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NRD Capital to Buy Ruby Tuesday, Will Hang Its Name on Firm by Early 2018

Ruby Tuesday restaurantAfter reporting declining revenue and same-store sales for the quarter, Ruby Tuesday Inc. (NYSE:RT) announced on Monday that it has agreed to be acquired by NRD Capital, a private equity firm that is owned and led by franchisees and other experts who invest in franchising firms. NRD Capital will buy Ruby Tuesday for $146 million in cash and an assumption of $189 million in debt obligations.

While the casual dining sector has experienced the worst of falling consumer traffic in comparison to other restaurant sectors, Ruby Tuesday of late looked as if it were in a state of free fall with no end in sight. For the most recent quarter that ended September 5, Ruby Tuesday reported on Monday that same-restaurant sales fell by 5.8 percent in comparison with the same period last year. Its total revenue dropped 15.3 percent. Seven company-owned restaurants ceased operations as well, but those were nothing compared to the shuttering of 95 underperforming restaurants in August 2016.

The Ruby Tuesday restaurant chain is largely company-owned. It owns 541 restaurants and has 58 franchise locations.

The casual dining company had a net loss of $9.8 million in its first quarter of 2017, significantly better than its net loss of $39.7 million in the same quarter in 2016.

“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,” Stephen Sadove, Ruby Tuesday's non-executive chairman, reassured shareholders.

The acquisition by NRD meant that there would not need to be a Ruby Tuesday demise. The acquisition was unanimously approved by the casual dining chain’s board of directors and is now subject to shareholder approval. With no time to lose, the acquisition is expected to be completed during the first calendar quarter of 2018.

“Our focus at NRD is investing in quality restaurant companies and providing strategic and operational expertise to create sustainable value. 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,” said Aziz Hashim, a multi-unit franchisee, a franchisor and the founder of NRD. The NRD Capital fund was established in 2014 by Hashim, who uses the store economic expertise of franchisees and store unit-level metrics to understand the health of a chain. In 2015 NRD bought out casual dining chain Frisch's Restaurants Inc.

“We are excited to be part of the company’s next chapter," said Hashim. "As a private company, we will be able to take a long-term view on Ruby Tuesday, allowing us to make 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.”


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Don Sniegowski is editor of Blue MauMau, the daily news journal for franchise & small business owners. Call him at +1 (270) 321-1268, tweet @bluemaumau or email don@bluemaumau.org.