Karat Packaging (KRT) 10-K 16 Mar 23 2022 FY Annual report Financial data

Cover

Cover - USD ($)	12 Months Ended
	Dec. 31, 2022	Mar. 14, 2023	Jun. 30, 2022
Cover [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-40336
Entity Registrant Name	Karat Packaging Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-2237832
Entity Address, Address Line One	6185 Kimball Avenue
Entity Address, City or Town	Chino
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	91708
City Area Code	626
Local Phone Number	965-8882
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	KRT
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 95,868,312
Entity Common Stock, Shares Outstanding		19,887,457
Documents Incorporated by Reference	Portions of the registrant’s Proxy Statement for the 2023 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended December 31, 2022.
Entity Central Index Key	0001758021
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false

Audit Information

Audit Information	12 Months Ended
	Dec. 31, 2022
Audit Information [Abstract]
Auditor Firm ID	243
Auditor Name	BDO USA, LLP
Auditor Location	Los Angeles, California

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents (including $2,022 and $1,163 associated with variable interest entity at December 31, 2022 and 2021, respectively)	$ 16,041	$ 6,483
Accounts receivable, net of allowance for bad debt of $1,260 and $250 at December 31, 2022 and 2021, respectively (including $6 and $24 associated with variable interest entity at December 31, 2022 and 2021, respectively)	29,912	32,776
Inventories	71,206	58,472
Prepaid expenses and other current assets (including $191 and $63 associated with variable interest entity at December 31, 2022 and 2021, respectively)	6,641	5,141
Total current assets	123,800	102,872
Property and equipment, net (including $45,399 and $46,612 associated with variable interest entity at December 31, 2022 and 2021, respectively)	95,568	93,475
Deposits	12,413	6,885
Goodwill	3,510	3,510
Intangible assets, net	353	380
Operating right-of-use assets	15,713	0
Other assets (including $38 and $65 associated with variable interest entity at December 31, 2022 and 2021, respectively)	818	477
Total assets	252,175	207,599
Current liabilities
Accounts payable (including $2 and $136 associated with variable interest entity at December 31, 2022 and 2021, respectively)	18,559	18,470
Accrued expenses (including $625 and $68 associated with variable interest entity at December 31, 2022 and 2021, respectively)	9,005	7,813
Related party payable	4,940	2,003
Income taxes payable (including $0 and $9 associated with variable interest entity at December 31, 2022 and 2021, respectively)	0	85
Customer deposits (including $165 and $88 associated with variable interest entity at December 31, 2022 and 2021, respectively)	1,281	1,215
Debt, current portion (including $957 and $1,178 associated with variable interest entity at December 31, 2022 and 2021, respectively)	957	1,178
Operating lease liabilities, current portion	4,511	0
Total current liabilities	39,253	30,764
Deferred tax liability	5,156	5,634
Long-term debt, net of current portion and debt discount of $216 and $200 at December 31, 2022 and December 31, 2021, respectively (including $41,558 and $35,339 associated with variable interest entity at December 31, 2022 and 2021, respectively, and debt discount of $216 and $200 associated with variable interest entity at December 31, 2022 and 2021, respectively)	41,558	35,339
Operating lease liabilities, net of current portion	11,623	0
Other liabilities (including $1,302 and $2,637 associated with variable interest entity at December 31, 2022 and 2021, respectively)	2,652	3,837
Total liabilities	100,242	75,574
Commitments and Contingencies (Note 18)
Karat Packaging Inc. stockholders’ equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding, as of December 31, 2022 and 2021	0	0
Common stock, $0.001 par value, 100,000,000 shares authorized, 19,908,005 and 19,885,005 shares issued and outstanding, respectively, as of December 31, 2022 and 19,827,417 and 19,804,417 shares issued and outstanding, respectively, as of December 31, 2021	20	20
Additional paid in capital	85,792	83,694
Treasury stock, $0.001 par value, 23,000 shares as of both December 31, 2022 and 2021	(248)	(248)
Retained earnings	56,118	39,434
Total Karat Packaging Inc. stockholders’ equity	141,682	122,900
Noncontrolling interest	10,251	9,125
Total stockholders’ equity	151,933	132,025
Total liabilities and stockholders’ equity	$ 252,175	$ 207,599

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Cash and cash equivalents	$ 16,041	$ 6,483
Allowance for bad debt	1,260	250
Prepaid expenses and other current assets	6,641	5,141
Property and equipment, net	95,568	93,475
Other assets	818	477
Accounts payable	18,559	18,470
Accrued expenses	9,005	7,813
Income taxes payable	0	85
Customer deposits	1,281	1,215
Long-term debt, current portion	957	1,178
Long-term debt, net of current portion	216	200
Other liabilities	$ 2,652	$ 3,837
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	19,908,005	19,827,417
Common stock, shares outstanding (in shares)	19,885,005	19,804,417
Treasury stock, par value (in dollars per share)	$ 0.001	$ 0.001
Treasury stock, shares (in shares)	23,000	23,000
VIE, Primary Beneficiary
Cash and cash equivalents	$ 2,022	$ 1,163
Allowance for bad debt	6	24
Prepaid expenses and other current assets	191	63
Property and equipment, net	45,399	46,612
Other assets	38	65
Accounts payable	2	136
Accrued expenses	625	68
Income taxes payable	0	9
Customer deposits	165	88
Long-term debt, current portion	957	1,178
Long-term debt, net of current portion	41,558	35,339
Debt discount	216	200
Other liabilities	$ 1,302	$ 2,637

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Statement [Abstract]
Net sales	$ 422,957,000	$ 364,244,000
Cost of goods sold	290,871,000	256,417,000
Gross profit	132,086,000	107,827,000
Operating expenses:
Selling expenses	35,844,000	32,261,000
General and administrative expenses (including $2,775 and $2,550 associated with variable interest entity for the years ended December 31, 2022 and 2021, respectively)	66,227,000	52,421,000
Total operating expenses	102,071,000	84,682,000
Operating income	30,015,000	23,145,000
Other income (expenses)
Rental income (including $949 and $931 associated with variable interest entity for the years ended December 31, 2022 and 2021, respectively)	949,000	931,000
Other (expense) income (including $0 and $9 other income associated with variable interest entity for the years ended December 31, 2022 and 2021, respectively)	(228,000)	259,000
Gain (loss) on foreign currency transactions	1,568,000	(412,000)
Interest income (including $2,171 and $1,270 associated with variable interest entity for the years ended December 31, 2022 and 2021, respectively)	2,226,000	1,512,000
Interest expense (including $1,821 and $1,781 associated with variable interest entity for the years ended December 31, 2022 and 2021, respectively)	(2,017,000)	(2,907,000)
Gain on forgiveness of debt	0	5,000,000
Total other income, net	2,498,000	4,383,000
Income before provision for income taxes	32,513,000	27,528,000
Provision for income taxes	6,676,000	5,089,000
Net income	25,837,000	22,439,000
Net income attributable to noncontrolling interest	2,189,000	1,661,000
Net income attributable to Karat Packaging Inc.	$ 23,648,000	$ 20,778,000
Basic and diluted earnings per share:
Basic (in dollars per share)	$ 1.19	$ 1.13
Diluted (in dollars per share)	$ 1.19	$ 1.12
Weighted average common shares outstanding, basic (in shares)	19,824,911	18,409,243
Weighted average common shares outstanding, diluted (in shares)	19,925,905	18,566,260

CONSOLIDATED STATEMENTS OF IN_2

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
General and administrative expenses	$ (66,227)	$ (52,421)
Rental income	949	931
Other (expense) income	(228)	259
Interest income	2,226	1,512
Interest expense	(2,017)	(2,907)
VIE, Primary Beneficiary
General and administrative expenses	(2,775)	(2,550)
Rental income	949	931
Other (expense) income	9	0
Interest income	2,171	1,270
Interest expense	$ (1,821)	$ (1,781)

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($)	Total	Total Stockholders’ Equity Attributable to Karat Packaging Inc.	Common Stock	Treasury Stock	Additional Paid-in Capital	Retained Earnings	Noncontrolling Interest
Balance at the beginning of period (in shares) at Dec. 31, 2020			15,190,000
Balance at the beginning of period at Dec. 31, 2020	$ 39,868,000	$ 32,404,000	$ 15,000	$ (248,000)	$ 13,981,000	$ 18,656,000	$ 7,464,000
Treasury stock, balance at the beginning of period (in shares) at Dec. 31, 2020				(23,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with our initial public offering, net of issuance costs (in shares)			4,542,500
Issuance of common stock in connection with our initial public offering, net of issuance costs of $5,088	67,592,000	67,592,000	$ 5,000		67,587,000
Cash dividends declared ($0.35 per share)	0
Issuance of common stock upon vesting of restricted stock units (in shares)			84,917
Stock-based compensation	$ 2,026,000	2,026,000			2,026,000
Exercise of stock options (in shares)	10,000		10,000
Exercise of stock options	$ 100,000	100,000			100,000
Net income	$ 22,439,000	20,778,000				20,778,000	1,661,000
Balance at the end of period (in shares) at Dec. 31, 2021	19,804,417		19,827,417
Balance at the end of period at Dec. 31, 2021	$ 132,025,000	122,900,000	$ 20,000	$ (248,000)	83,694,000	39,434,000	9,125,000
Treasury stock, balance at the end of period (in shares) at Dec. 31, 2021	(23,000)			(23,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared ($0.35 per share)	$ (6,964,000)	(6,964,000)	$ 0			(6,964,000)
Issuance of common stock upon vesting of restricted stock units (in shares)			75,588
Stock-based compensation	$ 2,047,000	2,047,000			2,047,000
Exercise of stock options (in shares)	5,000		5,000
Exercise of stock options	$ 51,000	51,000			51,000
Noncontrolling interest tax withholding	(1,063,000)	0					(1,063,000)
Net income	$ 25,837,000	23,648,000				23,648,000	2,189,000
Balance at the end of period (in shares) at Dec. 31, 2022	19,885,005		19,908,005
Balance at the end of period at Dec. 31, 2022	$ 151,933,000	$ 141,682,000	$ 20,000	$ (248,000)	$ 85,792,000	$ 56,118,000	$ 10,251,000
Treasury stock, balance at the end of period (in shares) at Dec. 31, 2022	(23,000)			(23,000)

CONSOLIDATED STATEMENTS OF ST_2

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Statement of Stockholders' Equity [Abstract]
Net of issuance costs		$ 5,088
Dividends paid to stockholders (in dollars per share)	$ 0.35

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities
Net income	$ 25,837	$ 22,439
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	10,405	10,044
Adjustments to allowance for bad debt	1,010	0
Adjustments to inventory reserve	6	68
Write-off of inventory	3,470	1,424
Gain on sale of asset	(32)	0
Change in fair value of interest rate swap	(2,159)	(1,512)
Amortization of loan fees	40	18
Deferred income taxes	(478)	(483)
Stock-based compensation	2,047	2,026
Gain on forgiveness of debt	0	(5,000)
Amortization of operating right-of-use assets	3,822	0
Impairment of deposit	465	0
(Increase) decrease in operating assets
Accounts receivable	1,854	(8,938)
Inventories	(16,210)	(10,850)
Prepaid expenses and other current assets	(1,514)	1,389
Deposits	(145)	(64)
Other assets	109	(316)
Increase (decrease) in operating liabilities
Accounts payable	89	(1,599)
Accrued expenses	1,571	2,854
Related party payable	2,937	(3,035)
Income taxes payable	(85)	44
Customer deposits	66	664
Operating lease liability	(3,780)	0
Other liabilities	149	300
Other payable	0	(794)
Net cash provided by operating activities	29,474	8,679
Cash flows from investing activities
Purchases of property and equipment	(2,657)	(4,175)
Proceeds from disposal of property and equipment	77	0
Deposits paid for property and equipment	(12,090)	(8,206)
Deposits paid for joint venture investment	(5,876)	0
Deposits refunded from joint venture investment	1,876	0
Proceeds from settlement of interest rate swap	825	0
Acquisition of Pacific Cup, Inc., net of cash acquired	0	(900)
Net cash used in investing activities	(17,845)	(13,281)
Cash flows from financing activities
Proceeds from line of credit	21,100	1,470
Payments on line of credit	(21,100)	(34,639)
Proceeds from long-term debt	27,477	15,997
Payments on long-term debt	(21,572)	(39,272)
Proceeds from issuance of common stock in connection with initial public offering, net of issuance costs	0	67,592
Proceeds from exercise of stock options	51	100
Dividends paid to shareholders	(6,964)	0
Payments on capital lease obligations	0	(611)
Payments of noncontrolling interest tax withholding	(1,063)	0
Net cash (used in) provided by financing activities	(2,071)	10,637
Net increase in cash and cash equivalents	9,558	6,035
Cash and cash equivalents
Beginning of year	6,483	448
End of year	16,041	6,483
Supplemental disclosures of non-cash investing and financing activities:
Transfers from deposit to property and equipment	9,859	4,981
Acquisition price of Pacific Cup, Inc. included within deposits	0	100
Gain on forgiveness of debt	0	5,000
Supplemental disclosures of cash flow information:
Cash paid for income tax	8,303	4,836
Cash paid for interest	$ 1,978	$ 2,895

Nature of Operations

Nature of Operations	12 Months Ended
	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Operations	Nature of Operations Lollicup USA Inc. (“Lollicup”) was incorporated on January 21, 2001 under the laws of the State of California as an S-corporation. Effective January 1, 2018, Lollicup elected to convert from an S-Corporation to a C-Corporation. Karat Packaging Inc. (“Karat Packaging”) was incorporated on September 26, 2018 as a Delaware corporation and became the holding company for Lollicup (collectively, the “Company”) through a share exchange with the shareholders of Lollicup. On April 15, 2021, the Company completed an initial public offering of shares of its common stock. The shares are listed on the NASDAQ Global Market under the symbol "KRT". The Company is a manufacturer and distributor of single-use disposable products used in a variety of restaurant and foodservice settings. The Company supplies a wide range of products such as food containers, tableware, cups, lids, cutlery, and straws. The products are available in plastic, paper, biopolymer-based and other compostable forms. In addition to manufacturing and distribution, the Company offers customized solutions to customers, including new product development, design, printing, and logistics services, and distributes certain specialty food and beverages products, such as boba and coffee drinks. The Company supplies products to national and regional distributors, supermarkets, restaurants, and convenience stores as well as to smaller chains and businesses including boutique coffee houses, bubble tea cafes, pizza parlors and frozen yogurt shops. The Company currently operates manufacturing facilities and distribution and fulfillment centers in Chino, California; Rockwall, Texas and Kapolei, Hawaii. In addition, the Company operates six other distribution centers located in Branchburg, New Jersey; Sumner, Washington; Summerville, South Carolina; Kapolei, Hawaii and City of Industry, California.

