Taco and tequila restaurant Pink Taco could soon join the ranks of Mexican megachains Acapulco, Chevys, and El Torito.
The rock ’n’ roll-themed eatery with Sunset Strip and Las Vegas locations is set to be bought by Cypress-based Real Mex Restaurants, an affiliate of New York private equity firm Z Capital Partners. The price was not disclosed.
For Real Mex, known for family-friendly eateries and cheese-laden fiesta platters, adding Pink Taco could attract the much coveted millennial demographic.
“It’s a smart buy,” said Kevin Burke, managing director at Brentwood investment bank Trinity Capital. “It’s got a following, and it’s hip and sassy. If they can stay true to the original concept, Real Mex will do very well with it.”
Z said it plans for Real Mex to wield its decades of restaurant experience in opening Pink Taco locations nationwide and overseas, and launching Pink Taco-branded food and drink products.
“We believe there is tremendous potential to elevate the brand and expand its unique restaurant experience,” James Zenni, Z’s chief executive, said in a statement.
The company did not respond to a request for further comment.
Rock ’n’ roll route
Pink Taco – with its colorful décor, cheeky name, loud music, and reputation for hosting celeb bashes for the likes of Aerosmith’s Steven Tyler – follows a funky Mexican cantina concept. Its creative direction under Real Mex will continue to stem from founder Harry Morton, 35, who opened the first Pink Taco at the Las Vegas Hard Rock Hotel & Casino in 1999 – when he was just 18. That site will remain under the hotel’s ownership. Morton’s knack for developing theme-based restaurants is part of a family legacy: Morton is the grandson of Morton’s The Steakhouse-founder Arnie Morton, and the son of Hard Rock Café International Inc.-co-founder Peter Morton.
Morton has talked for at least several years about plans to open more Pink Taco sites, telling the Los Angeles Times in 2014 that he hoped to eventually open between 80 and 100 internationally. But there have been stumbles. A Scottsdale, Ariz., location closed in 2009, and a site at Westfield Corp.’s Century City mall closed in January after nine years.
Real Mex has not revealed the scale of its expansion plan and did not return calls for comment, nor did representatives of Pink Taco.
Harry Morton is said to be staying on with the company to guide marketing, design, and location scouting.
The acquisition comes as Real Mex contends with an aging clientele and growing competition from fast-casual options. The full-service Mexican restaurant industry as a whole did $13.2 billion in business even as competitor El Torito closed at least three locations, and Chevys and Acapulco each closed at least two locations last year.
Real Mex had filed for bankruptcy in 2011 as customers opted for cheaper Mexican fare offered by chains such as Chipotle Mexican Grill Inc. during the recession. Z Capital became Real Mex’s largest shareholder in the company’s reorganization, which shuttered dozens of locations.
These days, the Chipotle threat hasn’t disappeared. Fast-growing Mexican chains, such as Dallas-based On the Border and Norwalk, Conn.-based Bartaco, tend to emphasize their liquor offerings – the better to sidestep competition from chains such as Chipotle, which don’t serve alcohol. They are also focusing on limited menus, serving a handful of quality tacos, for example, rather than everything from enchiladas to chile rellenos.
“They’re not going the traditional route, with five-page menus of pretty much everything,” said Lauren Hallow, a researcher at Technomic.
But even eateries tailored to millennials face the challenge of growing competition.
“That space is getting crowded,” said restaurant analyst Bonnie Riggs of NPD Group Inc. “It’s a battle for market share.”