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Danny Meyer Starts $200M Fund to Expand Businesses

Joe Coffee and Resy are early investments

God's Love We Deliver, Golden Heart Awards - Inside Photo by Dimitrios Kambouris/Getty Images for Michael Kors

Looks like Danny Meyer is throwing weight behind expanding restaurants: Union Square Hospitality Group has launched an investment fund that has already raised $200 million and could duplicate restaurants like Martina.

The Wall Street Journal reports that the private-equity fund called Enlightened Hospitality Investments LP, could be used to expand restaurants like cafe Daily Provisions and pizzeria Martina across the country. It’s also investing in outside companies, like Joe Coffee and even non-food related businesses.

The new fund run by Union Square Hospitality Group — one of the investors — promotes businesses with “an employee-centric focus.” WSJ claims that Meyer has earned a reputation on “providing staff with compensation and benefits beyond the industry norm.” He also eliminated tipping at his full-service restaurants in 2015.

“Mr. Meyer wants to bring those values and his business savvy, along with an infusion of cash, to companies that take a similar approach,” WSJ reports. As far as when Meyer would expand USHG restaurants like Daily Provisions or Martina, he says, “if and when the timing is right.”

So far, the fund that started in 2016 is making big investments “in the $10 million to $20 million range” — USHG chief investment officer Mark Leavitt told the WSJin companies like Joe Coffee, restaurant reservation app Resy, and Salt & Straw Ice Cream on the West Coast. Though it may eventually invest in non-food related businesses, none have officially been chosen yet.

In the case of Joe Coffee, the investment allows for the the coffee chain to update existing locations, broaden its footprint in New York and Philadelphia, and take on other cities. “In 2018 we want to identify a few more cities where we can develop our brand. We feel like there‘s so much opportunity and the world is our oyster,” Joe Coffee founder Jonathan Rubinstein said.

The group told WSJ it started a separate fund “to tap into a large pool of money from outside investors who might not have been interested in investing in the company itself because it is more narrowly focused on fine dining,” and to offer a “less complicated structure” when navigating a big group of outside investors. The fund will also generate revenue through a standard practice of charging investors a management fee.

Danny Meyer started Union Square Cafe in 1985, which moved from 16th Street to 19th Street in December; the restaurant was the beginning of an empire, which now includes Marta, Maialino, Martina, Daily Provisions, the newly opened Caffe Marchio and the upcoming Vini e Fritti, along with Shake Shack — a separate company from Union Square Hospitality Group — which started in 2004 and now has locations worldwide.

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