Ruth’s Chris deal could bring Darden expansion to Asia
Orlando-based Darden Restaurants’ $715 million deal to buy Winter Park’s Ruth’s Hospitality Group could open the door for other Darden brands to go global.
Darden, which owns Olive Garden and other chain restaurants, revealed Wednesday the deal to acquire Ruth’s, which has 80 company-owned or operated Ruth’s Chris Steak House restaurants and 74 franchised locations. Ruth’s has 23 international restaurants, including in Singapore, Hong Kong, and Tokyo.
“I think about the Asia presence,” Darden CEO Rick Cardenas said on a Thursday morning conference call with analysts. “If down the road, when we start talking to [Ruth’s Chris] franchisees, if they have some desire to add to their portfolio with some other Darden brands, that’s something that we can do.”
Darden already has 1,890 restaurants including Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House, The Capital Grille, Seasons 52, Bahama Breeze, Eddie V’s and The Capital Burger.
As the United States gets more restaurants, it’s always good to consider expanding internationally, said San Diego-based restaurant analyst John Gordon.
“This is a big deal, in my opinion, because for the first time, it really does allow entry, practical entry of Darden outside of the United States opportunity,” Gordon said.
Cardenas, who became CEO at the end of May last year, also said Darden has no plans to buy the franchisee-owned Ruth’s Chris restaurants at this time.
“Running company-owned brands is one of Darden’s core competencies,” Cardenas said. “That said, we’ll continue to support our growing franchisee base.”
The deal is expected to close in June, and Ruth’s would become Darden’s fourth largest brand based on its 154 combined company-owned and franchised locations. Olive Garden, LongHorn Steakhouse, and Cheddar’s have more stores.
“I am optimistic about the future of Ruth’s Chris and confident both organizations will be stonger together,” said Ruth’s CEO Cheryl Henry, who is expected to stay on as the brand’s president under Cardenas.
Gordon has pointed out some of the overlaps between the two Central Florida companies.
“In my opinion… there is no doubt that the Ruth’s Chris office in Winter Park will be eventually closed and it will be consolidated into the great Darden building,” he said Wednesday.
Examples of some departments that might have redundancies are finance, personnel and construction, according to Gordon.
Darden spokesman Rich Jeffers said he could not comment on questions from the Orlando Sentinel related to Ruth’s Winter Park presence and corporate staff due to the two companies being too early in the deal.
Gordon said Thursday he isn’t expecting Darden to stop being a buyer anytime soon. Darden’s last acquisition was Cheddar’s Scratch Kitchen in 2017 for $780 million.
“Darden is never done with its acquisitions,” Gordon said. “They have the capability and the strength to always acquire new brands and they are doing that in part because they’re looking to see how the United States population is shifting. They don’t want to wind up with a bunch of junk brands in their portfolio.”
