BranchOut Food Reports Record $3.2M in Q1 Revenue Following Peru Factory Ramp-Up, National Retail Expansion, and $5–6M Ingredient Channel Partnership

Rhea-AI Summary

BranchOut Food (NASDAQ: BOF) reported record Q1 2025 revenue of $3.2 million, up 118% year-over-year, marking the first full quarter of operations at its new 50,000-square-foot Peru facility. The facility, capable of $40M+ annual production, is now fully operational. The company expanded its warehouse club partnership to five U.S. regions and signed a strategic partnership with MicroDried, projecting $5-6 million in annual ingredient sales.

Key developments include expansion of retail products through major warehouse clubs, with nearly $3M in H1 2025 sales, and a growing private-label presence. The company is benefiting from 30% tariffs on Chinese imports, giving it a competitive advantage with its Peru-based production and U.S.-based packaging. Despite Q1 net losses due to startup costs and operational challenges, BranchOut expects to be debt-free by year-end 2025 with improving margins throughout the year.

Positive

• Record Q1 revenue of $3.2M, representing 118% YoY growth
• New Peru facility fully operational with $40M+ annual production capacity
• Expanded warehouse club partnership to five U.S. regions with $3M in H1 2025 sales
• Strategic partnership with MicroDried expected to generate $5-6M in annual ingredient sales
• Competitive advantage from 30% Chinese tariffs due to Peru-based production
• On track to be debt-free by year-end 2025

Negative

• Reported net loss in Q1 2025
• $160,000 in air freight expenses and $200,000 in excess raw material costs due to compressed timelines
• Low facility utilization in Q1 affecting margins
• Delayed warehouse club order shifted from Q1 to Q2

Insights

Financial Analyst

BranchOut's 118% revenue growth shows operational transition despite temporary margin pressures; complete vertical integration suggests promising financial trajectory.

BranchOut Food has delivered an impressive 118% year-over-year revenue increase to $3.2 million in Q1 2025, marking a critical inflection point in the company's growth trajectory. This quarter represents the first full operational period for their 50,000-square-foot Peru facility, which transforms their business model by enabling vertical integration and $40+ million annual production capacity.

Despite the strong top-line growth, BOF reported a net loss in Q1 driven by three temporary factors: 1) non-cash depreciation and interest expenses from the Peru facility investment, 2) approximately $360,000 in one-time costs ($160,000 in expedited air freight and $200,000 in premium raw material pricing) to fulfill backlogged orders, and 3) underutilization of the new facility, which amplified fixed overhead costs per unit. These factors are typical in manufacturing ramp-ups rather than structural issues.

The business shows significant momentum across multiple revenue channels. Their warehouse club partnership has expanded to five U.S. regions with multiple products, driving nearly $3 million in H1 2025 sales already. Their ingredient business partnership with MicroDried projects $5-6 million in annual sales, with initial orders already shipping. The 30% tariff on Chinese imports creates a structural advantage for BOF against competing freeze-dried products.

Q2 is already showing operational improvements with facility utilization up 50% over Q1. The company has begun paying down debt with operating cash flow and projects being debt-free by year-end 2025. These metrics suggest BOF has successfully navigated the capital-intensive setup phase and is positioned to realize improved margins as volumes increase and temporary costs normalize.

Supply Chain Expert

BOF's transformation to a fully vertically integrated operation represents a fundamental competitive advantage in their market. The completion of their Peru facility gives them complete control over the entire production process—from raw material sourcing to final production—creating significant operational leverage. This strategic positioning is particularly valuable given the current 30% tariff on Chinese imports, which puts many competitors relying on Chinese manufacturing at a severe disadvantage.

The operational challenges mentioned in Q1 are textbook examples of startup inefficiencies that typically resolve with time: expedited air freight costs ($160,000), premium raw material pricing ($200,000), and low facility utilization driving up per-unit overhead. These are transitory issues rather than structural problems. The 50% increase in utilization already seen in Q2 indicates the company is rapidly optimizing operations.

Their supply chain configuration—combining Peru-based production with U.S.-based packaging—creates a tariff-efficient model that positions them to capture market share from both branded competitors and private label manufacturers currently sourcing from China. This hybrid approach allows them to optimize labor costs while maintaining nimble market response capabilities through U.S. finishing operations.

With production capacity supporting $40+ million in annual output, BOF has built significant operational scalability. This capacity, combined with multi-channel distribution (warehouse clubs, national retail, ingredient sales, and the upcoming DTC channel), creates a resilient revenue structure that can adapt to changing market conditions and customer preferences. The company has effectively transformed from a brand into a platform capable of serving multiple market segments simultaneously.

