Mercato Partners, a 13-year-old, Salt Lake City, Utah-based investment firm that oversees a growth fund, a secondary investment fund and a venture fund, has launched yet another fund -- this one a $90 million vehicle that the firm says will be used to invest in restaurant concepts that are gaining traction.
Its timing is interesting, given the devastating impacts of the coronavirus on the restaurant industry.
As it happens, deeper-pocketed chains have had a much easier time surviving the downturn according to the NPD Group, which tracks transactions for 70 quick-service, fast-casual and full-service restaurant chains. Further, with as many as 30% of independent restaurants never expected to reopen their doors again, quick service restaurants that are already returning to pre-pandemic sales are poised to gather even more market share. (CNBC published related data on the restaurant industry's recovery earlier this week that offers a fuller picture.)
Mercato's new fund, dubbed Savory, is expected to provide initial checks to restaurant operators of $5 million to $10 million and to provide a host of services to fast fuel them, from advice about real estate to supply chain technologies to marketing. Indeed, the fund is being led by Mercato Managing Director Andrew Smith, who joined in late 2018 to help fundraise for the vehicle after spending a decade as CEO of Four Foods Group, a restaurant development outfit that specialized in emerging brands and at one point oversaw 170 locations in 10 states.
Some of its brands have been folded into the new fund, in fact. Among them: the Hawaiian-themed restaurant chain Mo’ Bettahs, with three locations; the fast casual chain R&R BBQ, which has eight locations; and Swig, a chain of 22 soda bars throughout Utah.
Assuming its investments are tracking, Savory will also provide its portfolio companies up to $10 million in follow-on funding.
Mercato is far from the first investment outfit to join the fast-casual revolution. A number of growth investors has been actively backing newer brands, including KarpReilly, L. Catterton and Roark Capital.