Amy’s Kitchen closes California factory, eliminating 331 jobs

Dive Brief:

• Amy’s Kitchen abruptly closed its factory in San Jose, California this week. It employed 331 people. According to paperwork filed with the state, the plant will officially close on Sept. 16, but manufacturing operations ceased on July 18.  
• The plant had a $1 million operating loss per month due to increased costs, supply chain disruptions and shifts in consumer behavior, Fred Scarpulla, acting chief operations officer, wrote in a letter to California’s Employment Development Department. Amy’s Kitchen did not respond to a request for more information or comment.
• Amy’s Kitchen has recently been in the news for reports of poor treatment of its workers, some of whom have spearheaded a boycott of the company’s products. The California-based firm is one of the pioneers in the organic meal space.

Dive Insight:

While this latest plant closure may be completely unrelated to other activity related to employees and worker treatment, it certainly doesn’t look good for the company as a whole.

Amy’s Kitchen has been operating the San Jose plant a relatively short amount of time. The company announced it was expanding there in November 2020 and would concentrate on its frozen pizza line. It began production in March 2021.

Amy’s Kitchen told the San Jose Mercury News the company envisioned the San Jose plant being able to produce 10% of the company’s total capacity. But problems getting equipment, fuel, ingredients and labor kept it from being able to ramp up as planned. Scarpulla told the newspaper a crucial piece of plant equipment ordered in 2021 was just delivered this week.

In a statement from Amy’s Kitchen reported by Just Food, material costs had increased by more than 100% in some instances.

During the height of the pandemic, then-president and CEO Xavier Unkovic told Food Navigator that demand for Amy’s Kitchen’s frozen meals was skyrocketing. For some products, sales spiked as much as 70% as consumers began pantry loading, he told the website. 

Scarpulla told the San Jose Mercury News this week that with consumers no longer stuck at home and inflation constraining their food choices, fewer people are paying premium prices for Amy’s Kitchen’s frozen pizzas. 

Amy’s Kitchen promotes itself as a company started by a family searching for better options that has nutrition and caring at its core. But recent news paints the company as something else entirely.

Employees have reported poor working conditions, with quotas drastically increasing and punitive action taken against those who report getting injured on the job.

Workers told NBC News they were expected to produce 25,716 plates of food in an eight-hour shift at the company’s Santa Rosa, California plant. They weren’t permitted to take bathroom or water breaks. Workers at Amy’s Kitchen are not unionized, though reports indicate the Teamsters Union and Unite Here have tried to interest them in organizing.

A still-pending complaint was filed with the U.S. Labor Department’s Occupational Safety and Health Administration in January, and the Teamsters Union has filed to have Amy’s Kitchen B Corp status revoked. 

In response to the reports, some grocers in California have stopped carrying the company’s products. A large Amy’s Kitchen customer requested an independent audit of the Santa Rosa factory at the beginning of the year. This revealed a lack of knowledge among employees about how to anonymously file grievances, according to the San Francisco Chronicle.

Amy’s Kitchen has denied the reports of poor working conditions in a statement on its website. The company said the Santa Rosa plant is very safe, it respects workers’ rights to unionize, and there are ample opportunities and facilities for bathroom and water breaks.

While most of the attention on workers’ conditions at Amy’s Kitchen has centered on its larger plant in Santa Rosa, incidents have been reported at the plant that is closing. In June, nine separate employee complaints regarding the San Jose factory were filed with the National Labor Relations Board. These cases, filed by the Unite Here union, made accusations regarding layoffs, disciplinary actions, coercive actions and interrogation.