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Karat Packaging is like an Amazon Business for restaurant disposables.

Karat Packaging is the Sysco for disposable food packaging.

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Karat Packaging (KRT) primarily offers the following major products and services:

• Disposable Foodservice Products: A comprehensive range of single-use items including cups, food containers, cutlery, straws, and bags, primarily serving restaurants, coffee shops, and other foodservice establishments.
• Foodservice Accessories & Supplies: Essential items such as gloves, aprons, and other related products critical for the hygiene and operation of foodservice businesses.
• Custom Printing and Branding Services: Customization options for their disposable products, enabling businesses to print logos and designs on cups, bags, and containers to enhance brand visibility.

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Major Customers of Karat Packaging (KRT)

Karat Packaging Inc. (KRT) primarily sells its disposable foodservice products and related items to other businesses (B2B) rather than directly to individuals.

According to its latest SEC filings (e.g., 2023 10-K), Karat Packaging emphasizes that it has a diverse customer base and is not dependent on any single customer or small group of customers for a substantial portion of its revenue. Specifically, no single customer accounted for 10% or more of its net sales for the years ended December 31, 2023, 2022, or 2021.

However, Karat Packaging's customer base spans several categories of businesses. Examples of the types of customers and specific companies mentioned in their public disclosures, representing parts of their diverse sales channels, include:

• National and Regional Distributors: These companies purchase Karat's products to then distribute them to a wide array of foodservice establishments.
  • Sysco Corporation (NYSE: SYY)
  • US Foods Holding Corp. (NYSE: USFD)
  • Bunzl plc (LSE: BNZL)
• Restaurant Chains: Karat Packaging supplies various national and regional restaurant operations.
  • McDonald's Corporation (NYSE: MCD)
  • Subway (privately held)
• Other Foodservice Operators and Retailers: This broad category includes customers such as coffee shops, bubble tea shops, bakeries, supermarkets, convenience stores, and various e-commerce platforms that resell Karat's products to smaller businesses and individual consumers. Specific public company names within this category are not consistently highlighted as "major" in SEC filings due to the highly fragmented and diverse nature of these sales channels.

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• Formosa Plastics Group (TWSE: 1301)
• ExxonMobil (NYSE: XOM)
• LyondellBasell (NYSE: LYB)

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Alan Yu, Chairman of the Board and Chief Executive Officer

Mr. Yu co-founded Karat Packaging Inc. in 2000, which originated from a boba tea shop that he also co-founded in 2000, Lollicup USA, Inc.. He identified the opportunity to directly source bubble tea supplies, leading to the establishment of the Tea Zone® brand in 2003 and the Karat® brand for packaging and disposable goods in 2004. Lollicup USA, Inc. later divested its retail tea business in 2013 to concentrate on distribution and manufacturing, with Mr. Yu being a driving force in the company's evolution into a prominent supplier of sustainable packaging.

Jian Guo, Director, Chief Financial Officer and Principal Accounting Officer

Ms. Guo was appointed Chief Financial Officer of Karat Packaging in February 2022. Her previous roles include senior vice president and corporate controller at Resources Connection, Inc., a Nasdaq-listed global consulting firm, and senior director of financial reporting at Newegg Inc., an international tech-focused e-retailer. She also spent nine years at Ernst & Young, LLP, where she assisted with client IPOs and SEC filings and managed various audit teams.

Marvin Cheng, Co-Founder, Vice President, Manufacturing and Secretary

Mr. Cheng co-founded Karat Packaging Inc. in 2000, alongside Alan Yu. He also co-founded Lollicup USA, Inc. in 2000. He brings two decades of experience in managing supply chains and overseeing manufacturing operations.

Daniel Quire, Chief Revenue Officer

Mr. Quire serves as the Chief Revenue Officer and is primarily focused on expanding sales within the Eastern U.S.. He possesses over a decade of experience in sales management within the food service industry.

Amy Tsen, Vice President Finance

Ms. Tsen, as Vice President Finance, is responsible for leading the preparation of financial statements, managing tax filings, and overseeing general accounting functions.

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Karat Packaging Inc. (KRT) faces several key business risks, primarily stemming from its supply chain and the highly competitive nature of the packaging industry.

