RUBY TUESDAY INC, 10-K, 1996-08-30

RUBY TUESDAY INC
10-K, 1996-08-30
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended June 1, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to

Commission file number 1-12454

RUBY TUESDAY, INC.
(Exact name of Registrant as specified in its charter)

GEORGIA 63-0475239
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

4721 Morrison Drive, Mobile, Alabama 36609
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (334)344-3000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Name of each exchange
Title of each class on which registered

$0.01 par value Common Stock New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None
(Title of class)

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES X NO

Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K.[ ]

The aggregate market value of the voting stock held by
non-affiliates of the Registrant, based upon the closing sale price
of Common Stock on August 9, 1996 as reported on the New York Stock
Exchange, was approximately $312,984,000.

The number of shares of the Registrant's common stock outstanding
at August 9, 1996 was 17,611,070.

DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended June 1, 1996 are incorporated by reference into
Parts I and II.

Portions of the Registrant's definitive proxy statement dated
August 23, 1996 are incorporated by reference into Part III.

INDEX

PART I
Page
Number
Item 1. Business 4 - 9

Item 2. Properties 9

Item 3. Legal Proceedings 9

Item 4. Submission of Matters to a Vote of
Security Holders 10-11

Executive Officers of the Company 11-12

PART II

Item 5. Market for the Registrant's Common Equity and
Related Shareholder Matters 12

Item 6. Selected Financial Data 12

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12

Item 8. Financial Statements and Supplementary Data 13

Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 13

PART III

Item 10. Directors and Executive Officers of the
Registrant 13

Item 11. Executive Compensation 13

Item 12. Security Ownership of Certain Beneficial
Owners and Management 14

Item 13. Certain Relationships and Related Transactions 14

PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 14-21

PART I
Item 1. Business.

General

Prior to March 9, 1996, Ruby Tuesday, Inc. (the "Company") was
known as Morrison Restaurants Inc. ("Morrison"). Morrison operated
three businesses in the foodservice industry. These businesses
were organized into two operating groups, the Ruby Tuesday Group,
consisting of the Company's casual dining concepts, and the
Morrison Group which was comprised of Morrison's family dining
restaurant and health care food and nutrition services businesses.

On March 7, 1996, the shareholders of Morrison approved the
distribution (the "Distribution") of its family dining restaurant
business (Morrison Fresh Cooking, Inc. ("MFCI")) and its health
care food and nutrition services business (Morrison Health Care,
Inc. ("MHCI")) to its shareholders effective March 9, 1996. In
conjunction with the Distribution, the Company reincorporated in
the state of Georgia, effected a one-for-two reverse stock split of
its common stock and changed its name to Ruby Tuesday, Inc.

The first Ruby Tuesday restaurant was opened in 1972 in Knoxville,
Tennessee near the campus of the University of Tennessee. The Ruby
Tuesday concept, with 16 operational units, was acquired by
Morrison in 1982. During the following years, Morrison added other
casual dining concepts, including the internally-developed
Mozzarella's Cafe ("Mozzarella's", formerly "Silver Spoon") and L&N
Seafood Grill ("L&N"). In June 1994, Morrison's Board of Directors
approved the plan to phase out the L&N concept in an attempt to
align all of the concepts into the strategic focus of "feeding
America for under $10." A majority of the L&N's were converted
primarily to either Ruby Tuesday or Mozzarella's and the remaining
locations were either sold or closed. Based on favorable operating
results, Morrison subsequently decided to continue to operate four
of the L&N units as L&N's through the remainder of their lease
terms. In January 1995, Morrison completed the acquisition of Tias,
Inc., a chain of Tex-Mex restaurants, which allowed it to enter
into one of the fastest growing segments of the casual dining
market. The information presented below relates to the business of
the Company following the Distribution unless the context otherwise
requires.

Operations

The Company operates three separate and distinct casual dining
concepts comprised of Ruby Tuesday, Mozzarella's and Tia's. As of
June 1, 1996, the Company operated 365 casual dining restaurants in
33 states.

Ruby Tuesday
Ruby Tuesdays are casual, full-service restaurants with mahogany
woods and whimsical artifacts, classic brass and Tiffany lamps
which create a comfortable, nostalgic look and feel. This year
we're making Ruby Tuesdays feel even more fun and a little more
casual, with black and white checked table cloths, servers dressed
in red polo shirts, and lighter, brighter wall colors. Ruby
Tuesday's menu is based on variety, with something for just about
everyone. Some of Ruby Tuesday's most popular entree items which
are prepared fresh daily are: fajitas, baby-back ribs, chicken
entrees, soups, sandwiches, salad bar, and signature "Tallcake"
desserts in strawberry and chocolate-Oreo varieties. Entree
selections range in price from $4.99 to $14.99.

Ruby Tuesday, with 301 units concentrated primarily in the
Southeast, Northeast, Mid-Atlantic and Midwest, is the Company's
primary growth vehicle. The Company intends to open approximately
32 additional units in fiscal 1997 with the majority of these in
existing markets. While the concept has historically been mall-
based, current development plans call for 85% of new units to be
freestanding. Existing prototypes range in size from 4,300 to 5,600
square feet with seating for 180 to 210 guests. A new prototype measuring
slightly below 4,000 square feet is being tested in order to enable Ruby Tuesday
to more efficiently fill in existing markets and penetrate additional smaller
markets. Other than population and traffic volume, site criteria requirements
for new units include annual household incomes ranging from $30,000 to
$50,000 and good accessibility and visibility of the location.

Mozzarella's Cafe
Mozzarella's is a company-developed, full-service restaurant with a
menu that features a variety of pastas and thin-crust gourmet
pizzas, along with made-from-scratch soups, entree salads and
sandwiches, fresh seafood selections, prime steak and grilled
chicken all prepared with signature recipes. Entree selections
range in price from $4.99 to $12.99.

Mozzarella's decor is upbeat and colorful with polished wood trim
and paneling, European poster art, strings of overhead lights and
tile floors. Displays of olive oil, tomatoes, pasta and other food
products contribute to the appeal of the restaurant. Servers
approach the guests dressed in white button-down shirts accented
with a colorful tie, black trousers and a red bistro apron.

With 46 Company-owned establishments, Mozzarella's are primarily
located in the Southeast and Mid-Atlantic with particular
concentration in the Washington, D.C. area, Florida and Virginia.
The Company intends to open only three units in fiscal 1997 in
order to concentrate on improving the operational efficiency and
effectiveness of existing units. New restaurants typically range
in size from 4,200 to 4,500 square feet and seat 140 to 160
visitors.

Tia's Tex-Mex
Tia's, the Company's newest concept, is a full-service, casual
dining restaurant. The decor is reminiscent of an authentic Mexican
restaurant with chandeliers replicating those of an old Mexican
hotel and colors, textures and artifacts that reflect the
restaurants' genuine Southwestern heritage. Tortillas are made by
hand in a display station which contributes to Tia's unique
atmosphere.

Tia's menu items, which are all fresh and made from scratch,
include an array of traditional Tex-Mex favorites such as: fajitas,
enchiladas, tacos, nachos and quesadillas and a selection of unique
grilled and sauteed dishes. The menu also provides the guest with
a variety of appetizers and desserts. Entree items range in price
from $4.49 to $11.99. Chips are cooked fresh throughout the day
and served with just-made salsa to every guest. Each guest is
greeted by a casually dressed server wearing a camp shirt, in
various colors, with the Tia's logo, blue jeans and a short black
apron.

The Company had 18 Tia's operational at the end of fiscal 1996 and
plans to open at least four units in fiscal 1997. New and existing
units are located in the Southwest, Southeast and Mid-Atlantic
regions. New units will have approximately 5,670 square feet with
seating capacity for 215 visitors. New Tia's restaurants are
considered in areas with annual household incomes greater than
$40,000, with sites which are visible, accessible and meet certain
population and traffic criteria.

Research and Development

The Company does not engage in any material research and
development activities. The Company, however, engages in on-going
studies in connection with the development of menu items for all of
its restaurant concepts. Additionally, it conducts consumer
research to determine guest preferences, trends, and opinions.

Raw Materials

Raw materials essential to the operation of the Company's business
are obtained through MRT Purchasing, LLC ("MRT"). MRT was
organized to serve as a purchasing cooperative to allow the
Company, MHCI, and MFCI to pool their collective purchasing power
and to coordinate the purchase of certain food, equipment and
services. The Company is obligated to purchase all core products
through MRT arrangements; non-core products may be purchased
independently. The Company is committed to this purchasing
arrangement for an initial term of five years from March 9, 1996,
the effective date of the Distribution, and the agreement will
automatically renew for additional five-year terms. The Company may
terminate its participation in these purchasing arrangements upon
six months prior written notice, provided it continues to honor its
purchase commitments under any then existing contracts to which MRT
is a party that extend beyond the termination date.

Raw materials are purchased by MRT principally from PYA/Monarch
under a cost-plus arrangement. The purchases from PYA/Monarch are
in accordance with a Supply Agreement entered into on July 8, 1988,
as amended. Purchasing obligations have been allocated to the
Company, MHCI, and MFCI based on past practice. If PYA/Monarch is
unable to meet the Company's supply needs, the Company negotiates
directly with primary suppliers to obtain competitive prices. The
Company uses purchase commitment contracts to stabilize the
potentially volatile pricing associated with certain commodities.
Because of the relatively short storage life of inventories,
limited storage facilities at the restaurants themselves, the
Company's requirement for freshness and the numerous sources of
goods, a minimum amount of inventory is maintained at the units.
If necessary, all essential food, beverage and operational products
are available and can be obtained from alternative suppliers in all
cities in which the Company operates.

Trademarks of the Company

The Company has registered certain trademarks and service marks,
with the United States Patent and Trademark Office, including " Ruby
Tuesday"," Mozzarella's", and "Tia's". The Company believes that
these and other related marks are of material importance to the
Company's business. Registrations of the trademarks listed above
expire from 2004 to 2005, unless renewed.

Seasonality

The Company's business is moderately seasonal. Average restaurant
sales of the Company are slightly higher during the winter months
than during the summer months as the Company is currently
concentrated in mall-based units. Freestanding restaurant sales
are higher in the summer months whereas mall-based restaurants have
higher sales in the winter months, generally peaking during the
holiday season.

Customer Dependence

No material part of the business of the Company is dependent upon a
single customer, or very few customers, the loss of any one of
which would have a material adverse effect on the Company.

Competition

The Company's activities in the restaurant industry are subject to
vigorous competition relating to restaurant location and service,
as well as quality, variety and value perception of the food
products offered. The Company is in competition with other food
service operations, with locally-owned operations as well as
national and regional chains that offer the same type of services
and products as the Company.

Government Compliance

The Company is subject to various licensing and regulations at both
the state and local levels for items such as zoning, land use,
sanitation, alcoholic beverage control, and health and fire safety,
all of which could delay the opening of a new restaurant or the
operation of an existing unit. The Company's business is subject to
various other regulations at the federal level such as health care,
minimum wage, and fair labor standards. Compliance with these
regulations has not had, and is not expected to have, a material
adverse effect on the Company's operations.

There is no material portion of the Company's business that is
subject to renegotiation of profits or termination of contracts or
sub-contracts at the election of the Government.

Environmental Compliance

Compliance with federal, state and local laws and regulations which
have been enacted or adopted regulating the discharge of materials
into the environment, or otherwise relating to the protection of
the environment, is not expected to have a material effect upon the
capital expenditures, earnings or competitive position of the
Company.

Personnel

The Company employs approximately 12,500 full-time and 12,300 part-
time employees. The Company believes working conditions are
favorable and employee compensation is comparable with its
competition. None of the Company's employees are covered by a
collective bargaining agreement.