Summary of Significant Accounti

Summary of Significant Accounting Policies	12 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Basis of Presentation: The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). Principles of Consolidation: The consolidated financial statements include the accounts of Karat Packaging and its wholly-owned and controlled operating subsidiaries, Lollicup, Lollicup Franchising, LLC (“Lollicup Franchising”) and Global Wells, a variable interest entity wherein the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated. Noncontrolling Interests: The Company consolidates its variable interest entity, Global Wells, in which the Company is the primary beneficiary. Noncontrolling interests represent third-party equity ownership interests in Global Wells. The Company recognizes noncontrolling interests as equity in the consolidated financial statements separate from the Company’s stockholders’ equity. The amount of net income attributable to noncontrolling interests is disclosed in the consolidated statements of income. Tax payments made by the Company on behalf of the noncontrolling interests are deducted from their equity balances, as shown in the consolidated statements of stockholders’ equity. Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ materially from the estimates that were assumed in preparing the consolidated financial statements. Estimates that are significant to the consolidated financial statements include stock-based compensation, allowance for doubtful accounts and reserve for slow-moving and obsolete inventory. Reporting Segments: The Company manages and evaluates its operations in one reportable segment. This segment consists of manufacturing and supply of a broad portfolio of single-use products that are used to serve food and beverages and are available in plastic, paper, foam, post-consumer recycled content and renewable materials. It also consists of the distribution of certain specialty food and beverage products, such as boba and coffee drinks, and certain restaurant and warehouse supplies. The Company’s long-lived assets are all located in the United States, and its revenues are all generated in the United States. Earnings per share: Basic earnings per common share is calculated by dividing net income attributable to Karat Packaging, Inc by the weighted average number of common shares outstanding during the related period. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive shares. Out-of-period adjustment: During the the year ended December 31, 2022, the Company recorded a $3,500,000 write off of certain inventory items out of which $879,000 was determined to be out-of-period and was recorded to correct immaterial errors in its previously issued quarterly and annual financial statements. The impact of the inventory out-of-period adjustment was a decrease to inventory, operating income and income before provision for income taxes of $879,000, an increase to cost of goods sold of $879,000, and a decrease to net income of $664,000 for the year ended December 31, 2022. Reclassification: Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported totals for assets and liabilities, shareholders' equity, cash flows or net income. Cash and cash equivalents: The Company considers all highly liquid investments purchased with an original maturity at the date of purchase of three months or less to be cash equivalents. At December 31, 2022 and 2021, cash and cash equivalents were comprised of cash held in money markets, cash on hand and cash deposited with banks. Accounts Receivable and Allowances: Accounts receivable consists primarily of amounts due from customers. Accounts receivable are carried at their estimated collectible amounts and are periodically evaluated for collectability based on past credit history. The Company recognizes an allowance for bad debt on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt write-offs, current past due customers in the aging, risk profiles associated with different customer types, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The Company also maintains a sales allowance primarily related to potential billing adjustments due to situations such as product returns and damages. The amount of the sales allowance is determined based on a historical transaction analysis and any additions to the sales allowance are recorded as a reduction to net revenue. Inventories: Inventories consist of raw materials, work-in-process, and finished goods. Inventory cost is determined using the first-in, first-out (FIFO) method and valued at lower of cost or net realizable value. The Company maintains a reserve for excess and obsolete inventory and carries its inventory at net realizable value, taking into account various factors including historic usage, expected demand, anticipated sales price, and product obsolescence. Property and Equipment: Property and equipment are carried at cost, net of accumulated depreciation and amortization, and net of impairment losses, if any. Depreciation of property and equipment are computed by straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the term of the lease, or the estimated life of the improvement, whichever is less. The estimated useful life of property and equipment are as follows: Machinery and equipment 5 years to 15 years Leasehold improvements Lesser of useful life or lease term Vehicles 5 years Furniture and fixtures 7 years Building and building improvements 10 years to 40 years Property held under capital leases 3 years to 5 years Computer hardware and software 3 years Normal repairs and maintenance are expensed as incurred, whereas significant changes that materially increase values or extend useful lives are capitalized and depreciated over the estimated useful lives of the related assets. Deposits: Deposits are payments made for machinery and equipment, and construction and improvement for the Company’s facilities. Included in deposits are also payments made to lessors of leased properties as security for the full and faithful observance of contracts, which will be refunded to the Company upon expiration or termination of the contract. Impairment of Long-lived Assets: The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. If such events or circumstances exist, an impairment test is performed which comprises of two steps. The first step compares the carrying amount of the asset to the sum of expected undiscounted future cash flows. If the sum of expected undiscounted future cash flows exceeds the carrying amount of the asset, no impairment is taken. If the sum of expected undiscounted future cash flows is less than the carrying amount of the asset, a second step is warranted and an impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value calculated using the present value of estimated net future cash flows. For the years ended December 31, 2022 and 2021, management concluded that an impairment write-down was not required. Business Combination and Goodwill: The Company applies the acquisition method of accounting for business combinations in accordance with GAAP, which requires the Company to make use of estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets, and liabilities acquired. Such estimates may be based on significant unobservable inputs. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Goodwill is the excess of the acquisition price over the fair value of the tangible and identifiable intangible net assets acquired. The Company performs an impairment test of goodwill annually or whenever events and circumstances indicate that the carrying amount of goodwill may exceed its fair value. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole. During the years ended December 31, 2022 and 2021, the Company determined no impairments have occurred. The following table summarizes the activity in the Company's goodwill from December 31, 2020 to December 31, 2022: (in thousands) Balance at December 31, 2020 $ 3,113 Goodwill acquired 397 Balance at December 31, 2021 $ 3,510 Goodwill acquired — Balance at December 31, 2022 $ 3,510 Government Grants: Government grants are not recognized unless there is reasonable assurance that the Company and Global Wells will comply with the grants’ conditions and that the grants will be received. As of December 31, 2022 and 2021, the Company received cumulative grants of $1,350,000 and $1,200,000, respectively. As of both December 31, 2022 and 2021, Global Wells received cumulative grants of $1,302,000. These grants are reported as deferred income within other liabilities in the accompanying consolidated balance sheets as there are conditions attached to the grants that the Company and Global Wells have not met. These conditions include requiring the facility in Rockwall, Texas to maintain a certain minimum tax value for 5 years calendar years through 2024 (the “Required Period”), continue operations in the facility for the Required Period, have a minimum number of full time equivalent employees with a minimum average annual gross wage employed in the operation of the facility in the Required Period, and promise to not engage in a pattern or practice of unlawful employment of aliens during the Required Period. Derivative Instruments: Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 815, Derivatives and Hedging , requires companies to recognize all of its derivative instruments as either assets or liabilities in the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the statement of income during the current period. The Company and Global Wells entered into certain interest rate swaps to manage the interest rate risk, and accounted for such interest rate swaps as a derivative instrument under ASC 815. The interest rate swaps were not designated for hedge accounting and as such, the change in the fair value of interest rate swaps was recognized as interest income (expense) in the accompanying consolidated statements of income. Variable Interest Entities: The Company has a variable interest in Global Wells. In 2017, Lollicup along with three other unrelated parties formed Global Wells. Lollicup has a 13.5% ownership interest and a 25% voting interest in Global Wells, located in Rockwall, Texas. The purpose of this entity is to own, construct, and manage a warehouse and a manufacturing facility. Global Wells’ operating agreement may require its members to make additional contributions only upon the unanimous decision of the members or where the cash in Global Wells’ bank account falls below $50,000. In the event that a member is unable to make an additional capital contribution, the other members will be required to make contributions to offset the amount that member cannot contribute, up to $25,000. Global Wells was determined to be a variable interest entity in accordance with ASC Topic 810, Consolidations, however, at the time the investment was made, it was determined that Lollicup was not the primary beneficiary. In 2018, Lollicup entered into an operating lease with Global Wells (“Texas Lease”). In 2020, the Company entered into another operating lease with Global Wells (“New Jersey Lease”). Upon entering into the Texas Lease with Lollicup on March 23, 2018, it was determined that Lollicup holds current and potential rights that give it the power to direct activities of Global Wells that most significantly impact Global Wells’ economic performance, receive significant benefits, or the obligation to absorb potentially significant losses, resulting in Lollicup having a controlling financial interest in Global Wells. As a result, Lollicup was deemed to be the primary beneficiary of Global Wells and has consolidated Global Wells under the risk and reward model of ASC 810, for the period from March 23, 2018. The monthly lease payments for the Texas Lease and New Jersey Lease are eliminated upon consolidation. Assets recognized as a result of consolidating Global Wells do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating Global Wells do not represent additional claims of the Company’s general assets; they represent claims against the specific assets of Global Wells. See Note 9 — Long Term Debt for a description of the two term loans that Global Wells had with financial institutions as of December 31, 2022. The following financial information includes assets and liabilities of Global Wells and are included in the accompanying consolidated balance sheets, except for those that eliminate upon consolidation: December 31, 2022 December 31, 2021 (in thousands) Cash $ 2,022 $ 1,163 Accounts receivable 53 384 Prepaid expenses and other current assets 191 63 Due from Lollicup USA Inc. 4,700 — Property and equipment, net 45,399 46,612 Other assets 4,262 4,762 Total assets 56,627 52,984 Accounts payable $ 2 $ 497 Accrued expenses 626 68 Income tax payable — 9 Customer deposits 165 88 Due to Lollicup USA Inc. — 2,620 Long-term debt, current portion 957 1,178 Long-term debt, net of current portion 41,558 35,339 Other liabilities 1,302 2,636 Total liabilities $ 44,610 $ 42,435 Revenue Recognition: The Company generates revenues from product sales to customers that include national and regional chains and distributors, fast food restaurants with multiple locations, small businesses, and those that purchase for individual consumption. The Company considers revenue disaggregated by customer type to most accurately reflect the nature and uncertainty of its revenue and cash flows that are affected by economic factors. For the years ended December 31, 2022 and 2021, net sales disaggregated by customer type consist of the amounts shown below. Year Ended December 31, 2022 2021 (in thousands) National and regional chains $ 95,786 $ 86,017 Distributors 242,285 199,902 Online 53,697 50,271 Retail 31,189 28,054 $ 422,957 $ 364,244 • National and regional chains revenue: National and regional chains revenue is derived from chain restaurants and supermarkets with locations across multiple states. Revenue from transactions with national and regional chains is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s facility to the customers. • Distributors revenue: Distributors revenues are derived from national and regional distributors across the U.S. that purchase the Company’s products for restaurants, offices, schools, and government entities. Revenue from distributions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s facility to the customers. • Online revenue: Online revenue is derived from small businesses such as small restaurants, bubble tea shops, coffee shops, juice bars and smoothie shops. Revenue from online transactions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s facility to the customers. • Retail revenue: Retail revenue is derived primarily from regional bubble tea shops, boutique coffee shops and frozen yogurt shops. Revenue from retail transactions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s facility to the customers. In addition to product sales, the Company also generates revenue from logistics services which is the transportation and delivery of shipping containers from ports to customers, primarily to retail customers. Logistics services revenue is recognized over time due to the continuous transfer of control to the customer. As control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. Logistics services revenue was $6,150,000 and $2,779,000 for the years ended December 31, 2022, and 2021, respectively. The transaction price is the amount of consideration to which the Company expects to be entitled to in exchange for transferring goods to the customer. Revenue is recorded based on the total estimated transaction price, which includes fixed consideration and estimates of variable consideration. Variable consideration includes estimates of rebates and other sales incentives, cash discounts for prompt payment, consideration payable to customers for cooperative advertising and other program incentives, and sales returns. The Company estimates its variable consideration based on contract terms and historical experience of actual results using the expected value method. The performance obligations are generally satisfied shortly after manufacturing and shipment as purchases made by the Company’s customers are manufactured and shipped with minimal lead time. The Company’s contract liabilities consist primarily of rebates, sales incentives, customer deposits and consideration payable to customers for cooperative advertising. As of December 31, 2022 and 2021, the rebates, sales incentives and cooperative advertising were not significant to the financial statements. Customer deposits are included in the current liabilities in the consolidated balance sheets. Shipping and handling fees billed to a customer are recorded within net sales, with corresponding shipping and handling costs recorded in selling expense on the accompanying consolidated statements of income. Shipping and handling fees billed to a customer are not deemed to be separate performance obligations for product sales, as these activities occur before the customer receives the products. Shipping and handling costs included within selling expenses in the consolidated statements of income for the years ended December 31, 2022 and 2021 were $32,508,000 and $28,525,000, respectively. Sales taxes collected concurrently with revenue-producing activities and remitted to governmental authorities are excluded from revenue. Sales commissions are expensed as incurred due to the amortization period being less than one year and are recorded in selling expense on the accompanying consolidated statements of income. Advertising Costs: The Company expenses costs of print production, trade show, online marketing, and other advertisements in the period in which the expenditure is incurred. Advertising costs included in operating expenses in the consolidated statements of income were $2,418,000 and $2,488,000 for the years ended December 31, 2022 and 2021, respectively. Income Taxes: The Company applies the provision of ASC 740, Income Taxes . Under ASC 740, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are evaluated for recoverability each reporting period by assessing all positive and negative evidence available in order to assess the need for a valuation allowance. A valuation allowance is used to reduce some or all of the deferred tax assets if, based upon the weight of available evidence, it is more likely than not that such deferred tax assets will not be realized. The Company accounts for uncertainties in income tax in accordance with ASC 740-10, Accounting for Uncertainty in Income Taxes . ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This accounting standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes in the accompanying consolidated statement of income. Accrued interest and penalties are included in the income taxes payable in the consolidated balance sheet. Concentration of Credit Risk: Cash is maintained at financial institutions and, at times, balances exceed federally insured limits. Management believes that the credit risk related to such deposits is minimal. The Company extends credit based on the valuation of the customers’ financial condition and general collateral is not required. Management believes the Company is not exposed to any material credit risk on these accounts. For the years ended December 31, 2022 and 2021, purchases from the following vendor makes up greater than 10 percent of total purchases: Year Ended December 31, 2022 2021 Keary Global Ltd. (“Keary Global”) and its affiliate, Keary International, Ltd. – related parties 11 % 12 % Amounts due to the following vendors at December 31, 2022 and 2021, respectively, that exceed 10 percent of total accounts payable are as follows: December 31, 2022 December 31, 2021 Keary Global and its affiliate, Keary International – related parties 21 % 10 % Fuling Technology Co., Ltd. 18 % 21 % Wen Ho Industrial Co., Ltd * 11 % * Amounts payable represented less than 10% of total accounts payable. No customer accounted for more than 10 percent of sales or accounts receivable for the years ended December 31, 2022 and 2021. Fair Value Measurements: The Company follows ASC 820, Fair Value Measurements , which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The three levels of inputs are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. Level 2 — Inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Company has financial instruments classified within the fair value hierarchy, which consist of the following: • At December 31, 2022 and 2021, the Company had a money market account, classified as Level 1 within the fair value hierarchy, and reported as a current asset on the consolidated balance sheets. • At December 31, 2021, the Company had an interest rate swap that met the definition of a derivative, classified as Level 2 within the fair value hierarchy, and reported as other liabilities on the consolidated balance sheet. The fair value of interest rate swap was calculated from pricing models that used volatility to quantify the probability of changes around interest rate trends. This interest rate swap was terminated in June 2022, as further discussed in Note 10 — Interest Rate Swaps . The following table summarizes the Company’s fair value measurements by level at December 31, 2022 for the assets measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 10,609 $ — $ — Fair value, December 31, 2022 $ 10,609 $ — $ — The following table summarize the Company’s fair value measurements by level at December 31, 2021 for the assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 2,000 $ — $ — Interest rate swap — (1,334) — Fair value, December 31, 2021 $ 2,000 $ (1,334) $ — The Company has not elected the fair value option as presented by ASC 825, Fair Value Option for Financial Assets and Financial Liabilities , for the financial assets and liabilities that are not otherwise required to be carried at fair value. Under ASC 820, material financial assets and liabilities not carried at fair value, including accounts receivable, accounts payable, related-party payable, accrued and other liabilities, other payable and borrowings under promissory notes and Line of Credit (as defined below), are reported at their carrying value. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, related-party payable, accrued and other liabilities and other payable at December 31, 2022 and 2021, approximated fair value because of the short maturity of these instruments. The carrying amount of the Company's Line of Credit approximates fair value because the interest rate is variable in nature. For the $21,580,000 term loan that the Company refinanced in June 2022, the carrying amount as of December 31, 2021 approximated fair value because the interest rate was variable in nature. The following is a summary of the carrying amount and estimated fair value of the $23,000,000 and $28,700,000 term loans that mature in September 2026 and July 2027, respectively: December 31, 2022 Carrying Amount Estimated Fair Value (in thousands) $23,000,000 term loan maturing in September 2026 $ 22,168 $ 20,115 $28,700,000 term loan maturing in July 2027 20,563 18,918 $ 42,731 $ 39,033 The fair value of these financial instruments was determined using Level 2 inputs. Foreign Currency: The Company includes gains or losses from foreign currency transactions, such as those resulting from the settlement of foreign receivables or payables, in the consolidated statements of income. The Company recorded a foreign currency gain of $1,568,000 and a loss of $412,000 for the years ended December 31, 2022 and 2021, respectively. Stock-Based Compensation: The Company recognizes stock-based compensation expense related to employee stock options and restricted stock units in accordance with ASC 718, Compensation — Stock Compensation . This standard requires the Company to record compensation expense equal to the fair value of awards granted to employees and non-employees. The fair value of share-based payment awards is estimated on the grant-date using the Black-Scholes option pricing model for stock options, and the closing price of the Company's common stock on the trading day immediately prior to the grant date for restricted stock units. Key input assumptions used in the Black-Scholes option pricing model to estimate the grant date fair value of stock options include the fair value of the Company’s common stock, the expected option term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate, and the Company’s expected annual dividend yield. The risk-free interest rate assumption for options granted under the 2019 Stock Incentive Plan (the "Plan") is based upon observed interest rates on the United States government securities appropriate for the expected term of the Company’s stock options. The expected term of employee stock options under the Plan represents the weighted-average period that the stock options are expected to remain outstanding. The expected term of options granted is calculated based on the “simplified method,” which estimates the expected term based on the average of the vesting period and contractual term of the stock option. The Company determines the expected volatility assumption using the frequency of daily historical prices of comparable public company’s common stock for a period equal to the expected term of the options. The dividend yield assumption for options granted under the Plan is based on the Company’s history and expectation of dividend payouts. Stock-based compensation expense is based on awards that ultimately vest. Forfeitures are accounted for as they occur. The Company has elected to treat stock-based payment awards with graded vesting schedules and time-based service conditions as separate awards and recognizes stock-based compensation expense over the requisite service period using the graded vesting attribution method. The determination of stock-based compensation is inherently uncertain and subjective and

