Facing stale cereal sales, Kashi Co. will uproot its longtime La Jolla headquarters and lay off dozens of local workers in the process.
The Kellogg Co.'s brand will lay off 28 employees at 4276 Executive Square in La Jolla, effective March 8, according to a notice filed with California.
Since being acquired by Kellogg (NYSE: K) in 2000, Kashi has expanded its lineup of health foods to include granola bars, cookies, crackers, cereal bars, frozen entrees and waffles.
Despite being owned by a breakfast conglomerate, whose brands include Pop-Tarts, Rice Krispies and Nutri-Grain, Kashi has operated independently in La Jolla since being founded in 1984.
Its University Town Center office sits in a pristine area for financial, legal and skin care companies, just a few miles from the beach. Now the California dream is over. The 29-year-old company is being forced to move in with its parents, more than 2,000 miles away.
“By joining Kellogg at its Battle Creek, Mich., headquarters, Kashi will be best positioned for continued growth,” said Kris Charles, Kellogg spokesperson, in a statement to The Daily Transcript.
Being under one roof will allow Kellogg to keep a close eye on the brand. During an earnings call Feb. 5, Kellogg revealed it’s “not happy” with the performance of its Kashi business.
While Kashi is getting gobbled up in the frozen food aisle, too many cereal boxes are staying on shelves.
“In cereal, we do have a couple challenges,” said Kellogg's CEO John Bryant.
Some of the innovation in recent years has not been as strong as its core Kashi products, Bryant admitted.
Kashi will retain a small satellite office in La Jolla, with 12 employees continuing to work from there or from sales offices around the United States, confirmed Kellogg.
“We do not take lightly the impact on the Kashi team and are working with impacted employees to consider alternative roles across Kellogg Company, where possible,” Charles said.
The Kashi story dates back to 1983, when the coastal beauty of La Jolla inspired its founders Phil and Gayle Tauber to experiment with different whole grains and seeds. They developed a unique recipe using seven whole grains and sesame, and today Kashi's motto remains "7 Whole Grains on a Mission."
Kashi has faced recent flack for its branding on ads, packaging and websites.
Last spring some fans on social media gave the cold cereal a cold shoulder, arguing its “natural” descriptions led consumers to think the cereal was organic and free of genetically altered ingredients.
In reality, the soy in its cereals comes from soybeans that have had a gene inserted to shield them from Roundup, an herbicide that destroys weeds.
The company’s defense was that the Food and Drug Administration has not opted to regulate the term “natural.”
Kellogg plans to give consumers better branding in the near future.
“Some of the brand building has moved away from the core benefit of Kashi, so we have an opportunity to sharpen our focus a little bit more,” said Bryant. “We want to see Kashi moving in the right direction over the next six months.”
Despite its disappointment in Kashi, the parent company is pleased with its newest member of the family: Pringles.
Kellogg acquired the popular potato chips line in 2012, helping fourth-quarter sales pop 18 percent to $3.56 billion.