International Operations

All Company-owned operations are located within the United States. On
March 30, 1995 the Company entered into a development agreement (the
"Agreement") with Jardine Pacific Restaurants Group Limited (the
"Developer") to open a minimum of eight, 20, and 38 Ruby Tuesday
restaurants in the Asia-Pacific region by the end of the third,
sixth, and tenth anniversaries of the date of the Agreement,
respectively. Under the terms of the Agreement the Company is to
receive a licensing fee on the first seven Ruby Tuesday restaurants
opened by the Developer in the Asia-Pacific region and royalties from
all units, derived as applicable, from sales or profits as defined in
the Agreement. As of June 1, 1996, the Developer had opened two Ruby
Tuesday restaurants. The Company does not expect this Agreement to
have a material effect on future operations, nor is it currently
engaged in material operations in foreign countries.

Item 2. Properties.

Information regarding the locations of the Company's Ruby Tuesdays,
Mozzarella's Cafes and Tia's operations is shown in the list below.
Of the 365 Company-operated restaurants, the Company owned the
building and held long-term land leases for 32 restaurants, owned
the land and building for 40 restaurants, held leases covering land
and building for 293 restaurants. Administrative personnel of the
Company are located in the executive and administrative
headquarters building located in Mobile, Alabama. The
administrative headquarters has a lease term ending in 1998 and
provides an option to purchase at a nominal amount at the end of
the initial lease term. This building was financed through the
sale of Industrial Development Revenue Bonds from the Industrial
Development Board of the City of Mobile, Alabama.

Additional information concerning the properties of the Company and
its lease obligations is incorporated herein by reference to Note 7
of the Notes to Consolidated Financial Statements included in the
Annual Report to Shareholders for the fiscal year ended June 1,
1996.

As of June 1, 1996, the Company operated 365 restaurants, including
301 Ruby Tuesday, 46 Mozzarella's Cafes and 18 Tia's Tex-mex
restaurants in the following locations:

Alabama (20) Kentucky (3) New York (23)
Arizona (4) Louisiana (4) North Carolina (6)
Arkansas (3) Maine (1) Ohio (14)
Colorado (5) Maryland (17) Oklahoma (1)
Connecticut (7) Massachusetts (5) Pennsylvania (18)
Delaware (3) Michigan (16) Rhode Island (1)
Florida (54) Minnesota (3) South Carolina (6)
Georgia (32) Mississippi (5) Tennessee (27)
Illinois (10) Missouri (7) Texas (13)
Indiana (4) Nebraska (2) Virginia (37)
Iowa (1) New Jersey (11) Wisconsin (2)

Item 3. Legal Proceedings.

The Company is from time to time, party to ordinary, routine
litigation incidental to its business. In the opinion of
management, the ultimate resolution of all pending legal
proceedings will not have a material adverse effect on the
Company's business, financial position, results of operations
or liquidity.

Item 4. Submission of Matters to a Vote of Security Holders.

On March 7, 1996 a Special Meeting of Shareholders of Morrison
was held. The matters voted upon and the voting results are
detailed below:

Proposal 1
Approval of the distribution of all of the outstanding shares
of common stock of MFCI and MHCI, wholly-owned subsidiaries of
Morrison.

Votes for 24,984,490
Votes against 981,869
Abstentions 75,068

Proposal 2
Approval and adoption of an Agreement and Plan of Merger
between Morrison (a Delaware corporation) and Ruby Tuesday,
Inc. (a Georgia corporation and wholly-owned subsidiary of
Morrison) providing for (i) the reincorporation of Morrison in
the state of Georgia pursuant to a statutory merger of
Morrison into Ruby Tuesday, Inc. and (ii) a one-for-two
reverse stock split.

Votes for 24,921,628
Votes against 1,036,519
Abstentions 83,280

Proposal 3
Approval of amendments to the Company's Stock Incentive Plan
to (i) increase the number of shares reserved for issuance
thereunder, (ii) permit grants of equity-based awards to non-
employee directors, and (iii) permit adjustments to
outstanding options in connection with the Distribution.

Votes for 23,173,717
Votes against 2,609,274
Abstentions 258,435

Proposal 4
Approval of amendments to (i) the Company's Stock Incentive
and Deferred Compensation Plan for Directors, (ii) the
Company's 1987 Stock Bonus and Non-Qualified Stock Option
Plan, and (iii) the Company's 1984 Long Term Incentive Plan to
permit adjustments to outstanding awards in connection with
the Distribution.

Votes for 24,461,194
Votes against 1,333,381
Abstentions 246,852

Proposal 5
Approval of the adoption (i)by MFCI of the MFCI 1996 Stock
Incentive Plan and (ii) by MHCI of the MHCI 1996 Stock
Incentive Plan.

Votes for 22,106,754
Votes against 2,664,353
Abstentions 1,290,320

Executive Officers of the Company.

Executive officers of the Company are appointed by and serve at
the discretion of the Company's Board of Directors. Information
regarding the Company's executive officers as of August 9, 1996
is provided below.

Executive

Officer
Name Age Position with the Company Since

S. E. Beall, III 46 Chairman of the Board and 1982
Chief Executive Officer

R. D. McClenagan 48 President- Ruby Tuesday 1985
Division

P. G. Hunt 60 Senior Vice President, 1972
General Counsel and
Secretary

J. R. Mothershed 48 Senior Vice President and 1992
Chief Financial Officer,
Treasurer and Assistant
Secretary

R. Vilord 60 Senior Vice President, 1993
Human Resources

Mr. Beall has been Chairman of the Board and Chief
Executive Officer of the Company and prior to the
Distribution, Morrison, since May 5, 1995. Mr. Beall served
as President and Chief Executive Officer of Morrison from
June 6, 1992 to May 4, 1995 and as President and Chief
Operating Officer of Morrison from September 1986 to June
1992.

Mr. McClenagan has been President of the Ruby Tuesday
Division of the Company and prior to the Distribution,
Morrison, since March 1994. He served as President of the
Ruby Tuesday Group of Morrison from April 1990 to March
1994 and as Senior Vice President of the Specialty Rest-
aurant Division of Morrison from March 1985 to April 1990.

Mr. Hunt joined Morrison in June 1968 and was named Senior
Vice President, General Counsel and Secretary of Morrison
in September 1985 and has served in the same capacity at
the Company since the Distribution. From December 1984 to
September 1985, he served as Vice President, General
Counsel and Secretary of Morrison.

Mr. Mothershed joined Morrison in July 1972 and was named
Senior Vice President, Finance in March 1994. Mr.
Mothershed has been Senior Vice of the Company since the
Distribution and in June 1996 was also named Chief
Financial Officer of the Company. He served as Vice
President, Controller and Treasurer of Morrison from March
1989 until March 1994.

Mr. Vilord joined Morrison in April 1988 and was named
Senior Vice President of Human Resources of Morrison in
June 1993 and has served the Company in the same capacity
since the Distribution. He served as Vice President of
Purchasing for Morrison from October 1989 until June 1993.

PART II

Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters.

Certain information required by this item is incorporated
herein by reference to Note 13 of the Notes to Consolidated
Financial Statements of the Registrant's Annual Report to
Shareholders for the fiscal year ended June 1, 1996.

The Company has not paid dividends to shareholders since the
Distribution and does not intend to pay cash dividends in the
foreseeable future. In addition, under various financing
agreements, the Company has agreed to restrict dividend
payments (other than stock dividends) and purchases of its
capital stock to amounts (collectively, "Restricted Payments")
based on earnings after fiscal year 1996. Specifically, the
maximum amount available for Restricted Payments at any time
is the excess of shareholders' equity above the amount equal
to the sum of $180 million plus 50% (or minus 100% in the case
of a deficit) of Consolidated Net Earnings for the period
commencing on June 2, 1996, and terminating at the end of the
last fiscal quarter preceding the date of any proposed
Restricted Payment. At June 1, 1996, the maximum amount of
permissible Restricted Payments was $17.3 million.

Item 6. Selected Financial Data.

The information contained under the caption "Summary of
Operations" of the Registrant's Annual Report to Shareholders
for the fiscal year ended June 1, 1996 is incorporated herein
by reference.

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.

The information contained under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" of the Registrant's Annual Report to Shareholders
for the fiscal year ended June 1, 1996 is incorporated herein
by reference.

Item 8. Financial Statements and Supplementary Data.

The following consolidated financial statements and the
related report of the Company's independent auditors contained
in the Registrant's Annual Report to Shareholders for the
fiscal year ended June 1, 1996, are incorporated herein by
reference:

Consolidated Statements of Income - Fiscal years ended
June 1, 1996, June 3, 1995 and June 4, 1994.

Consolidated Balance Sheets - As of June 1, 1996 and June 3, 1995.

Consolidated Statements of Shareholders' Equity - Fiscal
years ended June 1, 1996, June 3, 1995 and June 4, 1994.

Consolidated Statements of Cash Flows - Fiscal years ended
June 1, 1996, June 3, 1995 and June 4, 1994.

Notes to Consolidated Financial Statements.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.

PART III

Item 10. Directors and Executive Officers of the Company.

(a) The information regarding directors of the Company is
incorporated herein by reference to the information set forth
in the table captioned "Director and Director Nominee
Information" under "Election of Directors" in the definitive
proxy statement of the Registrant dated August 23, 1996,
relating to the Registrant's annual meeting of shareholders to
be held on September 30, 1996.

(b) Pursuant to Form 10-K General Instruction G(3), the
information regarding executive officers of the Company has
been included in Part I of this Report under the caption
"Executive Officers of the Company".

Item 11. Executive Compensation.

The information required by this Item 11 is incorporated
herein by reference to the information set forth under the
captions "Executive Compensation" and "Directors' Fees and
Attendance" in the definitive proxy statement of the
Registrant dated August 23, 1996 relating to the Registrant's
annual meeting of shareholders to be held on September 30,
1996.

Item 12. Security Ownership of Certain Beneficial Owners and
Management.

The information required by this Item 12 is incorporated
herein by reference to the information set forth in the table
captioned "Beneficial Ownership of Common Stock" under
"Election of Directors" in the definitive proxy statement of
the Registrant dated August 23, 1996, relating to the
Registrant's annual meeting of shareholders to be held on
September 30, 1996.

Item 13. Certain Relationships and Related Transactions.

The information required by this Item 13 is incorporated
herein by reference to the information set forth under the
caption "Certain Transactions" in the definitive proxy
statement of the Registrant dated August 23, 1996, relating to
the Registrant's annual meeting of shareholders to be held on
September 30, 1996.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.

(a) The following documents are incorporated by reference into
or are filed as a part of this report:

1. Financial Statements:

The following consolidated financial statements and the
independent auditors' report thereon, included in the
Registrant's Annual Report to Shareholders for the
fiscal year ended June 1, 1996, a copy of which is
contained in the exhibits to this report, are
incorporated herein by reference:

Page Reference
in paper version
of Annual Report
to Shareholders
Consolidated Statements of Income for
the fiscal years ended June 1, 1996,
June 3, 1995 and June 4, 1994 24

Consolidated Balance Sheets as of
June 1, 1996 and June 3, 1995 25

Consolidated Statements of Shareholders'
Equity for the fiscal years ended
June 1, 1996, June 3, 1995 and
June 4, 1994 26

Consolidated Statements of Cash Flows
for the fiscal years ended June 1, 1996,
June 3, 1995 and June 4, 1994 27

Notes to Consolidated Financial Statements 28-40

Report of Independent Auditors 41

2. Financial statement schedules:

Financial statement schedules are omitted because they are
either not required or the required information is shown in
the financial statements or notes thereto.

