- RXBAR laid off 40 employees last week — about 20% of its staff, according to Crain's Chicago Business. The layoffs come at the end of a strong year for RXBAR and just as the company announced its initial expansion into UK markets.
- "While RXBAR continues to see excellent market performance, we are proactively engaging in a reorganization to better support our business objectives in 2019 and beyond," an RXBAR spokeswoman told Crain's Chicago Business. "The brand is extremely healthy. Nielsen data shows that our retail sales have more than doubled this year."
- RXBAR CEO Peter Rahal said he sold to Kellogg in part because he felt the company shared his commitment to existing employees, according to NOSH. The strong growth for RXBAR intersects with Kellogg’s Project K, a multi-year effort to cut costs and focus on efficient operations.
Employees were caught by surprise last week when RXBAR laid off 40 people, Nosh reported. The company explained the layoffs were necessary as part of an ongoing reorganization, but they come at an unlikely time.
One year ago, Kellogg acquired the clean-label protein bar brand for $600 million. RXBAR moved into a new headquarters building to accommodate growth, which has been substantial during the past year. Kellogg's sluggish earnings have been largely boosted by RXBAR. The company also announced it is launching in the UK.
The growth at RXBAR comes amid a few tough years at Kellogg. Cereal sales have been down and the company launched Project K — a planned four-year initiative for cost savings — in 2013. Job cuts have been a part of that initiative, including last year when Kellogg eliminated 250 jobs from its North American business.
The company is using the savings from these cost-cutting measures to support its expansion into new types of products. The program has been successful so far — the company estimated it will save between $425 million and $475 million this year. But do the job cuts don't reflect ongoing challenges at RXBAR, or are they part of the parent company's efforts to trim costs and further integrate the business? Kellogg did have a year to study and review the operations following the purchase.
According to an email RXBAR sent to Food Dive, the company says the reorganization was completely unrelated to Kellogg.
"RXBAR continues to operate as a standalone company within Kellogg, and we proactively implemented this restructure to better support our business objectives in 2019 and beyond," the statement says.
Still, these new layoffs prove RXBAR's success isn't enough to turn around its parent company's struggles. Despite a 7% increase in net sales since last year bolstered by RXBAR, Kellogg reported during its third quarter that its operating profit was flat. Company leadership recognizes that the future is in snack foods and wants to continue to invest in innovative options, such as RXBAR. Reportedly, additional items like nut butters are in the works. Cutting jobs is part of the company's strategy to make room for more innovative products.
Despite bringing in more customers and helping to diversify Kellogg's portfolio, products like RXBAR can be more expensive to produce, package and ship. These job cuts could have an impact on RXBAR’s upcoming expansion into UK markets and further growth in the U.S. But regardless of whether they do, the layoffs dealt a blow to RXBAR’s attempt to represent itself as an employer out for the best interest of its workers. The bigger pressures at Kellogg seemed to overpower the once-small company’s commitment to its workforce.