Karat Packaging (KRT) 10-Q 8 Nov 24 2024 Q3 Quarterly report Financial data

Cover

Cover - shares	9 Months Ended
	Sep. 30, 2024	Nov. 04, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
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 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
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		20,024,105
Entity Central Index Key	0001758021
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false
Current Fiscal Year End Date	--12-31

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents (including $1,210 and $13,566 associated with variable interest entity at September 30, 2024 and December 31, 2023, respectively)	$ 38,903	$ 23,076
Short-term investments (including $11,128 and $0 associated with variable interest entity at September 30, 2024 and December 31, 2023, respectively)	21,531	26,343
Accounts receivable, net of allowance for bad debt of $562 and $392 at September 30, 2024 and December 31, 2023, respectively	33,868	27,763
Inventories	70,918	71,528
Prepaid expenses and other current assets (including $58 and $82 associated with variable interest entity at September 30, 2024 and December 31, 2023, respectively)	4,869	6,219
Total current assets	170,089	154,929
Property and equipment, net (including $43,275 and $44,185 associated with variable interest entity at September 30, 2024 and December 31, 2023, respectively)	90,132	95,226
Deposits	282	1,047
Goodwill	3,510	3,510
Intangible assets, net	307	327
Operating right-of-use assets	41,391	20,739
Other non-current assets (including $42 and $53 associated with variable interest entity at September 30, 2024 and December 31, 2023, respectively)	1,092	619
Total assets	306,803	276,397
Current liabilities
Accrued expenses (including $366 and $591 associated with variable interest entity at September 30, 2024 and December 31, 2023, respectively)	12,751	10,576
Deferred revenue (including $0 and $116 associated with variable interest entity at September 30, 2024 and December 31, 2023)	909	951
Long-term debt, current portion (including $1,165 and $1,122 associated with variable interest entity at September 30, 2024 and December 31, 2023, respectively)	1,165	1,122
Operating lease liabilities, current portion	8,616	4,800
Other current liabilities (including $2,186 and $1,302 associated with variable interest entity at September 30, 2024 and December 31, 2023, respectively)	3,700	3,200
Total current liabilities	54,479	44,401
Deferred tax liability	4,197	4,197
Long-term debt, net of current portion and debt discount of $156 and $203 at September 30, 2024 and December 31, 2023, respectively (including $47,565 and $48,396 associated with variable interest entity at September 30, 2024 and December 31, 2023, respectively, and debt discount of $156 and $203 associated with variable interest entity at September 30, 2024 and December 31, 2023, respectively)	47,565	48,396
Operating lease liabilities, net of current portion	36,603	16,687
Other non-current liabilities (including $116 and $0 associated with variable interest entity at September 30, 2024 and December 31, 2023 respectively)	363	26
Total liabilities	143,207	113,707
Commitments and Contingencies (Note 15)
Karat Packaging Inc. stockholders’ equity
Preferred stock, $0.001 par value, $10,000,000 shares authorized, no shares issued and outstanding, as of September 30, 2024 and December 31, 2023	0	0
Common stock, $0.001 par value, $100,000,000 shares authorized, $20,044,105 and $20,021,105 shares issued and outstanding, respectively, as of September 30, 2024 and $19,988,482 and $19,965,482 shares issued and outstanding, respectively, as of December 31, 2023	20	20
Additional paid in capital	88,823	86,667
Treasury stock, $0.001 par value, $23,000 shares as of both September 30, 2024 and December 31, 2023	(248)	(248)
Retained earnings	68,717	67,679
Total Karat Packaging Inc. stockholders’ equity	157,312	154,118
Noncontrolling interest	6,284	8,572
Total stockholders’ equity	163,596	162,690
Total liabilities and stockholders’ equity	306,803	276,397
Nonrelated Party
Current liabilities
Accounts payable	23,375	18,446
Related Party
Current liabilities
Accounts payable	$ 3,963	$ 5,306

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Cash and cash equivalents	$ 38,903	$ 23,076
Short-term investments	21,531	26,343
Allowance for bad debt	562	392
Prepaid expenses and other current assets	4,869	6,219
Property and equipment, net	90,132	95,226
Other non-current assets	1,092	619
Accrued expenses	12,751	10,576
Deferred revenue	909	951
Long-term debt, current portion	1,165	1,122
Other current liabilities	3,700	3,200
Debt discount	156	203
Other non-current liabilities	$ 363	$ 26
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)	20,044,105	19,988,482
Common stock, shares outstanding (in shares)	20,021,105	19,965,482
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	$ 1,210	$ 13,566
Short-term investments	11,128	0
Prepaid expenses and other current assets	58	82
Property and equipment, net	43,275	44,185
Other non-current assets	42	53
Accounts payable	67	63
Accrued expenses	366	591
Deferred revenue	0	116
Long-term debt, current portion	1,165	1,122
Other current liabilities	2,186	1,302
Debt discount	156	203
Long-term debt, net of current portion	47,565	48,396
Other non-current liabilities	$ 116	$ 0

