ORLANDO, FLA. — Darden Restaurants, Inc. has agreed to acquire Cheddar’s Scratch Kitchen for $780 million in cash from its stockholders, including private equity firms L Catterton and Oak Investment Partners. The transaction is expected to be completed in Darden’s fiscal 2017 fourth quarter.
Founded in 1979 in Arlington, Texas, Cheddar’s offers made-from-scratch food at 165 locations across 28 states. The chain has average annual restaurant volumes of $4.4 million.
|Ian Baines, c.e.o. of Cheddar’s|
“We are excited about the opportunity to be a part of Darden,” said Ian Baines, chief executive officer of Cheddar’s. “Our operating philosophy and values are similar and we believe this transaction provides a great opportunity for our team members to continue to grow and develop in their careers. Additionally, Darden’s expertise will enable us to further capitalize on our growth potential.”
Mr. Baines plans to remain president of Cheddar’s after the acquisition. This will not be his first time working with Darden, as he was the c.e.o. and president of Darden’s Smokey Bones restaurant before it was spun off and sold in 2010.
The acquisition of Cheddar’s is expected to be accretive to Darden’s diluted net earnings per share in fiscal 2018 by approximately 12c, Darden said. The company also expects between $20 million and $25 million of annualized pre-tax run rate synergies by fiscal 2019.
|Gene Lee, president and c.e.o. of Darden|
“Cheddar’s is an undisputed casual dining value leader with broad appeal and strong average restaurant volumes,” said Gene Lee, president and c.e.o. of Darden. “Cheddar’s is a great fit in the Darden portfolio because it complements our existing brands. This addition will also enable Darden to further strengthen two of our most important competitive advantages: our significant scale and our extensive data and insights.”Cheddar’s will add to Darden’s portfolio of restaurant brands, which includes Olive Garden, LongHorn Steakhouse, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s.