3. Exhibits

The following exhibits are filed as part of this report:

RUBY TUESDAY, INC. AND SUBSIDIARIES
LIST OF EXHIBITS
Exhibit
Number Description

3.1 Articles of Incorporation of Ruby Tuesday, Inc. (1)

3.2 Bylaws of Ruby Tuesday, Inc.(1)

4.1 Specimen Common Stock Certificate. (1)

4.2 Articles of Incorporation of Ruby Tuesday, Inc. (filed as Exhibit 3.1
hereto). (1)

4.3 Bylaws of Ruby Tuesday, Inc. (filed as Exhibit 3.2 hereto). (1)

4.4 Rights Agreement dated as of March 30, 1987 between Morrison
Restaurants Inc. (predecessor to Ruby Tuesday, Inc.) and AmSouth
National Association (predecessor of AmSouth Bank of Alabama), as Rights
Agent. (2)

4.5 Form of Rights Certificate (attached as Exhibit B to the Rights Agreement
filed as Exhibit 4.4 hereto). (1)

10.1 Executive Supplemental Pension Plan together with First Amendment made
June 30, 1994 and Second Amendment made July 31, 1995.* (3)

10.2 [Reserved]

10.3 Morrison Restaurants Inc. Stock Incentive and Deferred Compensation Plan
for Directors together with First Amendment dated June 29, 1995. *(4)

10.4 1993 Executive Stock Option Program.* (5)

10.5 1993 Management Stock Option Program (July 1, 1993 - June 30, 1996).* (6)

10.6 Morrison Restaurants Inc. Long-Term Incentive Plan. * (7)

10.7 Morrison Restaurants Inc. 1987 Stock Bonus and Non-Qualified Stock Option
Plan, and Related Agreement.* (8)

10.8 Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive Plan.* (9)

10.9 Morrison Restaurants Inc. Deferred Compensation Plan, as restated
effective January 1, 1994 together with amended and restated Trust
Agreement (dated December 1, 1992) to Deferred Compensation Plan.* (10)

10.10 Supply Agreement Between Morrison Restaurants Inc. and PYA/Monarch, Inc.
dated July 8, 1988. (11)

10.11 Letter Agreement dated March 5, 1996 amending Supply Agreement between
Morrison Restaurants Inc. and PYA/Monarch, Inc. (1)

10.12 Morrison Restaurants Inc. Management Retirement Plan together with First
Amendment made June 30, 1994 and Second Amendment made July 31, 1995.*
(12)

10.13 Asset Purchase Agreement dated June 27, 1994, by and among Morrison
Restaurants Inc. and Gardner Merchant Food Services, Inc. and the related
exhibits to such agreement. (13)

10.14 Morrison Restaurants Inc. Salary Deferral Plan as amended and restated
December 31, 1993 together with amended and restated Trust Agreement
(effective January 1, 1994) First and Second Amendments to the Plan dated
October 21, 1994 and June 30, 1995, respectively, and the First Amendment
to the Trust Agreement made June 30, 1995.* (14)

10.15 Executive Group Life and Executive Accidental Death and Dismemberment
Plan.* (15)

10.16 Non-Qualified Option Agreement between Morrison Restaurants Inc. and Mr.
E.E. Bishop, dated January 30, 1987.* (16)

10.17 Non-Qualified Option Agreement between Morrison Restaurants Inc. and Mr.
S.E. Beall, III dated January 30, 1987.* (17)

10.18 Form of Non-Qualified Stock Option Agreement for Executive Officers
Pursuant to the Morrison Restaurants Inc. Stock Incentive Plan.* (18)

10.19 [Reserved]

10.20 First Amendment to Morrison Restaurants Inc. Long-term Incentive Plan.
* (19)

10.21 Amendments to Morrison Restaurants Inc. 1987 Stock Bonus and Non-
Qualified Stock Option Plan.* (20)

10.22 Morrison Restaurants Inc. Executive Life Insurance Plan.* (21)

10.23 Distribution Agreement dated as of March 2, 1996 among Morrison
Restaurants Inc., Morrison Fresh Cooking, Inc. and Morrison Health Care,
Inc. (1)

10.24 Amended and Restated Tax Allocation and Indemnification Agreement dated
as of March 2, 1996 among Morrison Restaurants Inc., Custom Management
Corporation of Pennsylvania, Custom Management Corporation, John C.
Metz & Associates, Inc., Morrison International, Inc., Morrison Custom
Management Corporation of Pennsylvania, Morrison Fresh Cooking, Inc.,
Ruby Tuesday, Inc., a Delaware corporation, Ruby Tuesday (Georgia), Inc.,
a Georgia corporation, Tias, Inc. and Morrison Health Care, Inc. (1)

10.25 Agreement Respecting Employee Benefit Matters dated as of March 2, 1996
among Morrison Restaurants Inc., Morrison Fresh Cooking, Inc. and
Morrison Health Care, Inc. (1)

10.26 License Agreement dated as of March 2, 1996 between Ruby Tuesday
(Georgia), Inc. and Morrison Health Care, Inc. (1)

10.27 Amended and Restated Operating Agreement of MRT Purchasing, LLC dated as
of March 2, 1996 among Morrison Restaurants Inc., Ruby Tuesday, Inc.,
Morrison Fresh Cooking, Inc. and Morrison Health Care, Inc. (1)

10.28 Form of 1996 Stock Incentive Plan.* (1)

10.29 Form of Second Amendment to Stock Incentive and Deferred Compensation
Plan for Directors.* (1)

10.30 Form of First Amendment to 1993 Non-Executive Stock Incentive Plan. * (1)

10.31 Form of Third Amendment to Executive Supplemental Pension Plan. * (1)

10.32 Form of Third Amendment to Management Retirement Plan. * (1)

10.33 Form of Third Amendment to Salary Deferral Plan. * (1)

10.34 Form of First Amendment to Deferred Compensation Plan. * (1)

10.35 Form of Second Amendment to Retirement Plan. * (1)

10.36 Form of Fourth Amendment to 1987 Stock Bonus and Non-Qualified Stock
Option Plan. * (1)

10.37 Form of Second Amendment to 1984 Long Term Incentive Plan. * (1)

10.38 Form of Indemnification Agreement to be entered into with executive
officers and directors. (1)

10.39 Form of Change of Control Agreement to be entered into with executive
officers. * (1)

10.40 Credit Agreement dated as of March 6, 1996 among Ruby Tuesday (Georgia),
Inc., SunTrust Bank, Atlanta, for itself and as Agent and Administrative
Agent, and the other lenders signatories thereto. (1)

11 Statement regarding computation of per share earnings.

13 Annual Report to Shareholders for the fiscal year ended June 1, 1996
(Only portions specifically incorporated by reference in the Form 10-K
are being filed herewith).

21 Subsidiaries of Registrant.

23 Consent of Independent Auditors.

27 Financial Data Schedule.

EXHIBIT FOOTNOTES

Exhibit
Footnote Description
* Management contract or compensatory plan or arrangement.

(1) Incorporated by reference to Exhibit of the same number on Form 8-B
dated March 15, 1996 of Ruby Tuesday, Inc. (File No. 0-12454).

(2) Incorporated by reference to Exhibit 4.2 to Quarterly Report on Form
10-Q of Morrison Restaurants Inc. for the fiscal quarter ended
February 28, 1987 (File No. 0-1750).

(3) Incorporated by reference to Exhibit 10(b) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 5,
1993 (File No. 0-1750).

(4) Incorporated by reference to Exhibit 10(c) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 3,
1995 (File No. 1-12454).

(5) Incorporated by reference to Exhibit 10(d) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 3,
1995 (File No. 1-12454).

(6) Incorporated by reference to Exhibit 10(e) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 3,
1995 (File No. 1-12454).

(7) Incorporated by reference to Exhibit 28 to Registration Statement on
Form S-8 of Morrison Restaurants Inc. (Reg. No. 2-97120).

(8) Incorporated by reference to Exhibit 28.1 to Registration Statement
on Form S-8 of Morrison Restaurants Inc. (Reg. No. 33-13593).

(9) Incorporated by reference to Exhibit 10(h) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 5,
1993 (File No. 0-1750).

(10) Incorporated by reference to Exhibit 10(i) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 5,
1993 (File No. 0-1750).

(11) Incorporated by reference to Exhibit 10(m) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended May 28,
1988 (File No. 0-1750).

(12) Incorporated by reference to Exhibit 10(n) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 3,
1995 (File No. 1-12454).

(13) Incorporated by reference to Exhibit (2) to the Current Report on Form
8-K dated July 27, 1995 of Morrison Restaurants Inc. (File No.
1-12454)

(14) Incorporated by reference to Exhibit 10(p) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 3,
1995 (File No. 1-12454).

(15) Incorporated by reference to Exhibit 10(q) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 3,
1989 (File No. 0-1750).

(16) Incorporated by reference to Exhibit 10(s) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 2,
1990 (File No. 0-1750).

(17) Incorporated by reference to Exhibit 10(t) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 2,
1990 (File No. 0-1750).

(18) Incorporated by reference to Exhibit 10(v) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 5,
1993 (File No. 0-1750).

(19) Incorporated by reference to Exhibit 10(y) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 4,
1994 (File No. 1-12454).

(20) Incorporated by reference to Exhibit 10(z) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 4,
1994 (File No. 1-12454).

(21) Incorporated by reference to Exhibit 10(a)(a) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 4,
1994 (File No. 1-12454).

(b) Reports on Form 8-K

Current Report on Form 8-K dated March 14, 1996 reporting
the spin-off of two subsidiaries, the reincorporation of
Morrison Restaurants Inc. in the state of Georgia pursuant to
a statutory merger effective March 9, 1996, the one-for-two
reverse stock split effected in conjunction with the
reincorporation, the name change to Ruby Tuesday, Inc. and the
details regarding the new credit agreement entered into as of
March 6, 1996.

(d) The financial statement schedules listed in subsection
(a) (2) above are attached hereto.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly
authorized.

RUBY TUESDAY, INC.

Date 8/29/96 By: /s/ Samuel E. Beall, III
Samuel E. Beall, III
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the
Registrant and in the capacities and on the dates
indicated:

Date 8/29/96 By: /s/ Samuel E. Beall, III
Samuel E. Beall, III
Chairman of the Board and
Chief Executive Officer

Date 8/29/96 By: /s/ J. Russell Mothershed
J. Russell Mothershed
Senior Vice President, Finance
Chief Financial Officer
Treasurer and Assistant Secretary

Date 8/29/96 By:/s/J.B. McKinnon
J. B. McKinnon
Director

Date 8/29/96 By: /s/ Dr. Donald Ratajczak
Dr. Donald Ratajczak
Director

Date 8/29/96 By:/s/ Dolph W. von Arx
Dolph W. von Arx
Director

Date 8/29/96 By:/s/ Claire L. Arnold
Claire L. Arnold
Director

Date 8/29/96 By:/s/ Arthur R. Outlaw
Arthur R. Outlaw
Vice-Chairman of the Board

Date 8/29/96 By:/s/ Dr. Benjamin F. Payton
Dr. Benjamin F. Payton
Director

RUBY TUESDAY, INC. AND SUBSIDIARIES
LIST OF EXHIBITS

Exhibit
Number Description

3.1 Articles of Incorporation and all mergers of Ruby Tuesday, Inc. (1)

3.2 Bylaws of Ruby Tuesday, Inc.(1)

4.1 Specimen Common Stock Certificate. (1)

4.2 Articles of Incorporation and all mergers of Ruby Tuesday, Inc. (filed
as Exhibit 3.1 hereto). (1)

4.3 Bylaws of Ruby Tuesday, Inc. (filed as Exhibit 3.2 hereto). (1)

4.4 Rights Agreement dated as of March 30, 1987 between Morrison Restaurants
Inc. (predecessor to Ruby Tuesday, Inc.) and AmSouth National Association
(predecessor of AmSouth Bank of Alabama), as Rights Agent. (2)

4.5 Form of Rights Certificate (attached as Exhibit B to the Rights Agreement
filed as Exhibit 4.4 hereto). (1)

10.1 Executive Supplemental Pension Plan together with First Amendment made
June 30, 1994 and Second Amendment made July 31, 1995.* (3)

10.2 [Reserved]

10.3 Morrison Restaurants Inc. Stock Incentive and Deferred Compensation Plan
for Directors together with First Amendment dated June 29, 1995. *(4)

