Ruth's Chris Steak House owner Ruth's Hospitality Group Inc. (RUTH) said Monday that it agreed to sell its Mitchell's brand to Houston-based Landry's Inc. for $10 million.
The transaction includes the Mitchell's Fish Market along with the Mitchell's Steakhouse and Cameron Steakhouse chains. The target operates 21 company-owned restaurants, consisting of 18 seafood restaurants and three steakhouses mostly in Florida and in the Midwest.
The sale will allow Ruth's to focus on its core Ruth's Chris Steak house brand and will compliment Landry's portfolio of upscale steakhouses and seafood restaurants that includes Morton's Restaurant Group Inc. and McCormick and Schmick's Seafood Restaurants Inc., among others.
"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 toward the continued growth and expansion of our flagship Ruth's Chris Steak House brand," said Ruth's CEO Michael O'Donnell in a statement.
Ruth's acquired the brands from privately held Cameron Mitchell Restaurants LLC of Columbus, Ohio, in February 2008 for about $92 million.
"It had become increasingly difficult to see the long-term growth path of Mitchell's within [Ruth's]," Jefferies LLC analyst Andy Barish wrote in a Monday research note. "We believe this transaction makes sense and allows management more focus on growing the Ruth's Chris brand."
Ruth's Chris operates more than 140 franchised and company-owned restaurants worldwide. The company plans to open at least three company-owned restaurants within the next year and it is also seeking additional franchisees.