Mercato Partners closes $100 million second round of funding for emerging restaurants

Growth equity firm Mercato Partners announced Wednesday the closure of the $100 million second round of Savory Fund, which backs “emerging and profitable” restaurants with the funds needed to boost and expand their brands. Savory Fund II is closing on the heels of its first round, which closed in October 2020.

The second Savory Fund — which is being managed by General Partners Andrew K. Smith and Greg Warnock and backed by 65 industry professionals — aims to partner with six to eight new fast-casual and casual-dining restaurant brands that are “proven, profitable food and beverage brands” looking to expand and build upon their brand and geographic reach, with goals of scaling up from three to nine locations up to 40-50 locations around the country.

“With Savory Fund, we have many benefits other than the money — it’s only a quarter of what we do,” general partner Andrew K. Smith said. “We know how to scale to multiple units and new geographies […] About two-thirds of our partners come to us directly to ask for help, others are referrals and about 15% are us going out and contacting brands we’re intrigued by.”

Since the Savory Fund Practice began in 2018, the firm has invested $65 million and added another $15 million of growth capital into five restaurant concepts: The Crack Shack, Mo’Bettahs, R&R Barbeque, Swig, and Via 313. Currently, the firm is on track to add 40 units from the previous fund this year and 70 units in 2022. The fund’s current brands were same-store sales positive throughout 2020, except for the first six weeks when the pandemic hit in March and April.

“Swig partnered with Savory in December of 2017, and since then, our brand has experienced explosive revenue growth, approaching 300% from when we partnered,” said Chase Wardrop, president of Swig, which has already opened 13 additional restaurants and will be opening 17 more stores in 2021. “[…] Over the last few years, the Savory team has been instrumental in guiding us through the growth process, implementing their playbook on technologies, personnel and strategy necessary for our brand to scale.”

This time around, Savory Fund is looking for restaurants with an “it factor” with the right flavor profiles and within segments that are currently very popular.

“Our strategy is to get the limelight on these brands that deserve it — the next exciting restaurant brands,” Smith said. “We’re trying to start them super regional and know that [the next investors] can take them national.”

Savory Fund II will be fully deployed over the next two years with a third fund of $100 million to follow in 2024.

Cooley LLP provided legal counsel for the formation of Fund II.

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