Traditionally, restaurant brands partner with private equity firms as a way to scale their businesses through financial support. But husband-and-wife team Shauna and Andrew K. Smith don’t think that’s enough. As cofounders of Savory Fund, they partner with select emerging restaurant brands with fewer than 20 locations to act as more of an operational guide and partner than just a source for cash.
“The reason why we created our firm is because we were operators that had been approached by private equity for years,” Andrew K. Smith said. “We were looking for support and help, not just money. … When we provide the money to our partners, we keep the founders involved; they keep the authenticity of that brand alive during that period.”
Before Savory Fund launched in 2020, CEO Shauna Smith was a master franchisee for bakery/café concept Kneaders, growing it to 50 stores. She and Savory managing director Andrew built Four Foods Group to 170-plus locations, including franchised units of Kneaders and Little Caesars as well as a majority stake in fast casuals R&R BBQ, Swig and Mo’Bettahs. After they sold off their franchised restaurants and struggled to get matched with the right private equity firms themselves, the Smiths built Savory, which is a division of Salt Lake City-based growth fund Mercato Partners.
Savory Fund looks to partner with restaurant brands that might be overlooked because of their size or because of their owners’ relative inexperience, but the Smiths are more interested in the marketability and uniqueness of a brand — what they like to call the “new cool kids on the block” factor.
“We write checks between $4 million and $15 million that would be too small for a lot of firms,” Andrew Smith said.
Beyond the money, though, Savory offers deep operational support to its partner brands through Savory Management, which provides an extensive team of experts and other resources to set partner brands up for success.
Miami-based Pincho Burgers & Kebabs, which has been working with Savory Fund for several months, appealed to the Smiths because it’s not just another burger and fries restaurant; it’s burgers and kebabs “with a Latin flair.”
“When we first started with Pincho, we told [owner Otto Othman], ‘Let’s take a step back and think first about the customer experience,’” Shauna Smith said. “Let’s focus on that first, and then we’ll build sales. His mind was blown. … We want to do this the right way that builds up Pincho. And that's one example of us working together.”
Although the Smiths are selective with who they decide to invest in, they wanted to take the opportunity to spread their operations wisdom to other up-and-coming restaurants. They launched Restaurantology in 2019 as an in-person event that provides emerging operators with education on how to scale their businesses.
Additionally, Savory Fund started the Million Dollar Restaurant Launch in the fall. It’s a Shark Tank-like competition to award one restaurant business with a $1 million investment that has previously never been able to get their idea off the ground. The winner will be announced in the first quarter of 2022.
“We want to be able to share these impressive formulas with [smaller operators] because we truly believe that everyone has the power and the ability to run successful restaurants,” Shauna Smith said.
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