Our change in guest counts averaged nearly a percentage point better than [NAP], again in contrast to underperformance in the mid to single high digits for the first and second quarters. This suggests that we have gained market share relative to other casual dining chains during the quarter with our continued emphasis on value reflected by our scores and flat checks.

We also resumed debt paydown during the quarter as a result of our strong cash flow that benefited from the relative improvement in our same restaurant sales trends and cost reduction programs. During the quarter I mentioned we paid down $40 million, brining the total for the year up to $80 million. We now project even more paydown in the fourth quarter. That'll bring us to $90 to $100 million or so of debt for the year, a very strong performance there.

We remained in compliance, as I mentioned, with our debt covenants as of the end of the quarter, reflecting both good cash flow and paydown. The debt-to-EBITDAR ratio continued to improve and it's down now to 3.91 compared to a maximum allowable of 4.25. This level represents a step down from 4.5 times that was allowed at the end of the second quarter. Our fixed charge coverage ratio's in good shape. It was 2.5 versus our minimum requirement of 2.25. Based on current trends, we continue to believe we will remain in compliance with our covenants.

I'd now like to turn the call over to Margie to discuss our financial performance in more detail. Margie?

Marguerite N. Duffy

Thank you, Sandy, and good afternoon, everyone. As Sandy said, we are encouraged by our recent sales trends, the flow through to cash flow and earnings, and our debt paydown in the quarter.

We're reported fiscal third quarter earnings per share of $0.09 versus $0.23 last year. Included in our earnings this year were closure and impairment expenses of $14.6 million pre-tax that reduced earnings per share by $0.17. As Sandy mentioned, excluding these expenses and a one-time benefit from a change in the way we account for gift cards, our pre-tax income increased for the first time in two years.

Total revenue decreased 9.6% during the quarter, reflecting the 6.8% decline in same restaurant sales and the net decrease of 50 company owned restaurants from the same quarter of the prior year.

The restaurant level operating margin was 18.8% during the quarter compared with 19.3% a year earlier. Food costs were up 60 basis points largely due to increased promotional activity this year versus last. In general, we are experiencing favorable commodity costs.

Payroll and related costs were 33% of restaurant sales compared with 33.1% a year earlier. Payroll costs benefited from both cost savings and a new labor scheduling process for several hourly labor positions that enabled us to reduce hourly labor costs as a percentage of restaurant sales. Also, health insurance costs were lower based on favorable claims experience.

Other restaurant operating costs were down 10 basis points. This favorable variance was due to recognizing gift card breakage income of $1.9 million that resulted from a change in accounting estimate made concurrent with a decision to discontinue our prior policy of charging a dormancy fee. We now recognize gift card breakage income for a non-escheatable amount beginning 24 months after the date of activation. Included in the $1.9 million was $800,000 of breakage income related to gift cards activated prior to the end of the third quarter of fiscal 2007 or more than 24 months ago. Excluding this benefit, restaurant operating costs increased 50 basis points largely due to increased utility costs and to a loss of leverage on our lower sales.

Depreciation was down 130 basis points as a percent of sales primarily because of accelerated depreciation last year reflecting our re-imaging program and savings from our second quarter impairment and third quarter restaurant closings.

SG&A expenses declined 210 basis points as a percent of revenue. This favorable variance was a reflection of our cost controls.

Equity and losses of our franchise partners was less than last year due in part to providing fee relief as we continue to work closely with them to improve their profitability during these difficult times.

Interest was in line with our expectations and was down from last year, reflecting the decline in our average debt outstanding and lower rates because of the low level of LIBOR more than offsetting the higher spread in our bank line following the May amendment to our credit agreement.

Our tax rate was low during the quarter because of the impact of FICA tips and other allowable credits applied to a relatively low level of income.

We also had $14.6 million in closure and impairment expenses in the quarter, which was in line with our guidance for the quarter. Included in those expenses were lease reserves of $8.7 million, impairments of $3.9 million and other charges of $2 million.

Turning to our balance sheet, our book debt, including current maturities, was $525 million, down from $565 million in the prior quarter and $612 million a year earlier. We paid down nearly $40 million of debt in the third quarter and $80 million year to date. The magnitude of our debt paydown primarily reflects our strong cash flow, including cash from operations, proceeds from disposal of assets, and minimal capital expenditures.

We were in compliance with our debt covenants as of the end of the quarter. With our debt-to-EBITDAR ratio under 4 times now, our interest rate spread compared with LIBOR will be reduced in the fourth quarter.