10.4 1993 Executive Stock Option Program.* (5)

10.5 1993 Management Stock Option Program (July 1, 1993 - June 30, 1996).* (6)

10.6 Morrison Restaurants Inc. Long-Term Incentive Plan. * (7)

10.7 Morrison Restaurants Inc. 1987 Stock Bonus and Non-Qualified Stock Option
Plan, and Related Agreement.* (8)

10.8 Morrison Restaurants Inc. 1993 Non-Executive Stock Incentive Plan.* (9)

10.10 Supply Agreement Between Morrison Restaurants Inc. and PYA/Monarch, Inc.
dated July 8, 1988. (11)

10.11 Letter Agreement dated March 5, 1996 amending Supply Agreement between
Morrison Restaurants Inc. and PYA/Monarch, Inc. (1)

10.12 Morrison Restaurants Inc. Management Retirement Plan together with First
Amendment made June 30, 1994 and Second Amendment made July 31, 1995.*
(12)

10.13 Asset Purchase Agreement dated June 27, 1994, by and among Morrison
Restaurants Inc. and Gardner Merchant Food Services, Inc. and the
related exhibits to such agreement. (13)

10.15 Executive Group Life and Executive Accidental Death and Dismemberment
Plan.* (15)

10.16 Non-Qualified Option Agreement between Morrison Restaurants Inc. and Mr.
E.E. Bishop, dated January 30, 1987.* (16)

10.17 Non-Qualified Option Agreement between Morrison Restaurants Inc. and Mr.
S.E. Beall, III dated January 30, 1987.* (17)

10.18 Form of Non-Qualified Stock Option Agreement for Executive Officers
Pursuant to the Morrison Restaurants Inc. Stock Incentive Plan.* (18)

10.19 [Reserved]

10.20 First Amendment to Morrison Restaurants Inc. Long-term Incentive Plan. *
(19)

10.21 Amendments to Morrison Restaurants Inc. 1987 Stock Bonus and Non-
Qualified Stock Option Plan.* (20)

10.22 Morrison Restaurants Inc. Executive Life Insurance Plan.* (21)

10.23 Distribution Agreement dated as of March 2, 1996 among Morrison
Restaurants Inc., Morrison Fresh Cooking, Inc. and Morrison Health Care,
Inc. (1)

10.25 Agreement Respecting Employee Benefit Matters dated as of March 2, 1996
among Morrison Restaurants Inc., Morrison Fresh Cooking, Inc. and
Morrison Health Care, Inc. (1)

10.26 License Agreement dated as of March 2, 1996 between Ruby Tuesday
(Georgia), Inc. and Morrison Health Care, Inc. (1)

10.28 Form of 1996 Stock Incentive Plan.* (1)

10.29 Form of Second Amendment to Stock Incentive and Deferred Compensation
Plan for Directors.* (1)

10.30 Form of First Amendment to 1993 Non-Executive Stock Incentive Plan. * (1)

10.31 Form of Third Amendment to Executive Supplemental Pension Plan. * (1)

10.32 Form of Third Amendment to Management Retirement Plan. * (1)

10.33 Form of Third Amendment to Salary Deferral Plan. * (1)

10.34 Form of First Amendment to Deferred Compensation Plan. * (1)

10.35 Form of Second Amendment to Retirement Plan. * (1)

10.36 Form of Fourth Amendment to 1987 Stock Bonus and Non-Qualified Stock
Option Plan. * (1)

10.37 Form of Second Amendment to 1984 Long Term Incentive Plan. * (1)

10.38 Form of Indemnification Agreement to be entered into with executive
officers and directors. (1)

10.39 Form of Change of Control Agreement to be entered into with executive
officers. * (1)

11 Statement regarding computation of per share earnings.

13 Annual Report to Shareholders for the fiscal year ended June 1, 1996
(Only portions specifically incorporated by reference in the Form 10-K
are being filed herewith).

21 Subsidiaries of Registrant.

23 Consent of Independent Auditors.

27 Financial Data Schedule.

RUBY TUESDAY, INC.
EXHIBIT FOOTNOTES

Exhibit
Footnote Description
* Management contract or compensatory plan or arrangement.

(1) Incorporated by reference to Exhibit of the same number on Form 8-B dated
March 15, 1996 of Ruby Tuesday, Inc. (File No. 0-12454).

(2 ) Incorporated by reference to Exhibit 4.2 to Quarterly Report on Form 10-Q
of Morrison Restaurants Inc. for the fiscal quarter ended February 28,
1987 (File No. 0-1750).

(3) Incorporated by reference to Exhibit 10(b) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 5, 1993 (File
No. 0-1750).

(4) Incorporated by reference to Exhibit 10(c) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 3, 1995 (File
No. 1-12454).

(5) Incorporated by reference to Exhibit 10(d) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 3, 1995 (File
No. 1-12454).

(6) Incorporated by reference to Exhibit 10(e) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 3, 1995 (File
No. 1-12454).

(7) Incorporated by reference to Exhibit 28 to Registration Statement on Form
S-8 of Morrison Restaurants Inc. (Reg. No. 2-97120).

(8) Incorporated by reference to Exhibit 28.1 to Registration Statement on
Form S-8 of Morrison Restaurants Inc. (Reg. No. 33-13593).

(9) Incorporated by reference to Exhibit 10(h) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 5, 1993 (File
No. 0-1750).

(10) Incorporated by reference to Exhibit 10(i) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 5, 1993 (File
No. 0-1750).

(11) Incorporated by reference to Exhibit 10(m) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended May 28, 1988 (File
No. 0-1750).

(12) Incorporated by reference to Exhibit 10(n) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 3, 1995 (File
No. 1-12454).

(13) Incorporated by reference to Exhibit (2) to the Current Report on Form
8-K dated July 27, 1995 of Morrison Restaurants Inc. (File No. 1-12454)

(14) Incorporated by reference to Exhibit 10(p) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 3, 1995 (File
No. 1-12454).

(15) Incorporated by reference to Exhibit 10(q) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 3, 1989 (File
No. 0-1750).

(16) Incorporated by reference to Exhibit 10(s) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 2, 1990 (File
No. 0-1750).

(17) Incorporated by reference to Exhibit 10(t) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 2, 1990 (File
No. 0-1750).

(18) Incorporated by reference to Exhibit 10(v) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 5, 1993 (File
No. 0-1750).

(19) Incorporated by reference to Exhibit 10(y) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 4, 1994 (File
No. 1-12454).

(20) Incorporated by reference to Exhibit 10(y) to Annual Report on Form 10-K
of Morrison Restaurants Inc. for the fiscal year ended June 4, 1994 (File
No. 1-12454).

(21) Incorporated by reference to Exhibit 10(a)(a) to Annual Report on Form
10-K of Morrison Restaurants Inc. for the fiscal year ended June 4, 1994
(File No. 1-12454).

<TABLE>
RUBY TUESDAY, INC. AND SUBSIDIARIES

EXHIBIT 11

COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS EXCEPT PER-SHARE DATA)
<CAPTION>
Fiscal Year Ended
June 1, June 3, June 4,
1996 1995 1994

PRIMARY EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE

<S> <C> <C> <C>
Average common shares outstanding......... 17,689 17,321 17,987
Average additional common shares
issuable on exercise of dilutive
stock options (computed by use of
the "treaury stock method", at the
average market price)..................... 640 697

Number of shares used in computation of
primary earnings per share.............. 17,689 17,961 18,684

Net Income (loss)....................... $(2,884) $62,171 $44,684

Primary earnings (loss) per common and
common equivalent share................. $ (0.16) $ 3.46 $ 2.39

</TABLE>
</PAGE>
<PAGE>
<TABLE>

<CAPTION>
Fiscal Year Ended
June 1, June 3, June 4,
1996 1995 1994
FULLY DILUTED EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE

<S> <C> <C> <C>
Average common shares outstanding......... 17,689 17,321 17,987
Average additional common shares issuable
on exercise of dilutive stock options
(computed by use of the "treasury stock
method", at the higher of period-end
or average market price)................ 664 707

Number of shares used in computation of
fully diluted earnings per share........ 17,689 17,985 18,694

Net Income (loss)....................... $(2,884) $62,171 $44,684

Fully diluted earnings (loss) per common and
common equivalent share................. $ (0.16) $ 3.46 $ 2.39

Weighted average shares and all per share data for prior years have
been restated to give effect to common stock dividends and common stock splits
through June 1, 1996.
</TABLE>
</PAGE>
<PAGE>

RUBY TUESDAY, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per-share data)

For the Fiscal Year Ended
June 1, June 3, June 4,
1996 1995 1994
Revenues:
Net sales and operating revenues $ 618,803 $ 514,292 $ 458,451
Other revenues 1,331 1,020 588
620,134 515,312 459,039

Operating costs and expenses:
Cost of merchandise 170,352 138,665 127,862
Payroll and related costs 209,007 169,881 151,270
Other 134,043 106,028 94,330
Selling, general and administrative 39,139 37,521 34,250
Depreciation and amortization 34,131 26,634 23,353
L&N conversion/closing costs 19,727
Interest expense net of interest
income totaling $160 in 1996,
$736 in 1995, and $660 in 199 4,637 744 160
Loss on impairment of assets 25,881
Restructure charges 5,257
622,447 499,200 431,225

Income (loss) from continuing
operations before income taxes (2,313) 16,112 27,814

Provision (benefit) for federal
and state income taxes (1,651) 5,027 9,707

Income (loss) from continuing
operations (662) 11,085 18,107
Income (loss) from discontinued
operations, net of applicable
income taxes (2,222) 51,086 26,577

Net income (loss) $ (2,884) $ 62,171 $ 44,684

Earnings (loss) per common and
common equivalent share:
Continuing operations $ (0.03) $ 0.62 $ 0.97
Discontinued operations (0.13) 2.84 1.42

Earnings (loss) per common and
common equivalent share $ (0.16) $ 3.46 $ 2.39

Weighted average common and
common equivalent shares 17,689 17,961 18,684

The accompanying notes are an integral part of the consolidated financial
statements.
</PAGE>
<PAGE>
RUBY TUESDAY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

June 1, June 3,
Assets 1996 1995
Current assets:
Cash and short-term investments................. $ 7,139 $ 5,957
Receivables..................................... 2,040 2,475
Inventories:
Merchandise................................... 5,678 4,989
China, silver and supplies.................... 3,003 2,495
Prepaid expenses................................ 12,410 8,043
Prepaid income taxes............................ 2,988 3,758
Current assets of discontinued operations....... 52,481
Total current assets......................... 33,258 80,198

Property and Equipment - at cost:
Land............................................ 25,663 17,511
Buildings....................................... 55,284 38,728
Improvements.................................... 175,102 149,405
Restaurant equipment............................ 120,144 116,275
Other equipment................................. 28,122 26,206
Construction in progress........................ 39,160 38,945

Less accumulated depreciation and amortization.. 129,937 117,068
313,538 270,002

Costs in excess of net assets acquired............ 21,058 22,298

Non-current assets of discontinued operations..... 102,726

Other assets...................................... 13,262 8,827

Total assets...................................... $ 381,116 $ 484,051
</PAGE>
<PAGE>
RUBY TUESDAY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - (Continued)
(In thousands)

June 1, June 3,
Liabilities and Shareholders' Equity 1996 1995
Current liabilities:
Accounts payable................................. $ 26,386 $ 26,393
Short-term borrowings............................ 6,001 12,638
Accrued liabilities:
Taxes, other than income taxes................. 10,602 9,097
Payroll and related costs...................... 6,917 6,394
Insurance...................................... 7,478 6,396
Rent and other................................. 9,112 11,287
Current portion of long-term debt................ 95 87
Current liabilities of discontinued operations... 52,686
Total Current Liabilities...................... 66,591 124,978

