Joe & the Juice sells juice and coffee out of 338 locations. Many are in Australia and Europe, but it will sell you a sandwich in some North American operations, including New York, San Francisco and Boston. The business is so attractive that a majority ownership interest Joe & the Juice was sold to private equity company General Atlantic.
Private equity (PE) firms are known for taking on debt when buying businesses and then cutting costs to pay that debt. Hopefully, Joe & the Juice will avoid that. The PE company says otherwise. It wants to cut Joe & the Juice financial obligations. It will have to put its money where its mouth is.
According to Bloomberg, the buyout price will be $641 million. Andrew Crawford, global head of consumer at General Atlantic, said, “There’s a real scarcity value associated with the business as it’s a global, multi-unit concept that’s been proven in Scandinavia, the UK and the US at scale.” He believes that the company has a future in e-commerce.
The buyout is a gamble. Joe & the Juice has a large number of competitors. The most obvious are McDonald’s and Starbucks, which also sell smoothies. There are thousands of tiny juice companies in the United States, Asia and Europe. (See the 50 most successful small businesses to start in America.)
The idea shows how PE firms will take long odds if they think a niche is promising. However, PE also has a short fuse. Give the deal two or three years and see what happens.
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