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
Net sales	$ 112,771	$ 105,528	$ 320,984	$ 310,069
Cost of goods sold	69,274	66,584	196,478	191,120
Gross profit	43,497	38,944	124,506	118,949
Operating expenses
Selling expenses	13,746	8,004	38,377	25,500
General and administrative expenses (including $643 and $702 associated with variable interest entity for the three months ended September 30, 2024 and 2023; respectively, $1,888 and $2,020 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	18,508	19,870	53,170	53,767
Impairment expense and (gain) loss, net, on disposal of machinery	(27)	(310)	2,498	2,231
Total operating expenses	32,227	27,564	94,045	81,498
Operating income	11,270	11,380	30,461	37,451
Other income (expenses)
Rental income (including $263 and $235 associated with variable interest entity for the three months ended September 30, 2024 and 2023; respectively, $776 and $721 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	593	259	1,484	781
Other income (expenses), net	48	32	154	(58)
(Loss) gain on foreign currency transactions	(287)	455	152	350
Interest income (including $123 and $80 associated with variable interest entity for the three months ended September 30, 2024 and 2023; respectively, $469 and $278 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	770	454	1,734	1,040
Interest expense (including $517 and $528 associated with variable interest entity for the three months ended September 30, 2024 and 2023; respectively, $1,553 and $1,499 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	(535)	(536)	(1,607)	(1,516)
Total other income, net	589	664	1,917	597
Income before provision for income taxes	11,859	12,044	32,378	38,048
Provision for income taxes	2,597	2,904	7,413	9,045
Net income	9,262	9,140	24,965	29,003
Net income attributable to noncontrolling interest	168	75	605	431
Net income attributable to Karat Packaging Inc.	$ 9,094	$ 9,065	$ 24,360	$ 28,572
Basic and diluted earnings per share:
Basic (in dollars per share)	$ 0.45	$ 0.46	$ 1.22	$ 1.44
Diluted (in dollars per share)	$ 0.45	$ 0.45	$ 1.21	$ 1.43
Weighted average common shares outstanding, basic (in shares)	20,017,774	19,890,646	19,993,964	19,888,244
Weighted average common shares outstanding, diluted (in shares)	20,133,813	19,994,648	20,107,801	19,962,999

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
General and administrative expenses	$ 18,508	$ 19,870	$ 53,170	$ 53,767
Rental income	593	259	1,484	781
Interest income	770	454	1,734	1,040
Interest expense	535	536	1,607	1,516
VIE, Primary Beneficiary
General and administrative expenses	643	702	1,888	2,020
Rental income	263	235	776	721
Interest income	123	80	469	278
Interest expense	$ 517	$ 528	$ 1,553	$ 1,499

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) - USD ($) $ in Thousands	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, 2022			19,908,005
Balance at the beginning of period at Dec. 31, 2022	$ 151,933	$ 141,682	$ 20	$ (248)	$ 85,792	$ 56,118	$ 10,251
Treasury stock, balance at the beginning of period (in shares) at Dec. 31, 2022				(23,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes (in shares)			2,452
Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes	(14)	(14)			(14)
Stock-based compensation	277	277			277
Net income	9,186	9,005				9,005	181
Balance at the end of period (in shares) at Mar. 31, 2023			19,910,457
Balance at the end of period at Mar. 31, 2023	161,382	150,950	$ 20	$ (248)	86,055	65,123	10,432
Treasury stock, balance at the end of period (in shares) at Mar. 31, 2023				(23,000)
Balance at the beginning of period (in shares) at Dec. 31, 2022			19,908,005
Balance at the beginning of period at Dec. 31, 2022	151,933	141,682	$ 20	$ (248)	85,792	56,118	10,251
Treasury stock, balance at the beginning of period (in shares) at Dec. 31, 2022				(23,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	29,003
Balance at the end of period (in shares) at Sep. 30, 2023			19,916,839
Balance at the end of period at Sep. 30, 2023	164,753	154,165	$ 20	$ (248)	86,620	67,773	10,588
Treasury stock, balance at the end of period (in shares) at Sep. 30, 2023				(23,000)
Balance at the beginning of period (in shares) at Mar. 31, 2023			19,910,457
Balance at the beginning of period at Mar. 31, 2023	161,382	150,950	$ 20	$ (248)	86,055	65,123	10,432
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash Dividend	6,965	6,965				6,965
Treasury stock, balance at the beginning of period (in shares) at Mar. 31, 2023				(23,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes (in shares)			582
Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes	(4)	(4)			(4)
Stock-based compensation	216	216			216
Net income	10,677	10,502				10,502	175
Balance at the end of period (in shares) at Jun. 30, 2023			19,911,039
Balance at the end of period at Jun. 30, 2023	165,306	154,699	$ 20	$ (248)	86,267	68,660	10,607
Treasury stock, balance at the end of period (in shares) at Jun. 30, 2023				(23,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash Dividend	9,952	9,952				9,952
Stock-based compensation	250	250			250
Exercise of stock options (in shares)			5,800
Exercise of stock options	103	103			103
Noncontrolling interest tax withholding	(94)						(94)
Net income	9,140	9,065				9,065	75
Balance at the end of period (in shares) at Sep. 30, 2023			19,916,839
Balance at the end of period at Sep. 30, 2023	$ 164,753	154,165	$ 20	$ (248)	86,620	67,773	10,588
Treasury stock, balance at the end of period (in shares) at Sep. 30, 2023				(23,000)
Balance at the beginning of period (in shares) at Dec. 31, 2023	19,965,482		19,988,482
Balance at the beginning of period at Dec. 31, 2023	$ 162,690	154,118	$ 20	$ (248)	86,667	67,679	8,572
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash Dividend	$ 5,992	5,992				5,992
Treasury stock, balance at the beginning of period (in shares) at Dec. 31, 2023	(23,000)			(23,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes (in shares)			3,750
Stock-based compensation	$ 375	375			375
Exercise of stock options (in shares)			2,800
Exercise of stock options	52	52			52
Global Wells noncontrolling membership interest redemption	(3,209)	(316)				(316)	(2,893)
Net income	6,476	6,166				6,166	310
Balance at the end of period (in shares) at Mar. 31, 2024			19,995,032
Balance at the end of period at Mar. 31, 2024	$ 160,392	154,403	$ 20	$ (248)	87,094	67,537	5,989
Treasury stock, balance at the end of period (in shares) at Mar. 31, 2024				(23,000)
Balance at the beginning of period (in shares) at Dec. 31, 2023	19,965,482		19,988,482
Balance at the beginning of period at Dec. 31, 2023	$ 162,690	154,118	$ 20	$ (248)	86,667	67,679	8,572
Treasury stock, balance at the beginning of period (in shares) at Dec. 31, 2023	(23,000)			(23,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)	24,073
Net income	$ 24,965
Balance at the end of period (in shares) at Sep. 30, 2024	20,021,105		20,044,105
Balance at the end of period at Sep. 30, 2024	$ 163,596	157,312	$ 20	$ (248)	88,823	68,717	6,284
Treasury stock, balance at the end of period (in shares) at Sep. 30, 2024	(23,000)			(23,000)
Balance at the beginning of period (in shares) at Mar. 31, 2024			19,995,032
Balance at the beginning of period at Mar. 31, 2024	$ 160,392	154,403	$ 20	$ (248)	87,094	67,537	5,989
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash Dividend	7,004	7,004				7,004
Treasury stock, balance at the beginning of period (in shares) at Mar. 31, 2024				(23,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon vesting of restricted stock units, net shares withheld to cover taxes (in shares)			27,800
Stock-based compensation	940	940			940
Exercise of stock options (in shares)			14,833
Exercise of stock options	273	273			273
Net income	9,227	9,100				9,100	127
Balance at the end of period (in shares) at Jun. 30, 2024			20,037,665
Balance at the end of period at Jun. 30, 2024	163,828	157,712	$ 20	$ (248)	88,307	69,633	6,116
Treasury stock, balance at the end of period (in shares) at Jun. 30, 2024				(23,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash Dividend	10,010	10,010				10,010
Stock-based compensation	400	400			400
Exercise of stock options (in shares)			6,440
Exercise of stock options	116	116			116
Net income	$ 9,262	9,094				9,094	168
Balance at the end of period (in shares) at Sep. 30, 2024	20,021,105		20,044,105
Balance at the end of period at Sep. 30, 2024	$ 163,596	$ 157,312	$ 20	$ (248)	$ 88,823	$ 68,717	$ 6,284
Treasury stock, balance at the end of period (in shares) at Sep. 30, 2024	(23,000)			(23,000)