Our capital expenditures were only $2.9 million in the quarter as our new unit expansion is on hold. Also, our maintenance capital spending requirements are relatively modest because of recent re-imaging.

Our guidance is as follows:

We do not expect to add any net company operated restaurants in the fourth quarter. Franchisees are expected to open a net of four restaurants in the fourth quarter, three of which will be international. For the year we project the company will close a net 48 restaurants, our domestic franchisees will open a net 4, and our international franchisees a net 7.

We expect same restaurant sales to be down 8% to 9%, better than our prior estimate of down 9% to 10%, which assumes some further improvement in the fourth quarter.

We expect restaurant operating margins to be down 2 to 3 percentage points for the year, in line with our year-to-date change. Food costs for the year are expected to increase as a percent of sales, reflecting the impact of our value-focused promotional activity. Labor and other operating costs are also expected to be higher, principally because of negative leverage from lower average unit sales. Depreciation is projected to be in the $74 to $76 million range and SG&A is targeted to be down 25% to 30%, reflecting the benefit of our cost-savings program.

Including the impact of our closure and impairment and goodwill charges totaling $0.88 that we took in the second and third quarters, our fiscal 2009 loss per share is projected to be in the $0.40 to $0.50 range compared with our prior guidance of a per share loss of $0.45 to $0.55.

We project capital expenditures in the $17.5 to $18.5 million range and we now estimate that we will paydown $90 to $100 million of debt this year compared with our prior estimate of $80 to $90 million.

In view of a recent announcement by one of our competitors and while we normally don't give monthly updates, we thought it would be informative to provide some color on our sales in March. Our March period ends today so the final numbers are not in, but sales and traffic trends continue to improve from February. Please don't ask follow up questions with regard to this because at this time that's all we can say.

Now I'll turn the call back over to Sandy.

Samuel E. Beall

Thank you, Margie.

Our mission statement is to be the best in bar/grill by executing at high-quality casual dining levels with compelling value. Our strategies all support a fresh new brand that's differentiated and has lasting appeal. Those strategies are uncompromising freshness and quality in our food, gracious hospitality, a fresh new look, and compelling value. We believe we're executing on those strategies.

Our brand vision is that Ruby's is the one restaurant offering the best burger in the business. Burgers are the biggest seller in the restaurant industry, a $60 billion segment, and our position within this segment we believe is credible with our guests since our burgers consistently get very high ratings and about 40% of our all of our entrees sold are burgers. We offer more than 25 varieties, each with high quality and great value.

Now Mark, if you would, please go into some more detail on our sales initiatives.

Mark Young

Thank you, Sandy.

Our sales initiatives focus primarily on two areas - menu and marketing.

The menu is centered around our emphasis on high quality and compelling everyday value. It starts with our commitment of being fresher and better to differentiate ourselves from our competitors. While this commitment to freshness and quality contributes to the value perception, in today's economy price is equally if not more important. Consequently, we have very attractive price points, such as our classic hamburger, which comes with endless fries and our burger guarantee, or the pricing on a number of our specialty items, where you can get a complete meal for $9.95.

We also pay close attention to how our guests perceive our menu as we measure it multiple times a year through our food studies. These food studies provide us with key information, such as overall ratings, taste, portion size, preparation and value. Based on these findings, we will modify the menu items if necessary to enhance their ratings. For example, we increased the size of our Triple Prime hamburger by an ounce because a guest told us it was too small. We have made other product and recipe enhancements to menu items to improve quality even if they might cost us more. This continued focus on improving our overall food has led us to having our highest food scores ever as a concept.

Our marketing focus has evolved over time and is much more targeted market to market in contrast to our prior, more systemwide approach. It's more entrepreneurial and I think smarter. We are using in-depth market research to target specific ideas and supporting them with print promotion, television, community based programs, Internet activities, and food and beverage promotions. The approach is more guerilla marketing, the way one would approach his or her own business if he or she were to own several restaurants in a market and its' getting results. We're getting guests in to experience the new Ruby Tuesday and they like it.

We are also continuing to test and evaluate additional programs to increase sales and capacity utilization during off-peak times, with the overall objective to get more out of existing assets. In our continued effort to provide more everyday value, we have four additional value-oriented programs that we think could help drive sales next year. The key point is we are not being complacent about sales and are not relying on what is currently working to continue to drive traffic.

