The Real Good Food Company ramps up production of frozen food portfolio with ambitions of becoming a $500m brand
Launched in 2015, The Real Good Food Company went public in November 2021 debuting on the NASDAQ under the ticker symbol 'RGF' opening at $11.66 per share and is currently trading at $5.98/share.
Despite its share price dropping by almost 50%, the company is thriving and growing a strong retail presence in the frozen food category, said executive chairman Bryan Freeman.
For the full 2021 year, The Real Good Food Company notched up net sales by 116% to $84.1m compared to full year 2020 figures. Household penetration increased to 7.4%, nearly doubling from the year prior, putting it behind competing brands such as Amy's and InnovAsian (which hold 10.8% and 12.2%, respectively in household penetration) and ahead of other emerging brands such as Devour, Caulipower, and Sweet Earth, according to SPINS data for the 52 weeks ended 1/23/22.
Despite significant net sales growth, the company was still faced with increased raw material, labor, and plant overhead costs impacting gross margins and increased operating expenses by $3.1m for 2021 compared to the year prior. The increase in company expenses also includes costs related to "public company readiness" and increased investments in marketing and research and development, said the company.
"We are pleased with our fourth quarter and full year results which demonstrate the strength of the Real Good Foods brand and the solid momentum we have entering 2022,” said Freeman, executive chairman of The Real Good Food Company.
“Looking ahead, we remain focused on our mission to make craveable, nutritious comfort foods that are lower in carbohydrates, higher in protein, and made from gluten- and grain-free real ingredients more accessible to everyone and in doing so, help people pursue a healthier lifestyle.”
The triple-digit growth was due in larger part to the strong traction the company has had with its core entrée and breakfast products driven by greater demand in the club channel and from existing retailer partners. The company's retail footprint includes over 16,000 stores including Target, Costco, Kroger, and Walmart.
Expanded production and positive outlook
While many companies are still struggling to keep up with consumer demand and orders from retailers, The Real Good Food Company is making room for increased production capacity with the opening of a new 81,000-square-foot facility (2X the footprint of its existing facility in California) in Bolingbrook, Illinois, which will put it on a strong trajectory for strong immediate and long-term growth, said CEO Gerard Law.
"We are raising our guidance both for the year and long-term to reflect strong demand for our products, which in part will be fulfilled by our Bolingbrook facility that commences production later this month. We expect this new facility will significantly increase our production capacity, enabling us to meet the rapidly growing demand for our products while meaningfully lowering our costs over time,” said Law.
The opening of the Bolingbrook manufacturing facility has lifted the company's outlook for Q1 2022 and the full year. For the first quarter ending March 31, 2022, the company is expecting $35m in quarterly net sales (up from its original projection of $33m), a 109% increase compared to Q1 2021.
For the full year ending Dec. 31, 2022, net sales are projected to hit between $140m and $150m reflecting a 67% to 79% increase compared to 2021. Long-term (a timeline was not provided), the company expects to eventually hit $500m in net sales.