Acquisitions

Acquisitions	12 Months Ended
	Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract]
Acquisitions	Acquisitions Pacific Cup, Inc. On March 1, 2021, Lollicup entered into an asset purchase agreement (“the Pacific Cup Agreement”) with Pacific Cup, Inc. (“Pacific Cup”), a manufacturer and distributor of disposable products operating in Kapolei, Hawaii. Pursuant to the Pacific Cup Agreement, Lollicup paid cash consideration of $1,000,000 to acquire certain assets of Pacific Cup. Acquisition-related costs were immaterial. The amounts of revenue and earnings of the acquiree since the acquisition date is included in the consolidated statement of income for the reporting period, which is immaterial from March 1, 2021 through December 31, 2021 and for the year ended December 31, 2022. The goodwill recognized in this transaction was derived from expected opportunities to leverage Pacific Cup’s customer base, manufacturing facility, and sales force to expand the Company’s footprint. Goodwill recognized as a result of this acquisition is deductible for income tax purposes, and subject to annual impairment testing, which may give rise to deferred taxes in future periods. The following table summarizes the final valuation of assets acquired as a result of this acquisition: (in thousands) Inventories $ 153 Property and equipment 50 Customer relationships 400 Goodwill 397 Total assets acquired $ 1,000

Joint Venture

Joint Venture	12 Months Ended
	Dec. 31, 2022
Equity Method Investments and Joint Ventures [Abstract]
Joint Venture	Joint Venture On April 6, 2022, Lollicup entered into a definitive joint venture agreement (the “JV Agreement”) with Happiness Moon Co., Ltd., a Taiwanese company, to jointly establish Bio Earth Technology (“Bio Earth”), a new Taiwanese corporation, for the manufacturing of compostable foodservice products from bagasse. The JV Agreement stipulated an investment by the Company of approximately $6,500,000 for a 49% interest in Bio Earth. Lollicup had invested a total of $4,000,000 pursuant to the JV Agreement as of December 31, 2022, which is included in deposits in the accompanying consolidated balance sheet. This total investment comprised of three payments of $2,000,000 in April 2022, another $2,000,000 in June 2022, and $1,876,000 in November 2022, net of a refund of $1,876,000 received in December 2022. As of December 31, 2022, the incorporation and registration of Bio Earth had not been completed. See Note 19 — Subsequent Events for subsequent investments made under the JV Agreement.

Inventories

Inventories	12 Months Ended
	Dec. 31, 2022
Inventory Disclosure [Abstract]
Inventories	Inventories Inventories consist of the following: December 31, 2022 December 31, 2021 (in thousands) Raw materials $ 18,061 $ 12,543 Semi-finished goods 1,850 1,532 Finished goods 52,044 45,140 Subtotal 71,955 59,215 Less inventory reserve (749) (743) Total inventories $ 71,206 $ 58,472 During the year ended December 31, 2022, the Company recorded a $3,500,000 write-off of certain inventory items, out of which $879,000 was determined to be out-of-period and was recorded to correct immaterial errors in its previously issued quarterly and annual financial statements.

Property and Equipment

Property and Equipment	12 Months Ended
	Dec. 31, 2022
Property, Plant and Equipment [Abstract]
Property and Equipment	Property and Equipment December 31, 2022 December 31, 2021 (in thousands) Machinery and equipment $ 70,234 $ 60,935 Leasehold improvements 19,063 18,655 Vehicles 6,725 5,384 Furniture and fixtures 1,016 936 Building 36,599 35,387 Land 11,907 11,907 Computer hardware and software 593 553 146,137 133,757 Less: accumulated depreciation and amortization (50,569) (40,282) Total property and equipment, net $ 95,568 $ 93,475

Line of Credit

Line of Credit	12 Months Ended
	Dec. 31, 2022
Debt Disclosure [Abstract]
Line of Credit	Line of Credit Pursuant to the terms of the Business Loan Agreement, dated February 23, 2018, between Lollicup, as borrower, and Hanmi Bank, as lender (as amended, the “Loan Agreement”), the Company has a line of credit with a maximum borrowing capacity of $40,000,000 (the “Line of Credit”) secured by the Company’s assets. The Line of Credit also includes a standby letter of credit sublimit, which was amended and increased to $2,000,000 on August 18, 2022. The Company is not required to pay a commitment (unused) fee on the undrawn portion of the Line of Credit and interest is payable monthly. On October 6, 2021, the Company amended the Loan Agreement. Prior to October 6, 2021, interest accrued at an annual rate of prime less 0.25% with a minimum floor of 3.75%, and the amount that could be borrowed was subject to a borrowing base that was calculated as a percentage of the accounts receivable and inventory balances measured monthly. Additionally, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, minimum debt service coverage ratio, and minimum debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio. The amendment on October 6, 2021, among other things, (1) extended the maturity date to October 6, 2023, (2) revised the interest on any line of credit borrowings to an annual rate of prime less 0.25%, with a minimum floor of 3.25%, (3) removed the requirement for the maximum amount of borrowings to be subject to a borrowing base requirement that was calculated as a percentage of accounts receivable and inventory balances, (4) removed the minimum tangible net worth and minimum debt service coverage ratio from the financial covenant requirement, and (5) added a minimum fixed charge coverage ratio in the financial covenant requirement. As of December 31, 2022, the maximum remaining amount that could be borrowed under the Line of Credit was $38,930,000. The Company had $0 of borrowings outstanding under the Line of Credit as of both December 31, 2022 and 2021. The amount issued under the standby letter of credit was $1,070,000 and $0 as of December 31, 2022 and 2021, respectively. As of both December 31, 2022 and 2021, the Company was in compliance with the financial covenants under the Line of Credit. The Company amended the Line of Credit again in March 2023. See Note 19 — Subsequent Events for further discussion. Long-term debt consists of the following: December 31, 2022 December 31, 2021 (in thousands) A $23,000,000 term loan that matures September 30, 2026, with an initial balance of $16,115,000 and an option to request for additional advances up to a maximum of $6,885,000 through September 2022, which the Company exercised in February 2022. Interest accrues at a fixed rate of 3.5% per annum. Principal and interest payments of $116,000 are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by Global Wells and one of the Company’s stockholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt service coverage ratio. $ 22,168 $ 15,909 A $21,580,000 term loan ("2029 Loan") that was set to mature in May 2029. Interest accrued at prime rate less 0.25% (3.00% at December 31, 2021) and principal payments ranging from $24,000 to $40,000 along with interest were due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan was collateralized by substantially all of the Company’s and Global Well’s assets and was guaranteed by the Company and its stockholders. The Company incurred debt issuance costs of approximately $119,000, which was reported as a reduction of the carrying value of debt on the accompanying consolidated balance sheet. This loan was refinanced in June 2022 (see below). — 20,808 A $28,700,000 term loan ("2027 Loan") that matures July 1, 2027, with an initial balance of $20,700,000 and an option to request for additional advances up to a maximum of $8,000,000 through June 30, 2023. Interest accrues at a fixed rate of 4.375% per annum. Principal and interest payments of $$104,000 are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by one of the Company’s stockholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt coverage ratio. $ 20,563 $ — Long-term debt 42,731 36,717 Less: unamortized loan fees (216) (200) Less: current portion (957) (1,178) Long-term debt, net of current portion $ 41,558 $ 35,339 KARAT PACKAGING INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At December 31, 2022, future maturities are: (in thousands) 2023 $ 957 2024 990 2025 1,040 2026 20,653 2027 19,091 $ 42,731 The Company's refinance of the 2029 Loan with the 2027 Loan in June 2022 was accounted for as a debt modification. The Company was in compliance with all of its financial covenants as of both December 31, 2022 and 2021.

Accrued Expenses

Accrued Expenses	12 Months Ended
	Dec. 31, 2022
Payables and Accruals [Abstract]
Accrued Expenses	Accrued Expenses The following table summarizes information related to accrued expense liabilities: December 31, 2022 December 31, 2021 (in thousands) Accrued miscellaneous expenses $ 2,094 $ 1,054 Accrued interest 108 68 Accrued payroll 1,586 1,456 Accrued vacation and sick pay 543 416 Accrued shipping expenses 1,918 2,868 Accrued professional services fees 600 642 Deferred rent liability — 372 Accrued property tax 1,164 10 Accrued sale taxes and use taxes 992 927 Total accrued expenses $ 9,005 $ 7,813

Long-Term Debt

Long-Term Debt	12 Months Ended
	Dec. 31, 2022
Debt Disclosure [Abstract]
Long-Term Debt	Line of Credit Pursuant to the terms of the Business Loan Agreement, dated February 23, 2018, between Lollicup, as borrower, and Hanmi Bank, as lender (as amended, the “Loan Agreement”), the Company has a line of credit with a maximum borrowing capacity of $40,000,000 (the “Line of Credit”) secured by the Company’s assets. The Line of Credit also includes a standby letter of credit sublimit, which was amended and increased to $2,000,000 on August 18, 2022. The Company is not required to pay a commitment (unused) fee on the undrawn portion of the Line of Credit and interest is payable monthly. On October 6, 2021, the Company amended the Loan Agreement. Prior to October 6, 2021, interest accrued at an annual rate of prime less 0.25% with a minimum floor of 3.75%, and the amount that could be borrowed was subject to a borrowing base that was calculated as a percentage of the accounts receivable and inventory balances measured monthly. Additionally, the Company was required to comply with certain financial covenants, including a minimum current ratio, minimum tangible net worth, minimum debt service coverage ratio, and minimum debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio. The amendment on October 6, 2021, among other things, (1) extended the maturity date to October 6, 2023, (2) revised the interest on any line of credit borrowings to an annual rate of prime less 0.25%, with a minimum floor of 3.25%, (3) removed the requirement for the maximum amount of borrowings to be subject to a borrowing base requirement that was calculated as a percentage of accounts receivable and inventory balances, (4) removed the minimum tangible net worth and minimum debt service coverage ratio from the financial covenant requirement, and (5) added a minimum fixed charge coverage ratio in the financial covenant requirement. As of December 31, 2022, the maximum remaining amount that could be borrowed under the Line of Credit was $38,930,000. The Company had $0 of borrowings outstanding under the Line of Credit as of both December 31, 2022 and 2021. The amount issued under the standby letter of credit was $1,070,000 and $0 as of December 31, 2022 and 2021, respectively. As of both December 31, 2022 and 2021, the Company was in compliance with the financial covenants under the Line of Credit. The Company amended the Line of Credit again in March 2023. See Note 19 — Subsequent Events for further discussion. Long-term debt consists of the following: December 31, 2022 December 31, 2021 (in thousands) A $23,000,000 term loan that matures September 30, 2026, with an initial balance of $16,115,000 and an option to request for additional advances up to a maximum of $6,885,000 through September 2022, which the Company exercised in February 2022. Interest accrues at a fixed rate of 3.5% per annum. Principal and interest payments of $116,000 are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by Global Wells and one of the Company’s stockholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt service coverage ratio. $ 22,168 $ 15,909 A $21,580,000 term loan ("2029 Loan") that was set to mature in May 2029. Interest accrued at prime rate less 0.25% (3.00% at December 31, 2021) and principal payments ranging from $24,000 to $40,000 along with interest were due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan was collateralized by substantially all of the Company’s and Global Well’s assets and was guaranteed by the Company and its stockholders. The Company incurred debt issuance costs of approximately $119,000, which was reported as a reduction of the carrying value of debt on the accompanying consolidated balance sheet. This loan was refinanced in June 2022 (see below). — 20,808 A $28,700,000 term loan ("2027 Loan") that matures July 1, 2027, with an initial balance of $20,700,000 and an option to request for additional advances up to a maximum of $8,000,000 through June 30, 2023. Interest accrues at a fixed rate of 4.375% per annum. Principal and interest payments of $$104,000 are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by one of the Company’s stockholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt coverage ratio. $ 20,563 $ — Long-term debt 42,731 36,717 Less: unamortized loan fees (216) (200) Less: current portion (957) (1,178) Long-term debt, net of current portion $ 41,558 $ 35,339 KARAT PACKAGING INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At December 31, 2022, future maturities are: (in thousands) 2023 $ 957 2024 990 2025 1,040 2026 20,653 2027 19,091 $ 42,731 The Company's refinance of the 2029 Loan with the 2027 Loan in June 2022 was accounted for as a debt modification. The Company was in compliance with all of its financial covenants as of both December 31, 2022 and 2021.

