Operations

Is Tao Group Hospitality for sale?

Reports indicate Madison Square Garden Entertainment Corp. is looking to auction off the restaurant and nightlife collection.
Sake No Hana interior
The new Sake No Hana by Tao Group Hospitality opened in New York in December. /Photo courtesy of Michael Kleinberg.

New York-based Madison Square Garden Entertainment Corp., or MSGE, is reportedly considering a sale of Tao Group Hospitality, parent to a restaurant-and-nightlife portfolio that includes the Tao Asian Bistro, Hakkasan and Lavo Italian brands.

The report comes from The New York Post, which said MSGE has hired Goldman Sachs to explore a potential sale of the restaurant-and-bar group, citing unnamed insider sources.

The report also said first-round bids are under consideration and that mega-restaurateur Tilman Fertitta, president and CEO of Landry’s Inc., is a rumored suitor.

MSGE officials through a spokesperson declined to comment. Landry’s Inc. did not immediately respond to requests for confirmation.

Led by co-CEOs Noah Tepperberg and Jason Strauss, who sold a majority stake in the group to MSGE in 2017, Tao Group is known for its collection of splashy high-end dining and bar concepts designed to draw a celebrity clientele.

The group includes the namesake Tao Asian Bistros in New York, Las Vegas, Los Angeles and Chicago, for example, as well as five units of Lavo Italian Restaurant and three locations of Beauty & Essex. Multiple locations of Lavo and Beauty & Essex were on Restaurant Business’s Top 100 Independent restaurant list in 2022.

 In 2021, Tao Group acquired the Hakkasan Group, which created a mini dining-and-nightlife empire, including multiple locations of the lavish Hakkasan concept, as well as Yauatcha and Ling Ling.

More recently, Tao Group in December opened the new Japanese concept Sake No Hana in the Moxy hotel in New York’s Lower East Side.

And coming to Chicago in 2023 is a private members club that will be a first-ever partnership between Tao Group and the dining powerhouse Lettuce Entertain You Enterprises, which operates about 110 restaurants under 60 concepts.

In addition, Tao’s nightclub and lounge brands include Marquee, Omnia, Wet Republic, Little Sister, The Highlight Room and Jewel. And the group in November announced plans to open the first-ever Tao-branded resort in Orlando, Fla., which would serve as an anchor for O-Town West, a $1 billion mixed-use development there.

Tao Group now includes more than 70 locations in more than 20 markets on four continents. In its Sept. 30-ended earnings report, MSGE said Tao Group generated $132.7 million in revenues for the first quarter, which was up 11% compared with the prior year. Operating expenses increased 25%, however, due primarily to higher labor and food-and-beverage costs, as well as rent. The division reported income of $5.9 million for the quarter, which was down 41% year over year.

Last year, the parent company submitted a proposal to spin off Tao Group Hospitality as a separate company, along with the MSG Sphere, a “multi-sensory” $2.2 billion venue under construction in Las Vegas, which is expected to open later this year.

Under the plan, a majority interest in Tao Group would be held by the newly created MSG Sphere Corp., while the live entertainment (Madison Square Garden, Radio City Music Hall and more), as well as sports and entertainment bookings and sports licensing would remain under Madison Square Garden Entertainment Corp.

According to The New York Post, insiders say billionaire owner Jim Dolan is looking to auction off Tao Group now to fund the Sphere’s construction.

It cited a Morgan Stanley analyst who estimated Tao Group was worth $524 million. Using that number, the Post estimated that Madison Square Garden Entertainment’s 67% stake in Tao Group would be worth $274 million.

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