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 Sunday and closed 12 restaurants, leaving 34 locations across 14 states open as it searches for a buyer.
True Food Kitchen confirmed to FOX Business that the shuttered 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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Court documents reveal how tight the financial squeeze had become. The company entered bankruptcy with approximately $1.6 million in unrestricted cash, enough to cover operations and bankruptcy expenses for only about two weeks without access to financing and other cash, financial adviser George N. Koutsonicolis said.
Chief Restructuring Officer Nathan Cook pointed to management turnover, unsuccessful expansion efforts and pandemic-era experiments that hurt the dining experience.
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“The Company experienced significant management turnover, which resulted in frequent changes to expansion strategy, brand direction, and menu offerings,” Cook said in a court declaration.
Under successive leadership teams, the chain invested in new products and restaurant concepts that were unsuccessful and strayed 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. Those efforts hurt staffing and service and have since ended, according to Cook.
Some restaurants struggled to attract enough traffic, while others saw profitability erode as their markets changed. Cook listed approximately $42.1 million in funded debt obligations when the company filed.
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Winfrey made a significant equity investment in True Food Kitchen in 2018.
Then-CEO Christine Barone declined to disclose the investment amount but described it as “a very significant amount for our future.” She also said Winfrey would join the company’s board as the chain planned 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 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 business.
“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,” Chandler said in Monday’s announcement. “We are confident this step will help us build a stronger True Food Kitchen for the future.”
Before filing, the company cut corporate staff, renegotiated vendor contracts and sought changes to its restaurant leases, according to Cook’s declaration.
The company did not disclose how many employees were affected by the restaurant closures in its announcement. Chandler acknowledged the impact on workers.
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“We know these decisions are especially hard on the team members affected, and we are deeply grateful for their contributions to True Food Kitchen and their communities,” he said.
“We are committed to approaching this difficult moment with care and respect, and we will share information on resources and next steps with affected team members.”
The chain said it secured a commitment for 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 has also asked the court for permission to continue paying employee wages and benefits, maintain certain customer programs and work with vendors.
The company said it is seeking a long-term partner to support the brand’s future.
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Founded in Phoenix in 2008, the chain built its brand around nutritious meals and thoughtfully sourced ingredients. Its remaining restaurants are open and serving customers as usual, the company said.
FOX Business also reached out to representatives for Winfrey for comment.
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