Companies face heat for taking PE money. These days, the alternatives aren't great.
When popular NYC taqueria chain Los Tacos No. 1 received an investment from a private equity firm, criticism swiftly followed.
Private equity has a reputation for taking over companies, dismantling them, and piling on debt. This has led to the belief that any PE investment is a recipe for disaster. However, Los Tacos No. 1, a popular NYC taco chain, faced skepticism when a private equity firm, TSG Consumer, showed interest in the business. The chain's CEO, Christian Pineda, assured fans that private equity isn't always bad.
TSG's Colin Welch stated that the company had a "cultlike following," and investors wanted to prove skeptics wrong. A positive example exists with Blackstone's turnaround of Jersey Mike's, which professionalized the brand without altering core aspects. However, growth for Los Tacos No. 1 was challenging due to rising costs of ingredients and limited expansion opportunities in Manhattan.
With limited options for raising capital, the article suggests that while private equity may not be the favorite choice, it could be the only viable alternative for Los Tacos No. 1.
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