(Bloomberg) -- At Souvla, a four-location Greek restaurant chain in San Francisco, the menu has a nearly singular focus on rotisserie meats. But in October, it added an asterisk to the popular lamb leg, alerting diners to a meatless option courtesy of local startup Black Sheep Foods.

“We have, over the years, gotten a tremendous amount of calls for vegetarian offerings,” said Charles Bililies, chief executive officer of Souvla.

The chain had experimented with faux beef, but ultimately nixed it because it didn’t work with a menu that doesn’t include cow. A lamb substitute, however, fit right in. Black Sheep’s product “captures [lamb’s] positive aromatics and flavor profiles,” Bililies said.

Black Sheep is betting there are more Souvlas out there. It recently raised $5.25 million in seed funding and is adding several notable Bay Area eateries to its customer list, including Rooh, an upscale Indian restaurant, and Ettan, a Cal-Indian eatery led by Srijith Gopinathan, the former chef at the two Michelin-starred Taj Campton Place. Black Sheep co-founder Sunny Kumar declined to share the company’s valuation, but said he’s currently working on the next funding round with goal of raising as much as $30 million.

By starting with distribution to restaurants, the company is pursuing a similar strategy to Impossible Foods Inc., which won over fans at eateries and then expanded to grocery stores — a playbook that helped push its valuation to $7 billion last year, Bloomberg reported.

One hurdle for expansion is that lamb isn’t particularly popular in the U.S. Beef appeared on 91% of American restaurant menus in 2021, according to Datassential, while lamb showed up on only 17%.

“I’m not sure that there is a scalable market for lamb today, unless the product is so good that it overcomes other [plant-based] red meat in terms of consumer preference,” said JP Frossard, a consumer foods analyst at Rabobank.

However, the production of lamb on a per pound basis emits more greenhouse gases than beef, making it, in some ways, an obvious target to be replaced by consumers whose purchases are driven by environmental concerns. In a category dominated by beef, pork and chicken, Black Sheep also offers some much needed variety.

The specificity of lamb gives the company a chance to be a “big fish in a small pond,” said Jennifer Bartashus, an analyst for Bloomberg Intelligence. “A startup having something unique that meets an underserved need is usually a winning formula.”

Kumar, a tech veteran who worked at cell-based seafood startup Finless Foods before starting Black Sheep in 2019, wants to be both: dominate in niche faux meats and compete with the bigger players. “You could put us head-to-head with Impossible and Beyond Meat and, in terms of flavor, we’ll win,” he said. Black Sheep’s next product, duck nuggets, will beat the standard alt-chicken nugget, too, he said.

The company is also seeking regulatory approvals in the European Union and the U.K., where diaspora communities from the Middle East, India and North Africa heavily influence food culture and favor lamb.

For now, the company is working on scaling up in the U.S., Kumar said. That’s good news for Pujan Sarkar, chef de cuisine at Rooh, who is adding the product in San Francisco and is already talking to the company about having enough supply for his locations in New York, Chicago and Columbus, Ohio.

“I add my own spices and flavors to make it more Indian-ized,” he said, adding he had experimented with different cooking processes, like tandoor and high heat flash cooking. “There is a dimension of play with this product.”

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