Ruby Tuesday Inc. is formalizing its ownership of Lime Fresh Mexican Grill and will purchase the chain for $24 million, the company has announced.
In September 2010, Maryville, Tenn.-based Ruby Tuesday entered into a licensing agreement with the chain. In July 2011, Ruby Tuesday executives also said the company would continue to make progress on the development of the Lime Fresh chain. The effort included test rollouts in the Washington, D.C., and core Southeast markets such as Alabama, Georgia and Tennessee.
To date, Ruby Tuesday has opened four Lime Fresh locations.
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With the acquisition, expected to close in the fourth quarter, Ruby Tuesday will own the brand’s intellectual property rights and the assets of seven company-owned restaurants as well as the royalties from five franchised restaurants.
Meanwhile, Lime Fresh founder John Kunkel will retain ownership of his flagship South Beach, Fla., location and will join the Ruby Tuesday board. Kunkel also will step down as the CEO of Lime Fresh.
During the company's third quarter earnings report, Ruby Tuesday founder and CEO Sandy Beall said the acquisition will open up new territories for unit and revenue expansion. For the the third quarter, ended Feb. 28, 2012, Ruby Tuesday same-stores sales dropped 5 percent at company-owned restaurants. The company also plans to close 25 to 27 underperforming locations.
“From a growth standpoint, we are very excited about our upcoming acquisition of the Lime Fresh Mexican Grill brand as it aligns well with the Ruby Tuesday focus on fresh, high-quality ingredients and is well positioned in the fast casual sector as it offers a combination of the best of casual dining and fast casual," Beall said.
Moving forward, Beall said the company plans to add 20 Lime Fresh locations in fiscal 2013 and 30 in fiscal 2014.
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