UPDATED: Wal-Mart Stores, Inc. has just announced it will sever ties with Paula Deen and her products. The retail chain says it will not make “any new orders beyond what’s already committed.”
With the Food Network’s announcement that it would not be renewing its contract with the Paula’s Home Cooking star, along with QVC, Walmart and others distancing themselves from the celebrity chef and Smithfield Foods cutting ties with her altogether, it appears that Deen’s culinary empire is melting faster than a stick of butter in a hot skillet.
While she is still ranked as the fourth richest celebrity chef according to Forbes in 2012, her net worth of $17 million is dropping fast.
“I would estimate the loss of Food Network and Smithfield to be pretty huge,” says Forbes writer Caleb Melby, who estimates that Deen has taken a post-scandal hit of $3 million to $4.5 million. ”The important thing is a ripple effect. Without the Food Network, which is her primary platform for promoting her Smithfield hams and cookbooks and magazines, how is that going to affect the categories that this [loss of exposure] doesn’t directly effect?”
According to the magazine, Deen made $4.5 million in 2008 and has been on an upward trajectory every since, banking $17 million in 2012. Until now.
“To see [Food Network] who has been so closely aligned to her — they both grew famous and wealthy together — drop her, has created a domino effect,” Melby added. “It’s made a lot of companies that thought they could wait for this to blow over second-guess themselves.”
In addition to the $2.5 million that she lost from Food Network cancelling her contract, Deen’s empire also includes a magazine, cookbooks, a home furnishing line, independent TV appearances, restaurants and licensing deals with Walmart, Serta mattresses and Kaleen Rugs. Forbes also reports that her role as a spokeswoman for a pharmaceutical company (tied to her type 2 diabetes) is worth $6 million.
For Paula Deen, image is everything, and that’s what’s hurting most. “What we see, and this is where the dominoes are falling right now, where she makes most of her money is licensing and merchandising at 32 percent,” says Melby. “So when we see Smithfield pulling out and QVC considering pulling out, that could be a huge blow to her earning capacity. But, let’s say she loses every licensing and endorsing agreement, we are still looking at her making about $7 million a year.”
And thanks to her diehard customers and fans, Paula is expected to still maintain her restaurants which account for about 30 percent of her income.