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The Street
The Street
Fernanda Tronco

Darden wraps it up and saves iconic Mexican restaurant

Nearly everyone has a nostalgic restaurant they went to as a college kid, and every time they set foot into that establishment, a fountain of memorable moments flashes before their eyes.

For some people who went to college in the South, Chuy's became the go-to spot for catching up with friends.

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Established in 1982 in Austin, TX, Chuy's is a beloved family restaurant that blends Mexican flavors with Texas ingredients to create a fusion cuisine called Tex-Mex. The chain currently has 101 restaurants across 15 southern states. 

Although not a Michelin-star restaurant, it could almost be one for a college kid because it once was the most desirable spot to get into, with waiting times that were multiple hours long.

Chuy's became a staple because it has everything a college kid would want: a great environment, affordable food with a wide range of options, and cheap yet great drinks.

As nostalgic as Chuy's may be for its southern clients who have been ordering the restaurant's iconic Chuychanga's paired with its famous 'Ritas for decades, the sad truth is that Chuy's has been struggling to hit important targets in multiple sectors of its business for the last few quarters.

According to Chuy's last reported earnings, revenues decreased by 0.5%, with comparable restaurant sales down 3.1% compared to last year, which was primarily driven by a 5.6% decline in average weekly customers.

Unsurprisingly, Chuy's  (CHUY)  struggles led it to consider other ways to keep its business alive for future generations to enjoy. 

Tex-Mex restaurant Chuy's has been acquired by Darden.

Boston Globe/Getty Images

Darden targets Chuy's

Darden Restaurants  (DRI)  is a prominent player in the restaurant industry, with a portfolio consisting of multiple renowned family restaurants, such as Olive Garden, LongHorn Steakhouse, Yard House, Ruth's Chris Steak House, Cheddar's Scratch Kitchen, The Capital Grille, Seasons 52, Eddie V's, and Bahama Breeze.

According to Darden's Q1 earnings report for 2025, total sales increased by 1% to $2.8 billion compared to the year prior.

However, the current economic climate has also affected the company. Darden reported a decrease in same-restaurant sales by 1.1% compared to last year and an EPS decline of 1.7% to $1.75. 

Related: McDonald's unveils partnership with beloved breakfast giant

Yet despite the earnings dip, Darden's shares have increased over 19% since a year ago.

"While we fell short of our expectations for the first quarter, I firmly believe in the strength of our business. I am confident in the actions all our brand teams are taking to address their guests' needs, which do not compromise the long-term health of our business for short-term benefits," said Darden President and CEO Rick Cardenas in the earnings report.

Darden's impressive portfolio and solid financials led both companies to a merger agreement in July.

Darden announces the acquisition of Chuy's 

On Friday, Darden Restaurants announced it had officially acquired the beloved Mexican restaurant Chuy's after the proposed purchase was approved on Thursday.

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The restaurant was acquired in an all-cash transaction of around $605 million, approved by the majority of Chuy's stockholders. 

Chuy's customers aren't convinced the deal is a good thing.

View the original article to see embedded media.

According to Darden's press release, the transaction will be financed using a portion of the proceeds of a $400 million offering of 4.350% senior notes due in 2027 and a $350 million offering of 4.550% senior notes due in 2029, which were issued on October 2024.

"We are excited about the opportunity to join the Darden family and its portfolio of well-respected brands," said Chuy's Chairman, President, and CEO Steven Hislop. "Together, we will accelerate our business goals and bring our authentic, made-from-scratch Tex-Mex to more guests and communities," Hislop added.

Only time will tell of Darden's acquisition of Chuy's pans out.

Related: Veteran fund manager sees world of pain coming for stocks

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