Organic food retailer Better Food has launched a £350,000 fundraising drive to expand its store base.

The Bristol-based business is issuing a five-year bond in partnership with Dutch ethical bank Triodos to raise the cash in return for 7% fixed annual interest and a 10% store discount card.

Better Food, which was established by Phil Haughton in 1992 as an organic delivery service, will use the proceeds from the bond to finance further expansion and to open a third store and café in the Harbourside area of Bristol.

Environmental charity The Soil Association earlier this month reported that UK sales of organic products rose 5% last year to £1.95bn, while non-organic food sales fell 0.9% as a result of supermarket price wars and deflation in the market.

“We’re seeing a growing appetite for ethical food and goods from people across Bristol,” managing director Phil Haughton said. “The money raised through the bond will enable us to expand Better Food to a whole new area of the city, which is good news for everyone who wants access to healthy, sustainable produce and for the local suppliers we support.”

The business, which sells fresh produce grown by not-for-profit community organisation The Community Farm on a 24-acre site just outside Bristol, opened its first store in 2003 before expanding to a second site in October 2010.

The bond offer, which has a £2,000 minimum investment, will close on 1 April 2016.

Dan Hird, head of Triodos Corporate Finance, said: “Better Food has been a customer of Triodos Bank for over a dozen years. We are delighted to be able to help them access the capital they need to further expand their business and offer investors the opportunity to invest directly in a successful and well-known Bristol company.”

Haughton added: “I am delighted to have this opportunity to work with such like-minded ethical partners to launch this bond. It is heartening to put ethics and people first, in a market that traditionally prioritises profit and returns.”