USA – Darden Restaurants, an American multi-brand restaurant operator, is set to acquire Chuy’s in a deal worth approximately US$605 million.
Chuy’s would be Darden’s first restaurant chain focusing on Mexican food.
According to a news release, Darden, which already owns popular restaurant brands such as Olive Garden, LongHorn Steakhouse, and Ruth’s Chris Steak House, agreed to acquire all outstanding shares of Chuy’s at US$37.50 a share.
“Chuy’s is a differentiated brand within the full-service dining industry with strong performance and growth potential,” said Darden President and CEO Rick Cardenas in the news release.
“Based on our criteria for adding a brand to the Darden portfolio, we believe Chuy’s is an excellent fit that supports our winning strategy.”
“I am excited to welcome their 7,400 team members to Darden and diversify the Darden portfolio into a new dining category.”
Chuy’s operates 101 restaurants in 15 states, generating over US$450 million in revenue in the last twelve months as of March 31, 2024.
The restaurant chain, founded in 1982 in Austin, Texas, serves a “distinct menu of authentic, made-from-scratch Tex-Mex-inspired dishes,” according to the joint statement.
“We are excited about the opportunity to join the Darden family and its portfolio of well-respected brands,” said Steven Hislop, Chairman, CEO, and President of Chuy’s, in the news release.
“Darden shares many of our same core values, particularly our operating philosophy and strong team member cultures. Together, we will accelerate our business goals and bring our authentic, made-from-scratch Tex-Mex to more guests and communities.”
In other recent news, Darden Restaurants, Inc. has made significant strides in its business operations.
The company reported an 8.6% increase in total sales to US$11.4 billion for fiscal year 2024, exceeding expectations, and an adjusted diluted net earnings per share of US$8.88.
Darden also recently announced its acquisition of Chuy’s Holdings for US$605 million, adding 101 new restaurants to its portfolio.
Still, Jefferies downgraded Darden’s stock from Hold to Underperform, citing concerns about the company’s near-term fundamentals. The downgrade is attributed to potential market share loss and diminishing benefits from the pandemic’s impact on industry capacity.
These developments come as part of the company’s recent strategic moves. Darden is set to complete the Chuy’s acquisition by the second fiscal quarter of 2025. The company anticipates the acquisition to have a neutral impact on fiscal year 2025 earnings per share.
Looking forward, Darden’s guidance for fiscal year 2025 includes same-restaurant sales growth of 1% to 2% and total sales growth driven by same-restaurant sales and new restaurant growth. The company also underwent leadership changes to enhance its brand positioning further.
These recent developments reflect Darden’s ongoing efforts to expand its business and meet investor expectations.
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