Struggling casual dining chain Ruby Tuesday is being purchased by private equity group NRD Capital in a deal valued at $146 million.
The price, at $2.40 per share, is a 37 percent premium over Ruby Tuesday’s closing share price on March 13, the day before the company said it would explore strategic alternatives. NRD Capital, a franchisee-sponsored and managed equity investment fund, has a majority stake in 90-unit brand Fuzzy’s Taco Shop and owns Frisch’s Restaurants Inc. The deal values Ruby Tuesday at $335 million, including debt.
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Ruby Tuesday has struggled with declining same-store sales and revenue alongside many other casual dining competitors, and closed more than 100 restaurants over the past year. The company named former Church’s Chicken CEO James F. Hyatt, II, as its president earlier this year, as it seeks to turn around its performance through consolidating operations and implementing new initiatives like an expanded garden bar, a new mobile app, and a simplified one-page lunch menu.
Ruby Tuesday has had revenue decline year-over-year for the past five years, and has posted a net loss for nine consecutive quarters.
“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,” NRD founder Aziz Hashim said in a statement. “As a private company, we will be able to take a long-term view on Ruby Tuesday, allowing us to make an investments in people, product, and customer experience, without public company constraints. This approach will enable us to reward everyone involved in our success, in addition to our investors.”
NRD raised $104 million in its second round of funds this July, which exceeded its target of $100 million. The firm focuses on companies that specialize in franchised and multi-location business models, and has a strategy to invest in domestic and international restaurant concepts, as well as “new and emerging verticals” such as healthcare franchising.
The acquisition is expected to be completed during the first quarter of 2018. As of September 5, Ruby Tuesday has 599 locations in 41 states and 14 countries. Franchisees operate 58 of those locations.
“The board of directors and our advisors have thoroughly evaluated all options available to the company and 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,” Stephen Sadove, non-executive chairman of Ruby Tuesday said in a statement. “NRD Capital has a distinguished track record of achieving and maintaining profitable growth for restaurant concepts and will be an excellent partner to lead Ruby Tuesday going forward.”