1. Tariffs, Import Duties, and Sourcing Volatility: A predominant risk for Karat Packaging is its significant reliance on imported products, which exposes the company to fluctuating tariffs and import duties. These factors have historically led to considerable pressure on gross margins and increased costs of goods sold. Management has acknowledged ongoing trade volatility, higher import duties and tariffs, and foreign currency fluctuations as key risks, actively working to adjust sourcing strategies and increase domestic sourcing to mitigate these effects. For instance, a U.S. Customs and Border Protection (CBP) investigation concluded in February 2024 that Karat was responsible for transshipping lightweight thermal paper from China through Taiwan, further highlighting the complexities and risks associated with international sourcing.
2. Highly Competitive Packaging Sector and Pricing Pressure: The packaging industry is characterized by intense competition with numerous players vying for market share. This competitive landscape, combined with Karat Packaging's strategic pivot towards an asset-light model focused on supplying rather than manufacturing, presents a risk to its control over production prices and its ability to raise prices for customers. There is evidence suggesting that Karat may lack strong pricing power, as evidenced by past sales trends, indicating that tariff increases are more likely to impact margins rather than being fully passed on to consumers.
3. Supplier Non-Compliance and Reputational Risk: Karat Packaging's business model involves offering third-party products, which means its reputation and customer trust are partially dependent on its suppliers and manufacturers adhering to ethical and legal standards. The company faces significant risks if these external entities fail to comply with such standards, as a lack of direct control could lead to severe reputational damage, potential litigation, and increased operational costs, ultimately impacting Karat Packaging's financial health and operational performance.

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Karat Packaging Inc. (KRT) operates primarily in the manufacturing and distribution of disposable foodservice products, including cups, lids, food containers, cutlery, and straws, available in various materials such as plastic, paper, and eco-friendly options. The company also has a strong focus on sustainable and eco-friendly products.

Addressable Markets for Karat Packaging's Main Products and Services:

Disposable Foodservice Packaging and Disposable Tableware Market

• The global foodservice packaging market was valued at an estimated $120 billion in 2024 and is projected to reach $180 billion by 2033, growing at a Compound Annual Growth Rate (CAGR) of 4.5% from 2025 to 2033. Another estimate places the global foodservice packaging market size at US$ 67.9 billion in 2024, with a forecast to expand at a CAGR of 6% to reach US$ 121.7 billion by 2034.
• The United States foodservice packaging market has a significant market size of $35 billion, with a CAGR of 5%.
• The United States disposable tableware market was valued at approximately $5.37 billion in 2024 and is expected to grow to $8.42 billion by 2034, demonstrating a CAGR of 4.60% during the forecast period of 2025-2034.

Eco-Friendly/Sustainable Packaging Market

• The global sustainable packaging market was valued at $310.00 billion in 2022 and is projected to reach $518.33 billion by 2030, exhibiting a CAGR of 6.70%.
• The United States green packaging market reached $73.8 billion in 2024 and is expected to grow to $107.5 billion by 2033, at a CAGR of 4.06% from 2025 to 2033.
• The U.S. sustainable packaging market is predicted to expand from $51.23 billion in 2025 to $73.81 billion by 2034, growing at a CAGR of 4.15% during this period.

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• Expansion of the new paper bag business: Karat Packaging has secured a two-year contract with a major national chain to supply paper bags, a new product category. This segment is anticipated to contribute up to $100 million in annual sales within a few years, fueled by regulatory shifts favoring paper over plastic.
• Growth in customer accounts and market expansion: The company is actively expanding its customer base, including onboarding additional chain accounts and increasing its presence in the supermarket sector. This expansion to new accounts is a meaningful revenue driver.
• Growth in online sales: Karat Packaging is focusing on increasing its online marketing efforts, building on the significant growth seen in its online business, which reported a 33% increase in the third quarter of 2024 compared to the prior year.
• Development and sales of eco-friendly products: The company is prioritizing and experiencing growth in its eco-friendly product lines, such as compostable single-use disposable products. Sales of these products increased by 9% in Q3 2024 and are expected to continue growing with new launches like rPET cups and lids.

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Share Repurchases

• Karat Packaging initiated its first-ever share repurchase program, authorizing the company to buy back up to $15.0 million of its common stock.
• This program was announced on November 5, 2025, and reflects the board and management's confidence in the company's growth potential and financial strength.
• The repurchases can be made in open-market or private transactions and have no expiration date, though the company is not obligated to purchase any specific amount of shares.

Share Issuance

• Karat Packaging Inc. went public in 2021, and its shares outstanding have been tracked from 2021 to 2025.

Capital Expenditures

• Karat Packaging Inc.'s capital expenditures amounted to -$793k USD as of the financial report for June 30, 2025.
• The company's Capital Expenditures growth rates were 45% over the last year and 52% over the past five years.
• In the last 12 months, capital expenditures were -$4.07 million.