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023
Statement of Stockholders' Equity [Abstract]
Common stock, dividends declared (in dollars per share)	$ 0.50	$ 0.35	$ 0.30	$ 0.50	$ 0.35

CONDENSED CONSOLIDATED STATEM_5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash flows from operating activities
Net income	$ 24,965	$ 29,003
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including $910 associated with variable interest entity for both the nine months ended September 30, 2024 and 2023, respectively)	7,980	8,058
Adjustments to allowance for bad debt	212	(673)
Adjustments to inventory reserve	370	(27)
Write-off of inventory	1,145	3,225
Impairment of deposits	0	523
Impairment of operating right-of-use asset	1,993	0
Loss, net, on disposal of machinery and equipment	505	1,708
Amortization of loan fees (including $46 and $41 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	69	57
Accrued interest on certificates of deposit (including $49 and $0 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	(199)	(63)
Stock-based compensation	1,715	743
Amortization of operating right-of-use assets	5,474	3,617
(Increase) decrease in operating assets
Accounts receivable (including $0 and $6 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	(6,317)	(3,399)
Inventories	(905)	(3,649)
Prepaid expenses and other current assets (including $24 and $22 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	1,401	431
Other non-current assets (including $12 and $34 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	(74)	(75)
Increase (decrease) in operating liabilities
Accounts payable (including $4 and $57 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	5,529	1,701
Accrued expenses (including $225 and $163 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	2,175	(147)
Related party payable	(1,343)	(2,385)
Income taxes payable	0	8,010
Deferred revenue (including $0 and $49 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	(430)	(478)
Operating lease liabilities	(4,487)	(3,313)
Other liabilities	(46)	221
Net cash provided by operating activities	39,732	43,088
Cash flows from investing activities
Purchases of property and equipment	(718)	(2,870)
Proceeds from disposal of property and equipment	117	605
Payments for costs incurred from sale of machinery and equipment	0	(189)
Deposits paid for joint venture investment	0	(2,900)
Deposits refunded from joint venture investment	0	6,900
Deposit refund from cancelled property and equipment purchase	0	503
Deposits paid for property and equipment	(2,590)	(5,390)
Purchases of short-term investments (including $18,079 and $8,000 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	(33,591)	(28,000)
Redemption of short-term investments (including $7,000 and $0 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	38,602	10,000
Net cash provided by (used in) investing activities	1,820	(21,341)
Cash flows from financing activities
Proceeds from long-term debt (including $0 and $8,000 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	0	8,000
Payments for lender fees	0	(61)
Payments on long-term debt (including $834 and $733 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	(834)	(733)
Tax withholding on vesting of restricted stock units	0	(18)
Proceeds from exercise of common stock options	441	103
Dividends paid to shareholders	(23,006)	(16,917)
Payment for Global Wells noncontrolling membership interest redemption (including $2,010 and $0 associated with variable interest entity for the nine months ended September 30, 2024 and 2023, respectively)	(2,326)	0
Net cash used in financing activities	(25,725)	(9,626)
Net increase in cash and cash equivalents	15,827	12,121
Cash and cash equivalents
Beginning of period	23,076	16,041
End of period	38,903	28,162
Supplemental disclosures of non-cash investing and financing activities:
Transfers from deposits to property and equipment	2,919	8,953
Non-cash purchases of property and equipment	124	71
Supplemental disclosures of cash flow information:
Cash paid for income taxes	6,416	309
Cash paid for interest	$ 1,561	$ 1,493

CONDENSED CONSOLIDATED STATEM_6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Depreciation and amortization	$ 7,980	$ 8,058
Amortization of loan fees	(69)	(57)
Accrued interest on certificates of deposit	199	63
Accounts receivable	6,317	3,399
Prepaid expenses and other current assets	(1,401)	(431)
Other assets	74	75
Accounts payable	5,529	1,701
Accrued expenses	2,175	(147)
Deferred revenue	(430)	(478)
Purchases of short-term investments	33,591	28,000
Redemption of short-term investments	38,602	10,000
Proceeds from long-term debt	0	8,000
Payments on long-term debt	834	733
Payment for Global Wells noncontrolling membership interest redemption	2,326	0
VIE, Primary Beneficiary
Depreciation and amortization	910	910
Amortization of loan fees	46	41
Accrued interest on certificates of deposit	49	0
Accounts receivable	0	6
Prepaid expenses and other current assets	24	22
Other assets	12	(34)
Accounts payable	4	57
Accrued expenses	(225)	163
Deferred revenue	0	49
Purchases of short-term investments	18,079	8,000
Redemption of short-term investments	7,000	0
Proceeds from long-term debt	0	8,000
Payments on long-term debt	834	733
Payment for Global Wells noncontrolling membership interest redemption	$ 2,010	$ 0

