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True Food Kitchen, the health-focused restaurant chain backed by Oprah Winfrey, has filed for Chapter 11 bankruptcy protection and permanently closed 12 of its restaurants.
True Food Kitchen Parent and eight affiliated companies filed on Sunday in the US Bankruptcy Court for the Southern District of Texas, reporting about $42.1 million in total debt, including liabilities from merchant cash advances. The closures cut the chain to 34 restaurants in 14 states, all of which remain open.
The Scottsdale, Arizona-based company went into bankruptcy with roughly $1.6 million in unrestricted cash, enough to cover about two weeks of operations and bankruptcy costs without more money, according to Fox Business. It has secured a commitment for about $20 million in debtor-in-possession financing from HumanCo TFK IV, subject to court approval, to keep the restaurants running.
The company plans to sell itself through a court-supervised process.
Oprah's stake
Winfrey invested in True Food Kitchen in 2018. The amount was never disclosed, but the chain's chief executive at the time, Christine Barone, described it as "a very significant amount for our future." Winfrey joined the board as the company planned to double in size.
The company told Fox Business that she still holds a minority stake but no longer has a board seat or any role in running the business. Former Starbucks chief executive Howard Schultz is also among the chain's backers.
The bankruptcy is a setback for one of Winfrey's best-known consumer bets outside media. She has built much of her investment profile around health and wellness, including her long association with WeightWatchers.
What went wrong
True Food Kitchen was founded in Phoenix in 2008 and was among the first chains built around wellness-driven dining, with menus focused on nutrient-dense dishes and real ingredients. It grew to 46 restaurants before the closures began.
The company has blamed earlier management teams for spending on new products and restaurant formats that did not fit its health-focused mission. One of them was True Food To-Go, a quick-service format tested in Tempe, Arizona, which never caught on.
The chain hired Jeff Chandler as chief executive in July. Before filing, the company laid off corporate staff, renegotiated vendor contracts, hired consultants to review its leases and other options, and looked for buyers to take over some of its leases.
"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," Chandler said. "We are confident this step will help us build a stronger True Food Kitchen for the future."
The closed restaurants are in Century City, El Segundo and San Diego in California; Miami; Chicago; New Orleans; Bethesda, Maryland; Edison and Hackensack, New Jersey; Garden City, New York; Columbus, Ohio; and Reston, Virginia. Their last day of service was Sunday.
The company has asked the court for permission to keep paying employee wages and benefits and to keep working with its suppliers while it looks for a buyer.
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