Interest Rate Swaps

Interest Rate Swaps	12 Months Ended
	Dec. 31, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Interest Rate Swaps	Interest Rate Swaps In June 2022, Global Wells terminated its ten-year floating-to-fixed interest rate swap, and recognized cash proceeds of $825,000 as gain on the settlement, which was included in interest income in the accompanying consolidated statements of income. This interest rate swap had a notional value of $21,580,000 as of the effective date of June 13, 2019 based on the prime rate versus a 5.05% fixed rate. As of December 31, 2021, the fair value of the interest rate swap was $1,334,000, which is reported as other liabilities in the accompanying consolidated balance sheet. For the years ended December 31, 2022 and 2021, Global Wells recognized $2,159,000 (including the gain on settlement) and $1,270,000 as interest income related to change in fair value of this interest rate swap, respectively. In June 2019, the Company also entered into a five-year floating-to-fixed interest-rate swap, with an effective date of June 3, 2019, that was based on the prime rate versus 5.19% fixed rate. The notional was $10,000,000 as of June 2019. For the year ended December 31, 2021, the Company recognized approximately $47,000 in interest income related to change in fair value of this interest rate swap. In April 2021, the Company terminated this interest rate swap, recognizing $196,000 in swap termination fee, which was included in interest expense in the consolidated statements of income for the year ended December 31, 2021

Stockholder_s Equity

Stockholder’s Equity	12 Months Ended
	Dec. 31, 2022
Equity [Abstract]
Stockholder’s Equity	Stockholder’s Equity The Company’s Certificate of Incorporation authorize both common and preferred stock. The total number of shares of all classes of stock authorized for issuance is 110,000,000 shares, par value of $0.001, with 10,000,000 designed as preferred stock and 100,000,000 designated as common stock. Each holder of common stock and preferred stock shall be entitled to one vote per share held. In April 2021, the Company completed its initial public offering and issued 4,542,500 shares of its common stock. The total amount of proceeds received, net of issuance costs, was approximately $67,587,000. On November 9, 2022, Company declared a dividend of $0.35 per share of the Company's common stock. The Company recorded $6,964,000 of cash dividends as of December 31, 2022. The Company did not declare any dividend for the year ended December 31, 2021.

Stock-Based Compensation

Stock-Based Compensation	12 Months Ended
	Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]
Stock-Based Compensation	Stock-Based Compensation In January 2019, the Company’s board of directors adopted the 2019 Stock Incentive Plan (the “Plan”). A total of 2,000,000 shares of common stock were authorized and reserved for issuance under the Plan in the form of incentive or nonqualified stock options and stock awards. A committee appointed by the board of directors of the Company determines the terms and conditions of each grant under the Plan. Employees, directors, and consultants are eligible to receive stock options and stock awards under the Plan. The aggregate number of shares available under the Plan and the number of shares subject to outstanding options may be increased or decreased by the Plan administrator to reflect any changes in the outstanding common stock by reason of any recapitalization, reorganization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in capital stock or similar transaction. The exercise price of incentive stock options may not be less than the fair market value of the common stock at the date of grant. The exercise price of incentive stock options granted to individuals that own greater than 10% of the voting stock may not be less than 110% of the fair market value of the common stock at the date of grant. The term of each incentive and nonqualified option is based upon conditions as determined by the option agreement; however, the term can be no more than ten years from the date of the grant. In the case of an incentive stock option granted to an optionee who, at the time the option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary, the term of the option will be a shorter term as provided in the option agreement, but not more than five years from the date of the grant. As of December 31, 2022, a total of 1,322,349 shares of common stock was available for further award grants under the Plan. For the years ended December 31, 2022 and 2021, the Company recognized a total of $2,047,000 and $2,026,000 in stock-based compensation expense, respectively. The restricted stock units and stock options granted prior to April 15, 2021 were subjected to vesting conditions contingent upon the closing of an initial public offering of the Company. Such awards began vesting on April 15, 2021 when the Company completed its initial public offering. The Company recognizes stock-based compensation over the vesting period, which is generally 3 years for both the restricted stock units and stock options. The Company recognized a net tax benefit of $89,000 and $237,000 from compensation expense related to stock options and restricted stock units during the years ended December 31, 2022 and 2021, respectively. Stock Options A summary of the Company’s stock option activity under the Plan for the years ended December 31, 2022 and 2021 is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contract Life (In Years) Aggregate Intrinsic Value Outstanding at December 31, 2020 15,000 $ 10.00 8.0 $ — Granted 430,000 18.86 Exercised (10,000) 10.00 $ 116,000 Outstanding at December 31, 2021 435,000 $ 18.76 9.7 $ 632,000 Granted 50,000 16.53 Exercised (5,000) 10.00 Forfeited (60,000) 18.86 Outstanding at December 31, 2022 420,000 $ 18.58 8.8 $ — Expected to vest at December 31, 2022 420,000 $ 18.58 8.8 $ — Exercisable at December 31, 2022 123,333 18.86 8.8 $ — The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2022 and 2021 was $5.18 and $5.74 respectively. At December 31, 2022, total remaining stock-based compensation cost for unvested stock options under the Plan was approximately $792,000. The cost is expected to be recognized over a weighted-average period of 1.4 years. The aggregate intrinsic value is calculated by subtracting the exercise price of the option from the closing price of the Company’s common stock on December 31, 2022, multiplied by the number of shares per each option. The assumptions that were used to calculate the grant date fair value of the Company’s stock option grants for the year ended December 31, 2022 were as follows: Year Ended December 31, 2022 2021 Risk-free interest rate 1.70 % 1.22 % Expected term (years) 6.25 years 6.25 years Volatility 30 % 30 % Dividend yield 0.40 % 0.40 % Restricted Stock Units The Company issued restricted stock units to its employees. The following table summarizes the unvested restricted stock units for the years ended December 31, 2022 and 2021: Number of Shares Outstanding Weighted Average Grant Date Fair Value Unvested at December 31, 2020 256,000 $ 10.00 Granted 40,000 17.98 Vested (84,917) 11.55 Forfeited (52,083) 11.14 Unvested at December 31, 2021 159,000 $ 11.08 Granted 9,900 16.69 Vested (75,588) 10.72 Forfeited (11,166) 15.54 Unvested at December 31, 2022 82,146 $ 11.47 The weighted-average grant-date fair value of restricted stock units granted during the years ended December 31, 2022 and 2021 was $16.69 and $17.98 respectively. The total fair value of restricted stock units, as of their respective vesting date, during the years ended December 31, 2022 and 2021 was $1,156,000 and $1,884,000, respectively. In September 2021, the Company’s board of directors accelerated the vesting of the Company’s restricted stock units, with each tranche of award vesting 6 months earlier than the original vesting date. The acceleration of the restricted stock units vesting was treated as an award modification under ASC 718, resulting in an additional stock-based compensation expense of approximately $719,000 recognized during the year ended December 31, 2021. At December 31, 2022, total remaining stock-based compensation cost for unvested restricted stock units was approximately $327,000. The cost is expected to be recognized over a weighted-average period of 0.9 years .

Earnings Per Share

Earnings Per Share	12 Months Ended
	Dec. 31, 2022
Earnings Per Share [Abstract]
Earnings Per Share	Earnings Per Share (a) Basic Basic earnings per share is calculated by dividing the net income attributable to equity holders of the Company for the year by the weighted average number of common shares outstanding during the period. Year Ended December 31, 2022 2021 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 23,648 $ 20,778 Weighted average shares 19,825 18,409 Basic earnings per share $ 1.19 $ 1.13 (b) Diluted Diluted earnings per share is calculated based upon the weighted average number of common shares and common equivalent shares outstanding during the period, calculated using the treasury stock method. Under the treasury stock method, exercise proceeds include the amount the employee must pay for exercising stock options and the amount of compensation cost related to stock awards for future services that the Company has not yet recognized. Common equivalent shares are excluded from the computation in periods in which they have an anti-dilutive effect. The following table summarizes the calculation of diluted earnings per share: Year Ended December 31, 2022 2021 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 23,648 $ 20,778 Weighted average shares 19,825 18,409 Dilutive shares Stock options and restricted stock units 101 157 Total dilutive shares 19,926 18,566 Diluted earnings per share $ 1.19 $ 1.12

Leases

Leases	12 Months Ended
	Dec. 31, 2022
Leases [Abstract]
Leases	Leases The Company primarily leases manufacturing facilities, distribution centers and office spaces with lease terms expiring through 2031. For the year ended December 31, 2022, the Company recognized the following lease costs in the accompanying consolidated statement of income: (in thousands) Operating lease expense $ 4,522 Short-term lease expense 311 Variable lease expense 817 Total lease expense $ 5,650 For the year ended December 31, 2022, total lease expense included in operating expense and cost of goods sold was $3,446,000 and $1,076,000, respectively. Rent expense for the year ended December 31, 2021 was $1,783,000. The following table presents supplemental information related to operating leases for the year ended December 31, 2022: Weighted average remaining lease term 4.27 years Weighted average discount rate 5.32 % Right-of-use assets obtained in exchange for operating lease liabilities 10,727 Cash paid for amounts included in measurement of lease obligations Operating cash flows from operating leases 4,481 As of December 31, 2022, future lease payments under operating leases were as follows: (in thousands) 2023 $ 5,244 2024 4,097 2025 2,926 2026 3,015 2027 1,149 Thereafter 1,212 Total future lease payments 17,643 Less: imputed interest (1,509) Total lease liability balance $ 16,134 As of December 31, 2021, approximate future minimum lease obligations prior to the adoption of Topic 842 were as follows: (in thousands) 2022 $ 3,055 2023 3,060 2024 1,824 2025 380 2026 374 Thereafter 1,629 $ 10,322 In September 2020, Global Wells entered into an operating lease with an unrelated party as the landlord. The lease generates monthly rental payments from $58,000 to $61,000 over the lease term of 38 months beginning September 9, 2020. Rental income for the years ended December 31, 2022 and December 31, 2021 were $949,000 and $931,000, respectively. The expected rental income is $611,000 for the year ended December 31, 2023.

Related Party Transactions

Related Party Transactions	12 Months Ended
	Dec. 31, 2022
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions Keary Global owns 250,004 shares of the Company's common stock as of December 31, 2022, which Keary Global acquired upon exercise of two convertible notes during the third quarter of 2018. Keary Global and its affiliate, Keary International, are owned by one of the Company’s stockholders’ family member. In addition to being a stockholder, Keary Global and Keary International are inventory suppliers and purchasing agents for the Company overseas. The Company has entered into ongoing purchase and supply agreements with Keary Global. At December 31, 2022 and 2021, the Company has accounts payable due to Keary Global and Keary International of $4,940,000 and $2,003,000, respectively. Purchases for the years ended December 31, 2022 and 2021 from this related party were $42,978,000 and $37,021,000, respectively.

Employee Benefits

Employee Benefits	12 Months Ended
	Dec. 31, 2022
Retirement Benefits [Abstract]
Employee Benefits	Employee Benefits The Company maintains a 401(k) plan for employees who meet specific requirements. The Company matches 100% of the employees’ contributions up to 3% of each employee’s salary, 87.5% of the employees’ contributions up to 4% of each employee’s salary, and 80% of the employees’ contributions up to 5% of each employee’s salary. The Company’s portion of the contributions is expensed as incurred with a total expense of $345,000 and $322,000 for the years ended December 31, 2022 and 2021, respectively.

Income Taxes

Income Taxes	12 Months Ended
	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The provision for income taxes for the years ended December 31, 2022 and 2021, respectively, consisted of: Year Ended December 31, 2022 2021 (in thousands) Current Federal $ 6,291 $ 4,504 State 863 1,068 7,154 5,572 Deferred Federal (502) (576) State 24 93 (478) (483) Provision for income taxes $ 6,676 $ 5,089 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for federal and state income tax purposes. The Company’s deferred tax assets (liabilities), calculated using effective tax rates is as follows: December 31, 2022 December 31, 2021 (in thousands) Deferred tax assets: State taxes $ 252 $ 257 Reserves 825 537 Accruals & deferred expenses 66 188 Tenant improvement allowance — 1,216 R&D credit 43 44 Inventory 1,042 1,196 Government grant 343 311 Stock based compensation 573 267 Capitalized research and development costs 1,043 — Operating lease liabilities 8,452 — Total deferred tax assets 12,639 4,016 Deferred tax liabilities: Fixed assets – depreciation (10,350) (9,518) Investment in Global Wells Investment Group (172) (132) Operating ROU asset (7,273) — Total deferred tax liabilities (17,795) (9,650) Net deferred tax liability $ (5,156) $ (5,634) Reconciliation of income taxes are as follows from statutory rate of 21% to the effective tax rate for the years ended December 31, 2022 and 2021, respectively: December 31, 2022 December 31, 2021 (in thousands) Income tax computed at the federal statutory rate $ 6,828 $ 5,780 State taxes, net of federal tax benefits 1,101 1,055 Noncontrolling Interest - Income not subject to tax (460) (349) Government forgiveness of debt — (1,050) Permanent items 31 201 Excess tax benefit from stock based compensation (89) (237) Research and development credit (455) (239) Other (280) (72) Provision for income taxes $ 6,676 $ 5,089 The Company may be audited by the Internal Revenue Service and various state tax authorities. Disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws and regulations. The Company evaluates its exposures associated with the tax filing positions and, while it believes its positions comply with applicable laws, may record liabilities based upon estimates of the ultimate outcome of these matters and the guidance provided in ASC 740. The Company remains subject to IRS examination for the 2016 through 2021 tax years, and has received notice in February 2019 that it is under examination for years 2016 and 2017. Additionally, the Company files multiple state and local income tax returns and remains subject to examination in various of these jurisdictions for the 2018 through 2021 tax years. As of December 31, 2022, the Company does not have any unrecognized tax benefit. ASC 740, Income Taxes , provides for the recognition of deferred tax assets if realization of these assets is more-likely-than-not. In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence, including its operating results, ongoing tax planning and forecasts of future taxable income on a jurisdiction-by-jurisdiction basis. Based upon the level of historical taxable income, at this time, the Company determined that sufficient positive evidence existed to conclude that it is more likely than not there will be full utilization of the deferred tax assets in each jurisdiction. As such, as of December 31, 2022, based on the available evidence, the Company did not record any valuation allowance. The Taxpayer Certainty and Disaster Relief Act of 2020 (the "TCJA"), enacted on December 27, 2020, added a temporary exception to the 50% limit on the amount that businesses may deduct for food or beverages. Beginning January 1, 2021, through December 31, 2022, the temporary exception allows a 100% deduction for food or beverages from restaurants. The Company evaluated the impacts and incorporated such impacts into its income tax provision. As of January 1, 2022, pursuant to the TCJA, research and experimental expenditures incurred in the current period are required to be capitalized and amortized over five or fifteen years, depending on where the research is conducted. The Company has incorporated such impacts into its provision for income taxes for the year ended December 31, 2022 . In August 2022, the Inflation Reduction Act of 2022 (the "Act") was signed into law. The Act, among other things, imposes a nondeductible 1% excise tax on the fair market value of certain stock that is "repurchased" during the taxable year by publicly traded U.S. corporations or acquired by certain of its subsidiaries. The taxable amount is reduced by the fair market value of certain issuances of stock throughout the year. The Act also imposes a 15% corporate minimum tax on the adjusted financial statement income of large corporations for taxable years beginning after December 31, 2022. We do not expect these tax law changes to have a material impact on our consolidated financial statements; however, we will continue to evaluate their impact.

