Tattooed Chef, A Pioneer Of Plant-Based Foods, Considers The Unthinkable
Before he took his company public, Tattooed Chef CEO Salvatore “Sam” Galletti told investors his goal was “providing great-tasting plant-based products to the growing group of consumers who seek to adopt a more eco-friendly and health-conscious lifestyle.” Tattooed Chef, not without reason, calls itself “a leading plant-based food company.”
But the plant-based bubble popped this year, and Tattooed Chef, which went public in October 2020 with a $1.7 billion market cap, has lost nearly half its value in just the past year. Searching for ways to lift itself out of the hole, the company is considering what was once unthinkable: selling meat.
“It opens up a lot more avenues and a lot more doors,” Galletti tells Forbes. “The interest in plant-based has slowed, but the demand for food is still as great as ever.”
It’s a blow to the plant-based food industry, which launched a few years ago with high hopes of serving customers interested in better health and a slowdown in climate change. In the past year or so, shoppers seem to prefer Grandma’s meatloaf to meatless meat, and there now lingers a question of whether this is just a temporary bump in the road for plant-based food or a larger wipeout of the entire business model.
At the heart of Tattooed Chef’s problems was going public and having to answer to Wall Street investors rather than growing at its own pace as a closely held company. The company was profitable when it was private. Its vegan acai bowls and cauliflower-based pizza crusts were sold in 4,000 locations, mostly club stores like WalmartWMT +0.1% and Costco. After a reverse merger put it on the stock exchange, Tattooed Chef launched into supermarket chains like KrogerKR +1.1% and Safeway. That cost a lot of money, and though Tattooed Chef has increased its distribution five-fold to some 20,000 stores in just two years, the move siphoned significant cash for grocery store marketing, slotting fees and other trade expenses.
“I’ve never had the ability to be able to lose money as a privately held business,” Galletti says. “Wall Street said don’t worry about losing money, just worry about growing your brand. Now the whole world changed and it’s all about being profitable.”
In 2020, the firm had $23 million in gross profits on revenue of $148 million. In the past 12 months, gross profits fell to $5 million on revenue of $237 million. Tattooed Chef isn’t just looking at meat to help its profit woes. The firm is also looking to streamline and cut costs, and is considering other, more profitable products outside the frozen-food aisle, like protein bars, chips and refrigerated tortillas.