Luke’s Lobster Nets Equity Financing From Relentless Consumer Partners, Whole Foods to Scale CPG Business

Sustainable seafood company Luke’s Lobster has closed a minority growth equity financing led by Relentless Consumer Partners with participation from Whole Foods Market as it works to scale its CPG arm alongside its restaurant business. Terms of the investment were not disclosed.

The Maine-based company will deploy the fresh funds to expand its CPG line into new product categories, ramp up distribution efforts, support new restaurant openings in the U.S. and drive growth within the seafood industry as a whole.

“We [wanted] best-in-class partners to help us build a business roadmap so we can successfully scale [our CPG brand] and avoid making a pattern of mistakes. These partnerships will allow us to go after the category more strategically and with more intention,” Luke Holden, founder and CEO of Luke’s Lobster, told Nosh earlier this week.

Founded in 2009 by Holden and Ben Conniff, Luke’s Lobster began as a 250 sq. ft. shack in New York City’s East Village with the mission of bringing high-quality lobster rolls to the Big Apple. Today, the fast casual chain operates 28 shacks nationwide, as well as nine overseas locations in Japan and Singapore.

According to Holden, the company had long intended to enter the CPG space, but the onset of the pandemic – and the resulting restaurant closures – spurred innovation into a necessity. Luke’s had expanded into branded grocery with flash-frozen lobster meat, tails and seafood meals in 2018, but it wasn’t until 2020 that the brand launched its online marketplace to bring seafood directly to consumers.

Vertically integrated Luke’s operates its own purchasing and production facility in Saco, Maine, which ensures the traceability and transparency of its products. Transparency is a major issue in the seafood industry, with studies estimating that anywhere between 16% and 75% of seafood sold in the U.S. is mislabeled, per The Washington Post.

John Burns, founder and CEO of Relentless, said he was drawn to Luke’s for its industry-leading economics, the growth trajectory of its CPG business and its commitment to sustainable practices. Whereas there’s been an overwhelming push for natural, organic, transparently sourced products in other food categories, the opportunity in seafood has remained relatively untapped – until now.

“Seafood is still a little bit of the Wild West. In my opinion, no one has really built a truly sustainable, principled seafood brand as a whole. There are people who do bits and pieces of it, but I think there’s an opportunity for Luke’s to become the first truly sustainable seafood brand and platform,” said Burns.

Luke’s is a longstanding supplier to Whole Foods and, according to Holden, their partnership was “really cemented” when it was named the retailer’s Supplier of the Year for perishable products in 2018.

“Our customers consistently look to Whole Foods Market for an unparalleled seafood selection that meets our rigorous standard for sustainability and quality, as well as our Seafood Code of Conduct,” said Jennifer Coccaro, VP of Meat & Seafood at Whole Foods, in a statement. “We look forward to what’s next for Luke’s Lobster and continuing our longstanding collaboration.”

Luke’s CPG business has its strongest presence in the grocery channel, with availability in over 1,500 doors nationwide. As that number is still “remarkably low,” Relentless believes in a multi-pronged approach for Luke’s growth centered around velocity expansion in existing stores, marketing for branded products and product innovation.

To generate awareness and drive trial, the company plans to tap into its existing consumer base from its restaurants.

“There aren’t a lot of companies out there that have a CPG business and a restaurant business as well. Especially on the restaurant side, Luke’s is held in high regard and esteem,” said Burns. “Part of the strategy going forward is to leverage the foundation built in the restaurants and translate that to the shelf.”

Luke’s currently produces a portfolio of frozen lobster products that includes meat, ravioli and bisque. The brand is venturing into shrimp for the first time this summer, according to Burns, and is slated to enter additional categories later this year.

Per terms of the financing, Luke’s current leadership team will maintain day-to-day operational control of the company, while Relentless and Whole Foods will provide strategic guidance and resources. The backing of Luke’s Lobster marks Relentless’ third investment in the frozen category, following its backing of veggie burger brand Actual Veggies and frozen novelty producer Yasso.

Looking ahead, Luke’s is “hyper-focused” on growing the restaurant group at 15% to 20% top line while maintaining best-in-class economics. According to Holden, the company has “got to protect and grow the core while strategically focusing on getting the CPG flywheel up.”

“We hope that we can put the pieces together so we can really scale over time. I think the CPG business alone can be a $100 million business, and I hope we can get there in the not-so-distant future,” added Burns.