Rubio’s next in line for fast-food buyout

May 10th, 2010, 9:43 am
by Nancy Luna, Staff Writer

In a deal valued at $91 million, Rubio’s Fresh Mexican Grill will be acquired by an East Coast private equity firm in a move that marks another major financial fix for a struggling local food brand.

The San Diego fresh-Mex restaurant company said Connecticut-based Mill Road Capital will acquire all of the company’s shares in a cash merger transaction. Shareholders will receive $8.70 per share — a 14 percent premium over Rubio’s closing stock price as of Friday.

Company founder Ralph Rubio and two other large investors collectively own a 24 percent stake in the company. The three large investors have approved the merger, Rubio’s said Monday in a conference call. Mill Road owns nearly a 5 percent stake in Rubio’s.

The deal is expected to close in the third quarter of this year.

The parent company of Carl's Jr., which got its start in Anaheim, plans to sell its company, too.

The acquisition marks another big change for two food and beverage companies with Orange County ties. Last week, Green Mountain Coffee Roasters extended its previously announced $35 per share cash tender offer to purchase all outstanding shares of common stock of Irvine-based Diedrich Coffee. CKE Restaurants, the parent company of Carl’s Jr. and Hardee’s , is also selling its vast burger empire to a private equity firm.

Many of the chains are turning to a private equity buyout to improve shareholder value at a time of economic uncertainty. At Rubio’s, many of its core markets remain weak, which is hurting sales, the company said Monday.

For the first quarter of the year, Rubio’s said same-store sales decreased 1.8 percent. For the same quarter a year ago, comparable store sales increased 1.9 percent. Same-store sales are a key indicator of a restaurant’s health because it compares sales at existing stores — year-over-year.

The drop was tied to “decreased transaction volumeâ€