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OPINIONFinancing

A new restaurant SPAC takes off

Tastemaker Acquisition Corp., a restaurant-focused acquisition vehicle formed by former Barteca and Jamba executives, raised more than expected in its offering, says RB’s The Bottom Line.
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The Bottom Line

Tastemaker Acquisition Corp., the special purpose acquisition company founded by the former executives of Jamba and Barteca, started trading on Friday after higher-than-expected interest led to an upsized offering of $240 million.

So what now?

“Got any companies for sale?” Co-CEO Andy Pforzheimer joked in an interview. Pforzheimer, the founder and former CEO of Barteca Restaurant Group, along with former Jamba CEO Dave Pace, are leading the SPAC, which features a host of restaurant industry and investment professionals.

That is the challenge for Tastemaker, which will enter the restaurant merger and acquisition market at a time when there is an unexpectedly robust interest in the industry from potential buyers.

It is one of as many as four SPACs that could be in the market for a restaurant company. A SPAC is a publicly-traded shell company that takes money from public investors and uses it to buy a company, usually one that is privately held. The result takes that private company public in a reverse merger.

Many other companies are in the market for restaurant chains, too, including strategic investors and private equity groups.

Pforzheimer and Pace understand the challenge—which is notable as a SPAC has two years to make a deal. But they enter the fray with a lot more ammunition than expected. The company raised $40 million more than it initially expected back in October.

“Demand was very high,” said Pace, Tastemaker co-CEO. “We were really excited about that. We held national investor calls. The response was very positive and the conversion rate on meetings was high.”

The pair credited the level of interest to their preference for SPACs with seasoned management teams “as opposed to finance guys learning as they went,” Pforzheimer said.

It’s also a credit to the interest in the industry. Restaurants are facing a period of growth coming out of the coronavirus as consumers return and the economy improves. What’s more, they’ve spent the past 10 months innovating and doing things to survive that will last, potentially making them more profitable or more relevant.

Tastemaker isn’t just targeting restaurants—it is also looking at restaurant technology companies and those that serve restaurants.

As for chains the company is casting a wide net. It has a list of companies it plans to start calling soon, including quick-service chains, fast-casual concepts and casual dining companies. “It comes back to differentiators,” Pace said. “Which are the best management teams, who has been innovative increasing new revenue streams or technology that resonates with concept owners.”

Quick-service restaurants will have tough comparisons to lap this year, for instance, while full-service restaurants struggled with a headwind in 2020 that may ease in 2021.

What’s more, Pforzheimer said, “People are innovating in each segment. There are companies out there … that have increased their EBITDA with 20% lower sales. Wouldn’t you like to bet on those coming out of this?”

And there are certain companies where a SPAC is a right option as opposed to a private equity or a strategic buyer.

“We know who we’re going to call,” Pace said. “We’ll be dialing for dollars starting this weekend.”

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