Tattooed Chef Confirms Plan To File For Bankruptcy Protection
Tattooed Chef's brand image aims to keep a finger on the pulse of the intersection of food and culture, encompassing the totality of a "plant-based lifestyle." It runs a Spotify account that releases monthly curated playlists called "Taste the Jams," and its Instagram account has amassed 66.3k followers. But, despite its in-touch, accessible persona, it looks like Tattooed Chef's financial advisors might have been a little out of touch with revenue generation, and unfortunately, the company is filing for voluntary Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Central District of California, via an official press release. Tattooed Chef is looking to sell off its assets as necessitated by Section 363 of the U.S. Bankruptcy Code, which it plans to do via a bidding process to creditors.
While other plant-based food brand investors are seeing share values rise by an average of 15% in recent months, Tattooed Chef shares are down by nearly 80%. Company sales dropped by 13% in Q1 2023 alone.
Chairman and CEO Sam Galletti shared in the press release, "Despite their commitment to our mission and our best efforts to maintain the operations of Tattooed Chef, our business has continued to be impacted by a challenging financing environment and an inability to raise additional capital." This announcement follows a previous last-ditch effort in the form of a $12 million unsecured loan from Galletti himself.
An uncertain future for Tattooed Chef
Tattooed Chef has seen ping-ponging share prices as the plant-based food industry flourishes, but poor internal financial decisions painted a less-than-stellar business reputation for the company. Tattooed Chef's CFO resigned in 2021 without giving a clear explanation, and the same year, Tattooed Chef was given a non-compliance notice from NASDAQ for undercutting prices to the point of gross revenue loss. The company entered into a distribution partnership with Walmart in August 2022, but in addition to increasing product availability, the retailer also served to slash prices even further, driving company profitability into the ground.
Looking forward, Galletti plans to sell off all the components of Tattooed Chef for all they're worth, mentioning "400,000 square feet of manufacturing capacity and extensive branded and private label manufacturing capabilities" in the press release. Still, investors are unlikely to cash in from the liquidation. Employees can feel secure, for now. Operations will continue as normal while the assets are liquidated and the Chapter 11 protection takes effect. Workers will be paid, with existing benefits, and vendors will be compensated. But, beyond that, it doesn't look great. Layoff notices have already been issued in California and Mexico.
The global plant-based food industry hit $11.3 billion in 2022 and is expected to enjoy a year-over-year growth rate of 12.2% until at least 2032. Indeed, Tattooed Chef possibly aided this boom with an increased selection of accessible products like frozen entrees and cauliflower pizza crusts, a non-scary intro for plant-curious foodies.