Darden Restaurants, the parent of Olive Garden, LongHorn Steakhouse and seven other full-service brands, is acquiring Ruth’s Hospitality Group, the owner of Ruth's Chris Steak House, in a deal valued at $715 million.
The deal adds another fine-dining concept to Darden’s roster, which includes The Capital Grille, Seasons 52 and Eddie V’s in that category. It’s Darden’s first acquisition since buying Cheddar’s Scratch Kitchen in 2017.
Founded in 1965 in New Orleans, Ruth’s is known for high-quality steaks served on its signature 500-degree "sizzling plates." It has 154 locations worldwide, 80 of which are company-owned or operated. The chain has enjoyed a strong return from the pandemic, generating systemwide sales of more than $860 million last year. Same-store sales at company units rose 13.8% year over year, and AUVs were $6.2 million.
"Ruth's Chris is a strong and distinctive brand in the fine-dining segment with an impressive history of delivering elevated dining experiences to their loyal guests," said Darden President and CEO Rick Cardenas in a statement. "It fits the criteria we have for adding a brand to our portfolio and supports our winning strategy. Ruth's Chris is a great complement to our portfolio of brands, and I'm pleased to welcome their nearly 5,000 team members to Darden."
Cardenas in January said that Darden was looking to acquire another concept and that the company favored a full-service brand with broad appeal and the ability to grow sales faster than Olive Garden.
Ruth's appears to have a chance to do that. Its total sales increased more than 8% from 2020 to 2022, according to Technomic data, while Olive Garden's grew by nearly 7%.
"We are excited about the opportunity to join the Darden family,” said Ruth’s CEO and President Cheryl Henry in a statement. “Our strategy and operating philosophy aligns well with Darden, and we have a strong cultural fit that should ensure a smooth transition. This transaction will also provide more opportunities for our team members to develop in their careers as we continue to grow our 57-year-old iconic brand."
Henry will remain president of Ruth’s and report to Cardenas. She won't have to go far: Ruth's is based in Winter Park, Fla., just outside of Darden's home in Orlando.
Darden is acquiring Ruth’s for $21.50 per share, which represents a 9.4x multiple of the chain’s 2022 transaction-adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization.
The all-cash deal is expected to close in June.
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