Another nail in the coffin for mid-level restaurant chains: Publicly traded Ruby Tuesday sold to a private equity company following more than a decade of decline, the Wall Street Journal reports.
NRD Capital Management will buy the faltering chain for a mere $146 million, or $2.40 a share. At the stock’s peak in 2004, it was trading at $33 per share.
As the WSJ notes, Ruby Tuesday shuttered more than 100 locations over the past two years in an attempt to refocus on growing sales. Despite those efforts, the company posted net losses for nine quarters straight. "As a private company, we will be able to take a long-term view on Ruby Tuesday allowing us to make an investments without public company constraints," said NRD founder Aziz Hashim.
Privatization is sometimes the best bet for a company that's losing large sums of money over a long period of time. Going private means companies are no longer held accountable to shareholders or subject to the regulatory requirements that publicly traded companies face. Privatization can also make money for investors and company executives in the short-term, which can be attractive after years of losing money.
The chain isn’t alone in its struggles: Fellow casual dining chains such as Chili’s, Applebee’s, and TGI Fridays have all seen revenue decline in recent years thanks to numerous factors including increased competition from fast-casual restaurants and delivery apps, rising labor costs, and, of course, those damned millennials.
• Ruby Tuesday to Be Taken Private in $146 Million Deal [Wall Street Journal]
• The Slow Decline of Middlebrow Chains: A Timeline [E]