NEW YORK U.S. fast-food chain Del Taco, which specializes in Mexican cuisine as well as American favorites like burgers and fries, is in the early stages of exploring a sale that could fetch more than $500 million, people familiar with the matter said on Wednesday.
Founded in 1964, Lake Forest, California-based Del Taco owns and operates 546 restaurants in 17 U.S. states. The majority of them are in West Coast states including California and Oregon.
Del Taco is owned by private equity firms that include Goldman Sachs Mezzanine Partners, Charlesbank Capital Partners and Leonard Green & Partners.
The owners are working with Piper Jaffray and Goldman Sachs Group Inc (GS.N) on the sale process, the sources said, requesting anonymity because the matter is private.
Goldman Sachs Mezzanine Partners led a new equity infusion into Del Taco in 2010, with existing investors Charlesbank Capital Partners and Leonard Green & Partners also contributing new capital to the recapitalization.
Del Taco also refinanced its debt in April in a $260 million deal led by GE Capital (GE.N).
Representatives of Del Taco, Goldman Sachs, Piper Jaffray and Leonard Green did not immediately respond to requests for comment. Charlesbank declined to comment.
Del Taco offers made-to-order Mexican items such as tacos, burritos and quesadillas as well as American classics including burgers, fries and shakes.
The company is one of a number of restaurant chains trying to sell themselves or go public as market valuations for the sector continue to hold strong.
In May, Darden Restaurants Inc (DRI.N) agreed to sell its Red Lobster seafood chain to private equity firm Golden Gate Capital LLC for $2.1 billion.
Carlson Restaurants Inc agreed to sell its TGI Fridays casual dining chain to private equity firms Sentinel Capital Partners and TriArtisan Capital Partners in May for more than $800 million.
Recent public offerings from restaurant chains have included Zoe's Kitchen Inc (ZOES.N), Potbelly Corp (PBPB.O) and Papa Murphy's Holdings Inc (FRSH.O).
(Reporting by Soyoung Kim and Olivia Oran in New York; Editing by Lisa Von Ahn)