Arlington-born Cheddar’s Scratch Kitchen is being acquired by Darden Restaurants Inc. for $780 million, the Orlando, Florida-based owner of Olive Garden and other restaurants announced Monday, March 27.
Darden said it will pay $780 million in an all-cash transaction from its stockholders including private equity firms L Catterton and Oak Investment Partners. Cheddar’s will add to Darden’s portfolio which currently includes Olive Garden, LongHorn Steakhouse, Yard House, The Capital Grille, Seasons 52, Bahama Breeze and Eddie V’s. With 165 locations in 28 states, Cheddar’s would become Darden’s third-biggest brand.
“Cheddar’s is an undisputed casual dining value leader with broad appeal and strong average restaurant volumes,” said Darden CEO Gene Lee. “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 was founded in 1979 in Arlington by Aubrey Good and Doug Rogers. The chain features made-from-scratch food. Today, Cheddar’s has 165 locations, including 140 owned and 25 franchised, across 28 states. The average annual restaurant volume is $4.4 million, according to Darden. In August 2006, Cheddar’s had 55 restaurants in 15 states, when Catterton purchased the chain.
Ian Baines, CEO of Cheddar’s, will remain president of Cheddar’s and report to Gene Lee, Darden president and CEO.
“We are excited about the opportunity to be a part of Darden,” said Baines. 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.”
BofA Merrill Lynch is acting as exclusive financial advisor and Hunton & Williams LLP is acting as legal advisor to Darden. Morgan Stanley & Co. LLC is acting as exclusive financial advisor to Cheddar’s and DLA Piper is acting as legal advisor to L Catterton, Oak Investment Partners and Cheddar’s. The acquisition is expected to close in the fourth quarter.