Swig, the Utah-born beverage chain that helped popularize “dirty soda,” is finding some of its strongest growth well beyond its home state.
Andrew K. Smith, managing director and co-founder of restaurant-focused private equity firm Savory Fund, told FOX Business that Swig locations outside Utah are performing roughly 40% to 50% better than stores within the state.
The chain now operates in 23 states and expects to reach about 200 locations by the end of the year, Smith said, with additional expansion planned for next year.
Swig is best known for highly customizable drinks, particularly “dirty sodas” — fountain drinks mixed with flavored syrups, cream and other add-ins. The concept has surged in popularity in recent years, fueled in part by social media and pop culture.
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Hulu’s “The Secret Lives of Mormon Wives,” which puts Utah culture in the national spotlight, also helped introduce dirty soda to a broader audience.
“We actually were doing very, very well before ‘The Secret Lives of Mormon Wives,'” Smith said with a laugh. “But ’The Secret Lives of Mormon Wives’ definitely made, I think, the appeal and the interest and the mystique of dirty soda much more broad.”
Smith said Savory Fund’s investment in Swig was not simply a bet on soda. Instead, he sees the company benefiting from a broader shift in how Americans purchase their beverages.
Coffee followed a similar evolution, he said, going from something consumers routinely made at home to a premium and customizable product that they increasingly purchased from chains like Starbucks.
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“Really what Swig is, and what it was, was the ‘Starbucksification’ of soda, teas and lemonades,” Smith said.
Savory Fund manages more than $750 million in assets and has invested in restaurant brands including Swig, R&R BBQ, Mo’ Bettahs Hawaiian Style Food, Via 313 Pizzeria and PINCHO.
More recently, the firm invested in Zao Asian Grill, a 23-location Mountain West fast-casual chain that Smith believes could also expand well beyond its current footprint.
For Savory Fund, the goal is not simply to find the next trendy concept, according to Smith.
“As investors, and other investors that I would speak for, we don’t chase concepts, and we’re not chasing the right brand,” Smith said. “We’re backing exceptional founders, and we help them build enduring brands for our consumers.”
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Smith also said consumers across Savory Fund’s portfolio have not stopped spending, but they are looking more closely at whether the food, service and overall experience justify the price they are paying.
“If you paid $20 for a meal, and you sit down, and you’re like, this looks more like $11, they feel like they got kind of scammed,” he said. “…You’ve got to make sure that your value on the plate is the same as the dollars that they’re giving.”
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Smith added, “Restaurants are one of the best real-time indicators of consumer confidence, because millions of decisions happen every day in this industry.”
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