Yucaipa purchases Piccadilly Cafeterias

The firm is partnering with fellow Los Angeles-based private equity firm Diversified Investment Management Group to head a majority investment in the bankrupt Southeast and Mid-Atlantic US restaurant chain.

Los Angeles-based private equity firms The Yucaipa Companies and Diversified Investment Management Group have formed Piccadilly Investments to buy up the bankrupt assets and operations of Piccadilly Cafeterias.


Terms of the deal were not disclosed, according to a statement, though Yucaipa controls and is the majority owner of Piccadilly. The Daily Report, a subsidiary of the Baton Rouge Business Report, is reporting the transaction to be worth $80 million.


“One of the main reasons Yucaipa bought the chain was due to its long and proud tradition and name recognition in the South,” Yucaipa principal Frank Quintero said. “With our operational and retail expertise, we will be able to go in there and improve things for the customers.”


Headquartered in Baton Rouge, Louisiana, Piccadilly serves home-style meals, cafeteria style. The company tumbled into bankruptcy following a series of events that began back in 1998, when the then-publicly traded Piccadilly bought the Morrison’s Cafeteria chain, which operated mostly in Georgia in Florida, for $46 million. At the time of purchase, Piccadilly employed 8,500 employees in 131 cafeterias in the southern US, not including the 7,000 employees and 142 locations it took on as part of the Morrison’s deal.


Subsequent management and operational missteps led Piccadilly to sell off many of its restaurant locations. The company filed for bankruptcy in early November 2003 and was delisted from the American Stock Exchange.


Fast-food company TruFoods, based in Lake Success, New York, and a Florida investment group originally offered $54 million to purchase Piccadilly. TruFoods, which also owns Arthur Treacher's Fish & Chips and other restaurant chains, was not willing to exceed a $79 million to buy the bankrupt cafeteria chain, according to The Daily Report.


Yucaipa is a private investor group run by billionaire Ronald Burkle of Southern California, the son of a Claremont, California, grocery executive, who initially built his fortune through the Ralphs chain of supermarkets, which became part of the nation’s largest such chain when it was sold to Kroger Co. in 1998. Burkle, listed on Forbes 400 list of wealthiest Americans, sits on the board of Yahoo!, the Getty Center and is a friend of former President Bill Clinton.


Founded in 1986, The Yucaipa Companies has completed mergers and acquisitions valued at more than $30 billion. Though the firm invests in the retail, logistics and manufacturing industries, Yucaipa is best known for executing a series of major grocery chain mergers and acquisitions. The firm owns Jurgensen’s, Falley’s, and Alpha Beta, among other chains. Yucaipa’s board includes former President Bill Clinton and the Reverend Jess Jackson.