McAlister’s Deli
Subway, Dunkin’, Arby’s, P.F. Chang’s, Denny’s, Buffalo Wild Wings, Jimmy John’s, Hardee’s/Carl’s Jr., Auntie Anne’s, Baskin-Robbins, Cinnabon, Moe’s, Panera, and Bob Evans all share a common ingredient: private equity (salt, too, probably). Between 2014 and 2024, PE firms invested $94.5 billion in bars and restaurants, CNBC reported, citing PitchBook data. And while that cash can be a much-needed boon for a growing restaurant chain, it can also be a major source of indigestion. The upsides of private equity: At its best, a PE investment can be like making a deal on Shark Tank. You get a big capital infusion, as well as some expertise on how to scale the business, operate more efficiently, and grow the brand. One of PE’s biggest success stories has been fast-casual eatery McAlister’s Deli. Per Restaurant Business Online:
But PE acquisitions can also be a recipe for disaster. Nearly half of the restaurant and bar chains that filed for bankruptcy in 2024 were backed by private equity, per CNBC and PitchBook. Some of them were doomed, in part, by classic PE tactics, like leveraged buyouts. That’s when a PE firm borrows a ton of cash to buy a restaurant chain, then passes that debt onto the restaurant after the sale. Then, there’s the tactic that cooked Red Lobster: sale-leasebacks, which involve a PE firm selling a chain’s real estate out from under it, then making the restaurant pay above-market rent. PE firms currently making bread: Blackstone acquired sandwich chain Jersey Mike’s early last year for about $8 billion. Now, the company is looking to go public at a valuation of at least $12 billion, Bloomberg reported. |