Citing ‘Financial Challenges,’ No Evil Lays Off Staff, Pivots to Co-Manufacturing
North Carolina-based vegan meat maker No Evils Foods earlier this month laid off a number of employees, including its full production staff, amid the shutdown of its manufacturing facility in favor of a switch to co-manufacturing. The company has cited financial challenges, particularly in the wake of the pandemic, as the catalyst for the layoffs and the production changes.
The company executed an initial round of layoffs in May, followed by additional layoffs in June, which included its production team, R&D, sales and plant management, No Evil said, totaling over 45 staff members. In September of 2020 the company had over 60 staff members. At the time, co-founder and CEO Mike Woliansky told NOSH the company had doubled its headcount over the prior seven months.
No Evil moved to its 15,000 square foot production facility in Weaverville, North Carolina in 2018, allowing it to quadruple production capacity and add 15 new jobs, the company said in a press release at the time. No Evil products will now be manufactured at an Illinois-based co-packer in a dedicated area within the facility to “ensure the integrity of our products,” according to Woliansky. He said the decision to close its facility was “incredibly painful” but will lead to greater efficiency and fewer logistical challenges.
“There’s a lot of sadness in letting go of our vision to create living wage, fair chance jobs, build community, and effect positive change through our own in-house manufacturing facility,” Woliansky said. “We worked very hard to create a rewarding, supportive work environment, and know our team was heartbroken when they received the news — we are heartbroken too.”
Employee accounts published in Huffington Post claimed the company offered laid off employees a flyer for an upcoming job fair and a letter of recommendation. The company confirmed that it was unable to offer severance pay, but has offered laid off employees one-on-one coaching and resume development.
Founded in 2014, the plant-based brand’s mission is to “use our food to promote social good and create a positive impact for people, planet, and animals,” Woliansky said. No Evil is known for having unique product names for its meat alternatives such as Comrade Cluck (vegan chicken) and El Capitan (vegan crumbled chorizo), with products sold at retailers such as Whole Foods, Walmart, Kroger and Publix.
The retail-driven company was hit hard financially by the COVID-19 pandemic as foot traffic in stores declined, Woliansky said. These financial troubles led the company to seek out additional investors beyond its lead investor, Siddhi Capital. But negotiations for an infusion of capital “fell through suddenly” in June, Woliansky said, which led to the decision to undertake layoffs as the company had “run through its cash reserves.”
“Our capital situation… forced us to make substantive changes to preserve the future business in a way that is both financially reliable, maintains the same level of quality our retail and distribution partners have come to expect, and remains true to our mission,” Woliansky said.
According to SEC filings, the company was able secure approximately $2.5 million in funding, which Woliansky said was raised incrementally over the last six months. That funding was used to cover operating expenses, including payroll for its production staff to keep them “on board as long as possible,” Woliansky said.
The layoffs follow tensions among the company’s production staff last year. In March 2020, the company reportedly made an ultimatum to production staff workers, Business Insider reported, with one of three choices: continue to report to work and receive an attendance bonus, or quit and either receive no compensation but retain the option of being hired back, or get severance pay with no option to return. According to Business Insider, as a result, the company ultimately lost about 13% of its workforce last year.
Woliansky said the bonus was initially tied to attendance, but following employee feedback, the company ultimately offered a permanent $2.25 per hour raise to its entire production team. This brought its average line worker pay to $17 per hour.
The past two years have also included a number of labor disputes within the company around unionization, which date back to 2019, when employees attempted to unionize with United Food and Commercial Workers (UFCW). Recordings from company meetings in January 2020 showed Woliansky telling employees that a union “would be a terrible thing for you and for No Evil Foods,” and urging them to vote against it. A February 2020 union vote led by NLRB resulted in a 43-15 vote against unionizing, falling short of the 30-vote threshold needed.
“While we acknowledge the contributions of the labor movement to our society, we also know that not all unions are good – and we understand that’s an uncomfortable conversation for some,” the company said in a statement to NOSH in September. “We believe that unions aren’t the only way to protect and promote workers rights.”
Last September, the National Labor Relations Board (NLRB) issued a formal complaint against the company due to accusations from former production employees Jon Reynolds and Cortne Roche that they were unfairly terminated for trying to unionize. Rather than take the company to court, in October Reynolds and Roche settled with the company for $20,000 and $22,500, respectively.
Woliansky said the settlements were an “expedited way” to allow both parties to move beyond the disputes, while avoiding costly litigation when the company was already struggling financially.
“Had we pursued the litigation, we believe we would have ultimately prevailed, however, it would have been extremely costly and would have required our employees to testify against their former teammates – something we felt would negatively impact our team and company culture,” Woliansky said.
