Darden Restaurants to buy Yard House chain for $585 million
Darden Restaurants Inc., owner of the Olive Garden and Red Lobster chains, will buy the beer-centric Yard House USA Inc. restaurant chain for $585 million in cash.
The deal with Yard House owner TSG Consumer Partners will place the chain in Darden’s Specialty Restaurant Group, a more upscale lineup of restaurants that includes the Capital Grille, Bahama Breeze, Seasons 52 and Eddie Vs.
Yard House, based in Irvine, has more than 130 taps on average and takes advantage of the popularity of craft beers.
Revenue at Yard House boomed 27% in the second quarter compared with a year earlier.
The chain, which was launched in 1996, now has 39 restaurants across 13 states. Yard House features a soundtrack of rock music and an energetic atmosphere.
In a conference call Thursday, Darden executives said they expect the Yard House chain to eventually expand to 200 units.
If the deal passes muster with antitrust regulators, it is expected to close sometime in the fall, during Darden’s fiscal second quarter.
Yard House’s existing leadership will continue to lead its day-to-day operations under Darden. Chief Executive Harald Herrmann will become president of Yard House and report to Gene Lee, president of Darden’s specialty restaurants.
For several quarters, Orlando, Fla.-based Darden has had to rely on its specialty group to boost its sales, which have been dragged down by Olive Garden and Red Lobster.
Olive Garden’s same-store sales tumbled 1.8% in the quarter that ended May 27 compared with a year earlier, while Red Lobster’s same-store sales slid 3.9%.
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