Nature of Operations

Nature of Operations	9 Months Ended
	Sep. 30, 2024
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, bagasse, 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 syrups, boba, and coffee drinks. The Company supplies products to national and regional distributors, supermarkets, airlines, restaurants, and convenience stores as well as to smaller chains and businesses including coffee houses, bubble tea cafes, pizza parlors, and frozen yogurt shops. The Company currently operates manufacturing facilities and distribution centers in Chino, California; Rockwall, Texas, and Kapolei, Hawaii. In addition, the Company operates seven other distribution centers located in Puyallup, Washington; Summerville, South Carolina; Branchburg, New Jersey; Kapolei, Hawaii; Aurora, Illinois; Mesa, Arizona; and Sugar Land, Texas.

Summary of Significant Accounti

Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles as promulgated in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. The financial information as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2024. The condensed consolidated balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by US GAAP for complete financial statements. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023, as included in the Company's Annual Report on Form 10-K filed on March 15, 2024. Principles of Consolidation: The condensed consolidated financial statements include the accounts of Karat Packaging and its wholly-owned and controlled operating subsidiaries: Lollicup, Lollicup Franchising, LLC, and Global Wells Investment Group ("Global Wells"), a variable interest entity wherein the Company is the primary beneficiary. All intercompany accounts and transactions have been eliminated. Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with US 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 condensed consolidated financial statements. Reporting Segments: The Company manages and evaluates its operations in one reportable segment. This segment consists of manufacturing and distribution of a broad portfolio of single-use products that are used to serve food and beverages and are available in plastic, paper, bagasse, biopolymer-based, and other compostable forms. It also consists of the distribution of certain specialty food and beverage products, such as syrup, boba, and coffee drinks, as well as restaurant and warehouse supplies. The Company’s long-lived assets are all located in the United States, and its revenues are almost entirely generated in the United States. Variable Interest Entities: The Company has a variable interest in Global Wells located in Rockwall, Texas. In 2017, Lollicup along with three other unrelated parties formed Global Wells, of which Lollicup received a 13.5% ownership interest and a 25% voting interest. On February 29, 2024, Global Wells and one of its members (the "Selling Member") entered into a membership interest redemption agreement, under which the Selling Member sold and Global Wells purchased and redeemed all of the Selling Member's 10.8% ownership interest in Global Wells for a total cash consideration of $3,208,000, net of tax withholding. Subsequent to the redemption, the ownership interests and voting power of the remaining members of Global Wells were adjusted proportionally, with Lollicup's ownership interest increasing to 15.1% and voting interest increasing to 33.3%. On February 16, 2024, Global Wells made an advance cash payment of $2,325,000 to the Selling Member, with the remaining balance expected to be paid before December 31, 2024. The purpose of Global Wells is to own, construct, and manage warehouses and manufacturing facilities. Global Wells’ operating agreement may require its members to make additional contributions upon the unanimous decision of the members or when 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 (the “Texas Lease”). In 2020, the Company entered into another operating lease with Global Wells (the “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, the ability to receive significant benefits, and 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 both 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; rather they represent claims against the specific assets of Global Wells. See Note 8 — Long-Term Debt for a description of the two term loans that Global Wells had with financial institutions as of September 30, 2024. 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 condensed consolidated financial statements separate from the Company’s stockholders’ equity. The amount of net income attributable to noncontrolling interests is disclosed in the condensed 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 condensed consolidated statements of stockholders’ equity. Revenue Recognition: The Company generates revenues from product sales to customers that include national and regional chains, distributors, small local restaurants, and those that purchase for individual consumption primarily through our online stores. 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 three and nine months ended September 30, 2024 and 2023, net sales disaggregated by customer type consist of the amounts shown below. Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (in thousands) National and regional chains $ 23,312 $ 23,407 $ 68,834 $ 68,602 Distributors 63,071 61,037 177,995 178,274 Online 18,950 14,271 53,375 43,419 Retail 7,438 6,813 20,780 19,774 $ 112,771 $ 105,528 $ 320,984 $ 310,069 • National and regional chains revenue: National and regional chains revenue is derived from chain restaurants and businesses 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. • Distributors revenue: Distributors revenues are derived from national and regional distributors across the U.S. that purchase the Company’s products for resale and distribution to other businesses such as restaurants, supermarkets, offices, and schools. 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. • Online revenue: Online revenue is derived from the Company's online storefront on www.lollicupstore.com, and other e-commerce platforms including Amazon, Walmart, and eBay with customers largely consisting of small businesses such as small restaurants, coffee houses, bubble tea cafes, pizza parlors, and frozen yogurt 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. For online sales on third-party e-commerce platforms, the Company is the principal in the three-party arrangement and control of the products remains with the Company at all times until transferring to the end customer or upon return from the end customer. Online platform fees are recognized as selling expenses. • Retail revenue: Retail revenue is derived primarily from regional and local restaurants, coffee houses, bubble tea cafes, pizza parlors, 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. For all of the Company's revenue streams, shipping terms generally indicate when the title and risk of loss have passed, which is generally when products are delivered to customers. During the nine months ended September 30, 2024, the Company's revenue and cost of goods sold were understated by approximately $700,000 and $400,000, respectively, for products that had been shipped and recorded as revenue and costs of goods sold in 2023 and not delivered until 2024. In the prior periods, the Company had assessed the impact of the lag between shipping and delivery to the previously-issued quarterly and annual financial statements, and concluded that the impact on its overall financial statements, including net