Commitments and Contingencies

Commitments and Contingencies	12 Months Ended
	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesThe Company is a party to, and certain of its property is the subject of, various pending claims and legal proceedings that routinely arise in the ordinary course of its business. Management believes that the outcome of such litigation and claims, should they arise in the future, is not likely to have a material effect on the Company’s financial position or results of income.

Subsequent Events

Subsequent Events	12 Months Ended
	Dec. 31, 2022
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events In January and February 2023, Lollicup made two additional investment payments of $1,300,000 and $1,600,000, respectively, and received a refund of $950,000 in March 2023, pursuant to the JV Agreement as discussed in Note 4 — Joint Venture . In February 2023, the Company entered into an 88-month lease agreement commencing on April 17, 2023 for a 52,000 square-foot distribution facility in Aurora, Illinois. The term of the lease expires on July 31, 2030 and requires monthly base lease payments ranging from $34,000 to $43,000 after an initial rent abatement period.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation: The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”).
Principles of Consolidation	Principles of Consolidation: The consolidated financial statements include the accounts of Karat Packaging and its wholly-owned and controlled operating subsidiaries, Lollicup, Lollicup Franchising, LLC (“Lollicup Franchising”) and Global Wells, a variable interest entity wherein the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated.
Noncontrolling Interests	Noncontrolling Interests: The Company consolidates its variable interest entity, Global Wells, in which the Company is the primary beneficiary. Noncontrolling interests represent third-party equity ownership interests in Global Wells. The Company recognizes noncontrolling interests as equity in the consolidated financial statements separate from the Company’s stockholders’ equity. The amount of net income attributable to noncontrolling interests is disclosed in the consolidated statements of income. Tax payments made by the Company on behalf of the noncontrolling interests are deducted from their equity balances, as shown in the consolidated statements of stockholders’ equity.
Estimates and Assumptions	Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ materially from the estimates that were assumed in preparing the consolidated financial statements. Estimates that are significant to the consolidated financial statements include stock-based compensation, allowance for doubtful accounts and reserve for slow-moving and obsolete inventory.
Reporting Segments	Reporting Segments: The Company manages and evaluates its operations in one reportable segment. This segment consists of manufacturing and supply of a broad portfolio of single-use products that are used to serve food and beverages and are available in plastic, paper, foam, post-consumer recycled content and renewable materials. It also consists of the distribution of certain specialty food and beverage products, such as boba and coffee drinks, and certain restaurant and warehouse supplies. The Company’s long-lived assets are all located in the United States, and its revenues are all generated in the United States.
Earnings per Share	Earnings per share: Basic earnings per common share is calculated by dividing net income attributable to Karat Packaging, Inc by the weighted average number of common shares outstanding during the related period. Diluted earnings per common share is calculated by adjusting weighted average outstanding shares, assuming conversion of all potentially dilutive shares.
Out-of-period adjustment	Out-of-period adjustment: During the the year ended December 31, 2022, the Company recorded a $3,500,000 write off of certain inventory items out of which $879,000 was determined to be out-of-period and was recorded
Cash and cash equivalents	Cash and cash equivalents: The Company considers all highly liquid investments purchased with an original maturity at the date of purchase of three months or less to be cash equivalents. At December 31, 2022 and 2021, cash and cash equivalents were comprised of cash held in money markets, cash on hand and cash deposited with banks.
Accounts Receivable and Allowances	Accounts Receivable and Allowances: Accounts receivable consists primarily of amounts due from customers. Accounts receivable are carried at their estimated collectible amounts and are periodically evaluated for collectability based on past credit history. The Company recognizes an allowance for bad debt on accounts receivable in an amount equal to the estimated probable losses net of recoveries. The allowance is based on an analysis of historical bad debt write-offs, current past due customers in the aging, risk profiles associated with different customer types, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The Company also maintains a sales allowance primarily related to potential billing adjustments due to situations such as product returns and damages. The amount of the sales allowance is determined based on a historical transaction analysis and any additions to the sales allowance are recorded as a reduction to net revenue.
Inventories	Inventories: Inventories consist of raw materials, work-in-process, and finished goods. Inventory cost is determined using the first-in, first-out (FIFO) method and valued at lower of cost or net realizable value. The Company maintains a reserve for excess and obsolete inventory and carries its inventory at net realizable value, taking into account various factors including historic usage, expected demand, anticipated sales price, and product obsolescence.
Property and Equipment	Property and Equipment: Property and equipment are carried at cost, net of accumulated depreciation and amortization, and net of impairment losses, if any. Depreciation of property and equipment are computed by straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized using the straight-line method over the term of the lease, or the estimated life of the improvement, whichever is less.Normal repairs and maintenance are expensed as incurred, whereas significant changes that materially increase values or extend useful lives are capitalized and depreciated over the estimated useful lives of the related assets.
Deposits	Deposits: Deposits are payments made for machinery and equipment, and construction and improvement for the Company’s facilities. Included in deposits are also payments made to lessors of leased properties as security for the full and faithful observance of contracts, which will be refunded to the Company upon expiration or termination of the contract.
Impairment of Long-lived Assets	Impairment of Long-lived Assets: The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. If such events or circumstances exist, an impairment test is performed which comprises of two steps. The first step compares the carrying amount of the asset to the sum of expected undiscounted future cash flows. If the sum of expected undiscounted future cash
Business Combination and Goodwill	Business Combination and Goodwill: The Company applies the acquisition method of accounting for business combinations in accordance with GAAP, which requires the Company to make use of estimates and judgments to allocate the purchase price paid for acquisitions to the fair value of the assets, including identifiable intangible assets, and liabilities acquired. Such estimates may be based on significant unobservable inputs. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Fair values are subject to refinement for up to one year after the closing date of an acquisition as information relative to closing date fair values becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Government Grants	Government Grants: Government grants are not recognized unless there is reasonable assurance that the Company and Global Wells will comply with the grants’ conditions and that the grants will be received. As of December 31, 2022 and 2021, the Company received cumulative grants of $1,350,000 and $1,200,000, respectively. As of both December 31, 2022 and 2021, Global Wells received cumulative grants of $1,302,000. These grants are reported as deferred income within other liabilities in the accompanying consolidated balance sheets as there are conditions attached to the grants that the Company and Global Wells have not met. These conditions include requiring the facility in Rockwall, Texas to maintain a certain minimum tax value for 5 years calendar years through 2024 (the “Required Period”), continue operations in the facility for the Required Period, have a minimum number of full time equivalent employees with a minimum average annual gross wage employed in the operation of the facility in the Required Period, and promise to not engage in a pattern or practice of unlawful employment of aliens during the Required Period.
Derivative Instruments	Derivative Instruments: Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 815, Derivatives and Hedging , requires companies to recognize all of its derivative instruments as either assets or liabilities in the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, a company must designate the hedging instrument, based upon the exposure being hedged, as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in the statement of income during the current period. The Company and Global Wells entered into certain interest rate swaps to manage the interest rate risk, and accounted for such interest rate swaps as a derivative instrument under ASC 815. The interest rate swaps were not designated for hedge accounting and as such, the change in the fair value of interest rate swaps was recognized as interest income (expense) in the accompanying consolidated statements of income.
Variable Interest Entities	Variable Interest Entities: The Company has a variable interest in Global Wells. In 2017, Lollicup along with three other unrelated parties formed Global Wells. Lollicup has a 13.5% ownership interest and a 25% voting interest in Global Wells, located in Rockwall, Texas. The purpose of this entity is to own, construct, and manage a warehouse and a manufacturing facility. Global Wells’ operating agreement may require its members to make additional contributions only upon the unanimous decision of the members or where the cash in Global Wells’ bank account falls below $50,000. In the event that a member is unable to make an additional capital contribution, the other members will be required to make contributions to offset the amount that member cannot contribute, up to $25,000. Global Wells was determined to be a variable interest entity in accordance with ASC Topic 810, Consolidations, however, at the time the investment was made, it was determined that Lollicup was not the primary beneficiary. In 2018, Lollicup entered into an operating lease with Global Wells (“Texas Lease”). In 2020, the Company entered into another operating lease with Global Wells (“New Jersey Lease”). Upon entering into the Texas Lease with Lollicup on March 23, 2018, it was determined that Lollicup holds current and potential rights that give it the power to direct activities of Global Wells that most significantly impact Global Wells’ economic performance, receive significant benefits, or the obligation to absorb potentially significant losses, resulting in Lollicup having a controlling financial interest in Global Wells. As a result, Lollicup was deemed to be the primary beneficiary of Global Wells and has consolidated Global Wells under the risk and reward model of ASC 810, for the period from March 23, 2018. The monthly lease payments for the Texas Lease and New Jersey Lease are eliminated upon consolidation. Assets recognized as a result of consolidating Global Wells do not represent additional assets that could be used to satisfy claims against the Company’s general assets. Conversely, liabilities recognized as a result of consolidating Global Wells do not represent additional claims of the Company’s general assets; they represent claims against the specific assets of Global Wells. See Note 9 — Long Term Debt
Revenue Recognition	Revenue Recognition: The Company generates revenues from product sales to customers that include national and regional chains and distributors, fast food restaurants with multiple locations, small businesses, and those that purchase for individual consumption. The Company considers revenue disaggregated by customer type to most accurately reflect the nature and uncertainty of its revenue and cash flows that are affected by economic factors. National and regional chains revenue: National and regional chains revenue is derived from chain restaurants and supermarkets with locations across multiple states. Revenue from transactions with national and regional chains is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s facility to the customers. • Distributors revenue: Distributors revenues are derived from national and regional distributors across the U.S. that purchase the Company’s products for restaurants, offices, schools, and government entities. Revenue from distributions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s facility to the customers. • Online revenue: Online revenue is derived from small businesses such as small restaurants, bubble tea shops, coffee shops, juice bars and smoothie shops. Revenue from online transactions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s facility to the customers. • Retail revenue: Retail revenue is derived primarily from regional bubble tea shops, boutique coffee shops and frozen yogurt shops. Revenue from retail transactions is recognized at a point in time upon transfer of control of promised products to customers. Transfer of control typically occurs when the title and risk of loss passes to the customer. Shipping terms generally indicate when the title and risk of loss have passed, which is generally when the products are shipped from the Company’s facility to the customers. In addition to product sales, the Company also generates revenue from logistics services which is the transportation and delivery of shipping containers from ports to customers, primarily to retail customers. Logistics services revenue is recognized over time due to the continuous transfer of control to the customer. As control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. Logistics services revenue was $6,150,000 and $2,779,000 for the years ended December 31, 2022, and 2021, respectively. The transaction price is the amount of consideration to which the Company expects to be entitled to in exchange for transferring goods to the customer. Revenue is recorded based on the total estimated transaction price, which includes fixed consideration and estimates of variable consideration. Variable consideration includes estimates of rebates and other sales incentives, cash discounts for prompt payment, consideration payable to customers for cooperative advertising and other program incentives, and sales returns. The Company estimates its variable consideration based on contract terms and historical experience of actual results using the expected value method. The performance obligations are generally satisfied shortly after manufacturing and shipment as purchases made by the Company’s customers are manufactured and shipped with minimal lead time. The Company’s contract liabilities consist primarily of rebates, sales incentives, customer deposits and consideration payable to customers for cooperative advertising. As of December 31, 2022 and 2021, the rebates, sales incentives and cooperative advertising were not significant to the financial statements. Customer deposits are included in the current liabilities in the consolidated balance sheets. Shipping and handling fees billed to a customer are recorded within net sales, with corresponding shipping and handling costs recorded in selling expense on the accompanying consolidated statements of income. Shipping and handling fees billed to a customer are not deemed to be separate performance obligations for product sales, as these activities occur before the customer receives the products. Shipping and handling costs included within selling expenses in the consolidated statements of income for the years ended December 31, 2022 and 2021 were $32,508,000 and $28,525,000, respectively.
Advertising Costs	Advertising Costs: The Company expenses costs of print production, trade show, online marketing, and other advertisements in the period in which the expenditure is incurred.
Income Taxes	Income Taxes: The Company applies the provision of ASC 740, Income Taxes . Under ASC 740, deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are evaluated for recoverability each reporting period by assessing all positive and negative evidence available in order to assess the need for a valuation allowance. A valuation allowance is used to reduce some or all of the deferred tax assets if, based upon the weight of available evidence, it is more likely than not that such deferred tax assets will not be realized. The Company accounts for uncertainties in income tax in accordance with ASC 740-10, Accounting for Uncertainty in Income Taxes
Concentration of Credit Risk	Concentration of Credit Risk: Cash is maintained at financial institutions and, at times, balances exceed federally insured limits. Management believes that the credit risk related to such deposits is minimal.
Fair Value Measurements	Fair Value Measurements: The Company follows ASC 820, Fair Value Measurements , which defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. ASC 820 establishes a hierarchy of valuation inputs based on the extent to which the inputs are observable in the marketplace. Observable inputs reflect market data obtained from sources independent of the reporting entity and unobservable inputs reflect the entity’s own assumptions about how market participants would value an asset or liability based on the best information available. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The three levels of inputs are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. Level 2 — Inputs that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the same term of the assets or liabilities. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. The Company has financial instruments classified within the fair value hierarchy, which consist of the following: • At December 31, 2022 and 2021, the Company had a money market account, classified as Level 1 within the fair value hierarchy, and reported as a current asset on the consolidated balance sheets. • At December 31, 2021, the Company had an interest rate swap that met the definition of a derivative, classified as Level 2 within the fair value hierarchy, and reported as other liabilities on the consolidated balance sheet. The fair value of interest rate swap was calculated from pricing models that used volatility to quantify the probability of changes around interest rate trends. This interest rate swap was terminated in June 2022, as further discussed in Note 10 — Interest Rate Swaps . The Company has not elected the fair value option as presented by ASC 825, Fair Value Option for Financial Assets and Financial Liabilities , for the financial assets and liabilities that are not otherwise required to be carried at fair value. Under ASC 820, material financial assets and liabilities not carried at fair value, including accounts receivable, accounts payable, related-party payable, accrued and other liabilities, other payable and borrowings under promissory notes and Line of Credit (as defined below), are reported at their carrying value.
Foreign Currency	Foreign Currency: The Company includes gains or losses from foreign currency transactions, such as those resulting from the settlement of foreign receivables or payables, in the consolidated statements of income.
Stock-Based Compensation	Stock-Based Compensation: The Company recognizes stock-based compensation expense related to employee stock options and restricted stock units in accordance with ASC 718, Compensation — Stock Compensation . This standard requires the Company to record compensation expense equal to the fair value of awards granted to employees and non-employees. The fair value of share-based payment awards is estimated on the grant-date using the Black-Scholes option pricing model for stock options, and the closing price of the Company's common stock on the trading day immediately prior to the grant date for restricted stock units. Key input assumptions used in the Black-Scholes option pricing model to estimate the grant date fair value of stock options include the fair value of the Company’s common stock, the expected option term, the expected volatility of the Company’s stock over the option’s expected term, the risk-free interest rate, and the Company’s expected annual dividend yield. The risk-free interest rate assumption for options granted under the 2019 Stock Incentive Plan (the "Plan") is based upon observed interest rates on the United States government securities appropriate for the expected term of the Company’s stock options. The expected term of employee stock options under the Plan represents the weighted-average period that the stock options are expected to remain outstanding. The expected term of options granted is calculated based on the “simplified method,” which estimates the expected term based on the average of the vesting period and contractual term of the stock option. The Company determines the expected volatility assumption using the frequency of daily historical prices of comparable public company’s common stock for a period equal to the expected term of the options. The dividend yield assumption for options granted under the Plan is based on the Company’s history and expectation of dividend payouts. Stock-based compensation expense is based on awards that ultimately vest. Forfeitures are accounted for as they occur. The Company has elected to treat stock-based payment awards with graded vesting schedules and time-based service conditions as separate awards and recognizes stock-based compensation expense over the requisite service period using the graded vesting attribution method. The determination of stock-based compensation is inherently uncertain and subjective and involves the application of valuation models and assumptions requiring the use of judgment. If the Company had made different assumptions, its stock-based compensation expense, and its net income could have been significantly different.
Leases	Leases: The Company adopted ASU 2016-02, Leases (Topic 842) , as of January 1, 2022 which requires the recognition of the right-of-use ("ROU") assets and related operating and finance lease liabilities on the balance sheet and the disclosure of key information about certain leasing arrangements. The Company adopted this ASU and related amendments under the modified retrospective method with no recast of the comparative period presented in the Company's consolidated financial statements. There was no cumulative adjustment to retained earnings upon adoption. The Company elected certain practical expedients permitted under the transition guidance, including to exclude leases with an initial term of 12 months or less at lease commencement, combine non-lease components together with lease components as a single lease component, and to retain the historical lease classification as well as relief from reviewing expired or existing contracts to determine if they contain leases. The Company determines if an arrangement is a lease at commencement date . Leases are classified as either finance leases or operating leases.
New and Recently Adopted Accounting Standards	New and Recently Adopted Accounting Standards: The Company is an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and as such, the Company have elected to take advantage of certain reduced public company reporting requirements. In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards, as a result, the Company will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for private companies. In February 2016, the FASB issued ASU 2016-02 (Topic 842), " Leases ". This ASU amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a ROU asset and corresponding lease liability, measured at the present value of the lease payments. The Company adopted the ASU and the related amendments as of January 1, 2022 under the modified retrospective method with no recast of the comparative period presented in the Company's consolidated financial statements. The Company recorded a ROU asset of $8,800,000 and an operating lease liability of $9,200,000 upon adoption. See Note 14 — Leases for more information. In June 2016, the FASB issued ASU 2016-13, “ Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" , which adds to U.S. GAAP an impairment model known as the current expected credit loss (CECL) model that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. The ASU is also intended to reduce the complexity of U.S. GAAP by decreasing the number of credit impairment models that entities use to account for debt instruments. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years for public business entities that are U.S. Securities and Exchange Commission (SEC) filers. For all other public business entities, the ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted beginning after December 15, 2018, including interim periods within those fiscal years. The FASB subsequently issued ASU 2019-10 (Topic 326), “ Financial Instruments-Credit Losses: Effective Dates ” which amends the effective date for SEC filers that are eligible to be ‘smaller reporting companies’, non-SEC filers and all other companies, including not-for-profit companies and employee benefit plans. For calendar-year end companies that are eligible for the deferral, the effective date is January 1, 2023. The Company will adopt the new standard in annual reporting period beginning after January 1, 2023. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-3, “ Codification Improvements to Financial Instruments ”, which clarifies the requirement for all entities to provide the fair value option disclosures in paragraphs ASC 825-10-50-24 through 50-32. The guidance also clarifies that the contractual term of a net investment in a lease determined in accordance with ASC 842, “ Leases ”, should be the contractual term used to measure expected credit losses under ASC 326, “ Financial Instruments — Credit Losses

