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Veggie Burger Maker Falls on Lean Times

Gardenburger files for bankruptcy protection. It blames the low-carb, high-protein trend.

October 15, 2005|David Colker | Times Staff Writer

Could a vegetarian diet be hazardous to a company's financial health?

Gardenburger Inc., an Irvine company that claims to have originated the veggie burger, said Friday that it had filed for Chapter 11 bankruptcy protection.

The company, which the official history on its website says was founded in 1985 by a "health nut," said in a statement that it planned to continue operations and emerge as a private firm.

Gardenburger executives declined to be interviewed.

In documents filed in U.S. Bankruptcy Court in Santa Ana, Gardenburger listed $20.2 million in assets and $40.2 million in debts.

Gardenburger, whose frozen vegetarian products are sold in more than 30,000 stores, blamed the anti-carb movement for its financial woes.

The company lost $11.1 million in the nine months ended June 30, and its sales fell 10.5% to $33.8 million compared with the same period a year ago.

"The low-carbohydrate shift has led to increased meat consumption," Gardenburger said in a document filed with the Securities and Exchange Commission this year.

To fight back, the company said, it "reformulated" its veggie burgers to reduce its carbohydrate content.

It had also diversified its product line, introducing selections such as Meatless Citrus Glazed Chicken.

But it wasn't enough. Gardenburger said it hoped to emerge as a "simpler and more efficient vegetarian foods company" after the bankruptcy.

Its stock fell 3 cents to a penny a share Friday.

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