sales, cost of goods sold, accounts receivable, inventories and customer deposits was immaterial. The Company’s contract liabilities consist primarily of rebates, sales incentives, consideration payable to customers for cooperative advertising, and customer deposits. As of September 30, 2024 and December 31, 2023, the rebates, sales incentives and cooperative advertising were not significant to the financial statements. Customer deposits are included in current liabilities in the condensed consolidated balance sheets. During the three months ended September 30, 2024 and 2023, the Company recognized revenue of $8,000 and $16,000, respectively, related to customer deposits received as of the beginning of each respective period. During the nine months ended September 30, 2024 and 2023, the Company recognized revenue of $786,000 and $1,074,000, respectively, related to customer deposits received as of the beginning of each respective period. Out of Period Adjustment: As previously disclosed in the Company's 2023 Form 10-K, during the quarter ended December 31, 2023, the Company also recorded certain misclassification adjustments for the full year 2023 amounts within the consolidated statement of income with no impact on net income. Those misclassification adjustments were: (i) adjusting online sales third-party platform fees from net sales to selling expenses, (ii) production expenses primarily related to machinery repair and maintenance from general and administrative expenses to cost of goods sold, and (iii) payroll and employee-related costs for the Company's sales team within operating expenses from general and administrative expenses to selling expenses. These misclassification adjustments in the quarter ended December 31, 2023 had no effect on totals for assets and liabilities, shareholders' equity, cash flows or net income for either the quarter ended December 31, 2023 or any of the previously reported quarters in 2023. For the three months ended September 30, 2024, the properly classified amounts related to the online sales platform fees, production expenses, and payroll and employee-related costs for the sales team were $3,047,000, $655,000 and $730,000, respectively. For the nine months ended September 30, 2024, the properly classified amounts related to the online sales platform fees, production expenses, and payroll and employee-related costs for the sales team were $7,971,000, $1,938,000 and $2,177,000, respectively. Fair Value Measurements: The Company has financial instruments classified within the fair value hierarchy, which consist of the following: • At September 30, 2024, the Company had money market accounts and investments in publicly-traded equity securities classified as Level 1 and certificates of deposit classified as Level 2 within the fair value hierarchy. At December 31, 2023, the Company had money market accounts and certificates of deposit classified as Level 1 and Level 2, respectively, within the fair value hierarchy. The short-term investments comprise of certificates of deposits with an original maturity of longer than 90 days and are reported at their carrying value as current assets on the condensed consolidated balance sheets. The carrying value of these short-term investments approximates fair value as they were purchased near or on September 30, 2024. The following table summarizes the Company’s fair value measurements by level at September 30, 2024 for the assets measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 9,463 $ 21,920 $ — Short-term investments — 21,531 — Publicly-traded equity securities 35 — — Fair value, September 30, 2024 $ 9,498 $ 43,451 $ — The following table summarize the Company’s fair value measurements by level at December 31, 2023 for the assets measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 5,956 $ 10,000 $ — Short-term investments — 26,343 — Fair value, December 31, 2023 $ 5,956 $ 36,343 $ — 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 expenses, other payables 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 expenses, and other payables at September 30, 2024 and December 31, 2023, approximated fair value because of the short maturity of these instruments. 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 (the "2026 Term Loan" and "2027 Term Loan," respectively): September 30, 2024 Carrying Amount Estimated Fair Value (in thousands) 2026 Term Loan $ 21,037 $ 20,074 2027 Term Loan 27,693 27,712 $ 48,730 $ 47,786 December 31, 2023 Carrying Amount Estimated Fair Value (in thousands) 2026 Term Loan $ 21,490 $ 19,999 2027 Term Loan 28,028 27,810 $ 49,518 $ 47,809 The fair value of these financial instruments was determined using Level 2 inputs. Certain long-lived non-financial assets and liabilities may be required to be measured at fair value on a nonrecurring basis in certain circumstances, including when there is evidence of impairment. These non-financial assets and liabilities may include assets acquired in a business combination or long-lived assets that are determined to be impaired. During the nine months ended September 30, 2024, the Company recorded an impairment against its operating ROU assets of $1,993,000. See Note 11 — Leases for further information about this impairment charge. With the exception of the ROU impairment, the Company did not have any non-financial assets or liabilities that had been measured at fair value subsequent to initial recognition as of September 30, 2024 or December 31, 2023. 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 has 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 March 2023, the FASB issued updated ASU 2023-01 Lease (Topic 842) : Common Control Arrangements . The new guidance amends ASC 842 to require all lessees, including public business entities, to amortize leasehold improvements associated with common control leases over their useful life to the common control group. The Company adopted this new standard on January 1, 2024, by prospectively amortizing all new leasehold improvements recognized on or after the adoption date. The adoption of this new standard did not have a material impact on the Company's financial statements. In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The new guidance requires enhanced disclosure of significant expenses that are regularly reported to the chief operating decision maker and the nature of segment expense information used to manage operations. The new guidance is effective for all public companies for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company will adopt the new standard in annual reporting period beginning after December 15, 2023. The application of this new guidance is not expected to have a material impact on the Company’s consolidated balance sheets, statements of income or cash flows, as the guidance pertains to disclosures only. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) : Improvements to Income Tax Disclosures . The new guidance requires disaggregated information about the effective tax rate reconciliation and additional information on taxes paid that meet a quantitative threshold. The new guidance is effective for public companies for annual reporting periods beginning after December 15, 2024, and for non-public companies for annual reporting periods beginning after December 15, 2025, with early adoption permitted for both. The Company will adopt the new standard in annual reporting period beginning after December 15, 2025, and is currently evaluating the impacts of the new guidance on its disclosures within the consolidated financial statements.

