Ruby Tuesday’s days as a publicly traded company are over. NRD Capital completed its acquisition of the beleaguered casual dining chain December 21, and will now take Maryville, Tennessee-based Ruby Tuesday private in a deal valued at $2.40 per share. The acquisition was first announced on October 16 after a lengthy “strategic review” process.
The $146 million purchase ($335 million if you include debt) is NRD Capital’s largest to date. The Atlanta-based private equity firm was started in 2014 by Aziz Hashim, a former Domino’s, Checkers, and Popeyes franchisee. NRD’s first acquisition was a $175 million deal for Frisch’s in 2015. It then took a 70 percent stake in Fuzzy’s Taco Shop in February 2016. 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.
As of December 1, there were 596 Ruby Tuesday restaurants in 41 states, 14 foreign countries, and Guam. Of those, 541 are company operated and 55 franchised.
In connection with the closing, Ruby Tuesday said it entered into a new credit facility for a secured term loan in the amount of $115 million, as well as a $12.5 million secured revolving credit facility.
On Monday, Ruby Tuesday said it turned down an offer from The Boaz Group, LLC. The deal, the company said, was higher at $2.88 per share but was a “highly conditional and not fully financed proposal.”
The NRD deal was approved by a large majority during a shareholders meeting Wednesday in New York, the company said.
Ruby Tuesday also announced that Hashim would take over the interim CEO role until NRD appoints a permanent successor to the chain’s outgoing CEO and president, Jim Hyatt. In addition to his franchisee roles, Hashim served as chairman of the International Franchise Association from 2016–17.
“Ruby Tuesday is an iconic American brand that is well-known for providing its guests with delicious food, great value and a differentiated dining experience,” Hashim said in a statement. “It is our belief that by leveraging the brand’s core strengths—investing in its people and product, exploring new opportunities for growth, and executing operational excellence initiatives across the company—Ruby Tuesday can once again generate excitement with diners. On behalf of everyone at NRD Capital and our LPs, I want to be the first to officially welcome Ruby Tuesday.”
Ruby Tuesday has posted a net loss for nine consecutive quarters and has reported revenue decline, year-over-year, for the past five years.
For the past fiscal year, total revenue was down 12.8 percent to $952 million. Same-store sales dropped 1.6 percent in the fourth quarter compared to 3.7 percent in Q4 2016. They declined 3.1 percent for the year compared to 1.4 percent.
After its fourth-quarter review in August, Ruby Tuesday revealed a “Plan to Win,” to turn around sales. It was highlighted by a simplified menu and rollout of a mobile app. Here was the full breakdown:
Improve Total Guest Experience
- Develop and rollout nine to 12 months operations calendar to enhance operational excellence and support the marketing calendar
- Deploy Operations and Restaurant Support Center platforms to drive performance
- Focus on progressive improvement on all guest experience attributes
Ignite Same Restaurant Sales Growth
- Develop 12 to 15 month marketing calendar to increase frequency of existing and new target guests
- Drive improved ROI for marketing and media spending
- Implement menu simplification and test and pilot new lunch menu
- Re-energize To-Go and Catering Programs
Deliver System Profitability
- Reconfigure and optimize G&A expenses
- Deploy P&L benchmarking tool to drive accountability and enhance unit profitability
- Optimize supply chain process for profitability
