Tattooed Chef Review: plant-based food

Обзор Tattooed Chef: продукты питания на растительной основе

Tatooed Chef (NASDAQ: TTCF) is one of America's leading plant-based food companies.. The company offers a wide range of innovative and sustainable plant-based food products.. Branded products include semi-finished products, available in the frozen food section of leading grocery stores throughout the United States.

About company

In Russia, the company's shares are traded on the St. Petersburg Stock Exchange with 27 May 2021 under the ticker TTCF. Long-term dynamics of stocks is rather positive, medium and short term neutral, in this regard, initially the degree of attractiveness of these shares is controversial. Let's try to solve this issue.

history of the company.
The company was founded in 2009 under the name Ittella and specialized in the import of Italian vegetable products.. IN 2015 In 1999, the company moved into the category of food products under its own brand and began to produce frozen foods. Around the same time, Sarah Galletti, inspirer and creative director of the brand Tattooed Chef, led the company's transition from frozen vegetables to more sophisticated plant-based frozen meals and snacks.

Tattooed Chef went public through a SPAC deal between Forum Merger II and Ittella International in October 2020 and went public on the Nasdaq in November 2020. Less than a year after the IPO, in 2 quarter of 2021, The company reported an increase in revenue by 45,9% — up to $50.7 million — compared to the previous year. Tattooed Chef branded product line revenue increased by 62,3% - up to 33.1 million dollars.

Regarding distribution, the company increased its presence from 4,300 stores at the end of 2020 to 8,355 stores by the end 2 quarter of 2021.

Composition of the group of companies.
The structure of the group of companies is relatively small. Subsidiaries are registered in the US state of Delaware due to a relaxed tax regime, in California and New Mexico, and also in Italy, with which the company has historical ties.

The company's production facilities include two factories, one in Italy and one in California, the company owns fields and orchards in Italy, there are also two family farms, partially owned companies.

All this cannot be considered positive factors., since the geographical diversification of production is relatively weak, it is vulnerable to regional negative factors. On the other hand, In Italy, the situation with coronavirus is better, than in the USA, therefore it can be considered, that all is not lost.

Structure of the Tattooed Chef group of companies

Myjojo USA, Delaware
Upload International USA, California
Ittella’s Chef USA, California
Ittella Italy Italy
New Mexico Food Distributor USA, New Mexico
Karsten Tortilla Factory USA, New Mexico

USA, Delaware

The company's share capital is notable for its off-scale presence of small and retail investors. Small number of shares, in the hands of large status investors, - this is the weak side of the group of companies. This is not very attractive to retail and small institutional investors., which are often guided by the choice of leading market players.

Key figures.
Company Founder, serving as its president and CEO, - Salvatore "Sam" Galletti - ethnic Italian, US-born, descendant of Italian immigrants, more or less retained ties with their historical homeland, what determined the success of the business, which began with the supply of products from Italy.

Galletti has served as President and CEO of Ittella since its founding in 2009.. He has 35 years of experience in the food industry, including previous operating and investment positions at Ittella, Sonora Mills, Good Karma Foods and other companies, where did he gain experience. Through these previous roles, he has established key relationships with many retailers., who now sell Ittella products.

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The second most important key figure of the company is Sarah Galletti, daughter of Salvatore Galletti, creative director. In 2014, she led the rebranding of Ittella Parent.: from a manufacturer of frozen vegetables to a brand innovator in plant-based frozen meals and snacks. She is primarily responsible for the development of new products., and for the strategic and creative direction of the Tattooed Chef brand.

Sarah Galletti remains active in sales and marketing, including running the digital marketing platform of the Tattooed Chef brand and developing the online features of DTC Ittella Parent. Before her participation in Ittella Parent, Galletti worked for some time in her historical homeland, in Italy, pizzeria chef and pastry chef. Time, held in Italy, inspired her to create the brand Tattooed Chef: she realized the shortage in the United States of quality plant foods, grown without harmful fertilizers, unlike the mediterranean.

