Savory Fund stayed in the back of Amir Mostafavi’s mind for years.

He first learned about the company when a friend and mentor shared an article with him. The private equity firm built its reputation on investing in emerging quick-service chains, even through COVID. As the founder and leader of South Block, a rising fast casual in the DMV area known for its selection of made-to-order smoothies, açai bowls, toasts, and cold-pressed juices, Mostafavi seemed to fit what Savory typically looks for.

But it wasn’t the right time for an equity transaction.

Mostafavi’s goal was to build South Block to 15 locations before it explored outside investment. Also, COVID was a meaningful event for the chain. The pandemic was challenging, but it made the company stronger. South Block’s team gained steam as it pivoted and adapted to changing consumer preferences. In 2023, with the federal government officially calling off the pandemic, it was time to capitalize on the momentum.

“We became stronger as a brand, stronger as a team, and became more confident that, hey, we got through that,” Mostafavi says. “We’re ready to take on anything now, and there was a lot of growth coming out of COVID as well. We just felt like the timing was right to find a partner to help us pour fuel on the fire and help us grow outside of the DMV and into new markets.”

Mostafavi never forgot about Savory. When South Block started its due diligence, the fund was the first group he tried to make a connection with. He was introduced to the firm via Otto Othman, cofounder of PINCHO, which received an investment from Savory in 2021. Mostafavi also attended Restaurantology, an annual event created by Savory for emerging operators to gather and learn tips about the next stages of growth. The founder met with who he could, and the two sides hit it off.

The partnership was officially announced on Wednesday. Terms of the transaction were not disclosed, but Savory said it acquired a “healthy stake” in the better-for-you company. Mostafavi will remain as CEO and continue the culture he’s been building since 2011.

“We were first looking for a partner that aligned with that vision and saw the world of business the same way,” Mostafavi says. “Savory right away stood out to us for aligning with us in the way that we see the world of business and what makes certain brands really special and how we’re going to grow that brand and keep that magic part of the brand and not ruin the culture that people experience by sacrificing certain things along the way just for the sake of growth. We’re totally aligned on that and that was music to my ears when you’re a founder who’s really passionate about your brand and the future of the brand for your guests and for your team.”

South Block plans to open around five to six locations in 2024, all of them in DMV markets. In 2025, the fast casual will start exploring new states; Mostafavi has some trade areas in mind, but nothing has been solidified yet. They will ideally be nearby, like the East Coast and Mid-Atlantic. As of now there are no plans to franchise, and the founder expects that to stay the same through at least store No. 50.

The move comes three months after Savory announced its investment in Houston TX Hot Chicken. The fund now has a portfolio of 11 brands—Swig, R&R BBQ, PINCHO, Via 313 Pizzeria, Mo’ Bettahs Hawaiian Style Food, 86 Repairs, Saigon Hustle, Hash Kitchen, The Sicilian Butcher, Houston TX Hot Chicken, and South Block.

Savory Fund closed a $100 million fund in October 2020 and a second $100 million fund in 2021. The South Block investment represents the beginning of a third fund, this time worth $200 million. Savory managing partner Andrew Smith says the fast casual is a “shining light of what you really want a brand to be” and that all 15 stores are “extremely profitable and have extremely high revenues.”

He adds that the fund has been looking into the better-for-you category but with great caution. If a concept is too health-conscious, it could alienate a bigger audience. But that’s not the case with South Block; Smith calls the chain “healthy without being intimidating.”

“He’s done a really good job with South Block having a brand that is approachable by all,” Smith says. “It could be the healthy patrons. It could be the better-for-you patrons or can it just be a normal patron that’s not necessarily wanting to go and eat healthy every day and they’re not as conscious about calories or anything else, but they just really love the product and they love the company name and culture and vibe. So we think he’s really transcended lines between the different categories of patrons and made them become just die-hard, cult followers.”

Admittedly, Smith was skeptical when he was told about South Block’s differentiated product quality. He hears that line all the time as an investor. But he was “blown away” after trying the PBJ Bowl, and was adamant that there “is absolutely a quality gap between what South Block provides versus its peers.” He became a fan after only a couple of days visiting Washington, D.C.

Mostafavi was one of the first operators to introduce açai to the East Coast in the early 2000s when he started another juice bar. South Block prides itself on creating an authentically healthy product. Neither ice nor sorbet is used in smoothies; everything is blended to order. Bowls are made the same way.

Savory couldn’t ask for anything more.

“I’ve been making them for 20 years and that’s something we’re not willing to sacrifice,” Mostafavi says. “So we don’t take any shortcuts on it. That’s something we’re really proud about.”

South Block is the first of what will likely be eight chains in the $200 million fund. Savory will target fast casual, but will consider some casual-dining concepts as well. Smith says the firm is interested in Asian and Mexican cuisines and other quick-service beverage concepts.