Gardenburger Inc., an iconic Oregon company credited with putting vegetarian burgers on menus across the country, filed for Chapter 11 bankruptcy protection Friday -- two years after relocating its headquarters to California and manufacturing to Utah.
Gardenburger Inc., an iconic Oregon company credited with putting vegetarian burgers on menus across the country, filed for Chapter 11 bankruptcy protection Friday -- two years after relocating its headquarters to California and manufacturing to Utah.
The company released a statement saying it would continue to operate but would become privately held. The company did not say who the new owner would be.
"It's a very sad story," said Paul Wenner, who founded the company in 1985 and was worth more than $88 million before Gardenburger's stock crashed. "It started out as a wonderful growth story."
Wenner, who now lives on Maui, is no longer a Gardenburger employee but retains a seat on the company's six-person board.
Company officials referred calls to a public relations firm, which said details of the proposed reorganization would be released next week.
"We have taken this action as part of our ongoing efforts to make Gardenburger a simpler and more efficient vegetarian foods company," a statement released by the company said. "Our customers remain our number one priority. We will continue to uphold the high standard of quality and distribution excellence that is our heritage."
Gardenburger's fortunes peaked in 1997, when annual sales exceeded $100 million, Wenner said. The company reported to the Securities and Exchange Commission that it lost $11.1 million in the nine months that ended June 30 and that its sales fell 10.5 percent to $33.8 million compared with the same period a year ago.
The company bet heavily on advertising in the mid-1990s, culminating in a decision to spend $1.7 million to advertise during the final episode of the popular sitcom "Seinfeld." That bet turned out badly, Wenner said. "We did all that advertising that didn't work," he said.
The company was also hurt in 1997 when Kraft Foods, whose parent company also owns Philip Morris, bought Bocca Burger, and Kellogg Co. bought Morningstar Farms, two competing brands of vegetarian burgers.
In its Friday filings, the company said its reorganization plan will include the elimination of its convertible-note debt, which it estimated at more than $27 million, held by the company's largest unsecured creditor Annex Holdings LP. Gardenburger said it negotiated the plan with Annex and that Annex supports the plan.
Seth Tibbott, president and majority owner of Turtle Island Foods, a Hood River company that makes Tofurky brand vegetarian foods, said Gardenburger deserves credit for moving vegetarian burgers into the mainstream.
"Gardenburger was a historic company -- I'm sad to see them struggle," Tibbott said. "It points out the difficulty faced by the little guy in this big corporate world."
Holly Jarvis, manager of the Food Front Cooperative Grocery in Northwest Portland, said she is not surprised by Gardenburger's struggles. "To me it's an indication of how competitive this market has become," she said.
Gardenburger shares fell 3 cents Friday to 1.1 cent on the over-the-counter Bulletin Board.
To see more of The Oregonian, or to subscribe the newspaper, go to http://www.oregonian.com.
Source: Knight Ridder/Tribune Business News
