Taco Cabana acquired by Yadav Enterprises

Yadav Enterprises agreed on 1 July 2021 to acquire the whole of the share capital of Taco Cabana from Fiesta Restaurant Group, through its YTC Enterprises affiliate, for $50–150M in cash, representing an EV/EBITDA multiple of 10x–18x on the year to January 2021. Working capital and other closing adjustments were expected to reduce the consideration by between seven and nine million dollars, and completion was anticipated during the third quarter. Taco Cabana operates a chain of fast-casual Mexican restaurants concentrated in Texas, offering tacos, fajitas and related dishes prepared on the premises, with drive-through service, patio dining and a licensed beverage offering distinguishing it from most quick-service competitors. The estate comprised 142 restaurants operated directly in Texas and six franchised establishments in New Mexico. Revenue amounted to $150–250M for the year ended 3 January 2021, with an adjusted EBITDA of $5–25M. Those earnings reflected a year in which restaurant trading was interrupted by the pandemic and, in Texas, by Winter Storm Uri, the insurance proceeds from which the seller retained under the agreement. The transaction extends the acquirer beyond franchise operation into brand ownership, a group that had built its scale by operating other companies’ concepts under licence acquiring for the first time the trademark, the recipes and the right to franchise them to others.