Key Takeaways
- • TSG Consumer, which also backs Crumbl and Dutch Bros Coffee, is investing in NYC Tijuana-style taco chain Los Tacos No. 1, despite fan fears that private equity will erode the brand.
- • Blackstone spent two years professionalizing founder-run Jersey Mike's before its summer IPO, without changing portion sizes or suppliers, and established a shared ownership plan for employees.
- • Jersey Mike's opened below its $23 IPO price and was trading around $18 per share, per the Business Insider report.
- • Business Insider argues that weak lending conditions and an AI-focused public market have narrowed alternatives to private equity for mid-sized companies.
Summary
Business Insider reports that Los Tacos No. 1, an NYC Tijuana-style taco chain, has taken a private equity investment from TSG Consumer, which also backs Crumbl and Dutch Bros Coffee. Fans of the chain feared the deal would ruin the business, a reaction that the article notes is common given private equity's reputation for stripping companies and saddling them with debt. Chief executive and cofounder Christian Pineda told Business Insider that he is determined to prevent that outcome and that "private equity is not always bad." TSG executive Colin Welch described the chain as having a "cultlike following" and said the firm needs to "show those skeptics that it's going to be exactly the same."
The article points to Jersey Mike's as a recent example of a largely positive private equity-backed restaurant story. Blackstone spent two years professionalizing the 51-year-old founder-run sandwich chain ahead of its IPO, while leaving portion sizes and suppliers unchanged. Blackstone also set up a shared ownership plan that let Jersey Mike's employees benefit from this summer's IPO. The results have been mixed, however: the stock opened below its $23 IPO price and was trading near $18 per share at the time of reporting.
Business Insider frames the Los Tacos No. 1 deal as a product of constrained options rather than an endorsement of private equity. The chain spent 13 years growing to 10 Manhattan locations plus a sister location, Los Mariscos, and faces high New York costs and rising input prices for beef, limes, and avocados. The article says borrowing costs are unlikely to fall soon given the possibility of at least one more rate hike this year, and that public markets are unreceptive to companies outside AI, noting that even major AI players such as OpenAI are not rushing to go public. The piece concludes that the economic and market environment has limited many companies' financing choices.
The article points to Jersey Mike's as a recent example of a largely positive private equity-backed restaurant story. Blackstone spent two years professionalizing the 51-year-old founder-run sandwich chain ahead of its IPO, while leaving portion sizes and suppliers unchanged. Blackstone also set up a shared ownership plan that let Jersey Mike's employees benefit from this summer's IPO. The results have been mixed, however: the stock opened below its $23 IPO price and was trading near $18 per share at the time of reporting.
Business Insider frames the Los Tacos No. 1 deal as a product of constrained options rather than an endorsement of private equity. The chain spent 13 years growing to 10 Manhattan locations plus a sister location, Los Mariscos, and faces high New York costs and rising input prices for beef, limes, and avocados. The article says borrowing costs are unlikely to fall soon given the possibility of at least one more rate hike this year, and that public markets are unreceptive to companies outside AI, noting that even major AI players such as OpenAI are not rushing to go public. The piece concludes that the economic and market environment has limited many companies' financing choices.
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