Atkins Nutritionals Files for Bankruptcy
MELISSA BLOCK, host:
This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
MICHELE NORRIS, host:
And I'm Michele Norris, with confirmation that the Atkins diet craze is so over. Yesterday, Atkins Nutritionals, the company that did more than any other to promote the low-carb diet, filed for bankruptcy in New York. At its peak in 2003, nearly 10 percent of Americans said they were either on the Atkins diet or had tried it. NPR's Jack Speer reports that the phenomenon was strong enough to bankrupt several bread and pasta makers and attract the interest of Wall Street investment bankers.
JACK SPEER reporting:
John Rutherford, managing partner at the investment firm Parthenon Capital, probably wishes he'd never heard of the Atkins diet.
Mr. JOHN RUTHERFORD (Managing Partner, Parthenon Capital): I have never seen a situation that looked so compelling as a business proposition at the beginning that changed so rapidly.
SPEER: Parthenon, along with Goldman Sachs, became majority stakeholders in Atkins Nutritionals just as the low-carb trend was taking off, investing at least $400 million in the company according to published reports. Rutherford says Atkins was enjoying the type of success most fledgling firms only dream about, with revenues doubling and tripling from one quarter to the next.
Mr. RUTHERFORD: Anytime you'd turn on the television or the radio or open a newspaper, you just couldn't help but see articles every day on low-carb and always talking about Atkins, because it was sort of the very definition of low-carb.
SPEER: Atkins was branching out quickly. It signed deals with restaurant chains such as TGI Friday's and Subway, and there was talk the privately held company would soon go public.
But then virtually overnight, the company ran into trouble. In 2003, company founder Robert Atkins died after a fall. There were allegations Atkins was seriously overweight at the time of his death. And there was a lawsuit filed by a man who claimed the diet caused his heart disease. But the company's real problem was that many Americans had come to the conclusion that life without bread or pasta was too tough.
Philip Price(ph) is part-owner of a store in Rockville, Maryland, that features a great variety of low-carb foods as well as some low-sugar products. He says despite the bankruptcy, he still believes in the low-carb concept and he said he hopes the company can bounce back.
Mr. PHILIP PRICE (Merchant): They seemed to get too big. They wanted to get too big too fast, and now they're paying for it. I mean, it's not good. It's not good for us, 'cause it's hard to get products. But luckily, there are a lot of other companies that are also making low-carb products, so we can still keep the customers happy.
SPEER: But Price may have to get used to shrinking demand. Surveys suggest that fewer than half as many Americans are now using a low-carb diet like Atkins for weight control. At a Maryland shopping mall, Ashley Gerber, a nutritionist, couldn't help gloating a bit about the bankruptcy. She says it reinforces what, for her, are some basic truths.
Ms. ASHLEY GERBER (Nutritionist): We just have some unrealistic perspectives on diet. People want a quick fix. They want it to happen overnight, and they want to make it the easiest way possible.
SPEER: The Atkins bankruptcy follows the liquidation of another big low-carb outfit, Keto Foods. Keto once had more than a hundred low-carb products, but closed its doors earlier this year. Parthenon Capital's John Rutherford says the reality never quite lived up to the hype.
Mr. RUTHERFORD: I guess all of that media heat and hype, if you will, led to massive consumer trial of low-carb products. But a lot of consumers having tried it decided it wasn't necessarily right for them. And so, frankly, consumer behavior didn't change all that much.
SPEER: In its filing submitted to the bankruptcy court today, Atkins Nutritionals said lenders will receive equity in the company in exchange for a reduction in debt. The company, which once employed more than 300 people, now has only about 100 workers. Jack Speer, NPR News, Washington.