Despite the fact that Ruby Tuesday Incoroprated (NYSE: RT) serves up a mean burger, consumers continue to sit at home digesting more and more negative economic news. The company recently released third quarter (3Q) 2008 earnings that take away the appetite. 3Q 2008 net income was $11.7 million or $0.23 EPS, compared to 3Q 2007 net income of $28.7 million or $0.49 EPS. Same location sales declined 12-13%. Company expansion was flat with 6 new locations replacing 6 closed locations.

To be fair, some of the decline in customer traffic was due to a company-wide remodel of many locations. The company spent $25 million in 3Q updating its facilities and its menu, with plans to double that amount in the coming year in order to help Ruby Tuesday stand out from its bar and grill competition. Let's hope the remodel woos customers back into its restaurants. The company is renegotiating its existing debt covenants, and controlling advertising expenditures and other costs. CEO Sandy Beall hopes these initiatives will "set the stage for future profits."

FY 2008 guidance is not encouraging. The company expects sales to continue to decline 9-10%, leading to diluted EPS in the $0.40-$0.50 range. The stock jumped 5% on Thursday when 3Q earnings per share (EPS) beat estimates by $0.05, but has since dropped off 2% to trade at just around $8 per share.