Butterfly adds farm-to-table chain to sustainability portfolio

Butterfly, a food and agriculture-focused private equity firm based in Los Angeles, has acquired Modern Market, a farm-to-table restaurant chain.

Founded in 2009 and headquartered in Denver, Colorado, Modern Market serves protein-based bowls and plates, salads, pizza and other offerings sourced from farmers, ranchers and suppliers using sustainable practices. The fast-casual chain has 28 locations across Colorado, Texas, Arizona and Maryland, and plans to add another four by the end of the year, according to its co-chief executive, Anthony Pagliocampo.

Butterfly co-founder Adam Waglay called the company “highly scalable” and said the firm planned to grow Modern Market to help it cater for an “ever-expanding national audience.”

“Modern Market’s innovative menu, emphasis on convenience and ability to meet any dietary need results in a concept with immense, broad appeal and significant room to grow,” added co-founder Dustin Beck.

Organic growth

Modern Market co-chief executive Anthony Pagliocampo told Agri Investor that the company’s restaurants draw from a supply chain he described as “intentional” rather than necessarily local. Over the eight years the company has been in operation, he said, it has become increasingly easy to find sustainable produce, though proteins, especially steak, remain harder to come by.

According to the company’s internal research, Pagliocampo said, it is now possible to set up a sustainable food supply chain in every metro area of the US, which was not the case just two years ago. As the company has expanded into new markets, he added, it has created opportunities for the boutique producers it has established relationships with.

Its producer of baby greens in the South-West, for example, has been able to follow Modern Market where it later set up shop, according to Pagliocampo. He declined to identify the supplier by name.

“Consumers would much rather pay a premium for something that is grown closer”
Anthony Pagliocampo

“We’re big enough that we can help them figure out how to do it, but we’re small enough that it’s not a huge investment on their part to figure it out. If Chipotle decides they’re going to do something, it breaks the back of a lot of these suppliers,” he said. “We’ve used our network to say, ‘Hey, we may only be 10 restaurants in this market, but here’s a list of 50 other restaurants that we are familiar with that may like this product as well, for the same reasons we do.’ We are able to introduce them into a broader supply chain.”

The expansion of healthy and organic offerings in grocery stores has also played an important role in creating demand for sustainable food, which is only now making its way into foodservice supply chains, said Pagliocampo. While in instances where prices are the same, it makes sense that consumers would opt for organic, Modern Market does not focus on sourcing organic food necessarily. Other aspects of sustainability are at least or more important for consumers, Pagliocampo added.

“Consumers would much rather pay a premium for something that is grown closer rather for commodity organic produce that’s grown in California and is somewhat tasteless. Eight years ago, everything we bought, produce wise, was from California and if it was citrus, it was Texas and Florida. Now, we really do have a broad network we can draw from in every state we operate in, at all times of the year.”

A Butterfly representative declined to confirm whether capital for the Modern Market deal came from the firm’s food and agriculture-focused Fund II, which secured a $75 million commitment from the Indiana Public Retirement System in January and has a reported target of $400 million. Last month, Butterfly purchased Pacifico Aquaculture, an ocean-raised striped bass provider headquartered near the coast of Northern Baja, California.