Winter Park-based Ruth’s Hospitality Group said Monday it is selling Mitchell’s Fish Market for $10 million to Landry’s Inc. — $84 million less than it was bought for in 2008.
The companies are expected to close the deal for the 21-restaurant portfolio, which also includes three Mitchell’s Steakhouse and Cameron’s Steakhouse locations, in the next 75 days.
“This is going to go down as one of the largest merger and acquisition blunders in the restaurant industry,” said Aaron Allen, a restaurant consultant and owner of Aaron Allen & Associates. “When Ruth’s bought Mitchell’s it was an up and coming and a growing brand. They just haven’t delivered since then.”
The substantial net loss on the sale, Allen said, shows that Ruth’s was eager to get rid of the restaurants.
In a statement, Michael O’Donnell, CEO of Ruth’s Hospitality Group said, “While the Mitchell’s restaurants continue to be profitable and generate positive cash flows, the sale of these restaurants will enable us to direct all of our resources towards the continued growth and expansion of our flagship Ruth’s Chris Steak House brand.”
The deal includes “substantially all of the assets” related to those brands.
Houston-based Landry’s owns dozens of concepts, including Landry’s Seafood, Morton’s, Bubba Gump Shrimp Co. and Rainforest Café. Landry’s has turned itself into one of the largest owners of seafood restaurants and should be able to take advantage of even greater buying power in the volatile seafood industry, Allen said.
Mitchell’s has struggled in recent years and results released earlier this month showed that in the third quarter sales fell 2.8 percent from the previous year and traffic dropped by 6.2 percent.
The company did open one Mitchell’s location in the area in 2010 in Winter Park.
But the Mitchell’s portfolio had 19 restaurants when Ruth’s made the purchase in 2008 and the company has expanded the brand by just two restaurants in six years of ownership.
“Given trends over the past few years, and a write-down associated with Mitchell’s in the 3Q, it had become increasingly difficult to see the long-term growth path of Mitchell’s within [Ruth’s],” said Andy Barish, an analyst with Jefferies in a note to investors.
Along with the sale announcement, Ruth’s Hospitality reported that it is also launching a $50 million share repurchase program.
Ruth’s Chris Steak House has 138 locations in the United States.
karnold@tribune.com or 407-420-5664
