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Featured GP Q&A: Building a Hospitality Business in a Pandemic – and Thriving.

We talked with Andrew K. Smith, Managing Director at the Savory Fund, about how he and the team at Mercato Partners have been managing during the pandemic. Keys to the kind of growth they're achieving? Building a world-class team and embracing change. Coming from the recipient of EY's Entrepreneur of the Year Award, in his category, in 2017, we think he might know a thing or two.

Q: Tell us a bit about yourself and your fund.

A: I started my career as a young tech entrepreneur. I was the founder and CEO of 3 successful tech ventures, all sold to either public or private companies. After a decade of experience in this arena, I found myself wanting to spread my wings and tackle something in another industry. Born and raised in Chicago, I have always considered myself a bit of a foodie. I enjoyed dining out and the business makeup of a restaurant. So I decided to jump in headfirst. I opened up my first restaurant in 2008, and I found out fast that it is one of the toughest businesses to operate. It is unrelenting. Constant. Demanding. Physical. BUT I loved it. I enjoyed wiping down 'someone's table after they ate at my restaurant and seeing the immediate gratification of our offering. But I realized that you can't work ON your business when you are a busy operator because you are IN the business every day. So if I ever wanted to scale, I needed to do what I had done in the first part of my career; build a world-class team that could support growth.

And that is what I did.

Over the subsequent ten years, I built and acquired over 180 restaurants, developed over $250M of restaurant real estate, and generated over $1.4B in F&B sales.

With this experience and operations team, I formed a partnership with the co-founder of Mercato Partners, Greg Warnock, a longtime friend and someone I looked up to for years. He is a 30-year veteran in the VC and private equity arena and one of the most brilliant minds I have ever encountered.

Savory Fund was born in the fall of 2018. Our target is emerging, high-growth brands looking for capital and a team to help them get from 5-8 units to 30-40 units. Once they get to scale and surpass a $10-12M EBITDA level, a new group of buyers are interested in taking the brand to the next level of growth. That is where we will exit the brand.

After an 18-month window of fundraising, even in the middle of a world-wide pandemic, Savory closed an oversubscribed $100M fund in October 2020. Today, we have five brands in our portfolio, all growing at more than 40% a year, and have even been able to pivot and grow during 2020, despite the effects of Covid. As of today, we have generated 61.8% NET IRR to our LPs, and we do not see the future slowing down.

Q: What challenges have you been facing because of the pandemic, and what steps have you taken to address these?

A: Change. Every day there has been a curveball, and we have had to pivot as fast as the changes came. We designed a 5-stage response plan depending on the level of restrictions we were forced to follow in each jurisdiction we had operations. This helped us prevail as our management and operations teams were well informed, had the resources they needed to be prepared for the daily changes, and the positive environment that we continued to operate made people feel safe to come to work and serve our guests. We wanted to keep everyone working while keeping them safe, as well as our guests. And we won that battle. So far.

Q: How has your strategy changed as a result of the pandemic? How has deal sourcing changed?

A: Strategy is the same for us. The F&B industry has been hit, but it is not going anywhere. So we are still scaling, growing, and investing in the industry, just like before. Our sourcing is also super-focused on brands that have pivoted and survived this pandemic – but not only survived but prevailed as we have. That says a lot about the brand, the founders, and their team – if they could prevail during this pandemic. The pandemic almost provides us answers to some of the due diligence we would have anyhow. Pretty fascinating.

Q: What opportunities and threats do you see for private market investors in 2021?

A: Opportunities are still out there, and they are priced right and still have a lot of growth ahead of them. However, on the opposite side, there is a lot of money on the sidelines right now, and it is driving up valuations on many companies that really 'can't support the valuations they are given. I believe that private market investors should look for segments within the market that are inefficient but can be improved and scaled with the right type of capital and strategy. The threat is to chase valuation increases as the only strategy, versus the business's strength and the fundamentals they are built on. I 'don't think you can cheat the system forever. But sometimes you can get lucky.

I believe the future is much more exciting than the past. I am looking forward to a successful 2021 for many.

To learn more about how TritonLake helps to bring differentiated investment opportunities like the Savory Fund to our network of sophisticated investors, contact us at