With many LBOs scrambling to cater to ethnic minorities, it is no surprise that Palladium Capital Partners, which has been looking to invest in the Hispanic market place, has just completed its acquisition of TC Corp., parent of the Taco Bueno restaurant chain. Jacobson Partners was the seller.
Taco Bueno, a quick service restaurant chain offering Mexican food in Texas, Oklahoma and Kansas, has been in business since 1967 and is headquartered in Dallas, Texas.
“We have been looking at the Hispanic oriented restaurant business for a while now,” said Peter Joseph, managing director at Palladium. “We have been tracking Taco Bueno for some time and when we got wind that Jacobson might be interested in a sale, we approached them directly.”
Joseph notes that Taco Bueno has a long history of possessing a good brand. That, coupled with its strong market position and solid management, has made it an ideal investment for Palladium and leads the firm to believe that Taco Bueno possesses exciting growth opportunities, Joseph said.
“It is very well-positioned in the casual/fast food sector,” said Joseph. “There is a loyal clientele and a high quality product there. It is a terrific brand.”
According to Joseph, Palladium plans to do some geographic expansion in areas such as Oklahoma and Texas, where the firm hopes to do a natural growth extension under the new lead of John Miller who was named chief executive officer.
Miller, who was most recently President of Brinker International’s Macaroni Grill, and who earlier served as vice president of operations for Taco Bueno, replaces Stephen Clark, who is remaining with Jacobson Partners as CEO of Bertucci’s Italian Restaurants.
In this directly negotiated transaction between Palladium and Jacobson, there were no specific financial terms disclosed by Palladium; however Golub Capital Inc. provided $21.5 million in second lien debt and co-investment equity to help finance this acquisition. Golub had already invested in Taco Bueno in 2004 with Jacobson, to partially finance the recapitalization of the company.
Lawrence Golub, founder and president of Golub Capital, said that, because his company was an incumbent lender, it already knew Taco Bueno for a long time and “had tremendous confidence in the company’s business plan and its fundamental attractiveness to its customers.”
“We love the Taco Bueno deal,” said Golub. “It’s not subject to tourism, it is a concept that has been proven over an extended period of time and it has become a core concept with tremendous customer recurring value.”
This is Palladium’s first investment in the restaurant chain sector and this is Golub Capital’s eighth restaurant investment in the past two years.