My Bullish Thesis on The Tattooed Chef
CEO ("Sam Galletti")
Sam Galletti has over 35 years of experience in the food industry including prior operational and investor roles at Ittella, Sonora Mills, Good Karma Foods, and more, where he gained experience manufacturing a wide variety of products. His experience in manufacturing a wide variety of products is useful because of the extent of the products that the company offers.
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Who/What is The Tattooed Chef ("TTCF")?
The Tattooed Chef is a plant-based foods company that is disrupting the frozen food industry. The company went public on October 15, 2020 via a SPAC merger. The company manufactures and sells over 200 different Stock Keeping Units ("SKU"s).
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The Bull Thesis
Vertically Integrated - The company plants, grows, and manufactures all of its products. This is a particularly important benefit for TTCF because many food companies rely on 3rd party farmers in order to manufacture their products. This also offers Tattooed Chef several key benefits.
For instance, because they are less dependent on 3rd party growers and manufacturers the company has more control over quality and speed of their distribution. Dealing with 3rd parties requires extensive negotiation over contract terms. Prices can be arbitrarily increased and relationships can fall through at any moment.
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Exceptional Growth
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SKU Growth
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2017 - 2 SKUs​
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2018 - 10 SKUs
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2019 - 21 SKUs
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2020 - 38 SKUs
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2021 - The company expects to grow to 62+ SKUs
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E-Commerce Growth - The company launched their site on 10/26/20 and has grown its email list by 250%. The increase in the company's focus on e-commerce provides the company to do more business Direct to Consumer, as opposed to wholesale, thereby increasing the vertical integration of the company.
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Exceptional Revenue Growth - TTCF products sell out fast. the company has been making efforts to increase production capacity. The company owns 200 sq. ft. of manufacturing space including a plant in California and another in Italy.
In 2020, they doubled their capacity and in 2021 the company expects to double its capacity again. In 2019, sales of TTCF's products grew 77%. As a result of increase capacity and sales the company's gross profit increased 70 and Earnings Before Interest, Taxes, Depreciation and Amortization increased 127% to $10.6 MM.
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Vegetarian Diets Are Growing, Healthy, Good for the Environment - See BYND and VRYYF. I don't want to go into too much detail on these points because I made the same points on the linked pages. However, TTCF SKUs extend beyond plant-based meats and are likely healthier because of that fact.
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Long and Rapidly Growing List of High Profile Partnerships
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Costco
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Sam's Club
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Walmart
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Target
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Whole Foods
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7-Eleven
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Albertsons
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Kroger
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Stater Brothers
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Smart and Final
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Lesser known but still important Partnerships - Fresh Thyme Market, Meijer, Bristol Farms, Food Lion, The Fresh Market, Harris Teeter, Plublix, Shop Rite, Southeastern Grocers, H-E-B, Gelson's, Stop & Shop.
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Total Addressable Market ("TAM") Opportunity
The TAM opportunity for the global frozen food market is estimated to be $380 B annually. In 2019, total sales of frozen food items within the U.S. rose to $55.2 B. This growth outpaced store food categories generally. This is a huge TAM opportunity and TTCF is quickly gaining stride.
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The Bear Thesis
Popularity - I am hesitant to include this in the bear thesis section because Tattooed Chef products are very popular, but if for some reason that popularity were to fade the company could see declined growth. However, I don't think a decrease in popularity is likely given the growth of the company's brand. If anything the company's brand will probably continue to grow more popular.
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Competition - The food industry is particularly competitive and the barrier to entry is fairly low. As TTCF begins to become more successful large companies in the food industry may begin to imitate and compete with Tattooed Chef (Large companies like Pepsi, Kelloggs, Kraft, Nestle, etc...)