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Mercato Partners closes USD100m Savory Fund II

Mercato Partners has closed Savory Fund II, its second investment vehicle devoted exclusively to backing emerging and profitable restaurant concepts, raising USD100 million of commitments. The closing of Fund II builds upon the early success of the firm’s inaugural vehicle, which closed on USD100 million of commitments in October 2020. 

Limited partners in the fund consist of both existing and new investors, including institutional investors, family offices, and financial services and advisory firms. 72 percent of investors in Fund I have committed to Fund II and will enjoy co-investment rights on a deal-by-deal basis.  

Savory’s investment strategy focuses on partnering with proven, profitable food and beverage brands looking to expand beyond their founding region and build a culture of operational excellence. The fund is managed by General Partners Andrew K Smith and Greg Warnock, along with an experienced F&B team of 65 professionals responsible for scaling Savory’s brands from 3-9 locations up to 40-50 locations nationwide. 

Fund II will seek to partner with six-seven new brands during its investment period. Since the inception of the Savory Fund Practice in 2018, the firm has deployed USD65 million and allocated an additional USD15 million of growth capital into five distinctive, emerging restaurant concepts – The Crack Shack, Mo’Bettahs, R&R Barbeque, Swig, and Via 313. Currently the firm is on pace to open over 40 locations across the portfolio in 2021, with 70 openings targeted for 2022. 

“We are grateful for the continued support of our investors, especially after closing Fund I less than one year ago,” says Smith. “As one of the few firms operating in this industry niche, they understand our mission of partnering with leading entrepreneurs early in their business’ life cycles and accelerating their brand and operations nationally. The last year has shown that skilled, active managers can provide true alpha to investment portfolios beyond market rate returns. Striving for outperformance will always be a feature of Savory’s DNA.”  

“Through the deployment of Fund I, we have developed a replicable playbook for success with five amazing companies, not only through the efficient use of capital, but also through on-the-ground operational assistance. We managed to do this despite operating during the most challenging time in the industry’s history. We are grateful for the perseverance of our founders and our loyal employees,” Smith continues. 

“As the pandemic fades into memory, Savory is poised to take advantage of re-openings across the country, and the desire to eat outside the home and try new concepts. We are also deploying Fund II during a transition period in the commercial real estate market. Many sites have become available due to the effects of the pandemic, allowing Savory’s portfolio companies to secure new space in desirable locations. We expect this to continue during the life of Fund II,” Smith concludes. 

“Swig partnered with Savory in December of 2017, and since then, our brand has experienced explosive revenue growth, approaching 300 per cent from when we partnered,” says Chase Wardrop, President of Swig. “We have also been fortunate to open 13 additional stores as a partnership, with 17 more slated to open 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. As a result, our teams have been able to adapt, and we were extremely well positioned during the unexpected challenges our industry faced during the pandemic. Swig is now poised for additional mind-bending growth in the coming years. Because we have the Savory team behind us, we feel prepared to execute better than ever.” 

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