Notes and mortgages payable........................ 76,108 32,003

Deferred income taxes.............................. 8,232 16,864

Other deferred liabilities......................... 32,842 18,672

Non-current liabilities of discontinued operations. 46,041

Shareholders' Equity:
Common stock, $0.01 par value; (authorized:
50,000 shares; issued: 1996 - 17,598 shares,
1995 - 21,822 shares)......................... 176 218
Capital in excess of par value.................. 1,762 84,733
Retained earnings............................... 198,354 298,181
200,292 383,132
Less cost of treasury stock..................... 2,949 137,639
197,343 245,493
Total Liabilities and Shareholders' Equity..... $ 381,116 $ 484,051

The accompanying notes are an integral part of the consolidated financial
statements.
</PAGE>
<PAGE>
<TABLE>

RUBY TUESDAY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands except per-share data)

<CAPTION>
Capital in Total
Common Stock Issued Treasury Stock Excess of Retained Stockholders'
Shares Amount Shares Amount Par Value Earnings Equity

<S> <C> <C> <C> <C> <C> <C> <C>
Balance, June 5, 1993........................ 29,097 $ 291 (4,723) $ (71,074) $ 75,181 $215,226 $219,624
Net income................................. 44,684 44,684
3-for-2 stock split........................ 14,547 145 (2,415) (145) 0
Shares issued under stock bonus and stock
option plans.............................. 484 5,844 2,620 8,464
Cash dividends of $0.6598 per common share. (11,866) (11,866)
Purchase of treasury stock
including deferred compensation plan...... (1,681) (39,770) (39,770)
Balance, June 4, 1994........................ 43,644 436 (8,335) (105,000) 77,656 248,044 221,136
Net income................................. 62,171 62,171
Shares issued under stock bonus and stock
option plans.............................. 562 7,792 3,132 10,924
Shares issued pursuant to Tias, Inc.
acquisition.............................. 355 5,273 3,727 9,000
Cash dividends of
$0.6916 per common share.................. (12,034) (12,034)
Purchase of treasury stock including
deferred compensation plan................ (1,701) (45,704) (45,704)
Balance, June 3, 1995........................ 43,644 436 (9,119) (137,639) 84,515 298,181 245,493
Net income (loss)......................... (2,884) (2,884)
Shares issued under stock bonus and stock
option plans............................. 84 1 129 1,926 1,663 251 3,841
Cash dividends of $0.543 per common share. (9,377) (9,377)
Purchase of treasury stock, net of changes
in deferred compensation plan............ 240 (858) (858)
Equity transfers to MFC and MHC........... 5,080 (43,952) (38,872)
Retirement of treasury stock.............. (8,616) (86) 8,616 128,542 (84,416) (44,040) 0
1-for-2 reverse stock split............... (17,514) (175) 175 0
Balance, June 1, 1996........................ 17,598 $ 176 (134) $ (2,949) $ 1,762 $198,354 $197,343

The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
</PAGE>
<PAGE>
<TABLE>
RUBY TUESDAY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

<CAPTION>
For the Fiscal Year Ended
June 1, June 3, June 4,
1996 1995 1994
Operating activities:
<S> <C> <C> <C>
Income (loss) from continuing operations......... $ (662) $ 11,085 $ 18,107
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Loss on impairment of assets................... 25,881
Depreciation................................... 34,131 26,634 23,353
Amortization of intangibles.................... 699 607 485
Other, net..................................... (1,118)
Deferred income taxes.......................... (7,157) 2,501 4,909
Loss on disposition of assets.................. 2,592 4,419 523
Changes in operating assets and liabilities:
(Increase)/decrease in receivables........... (282) (213) 878
Increase in inventories...................... (1,197) (1,059) (862)
(Increase)/decrease in prepaid and
other assets................................ 721 3,355 (2,116)
Increase in accounts payable,
accrued and other liabilities............... 14,989 18,810 6,677
Increase/(decrease) in income taxes payable.. (4,493) 1,205 (1,947)
Cash provided by continuing operations........... 64,104 67,344 50,007
Cash provided (used) by discontinued operations.. 10,030 (11,128) 58,514
Net cash provided by operating activities......... 74,134 56,216 108,521

Investing activities:
Purchases of property and equipment............. (109,164) (108,452) (70,189)
Proceeds from disposal of assets................ 3,444 153 67
Other, net...................................... (4,475) 2,701 (779)
Discontinued operations investing
activities, net................................ (14,448) 71,693 (22,826)
Net cash used by investing activities............. (124,643) (33,905) (93,727)

Financing activities:
Proceeds from long-term debt.................... 44,200 30,800 559
Net change in short-term borrowings............. (6,637) (11,828) 17,416
Principal payments on long-term debt and
capital leases................................. (87) (7,438)
Proceeds from issuance of stock,
including treasury stock....................... 3,841 10,924 8,464
Stock repurchases............................... (858) (45,704) (39,770)
Dividends paid.................................. (9,377) (12,034) (11,866)
Discontinued operations financing
activities, net................................ 20,609 14,506 (147)
Net cash provided (used) by financing activities.. 51,691 (20,774) (25,344)

Increase/(decrease) in cash and short-term
investments...................................... 1,182 1,537 (10,550)
Cash and short-term investments:
Beginning of period.............................. 5,957 4,420 14,970
End of period.................................... $ 7,139 $ 5,957 $ 4,420

Supplemental disclosure of cash flow information-
cash paid for:
Interest (net of amount capitalized)............ $ 4,252 $ 1,547 $ 656
Income taxes, net............................... $ 2,605 $ 5,200 $ 9,678

The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
</PAGE>

1. Summary of Significant Accounting Policies

Basis of Presentation
Ruby Tuesday, Inc. (the "Company") operates three separate and distinct
casual dining concepts comprised of Ruby Tuesday, Mozzarella's Cafes and Tia's
Tex-Mex restaurants. At June 1, 1996, the Ruby Tuesday concept consisted of
301 units concentrated primarily in the Northeast, Southeast, Mid-Atlantic and
the Midwest. With 46 company-owned establishments, Mozzarella's units are
primarily located in the Mid-Atlantic and the Southeast with particular
concentration in the Washington, D.C. area, Florida and Atlanta. The Company's
newest concept, Tia's Tex-Mex, operates 18 units located in the Southwest,
Southeast and Mid-Atlantic regions.
Prior to March 9, 1996, the Company was known as Morrison Restaurants Inc.
("Morrison"). Morrison operated three businesses in the foodservice industry.
These businesses were organized into two operating groups, the Ruby Tuesday
Group, consisting of the Company's casual dining concepts, and the Morrison
Group, which was comprised of Morrison's family dining restaurant and health
care food and nutrition services businesses. Effective March 9, 1996, the
shareholders of Morrison approved the spin-off (the "Distribution") of its
family dining restaurant and health care food and nutrition services businesses
to its shareholders. The spin-off resulted in the family dining restaurant and
health care food and nutrition services businesses operating as two separate
stand-alone, publicly-traded companies. In accordance with Accounting
Principles Board Opinion No. 30, the financial results of these two businesses,
together referred to as the Morrison Group, are reported as discontinued
operations. For accounting purposes, the Distribution is reflected as if it
occurred on March 2, 1996, the last day of the Company's third fiscal quarter.
As part of the Distribution, Morrison reincorporated in Georgia and changed
its name to Ruby Tuesday, Inc.
The accompanying consolidated financial statements have been prepared to
reflect the operations of the family dining restaurant and health care food and
nutrition businesses as discontinued operations for all periods presented, as
if the Company's casual dining restaurant operations had operated as a stand-
alone entity, thus all disclosures except for the information relating to
discontinued operations as presented in Note 2 of Notes to the Consolidated
Financial Statements relate to continuing operations only.

Fiscal Year
The Company's fiscal year ends on the first Saturday following May 30. The
fiscal years ended June 1, 1996, June 3, 1995, and June 4, 1994 were comprised
of 52 weeks.

Cash and Short-Term Investments
The Company's cash management program provides for the investment of excess
cash balances in short-term money market instruments. Short-term investments
are stated at cost, which approximates market. The Company considers
marketable securities with a maturity of three months or less when purchased to
be short-term investments.

Inventories
Inventories consist of materials, food supplies, china and silver and are
stated at the lower of cost (first in-first out) or market.

Property and Equipment and Depreciation
Depreciation for financial reporting purposes is computed using the
straight-line method over the estimated useful lives of the assets or, for
capital lease property, over the term of the lease, if shorter. Annual rates
of depreciation range from 3% to 5% for buildings and improvements and from 8%
to 34% for restaurant and other equipment.

Accounting Changes
During March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS 121").
FAS 121 requires that, beginning in fiscal years starting after December 15,
1995, long-lived assets and certain identifiable intangibles to be held and
used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.
As discussed in Note 3, the Company adopted FAS 121 during the third quarter
of fiscal year 1996.

Income Taxes
Deferred income taxes are determined utilizing a liability approach. This
method gives consideration to the future tax consequences associated with
differences between financial accounting and tax bases of assets and
liabilities.

Pre-Opening Expenses
Salaries, personnel training costs and other expenses of opening new
facilities are charged to expense as incurred.

Intangible Assets
Excess of costs over the fair value of net assets acquired of purchased
businesses generally is amortized on a straight-line basis over 40 years. At
June 1, 1996 and June 3, 1995, accumulated amortization for costs in excess of
net assets acquired was $5.3 million and $4.7 million, respectively.

Fair Value of Financial Instruments
The Company's financial instruments at June 1, 1996 and June 3, 1995
consisted of cash and short-term investments, notes receivable, short-term
borrowings and long-term debt. The fair value of these financial instruments
approximated the carrying amounts reported in the consolidated balance sheets.

Earnings Per Share
Earnings per share are based on the weighted average number of shares
outstanding during each year and are adjusted, when the effect is dilutive, for
the assumed exercise of options, after the assumed repurchase of shares with
the related proceeds, after adjustment for stock splits and stock dividends
through June 1, 1996.

Stock-Based Employee Compensation Plans
During October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" ("FAS 123"). FAS 123 establishes financial accounting and
reporting standards for stock-based employee compensation plans. FAS 123
defines a fair value-based method of accounting for an employee stock option or
similar equity instrument. FAS 123 allows an entity to continue to measure
compensation cost for those plans using the intrinsic value-based method of
accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees". The Company intends to continue to measure compensation cost
following the principles of APB Opinion No. 25 and will therefore be required
to present pro forma disclosures of net income and earnings per share as if the
fair value-based method had been applied beginning in fiscal 1997.

Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

2. Discontinued Operations
As previously mentioned, Morrison distributed the common stock of its family
dining restaurant business (Morrison Fresh Cooking, Inc., or "MFC") and its
health care contract food and nutrition business (Morrison Health Care, Inc.,
or "MHC") to its shareholders. Morrison shareholders received one share of
MFC stock for every four shares of Morrison stock and one share of MHC stock
for every three shares of Morrison stock. In accordance with Accounting
Principles Board Opinion No. 30, the financial results of the two businesses,
together referred to as the Morrison Group, are reported as discontinued
operations in the accompanying consolidated financial statements and the
results of the prior periods have been restated.
The condensed results presented below include an allocation of general
expenses of Morrison, such as legal, data processing and interest on a
specific identification method, where appropriate. Management believes the
allocation methods used are reasonable. Condensed results of the discontinued
operations are as follows:
(In thousands)
Fiscal Year Ended
1996 1995 1994

Revenues......................... $ 370,439 $ 519,777 $ 754,351
Income (loss) before provision
for income taxes............... $ (2,434) $ 88,600 $ 43,344
Provision (benefit) for federal
and state income taxes......... $ (212) $ 37,514 $ 16,767

Net income (loss)................ $ (2,222) $ 51,086 $ 26,577

Included in the June 3, 1995 income before provision for income taxes is
a $46.8 million gain on sale of certain business and industry contracts and
assets of MHC. Included in the June 1, 1996 income before provision for
income taxes is a charge of $23.7 million for costs associated with asset
impairment and restructuring.
As a result of the Distribution, the Company does not have any ownership
interest in either MFC or MHC, except for stock held by the rabbi trust
associated with the Company's Deferred Compensation Plan. (See Note 9 of
Notes to Consolidated Financial Statements for more information.) Prior to
the Distribution, the Company entered into agreements with both MFC and MHC
governing certain operating relationships among the Company, MFC and MHC
subsequent to the Distribution including (i) an agreement providing for
assumptions of liabilities and cross-indemnities to allocate responsibilities
for liabilities arising out of or in connection with business activities prior
to the Distribution; (ii) a tax indemnity agreement which provides that none
of the three companies will take any action that would jeopardize the intended
tax free consequences of the Distribution; (iii) a tax allocation agreement to
the effect that MFC and MHC will pay their respective shares of the Company's
consolidated tax liability for the tax years that MFC and MHC were included in
the Company's consolidated federal income tax return; (iv) intellectual
property license agreements which provided for the licensing of rights
currently owned by the Company to the three companies; and (v) an agreement
providing for the allocation of employee benefit rights and responsibilities
among the three companies.

