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Ruby Tuesday F1Q08 (Qtr End 9/4/07) Earnings Call Transcript

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2007-10-10 19:08:45.0

Tags: Ruby Tuesday Inc.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Stephen Rees.

Stephen Rees - J.P. Morgan

Can you hear me?

Sandy Beall

Yes, I can hear you now.

Stephen Rees - J.P. Morgan

Yeah, so when you were --

Sandy Beall

I can’t hear you now. Operator?

Operator

Yes, his line disconnected. Your next question comes from the line of Robert Barrington.

Robert Barrington

Sandy, could you help us understand a couple of things? One, what are you seeing in the operating trends of those stores that have been remodeled for a longer period of time? Are you seeing some stabilization or some improvement in their trends?

Sandy Beall

Oh no, we’re seeing improvement, Bob. If you take just pure -- I should have mentioned that, sorry. If we took just pure remodel-to-remodel, apples-to-apples, they are up a couple of points -- a couple points, anyway. There is nothing negative there at all -- 2.5 points, Kimberly said.

Robert Barrington

Okay, so that’s for the first five that have been remodeled or the first --

Sandy Beall

That’s about 50-ish. They’ve been remodeled. They were finished by the July period. They actually gained a little ground in August, September.

Kimberly Grant

The end of August and throughout September is where they really started to start to separate from the rest of the concepts.

Robert Barrington

And the traffic trends, are those similar? Are you seeing a benefit from the check average in those restaurants?

Kimberly Grant

Actually, all of the improvement is 100% in traffic. The check has been pretty similar overall, maybe within a couple of pennies. And it’s all been in traffic improvement.

Robert Barrington

Sandy, help us understand; the one thing that I am curious about when I hear you mention that you will be doing some couponing, some FSIs and some targeted mailers, it sounded as though you were going to mail those to your higher income consumers, yet you mentioned that the lower income consumers were the ones that you had lost. Can you reconcile that?

Sandy Beall

Yeah. We said for a long time we are trying to move our average check up. We would like to have the customers, we would like to have a higher percentage of customers that Outback or Carrabba’s or Olive Garden would have to support our strong core customers that are eating burgers and combos.

The lower end customer we are losing, which I think is more financial and deal driven. The ones we want -- and we’ve always said this, Bob. We realize in our transition we are going to lose a few of the lower end as we reposition the brand, but the $75,000 and above income person that we are trying to attract, so we are just targeting that person. We are not trying to exclude anybody else and the FSI really covers broad demographic appeal in the Sunday paper. But to supplement that, we also want to target the higher income.

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