Operations

Mercato Partners launches $90M investment fund to fuel up-and-coming brands

June 4, 2020

Mercato Partners, an investor for growth-stage companies, has developed Savory, a $90 million fund to help scale up-and-coming restaurant concepts. To create the investment practice, Mercato Partners founder Greg Warnock partnered with  Andrew K. Smith, whose company — Four Food Groups —  owns 175 geographically diverse restaurants.

"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," Smith, managing director of Savory, said in a company press release. "Both capital and expertise are essential to creating lasting value in the restaurant industry."

He said Savory's approach is to:

1. Identify where consumers have "already picked" a winner through loyal patronage.
2. Provide capital to rapidly expand, while preserving the brand's uniqueness.
3. Provide restaurant founders with a 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 portfolio includes Mo'Bettahs, R&R BBQ and Swig with strong portfolio performance demonstrating its ability to identify and grow successful concepts at a rate exceeding 40% year-over-year and to do so profitably, according to the release. This growth has continued throughout the economic fallout of the pandemic. 

"The restaurant industry carries an undeserved reputation among certain investors for business risk and razor-thin margins, giving rise to market inefficiency and opportunity," Greg Warnock, managing director of Savory and Mercato Partners, said in the release. "A differentiated brand with several profitable locations and years of consumer loyalty offers a compelling risk-return profile for investors. 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."

Mo'Bettahs co-founder Kimo Mack said he created the brand 10 years ago to provide guests an authentic Hawaiian experience but reached a plateau in expansion efforts.

"We were stretched thin and being pulled away from our core strengths," he said. "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."

Founded in 2007, Mercato Partners provides capital and guidance to firms in periods of high growth.