The third key figure is Stephanie Dieckmann, financial director. Previously, she served as CEO and CFO of Ittella prior to the SPAC deal.. Dieckmann has 12 years of experience in the food industry.

The fourth head of the group of companies - Gaspare "Gasper" Guarrasi, Executive Director. Prior to joining Tattooed Chef, Guarrasi served as CEO of Frog Environmental and Stormwater Systems with 2007 to 2020. With 1994 by 2006 he was the founder, president, CFO and CEO of Certi-Fresh Foods, food manufacturing companies, specializing in seafood, meat and breaded dishes.

Supply chain and sales.
Most vegetables come from Italy, one of the largest crop growing regions in Europe. Suppliers are based in different regions of Italy - this is the strength of the company, because it reduces climate risks, because there are several climatic zones in Italy. Companies are provided with stable supplies throughout the growing season. Acai puree comes from Brazil through an American reseller, but at the same time, Ittella is the only supplier to the local market of this product in the United States in finished and packaged form. The rest of the products are made in the USA., in California and New Mexico. Liquid nitrogen from a single supplier is used to freeze food, American company Messer, providing 120% the company's monthly requirements for this raw material.

The Group's products are sold in the USA and Italy. In the US, as of the end of 2020, products were sold in 4,300 outlets, mostly in eastern and central states, what can be considered the strength of the group of companies, because these are the regions with the highest purchasing power. The products are mainly presented in three US retail chains, which account for 88% selling.

What he earns

Products and brands.
The company produces 16 types of products. All products are vegan certified, and it is gluten free.

Products are marketed primarily under the Tattooed Chef and Belmont brands.. Most of the sales come from the Tattooed Chef brand., it also showed the largest increase in sales revenue for 9 months of 2021 compared to the same period of the previous year.

IN 3 quarter, small brands showed the largest increase compared to the same period of the previous year. Maybe, this is due to the increase in demand for healthy food against the backdrop of the ongoing pandemic and, that consumers are willing to experiment. But in any case, this does not apply to the strengths of the company., since the share of sales in the category "Other brands" is negligible, and the most famous brand to the American consumer is Tattooed Chef.


Among revenues by product category in 3 quarter of 2021, finished products and raw materials were in the lead. Finished products showed the largest increase, what, apparently, reflects the increasing demand of Americans for healthy food in the current situation.

Brand revenue for 9 Months, one thousand dollars

2020 share 2021 share Growth
Tattooed Chef 60 643 55% 104 245 64% 71,90%
Belmont 47 495 44% 56 698 35% 19,38%
Other 765 1% 1029 1% 34,51%

Brand revenue in 3 quarter, one thousand dollars

2020 share 2021 share Growth
Tattooed Chef 22 629 55% 35 289 60% 55,95%
Foods of New Mexico 18 106 44% 23 118 39% 27,68%
Other 229 1% 373 1% 62,88%

Revenues of product categories in 3 quarter, one thousand dollars

2020 share 2021 share Growth
Raw materials 16 534 43,51% 16 327 36,07% −1,25%
Foods 5040 13,26% 3993 8,82% −20,77%
finished products 13 424 35,32% 21 001 46,39% 56,44%
Package 3004 7,90% 3950 8,73% 31,49%

Financial indicators.
Based on the results of 9 months of 2021, the company showed a generally negative trend. While the income, cost of goods sold and gross margin increased, other stats have dropped significantly.. This is due to the takeover of Foods of New Mexico., mexican food manufacturer. In this way, decrease in financial results for 9 months of 2021 compared to the same period of the previous year due to the non-deterioration of operating results, but the inevitable financial result of the takeover of a fairly large company with two factories.

Decreased results in 3 quarter of 2021 compared to the same period of the previous year due to, Most likely, with increasing costs, at the same time, negative results during this period can be associated with seasonal harvesting work.