Inventories

Inventories	9 Months Ended
	Sep. 30, 2024
Inventory Disclosure [Abstract]
Inventories	Inventories Inventories consist of the following: September 30, 2024 December 31, 2023 (in thousands) Raw materials $ 6,596 $ 9,116 Semi-finished goods 1,551 1,343 Finished goods 63,491 61,419 Subtotal 71,638 71,878 Less: inventory reserve (720) (350) Total inventories $ 70,918 $ 71,528 The Company incurred inventory adjustments and write-offs of $694,000 and $1,145,000 for the three and nine months ended September 30, 2024, respectively. Similarly, the Company incurred inventory adjustments and write-offs of $281,000 and $3,225,000 for the three and nine months ended September 30, 2023, respectively. Included within the amount for the nine months ended September 30, 2023 was a $1,700,000 write-off of raw materials, as the Company disposed of certain machinery and equipment in executing the strategy to scale back production in certain locations. Inventory adjustments and write-offs are included in cost of goods sold on the accompanying condensed consolidated statements of income. See Note 12 — Impairment Expense and (Gain) Loss, Net, on Disposal of Machinery for further discussion about the disposal of machinery.

Property and Equipment

Property and Equipment	9 Months Ended
	Sep. 30, 2024
Property, Plant and Equipment [Abstract]
Property and Equipment	Property and Equipment September 30, 2024 December 31, 2023 (in thousands) Machinery and equipment $ 67,722 $ 67,321 Leasehold improvements 19,193 19,085 Vehicles 8,233 7,038 Furniture and fixtures 1,015 1,015 Building 38,779 38,503 Land 11,907 11,907 Computer hardware and software 93 93 Construction in progress 316 — 147,258 144,962 Less: accumulated depreciation and amortization (57,126) (49,736) Total property and equipment, net $ 90,132 $ 95,226 Depreciation and amortization expense is reported within general and administrative expense except for depreciation and amortization expense related to manufacturing facilities and equipment, which is included in cost of goods sold on the accompanying condensed consolidated statements of income. For the three months ended September 30, 2024 and 2023, depreciation and amortization expense reported within general and administrative expense was $1,099,000 and $1,167,000 respectively, and depreciation and amortization expense reported within cost of goods sold was $1,585,000 and $1,534,000, respectively. For the nine months ended September 30, 2024 and 2023, depreciation and amortization expense reported within general and administrative expense was $3,154,000 and $3,439,000 respectively, and depreciation and amortization expense reported within cost of goods sold was $4,806,000 and $4,599,000, respectively.

Goodwill

Goodwill	9 Months Ended
	Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	Goodwill The following table summarizes the activity in the Company's goodwill from December 31, 2023 to September 30, 2024: (in thousands) Balance at December 31, 2023 $ 3,510 Goodwill acquired — Balance at September 30, 2024 $ 3,510

Line of Credit

Line of Credit	9 Months Ended
	Sep. 30, 2024
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 Company is not required to pay a commitment (unused) fee on the undrawn portion of the Line of Credit and interest is payable monthly. The Company is required to comply with certain financial covenants, including a minimum current ratio, minimum debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio and a minimum fixed charge coverage ratio. On March 14, 2023, the Company amended the Line of Credit. Prior to March 14, 2023, interest accrued at the annual rate of prime less 0.25% with a minimum floor of 3.25%. The amendment on March 14, 2023, among other things, (1) extended the maturity date to March 14, 2025, and (2) revised the interest on any Line of Credit borrowings to an annual rate of one month term Secured Overnight Financing Rate ("SOFR") plus 2.50%, with a SOFR floor of 1.0%. The Line of Credit also includes a standby letter of credit sublimit, which was amended and increased to $5,000,000 from $2,000,000 on June 20, 2023. The Company had no borrowings outstanding under the Line of Credit as of both September 30, 2024 and December 31, 2023. The amount issued under the standby letter of credit was $3,813,000 and $3,766,000 as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, the maximum remaining amount that could be borrowed under the Line of Credit was $36,187,000. As of both September 30, 2024 and December 31, 2023, the Company was in compliance with the financial covenants under the Line of Credit. Long-term debt consists of the following: September 30, 2024 December 31, 2023 (in thousands) The 2026 Term Loan, 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. $ 21,084 $ 21,555 The 2027 Term Loan, 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, which the Company exercised in March 2023. Interest accrues at a fixed rate of 4.375% per annum. Prior to August 1, 2023, principal and interest payments of $104,000 are due monthly. Beginning August 1, 2023, monthly principal and interest payments increased to $144,000 for the remainder of the loan term, 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. $ 27,802 $ 28,166 Long-term debt 48,886 49,721 Less: unamortized loan fees (156) (203) Less: current portion (1,165) (1,122) Long-term debt, net of current portion $ 47,565 $ 48,396 At September 30, 2024, future maturities are: (in thousands) 2024 (remainder) $ 287 2025 1,179 2026 20,798 2027 26,622 $ 48,886 The Company was in compliance with all of its financial covenants as of both September 30, 2024 and December 31, 2023.

Accrued Expenses

Accrued Expenses	9 Months Ended
	Sep. 30, 2024
Payables and Accruals [Abstract]
Accrued Expenses	Accrued Expenses The following table summarizes information related to accrued expense liabilities: September 30, 2024 December 31, 2023 (in thousands) Accrued miscellaneous expenses $ 3,288 $ 1,271 Accrued payroll 988 1,685 Accrued ocean freight and other import costs 4,025 3,513 Accrued sale and use taxes 1,041 1,006 Accrued professional services fees 612 845 Accrued vacation and sick pay 936 619 Accrued property tax 834 552 Accrued shipping expenses 697 525 Accrued sales discount expense 257 487 Accrued interest expense 73 73 Total accrued expenses $ 12,751 $ 10,576

