Deep Dive: Tattooed Chef
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What do they do? Tattooed Chef is a plant-based CPG company based out of California. They try to source local ingredients and sell their products through Wal-Mart, Costco, Target, and have a new DTC offering.
History? The company was founded by Sam Galletti in 2009, and was named Stonegate Foods. His daughter, Sarah Galletti, joined the company in 2014. She is the “tattooed chef” and the creator of the company’s current flagship brand.
Industry? The plant-based industry is expected to grow at a 12% CAGR through 2027, and almost 10 million Americans now considered themselves “plant-based.”
Management? The Galletti’s own about 41% of outstanding shares, and are the leaders of the company. They also have brought in some CPG veterans to the executive team.
Valuation? (from time of recording) $1.7B market cap, EV/sales of 10, EV/GP of 100
Earnings? 87% revenue growth first nine months of 2020 and around break-even with net income.
Balance Sheet? The post-SPAC balance sheet is very clean. They don’t have many large liabilities and $200M in cash.
Potential Competitive Advantages? The plant-based cache, vertical integration, and sustainability.
Potential Future Growth Opportunities? Signing on with new retail customers, better marketing, and the new DTC website.
Highlights? Riding industry tailwinds, good management mix, likely has an edge with younger consumers.
Lowlights? Terrible margins currently, possible artificial bump from COVID, not as large of an addressable market as management touts.
Disclosure: The authors and podcast guests are not financial advisors. Brett Schafer and Ryan Henderson are portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this podcast.