Project Gravity is a cost reduction and optimization strategy that Traeger developed to deal with economic headwinds and shrinking margins from tariffs. They performed a reduction in force earlier this year as Phase 1 of their Project Gravity plan.

As part of other consolidation activities, they plan to reduce their workforce by and additional $8 million as part of Phase 2 of the plan. The reduction was approved by their board of directors.

Similar to what Solo Brands did this year, Traeger is effectively shrinking their cost structure to match the new revenue and margin profile of the business. Phase 1 of Project Gravity was centered around centralizing operations, while the current Phase 2 is about optimizing the centralized operations.

Traeger previously said that they’re going to redirect customers on their website to retailers and stop selling direct to consumer, and stop doing Costco Roadshows. With the SEC filing regarding the reduction in force, they also disclosed that they are going to consolidate their pellet mill operations.

In addition to the market slowdown, Traeger’s pellet sales took a hit when a major retailer started to sell their own house brand pellets, so Traeger likely has significant excess capacity. In previous cost-cutting actions in 2023, they downsized their pellet product operation by closing their Redmond, OR facility. Below is their current pellet production footprint as of their annual report filing earlier this year.

I don’t know the terms in Traeger’s leases, but I’m sure they’re evaluating early termination options or sub-leasing. Looking at their footprint though, the Menlo, GA facility seems like the most obvious facility to close. It’s a large operation with a near lease end date, which should net some decent operating expense reduction. It could create logistic challenges though being their only facility in the Southeast.

Molalla, OR is also an option with a 2027 lease end date, and their other Oregon facility may be able to take on the additional production being much larger. Their Addison, NY facility is owned, so that’s also a possibility given that they aren’t on the hook for a lease agreement if they moved on from it.

Traeger isn’t the only grill company that ramped up pellet production through the Pandemic only to reduce it after. Camp Chef’s parent company at the time acquired a pellet mill during that time and divested it last year.

With the newly announced workforce reduction and additional consolidation activities, Traeger now expects to achieve $58 million in annual run-rate savings. $30 million will come from Phase 1 and $28 million from Phase 2. Project Gravity is expected to be substantially completed by the end of 2026.