Long-Term Debt

Long-Term Debt	9 Months Ended
	Sep. 30, 2024
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 Company is not required to pay a commitment (unused) fee on the undrawn portion of the Line of Credit and interest is payable monthly. The Company is required to comply with certain financial covenants, including a minimum current ratio, minimum debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio and a minimum fixed charge coverage ratio. On March 14, 2023, the Company amended the Line of Credit. Prior to March 14, 2023, interest accrued at the annual rate of prime less 0.25% with a minimum floor of 3.25%. The amendment on March 14, 2023, among other things, (1) extended the maturity date to March 14, 2025, and (2) revised the interest on any Line of Credit borrowings to an annual rate of one month term Secured Overnight Financing Rate ("SOFR") plus 2.50%, with a SOFR floor of 1.0%. The Line of Credit also includes a standby letter of credit sublimit, which was amended and increased to $5,000,000 from $2,000,000 on June 20, 2023. The Company had no borrowings outstanding under the Line of Credit as of both September 30, 2024 and December 31, 2023. The amount issued under the standby letter of credit was $3,813,000 and $3,766,000 as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, the maximum remaining amount that could be borrowed under the Line of Credit was $36,187,000. As of both September 30, 2024 and December 31, 2023, the Company was in compliance with the financial covenants under the Line of Credit. Long-term debt consists of the following: September 30, 2024 December 31, 2023 (in thousands) The 2026 Term Loan, 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. $ 21,084 $ 21,555 The 2027 Term Loan, 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, which the Company exercised in March 2023. Interest accrues at a fixed rate of 4.375% per annum. Prior to August 1, 2023, principal and interest payments of $104,000 are due monthly. Beginning August 1, 2023, monthly principal and interest payments increased to $144,000 for the remainder of the loan term, 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. $ 27,802 $ 28,166 Long-term debt 48,886 49,721 Less: unamortized loan fees (156) (203) Less: current portion (1,165) (1,122) Long-term debt, net of current portion $ 47,565 $ 48,396 At September 30, 2024, future maturities are: (in thousands) 2024 (remainder) $ 287 2025 1,179 2026 20,798 2027 26,622 $ 48,886 The Company was in compliance with all of its financial covenants as of both September 30, 2024 and December 31, 2023.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 2024
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 September 30, 2024, a total of 1,287,017 shares of common stock were available for further award grants under the Plan. For the three months ended September 30, 2024 and 2023, the Company recognized a total of $400,000 and $250,000 in stock-based compensation expense, respectively. For the nine months ended September 30, 2024 and 2023, the Company recognized a total of $1,715,000 and $743,000 in stock-based compensation expense, respectively. The Company recognizes stock-based compensation over the vesting period, which generally ranges from two (2) to three (3) years for both the restricted stock units and stock options. Stock Options A summary of the Company’s stock option activity under the Plan for the nine months ended September 30, 2024 is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contract Life (In Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2023 386,473 $ 18.58 7.8 $ 2,424 Exercised (24,073) $ 18.33 Forfeited (33,333) $ 18.86 Outstanding at September 30, 2024 329,067 $ 18.57 7.1 $ 2,410 Vested and expected to vest at September 30, 2024 329,067 $ 18.57 7.1 $ 2,410 Exercisable at September 30, 2024 209,067 $ 18.58 7.1 $ 1,528 There were no stock options granted during the nine months ended September 30, 2024. At September 30, 2024, total remaining stock-based compensation cost for unvested stock options under the Plan was approximately $10,000. The cost is expected to be recognized over a weighted-average period of 0.3 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 September 30, 2024, multiplied by the number of shares per each option. Restricted Stock Units A summary of the Company’s unvested restricted stock units activity under the Plan for the nine months ended September 30, 2024 is as follows: Number of Shares Outstanding Weighted Average Grant Date Fair Value Unvested at December 31, 2023 5,346 $ 16.71 Granted 97,004 29.31 Vested (31,550) 27.54 Unvested at September 30, 2024 70,800 $ 29.14 On March 12, 2024, the Company's Compensation Committee of the Board of Directors approved a grant totaling 91,000 restricted stock units to certain key employees. The grant date fair value of these restricted stock units was $2,674,000. The restricted stock units vest at various times between May 2024 and May 2026. On May 7, 2024, the Company's Compensation Committee of the Board of Directors approved a grant totaling 6,000 restricted stock units to each independent director of the Board of Directors. The grant date fair value of these restricted stock units was $169,000. The restricted stock units vest at various times between May 2025 and May 2026. At September 30, 2024, total remaining stock-based compensation cost for unvested restricted stock units was approximately $1,317,000. The cost is expected to be recognized over a weighted-average period of 1.2 years.

Earnings Per Share

Earnings Per Share	9 Months Ended
	Sep. 30, 2024
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 period by the weighted average number of common shares outstanding during the period. Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 9,094 $ 9,065 $ 24,360 $ 28,572 Weighted average number of common shares in issue 20,018 19,891 19,994 19,888 Basic earnings per share $ 0.45 $ 0.46 $ 1.22 $ 1.44 (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: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 9,094 $ 9,065 $ 24,360 $ 28,572 Weighted average number of common shares in issue 20,018 19,891 19,994 19,888 Dilutive shares Stock options and restricted stock units 116 104 114 75 Adjusted weighted average number of common shares 20,134 19,995 20,108 19,963 Diluted earnings per share $ 0.45 $ 0.45 $ 1.21 $ 1.43

