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Oprah Winfrey-backed True Food Kitchen has landed in bankruptcy court after management turmoil and failed expansion bets left the restaurant chain built around healthy eating struggling to stay afloat.
The company filed for Chapter 11 protection on Sunday and closed 12 restaurants, leaving 34 locations open in 14 states as it searches for a buyer.
True Food Kitchen confirmed to FOX Business that the closed locations are Century City, El Segundo and San Diego UTC in California; Miami; Chicago; New Orleans; Bethesda, Maryland; Edison and Hackensack, New Jersey; Garden City, New York; Columbus, Ohio; and Reston, Virginia.
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True Food Kitchen says its remaining 34 restaurants are open and serving customers as the company goes through bankruptcy proceedings. (Getty Images/Getty Images)
Court documents reveal how tight the financial situation had become. The company entered bankruptcy with about $1.6 million in unrestricted cash, enough to cover bankruptcy operations and expenses for only about two weeks without access to financing and other liquidity, said financial advisor George N. Koutsonicolis.
Nathan Cook, chief restructuring officer, pointed to staff turnover, unsuccessful expansion efforts and pandemic experiences that have hurt the dining experience.
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True Food Kitchen says its remaining 34 restaurants across 14 states are open and serving customers during its bankruptcy proceedings. (Collection Smith/Gado/Getty Images / Getty Images)
“The Company has undergone a significant change in leadership, resulting in frequent changes in expansion strategy, brand direction and menu offerings,” Cook said in a court filing.
Under successive management teams, the chain invested in new products and restaurant concepts that failed and moved away from its health-focused mission, Cook said.
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The company also tried using some restaurants as ghost kitchens and opened a separate delivery-only kitchen as in-person dining declined during the pandemic. These efforts were detrimental to staff and service and have since ended, according to Cook.
Some restaurants struggled to attract enough traffic, while others saw their profitability erode as their markets changed. Cook listed approximately $42.1 million in funded debt in the company’s filing.
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Oprah Winfrey invested in True Food Kitchen in 2018 and remains a minority investor but is not involved in day-to-day operations. (Elyse Jankowski/Variety/Fox News)
Winfrey made a significant stock investment in True Food Kitchen in 2018.
Christine Barone, then CEO, declined to disclose the amount of the investment, but described it as “a very important amount for our future.” She also said Winfrey would join the company’s board as the chain plans to double its size over the next three years.
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True Food Kitchen confirmed to FOX Business that Winfrey remains a minority investor but does not have a representative on the company’s board of directors and is not involved in day-to-day management.
True Food Kitchen CEO Jeff Chandler, who took the helm in July, called the bankruptcy process “the best path forward” to simplify the company.
“This process is the best path forward to simplify the business and focus on what we do best: providing great-tasting, healthy food and true hospitality,” Chandler said in Monday’s announcement. “We are confident that this step will help us build a stronger True Food Kitchen for the future.”
Before the filing, the company reduced its workforce, renegotiated its supplier contracts and requested changes to its restaurant leases, according to Cook’s statement.
In its announcement, the company did not disclose how many employees were affected by the restaurant closures. Chandler acknowledged the impact on workers.
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True Food Kitchen filed for Chapter 11 bankruptcy after closing 12 restaurants across the country. (Marie D. De Jesus/Houston Chronicle via Getty Images / Getty Images)
“We know these decisions are particularly difficult for the team members involved, and we are deeply grateful for their contributions to True Food Kitchen and their communities,” he said.
“We are committed to approaching this difficult time with care and respect, and we will share information about resources and next steps with affected team members.”
The chain said it secured a commitment of approximately $20 million in financing from HumanCo TFK IV, subject to court approval, to help support operations during the bankruptcy and sale processes.
True Food Kitchen also asked the court for permission to continue paying employee salaries and benefits, maintaining certain customer programs and working with suppliers.
The company said it was looking for a long-term partner to support the future of the brand.
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Founded in Phoenix in 2008, the chain has built its brand around nutritious meals and carefully selected ingredients. Its remaining restaurants are open and serving customers as usual, the company said.
FOX Business has also reached out to Winfrey’s representatives for comment.
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