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Millstone Capital buys Native Foods Café

The owner of the Lion’s Choice chain acquired the 13-unit, plant-based fast-casual concept.
Native Foods Cafe/Millstone Capital Advisors

The private equity firm Millstone Capital Advisors has acquired the 13-unit fast-casual chain Native Foods Café, the company said on Thursday. Terms of the deal were not disclosed.

The acquisition gives Millstone its second company in the restaurant space, following its purchase five years ago of the St. Louis-based roast beef chain Lion’s Choice, which currently has 26 locations.

Native Foods is a different concept. Based in Chicago, the company serves a menu of all plant-based food items, many of which are designed to replicate meat-based fare, such as Bulgogi Kimchi Tacos and a Double Cheeseburger.

“It’s a very high-quality product,” Robert Millstone, managing director of the St. Louis-based Millstone Capital, said in an interview. “It has a very, very loyal customer base and is in a sector of the industry we believe is growing.”

Native Foods was founded in Palm Springs, Calif., in 1994 and current operates locations in four states: California, Colorado, Oregon and Illinois.

Millstone said that his company will work with the management team and analyze strategies to position the chain for growth. He sees Native Foods expanding via company-owned stores, at least for now, in existing and newer markets.

“We’re a growth-oriented fund,” Millstone said. “We only invest in things that have the potential for growth.”

Robert Millstone, photo courtesy of Millstone Capital Advisors

He said that Native Foods has been an “early innovator” in the healthy fast-casual space. The chain uses no animal products, which include items like Southern-Fried Chicken and Waffles, a Meatball Sub, Reuben, Pad Thai and many others. Ingredients for its food is “often bought locally.”

But, while the chain has a vegan menu, most of its customers are meat eaters: 75% of its customers are non-vegetarian.

That’s a key for a company that plans to grow.

“That was important to us,” Millstone said. “It shows it has a much broader appeal than just its core loyalists.”

Still, he cited a rapid increase in the number of Americans who identify themselves as vegan, and the growing interest in plant-based alternatives to products traditionally prepared with meat.

The restaurant industry has been following suit. Several chains, including White Castle and Houlihans, have added the plant-based Impossible Burger to their menus, for instance.

Millstone has been looking at Native Foods for some time. The investment will provide the chain with resources necessary to help it add locations.

“We’re looking at things we can improve on to position it for growth in a sustainable, healthy way,” Millstone said. “We’ll work with the management team to assess what it needs to put in place so it can expand the right way.”

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