Breaking News: Health food chain files Chapter 11, closes 12 restaurants

When my wife, son, and I pick a restaurant for dinner, we all have to make sacrifices.

It’s challenging to find am eatery that offers something for each of us. The more specialized a restaurant gets, however, the less likely we eat there.

That’s a reality that hurts chains that focus on healthy food.

People may say they want to eat healthy, but chains like True Food Kitchen face a major challenge when it comes to people actually choosing to eat there.

My wife can order a salad at Chili’s, but I can’t get ribs and my son can’t order chicken tenders at True Food Kitchen. That’s one of the challenges facing a healthy restaurant brand that has now filed for Chapter 11 bankruptcy protection, according to a press release.

True Food Kitchen files Chapter 11

Recently, my wife and I ate dinner at Eataly in CityPlace in downtown West Palm Beach. We had a reservation and the restaurant was crowded as was the Mexican place, and another Italian restaurant across the road from where we ate.

The overall area was packed with people, but True Food Kitchen, which we walked by, only had a handful of customers. While most places we walked past had crowds outside, the healthy chain, on a Friday night, appeared to have roughly two thirds of its tables open.

That’s anecdotal, but it illustrates one of the challenges facing restaurants built around healthy eating.

True Food Kitchen’s bankruptcy filing has a much more complicated financial backdrop, but the company’s positioning highlights a difficult question for healthy restaurant chains: Will consumers say they want healthier food and then choose something else when they actually sit down to eat?

True Food Kitchen and certain affiliates have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas, the company shared.

The company intends to use the Chapter 11 process to strengthen its financial foundation, optimize its restaurant footprint and cost structure, and accelerate ongoing operational improvements.

“True Food Kitchen is a pioneering brand with a distinctive position in wellness-driven dining, a loyal community of guests, and a mission that is more relevant than ever,” said CEO Jeff Chandler. “This process is the best path forward to simplify the business and focus on what we do best: delivering craveable, health-forward food and genuine hospitality. We are confident this step will help us build a stronger True Food Kitchen for the future.”

In connection with the restructuring, True Food Kitchen has closed 12 restaurants, with their final day of service on Sunday, October 4. The company’s remaining 34 restaurants across 14 states are open and serving guests as usual.

What’s next for True Food Kitchen?

As part of the Chapter 11 process, True Food Kitchen will pursue a Court-supervised sale process with the goal of identifying a long-term partner with the resources and mission alignment to support the brand’s future.

Any proposed transaction will be subject to Court approval and other customary conditions.

The Company has secured a commitment for approximately $20 million in debtor-in-possession financing from HumanCo TFK IV, subject to Court approval. Together with cash generated from operations, the financing is expected to provide liquidity to support the business through the Chapter 11 and sale processes.

Americans are mixed on healthy food

“Surveying American diners, Mintel found that only one in five (20%) rank food health as an important factor when ordering dinner. Far more essential are taste and hunger satisfaction, selected by 77% and 44% of respondents, respectively, when describing what they look for on a dinner menu. And although over three-quarters of adults claim they’d like to see more healthy items on the menu, barely half (51%) say they usually order them,” the data firm shared.

Essentially, True Food Kitchen sells what people say they want, not what they actually order.

“There’s definitely a dichotomy between what people say they want and what they actually do when it comes to healthy restaurant eating,” Maria Caranfa, a registered dietician, told Mintel. “Over eight in 10 adults told us it’s very or somewhat important to them to eat healthy, but when it comes to dining out, most people are really looking for taste, texture and experience. So healthy menu items need to perfect the balance between nutrition and flavor.”

This is a breaking news story and will be updated as more information becomes available.

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