ImpactAlpha, April 11 – Healthy eating led to sustainable foods, which led to Bain Capital Double Impact Fund’s double investment in the past week in healthy, sustainable restaurant ventures.
The $390 million fund, headed by former Massachusetts Gov. Deval Patrick, is looking for what Patrick calls “big secular trends driving market opportunities around mission-driven brands and companies.”
The Double Impact fund has taken a stake in Sustainable Restaurant Group, based in Portland, Oregon, which operates five seafood restaurants in Oregon and Colorado. One of them, Bamboo Sushi, says it is the first certified sustainable sushi restaurant. Sustainable Restaurant Group says its mission is building a sustainable, ethical supply chain and offering healthy dining options.
Last week, Bain Double Impact said it was making an investment in the vegan restaurant chain by CHLOE. Both of the moves were co-investments with Kitchen Fund, an early-stage restaurant investor. In previous deals Double Impact has invested alongside Bridges Fund Management and SJF Ventures.
“We’re firm believers that Americans will eat healthier, more sustainable food in the future than they do today,” said Warren Valdmanis, who moved from Bain’s private equity business to the impact fund. He told ImpactAlpha that Bain’s large cap group, the team that invests in companies with valuations of $10 billion or more, is also watching the trend, but doesn’t base its restaurant investments on their sustainability impact.
The Double Impact team “has spent significant time analyzing the potential of the sector in order to be [at the forefront] of what we believe will be an impactful trend,” says Valdmanis.
Bain tracks impact data points, including the company’s B score, the mark a company receives after completing nonprofit B-Lab’s impact assessment, and “unsustainable meals displaced.”
“We have data around where customers would have gone if they didn’t have these options,” Valdmanis explains. For example, “a large portion of [by] CHLOE’s customers would have eaten meat if they didn’t have that option,” even though both Sustainable Restaurant Group and by CHLOE’s customers are already disproportionately sustainability-focused.
Impact management is core to Sustainable Restaurant Group’s business model. All of the group’s locations are certified under the James Beard Foundation’s Smart Catch program, the Marine Stewardship Council and the Green Restaurant Association. It also uses a “carbon calculator” for its business and individual menu items and partners with the Ocean Foundation to offset its carbon emissions.
On the supply chain side, Sustainable Restaurant Group validates sustainable fishing practices with suppliers to avoid sourcing from overfished areas and unhealthy farmed fisheries, and to prevent “food fraud.”
“I’ve spend a lot of time with the guy who sources [for Sustainable Restaurant Group] — he often goes right to the dock, or if he uses a distributor he knows the distributor’s source,” Valdmanis tells ImpactAlpha. He says this intimate knowledge permeates all of Sustainable Restaurant Group’s business, down to the serving staff, who pass their knowledge on to customers. “If you ask the server where the fish comes from, they’ll happily tell you the source. They may tell you even if you don’t ask, because they’re proud of the provenance of their fish.” Consumer education is a key part of the company’s mission, Valdmanis adds.
Bain’s investment will support the company in adding at least 10 more locations in the next two years. Valdmanis says Bain’s deep experience in working with restaurant companies will help the company with issues like managing its central kitchen, sourcing, staffing, marketing and building a disciplined expansion strategy.
Earlier Bain Double Impact investments include Impact Fitness, a franchisee of 13 Planet Fitness health clubs operating in Indiana and Michigan, states with high rates of obesity, diabetes and high blood-pressure. Bain Double Impact has also backed Living Earth, a Houston, Texas, recycler of organic waste. Last week, the impact fund joined Impact Capital Managers, a network of two dozen “market-rate” impact investment fund managers representing more than $5 billion in capital.