Inside the Food52 Bankruptcy | Heidi Robinson

Heidi Robinson (0:00)

I'm at the kitchen table with my dad. I refresh our bank at zero. And my dad is like, what is going on? And I said, they took it. They took all our cash. It's gone.

CJ Gustafson (0:10)

Did you have anything that you could sell and try to liquidate at a discount just to get some money in?

Heidi Robinson (0:14)

I've grown up like margins are so important. That all went out the window, right? Like, so who cares what the margin is? You just need cash as long as you can clear the cost to deliver it to the customer. Our dollars were the inventory pieces sitting there. In this case, we needed someone to fund the bankruptcy. It's a great deal, right? Bankruptcy is this like hidden gem of assets. Like people should buy bankruptcy assets. It's kind of amazing sometimes. There's like a menu of ways to sort of end a company. One would be chapter seven, which would have been the just straight up liquidation. That's on Monday night. There's no PayPal account. It's just over, right? And you just liquidate and someone takes over. We're all done too. And we're out. With chapter 11, actually, the management, select management can stay, the board of directors stays intact.

CJ Gustafson (1:04)

Is this thing on?

Heidi Robinson (1:08)

Yesterday's price is not today's price.

CJ Gustafson (1:19)

Today on Run the Numbers, I'm joined by Heidi Robinson, former CFO and COO of Food52.

This is a very different episode. Heidi joined Food52 thinking she was signing up for a turnaround. But within weeks, she realized the company was in far deeper trouble than she or almost anyone else understood. What followed is one of the wildest CFO stories we've had on the show. We talk about what it's like to be the newest executive in the room and have to tell everyone the numbers don't add up. Then one Monday evening, the company's lender swept its cash and suddenly the clock was ticking. Heidi takes us inside what happened next, layoffs, trying to make payroll, working through Christmas, preparing for Chapter 11 and ultimately sitting in the room as Food52 was auctioned off.

She explains the part of bankruptcy most finance leaders never see, the restructuring lawyers, bankers, VIP lenders, independent board members, and the surprisingly complex process of figuring out who gets paid when it's all over. It's part finance lesson, part survival story and a fascinating look at what the CFO job becomes when almost every option you have is a bad one. Here's my conversation with Heidi Robinson. Heidi, thank you so much for joining me on the podcast.

Heidi Robinson (2:31)

No problem. Happy to be here.

CJ Gustafson (2:33)

So our mutual friend, Blake Saunders, he introduced us and he told me, CJ, you've got to talk to Heidi and hear her story because you've had this incredible career operating businesses that I would say are at the intersection of retail, e-commerce, and media. And I wanted to spend most of our time today on your experience at Food52 because it's one of the most fascinating CFO stories I've ever heard.

Heidi Robinson (2:56)

Oh, goodness. Yes. No, Blake's awesome. It was fun to work with him.

CJ Gustafson (2:59)

You joined Food52 expecting to help turn around a business that was maybe struggling a bit. And it seemed like within a couple of weeks, you realized this wasn't the situation you thought you were walking into. First question here, just to kind of set the scene, give people some context. When did you first realize that the company was maybe in more trouble than everyone believed?

Heidi Robinson (3:21)

Yeah. So I joined October 1st, brought in by the lead investor. And the mandate was always, it was distressed. Like I didn't walk in saying this is a fresh fundraising round and this is like all up and to the right. It was a distressed company, but beloved and beloved brands. So Food52, Schoolhouse and Dansk, I'd been fans of those brands forever. But it had some hair on it and it's like, let's improve margins and clean it up and then probably set it up for a sale within about a year. And the expectation was about a year of runway. As much as we're like data and finance people, you get a gut feeling pretty quickly. Within two to three weeks, I was like, I'm just not getting straight answers. There's a fractional CFO in place and he was passing them a ton and he just wouldn't really answer the questions or provide the 13 week cash flow and just all the like basic stuff. And so my suspicions were kind of heightened and then I just started building the podcast myself and pretty quickly realized we were in a different state of affairs and it certainly wasn't a year.