Chubby Snacks Shutting Down
Frozen sandwich maker Chubby Snacks appears to be ceasing operations after four years in business, following financial and legal challenges.
In a December 10 email viewed by Nosh, Chubby Snacks notified its suppliers of the decision to wind down, citing a spate of challenges including “increased competition, rising overhead costs, limited capital and inflationary pressures” and noting the company’s financial strains caused it to default on payments for its production line, a set of fully automated peanut butter and jelly sandwich machines housed at a manufacturing facility in Colorado.
“With the company now insolvent, with no material assets, our focus will shift to liquidating any intangible assets with the goal of paying down outstanding debts,” the email read, adding that the company intended to file for dissolution on December 13, 2024.
Chubby Snacks declined to comment when contacted by Nosh.
Chubby Snacks is a line of frozen crustless sandwiches filled with peanut butter or almond butter and specialty jams. Last year, the brand was gearing up for the launch of a hazelnut cocoa peanut butter sandwich that it previewed at Natural Products Expo West. The products were sold online and across the country in Fred Meyer, Ralphs, Smiths, Central Market, Giant, ShopRite and select Target and Whole Foods stores.
Chubby Snacks has also faced challenges in court in recent months.
This past September, the J.M. Smucker Company filed a lawsuit in the U.S. District Court Northern District of Ohio Eastern Division accusing the brand of false advertising, trademark violations and disparagement in “years of advertising designed to tarnish the name and reputation” of Smucker’s competing Uncrustables brand. Chubby Snacks has requested an extension to respond to the complaint to February 10, according to a filing from January 9.
The following month, Chubby Snacks was hit with a class action lawsuit alleging the company mislabeled the amount of sugar in its sandwiches. Per the complaint, filed in the U.S. District Court of the Northern District of California San Francisco Division, independent third-party testing of Chubby Snacks’ products indicated their sugar content was more than two or three times higher than the stated amount. Recent administrative filings in the case have been delayed, however. On January 21, the court granted a 90-day stay of proceedings; in the filing requesting that delay, the plaintiff’s attorney noted that Chubby Snacks “has advised that its company is nearing insolvency and intends to undertake solvency proceedings and/or dissolution.”
These events compounded the brand’s ongoing struggle to raise capital, which the company referenced in the email to suppliers. Additionally, new entrants in the frozen sandwich category, including Rudi’s, Red’s and SunButter, as well as private label players, are now vying for limited shelf space in the set.
The company had raised a total of $3.5 million by the end of 2022. The following year, Chubby Snacks installed its production line, dubbed the Chubb-O-Matic, which increased capacity from 120,000 units per month to more than 2 million, using bread from a local bakery delivering fresh loaves daily. After transitioning to the new machines, the brand launched reformulated sandwiches and debuted its first-ever marketing campaign.
