Ruth's Chris Buying Mitchell's for $94M

The two restaurant chains expect the acquisition, which will be funded through the Ruth's Chris line of credit, to close in the first quarter of 2008. Craig S. Miller, chairman of the board, president and CEO of Ruth's Chris says that the deal illustrates that the steak house chain is "open to innovative concepts that are compatible with our own" in addition to expanding the Ruth's Chris brand.

The agreement includes a three-year consulting agreement with Cameron Mitchell, the founder and president of Cameron Mitchell Restaurants LLC, which operates its 33 restaurants in nine states. Its formats include Cameron's American Bistro, Cap City Fine Diner & Bar, Martini Italian Bistro, M, Molly Woo's Asian Bistro, Marcella's, Mitchell's Steakhouse (a.k.a. Cameron's Steakhouse), Mitchell's Fish Market (a.k.a. Columbus Fish Market), Mitchell's Ocean Club and Cameron Mitchell Catering Company. Additionally, the Rusty Bucket Corner Tavern currently operates eight units with four in development.

Along with the acquisition news, Ruth's Chris executives in a conference call Tuesday reported that the company earned $1.8 million and eight cents per diluted share for the third quarter that ended Sept. 30, compared with $2.3 million and 10 cents per share in the comparable period last year. Last year's third-quarter net income included $900,000 in pre-tax hurricane-related insurance proceeds, which boosted the company's third-quarter earnings last year by two cents per share, after-tax. This year's third-quarter revenue climbed 20.5% to $70.2 million from $58.3 million, with company-owned comparable restaurant sales decreasing 0.4% and franchised-owned comparable restaurant sales decreasing 0.5%.

Commenting on results for the quarter, Miller cited "fire-related sales challenges in selective Southern California markets," as well as some sales interruption in two restaurants that are undergoing expansion. He said that the sliding comparable store sales reflect "a continuation of the trends we've experienced for the past several quarters, as the challenging consumer environment resulted in slower dining traffic in our restaurants."

Ruth's Chris opened two new franchised restaurants in Columbia, SC and Mishawaka, IN in the quarter and completed its acquisition of three formerly franchised restaurants in Bellevue and Seattle, Washington and Portland, OR.