Tattooed Chef, a plant-based food company based in Paramount, is looking to expand its offerings with the acquisition of two Albuquerque businesses that specialize in Mexican food.
The company has entered into agreements to acquire New Mexico Food Distributors Inc. and Karsten Tortilla Factory LLC — collectively known as Foods of New Mexico — for $35 million in cash.
The transactions, approved by Tattooed Chef’s board of directors, are expected to close early this month, pending regulatory approval.
President and CEO Sam Galletti said the acquisition will allow the fast-growing business to diversify its product lines and boost its manufacturing capabilities to capitalize on the $20 billion Hispanic/Southwest food sector and beyond.
“We will be immediately addressing the $1 billion frozen Mexican food category once the transactions close,” Galletti said in a statement. “At full capacity, we believe Foods of New Mexico can contribute up to $200 million annually in revenue in the next two to three years and create significant value for all our stakeholders.”
The company posted net income of $68.7 million for fiscal 2020.
A boost in staffing
Tattooed Chef employed 500 full-time employees as of Dec. 31. The acquisition will add another 300 workers, bumping the total to 800.
The company leases several buildings in Paramount that total 50,000 square feet as well as a processing plant in Italy with 100,000 square feet of space. That operation primarily processes riced cauliflower, diced squash/zucchini and vegetable spirals.
The Paramount operation focuses on cauliflower-crust pizzas, acai and smoothie bowls, Mexican-style street corn and other riced-cauliflower bowls.
New Mexico’s two facilities span 118,000 square feet.
A fast-growing market
Tattooed Chef has tapped into a fast growing market.
Plant-based food sales totaled $7 billion in 2020. That represented year-over-year growth of 27%, more than twice the 11% growth seen in 2018 and 2019, according to data compiled by the Good Food Institute and the Plant Based Foods Association. The report notes that 57% of U.S. households purchased plant-based food last year, up from 53% in 2019.
Tattooed Chef’s signature products include ready-to-cook bowls, zucchini spirals, riced cauliflower, acai, smoothie bowls and cauliflower pizza crusts, which are sold in the frozen food sections of Walmart, Target and Costco stores.
Some history
The company’s origin dates back to 2009 when it was established as Stonegate Foods by founder Sam Galletti, who remains CEO to this day. Stonegate began as a business that imported vegetables and other natural products from Italy to be sold by retailers of natural foods.
A year later, Stonegate began private labeling its products.
Tattooed Chef farms its own ingredients and manufactures its food products in-house. The company imports most of its ingredients from Italy.
Galletti’s daughter, Sarah Galletti, joined the company in 2014 and serves as creative director. A year later the business name was changed to Ittella International. The company was later taken public in a reverse merger with Forum Merger II Corp., with the combined operation rebranded as Tattooed Chef.
Tattooed Chef shares closed at $18.08 Monday on the Nasdaq exchange. Over the past 52 weeks, shares have ranged from a low of $10.33 to a high of $28.64.