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	12 Months Ended
	Dec. 31, 2022
Accounting Policies [Abstract]
Schedule of estimated useful life of property and equipment	The estimated useful life of property and equipment are as follows: Machinery and equipment 5 years to 15 years Leasehold improvements Lesser of useful life or lease term Vehicles 5 years Furniture and fixtures 7 years Building and building improvements 10 years to 40 years Property held under capital leases 3 years to 5 years Computer hardware and software 3 years
Schedule of goodwill	The following table summarizes the activity in the Company's goodwill from December 31, 2020 to December 31, 2022: (in thousands) Balance at December 31, 2020 $ 3,113 Goodwill acquired 397 Balance at December 31, 2021 $ 3,510 Goodwill acquired — Balance at December 31, 2022 $ 3,510
Schedule of variable interest entity financial information	The following financial information includes assets and liabilities of Global Wells and are included in the accompanying consolidated balance sheets, except for those that eliminate upon consolidation: December 31, 2022 December 31, 2021 (in thousands) Cash $ 2,022 $ 1,163 Accounts receivable 53 384 Prepaid expenses and other current assets 191 63 Due from Lollicup USA Inc. 4,700 — Property and equipment, net 45,399 46,612 Other assets 4,262 4,762 Total assets 56,627 52,984 Accounts payable $ 2 $ 497 Accrued expenses 626 68 Income tax payable — 9 Customer deposits 165 88 Due to Lollicup USA Inc. — 2,620 Long-term debt, current portion 957 1,178 Long-term debt, net of current portion 41,558 35,339 Other liabilities 1,302 2,636 Total liabilities $ 44,610 $ 42,435
Schedule of net sales disaggregated by customer type	For the years ended December 31, 2022 and 2021, net sales disaggregated by customer type consist of the amounts shown below. Year Ended December 31, 2022 2021 (in thousands) National and regional chains $ 95,786 $ 86,017 Distributors 242,285 199,902 Online 53,697 50,271 Retail 31,189 28,054 $ 422,957 $ 364,244
Schedule of concentration of credit risk	For the years ended December 31, 2022 and 2021, purchases from the following vendor makes up greater than 10 percent of total purchases: Year Ended December 31, 2022 2021 Keary Global Ltd. (“Keary Global”) and its affiliate, Keary International, Ltd. – related parties 11 % 12 % Amounts due to the following vendors at December 31, 2022 and 2021, respectively, that exceed 10 percent of total accounts payable are as follows: December 31, 2022 December 31, 2021 Keary Global and its affiliate, Keary International – related parties 21 % 10 % Fuling Technology Co., Ltd. 18 % 21 % Wen Ho Industrial Co., Ltd * 11 % * Amounts payable represented less than 10% of total accounts payable.
Schedule of fair value measurements by level for the assets and liabilities measured at fair value on a recurring basis	The following table summarizes the Company’s fair value measurements by level at December 31, 2022 for the assets measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 10,609 $ — $ — Fair value, December 31, 2022 $ 10,609 $ — $ — The following table summarize the Company’s fair value measurements by level at December 31, 2021 for the assets and liabilities measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 2,000 $ — $ — Interest rate swap — (1,334) — Fair value, December 31, 2021 $ 2,000 $ (1,334) $ —
Schedule of carrying values and estimated fair values of debt	The following is a summary of the carrying amount and estimated fair value of the $23,000,000 and $28,700,000 term loans that mature in September 2026 and July 2027, respectively: December 31, 2022 Carrying Amount Estimated Fair Value (in thousands) $23,000,000 term loan maturing in September 2026 $ 22,168 $ 20,115 $28,700,000 term loan maturing in July 2027 20,563 18,918 $ 42,731 $ 39,033

Acquisitions (Tables)

Acquisitions (Tables)	12 Months Ended
	Dec. 31, 2022
Business Combination and Asset Acquisition [Abstract]
Schedule of assets acquired and liabilities assumed	The following table summarizes the final valuation of assets acquired as a result of this acquisition: (in thousands) Inventories $ 153 Property and equipment 50 Customer relationships 400 Goodwill 397 Total assets acquired $ 1,000

Inventories (Tables)

Inventories (Tables)	12 Months Ended
	Dec. 31, 2022
Inventory Disclosure [Abstract]
Schedule of inventories	Inventories consist of the following: December 31, 2022 December 31, 2021 (in thousands) Raw materials $ 18,061 $ 12,543 Semi-finished goods 1,850 1,532 Finished goods 52,044 45,140 Subtotal 71,955 59,215 Less inventory reserve (749) (743) Total inventories $ 71,206 $ 58,472

Property and Equipment (Tables)

Property and Equipment (Tables)	12 Months Ended
	Dec. 31, 2022
Property, Plant and Equipment [Abstract]
Schedule of property and equipment, net	December 31, 2022 December 31, 2021 (in thousands) Machinery and equipment $ 70,234 $ 60,935 Leasehold improvements 19,063 18,655 Vehicles 6,725 5,384 Furniture and fixtures 1,016 936 Building 36,599 35,387 Land 11,907 11,907 Computer hardware and software 593 553 146,137 133,757 Less: accumulated depreciation and amortization (50,569) (40,282) Total property and equipment, net $ 95,568 $ 93,475

Accrued Expenses (Tables)

Accrued Expenses (Tables)	12 Months Ended
	Dec. 31, 2022
Payables and Accruals [Abstract]
Schedule of accrued expense liabilities	The following table summarizes information related to accrued expense liabilities: December 31, 2022 December 31, 2021 (in thousands) Accrued miscellaneous expenses $ 2,094 $ 1,054 Accrued interest 108 68 Accrued payroll 1,586 1,456 Accrued vacation and sick pay 543 416 Accrued shipping expenses 1,918 2,868 Accrued professional services fees 600 642 Deferred rent liability — 372 Accrued property tax 1,164 10 Accrued sale taxes and use taxes 992 927 Total accrued expenses $ 9,005 $ 7,813

Long-Term Debt (Tables)

Long-Term Debt (Tables)	12 Months Ended
	Dec. 31, 2022
Debt Disclosure [Abstract]
Schedule of long-term debt	Long-term debt consists of the following: December 31, 2022 December 31, 2021 (in thousands) A $23,000,000 term loan that matures September 30, 2026, with an initial balance of $16,115,000 and an option to request for additional advances up to a maximum of $6,885,000 through September 2022, which the Company exercised in February 2022. Interest accrues at a fixed rate of 3.5% per annum. Principal and interest payments of $116,000 are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by Global Wells and one of the Company’s stockholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt service coverage ratio. $ 22,168 $ 15,909 A $21,580,000 term loan ("2029 Loan") that was set to mature in May 2029. Interest accrued at prime rate less 0.25% (3.00% at December 31, 2021) and principal payments ranging from $24,000 to $40,000 along with interest were due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan was collateralized by substantially all of the Company’s and Global Well’s assets and was guaranteed by the Company and its stockholders. The Company incurred debt issuance costs of approximately $119,000, which was reported as a reduction of the carrying value of debt on the accompanying consolidated balance sheet. This loan was refinanced in June 2022 (see below). — 20,808 A $28,700,000 term loan ("2027 Loan") that matures July 1, 2027, with an initial balance of $20,700,000 and an option to request for additional advances up to a maximum of $8,000,000 through June 30, 2023. Interest accrues at a fixed rate of 4.375% per annum. Principal and interest payments of $$104,000 are due monthly throughout the term of the loan, with the remaining principal balance due at maturity. The loan is collateralized by substantially all of Global Wells’ assets and is guaranteed by one of the Company’s stockholders. In accordance with the loan agreement, Global Wells is required to comply with certain financial covenants, including a minimum debt coverage ratio. $ 20,563 $ — Long-term debt 42,731 36,717 Less: unamortized loan fees (216) (200) Less: current portion (957) (1,178) Long-term debt, net of current portion $ 41,558 $ 35,339
Schedule of future maturities	At December 31, 2022, future maturities are: (in thousands) 2023 $ 957 2024 990 2025 1,040 2026 20,653 2027 19,091 $ 42,731

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	12 Months Ended
	Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]
Schedule of stock option activity	A summary of the Company’s stock option activity under the Plan for the years ended December 31, 2022 and 2021 is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contract Life (In Years) Aggregate Intrinsic Value Outstanding at December 31, 2020 15,000 $ 10.00 8.0 $ — Granted 430,000 18.86 Exercised (10,000) 10.00 $ 116,000 Outstanding at December 31, 2021 435,000 $ 18.76 9.7 $ 632,000 Granted 50,000 16.53 Exercised (5,000) 10.00 Forfeited (60,000) 18.86 Outstanding at December 31, 2022 420,000 $ 18.58 8.8 $ — Expected to vest at December 31, 2022 420,000 $ 18.58 8.8 $ — Exercisable at December 31, 2022 123,333 18.86 8.8 $ —
Schedule of assumptions used to calculate grant date fair value	The assumptions that were used to calculate the grant date fair value of the Company’s stock option grants for the year ended December 31, 2022 were as follows: Year Ended December 31, 2022 2021 Risk-free interest rate 1.70 % 1.22 % Expected term (years) 6.25 years 6.25 years Volatility 30 % 30 % Dividend yield 0.40 % 0.40 %
Schedule of unvested restricted stock unit activity	The Company issued restricted stock units to its employees. The following table summarizes the unvested restricted stock units for the years ended December 31, 2022 and 2021: Number of Shares Outstanding Weighted Average Grant Date Fair Value Unvested at December 31, 2020 256,000 $ 10.00 Granted 40,000 17.98 Vested (84,917) 11.55 Forfeited (52,083) 11.14 Unvested at December 31, 2021 159,000 $ 11.08 Granted 9,900 16.69 Vested (75,588) 10.72 Forfeited (11,166) 15.54 Unvested at December 31, 2022 82,146 $ 11.47

Earnings Per Share (Tables)

Earnings Per Share (Tables)	12 Months Ended
	Dec. 31, 2022
Earnings Per Share [Abstract]
Schedule of earnings per share	Basic earnings per share is calculated by dividing the net income attributable to equity holders of the Company for the year by the weighted average number of common shares outstanding during the period. Year Ended December 31, 2022 2021 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 23,648 $ 20,778 Weighted average shares 19,825 18,409 Basic earnings per share $ 1.19 $ 1.13 The following table summarizes the calculation of diluted earnings per share: Year Ended December 31, 2022 2021 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 23,648 $ 20,778 Weighted average shares 19,825 18,409 Dilutive shares Stock options and restricted stock units 101 157 Total dilutive shares 19,926 18,566 Diluted earnings per share $ 1.19 $ 1.12

Leases (Tables)