Now Kimberly will go into a little more information on sales teams and guest satisfaction.

Kimberly M. Grant

Thank you, Mark.

We have mentioned in the past the discrepancy in performance between our Northern and Southern markets. This continues to be the case, although the rate of decline has moderated in both areas. We do have several markets with our year-over-year same restaurant sales increases, and we are outperforming [NAP] currently in four out of the six [NAP] regions, including Florida, in which we have the bulk of our restaurants.

Four of our weakest markets are in Alabama, parts of Tennessee, Georgia, and the Carolinas, and they continue to remain soft. As Mark mentioned, we are continuing to implement market-specific programs to improve these poorest-performing markets.

Our operations are stronger than they have ever been. Our total management turnover is very low  under 20%  our hourly turnover is also low, and we hope to get it below 100% this year. Maintaining industry low levels of turnover for several years, combined with our efforts to significantly improve the brand, has enabled us to attract the very best talent we have ever seen. These high-quality candidates see the look of our restaurants and the quality of our food and service and simply want to be a part of it.

Our guest satisfaction scores continue to be at record high levels, with our top two box scores for our key four attributes - which are overall experience, value, intent to revisit and intent to recommend - all well over 90%. We do actively monitor our guest satisfaction scores daily and have not seen any adverse impact to the guest experience as a result of our cost savings initiatives.

Samuel E. Beall

Thanks, Kimberly and Mark.

In summary, this is as difficult of an operating environment as I've ever seen. Nonetheless, I've never felt better about how we are operating our restaurants and our business. Our team members have responded to these times and maintained their focus on serving our guests while simultaneously watching costs very closely. It's like not spending - being cheap - is cool in our company now. And we're seizing opportunities to increase sales in multiple different ways.

Our internal customer research continues to show we're executing at high levels in our food, service and value. Guest satisfaction scores continue to be at record-high levels. Additionally, our employee and management turnover are at or near record low levels, as Kimberly mentioned.

Our initiatives are taking hold and we recognize the need to stay focused and not let up, especially in this economy. I believe - but more importantly, our team believes - we are better positioned than ever. Our management team has proven the ability to control costs and make money - we do that extremely well - so that we can survive in very difficult times, but more importantly so we can excel as the economy and consumer situation improves.

With that, I'll open up the floor to questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Your first question comes from Jeff Omohundro - Wachovia Capital Markets.

Jeff Omohundro - Wachovia Capital Markets

My first question relates to the cost reduction initiative. I wonder if you'd provide a little bit more color around the targets on that and where you are in the process and how much of it do you think would be impactful to the guest?

Kimberly M. Grant

The total amount, as Margie mentioned, is between $60 and $65 million, part of which is in this fiscal year and what we plan going forward, about $40 to $45 million going forward. Obviously one of the biggest cost areas for restaurant operations is in labor, so a lot of those cost savings are in labor and G&A, supervision.

We don't believe that the changes that we're making are affecting the guest experience thus far and we monitor all of the attributes, key attributes, every day to make sure that anything that we're trying to gain efficiencies in is having any impact on the guest experience.

The labor initiatives are focused on two areas. The first is just being more productive and more efficient, and we've done that by changing our objectives for labor to being based upon guest counts versus sales dollars. And the second is wage rate control, just ensuring that we're monitoring our standards for wage rates going forward.

Samuel E. Beall

And I might add, these savings have been in, the vast majority of those, for a couple of months now, and so it's not something we're worried about going forward because we haven't seen any guest satisfaction falloff.

Marguerite N. Duffy

In addition, we do have approximately $10 million from the closing of our 43 restaurants between rent, depreciation and then mitigating their losses, and then on addition the G&A side, some of reductions in benefits as we've looked at everything in our business to be as efficient as possible.

Jeff Omohundro - Wachovia Capital Markets

My second question relates to the cost of sales trends and the impact of the promotional strategy on that, cost of sales as a percentage of sales. I'm just wondering where you see the company in terms of this promotional message and the evolution of it and whether we can expect these trends to continue having this impact on cost of sales.

Samuel E. Beall

I would think that the cost of sales we're running right now should be pretty consistent for the next year. We're making some investments, but we have some savings. And if anything, it could moderate some, but it would definitely be up some for the first couple of quarters anyway versus prior year.

Operator

Your next question comes from Brad Ludington - KeyBanc Capital Markets.

