Tattooed Chef plans to file for Chapter 11 bankruptcy protection and pursue a sale of all its assets, the company said in a statement.
Sam Galletti, its chairman and CEO, said the plant-based food company continues “to be impacted by a challenging financing environment and an inability to raise additional capital.” The company said it will continue operations during bankruptcy.
Tattooed Chef is the latest company in a once thriving plant-based food sector that has seen sales slow and growth struggle to reach the once lofty ambitions predicted just a few years ago.
Tattooed Chef,which launched in 2018, has been floundering for some time with declining revenue, inflationary pressure on its business through higher packaging and material costs, mounting competition, a rapidly shrinking cash stockpile and broader challenges in the plant-based sector.
The weight of all these factors contributed to the demise of the California-based private-label and branded food manufacturer that just a year ago had a much more optimistic outlook.
“We’re on a rocket ship, and we love the fact that we’re introducing plant-based foods to so many new consumers,” Matt Williams, the company’s chief growth officer, told Food Navigator in March 2022.
As recently as two months ago, Galletti touted the company’s focus on growth instead of profitability and noted it expected to reach breakeven adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and become cash flow neutral during the third quarter of 2024.
He said Tattooed Chef would achieve these goals through cost reductions, efficiency gains, inventory management, rationalization of underperforming products, new product introductions and targeted retail expansion.
Instead, Tattooed Chef, which entered the public markets through a merger with a SPAC in 2020, has succumbed to many of the difficulties facing other plant-based companies. Recently, Tattooed Chef struggled to raise the cash it needed to sustain and grow. Tattooed Chef simply ran out of time and failed to adequately separate itself from other companies in a crowded space.
Once a fast-growing food category, the plant-based industry has seen growth slow or decline, especially in meat. It has prompted several major companies to roll back their presence. In 2022, JBS USA abruptly shuttered its Planterra plant-based business, and Beyond Meat, Impossible Foods and Maple Leaf Foods’ Greenleaf Foods all cut employees.
For Tattooed Chef, its announcement to sell its assets through a bidding process means the company’s time as a standalone entity is numbered. The company has provided notice of intended layoffs to its employees in California and New Mexico.
Tattooed Chef posted $213 million in revenue during its 2021 fiscal year. While that’s a respectable number, the company’s small size likely makes it an ideal addition for a private equity firm or another company with a presence in plant based.
“We have created a strong brand, a portfolio of frozen plant-based food, a vertically integrated operating infrastructure supported by approximately 400,000 square feet of manufacturing capacity, and extensive branded and private label manufacturing capabilities,” Galletti said. “The actions we are announcing … are designed to promote a fast, efficient, and value-maximizing sale.”