Darden's Acquisition of Ruth's Chris: the continued consolidation of American dining

"Ruth's Chris features signature USDA Prime steaks served sizzling on 500-degree plates, New Orleans-inspired sides and an award-winning wine list. Ruth's Chris has 155 locations around the globe, including 81 company-owned or company-operated restaurants and 74 franchised restaurants...

For $21.50 a share, Ruth's Chris Steak House brand now joins and complements Darden's portfolio of differentiated brands that include Olive Garden, LongHorn Steakhouse, Yard House, Cheddar's Scratch Kitchen, The Capital Grille, Seasons 52, Eddie V's and Bahama Breeze." Source: AP News

Darden is the largest full-service restaurant operator in the U.S. So while visitation trends across the full-service restaurant category have declined year-over-year, roughly 6.7%, Darden has only averaging a 3%-4% decline in visits. The corporation is fairing better due to effectively wielded the scale advantages. Darden purchases so much from its suppliers that it often receives better pricing than its peers, The company has the bandwidth to run promotions like Olive Garden’s $13.99 Never Ending Pasta pasta and this helps to drive improved visitation trends. Additionally, with the Ruth's Chris acquisition, I believe the firm is position itself to capture consumers that were previously dining higher price point restaurants and will be transitioning to Darden's mid-tier options.

Why is this important?

It is essential to facilitate continued growth, entrepreneurship and innovation in all aspects of the economy to ensure inspiration and fuel indulgence in a basic need of life. This is a roundabout way to say that by depriving the bulk of society access to dining options that are distinct (and forcing consumption the same core macros from the same sources) part of the spark and excitement of "food" (in the food-shelter-water) is extinguished.

What can we do to keep flavor alive?

Phoenix-Metro, as a city should be pushing to encourage entrepreneurs to explore opportunities in town. We should expand our horizons and continue to explore dining. We must actively seek new flavor experiences and celebrate new-comers bringing new styles and dishes.

Where it becomes difficult.

It become more and more difficult for lower and middle income families to afford a variety of options and choices as inflation continues to rise. Additionally, when the economy is in flux, lending starts shrinking, and loans become more difficult to secure and costs become more prohibitive - the small business sector shrinks.

What's next?

Make it a mission to step out of your comfort zone - it is up to us to as consumers and community members to be the change we want to see.

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