Financial results for 9 Months, one thousand dollars

2020 2021 The change
Income 108 903 161 972 48,73%
Cost of goods sold 91 619 140 304 53,14%
Gross profit 17 284 21 668 25,36%
Operating profit 4694 −23 185 −593,93%
Profit before tax 5238 −25 840 −593,32%
Net profit 3462 −70 095 −2124,70%
Basic earnings per share 0,08 $ −0,86 $ −1175,00%
Diluted earnings per share 0,08 $ −0,86 $ −1175,00%

Plans and prospects

The mediterranean sees the mediterranean from afar.
Great hopes for the growth of financial indicators and shares can now be placed on the 4 quarter of 2021 takeover of Belmont Confections, private manufacturer of diet bars.

Belmont Company, located in Youngstown, Ohio, specializes in the development and production of diet snacks and nutrition bars. If Tattooed Chef is an ethnic Italian family business, then Belmont is a family business of ethnic Greeks, whose historical homeland is also in the same Mediterranean region.

At the factory area 47 thousand square feet of equipment to produce many different types of bars. Tattooed Chef and Belmont joint forecast foresees, that Belmont, which is part of the group of companies, will become the leader in the American segment of these products.

The value of the deal is, that although the group of companies will receive at the expense of additional expenses in 4 quarter of 2021 negative net profit, but in the long term, the transaction may positively affect its results and share price. Acquisition allows Tattooed Chef to further diversify its product offerings and enter the plant-based bar industry, the global capacity of which is estimated at 10 billion dollars.

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Against the background of the already completed acquisition of Foods of New Mexico, this adds to the diversification of the range and brings the company into the sports nutrition market.. These factors can be assessed as positive for the growth of the shares of the group of companies, although this is unlikely to happen immediately due to the high acquisition costs of Foods of New Mexico and Belmont.

Sales geography expansion.
This summer, the group began expanding into Kroger stores across the United States., in the network of which there are 1800 stores. As a result, a further increase in sales can be expected.: in the fall of 2021, the main products of the group of companies were already sold in almost every store of this chain. The achievement is definitely positive for the growth of the issuer's shares.


Risk of new business acquisition costs.
First of all, it should be noted the risk of a systematic decrease in net profit due to the issuer's expenses for the takeover of more and more new companies. In the past year alone, the group has acquired two companies, including three plants. Moreover, the purchase of two food factories by Foods of New Mexico carries a risk, caused by the bad reputation of the state of New Mexico: one of the factories is in Albuquerque. Objectively, Albuquerque is considered one of the most criminal cities in the United States.. The state itself, however, not the most criminal, but no guarantee, that the group of companies will not face corruption and the pressure of Latin American organized crime there.

Volatility risk.
Also, the risks include excessive volatility in the price of the company's shares. This is typical for the entire industry.. As a result of this volatility, investors may not be able to sell their shares at or above the purchase price., especially given the rather low liquidity of these shares on the St. Petersburg Exchange.

Risk of selling own shares.
The risk is the practice of selling shares by the company itself, which reduces their cost.. In particular, 5 November 2020 she sold 46 605 329 shares to purchase up to 655 thousand ordinary shares and up to 20 million ordinary shares, underlying warrants, included in units, issued during the initial public offering.

Risk of lack of information.
Tattooed Chef Under Securities Law Is A Growth Company, which has some exemptions from disclosure requirements. Incomplete disclosures make its securities not attractive enough for many investors and may make it difficult to compare its performance with other public companies.

The risk of authoritarian management.
President Galletti has significant shareholder influence, and its interests may conflict with the interests of other shareholders. Through the companies controlled by him and his family, he owns about 40,2% group shares. Galletti controls elections to the board of directors. Dividend payments can also be controlled by Galletti. These factors can not but alarm investors.


The company's risks are significant. However, they are characteristic of many American developing companies, controlled by family groups, especially of Mediterranean and Hispanic origin. Therefore, these risks should not be considered as something extraordinary..

It cannot be said, that the group's prospects outweigh the risks, but they are quite positive. If aggressive expansion leads to real results - and there is such a prospect, because the acquired companies are operating, - then we will see an increase in revenue next year. Fashion for vegan products suggests, that this prospect is real.

The company's shares can be considered long-term and medium-term attractive for investors, but short-term attractiveness is low due to high acquisition costs, resulting in low net income and earnings per share.

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