Turnarounds

Ruby Tuesday Going Private in $335M Deal

NRD Capital will purchase the restaurant chain, which has lost money for nine straight quarters amid competition from fast-dining concepts.
Matthew HellerOctober 16, 2017

After years of weak same-store sales and declining traffic, casual-dining chain Ruby Tuesday has agreed to be taken private by NRD Capital in a deal valued at $335 million.

NRD, an Atlanta-based private-equity firm, it is paying $2.40 a share for Ruby Tuesday, or about 21% above Friday’s closing price of $1.99. It will also assume or retire all of Ruby Tuesday’s debt obligations.

“With a well-established brand, differentiated from other casual dining restaurants by its garden bar, we see significant opportunities to drive value for Ruby Tuesday,” Aziz Hashim, the founder of NRD, said Monday in a news release.

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As of Sept. 5, Ruby Tuesday operated 599 restaurants in 41 states, 14 foreign countries, and Guam, of which 541 were company-owned and 58 were franchises. It had announced in March that it would explore strategic alternatives including a potential sale or merger.

“The board of directors and our advisors … are confident that this agreement will provide the most promising opportunity to realize the highest value for our stockholders while providing the best path forward for the Ruby Tuesday brand, its employees, franchisees, and loyal customers,” non-executive Chairman Stephen Sadove said.

Ruby Tuesday has posted a net loss for nine consecutive quarters amid declining same-store sales and revenue. As Food Newsfeed reports, it has closed more than 100 restaurants over the past year as part of a turnaround effort that also includes implementing new initiatives such as an expanded garden bar, a new mobile app, and a simplified lunch menu.

The company announced Monday that its first-quarter net loss narrowed to $9.8 million or $0.16 per share and same-store sales fell 5.8%.

NRD’s previous acquisitions include Fuzzy’s Taco Shop and Frisch’s Big Boy. “NRD Capital has a distinguished track record of achieving and maintaining profitable growth for restaurant concepts,” Sadove said.

As Eater reports, other casual dining chains such as Chili’s, Applebee’s, and TGI Fridays have seen revenue decline in recent years due in part to increased competition from fast-casual restaurants and delivery apps.

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