Company Reaches Full Vertical Integration with Record Sales; Chinese Tariff Drive Major Retail Opportunity; Strong Momentum Across All Sales Channels

Key Highlights:

• Q1 Revenue of $3.2 Million, up 118% with strong growth anticipated throughout the year
• Targeted to be debt-free by YE 2025
• Peru Facility Fully Operational, supporting $40M+ annual production capacity
• Expanded Warehouse Club Partnership, now spanning five U.S. regions with multiple products
• Strategic Ingredient Partnership with MicroDried Signed, with multiple containers shipped in Q1 and projecting $5–6 million in annual ingredient sales.
• DTC & Brand Strategy Bolstered with the appointment of an experienced Chief Brand Officer to focus on launching the channel.
• Tariff Tailwinds Favor BranchOut: With tariffs at 30% on imports from China, BranchOut’s Peru-based bulk production combined with U.S. based retail packaging offers a clear cost advantage as retailers scramble to find alternatives.
  

BEND, Ore., May 15, 2025 (GLOBE NEWSWIRE) -- BranchOut Food Inc. (NASDAQ: BOF), a leading food technology company specializing in its patented GentleDry™ dehydrated snacks and ingredients, today announced record Q1 2025 revenue of $3.2 million, representing a 118% year-over-year increase and highlighting major operational milestones. This performance marks a turning point for BranchOut, as Q1 was the first full quarter of operations at its 50,000-square-foot production facility in Peru. After dedicating much of 2024 to the construction, buildout, and operational ramp-up of the factory, the company is now realizing the benefits of that investment. The facility houses the largest GentleDry™ capacity in the world, supports more than $40 million in annual production, and gives BranchOut full control over product quality, cost structure, and supply chain efficiency.

“We spent 2024 investing heavily in building out the factory. Now that it’s fully operational, Q1 shows what’s possible,” said Eric Healy, CEO of BranchOut. “We’re just getting started. As our team settles in and gains momentum, we expect meaningful improvements in efficiency throughout Q2 and beyond.”

Retail Acceleration: Warehouse Club & National Retailer Growth

BranchOut’s partnership with the nation’s largest warehouse club continues to exceed expectations. Following strong sales in 2024, the club has expanded its orders to five U.S. regions and increased its product count, driving nearly $3 million in sales in H1 2025 alone. Flagship products include:

• Bell Pepper Crisps – currently selling in the Los Angeles and Bay Area regions, set to expand into Texas and the Midwest soon.
• Pineapple Chips – back in Southeast clubs with nearly $900K in reorders after continued exceptional sales
• Organic Chewy Banana Bites – launching soon in Southern California and Hawaii
• Brussels Sprout Crisps, Strawberry Halves, Dragon Fruit Chips, Mango Crisps, and several other innovations are currently under consideration by the Warehouse Club, highlighting BranchOut’s ongoing ability to develop and deliver innovative, high-quality products.

In addition, BranchOut has five private-label products in the nation’s largest retailer, including its innovative Brussels Sprout Crisps and Carrot Sticks, now available nationwide.

Strategic Expansion Into Direct-to-Consumer (DTC)

To complement its growing branded business, BranchOut is expanding into the direct-to-consumer (DTC) channel with a focused strategy centered on e-commerce, subscriptions, and digital marketing. The company sees strong opportunity in this category, as many competing freeze-dry brands are produced in China. With newly imposed tariffs, BranchOut’s offers a significant pricing advantage, along with superior texture, flavor, and nutritional retention thanks to its proprietary GentleDry™ technology.

Ingredient Channel & Industrial Expansion

BranchOut has entered into a strategic partnership with MicroDried to lead sales and distribution in the industrial ingredient channel, an initiative expected to generate $5–6 million in annual revenue. Leveraging its deep relationships with major CPG companies, MicroDried is actively expanding market access for BranchOut’s high-quality ingredients. The Company successfully delivered its first order to MicroDried in Q1 and is already ramping up production for multiple follow-on orders in Q2. In parallel, BranchOut has begun fulfilling dried cherry tomatoes for leading salad kit producers and e-commerce grocery platforms, further validating the scalability and versatility of its ingredient platform.

