Dive Brief:

• Simply Good Foods said it will lay off 15% of its workforce and restructure corporate leadership. CEO Joseph Scalzo, who returned to the Quest protein bars and Atkins weight-loss shake maker in January, said he is acting “with urgency” to turn around declining sales.
• As part of the changes, the company’s chief human resources officer and chief supply chain officer will depart within the next few months. The cuts are expected to save $17 million annually, according to a release.
• Scalzo said the reorganization is necessary “to advance performance across our portfolio and generate greater value for our shareholders.” Earlier this month, Simply Good lowered its outlook for the year and now expects up to a 10% decline in sales.

Dive Insight:

Just three months after returning to Simply Good with a mandate to improve profitability, Scalzo said the company is still grappling with “executional challenges” and a “highly competitive marketplace” within the protein and nutrition market.

Simply Good has struggled as Atkins weight-loss shakes lose momentum in the backdrop of rising GLP-1 use. Losses at Atkins have been compounded by issues with the recently acquired plant-based protein shake brand Owyn.

Even its best-performing brand, Quest, is experiencing challenges. While Quest saw a 2.4% growth in consumption during the most recent quarter, the brand’s flagship protein bars are experiencing a slowdown in sales velocity.

“It’s clear that our performance has not reflected the strength of our company or the potential of our brands,” Scalzo said during the company’s most recent earnings call.

Simply Good Foods will work on “fewer, bigger initiatives” and rebuild investments in its brands, particularly Quest, Scalzo added. It will also consider reducing prices and costs to “strengthen the economic model of the business.”

The company also is streamlining its leadership team with the departure of Chief Human Resources Officer Amy Held and Chief Supply Chain Officer Jason Bendure. Their responsibilities are being delegated to other executives.

Kathy Kelley, vice president of logistics, has been elevated to senior vice president of operations and will lead the company’s supply chain functions. Timothy Kraft, chief legal and corporate development officer, has been promoted to chief administrative officer and will have oversight of compliance, human resources, M&A and nutrition functions.

As protein takes over nearly every aisle of the grocery store, stalwart brands like Quest are now struggling amid increasing competition. Scalzo said Simply Good will innovate more within Quest and invest additional resources in marketing to reposition the brand back as “athlete-worthy nutrition.”

The company also intends to “reset” Owyn, which stands to lose distribution following poor performance. However, Simply Good intends to focus more on rebuilding Quest to avoid spreading “our attention too broadly,” Scalzo said, noting Owyn is the company’s smallest brand.

“The good news is that we believe we are well-positioned to fix this,” he said. “I believe Simply Good Foods can return to delivering the durable long-term growth that you would expect from a leading nutrition company.”