Brad Ludington - KeyBanc Capital Markets

I wanted to ask a little bit on the trends. If we kept on seeing improving same-store sales, improving margins, would that impact the 30 closures that you've guided to over the next two to three years? Could that cut back on some of those?

Samuel E. Beall

No. No, those are already - they're gone.

Brad Ludington - KeyBanc Capital Markets

And then out of the $1.9 million breakage, you said that $800,000 of it was from prior to 24 months out when those gift cards were bought, so on a run rate going forward should we expect that maybe you'd see some kind of breakage plus or minus around the $1 million mark?

Marguerite N. Duffy

In the third quarter, that's correct. That's going to be your largest quarter because it encompasses your holiday period, the December period where you sell most of your gift cards. But in other quarters it would be less than that.

Operator

Your next question comes from Joseph Buckley - BAS-ML.

Joseph Buckley - BAS-ML

I just want to go back to the cost savings again. You took in some pretty big numbers and I know you've talked these numbers before, but can you kind of group them into significant buckets that we can think about in terms of potential cost savings?

Marguerite N. Duffy

I do think most of them, Joe, are going to be in the labor line. And that is from our management labor savings, our hourly labor savings.

Samuel E. Beall

Corporate labor savings.

Marguerite N. Duffy

Well, corporate would be in the G&A line, so that's another area. We have approximately $4 million in the food cost area. The $10 million from the closures, that comes about half from rent and half from depreciation. And then the balance really is going to be in G&A.

Samuel E. Beall

Also, our lower turnover, you know, the hourly turnover, which is approaching 100%, really, on an annualized basis, that saves you a ton, too, not to mention management turnover, although it's consistent with the prior year.

Joseph Buckley - BAS-ML

And then a quick question on couponing. How aggressive were in the quarter and what do you anticipate going forward in terms of the level of couponing?

Mark Young

Joe, I don't know that we're that aggressive any more than anybody who does television is aggressive with their dollars. I think it was comfortable for us. And I think it moves around every quarter based on what our needs are between television and print promotion or in unit promotion or community based, etc., but I would think it would stay about where it was that quarter.

Joseph Buckley - BAS-ML

And then, Margie, I know you didn't want to say much about March, but I kind of missed what you did say about March. Did you say that same-store sales and traffic were sequentially better than February? Was that the message?

Marguerite N. Duffy

That's right.

Samuel E. Beall

Correct. That's a good thing.

Operator

Your next question comes from Karen Holthouse - Credit Suisse.

Karen Holthouse - Credit Suisse

First, it looks like relative to last quarter you kite your annual G&A guidance by about $10 or $15 million. I'm wondering if all that's coming from the marketing cost savings or some of those other buckets, you know, labor, other G&A items?

And then also, could you give us a little color on kind of the moving pieces on your cost trends for the quarter and what your commodity outlook is looking like?

Marguerite N. Duffy

I'd say it came from both categories. We continue to focus on cost controls in both categories of G&A.

On the commodity costs, Steve, do you have some of the trends there?

Steve Rockwell

Generally, our commodity costs are down and likely to be lower. As we've said in the past, we've locked in our commodity costs, most of our costs, going forward. Some of the specifics are that we've got our beef, our steaks, contracted through December of this year, rib eyes through December of this year, and hamburger through May. We're in the process of looking at a new supplier for hamburger and we'll see where that comes out, and that's obviously one of our larger commodities.

Samuel E. Beall

We actually have a locked-in price now on hamburger on the [capis] system with [inaudible], and the other half has a slight price increase.

But commodities are in good shape for the year. I mean, oil being down also, but overall I think it's an opportunity to save. And as we go into next year, in trying to find additional we're going to target that, we're going to target cost of sales.

Operator

Your next question comes from Bryan Elliott - Raymond James.

Bryan Elliott - Raymond James

I just wanted to follow up actually on I think it was Joe's question on the promotional activity and outlook. My understanding is I think - I'm trying to find it, but I can't - that via the Internet there was a Ruby Tuesday buy one, get one free entrée that was I think pretty broadly disseminated and I'm wondering if your answer to that question means that you expect to continue to do that periodically going forward?

Mark Young

Yes. There was one, which didn't hurt us, really, but we corrected that so they can't be duplicated like that. But, Bryan, we have had some very focused - we do lots of different promotions, but the one main one, I guess, is a buy one, get one on dinner items, which people have seen in different markets, and that's been, I guess, the main one we've pushed. It's generally through the newspaper or through direct post card, mail box. Yes, we go through the mail box or the newspapers. And then, you know, the digital world with the So Connected, which is our eclub group, is another avenue that we utilize. But that's the one you saw was to the e-club group.

