Mercato Partners Thursday announced its inaugural food and beverage fund, Savory. This new fund of $90 million will make investments into compelling, up-and-coming restaurant concepts by providing access to capital together with a team of experienced industry professionals to fuel growth and operations.
To create this unique investment practice, Mercato Partners founder Greg Warnock partnered with restaurant industry veteran Andrew K. Smith along with several members of his leadership team. Savory combines the experience of Smith and his team in developing and operating over 175 geographically diverse restaurant locations with the experience of Warnock and the Mercato Partners team in successfully executing institutional investment strategies through various economic cycles and private equity practices.
Savory fills a noticeable void in the food and beverage industry by delivering access to growth capital together with an award-winning restaurant operations team of more than 50 industry veterans who formerly led restaurant development at Four Foods Group, one of the fastest-growing restaurant operators in the nation. With a well-documented track record and decades of relevant experience, this value-add team brings pivotal resources critical to the establishment of successful processes for emerging multi-unit concepts. These resources include expertise in real estate selection and negotiation, development and construction of each restaurant location, project and event management, talent recruiting, leadership training and development, supply chain/procurement, human resources, accounting, strategic financial planning, facilities management, sales and marketing, and more.
“Thousands of restaurant brands have built winning concepts with a promising mix of culture, flavor profile, and momentum; however, the creativity and courage needed to launch a new restaurant is much different from the skill set required to scale a restaurant concept to dozens of locations in multiple states,” says Smith, managing director of Savory. “Both capital and expertise are essential to create lasting value in the restaurant industry. Savory’s unique approach is to 1) identify where consumers have "already picked" a winner through loyal patronage, to 2) provide capital to rapidly expand while preserving the brand's uniqueness and to 3) provide restaurant founders with a capable support team ready to go beyond advice and coaching - and actually do work 'on the business' while the founders continue to work 'in the business' and thereby ensure mutual success.”
Savory’s current portfolio includes popular restaurant concepts Mo’Bettahs, R&R BBQ and Swig. Strong portfolio performance demonstrates Savory’s ability to identify and grow successful concepts at a rate exceeding 40 percent year-over-year, and to do so profitably. This remarkable growth has continued throughout, and in spite of, the economic fallout of the current crisis.
“The restaurant industry carries an undeserved reputation among certain investors for business risk and razor-thin margins, giving rise to market inefficiency and opportunity. A differentiated brand with several profitable locations and years of consumer loyalty offers a compelling risk-return profile for investors,” says managing director of Savory and Mercato Partners, Greg Warnock. “By providing both capital and relevant expertise, we have unlocked tremendous success. Savory’s limited partner investors and portfolio brand founders appreciate the Savory approach to driving incremental growth and value.”
“We created Mo’Bettahs to give guests an authentic Hawaiian experience, which we were able to successfully provide through lots of hard work and deliberate culture curation over the past 10 years,” adds Kimo Mack, co-founder of Mo’Bettahs. “Despite that success, we had reached a plateau in our expansion efforts. We were stretched thin and being pulled away from our core strengths. The Savory team helped us to achieve a breakthrough in performance and together we quickly grew our business to heights we simply couldn’t have reached on our own. Our partnership with Savory and its value-add team remains one of our greatest accomplishments.”
Dining behaviors have changed in ways both temporary and permanent as a result of COVID-19. Many community favorite restaurants will not survive, and those losses are heartbreaking to their loyal customers. These market shifts and disruptions create an opportunity for brands that are fresh, nimble, and well-funded to prosper in the food and beverage landscape for years to come.