Leases (Tables)	12 Months Ended
	Dec. 31, 2022
Leases [Abstract]
Schedule of Lease Cost and Supplemental Cash Flow Information	For the year ended December 31, 2022, the Company recognized the following lease costs in the accompanying consolidated statement of income: (in thousands) Operating lease expense $ 4,522 Short-term lease expense 311 Variable lease expense 817 Total lease expense $ 5,650
Schedule of Supplemental Information Related to Operating Leases	The following table presents supplemental information related to operating leases for the year ended December 31, 2022: Weighted average remaining lease term 4.27 years Weighted average discount rate 5.32 % Right-of-use assets obtained in exchange for operating lease liabilities 10,727 Cash paid for amounts included in measurement of lease obligations Operating cash flows from operating leases 4,481
Schedule of Future Lease Payments under Operating Leases	As of December 31, 2022, future lease payments under operating leases were as follows: (in thousands) 2023 $ 5,244 2024 4,097 2025 2,926 2026 3,015 2027 1,149 Thereafter 1,212 Total future lease payments 17,643 Less: imputed interest (1,509) Total lease liability balance $ 16,134
Schedule of Future Minimum Lease Obligations	As of December 31, 2021, approximate future minimum lease obligations prior to the adoption of Topic 842 were as follows: (in thousands) 2022 $ 3,055 2023 3,060 2024 1,824 2025 380 2026 374 Thereafter 1,629 $ 10,322

Income Taxes (Tables)

Income Taxes (Tables)	12 Months Ended
	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Schedule of income tax provisions	The provision for income taxes for the years ended December 31, 2022 and 2021, respectively, consisted of: Year Ended December 31, 2022 2021 (in thousands) Current Federal $ 6,291 $ 4,504 State 863 1,068 7,154 5,572 Deferred Federal (502) (576) State 24 93 (478) (483) Provision for income taxes $ 6,676 $ 5,089
Schedule of deferred tax assets and liabilities	The Company’s deferred tax assets (liabilities), calculated using effective tax rates is as follows: December 31, 2022 December 31, 2021 (in thousands) Deferred tax assets: State taxes $ 252 $ 257 Reserves 825 537 Accruals & deferred expenses 66 188 Tenant improvement allowance — 1,216 R&D credit 43 44 Inventory 1,042 1,196 Government grant 343 311 Stock based compensation 573 267 Capitalized research and development costs 1,043 — Operating lease liabilities 8,452 — Total deferred tax assets 12,639 4,016 Deferred tax liabilities: Fixed assets – depreciation (10,350) (9,518) Investment in Global Wells Investment Group (172) (132) Operating ROU asset (7,273) — Total deferred tax liabilities (17,795) (9,650) Net deferred tax liability $ (5,156) $ (5,634)
Schedule of reconciliation of income taxes	Reconciliation of income taxes are as follows from statutory rate of 21% to the effective tax rate for the years ended December 31, 2022 and 2021, respectively: December 31, 2022 December 31, 2021 (in thousands) Income tax computed at the federal statutory rate $ 6,828 $ 5,780 State taxes, net of federal tax benefits 1,101 1,055 Noncontrolling Interest - Income not subject to tax (460) (349) Government forgiveness of debt — (1,050) Permanent items 31 201 Excess tax benefit from stock based compensation (89) (237) Research and development credit (455) (239) Other (280) (72) Provision for income taxes $ 6,676 $ 5,089

Nature of Operations (Details)

Nature of Operations (Details)	12 Months Ended
	Dec. 31, 2022 distribution_center
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Distribution centers operated by entity	6

Summary of Significant Accoun_4

Summary of Significant Accounting Policies - Narrative (Details)	12 Months Ended
	Dec. 31, 2022 USD ($) segment
Debt Instrument [Line Items]
Reportable segment | segment	1
Term Loan, Maturing May 2029
Debt Instrument [Line Items]
Face amount of loan	$ 21,580,000
Term Loan, Maturing September 30, 2026
Debt Instrument [Line Items]
Face amount of loan	23,000,000
Term Loan Maturing July012027
Debt Instrument [Line Items]
Face amount of loan	$ 28,700,000

Summary of Significant Accoun_5

Summary of Significant Accounting Policies - Out-of-Period Adjustment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Adjustments to inventory reserve	$ 6	$ 68
Cost of goods sold	290,871	256,417
Decrease in operating income	(30,015)	(23,145)
Decrease in income before provision for income taxes	(32,513)	(27,528)
Decrease in inventory	(71,206)	(58,472)
Net income (loss)	(23,648)	$ (20,778)
Revision of Prior Period, Error Correction, Adjustment
Variable Interest Entity [Line Items]
Adjustments to inventory reserve	3,500
Cost of goods sold	879
Decrease in operating income	879
Decrease in income before provision for income taxes	879
Decrease in inventory	879
Net income (loss)	$ 664

Summary of Significant Accoun_6

Summary of Significant Accounting Policies - Estimated Useful Life (Details)	12 Months Ended
	Dec. 31, 2022
Vehicles
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment (in years)	5 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment (in years)	7 years
Computer hardware and software
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment (in years)	3 years
Minimum | Machinery and equipment
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment (in years)	5 years
Minimum | Building and building improvements
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment (in years)	10 years
Minimum | Property held under capital leases
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment (in years)	3 years
Maximum | Machinery and equipment
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment (in years)	15 years
Maximum | Building and building improvements
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment (in years)	40 years
Maximum | Property held under capital leases
Property, Plant and Equipment [Line Items]
Estimated useful life of property and equipment (in years)	5 years

Summary of Significant Accoun_7

Summary of Significant Accounting Policies - Capitalized and Depreciated (Details)	12 Months Ended
	Dec. 31, 2022 USD ($) reporting_unit	Dec. 31, 2021 USD ($)
Business Combination, Goodwill [Abstract]
Reporting unit | reporting_unit	1
Impairments of goodwill	$ 0	$ 0
Government Grants
Cumulative grants	1,350,000	1,200,000
Global Wells
Government Grants
Cumulative grants	$ 1,302,000	$ 1,302,000

Summary of Significant Accoun_8

Summary of Significant Accounting Policies - Schedule of Goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 3,510	$ 3,113
Goodwill acquired	0	397
Goodwill, ending balance	$ 3,510	$ 3,510

Summary of Significant Accoun_9

Summary of Significant Accounting Policies - Global Wells (Details) - Global Wells $ in Thousands	12 Months Ended
	Dec. 31, 2017 USD ($)
Variable Interest Entity [Line Items]
Ownership interest (as a percent)	13.50%
Voting interest (as a percent)	25%
Minimum bank account to make additional contributions from members	$ 50
Contributions to offset the amount that member cannot contribute (up to)	$ 25

Summary of Significant Accou_10

Summary of Significant Accounting Policies - Assets and Liabilities of Global Wells (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Variable Interest Entity [Line Items]
Cash	$ 16,041	$ 6,483
Accounts receivable	29,912	32,776
Prepaid expenses and other current assets	6,641	5,141
Property and equipment, net	95,568	93,475
Other assets	818	477
Total assets	252,175	207,599
Accounts payable	18,559	18,470
Accrued expenses	9,005	7,813
Income taxes payable (including $0 and $9 associated with variable interest entity at December 31, 2022 and 2021, respectively)	0	85
Due to Lollicup USA Inc.	4,940	2,003
Long-term debt, current portion	957	1,178
Long-term debt, net of current portion	41,558	35,339
Other liabilities	2,652	3,837
Total liabilities	100,242	75,574
Global Wells
Variable Interest Entity [Line Items]
Cash	2,022	1,163
Accounts receivable	53	384
Prepaid expenses and other current assets	191	63
Due from Lollicup USA Inc.	4,700	0
Property and equipment, net	45,399	46,612
Other assets	4,262	4,762
Total assets	56,627	52,984
Accounts payable	2	497
Accrued expenses	626	68
Income taxes payable (including $0 and $9 associated with variable interest entity at December 31, 2022 and 2021, respectively)	0	9
Customer deposits	165	88
Due to Lollicup USA Inc.	0	2,620
Long-term debt, current portion	957	1,178
Long-term debt, net of current portion	41,558	35,339
Other liabilities	1,302	2,636
Total liabilities	$ 44,610	$ 42,435

Summary of Significant Accou_11

Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Net sales	$ 422,957,000	$ 364,244,000
Cost of goods sold	290,871,000	256,417,000
Selling expenses
Disaggregation of Revenue [Line Items]
Cost of goods sold	32,508,000	28,525,000
National and regional chains
Disaggregation of Revenue [Line Items]
Net sales	95,786,000	86,017,000
Distributors
Disaggregation of Revenue [Line Items]
Net sales	242,285,000	199,902,000
Online
Disaggregation of Revenue [Line Items]
Net sales	53,697,000	50,271,000
Retail
Disaggregation of Revenue [Line Items]
Net sales	31,189,000	28,054,000
Logistics Services
Disaggregation of Revenue [Line Items]
Net sales	$ 6,150,000	$ 2,779,000

Summary of Significant Accou_12

Summary of Significant Accounting Policies - Advertising Costs and Income Taxes (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Marketing and Advertising Expense [Abstract]
Advertising costs	$ 2,418,000	$ 2,488,000

Summary of Significant Accou_13

Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) - Supplier	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Purchases | Keary Global and its affiliate, Keary International – related parties
Concentration Risk [Line Items]
Concentration risk percentage	11%	12%
Accounts payable | Keary Global and its affiliate, Keary International – related parties
Concentration Risk [Line Items]
Concentration risk percentage	21%	10%
Accounts payable | Fuling Technology Co., Ltd.
Concentration Risk [Line Items]
Concentration risk percentage	18%	21%
Accounts payable | Wen Ho Industrial Co., Ltd
Concentration Risk [Line Items]
Concentration risk percentage		11%

Summary of Significant Accou_14

Summary of Significant Accounting Policies - Fair Value Measurements (Details) - Recurring basis - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 10,609	$ 2,000
Interest rate swap		0
Fair value	10,609	2,000
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Interest rate swap		(1,334)
Fair value	0	(1,334)
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Interest rate swap		0
Fair value	$ 0	$ 0

Summary of Significant Accou_15

Summary of Significant Accounting Policies - Summary of Carrying Values and Estimated Fair Values of Debt (Details) - USD ($)	Dec. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Carrying Amount	$ 42,731,000	$ 36,717,000
Estimated Fair Value	39,033,000
Term Loan, Maturing September 30, 2026
Debt Instrument [Line Items]
Face amount of loan	23,000,000
Carrying Amount	22,168,000	15,909,000
Estimated Fair Value	20,115,000
Term Loan Maturing July012027
Debt Instrument [Line Items]
Face amount of loan	28,700,000
Carrying Amount	20,563,000	$ 0
Estimated Fair Value	$ 18,918,000

Summary of Significant Accou_16

Summary of Significant Accounting Policies - Foreign Currency (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Foreign Currency
Gain (loss) on foreign currency transactions	$ 1,568,000	$ (412,000)

Summary of Significant Accou_17

Summary of Significant Accounting Policies - New and Recently Adopted Accounting Standards (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating right-of-use assets	$ 15,713	$ 0
Operating lease liability	$ 16,134
Cumulative Effect, Period of Adoption, Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating right-of-use assets		8,800
Operating lease liability		$ 9,200

Acquisitions - Narrative (Detai

Acquisitions - Narrative (Details) $ in Thousands	Mar. 01, 2021 USD ($)
Pacific Cup, Inc
Business Acquisition [Line Items]
Cash consideration	$ 1,000

Acquisitions - Pacific Cup (Det

Acquisitions - Pacific Cup (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Mar. 01, 2021	Dec. 31, 2020
Business Acquisition [Line Items]
Goodwill	$ 3,510	$ 3,510		$ 3,113
Pacific Cup, Inc
Business Acquisition [Line Items]
Inventories			$ 153
Property and equipment			50
Customer relationships			400
Goodwill			397
Total assets acquired			$ 1,000

Joint Venture (Details)

Joint Venture (Details) - Bio Earth Technology - USD ($)	1 Months Ended
	Feb. 28, 2023	Jan. 31, 2023	Nov. 30, 2022	Jun. 30, 2022	Apr. 30, 2022	Dec. 31, 2022	Apr. 06, 2022
Lollicup Franchising, LLC
Schedule of Equity Method Investments [Line Items]
Ownership percentage by parent							49%
Lollicup Franchising, LLC
Schedule of Equity Method Investments [Line Items]
Committed capital to joint venture							$ 6,500,000
Noncontrolling interest in joint ventures						$ 4,000,000
Investment payment			$ 1,876,000	$ 2,000,000	$ 2,000,000
Lollicup Franchising, LLC | Subsequent Event
Schedule of Equity Method Investments [Line Items]
Investment payment	$ 1,600,000	$ 1,300,000

Inventories - Schedule of Inven

Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 18,061	$ 12,543
Semi-finished goods	1,850	1,532
Finished goods	52,044	45,140
Subtotal	71,955	59,215
Less inventory reserve	(749)	(743)
Total inventories	$ 71,206	$ 58,472

Inventories - Narrative (Detail

Inventories - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Inventory [Line Items]
Adjustments to inventory reserve	$ 6	$ 68
Cost of goods sold	290,871	$ 256,417
Revision of Prior Period, Error Correction, Adjustment
Inventory [Line Items]
Adjustments to inventory reserve	3,500
Cost of goods sold	$ 879

Property and Equipment - Schedu

Property and Equipment - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	$ 146,137	$ 133,757
Less: accumulated depreciation and amortization	(50,569)	(40,282)
Total property and equipment, net	95,568	93,475
Depreciation and amortization expense	10,378	10,024
Machinery and equipment
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	70,234	60,935
Leasehold improvements
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	19,063	18,655
Vehicles
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	6,725	5,384
Furniture and fixtures
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	1,016	936
Building
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	36,599	35,387
Land
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	11,907	11,907
Computer hardware and software
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	$ 593	$ 553

Line of Credit (Details)

Line of Credit (Details) - USD ($)	Oct. 06, 2021	Oct. 05, 2021	Dec. 31, 2022	Aug. 18, 2022	Dec. 31, 2021	Feb. 23, 2018
Line of credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity			$ 38,930,000			$ 40,000,000
Floor rate (as a percent)	3.25%	3.75%
Long-term line of credit, noncurrent			0		$ 0
Standby letter of credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity				$ 2,000,000
Long-term line of credit, noncurrent			$ 1,070,000		$ 0
Prime Rate | Line of credit
Line of Credit Facility [Line Items]
Spread on variable rate (as a percent)	0.25%	0.25%

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accrued miscellaneous expenses	$ 2,094	$ 1,054
Accrued interest	108	68
Accrued payroll	1,586	1,456
Accrued vacation and sick pay	543	416
Accrued shipping expenses	1,918	2,868
Accrued professional services fees	600	642
Deferred rent liability	0	372
Accrued property tax	1,164	10
Accrued sale taxes and use taxes	992	927
Total accrued expenses	$ 9,005	$ 7,813

