Darden to Acquire Tex-Mex Chain Chuy’s for $605 Million

This is an English adaptation of a FoodBud historical article originally published on July 28, 2024.

On July 17, Darden Restaurants announced an all-cash agreement to acquire Tex-Mex full-service chain Chuy’s at $37.50 per share, valuing the transaction at $605 million, or about RMB 4.4 billion.

The deal is intended to add another brand to Darden’s portfolio, which currently includes Olive Garden, LongHorn Steakhouse, Yard House, Ruth’s Chris Steak House, Cheddar’s Scratch Kitchen, The Capital Grille, Seasons 52, Eddie V’s and Bahama Breeze.

This is Darden’s second acquisition since the pandemic. In June 2023, it acquired Ruth’s Hospitality Group for $720 million, or about RMB 5.2 billion.

Chuy’s Operating Profile

Chuy’s was founded in 1982. As of July 16, 2024, it operated 101 restaurants across 16 U.S. states.

For the twelve months ended at the end of March 2024, Chuy’s reported revenue of $450 million, equal to average annual sales of $4.5 million per restaurant.

Strategic Rationale

According to Darden’s disclosure, the company is focused on the growth profile of the Mexican restaurant chain market. Chuy’s ranks first among Mexican full-service restaurant chains, with sales 1.6 times those of the second-ranked player.

Darden’s Scale

According to Darden’s annual report, the group operated 2,031 restaurants as of May 26, 2024.

In fiscal 2023, Darden generated total sales of $11.4 billion, or about RMB 82.9 billion, up 8.6% year over year. Its largest brand by sales was Italian chain Olive Garden, with fiscal 2023 sales of $5.1 billion. LongHorn Steakhouse, a steak-focused chain, ranked second with fiscal 2023 sales of $2.8 billion.

Note: Acquisition values and financial figures are historical as reported in the source article.