Tariff Tailwinds Favor BranchOut

With U.S. tariffs on Chinese imports reaching 30%, BranchOut is uniquely positioned to benefit from a major shift in global supply chains. A lot of freeze-dried retail products sold in the U.S.—both branded and private label—are currently manufactured in China. In contrast, BranchOut’s vertically integrated model, combining Peru-based production with U.S.-based packaging, offers a cost-efficient, scalable, and tariff-advantaged alternative.

Several leading freeze-dried snack brands generate $20M+ in annual sales across grocery and e-commerce channels but rely heavily on Chinese sourcing. BranchOut was already poised to compete aggressively with these brands due to its superior ingredient quality, proprietary GentleDry™ technology, and flexible supply chain. With the addition of steep new tariffs, the company sees a powerful opportunity to disrupt the category and gain meaningful market share.

In parallel, BranchOut is in active discussions with multiple national retailers to replace China-sourced private label SKUs with its own domestic-aligned offerings—providing both pricing stability and supply chain resilience.

Financial Context: Near-Term Losses Reflect Factory Ramp-Up and Strategic Investment

While the company reported a net loss in Q1, a significant portion is attributed to non-cash depreciation and interest expenses related to the recent completion of its state-of-the-art Peru facility. Additionally, one of the company’s largest Club orders was shifted into Q2 due to customer scheduling, resulting in a shortfall in Q1 revenue relative to internal expectations.

Q1 also carried unique startup dynamics. As the factory came online, BranchOut faced a significant manufacturing backlog from orders placed prior to launch. To meet customer deadlines and maintain service levels, the company fast-tracked fulfillment by purchasing higher-cost raw materials and air shipping multiple large orders—resulting in approximately $160,000 in air freight expenses and $200,000 in excess raw material costs. These elevated costs were driven by compressed timelines rather than structural inefficiencies. With proper lead times, the sourcing team expects to secure materials at more favorable pricing going forward, significantly improving cost of goods sold in future quarters.

Further impacting margins, the facility operated at relatively low utilization throughout Q1, amplifying fixed overhead per unit. As sales continue to ramp, these costs will be more efficiently absorbed. Utilization in Q2 is already up more than 50% compared to Q1, and management expects this trend to accelerate throughout the year.

Despite these initial ramp-up challenges, the company began paying down debt with operating cash flow in Q2 and remains on track to be debt-free by year-end. Substantial improvements in gross margin and cost structure are anticipated beginning in Q2 and continuing throughout 2025.

Positioned for Long-Term Growth

“With production scaled, demand surging, and every revenue channel firing, 2025 is shaping up to be a transformational year for BranchOut,” said Healy. “We are building a powerful, profitable, and defensible food platform.”

BranchOut remains committed to innovation, operational discipline, and brand excellence across all channels.

About BranchOut Food Inc.

BranchOut Food is a leading international food technology company, specializing in the production of high-quality dehydrated fruit and vegetable-based products through its proprietary GentleDry Technology. This next-generation dehydration method preserves up to 95% of the original nutrition of fresh produce, offering superior quality and taste. Protected by over 17 patents, BranchOut’s technology enables it to stand out as a trusted brand, ingredient and a private-label supplier. For more information, visit www.branchoutfood.com or follow us on social media here.

For more information:
info@branchoutfood.com

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to expectations or forecasts of future events. Forward-looking statements may be identified using words such as "forecast," "intend," "seek," "target," "anticipate," "believe," "expect," "estimate", "plan," “position”, "outlook," and "project" and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Forward-looking statements with respect to the operations of BranchOut Food, Inc., (the Company) strategies, prospects and other aspects of the business of the Company are based on current expectations that are subject to known and unknown risks and uncertainties, which could cause actual results or outcomes to differ materially from expectations expressed or implied by such forward-looking statements. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Although it may voluntarily do so from time to time, the Company undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

FAQ

What was BranchOut Food's (BOF) revenue growth in Q1 2025?

BranchOut Food reported Q1 2025 revenue of $3.2 million, representing a 118% year-over-year increase.

What is the production capacity of BranchOut's new Peru facility?

The 50,000-square-foot facility in Peru supports more than $40 million in annual production capacity.

How much revenue is expected from BranchOut's partnership with MicroDried?

The strategic partnership with MicroDried is expected to generate $5-6 million in annual revenue from ingredient sales.

How does the Chinese tariff situation benefit BranchOut Food (BOF)?

With 30% tariffs on Chinese imports, BranchOut's Peru-based production and U.S.-based packaging offers a cost advantage over competitors who source from China.

When does BranchOut Food (BOF) expect to become debt-free?

The company expects to be debt-free by year-end 2025.