3. Impairment of Long-Lived Assets/Restructure Charges
The Company adopted Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" ("FAS 121"), in the third quarter of fiscal 1996. A pre-tax
charge of $25.9 million was recorded of which $3.9 million, the difference
between fair value and net realizable value of the impaired assets, resulted
from the adoption of FAS 121. The $25.9 million charge is comprised of the
following: impairment on 16 units approved for closure within one year by the
Board of Directors on January 10, 1996, ($10.0 million); impairment on in-unit
computer equipment ($0.8 million) and write-offs resulting from management's
decision to abandon an information technology plan ($3.8 million) approved on
that same date; and impairment on units remaining open ($11.3 million).
The Board approved the closing of ten Ruby Tuesdays, four Mozzarella's and
two Tia's restaurants based upon management's review of negative cash flow and
operating loss units and other considerations. The expected loss on disposal
of the long-lived assets of these units is $10.0 million (net of an assumed
salvage value of $0.9 million). Included in this amount is $0.6 million which
represents the goodwill associated with two Tia's units to be closed. As of
June 1, 1996, nine of these units have been closed (six Ruby Tuesdays and
three Mozzarella's). Management anticipates closing the remaining seven units
during the first two quarters of fiscal 1997.
Prior to the initiation of the Distribution, Morrison was undertaking an
information technology project intended, among other things, to update or
replace certain accounting and human resource systems for all of Morrison.
Upon initiation of the intended Distribution, management commenced a project
by project review of the information technology plan. Upon completion of its
review, management decided to abandon certain projects in development,
including the project to update or replace certain accounting and human
resource systems. In connection therewith, the Company instituted a plan to
dispose of certain in-unit computer equipment and replace that equipment with
computers more technologically advanced. Accordingly, the Company recorded
the charge of $3.8 million for the write-off of the information technology
projects and $0.8 million for the remaining carrying value of certain in-unit
computer equipment.
Negative cash flow and operating loss units not recommended for closure were
also reviewed for impairment. Management believed these units might have been
impaired based upon poor operating performance. Accordingly, management
estimated the undiscounted future cash flows to be generated by these units
and determined that certain of them would not likely generate net cash flows
in excess of carrying value. Based upon third quarter operating and cash flow
results, two additional units were identified as impaired. Accordingly, the
charge of $11.3 million was recorded to reduce the carrying value of the
impaired assets (including the two units identified during the third quarter)
to their estimated fair value, as determined by using discounted estimated
future cash flows. Future cash flows were estimated based on considerable
management judgment. Thus actual cash flows could vary from such estimates.
As a result of the reduced carrying value of the impaired assets,
depreciation expense for the fourth quarter of fiscal 1996 was reduced by $0.6
million ($0.3 million after-tax or $0.02 per share) and fiscal 1997
depreciation expense is expected to be reduced by approximately $2.3 million
($1.4 million after-tax or $0.08 per share).
In addition to the write-down of fixed assets on the 16 units to be closed,
the Company accrued charges not included above of $3.4 million relating to the
settlement of the related lease obligations. Management estimates it can
negotiate lease settlements within 36 months on a majority of those units
which cannot be sublet. At June 1, 1996, $3.0 million of this reserve remains.
Other charges of $1.8 million were also recorded during the third quarter of
fiscal 1996. These charges consisted of estimated professional and other fees
incurred in accordance with the Distribution ($1.3 million); severance pay for
staff reductions expected during the quarter ($0.2 million) and miscellaneous
other asset write-offs ($0.3 million). Professional fees and severance pay
approximating the amounts accrued were paid prior to the end of the fiscal
year. No additional amounts are anticipated.

4. Acquisition of Tias, Inc.
On January 17, 1995, the Company acquired all of the outstanding common
stock of Tias, Inc., a 12-unit Tex-Mex restaurant concept based in Dallas,
Texas, for $9.0 million in common stock (177,336 shares). The acquisition was
accounted for as a purchase. Accordingly, the purchase price was allocated on
the basis of the estimated fair value of the assets acquired and liabilities
assumed. This treatment resulted in goodwill of $12.2 million which is being
amortized on a straight-line basis over 40 years. As discussed in Note 3 to
the Consolidated Financial Statements, the Company wrote off $0.6 million of
goodwill in accordance with the restructure approved by the Board of Directors
on January 10, 1996. This amount represented the goodwill associated with two
Tia's units to be closed.

5. Phase Out of the L&N Seafood Grill Concept
On June 27, 1994, plans to phase-out the L&N Seafood Grill concept were
announced by the Company. The original plan, as approved by the Board of
Directors, called for the conversion of 30 L&N units into other Company
concepts. All remaining units were to be sold or closed. The Company accrued
$19.7 million for costs to be incurred as a result of the phase-out. This
amount, originally accrued to cover the costs to convert 30 L&N units and
close the remaining eight, consisted primarily of the following: losses on
disposal of fixed assets net of anticipated proceeds and the net cost of
related lease obligations for the units to be closed ($11.6 million), expected
operating losses during the phase-out period ($4.8 million), severance pay
($1.1 million) and other losses on the conversion of units, consisting
primarily of the write-off of fixed assets, inventory, and unamortized cost in
excess of net assets acquired ($2.2 million). The Company originally
estimated that, of the $19.7 million charge, asset write-offs (including
inventory, fixed assets and goodwill) would total $9.2 million. Cash proceeds
from disposal of the properties were anticipated to be $0.7 million. The
remaining $11.2 million represented the estimated cash outlay for lease
settlements, severance pay and other operating expenditures. The original
plan assumed that no units would
be sublet and that buyout of leases could occur. Determination of the number
of months assumed in which buyouts could occur was made on an individual unit
basis.
Subsequent to the June 1994 announcement, the Company reacquired three
additional L&N units as a result of a default on a licensing agreement. These
three units were closed. Based on favorable operating results, in the third
quarter of fiscal 1995, management decided to continue to operate four of the
L&N units as L&N's through the remainder of their lease terms. During fiscal
1995, 21 of the L&N units were converted and are operating as other restaurant
concepts. In fiscal 1996, two additional units were converted and reopened as
Tia's.
The increase from the original plan in the number of units to be closed did
not result in a material increase to the $11.6 million closing cost estimate
as the increases necessary for the six additional units ultimately closed were
offset by decreases in estimates for the other units closed and the decrease
which resulted from the decision to continue to operate the four units
discussed above. Of the original $19.7 million accrued to phase out the
concept, $1.0 million and $6.0 million of reserves remain outstanding as of
June 1, 1996 and June 3, 1995, respectively.

6. Notes and Mortgages Payable
Notes and mortgages payable consists of the following:
(In thousands)
1996 1995
Revolving credit facility $25,000 $30,800
Term notes payable to banks 50,000
Other notes and mortgages 1,203 1,290
76,203 32,090
Less current maturities 95 87
$76,108 $32,003

Annual maturities of notes and mortgages at June 1, 1996 are as follows (in
thousands):
1997 $ 95
1998 103
1999 112
2000 121
2001 75,132
Subsequent years 640
Total $ 76,203

On March 6, 1996, the Company entered into a five-year credit facility with
several banks which allows the Company to borrow up to $100.0 million under
various interest rate options. The $100.0 million credit facility is comprised
of a $50.0 million five-year term note and a $50.0 million five-year revolving
credit facility. Commitment fees equal to 0.1875% per annum are payable
quarterly on the unused portion of the revolving credit facility. At June 1,
1996, the Company had $25.0 million of borrowings outstanding with various
banks under the revolving credit facility at interest rates ranging from 5.75%
to 5.87% per annum. Such borrowings (with maturities up to 180 days) have been
classified as long-term based on the Company's ability and intent to refinance
such borrowings under the revolving facility.
The credit facility provides for certain restrictions on incurring additional
indebtedness and certain funded debt, net worth, and fixed charge coverage
requirements. At June 1, 1996, retained earnings in the amount of $17.3 million
were available for distribution under the debt restrictions.
In order to control interest costs on the term loan, the Company entered into
an interest rate swap agreement. The notional amount of this agreement is
equal to the $50.0 million term loan. The agreement effectively fixes the
interest rate at 6.25% for the five-year period ended March 4, 2001. In
conjunction with entering into the new swap agreement, Morrison settled the
previous interest swap agreement at a cost of approximately $0.4 million.
Prior to the Distribution, each of the Company, MFC and MHC agreed to pay one-
third of the cost of settling the swap. Accordingly, the portion allocated to
the Company, $0.1 million, was included as part of the restructure costs
recorded in the third quarter of fiscal 1996.
The March 6, 1996 credit facility replaced previous indebtedness which had
been incurred by Morrison under a September 30, 1994 five-year revolving line
of credit with various banks. The 1994 credit facility allowed Morrison to
borrow up to $200.0 million under various interest rate options. Commitment
fees ranging from 0.0625% to 0.15% per annum were payable on the unused portion
of the credit facility. Based on the allocation of debt as of the date of the
Distribution, a pro rata percentage of Morrison's March 2, 1996 outstanding
balance under the revolving line of credit was allocated to MHC. This amount
totaled $27.1 million and was assumed by MHC at that date. The Company
retained the balance of Morrison's obligations under the revolving line of
credit at the time of distribution.
In addition, at June 1, 1996, the Company had committed lines of credit
amounting to $25.0 million (of which $19.0 million remain available at June 1,
1996) and non-committed lines of credit amounting to $10.0 million with various
banks at various interest rates. All of these lines of credit are subject to
periodic review by each bank and may be canceled by the Company at any time.
The Company utilized its lines of credit to meet operational cash needs during
fiscal year 1996. Borrowings on these lines of credit were $6.0 and $12.6
million at June 1, 1996 and June 3, 1995, respectively.
Interest expense capitalized in connection with financing additions to
property and equipment amounted to approximately $1.6 and $1.0 million for the
years ended June 1, 1996 and June 3, 1995, respectively.

