Overview of The Grill Room — Food52’s Recipe for Bankruptcy
This episode of The Grill Room (host Dylan Byers) features Erica Ayers‑Baden, former long‑time CEO of Barstool Sports and, until recently, CEO of Food52. They discuss how Food52—a once highly valued content‑to‑commerce startup—ended up in Chapter 11, Erica’s experience steering the company through the insolvency process, lessons for digital media operators, and where media is headed.
Episode snapshot
- Guest: Erica Ayers‑Baden (ex‑Barstool CEO; led Food52 through bankruptcy).
- Context: Food52 was founded ~2009, grew into content + commerce, took outside capital (including Chernin/TCG), acquired Schoolhouse and Dansk, peaked at >$300M valuation, later ended up ≈$25M in debt.
- Outcome mentioned: An asset purchase/“stalking horse” deal (America’s Test Kitchen cited as bidder) for ~$6.5M plus associated assets.
- Format: candid interview about operational mistakes, the bankruptcy process, and strategic takeaways for media companies.
What went wrong at Food52 — root causes
- Over‑diversification: multiple lines of business (media, manufacturing, retail, design) pursued simultaneously without enough focus or integration.
- M&A without synergies: acquisitions (Schoolhouse, Dansk) required very different skills and cost structures; integration failed to deliver expected benefits.
- Management churn: many leadership changes produced shifting strategies and inconsistent execution.
- Weak cost discipline: insufficient financial controls and spending oversight as the company scaled.
- Legacy tech and operations debt: outdated systems (tech from ~2014) made changes slow, manual, and costly.
- Too many experiments left alive: projects that didn’t scale were kept, wasting resources and attention.
- Timing and capital pressure: COVID‑era growth expectations reversed; sale process timing and a bank cash sweep accelerated the crisis.
The bankruptcy experience — what Erica learned
- Intensity and precision: bankruptcy (Chapter 11 / asset sale) is fast, high‑pressure, and requires minute‑by‑minute financial decisions (e.g., calculating payroll runway hour by hour).
- Openness vs. stigma: media people often see bankruptcy as shameful, but Erica found the process illuminating and a disciplined mechanism to sort assets/value.
- Opportunity for buyers: bankruptcy can create chances to acquire strong brands or communities at steep discounts.
- Skill growth: Erica calls bankruptcy the most demanding transaction she’s done and says she learned more from it than from IPOs or M&A.
Actions Erica took and immediate outcomes
- Rapid cost cuts: she says the company removed about $20M in costs and refocused on creator‑led, social‑first media.
- Sale process accelerated: after the bank swept cash, an asset purchase agreement and stalking‑horse bidder were assembled within about nine days.
- Preserved brand value: Erica believes the Food52 brand and community still hold distinct commerce+content value and are attractive to buyers.
Key lessons and practical advice for media founders/CEOs
- If a realistic buyer offers a fair deal, consider selling rather than waiting for a higher exit that may never come.
- Don’t take more external capital than necessary—more capital often means more complexity and worse outcomes (“more money, more problems”).
- Keep multiple durable revenue streams so one downturn doesn’t sink the business.
- Kill what doesn’t scale: experimentation is healthy, but failing projects should be shut decisively to avoid sunk‑cost drag.
- Be realistic about M&A: acquisitions must have clear, executable synergies before you buy.
- Maintain tight cost controls and modern, maintainable tech infrastructure to stay nimble.
- Move sale processes aggressively when necessary—weeks can change outcomes.
Media industry context & Erica’s view of the landscape
- Fragmentation and headwinds: search traffic and programmatic ad rates are declining; creator economics are fragmented and hard to scale.
- Future = narrow, deep communities: Erica bets on tightly focused communities (high depth, low breadth) as the more sustainable model.
- Value of legacy brands: with AI noise and content slop increasing, trusted legacy brands could regain relative value if they reimagine cost structures and productization.
- Valuations: Erica is skeptical of some high private valuations (mentions Semaphore’s ~$330M as “high at first blush”) and felt Barry/Free Press at $150M looked low given audience and IP potential.
- Attractive businesses now: small, highly profitable, community‑driven companies may be the most interesting investments.
Notable quotes
- “There will never be another Food52… brands are very hard to build.”
- “Bankruptcy wins. It was the most elite, the hardest to come by, and also demanded the highest performance of everyone involved.”
- “More money, more problems.”
- “If somebody comes and wants to buy you, sell now.”
Actionable checklist for founders in distress
- Audit runway: calculate payroll and obligations to the hour/day if needed.
- Prioritize buyers: identify and engage likely strategic acquirers early.
- Cut quickly: target high‑burn experiments and redundant business lines for immediate cuts.
- Centralize finance: unify accounting, reporting, and tech stacks to enable rapid due diligence.
- Protect core community/IP: prepare a clear narrative of what is unique and monetizable about your brand.
- Get legal/financial advisors who know Chapter 11 and asset sales early.
Where Erica goes next
- She’s staying in media: exploring narrower community and brand plays (writing on Substack, building “Work” community), and is intrigued by bankruptcy‑adjacent media (e.g., Petition 11).
- Unlikely to return to manufacturing/furniture; interested in reapplying lessons to media and community‑first businesses.
Who should listen
- Media founders, executives, and investors interested in content‑to‑commerce models, turnaround work, M&A in media, or the operational realities of bankruptcy.
- Anyone building community‑driven media brands who wants practical, war‑room lessons on focus, cost discipline, and sale timing.
Credits: Host Dylan Byers; guest Erica Ayers‑Baden. Produced by Odyssey in partnership with Puck.