Marco Julian Serrano Darden Restaurants Inc, the company owning Olive Garden and Ruth’s Chris Steak House, has disclosed purchase of the TexMex chain, Chuy’s Holdings Inc., for about 605 million. The purchase includes payment in cash of $37.50 per share, a 48% premium to Chuy’s prior closing price.
The Acquisition Information
- Darden is paying about $605 million cash for Chuy, around $37.50 per share.
- The buy is estimated to finalise in Darden’s fiscal second quarter, which ends November 2024.
- The Chuy’s board of directors has approved the integration agreement without disagreement.
- The deal includes a 30 day period for Chuy’s to invite other proposals, called a “go shop” period.
Chuy’s Background
Chuy’s, started in 1982 in Austin, Texas, serves authentic TexMex food in a lively, original setting. With 101 restaurants in 15 states, including 10 around Houston, the chain delivers distinct dishes with unusual names, like “Big As Yo’ Face Burritos” and “ChickaChickaBoomBoom Enchiladas,” and showcases their creamy jalapeno salsa and the yearly Hatch Green Chile Festival.
Chuy’s Financial Overview
In the one year ending March 31, 2024, Chuy’s brought in over $450 million. Despite some financial issues, including same store sales dropping 4.3% in the first quarter of 2024, the chain has stayed strong. They have boosted their noninstore mix, with delivery making up 12% of sales. Catering is expected to be 4% to 6% of sales for the long term. Seasonal menu items, like Green Chili Barbecue Ribs and Fat Daddy Flautas, have drawn in customers.
Darden’s Growth Strategy
The Chuy’s buyout is a part of Darden’s large plan to grow and expand their reach. Rick Cardenas, Darden’s president and CEO, mentioned Chuy’s strong results and expansion possibilities make it a great addition to Darden. Darden previously bought Ruth’s Hospitality Group for $715 million in 2023, proving its continuous drive to grow, even amid industry struggles.
“Chuy’s aligns well with the Darden brand and supports our successful strategy,” stated Cardenas. “We will speed up our business aims and serve our genuine TexMex to more customers and neighbourhoods.”
Adding to Darden’s Variety
- The purchase adds a TexMex chain to Darden’s varied portfolio, which already includes Olive Garden, LongHorn Steakhouse, Yard House, Bahama Breeze, among others.
- This variety should boost Darden’s market position and offer new avenues for growth in the full service dining segment.
Chuy’s Upcoming Plans
Chuy’s CEO, Steven Hislop, showed his zeal for joining Darden, citing shared values and work philosophies. “Our values align well, with our focus on great team member cultures,” said Hislop. “We will speed up our business aims and serve our genuine TexMex to more customers and neighbourhoods.”
The acquisition should provide Chuy’s the required resources to broaden its reach and continue producing top quality TexMex food for a wider audience. Darden is looking to keep a healthy balance sheet and use capital to maintain existing restaurants, develop new ones, and return capital to shareholders through dividends and smart share buybacks.
Wrap Up
Darden Restaurants buying Chuy’s is an important step in the restaurant industry, with the potential to expand Darden’s portfolio and Chuy’s impact. This event highlights Darden’s focus on growth and increasing variety, getting both companies ready for future prosperity.
With Darden’s support, Chuy’s is ready to keep serving genuine TexMex food in a fun and unique setting, pleasing customers throughout the United States.