7. Leases
Various operations of the Company are conducted in leased premises. Initial
lease terms expire at various dates over the next 23 years and may provide for
escalation of rent during the lease term. Most of these leases provide for
additional contingent rents based upon sales volume and contain options to
renew (at adjusted rentals for some leases). The administrative headquarters
has a lease term ending in 1998 and provides an option to purchase at a nominal
amount at the end of the initial lease term.
Assets recorded under capital leases (included in Property and Equipment in
the accompanying consolidated balance sheets) are as follows:

(In Thousands) 1996 1995
Buildings $4,500 $4,500
Other equipment 50
4,500 4,550
Less accumulated amortization 2,229 2,149
$ 2,271 $ 2,401

The capital lease obligation relating to the administrative headquarters
lease are considered extinguished in accordance with Statement of Financial
Accounting Standards No. 76 concerning in-substance defeasance of corporate
debt. U. S. Treasury Bills and cash have been placed in an irrevocable trust
to satisfy scheduled payments of both interest and principal on this capital
lease obligation.
At June 1, 1996, the future minimum lease payments under operating leases for
the next five years and in the aggregate are as follows:

(In Thousands) _
1997 $ 34,817
1998 35,123
1999 34,412
2000 32,820
2001 31,881
Subsequent years 243,082
Total minimum lease payments $412,135

Rental expense pursuant to operating leases is summarized as follows:

(In Thousands) 1996 1995 1994_
Minimum rent $35,357 $30,337 $24,732
Contingent rent 768 1,416 1,677
$36,125 $31,753 $26,409

8. Income Taxes
The components of income tax expense (benefit) are as follows:

(In thousands)
1996 1995 1994
Current:
Federal $ 4,323 $ 1,959 $ 3,835
State 1,183 567 963
5,506 2,526 4,798
Deferred:
Federal (5,949) 2,313 4,105
State (1,208) 188 804
(7,157) 2,501 4,909
$(1,651) $ 5,027 $ 9,707

Deferred tax assets and liabilities are comprised of the following:

(In thousands)
1996 1995
Deferred tax assets:
Employee benefits $ 7,626 $ 3,609
Insurance reserves 4,005 3,124
Escalating rents 3,451 2,348
Acquired net operating losses 2,551 2,629
Restructuring and FAS 121 reserves 1,264
Unit closing reserve 313 2,626
Other 687 245
Total deferred tax assets 19,897 14,581

Deferred tax liabilities:
Depreciation 20,493 24,534
Prepaid deductions 1,010 1,593
Retirement plans 833 624
Other 2,805 936
Total deferred tax liabilities 25,141 27,687
Net deferred tax (liability) $ (5,244) $(13,106)

At June 1, 1996, the Company had net operating loss carryforwards for tax
purposes of approximately $6.5 million as a result of the acquisition of Tias,
Inc., which expire through 2002. The Company's net operating loss
carryforwards are subject to an annual limitation for tax reporting purposes
due to changes in ownership of the acquired company. Management does not
believe a valuation allowance is necessary.
A reconciliation from the statutory federal income tax expense (benefit) to
the reported income tax expense is as follows:
(In thousands)
1996 1995 1994
Statutory federal income taxes $ (810) $ 5,639 $ 9,735
State income taxes net of federal
income tax benefit (68) 549 1,128
Tax credits (1,349) (2,964) (1,579)
Other, net 576 1,803 423
$ (1,651) $ 5,027 $ 9,707

The effective income tax rate (benefit) was (71.4)%, 31.2%, and 34.9% in 1996,
1995, and 1994, respectively. The increase in the effective tax benefit for
1996 is attributable to the tax credits which were available to the Company.

9. Employee Benefit Plans
Salary Deferral Plan - Under the Ruby Tuesday, Inc. Salary Deferral Plan each
eligible employee may elect to make pre-tax contributions to a trust fund in
amounts ranging from 2% to 10% of their annual earnings. Employees
contributing a pre-tax contribution of at least 2% may elect to make after-tax
contributions not in excess of 10% of annual earnings. The Company contribu-
tion to the Plan is based on the employee's pre-tax contribution and years of
service. After three years of service the Company contributes 20% of the
employee's pre-tax contribution, 30% after ten years of service and 40% after
20 years of service. Normally, the full amount of each participant's interest
in the trust fund is paid upon termination of employment. However, the Plan
allows participants to make early withdrawals of pre-tax and after-tax
contributions, subject to certain restrictions. The Plan may be terminated by
the Company at any time. The Company's contributions to the trust fund
approximated $0.2 million, $0.1 million, and $0.1 million for 1996, 1995, and
1994, respectively.
Deferred Compensation Plan - The Company maintains the Ruby Tuesday, Inc.
Deferred Compensation Plan for certain selected employees. The provisions of
this Plan are similar to those of the Salary Deferral Plan. The Company's
contributions under the Plan approximated $0.1 million for each of 1996, 1995,
and 1994. Company assets earmarked to pay benefits under the Plan are held by
a rabbi trust. Under current accounting rules, assets of a rabbi trust must be
accounted for as if they are assets of the Company, therefore, all earnings and
expenses are recorded in the Company's financial statements. The Plan's
assets, which approximated $9.5 million and $6.1 million in 1996 and 1995,
respectively, are included in Other Assets in the Consolidated Balance Sheets.
Retirement Plan - The Company, along with MFC and MHC, sponsors the Morrison
Restaurants Inc. Retirement Plan. Effective December 31, 1987, the Plan was
amended so that no additional benefits will accrue and no new participants will
enter the Plan after that date. Participants will receive benefits based upon
salary and length of service. Certain responsibilities involving the
administration of the Plan are jointly shared by each of the three companies.
No contribution was made in 1996, 1995, or 1994. The Company recorded net
pension expense of $44,000 in 1996 and income of $2,000 in each of 1995 and
1994.
Executive Supplemental Pension Plan - Under the Ruby Tuesday, Inc. Executive
Supplemental Pension Plan, employees with an average annual compensation of at
least $120,000 and who have completed five years in a qualifying position
become eligible to earn supplemental retirement income based upon salary and
length of service, reduced by social security benefits and amounts otherwise
receivable under the Retirement Plan. Expenses under the Plan approximated
$0.6 million, $0.5 million, and $0.4 million for 1996, 1995, and 1994,
respectively.
Management Retirement Plan - Under the Ruby Tuesday, Inc. Management
Retirement Plan, individuals actively employed by the Company as of June 1,
1989, or thereafter, who have 15 years of credited service and whose average
annual compensation equals or exceeds $40,000, become participants.
Participants will receive benefits based upon salary and length of service,
reduced by social security benefits and benefits payable under the Retirement
Plan. Expenses recognized approximated $0.3 million, $0.1 million, and $0.1
million in 1996, 1995, and 1994, respectively.
To provide a source for the payments of benefits under the Executive
Supplemental Pension Plan and the Management Retirement Plan, the Company owns
whole-life insurance contracts on some of the participants. The cash value of
these policies net of policy loans is $3.0 million at June 1, 1996. The
Company maintains a rabbi trust to hold the policies and death benefits as they
are received.
The table presented on the following page details the components of pension
expense, the funded status and amounts recognized in the Company's Consolidated
Financial Statements for the Management Retirement Plan, the Executive
Supplemental Pension Plan, and the Retirement Plan. Amounts presented are in
thousands.
<PAGE>
<TABLE>

<CAPTION>
Assets Exceed Accumulated Benefits Exceed Assets-
Accumulated Benefits- Executive Supplemental Pension Plan
Retirement Plan and Management Retirement Plan
1996 1995 1994 1996 1995 1994

<S> <C> <C> <C> <C> <C> <C>
Components of pension expense (income):
Service cost......................... $ $ $ $ 96 $ 73 $ 71

Interest cost........................ 334 31 31 525 276 247

Actual return on plan assets......... (787) (10) (46)

Amortization and deferral............ 497 (23) 13 294 123 171

Other................................ 89
$ 44 $ (2) $ (2) $ 915 $ 561 $ 489

Plan assets at fair value............ $ 4,502 $ 382 $ 446 $ 0 $ 0 $ 0

Actuarial present value of
projected benefit obligations:
Accumulated benefit obligations:
Vested............................ 4,432 374 435 7,479 3,434 2,088
Nonvested......................... 63 8 598
Provision for future salary
increases......................... 1,960 883 1,515
Total projected benefit obligations... 4,432 374 435 9,502 4,325 4,201

Excess (deficit) of plan assets over
projected benefit obligations........ 70 8 11 (9,502) (4,325) (4,201)
Unrecognized net loss (gain).......... 607 74 67 235 (265) 160
Unrecognized prior service cost....... 840 665 211

Unrecognized net transition obligation 389 41 47 1,510 993 1,291

Additional minimum liability.......... (1,164) (578) (343)
Prepaid (accrued) pension cost........ $ 1,066 $ 123 $ 125 $ (8,081) $ (3,510) $ (2,882)
</TABLE>
</PAGE>

The Retirement Plan's assets include common stock, fixed income securities,
short-term investments and cash. The weighted-average discount rate for all
three plans is 7.75%, 8.5%, and 7.5% for 1996, 1995, and 1994, respectively.
The rate of increase in compensation levels for the Executive Supplemental
Pension Plan and Management Retirement Plan is 4% for 1996 and 1995 and 5% for
1994. The expected long-term rate of return on plan assets for the Retirement
Plan is 10% for all three years.

10. Preferred Stock
Under its Certificate of Incorporation the Company is authorized to issue
preferred stock with a par value of $0.01 in an amount not to exceed 250,000
shares which may be divided into and issued in designated series, with
dividend rates, rights of conversion, redemption, liquidation prices and other
terms or conditions as determined by the Board of Directors. No preferred
shares have been issued as of June 1, 1996. The Board of Directors has
designated 50,000 of such shares as Series A Junior Participating Preferred
Stock and has issued rights to acquire such shares, upon certain events, with
an exercise price of $75.00 per one one-thousandth of a share, subject to
adjustment. The rights expire on April 9, 1997, and may be redeemed prior to
ten days after the acquisition of 20% or more of the Company's common stock.

11. Capital Stock, Options, And Bonus Plans
The Ruby Tuesday, Inc. 1996 Stock Incentive Plan - In March 1996, the
shareholders approved the Ruby Tuesday, Inc. 1996 Stock Incentive Plan which is
an amendment and restatement of the Morrison Restaurants Inc. 1992 Stock
Incentive Plan. A Committee, appointed by the Board, administers the Plan on
behalf of the Company and has complete discretion to determine participants and
the terms and provisions of Stock Incentives, subject to the Plan. The Plan
permits the Committee to make awards of shares of common stock, awards of
derivative securities related to the value of the common stock, and certain
cash awards to eligible persons. These discretionary awards may be made on an
individual basis or pursuant to a program approved by the Committee for the
benefit of a group of eligible persons. All options awarded under this plan
have been at the prevailing market value at the time of issue or grant. During
1996, 22,000 shares were issued under the Plan. At June 1, 1996, the Company
had reserved a total of 819,000 shares of common stock for this Plan.
The Ruby Tuesday, Inc. Stock Incentive and Deferred Compensation Plan for
Directors - In March 1996, the shareholders approved the Ruby Tuesday, Inc.
Stock Incentive and Deferred Compensation Plan for Directors, which is a
continuation of the similarly titled 1994 Morrison plan. To defer the receipt
of their retainer fees or to allocate their retainer fees to the purchase of
shares of the Company, the Plan provides that the directors must use 60% of
their retainer to purchase shares of the Company if they have not attained a
specified level of ownership of shares of Company common stock. Each director
purchasing stock receives additional shares equal to 15% of the shares
purchased and three times the total shares in options which after six months
are exercisable for five years from the grant date. During 1996, 3,000 shares
were issued under the Plan. Pursuant to this Plan, a one-time restricted stock
award totaling 5,000 shares was made in fiscal 1995 to each non-management
director who was elected after September 1993. All options awarded under this
plan have been at the prevailing market value at the time of issue or grant. A
Committee, appointed by the Board, administers the Plan on behalf of the
Company. At June 1, 1996, the Company had reserved 95,000 shares of common
stock for the Plan.
The Ruby Tuesday, Inc. 1996 Non-Executive Stock Incentive Plan - In March
1996, the Board of Directors approved the Ruby Tuesday, Inc. 1996 Non-Executive
Stock Incentive Plan, which is an amendment and restatement of the similarly
titled 1993 Morrison plan. A Committee, appointed by the Board, administers
the Plan on behalf of the Company and has full authority in its discretion to
determine the officers and key employees to whom Stock Incentives are granted
and the terms and provisions of Stock Incentives, subject to the Plan. The
Plan permits the Committee to make awards of shares of common stock, awards of
derivative securities related to the value of the common stock, and certain
cash awards to eligible persons. These discretionary awards may be made on an
individual basis or pursuant to a program approved by the Committee for the
benefit of a group of eligible persons. All options awarded under this plan
have been at the prevailing market value at the time of issue or grant. During
1996, 91,000 shares were issued under the Plan. At June 1, 1996, the Company
had reserved a total of 1,320,000 shares of common stock for this Plan.
In March 1996, the number and exercise price of all outstanding options were
adjusted for the spin-off of MFC and MHC and the concurrent reverse one-for-two
split of the Company shares. This adjustment decreased the number of options
outstanding by 1,368,000 and increased each outstanding option's exercise
price.
In addition to the above plans, stock options remain outstanding under two
terminated plans, the Ruby Tuesday, Inc. Long-Term Incentive Plan, which was
effective from 1984 to 1989, and the Ruby Tuesday, Inc. Stock Bonus and Non-
Qualified Stock Option Plan, which was effective from 1986 to 1992. Options to
purchase 8,000 and 472,000 shares, respectively, remain outstanding under the
terms of these two plans at June 1, 1996.
The following table summarizes the activity in options under these stock
option plans (option amounts and prices for 1994 and 1995 are derived from the
historical financial statements of Morrison Restaurants Inc. and do not reflect
the March 1996 reverse stock split):

