This story is part of “Post-Close: An Inside Look at Franchise M&A Outcomes,” a digital series in which Franchise Times revisits past Dealmakers winners to explore how they’re putting investment dollars to work, if integration of that acquisition is going as planned and what they’ve learned in the process.
Drinks such as coffee, boba and iced tea are staples in the beverage category. There’s no shortage of franchises that specialize in each of the three, and more drink concepts are popping up nationwide.
“Dirty” soda franchisors are now making their bid for beverage market share around the United States. Dirty soda is already popular in the mountain states, in part because many members of the Church of Jesus Christ of Latter-day Saints, aka the Mormon Church, don’t drink alcohol or coffee. That makes these specialty sips an attractive alternative. Typically, a soda is considered dirty when it has flavored syrup and cream.
One such dirty soda brand is Swig, a Utah-based franchise that won Deal of the Year in 2023 as part of the Franchise Times Dealmakers program. Family office The Larry H. Miller Company bought a majority stake in the brand in 2022 from Savory Restaurant Fund, which is still a minority owner and handles franchising. Founded in 2010 by Nicole Tanner, Savory bought into Swig in 2018 and started franchising the concept in 2022.
Shauna Smith, CEO of Savory Restaurant Fund, is helping build the team for Swig.
“If I could outline a perfect marriage, it would be this,” said Shauna Smith, Savory’s CEO, of LHM. “They’ve been just perfect partners and they’re really good operators. They want to invest in the team and really build the team.”
Savory’s restaurant investment portfolio also includes Hawaiian-style brand Mo’ Bettahs, Houston TX Hot Chicken and kebab and burger brand Pincho, among others.
Related: Savory to Franchise Drive-Thru Soda Concept Swig as it Gains New Investor
Swig, now with 70 units, had less than 50 in early 2023, when Franchise Times last reported on the brand for the Dealmakers cover story. Smith said Swig has agreements signed for more than 500 units, which the brand anticipates opening in the next five to seven years in Texas, Florida, the Midwest, Idaho, Florida and the Carolinas.
The initial investment required to open a Swig shop ranges from $504,900 to $1.1 million, according to its franchise disclosure document. Unit volume among company-owned stores in 2023 ranged from $574,553 to $1.65 million. Swig opened 14 stores last year, two of which are franchised.
There is increasing competition in this emerging segment. There’s Quench It, an 11-unit franchise with stores in Utah and Texas and more on the way. SodaRush is another franchise in the space, with four Arizona locations. Utah-based Fiiz has 70 stores across 10 states.
Related: Dirty Soda Franchise Fiiz Serves Up Custom Sodas, Energy Drinks
Swig announced June 3 its new chief development officer, Daniel Batty. He comes from Dutch Bros Coffee, where he worked as vice president of design and construction.
“When I think about the 500 franchises and the corporate growth and all of that, we are going to have to have a state-of-the-art development team,” Smith said. “We just feel like he knows hyper-growth. He did it for Dutch Bros.”
Alex Dunn is Swig’s interim CEO and says the brand is focused on remaining a leader in the dirty soda segment.
Building out the “lean” Swig team has proven a difficult, but important, task, Smith said. Former CEO Rian McCartan left the company at the end of March. Alex Dunn, a Larry H. Miller partner, is the interim CEO.
“We learned very quickly that one person does not change the trajectory or the momentum,” she said. “I think that’s a testament to the overall team that we just keep going.”
Swig openings are consistently met with lines down the block, if not further, Dunn said. That reception nationwide is exciting, he continued, and stores are performing on pace or even ahead of what the firm underwrote.
The Larry H. Miller Company emphasizes the culture that comes with the Swig brand. The franchise touts itself as the original dirty soda chain, so Swig is constantly innovating and updating its menu. “The ability to customize a drink is pretty endless,” Dunn said. “We’re focused on providing a great experience to the customer. That’s what’s gotten us where we’re at, and I think, what will get us to where we want to get to as a brand.”
Now comes the challenge of turning those 500 units sold into open locations and maintaining the down-the-block lines.
“We are the OG. We invented this category,” Dunn said. “You’re gonna see us maintaining our lead in terms of being a leader in the space. That is about expanding Swig nationwide and allowing millions of consumers to have that Swig experience.”