Los Tacos No 1 is a classic New York success story. After the Mexican-style taco joint opened in 2013, it quickly became a critic’s pick in the city’s paper of record, drawing long lines and a devoted lunchtime crowd. As word spread about its juicy al pastor and handmade tortillas, it expanded to nine locations. Then, this September, bad news struck: Los Tacos No 1 had received an undisclosed amount of funding from private equity firm TSG Consumer.
According to a press release, this cash would help Los Tacos pursue “thoughtful, founder-led growth”. Customers were not so sure. Social media posts quickly declared “the beginning of the end” for the chain, half-jokingly anticipating tiny portions of bad food.
Faced with such eulogies, the co-founders promised: “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.” This, too, was met with skepticism and ire.
Critics bemoaning the “same-ification” of New York – the idea that a once lively and creative city has devolved into a suburban strip mall – often blame the same villainous force: private equity. The business model involves firms investing in privately owned companies to grow and restructure them, in hopes of making a profit. Across the country, private equity has hooks in an ever-increasing variance of industries, from hospitals and veterinary clinics to clothing lines and cutlery brands. Now, some New Yorkers are ringing the death knell for one of their favorite activities, eating out.
“Big Money Is Betting on Bagels,” read a New York Times headline in April about private equity investing in the breakfast staple. Baked goods, too, according to the worker-owned food publication Ravenous, which last week examined “the curious case of the soulless private equity cookie”. (See: Crumbl, Levain Bakery.)
According to Jaya Saxena, a writer and worker-owner at Ravenous, attractive concepts for private equity investment tend to be restaurants serving food that can be made easily and on the cheap. “Cookies, bagels, ice-cream all work really well, because you don’t need to be a professionally trained chef to scoop ice-cream or put premade frozen cookies in an oven,” she said. Plus, customers will literally line up for these eats, as they did this summer in the West Village for Myka’s Greek yogurt or last week at Blank Street Coffee’s new shop in Philadelphia. (Both franchises have received private equity funding.)
But other diners stay far away from the queue, believing that restaurants funded or owned by private equity are destined to cut costs, sling slop and adhere to an aesthetic devoid of personality. You know them when you see them. Sleek but sterile, and lacking any cultural cohesion with its neighborhood. Cashiers replaced by touchscreen ordering stations. Prices high enough to induce buyer’s remorse, leaving you wondering why you just paid $20 for a disappointing sandwich.
The conversation recently hit TikTok, when a user who goes by the handle @thedilligentdiva compiled a list of such New York restaurants to avoid, “so you don’t have to spend $20 on an acai bowl”. The creator was not available for an interview, but her crusade seems to have stemmed from eating said $20 acai bowl at Pura Vida, which she described as low quality and “pure sugar”.
Commentators chimed in, listing other places owned by private equity and lamenting its presence in the industry. The consensus was grim: “It’s sad once you realize it’s really hard to find real mom and pop,” and “So we cooking and eating at home.” At times the critiques veered into paranoia. “Tbh any spot that has more than 2 locations is suspicious,” one user wrote.
Using Beli, an app for tracking and rating restaurants, TikTokers suggested alternatives to what @thedilligentdiva called “PE SLOP”. Pop Up Bagel has received capital from multiple investors, so users recommended Apollo Bagels and Tompkins Square Bagels. Instead of fast casual chain Dig Inn, @thedilligentdiva suggested the health food spot ThisBowl. (Fact check: ThisBowl has received partial funding from Stripes, a private equity company.)
Los Tacos No 1 was listed as an alternative to rival taco spot Tacombi, which has received private equity money – that is, until Los Tacos No 1 announced its TSG Consumer investment (it did not disclose how much stake the firm now has in the brand). “Guys we lost another one LITERALLY TODAY,” @thedilligentdiva wrote in a comment.
Diners do have cause for concern when private equity gets involved in a beloved business, says Megan Greenwell, a journalist and author of Bad Company: Private Equity and the Death of the American Dream. “Quality is generally the furthest thing from its mind,” she said. “What they are trying to do above all else is increase profits.” And for the consulting class, “increasing profits” usually means cutting corners.
“You’re laying off people, cutting down on staff, or spending less money on development and training,” Greenwell said. More often than not, this affects the product or service. “It now has become a kind of meme where everything gets worse as soon as it’s bought by private equity.”
