Deep-pocketed investment groups are giving mom-and-pop food businesses a shot at big success. But many of their regulars are speaking out against those deals.
Last month, when Christian Pineda and his two partners accepted a multimillion-dollar deal from a private equity company to expand their nationally acclaimed New York taqueria, Los Tacos No. 1, he figured that its fans wouldn’t mind. Perhaps they’d even be excited. They were not. After the announcement scores of people posted on social media, complaining that Los Tacos had sold out and would soon decline in quality. “There was one about us changing our meat to horse meat,” said Mr. Pineda. “I didn’t know how bad of a juju there was on P.E. partnering up with mom-and-pop brands. I didn’t know it was that extreme.”
The ire was so intense that he posted a statement on Instagram: “No, we’re not going to start charging extra for guac. We’re not switching to horse meat. And no, we’re definitely not messing with the tacos.” It’s hard to know who was behind every post, but many were customers like Mark Vermylen, who runs a pickleball shop in Greenpoint, Brooklyn, and posted a Tik Tok video voicing his discontent. “It feels like the end of something that was at one point good,” he said in an interview. Mr. Vermylen, 30, has nothing against chains as such — he eats at Mc Donald’s and Chipotle regularly. He said his gripe is seeing his favorite small businesses “cross that threshold into Mc Donald’s level.”
Private equity — in which a firm pools investor money and buys controlling stakes in private companies, expanding and then selling them for a profit — has long been a catalyst in the restaurant industry. But these firms are increasingly taking control of small, independent food businesses like Los Tacos No. 1, and Levain Bakery, popular New York City operations that have used the money to scale up and create a corporate structure, as many are struggling to break even. In teaming up with private equity, though, many face a tricky trade-off: At a time when Americans are telling pollsters they’re skeptical about big business, do these small operations risk alienating their most devoted customers in search of a larger audience?
While Mr. Pineda sees the Los Tacos private equity deal as a life-changing opportunity that will allow him to expand the business (currently 10 locations) nationwide and spend more time with his family, some of his customers see it as a Faustian bargain, fearing that the expansion will destroy the indie charm, and perhaps the food, that made these places beloved to begin with. “It is like the reverse of a Hallmark movie, where this evil shapeless entity comes over and takes over your hometown restaurant,” said Jenny Dorsey, a food scholar from Seattle currently living in Singapore.
Private equity executives say those concerns are misguided. “There is inevitably skepticism,” said Colin Welch, a managing director at TSG, the private equity company that partnered with Los Tacos. But “the last thing we would ever want to do, in terms of our own passion for the brands as well as from an investing standpoint, would be to do anything that would damage the fundamentals of this business or brand and put it at risk.” “We want to keep what is special special and provide support to the founders,” he said.
Source: New York Times Top Stories · Summarized by HeadlinesBriefing