Darden’s Bold Bet on Mexican Dining with Chuy's

[Sanjeev Advani]

Darden Restaurants, the parent of Olive Garden and LongHorn Steakhouse, is making a significant move by acquiring Chuy's, a Tex-Mex chain, for $605 million. Despite the failures of other national full-service Mexican chains like Chi-Chi's, Darden's CEO Rick Cardenas is confident in Chuy's potential. With its unique Tex-Mex menu and brand appeal, Chuy’s has already established itself as the leading full-service Mexican chain, providing Darden a foothold in the rapidly growing Mexican cuisine sector.

As the company looks to expand Chuy’s, it faces challenges in competing with local operators and navigating consumer preferences. However, with Mexican food being popular in inflationary times due to its perceived value, Darden believes Chuy's can grow sustainably without needing to become a full-blown national chain. The acquisition could help Darden diversify its portfolio and tap into the young demographic that increasingly favors Mexican cuisine.