Ruth’s Chris appears to be fitting in quite well in its new home at Darden Restaurants.
The company said Thursday that adding the 155-unit steakhouse chain to its portfolio will unlock $35 million in run rate synergies and savings annually, which is $15 million more than Darden was initially expecting. The savings are primarily in the supply chain and general and administrative costs.
Darden now plans to invest $10 million of that back into Ruth’s, with a focus on food and human resources. The investments will be “more on the food side,” said CEO Rick Cardenas, though he declined to provide further details.
Orlando-based Darden closed the $715 million deal for Ruth’s Chris in July, adding a fourth fine-dining brand to its group. It views the chain as complementary to its other upscale brands, noting that there is little overlap between Ruth’s guests and those of Eddie V’s or The Capital Grille.
It is currently working on migrating Ruth’s over to its systems and processes, which Cardenas called “the hardest part” of the integration. That will happen in phases over the next nine months, he said.
Darden’s fine-dining segment struggled in the quarter ended Aug. 27, with sales down 2.8% year over year. Executives blamed it on difficult comparisons to a year ago, when consumers were emerging from the omicron wave of COVID-19 and spending more freely.
The latest comps do not include Ruth’s, which won’t appear in Darden’s results until it has been part of the company for 16 months.
However, Ruth’s 77 company-owned restaurants were factored into Darden’s total sales for the period, which rose 11.6%, to $2.7 billion.
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