Long-Term Debt - Schedule of Lo

Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Carrying Amount	$ 42,731,000	$ 36,717,000
Less: unamortized loan fees	(216,000)	(200,000)
Less: current portion	(957,000)	(1,178,000)
Long-term debt, net of current portion	41,558,000	35,339,000
Term Loan, Maturing September 30, 2026
Debt Instrument [Line Items]
Carrying Amount	22,168,000	15,909,000
Face amount of loan	23,000,000
Amount converted to term loan	16,115,000
Term loan, accordion feature	$ 6,885,000
Fixed interest rate (as a percent)	3.50%
Monthly principal and interest payments	$ 116,000
Term Loan, Maturing May 2029
Debt Instrument [Line Items]
Carrying Amount	0	$ 20,808,000
Face amount of loan	21,580,000
Debt issuance costs	119,000
Term Loan, Maturing May 2029 | Minimum
Debt Instrument [Line Items]
Monthly principal and interest payments	24,000
Term Loan, Maturing May 2029 | Maximum
Debt Instrument [Line Items]
Monthly principal and interest payments	$ 40,000
Term Loan, Maturing May 2029 | Prime Rate
Debt Instrument [Line Items]
Interest rate during the period (as a percent)	0.25%	3%
Term Loan Maturing July012027
Debt Instrument [Line Items]
Carrying Amount	$ 20,563,000	$ 0
Face amount of loan	28,700,000
Amount converted to term loan	20,700,000
Term loan, accordion feature	$ 8,000,000
Fixed interest rate (as a percent)	4.375%
Monthly principal and interest payments	$ 104,000

Long-Term Debt - Schedule of Fu

Long-Term Debt - Schedule of Future Maturities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Future maturities:
2023	$ 957
2024	990
2025	1,040
2026	20,653
2027	19,091
Long-term debt	$ 42,731	$ 36,717

Long-Term Debt - Narrative (Det

Long-Term Debt - Narrative (Details) - USD ($)		12 Months Ended
	Apr. 16, 2020	Dec. 31, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Gain on forgiveness of debt		$ 0	$ 5,000,000
Paycheck Protection Program, CARES Act
Debt Instrument [Line Items]
Loan proceeds received	$ 5,000,000
Fixed interest rate (as a percent)	1%
Gain on forgiveness of debt		$ 5,000,000

Interest Rate Swaps (Details)

Interest Rate Swaps (Details) - USD ($) $ in Thousands	1 Months Ended			12 Months Ended
	Jun. 30, 2022	Apr. 30, 2021	Jun. 30, 2019	Dec. 31, 2022	Dec. 31, 2021	Jun. 13, 2019	Jun. 03, 2019
Derivative [Line Items]
Swap termination fee		$ (196)
Interest Rate Swap
Derivative [Line Items]
Term of contract (in years)			5 years
Notional value			$ 10,000
Fixed interest rate (as a percent)							5.19%
Derivative interest income (expense)					$ 47
Global Wells | Interest Rate Swap
Derivative [Line Items]
Term of contract (in years)			10 years
Gain on termination	$ 825
Notional value						$ 21,580
Fixed interest rate (as a percent)						5.05%
Derivative interest income (expense)				$ 2,159	1,270
Global Wells | Interest Rate Swap | Other Liabilities
Derivative [Line Items]
Derivative fair value					$ 1,334

Stockholder_s Equity (Details)

Stockholder’s Equity (Details)		1 Months Ended	12 Months Ended
	Nov. 09, 2022 $ / shares	Apr. 30, 2021 USD ($) shares	Dec. 31, 2022 USD ($) vote $ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares
Equity [Abstract]
Shares authorized (in shares)			110,000,000
Common stock, par value (in dollars per share) | $ / shares			$ 0.001	$ 0.001
Preferred stock, par value (in dollars per share) | $ / shares			$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)			10,000,000	10,000,000
Common stock, shares authorized (in shares)			100,000,000	100,000,000
Votes per share held | vote			1
Issuance of common stock in connection with our initial public offering, net of issuance costs (in shares)		4,542,500
Issuance of common stock in connection with our initial public offering, net of issuance costs of $5,088 | $		$ 67,587,000		$ 67,592,000
Common stock, dividends declared (in dollars per share) | $ / shares	$ 0.35
Cash dividends declared ($0.35 per share) | $			$ 6,964,000	$ 0

Stock-Based Compensation - Narr

Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Jan. 31, 2019
Stock-based Compensation
Shares reserved for issuance (in shares)	1,322,349		2,000,000
Stock-based compensation expense	$ 2,047	$ 2,026
Tax benefit, share-based payment arrangement, amount	$ 89	$ 237
Stock options, weighted-average grant-date fair value (in dollars per share)	$ 5.18	$ 5.74
Remaining stock-based compensation expense for unvested stock options	$ 792
Accelerated award vesting period	6 months
Share-based payment arrangement, accelerated cost		$ 719
Remaining stock-based compensation expense for unvested restricted stock units	$ 327
Restricted Stock Units (RSUs)
Stock-based Compensation
Vesting period (in years)	3 years
Granted (in dollars per share)	$ 16.69	$ 17.98
Fair value on vesting date	$ 1,156	$ 1,884
Cost not yet recognized, period for recognition (in years)	10 months 24 days
Share-based Payment Arrangement, Option
Stock-based Compensation
Vesting period (in years)	3 years
Cost not yet recognized, period for recognition (in years)	1 year 4 months 24 days
Maximum
Stock-based Compensation
Award term (in years)	10 years
Incentive Stock Optionee, Stock Ownership Greater than Ten Percent of Voting Power
Stock-based Compensation
Minimum exercise price to fair market value of common stock at the date of grant (as a percent)	110%
Incentive Stock Optionee, Stock Ownership Greater than Ten Percent of Voting Power | Maximum
Stock-based Compensation
Award term (in years)	5 years

Stock-Based Compensation - Sche

Stock-Based Compensation - Schedule of Stock Options Activity (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Number of Options
Outstanding at beginning of period (in shares)	435,000	15,000
Granted (in shares)	50,000	430,000
Exercised (in shares)	(5,000)	(10,000)
Forfeited (in shares)	(60,000)
Outstanding at end of period (in shares)	420,000	435,000	15,000
Number of options, expected to vest (in shares)	420,000
Number of options, exercisable (in shares)	123,333
Weighted-Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 18.76	$ 10
Granted (in dollars per share)	16.53	18.86
Exercised (in dollars per share)	10	10
Forfeited (in dollars per share)	18.86
Outstanding at end of period (in dollars per share)	18.58	$ 18.76	$ 10
Weighted average exercise price, expected to vest (in dollars per share)	18.58
Weighted average exercise price, exercisable (in dollars per share)	$ 18.86
Stock Option Activity, Additional Disclosures
Weighted average remaining contract life, options outstanding	8 years 9 months 18 days	9 years 8 months 12 days	8 years
Weighted average remaining contract life, expected to vest	8 years 9 months 18 days
Weighted average remaining contract life, exercisable	8 years 9 months 18 days
Aggregate intrinsic value, options exercised		$ 116,000
Aggregate intrinsic value, options outstanding	$ 0	$ 632,000
Aggregate intrinsic value, expected to vest	0
Aggregate intrinsic value, exercisable	$ 0

Stock-Based Compensation - Assu

Stock-Based Compensation - Assumptions Used to Calculate Grant Date Fair Value (Details)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Share-Based Payment Arrangement [Abstract]
Risk-free interest rate	1.70%	1.22%
Expected term (years)	6 years 3 months	6 years 3 months
Volatility	30%	30%
Dividend yield	0.40%	0.40%

Stock-Based Compensation - Sc_2

Stock-Based Compensation - Schedule of Unvested Restricted Stock Units (Details) - Restricted Stock Units (RSUs) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Number of Shares Outstanding
Outstanding at beginning of period (in shares)	159,000	256,000
Granted (in shares)	9,900	40,000
Vested (in shares)	(75,588)	(84,917)
Forfeited (in shares)	(11,166)	(52,083)
Outstanding at end of period (in shares)	82,146	159,000
Weighted Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share)	$ 11.08	$ 10
Granted (in dollars per share)	16.69	17.98
Vested (in dollars per share)	10.72	11.55
Forfeited (in dollars per share)	15.54	11.14
Outstanding at end of period (in dollars per share)	$ 11.47	$ 11.08

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Earnings Per Share Reconciliation [Abstract]
Net income attributable to Karat Packaging Inc.	$ 23,648	$ 20,778
Weighted average shares (in shares)	19,824,911	18,409,243
Basic earnings per share (in dollars per share)	$ 1.19	$ 1.13
Weighted Average Number of Shares Outstanding, Diluted [Abstract]
Net income attributable to Karat Packaging Inc.	$ 23,648	$ 20,778
Weighted average shares (in shares)	19,824,911	18,409,243
Dilutive shares
Stock options and restricted stock units (in shares)	101,000	157,000
Total dilutive shares (in shares)	19,925,905	18,566,260
Diluted earnings per share (in dollars per share)	$ 1.19	$ 1.12
Potentially dilutive shares excluded from diluted earnings per share calculation (in shares)	449,223	234,072

Leases - Schedule of Lease Cost

Leases - Schedule of Lease Cost (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Leases [Abstract]
Operating lease expense	$ 4,522
Short-term lease expense	311
Variable lease expense	817
Total lease expense	$ 5,650

Leases - Narrative (Details)

Leases - Narrative (Details) - USD ($) $ in Thousands		12 Months Ended
	Sep. 09, 2020	Dec. 31, 2022	Dec. 31, 2021
Lessee, Lease, Description [Line Items]
Rent expense			$ 1,783
Lease revenue		$ 949	$ 931
Payments receivable in 2023		$ 611
OperatingLeaseIncomeComprehensiveIncomeExtensibleListNotDisclosedFlag		Rental income	Rental income
Global Wells
Lessee, Lease, Description [Line Items]
Term of contract	38 months
Global Wells | Minimum
Lessee, Lease, Description [Line Items]
Monthly lease payment	$ 58
Global Wells | Maximum
Lessee, Lease, Description [Line Items]
Monthly lease payment	$ 61
Operating Expense
Lessee, Lease, Description [Line Items]
Lease expense		$ 3,446
Cost of Sales
Lessee, Lease, Description [Line Items]
Lease expense		$ 1,076

Leases - Schedule of Supplement

Leases - Schedule of Supplemental Information Related to Operating Leases (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)
Leases [Abstract]
Weighted average remaining lease term (in years)	4 years 3 months 7 days
Weighted average discount rate	5.32%
Right-of-use assets obtained in exchange for operating lease liabilities	$ 10,727
Cash paid for amounts included in measurement of lease obligations
Operating cash flows from operating leases	$ 4,481

Leases - Schedule of Maturities

Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Leases [Abstract]
2023	$ 5,244
2024	4,097
2025	2,926
2026	3,015
2027	1,149
Thereafter	1,212
Total future lease payments	17,643
Less: imputed interest	(1,509)
Operating lease liability	$ 16,134

Leases - Schedule of future min

Leases - Schedule of future minimum lease obligations (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Leases [Abstract]
2022	$ 3,055
2023	3,060
2024	1,824
2025	380
2026	374
Thereafter	1,629
Future minimum lease obligations	$ 10,322

Related Party Transactions (Det

Related Party Transactions (Details)	3 Months Ended	12 Months Ended
	Sep. 30, 2018 convertible_note	Dec. 31, 2022 USD ($) shares	Dec. 31, 2021 USD ($) shares
Related Party Transaction [Line Items]
Common stock, shares outstanding (in shares) | shares		19,885,005	19,804,417
Number of exercised convertible notes | convertible_note	2
Related party payable		$ 4,940,000	$ 2,003,000
Affiliated Entity | Keary Global
Related Party Transaction [Line Items]
Common stock, shares outstanding (in shares) | shares		250,004
Related party payable		$ 4,940,000	2,003,000
Purchases from related party		42,978,000	37,021,000
Affiliated Entity | Keary International
Related Party Transaction [Line Items]
Related party payable		4,940,000	2,003,000
Purchases from related party		$ 42,978,000	$ 37,021,000

Employee Benefits (Details)

Employee Benefits (Details) - USD ($)	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Defined Contribution Plan Disclosure [Line Items]
Contributions	$ 345,000	$ 322,000
Tranche One
Defined Contribution Plan Disclosure [Line Items]
Employer matching contribution, percent of match	100%
Employer matching contribution, percent of employees' gross pay	3%
Tranche Two
Defined Contribution Plan Disclosure [Line Items]
Employer matching contribution, percent of match	87.50%
Employer matching contribution, percent of employees' gross pay	4%
Tranche Three
Defined Contribution Plan Disclosure [Line Items]
Employer matching contribution, percent of match	80%
Employer matching contribution, percent of employees' gross pay	5%

Income Taxes - Schedule of Inco

Income Taxes - Schedule of Income Tax Provisions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Current
Federal	$ 6,291	$ 4,504
State	863	1,068
Current income tax provision	7,154	5,572
Deferred
Federal	(502)	(576)
State	24	93
Deferred income tax provision	(478)	(483)
Provision for income taxes	$ 6,676	$ 5,089

Income Taxes - Schedule of Defe

Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred tax assets:
State taxes	$ 252	$ 257
Reserves	825	537
Accruals & deferred expenses	66	188
Tenant improvement allowance	0	1,216
R&D credit	43	44
Inventory	1,042	1,196
Government grant	343	311
Stock based compensation	573	267
Capitalized research and development costs	1,043	0
Operating lease liabilities	8,452	0
Total deferred tax assets	12,639	4,016
Deferred tax liabilities:
Fixed assets – depreciation	(10,350)	(9,518)
Investment in Global Wells Investment Group	(172)	(132)
Operating ROU asset	(7,273)	0
Total deferred tax liabilities	(17,795)	(9,650)
Net deferred tax liability	$ (5,156)	$ (5,634)

Income Taxes - Schedule of Reco

Income Taxes - Schedule of Reconciliation of Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Income Tax Disclosure [Abstract]
Income tax computed at the federal statutory rate	$ 6,828	$ 5,780
State taxes, net of federal tax benefits	1,101	1,055
Noncontrolling Interest - Income not subject to tax	(460)	(349)
Government forgiveness of debt	0	(1,050)
Permanent items	31	201
Excess tax benefit from stock based compensation	(89)	(237)
Research and development credit	(455)	(239)
Other	(280)	(72)
Provision for income taxes	$ 6,676	$ 5,089

Income Taxes - Narrative (Detai

Income Taxes - Narrative (Details)	Dec. 31, 2022 USD ($)
Income Tax Disclosure [Abstract]
Unrecognized tax benefit	$ 0
Deferred tax assets, valuation allowance	$ 0

Subsequent Events (Details)

Subsequent Events (Details) ft² in Thousands, $ in Thousands	1 Months Ended
	Feb. 28, 2023 USD ($) ft²	Jan. 31, 2023 USD ($)	Nov. 30, 2022 USD ($)	Jun. 30, 2022 USD ($)	Apr. 30, 2022 USD ($)	Mar. 31, 2023 USD ($)
Subsequent Event
Subsequent Event [Line Items]
Lease term	88 months
Area of Distribution facility (square foot) | ft²	52
Subsequent Event | SOFR
Subsequent Event [Line Items]
Interest rate						2.50%
Floor interest rate						1%
Subsequent Event | Minimum
Subsequent Event [Line Items]
Lease expense	$ 34
Subsequent Event | Maximum
Subsequent Event [Line Items]
Lease expense	43
Bio Earth Technology | Lollicup Franchising, LLC
Subsequent Event [Line Items]
Investment payment			$ 1,876	$ 2,000	$ 2,000
Bio Earth Technology | Subsequent Event | Lollicup Franchising, LLC
Subsequent Event [Line Items]
Investment payment	$ 1,600	$ 1,300
Received refund						$ 950