Bryan Elliott - Raymond James

So that won't be reusable in the future or duplicatable, I guess?

Mark Young

Duplicatable.

Bryan Elliott - Raymond James

Right, okay. And what kind of conversion rate did you see on that coupon? What percent of sales maybe was - or percentage of tables - actually utilized the coupon while it was out in the market? Was it, you know, 1 or 2, or was it a lot higher than that? Just a sense of magnitude; I don't need a hard number.

Samuel E. Beall

And you question was what?

Bryan Elliott - Raymond James

What was the percentage, you know, sort of usage or what percentage of tables actually used one of those coupons when they were active?

Mark Young

I don't know exactly. Generally when you drop a coupon your redemption rate's somewhere between 1 if it's a week, 4 or 5 points if it's an all star. It depends on -- are you talking about So Connected?

Marguerite N. Duffy

The particular coupon that you're referencing that was out on the Internet was a very low redemption.

Bryan Elliott - Raymond James

Oh, really? Okay.

Marguerite N. Duffy

That was maybe four or five coupons per restaurant.

Bryan Elliott - Raymond James

Would you consider that maybe that it didn't work then conceptually? That sounds awfully low given the -

Samuel E. Beall

That's really a reward for our existing guests who sign up for things. That one's not necessarily trying to drive traffic. It's really trying to create loyalty through our digital program. But the other ones we referred to would have a redemption, Bryan, of anywhere from 1% to 4% or 5%, I guess. It just depends on what the offer is and where it is.

Operator

(Operator Instructions) Your next question comes from Tom Forte - Telsey Advisory Group.

Tom Forte - Telsey Advisory Group

For starters I wanted to know if you could give some additional thoughts on the improving trends you're seeing in casual dining, not just for Ruby Tuesday, for everyone else. You've talked about how you characterize this as one of the most difficult operating environments, yet you saw really since December and into March improving sales trends. To what extent do you think lower gas prices if at all are having an effect? And then what are your thoughts on consumers' ability to adjust their spending levels despite the pressure we're seeing from rising unemployment?

Samuel E. Beall

A lot of questions. Let's see. I think, part of that, I do think it's the most difficult operating environment and economic environment I've seen. It's much more difficult than the '79 to '82 period times 4 or 5 or something, or 10.

I think the reason we're performing better is one, we went into it earlier, so we had a larger decrease last year at this time than our competitive group did. That's number one. Number two, we are getting people in to see a totally revamped restaurant that is different. We might have lost some guests to it, you know, to all the changes a year or so ago, but now people are coming in and seeing the difference and I think that resonates fairly well. So we're on upward, as is stated by the sales we gave you. We have some solid consistent momentum that's building, but it's still very difficult - very, very difficult times.

The other question you asked - does anybody remember? Do you remember?

Tom Forte - Telsey Advisory Group

Lower gas prices, whether or not that's having a benefit?

Samuel E. Beall

Lower gas prices are helping right now. I think people are pretty well scared. I think it's good, though. I think people are saving money. That's good. They want to go out. So if you can give them a reason, whether it's the ads, the people. You know, our competitors on television are giving them a high value deal, that works; we try to give them value some other ways. But if you can give them a reason to go out to eat, they still want to eat.

Tom Forte - Telsey Advisory Group

And then one other quick question. What was TV ad spend versus the year ago period as far number of days on air? And then what's your ability, then, to take advantage of lower spot rates in television advertising?

Samuel E. Beall

Well, I know the second one's an interesting question. We're taking advantage of every kind of spot rate or cheap rate that can be bought. We've turned into the Wal-Mart of marketing buying here, basically set up our own in-house agency to do so.

The first question, we didn't advertise much last year this quarter and we didn't advertise much this year this quarter either so it was not heavy, below $10 million, I think, both years.

Well, I think that's all the people we have that have called in for questions, so we want to thank you for joining us today. If you do think of a question, please give Steve a call and we'll try to answer it for you. Make it a great day.

Operator

This concludes the teleconference. You may disconnect your lines. Thank you for your participation.

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Source: Ruby Tuesday, Inc. F3Q09 (Qtr End 3/3/09) Earnings Call Transcript
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