Number of Shares Under Options
(In thousands except per-share data)
1996 1995 1994
Beginning of year 2,695 2,717 2,386
Adjustment due to MFC
and MHC spin-off and
reverse stock split (1,368)
Granted 1,340 343 755
Exercised (87) (258) (313)
Forfeited (115) (107) (111)
End of year 2,465 2,695 2,717
Exercisable 808 971 958
Outstanding options' prices $ 8.09-$30.57 $ 7.61-$28.75 $ 5.40-$25.38
Exercised options' prices $ 7.61-$14.09 $ 5.40-$25.38 $ 5.40-$11.36
Granted options' prices $13.62-$23.50 $14.01-$28.75 $11.88-$25.38

12. Contingencies
At June 1, 1996, the Company was contingently liable for approximately $15.5
million in letters of credit, issued primarily in connection with its workers'
compensation and casualty insurance programs.
The Company is presently, and from time to time, subject to pending claims
and lawsuits arising in the ordinary course of its business. In the opinion of
management, the ultimate resolution of these pending legal proceedings will not
have a material adverse effect on the Company's operations or consolidated
financial position.

<PAGE>
<TABLE>
13. Supplemental Quarterly Financial Data (Unaudited)

Quarterly financial results for the years ended June 1, 1996 and June 3,
1995, are summarized below. All quarters are composed of 13 weeks.
<CAPTION>
FIRST SECOND THIRD FOURTH
In thousands except per-share data) QUARTER QUARTER QUARTER QUARTER TOTAL
For The Year Ended June 1, 1996:
<S> <C> <C> <C> <C> <C>
Revenues $145,964 $152,001 $163,957 $158,212 $620,134

Gross profit* $ 25,448 $ 23,068 $ 30,435 $ 27,781 $106,732

Income (loss) before income taxes $ 6,211 $ 3,125 $(20,981)** $ 9,332 $ (2,313)

Provision (benefit) for federal and
state income taxes 2,000 1,038 (8,142) 3,453 (1,651)

Income (loss) from continuing
operations 4,211 2,087 (12,839) 5,879 (662)

Income (loss) from discontinued
operations 5,245 4,647 (12,114)** - (2,222)

Net income (loss) $ 9,456 $ 6,734 $(24,953) $ 5,879 $ (2,884)

Earnings (loss) per common and
common equivalent share:
Continuing operations $ 0.24 $ 0.13 $ (0.73) $ 0.33 $ (0.03)
Discontinued operations 0.29 0.26 (0.68) - (0.13)

$ 0.53 $ 0.39 $ (1.41) $ 0.33 $ (0.16)
</TABLE>
<TABLE>

<CAPTION>
FIRST SECOND THIRD FOURTH
(In thousands except per-share data) QUARTER QUARTER QUARTER QUARTER TOTAL
For The Year Ended June 3, 1995:
<S> <C> <C> <C> <C> <C>
Revenues $113,284 $120,778 $142,094 $139,156 $515,312

Gross profit* $ 24,026 $ 24,232 $ 28,626 $ 23,854 $100,738

Income (loss) before income taxes $(11,229)***$ 8,267 $ 12,293 $ 6,781 $ 16,112

Provision (benefit) for federal and
state income taxes (4,784) 2,945 4,425 2,441 5,027

Income (loss) from continuing
operations (6,445) 5,322 7,868 4,340 11,085

Income from discontinued operations 30,955**** 6,809 5,274 8,048 51,086

Net income $ 24,510 $ 12,131 $ 13,142 $ 12,388 $ 62,171

Earnings (loss) per common and
common equivalent share:
Continuing operations $ (0.35) $ 0.28 $ 0.44 $ 0.25 $ 0.62
Discontinued operations 1.70 0.39 0.30 0.45 2.84

$ 1.35 $ 0.67 $ 0.74 $ 0.70 $ 3.46

* The Company defines gross profit as revenue less cost of merchandise,
payroll and related costs, and other operating costs and expenses.
** Continuing operations includes a pre-tax loss of $25.9 million recognized as a
result of the implementation of FAS 121, other asset impairment charges and a $5.3
million restructure charge. Discontinued operations includes a pre-tax loss of
$23.7 million recognized for costs associated with asset impairment and
restructurings.
*** Includes a pre-tax loss of $19.7 million recognized upon the decision to phase
out the L&N Seafood Grill concept.
**** Includes a pre-tax gain of $46.8 million ($25.8 million net of tax) realized
upon the sale of certain business and industry contracts and assets of MHC.
</TABLE>
</PAGE>
<PAGE>
Morrison Restaurants Inc. common stock was traded on the New York Stock
Exchange under the ticker symbol RI. In connection with the Distribution,
Morrison effected a one-for-two reverse stock split and changed its name to
Ruby Tuesday, Inc. The common stock for Ruby Tuesday, Inc. is traded under
the same ticker symbol, RI. The following table sets forth the reported high
and low prices for each quarter during fiscal 1996 and 1995 for (i) the common
stock of Morrison Restaurants Inc. prior to the Distribution, not adjusted for
either the Distribution or the reverse stock split; and (ii) the common stock
of Ruby Tuesday, Inc. after the Distribution.

Fiscal Year Ended June 1, 1996 Fiscal Year Ended June 3, 1995

As Morrison Restaurants Inc. As Morrison Restaurants Inc.

Per Share Per Share
Cash Cash
Quarter High Low Dividends Quarter High Low Dividends
First $25.75 $19.13 $0.1750 First $25.88 $20.88 $0.1666
Second $20.63 $15.50 $0.1840 Second $29.75 $24.88 $0.1750
Third $17.38 $12.50 $0.1840 Third $27.88 $22.88 $0.1750
Fourth $26.88 $20.88 $0.1750

As Ruby Tuesday, Inc.
Per Share
Cash
Quarter High Low Dividends
Fourth $23.00 $17.25 $0.0000

</PAGE>
<PAGE>
Report of Independent Auditors

Shareholders and Board of Directors
Ruby Tuesday, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of
Ruby Tuesday, Inc. as of June 1, 1996 and June 3, 1995, and the related
consolidated statements of income, shareholders' equity and cash flows
for each of the three fiscal years in the period ended June 1, 1996.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Ruby Tuesday, Inc. and Subsidiaries at June 1, 1996 and June 3, 1995,
and the consolidated results of their operations and their cash flows
for each of the three fiscal years in the period ended June 1, 1996, in
conformity with generally accepted accounting principles.
As discussed in Note 3 to the consolidated financial statements, in
fiscal 1996 the Company changed its method of accounting for the
impairment of long-lived assets and for long-lived assets to be disposed
of.

ERNST & YOUNG LLP
Birmingham, Alabama
June 19, 1996

</PAGE>
<PAGE>

RUBY TUESDAY, INC. AND SUBSIDIARIES

EXHIBIT 21

SUBSIDIARIES OF REGISTRANT

(a) The Registrant has no parent.

(b) The Registrant's subsidiaries and their jurisdictions of each
organization are as follows (100% of voting securities of each
subsidiary owned by the Registrant):

Delaware:

Morrison International, Inc.

Texas:
Tias, Inc.

In addition to the subsidiaries listed above, the Registrant
has a minority ownership in several operating subsidiaries and
several wholly-owned and minority interests in non-operating
subsidiaries created solely for the purpose of holding certain
licenses.

</PAGE>
<PAGE>

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-32697) pertaining to the Ruby Tuesday, Inc. Deferred
Compensation Plan, in the Registration Statement (Form S-8 No. 333-03165)
pertaining to the Ruby Tuesday, Inc. Deferred Compensation Plan , in the
Registration Statement (Form S-8 No. 33-20585) pertaining to the Ruby Tuesday,
Inc. Salary Deferral Plan, in the Registration Statement (Form S-8 No.
333-03153) pertaining to the Ruby Tuesday, Inc. Salary Deferral Plan, in the
Registration Statement (Form S-8 No. 2-97120) pertaining to Ruby Tuesday, Inc.
Long-Term Incentive Plan, in the Registration Statement (Form S-8 No.
33-13593) pertaining to the Ruby Tuesday, Inc. 1987 Stock Bonus and Non-
Qualified Stock Option Plan, in the Registration Statement (Form S-8 No.
33-46220) pertaining to the Ruby Tuesday, Inc. Compensatory Non-Qualified
Stock Option Arrangements, in the Registration Statement (Form S-8 No. 33-56452)
pertaining to the Ruby Tuesday, Inc. Stock Incentive and Compensation Plan for
Directors, Stock Incentive Plan and Non-Qualified Management Stock Option
Agreements, in the Registration Statement (Form S-8 No. 333-03155) pertaining to
the Ruby Tuesday, Inc. 1996 Stock Incentive Plan, in the Registration Statement
(Form S-8 No. 333-03157) pertaining to the Ruby Tuesday, Inc. 1993 Non-Executive
Stock Incentive Plan, in the Resgistration Statement (Form S-8 No. 33-70490)
pertaining to the Ruby Tuesday, Inc. 1993 Non-Executive Stock Incentive Plan,
in the Registration Statement (Form S-8 No. 33-46218) pertaining to the Ruby
Tuesday,Inc. 1989 Non-qualified Stock Option Plan,and in the Registration
Statement (Form S-3 No. 33-57159) of Ruby Tuesday, Inc., of our report dated
June 19,1996, with respect to the consolidated financial statements of Ruby
Tuesday, Inc. incorporated by reference in the Annual Report (Form 10-K) for the
yearended June 1, 1996.

/s/ Ernst & Young LLP
Ernst & Young LLP

Birmingham, Alabama
August 27, 1996

</PAGE>
<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RUBY
TUESDAY, INC. FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDED JUNE 1, 1996
AND ARE QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-01-1996
<PERIOD-END> JUN-01-1996
<CASH> 7,139
<SECURITIES> 0
<RECEIVABLES> 2,040
<ALLOWANCES> 0
<INVENTORY> 8,681
<CURRENT-ASSETS> 33,258
<PP&E> 443,475
<DEPRECIATION> 129,937
<TOTAL-ASSETS> 313,538
<CURRENT-LIABILITIES> 66,591
<BONDS> 76,108
0
0
<COMMON> 176
<OTHER-SE> 197,167
<TOTAL-LIABILITY-AND-EQUITY> 381,116
<SALES> 618,803
<TOTAL-REVENUES> 620,134
<CGS> 170,352
<TOTAL-COSTS> 416,320
<OTHER-EXPENSES> 31,138
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,637
<INCOME-PRETAX> (2,313)
<INCOME-TAX> (1,651)
<INCOME-CONTINUING> (662)
<DISCONTINUED> (2,222)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,884)
<EPS-PRIMARY> $(0.16)
<EPS-DILUTED> $(0.16)

</TABLE>