Popular food and cooking website files surprise bankruptcy

Most websites lose money creating content.

That’s because Google no longer drives traffic to publishers like it used to.

Nearly 60% of Google searches end without a click in 2024
Meanwhile, almost 30% of clicks go to Google’s properties, and about 36% of clicks go to the open web, a new zero-click search study finds. Source: A zero-click search study published by Rand Fishkin, SparkToro’s CEO and co-founder, based on clickstream data from Datos, which is owned by Semrush.

As more searches end without a click, even popular content brands struggle to turn eyeballs into revenue.

Very few content-driven brands have succeeded on the internet. That’s because creating good content costs money, and advertising rates don’t necessarily support those costs.

Former Microsoft CEO Steve Ballmer forecast both the move of content to digital and the challenge in monetizing that content in a 2009 speech.

“All content consumed will be digital, we can [only] debate if that may be in one, two, five or 10 years,” Ballmer said at Cannes Lions. “There won’t be newspapers, magazines, and TV programs…In 10 years it will all be online. Static content won’t cut it in the future.”

Ballmer was not entirely right as some legacy content still exists and small amounts of it, like sports on network television, still thrives, but his general point rings true as does what he said next.

“Some say that the ad-funded model has not led to profitability. Google’s search site makes money, but past Google, is there a publisher with an ad-funded or fee-based model that has made lots of money? No,” he added.

That’s not entirely true, as there are some successful ad-driven content companies (like the one that published this article, The Arena Group), but making money in content with an ad-driven site, even one supported with e-commerce, has proven to be very challenging.

Now, another popular content and commerce brand, Food52, has filed for Chapter 11 bankruptcy.

Food52 has been struggling

One brand feeling the pressure of digital monetization is Food52, which recently filed for Chapter 11 bankruptcy.

Food52 had a major layoff back in March.

Workforce reduced by 40% (from 140 to 90 employees).
Revenue target of $60M in 2025, but unprofitable.
Exploring a sale to one or multiple acquirers. Source: I Alternative Media reported.

These layoffs and revenue struggles show just how difficult it is for even well-known content brands to survive online.

The company has been pursuing a sale since Nov.

“The food media publisher Food52 is exploring a sale, according to an internal email viewed by ADWEEK. The memo, which was sent by chief executive Erika Ayers Badan, marks the clearest sign yet that the food and lifestyle publisher’s years-long turnaround effort may give way to new ownership,” ADWEEK reported.

No sale price has been specified, though Badan wrote in her email that Food52 is in the “early stages” of exploring a sale and may sell to one or multiple acquirers.

More Bankruptcy:

The company, which includes the Food52 publisher, the manufacturing firm Schoolhouse, and design brand Dansk, hoped to generate $60 million in revenue this year, although it was unprofitable, according to previous ADWEEK reporting.

Now, the company will no longer have full control of that process as it has filed for Chapter 11 bankruptcy.

Recipes are a challenging content form to make money on.

Shutterstock

Making money in content is very hard

Having been a digital editor since the late 90s, when I once worked at a company that spent over $100,000 fulfilling a $50,000 ad contract with a major car brand, I have had a front row seat to the challenges facing online content creators.

The challenge, and it’s very hard to do this with specialized, but not overly differentiated content like recipes, is to get enough eyeballs that advertising pays for your content and then some.

That’s hard to do with recipes and cooking tips where the difference between lousy content generated by AI can still give you a serviceable recipe for chicken parmesan.

I have spent decades working on the problem of producing human, not artificial intelligence, content that drives enough viewers to make money. That’s a puzzle that, on most days, I have solved, but it’s a challenge very few editors and publications have beaten,

Digital advertising continues to grow as a proportion of total advertising revenue, a trend driven in large part by growth in advertising on mobile devices.

“In 2022, according to eMarketer estimates, digital advertising grew to $245 billion, an increase from $221 billion in 2021 and $161 billion in 2020. It was estimated to comprise nearly three-quarters of all advertising revenue (72%), compared with 70% in 2021 and 64% in 2020,” according to eMarketer estimates reported by Pew Research Center in their State of the News Media 2023 report.

Despite digital advertising now comprising nearly three-quarters of total ad revenue, many content-driven publishers struggle to capture a meaningful share, making profitability elusive.

Food52 files Chapter 11 bankruptcy

New bankruptcy filing: Food52, Inc. has filed a Chapter 11 petition in bankruptcy court (Delaware) under case number 1:25‑bk‑12277, indicating they’ve initiated formal reorganization proceedings, according to PacerMonitor.
Reorganization process: Filing under Chapter 11 suggests Food52 intends to reorganize its debts and continue operating while working with creditors under court supervision, documents filed on PacerMonitor reveal.
Revenue decline and strategy shift: After explosive growth during the pandemic, the company saw revenues fall sharply. It shifted focus toward e-commerce and commerce brands (like Schoolhouse and Dansk) while de‑emphasizing its original content/community model, Adweek reported.
Business continues: Under typical Chapter 11 practice, the company generally remains open and operating, now as a “debtor in possession,” according to the United States Courts.
Debt restructuring: Food52 will propose a reorganization plan to restructure obligations to creditors, possibly selling assets or brands as part of that plan, according to its filings on PacerMonitor.

Food52 has been struggling

Making money in content is very hard

Food52 files Chapter 11 bankruptcy

Food52 files Chapter 11 bankruptcy