Darden Restaurants is officially the new owner of Chuy’s Tex-Mex.
The parent company of Olive Garden and eight other full-service chains said Friday it had closed the deal for 101-unit Chuy’s, bringing its portfolio to 10 brands.
The all-cash transaction was worth about $605 million. Darden financed it by selling bonds.
Chuy’s shareholders overwhelmingly approved the acquisition during a meeting Thursday. Earlier, some shareholders had raised concerns about whether Darden was paying enough for the chain. Chuy’s responded last week by sharing additional details about how it came to the price of $37.50 per share, which represents a 10.9x multiple of Chuy’s estimated EBITDA, or earnings before interest, taxes, depreciation and amortization, for the year. That is on the higher end of recent acquisitions in the full-service sector, according to data provided by the chain.
Austin, Texas-based Chuy’s was founded in 1982 and is known for its scratch-made Tex-Mex fare and eclectic atmosphere. It’s the largest full-service Mexican chain in the U.S. in terms of sales, and has restaurants in 15 states.
Chuy’s brings a new dimension to Darden as the only Mexican-focused concept in the portfolio. Its customers also tend to be younger and more affluent than the average Darden visitor.
But it would appear to be a good fit for Darden in other ways. Chuy’s operates all of its restaurants and values strong unit economics, which aligns with Darden’s business model. And Darden believes Chuy’s has room to open new locations at about the 10% annual rate it typically targets for its brands.
The deal marks Darden’s second acquisition in two years after it bought Ruth’s Chris Steak House last year.
Orlando-based Darden also owns LongHorn Steakhouse, Yard House, Cheddar's Scratch Kitchen, The Capital Grille, Seasons 52, Eddie V's and Bahama Breeze. With Chuy’s in the fold, the company now operates 10 of the 50 largest full-service chains in the U.S.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.