If it feels like private equity has its tentacles in pretty much everything, that’s because it does. Whether they’re taking public companies private or buying up controlling stakes in your favorite bagel chain, this cohort of moneyed investors with no one to answer to but themselves has demonstrated extreme interest in the restaurant industry in recent years, buying up everything from old-school pizza chains to Taiwanese boba titans.
And while each of these companies operates in vastly different ways, consumers generally agree that private equity taking a position in your favorite fast-food spot is a clear indication that it’s going to get worse. As private equity investors take over restaurants, they frequently saddle the chains with extreme debt (as in the case of Red Lobster) and cut corners to save a buck or two, minimizing staffing and ordering cheaper ingredients to save a little cash. This decline usually isn’t immediate — it’s more of a slow creep that results in longer waits, soggier fries, and dirtier restaurants, in my experience. Our list doesn't even include private equity's investments in vendors like Sysco, which supply the ingredients for many of the restaurants that aren't on this list.
Some chains are speaking openly about their resistance to private equity investment, while others are being bought back by locals. In March, a group of local Michigan investors bought the iconic Detroit pizza chain Buddy’s back from its private equity owners. Months earlier, the co-founder of Hooters claimed that private equity investors turned the chain into a “boys club,” and announced plans to give the decades-old breastaurant a “family-friendly” revamp. In Austin, Texas, the family-owned burger chain P. Terry’s rejected an offer to buy the company from a private equity investment group, opting instead to establish a worker-owned model.
The very nature of private equity also means that it’s very difficult to know which financial overlords have a stake in your favorite fast-casual spot. They’re not beholden to the same legal reporting requirements as publicly traded chains like McDonald’s, and we don’t hear much about what they’re doing until the latest acquisition is announced. So we thought we’d put together a list of every spot we know of that is, at least in part, owned by private equity. Some companies, like the juggernaut Inspire Brands, have acquired numerous restaurant brands in recent years, while others are just getting in on the game with one or two regional chains.
This list just encompasses American restaurants, but private equity’s influence is global — right now, investors are buying up fast-food chains in Korea, Australia, and Japan. It’s also taking its piles of cash to the franchise level, investing in large fast-food franchisees, like Bain Capital’s $1 billion purchase of a major Little Caesars Pizza franchise operator earlier this year.
Here's a list of every private-equity-backed restaurant we know of, a list that will likely get longer with each passing day. If there's a PE-backed spot we're missing, drop us a line at info@weareravenous.com and we'll get it added.
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