Despite interest in the TikTok list, Greenwell says she has not seen a meaningful, sustained backlash to private equity in food. This in comparison with private equity in healthcare, for example: this week, congressional Democrats introduced a bill that would ban the corporate takeover of physician offices. (The National Restaurant Association, the leading food service trade association in the US, declined to comment on private equity in restaurants. A representative said it’s not something the group “track[s] closely”.)
But younger people may be more likely to sound the alarm. “In some ways, gen Z folks are more conscious consumers than older generations,” said Greenwell, who teaches journalism to high school and college students. “I work with a lot of teenagers, and I don’t even think they could articulate what private equity is. But they’d say, ‘Oh, I wouldn’t eat at a chain owned by it.’”
Increasingly on social media, users deploy “private equity” as a derogatory – if not always factual – term for businesses that seem overly corporate or lacking in charm. “I’ve also seen so many [posts] where people are like, ‘Apparently this place is not private equity, but it might as well be,’” Greenwell said.
Scarr Pimentel, owner of the New York pizza joint Scarr’s and a critic of the food industry, also called out some restaurants in a January video for the online series Subway Takes. “A lot of them are fronts for like VC [venture capital] and private equities that people don’t realize,” Pimentel said, adding that the days of opening up a truly independent spot are waning. He added that “telltale signs” include a restaurant having merch and an Instagram account that’s “too perfectly curated off the rip” – “[when the] doors are not even open and they have a hype train behind them”.
Pimentel called on local politicians to help small businesses out, so that keeping a restaurant open in New York without corporate funding remains feasible.
The restaurant industry is notoriously brutal for owners, especially in a cutthroat market such as New York. Rents, insurance and the cost of labor are high, and tariffs continue to drive up the price of ingredients. “You have a lot of restaurant owners who have been pretty open about the fact that it feels impossible to open up a restaurant without some sort of backing, whether that’s via having a bunch of really wealthy friends [invest] or actively seeking out private equity,” said Saxena, the Ravenous worker-owner. “It’s not surprising to me that a lot of places are looking toward private equity, but it’s extraordinarily depressing that this often leads to a less flavorful environment.”
Private equity proponents say the business model helps to grow small businesses. “Founders and businesses choose to partner with private equity because it provides long-term capital and industry expertise that helps them to grow, build, and innovate,” Will Dunham, CEO of the industry group American Investment Council, said in a statement. “Eighty-five percent of private equity funding supports small business, allowing them to hire more workers and compete against much larger companies.”
The conversation transcends New York. In 2024, Blackstone acquired stake in the sandwich chain Jersey Mike’s. This week, the company went public, which has been hailed as a success for private equity. Jersey Mike’s recently dethroned Chick-fil-A as the top-rated quick-service restaurant according to the American Customer Satisfaction Index; the fried chicken franchise had previously spent 11 years ranked in first place.
The sub shop is just one familiar chain that has been taken over by private equity: Dunkin’, Subway, Arby’s, Baskin-Robbins, and Buffalo Wild Wings are other examples. According to CNBC, PE firms invested $94.5bn in bars and restaurants between 2014 and 2024. This often does not work for the individual chain; almost half of bars and restaurants that filed for bankruptcy in 2024 were backed by private equity. That’s not because of bad luck. Private equity is known for leveraged buyouts, or the model of borrowing money to buy a restaurant and then pass debt from that sale down to its new acquisition.
The case of Panera Bread tends to particularly upset customers who remember its salad days of the 1990s, when the bakery was known for its cozy atmosphere and delicious bread. The Nation wrote in 2024 that the chain’s acquisition by private equity tells “the story of late capitalism”: “In expanding, the charm faded, and then vanished.”
Over the years, Panera tried to reclaim its former reputation as a “conscious” chain, but those efforts were clumsy at best. In 2010, the brand launched a “Pay What You Can” offshoot of its cafes to ease financial burdens on low-income customers. They were such a flop that cafe workers started telling customers that they would have to work in exchange for a “free” lunch. These days, Panera may be best known for its “charged” lemonade, a caffeinated drink that was discontinued after multiple lawsuits alleged it was unsafe to drink. (Two people died and others faced permanent cardiac injuries after consuming the beverage; Panera said it “stands firmly by the safety of our products”.)
The prospect of losing a comfort dish or local staple can feel personal. Greenwell, a native Californian who lives in New York, loves Los Tacos No 1. When the investment was announced, she thought: “Oh no, this is so terrible for me, because I like their tacos, and I don’t like that many tacos in New York City.”
