Gourmet meal or dog's dinner

1. Forward Foods

An investment group led by Emigrant Capital created Forward Foods in 2006, with the firm investing $12.8 million. Emigrant then contributed a further $6.2 million to the company, before Forward Foods fell victim to a recall of peanut products following an outbreak of salmonella (see also page 24). Unable to sustain losses when its products were pulled from stores, the company declared bankruptcy in December.

2. Atkins Nutritionals

Atkins, owned by private equity firm North Castle Partners, was also affected by the peanut recall – and it was not the first time losses made by the health food company had affected private equity firms. Parthenon Capital and Goldman Sachs Partners originally paid $533 million in 2003 for the company, which was founded on the low-carb philosophy of Dr. Robert Atkins. But with the diet's popularity waning after Atkins's death, the eponymous firm filed for Chapter 11 in 2005, which halved the return on Parthenon's fund.

3. New World Pasta

Atkins's difficulties highlighted the danger of investing in health food trends that can attract big returns but also be out of fashion in a blink. The Atkins craze preached avoidance of carbohydrates including bread and pasta, and its temporary popularity helped sink JLL Partners portfolio company New World Pasta in 2004. If it had held out, the company might have capitalised on the pro-carb bandwagon that rolled a few years later.

Atkins's difficulties highlighted the danger of investing in health food trends that can attract big returns but also be out of fashion in a blink. The Atkins craze preached avoidance of carbohydrates including bread and pasta, and its temporary popularity helped sink JLL Partners portfolio company New World Pasta in 2004. If it had held out, the company might have capitalised on the pro-carb bandwagon that rolled a few years later.

4. Gaceau

Healthy foods can still make fat profits in our diet-obsessed world. In 2006, TSG Consumer Partners sold its 30 percent interest in vitamin water producer Gaceau for $677 million, while London-listed 3i sold fruit and vegetable extractor Braes Group for €80 million and cereal bar manufacturer Halo Foods for an undisclosed sum.

5. The Orchid Group

While alcohol is usually a good investment, especially in times of distress, the chairman of UK pub chain JD Wetherspoon said in January that the excessive debt taken on by private equity investors was “running down” the British pub industry. The statement came after lenders to GI Partners' portfolio The Orchid Group – the UK's fifth-largest pub chain – hired PricewaterhouseCoopers to conduct a financial restructuring.

6. Bold Pub Company

Despite these problems, the alcohol and leisure sector has still seen investors lining up outside the door. Close Ventures generated an internal rate of return of 20 percent on its sale of Bold Pub Company in 2007.

7. Burger King

Fast food hasn't always meant fast profits, and it was never likely to when TPG, Bain Capital and Goldman Sachs paid $1.5 billion in 2002 for Burger King, which at that point was weighed down by a number of weak franchises. But after the group spent a further $150 million in turnaround efforts – including renovating restaurants and increasing advertising – it took the company public for $425 million in 2006, the largest-ever IPO of a US restaurant chain.

8. Pacific Coast Restaurants

The success of the Burger King IPO may have contributed to the popularity of restaurant deals in the years since. For instance, Sun Capital Partners purchased Pacific Coast Restaurants in 2007. Other deals included Bain partnering with Catterton Partners to acquire OSI Restaurant Partners for $3.2 billion, and Golden Gate Capital purchased Macaroni Grill last year for $132 million.

9. Tyrells Potato Chips

While snack foods have long been a popular target for private equity, more firms have been tapping into the demand for exotic snack products in the UK. For instance, last year Langholm Capital bought Tyrrells Potato Chips, which has flavours such as parsnip, asparagus and Ludlow sausage, for around £40 million, after previously making portfolio company Dorset Cereals the second-most popular muesli brand in the UK.

10. Jenny Craig

Sometimes a food company just needs a little celebrity endorsement to turn its fortunes around. ACI Capital and Mid-Ocean Partners sold weight-loss company Jenny Craig for $600 million in 2006, after it had generated sales of more than $400 million due largely to the high-profile campaign chronicling actress Kirstie Alley's shrinking waistline.