Leases

Leases	9 Months Ended
	Sep. 30, 2024
Leases [Abstract]
Leases	Leases The Company primarily leases manufacturing facilities, distribution centers, and office spaces with lease terms expiring through 2031. In May 2024, the Company determined there was a change in the assessment of whether the renewal option on the lease agreement for its Chino, California facility was reasonably certain to be exercised. As a result, the Company remeasured the lease liability and the right-of-use asset for this lease, utilizing the fair market rate determined by independent arbitrators on July 8, 2024, and an extended lease term expiring July 31, 2029. The Company recognized the following lease costs in the accompanying condensed consolidated statement of income: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (in thousands) (in thousands) Operating lease expense $ 2,752 $ 1,606 $ 6,694 $ 4,454 Short-term lease expense 370 106 795 143 Variable lease expense 357 260 1,125 750 Total lease expense $ 3,479 $ 1,972 $ 8,614 $ 5,347 For the three months ended September 30, 2024 and 2023, rent expense included in operating expenses was $2,843,000 and $1,653,000, respectively, and rent expense included in cost of goods sold was $636,000 and $319,000, respectively. For the nine months ended September 30, 2024 and 2023, rent expense included in operating expenses was $7,209,000 and $4,542,000, respectively, and rent expense included in cost of goods sold was $1,405,000 and $805,000, respectively. The following table presents supplemental information related to operating leases: September 30, 2024 December 31, 2023 Weighted average remaining lease term 4.55 years 4.51 years Weighted average discount rate 7.0 % 6.2 % Nine Months Ended September 30, 2024 2023 (in thousands) Cash paid for amounts included in measurement of lease obligations: Operating cash flows from operating leases $ 5,721 $ 4,129 As of September 30, 2024, future lease payments under operating leases were as follows: (in thousands) 2024 (remainder) $ 2,825 2025 11,550 2026 11,909 2027 10,827 2028 9,617 Thereafter 6,216 Total future lease payments 52,944 Less: imputed interest (7,725) Total lease liability balance $ 45,219 During the nine months ended September 30, 2024, the Company recorded a non-cash impairment of a ROU asset of $1,993,000 resulting from the sublease of its City of Industry warehouse in California.

Impairment Expense and (Gain) L

Impairment Expense and (Gain) Loss, Net, on Disposal of Machinery and Equipment	9 Months Ended
	Sep. 30, 2024
Discontinued Operations and Disposal Groups [Abstract]
Impairment Expense and (Gain) Loss, Net, on Disposal of Machinery and Equipment	Impairment Expense and (Gain) Loss, Net, on Disposal of Machinery and Equipment In February 2023, the Company started to execute a strategy to increase imports and scale back manufacturing in certain locations. The Company reached an agreement with two unrelated third-party vendors in Taiwan to sell them certain of its manufacturing machinery and equipment. The Company also cancelled certain equipment purchase commitments that it had previously paid deposits towards, and disposed of certain machinery and equipment through abandonment. During the three and nine months ended September 30, 2023, the Company recorded a net gain of $310,000 and a net loss of $1,612,000, respectively, on disposal of machinery and equipment associated with the sale of machinery to the vendors in Taiwan. During the nine months ended September 30, 2023, the Company recorded $523,000 of impairment expense related to the unrecoverable cancelled deposits. The Company also recorded a net gain of $27,000 and net loss of $505,000 on disposal of fixed assets during the normal course of business for the three and nine months ended September 30, 2024, respectively, and recorded a net loss of $0 and $96,000 on disposal of fixed assets during the normal course of business for the three and nine months ended September 30, 2023, respectively.

Related Party Transactions

Related Party Transactions	9 Months Ended
	Sep. 30, 2024
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions On April 6, 2022, the Company entered into a joint venture agreement (the "JV Agreement") to establish a new corporation, Bio Earth, to build a bagasse factory in Taiwan. The JV Agreement stipulated an investment by the Company of approximately $6,500,000 for a 49% interest in Bio Earth. During the year ended December 31, 2022, the Company made payments of $5,876,000 and received a refund of $1,876,000 under the JV agreement. During the three months ended March 31, 2023, the Company made additional payments of $2,900,000 and received a refund of $900,000 under the JV Agreement. On May 8, 2023, the Company entered into a Share Transfer Agreement (the "Share Transfer Agreement"), with approval of the Board of Directors, to sell all of its equity interest in Bio Earth to Keary Global Ltd. ("Keary Global") for a total consideration of approximately $6,100,000 (the "Share Transfer"), representing the total net deposits made by the Company of $6,000,000 under the JV Agreement as discussed above and interest accruing at 5% per annum. Keary Global and its affiliate, Keary International are both owned or controlled by Jeff Yu, brother of the Company's Chief Executive Officer, Alan Yu. Concurrent with the Share Transfer Agreement, the Company also entered into an agreement with Keary Global, Bio Earth and Happiness Moon Co., Ltd. (“Happiness Moon”) pursuant to which (i) Lollicup agreed to transfer all Bio Earth shares, as well as its rights and obligations under the JV Agreement to Keary Global, (ii) Happiness Moon and Bio Earth agree to foregoing and (iii) Bio Earth shall manage the regulatory and registration requirements related to the Share Transfer. As of the end of the second quarter of 2023, the Company had completed the Share Transfer to Keary Global and received the total consideration of $6,100,000 in full. Keary Global Ltd. owns 250,004 shares of the Company's common stock as of September 30, 2024, which Keary Global acquired upon exercise of two convertible notes during the third quarter of 2018. 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 September 30, 2024 and December 31, 2023, the Company has accounts payable due to Keary Global and Keary International of $3,963,000 and $5,306,000, respectively. Purchases for the three months ended September 30, 2024 and 2023 from this related party were $7,473,000 and $7,371,000, respectively. Purchases for the nine months ended September 30, 2024 and 2023 from this related party were $30,920,000 and $32,384,000, respectively.

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2024
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes For the three months ended September 30, 2024 and 2023, the Company's income tax expense was $2,597,000 and $2,904,000, respectively, with an effective tax rate of 21.9% and 24.1%, respectively. For the nine months ended September 30, 2024 and 2023, the Company's income tax expense was $7,413,000 and $9,045,000, respectively, with an effective tax rate of 22.9% and 23.8%, respectively. For both the three and nine months ended September 30, 2024 and 2023, the Company's effective tax rate differed from the United States federal statutory rate of 21% primarily due to state taxes and noncontrolling interest income. 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 September 30, 2024, the Company did not record any valuation allowance.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies In May 2023, the Company received a Notice of Investigations and Interim Measures stating that U.S. Customs and Border Protection (“CBP”) had initiated a formal investigation to determine whether the Company had evaded the anti-dumping and countervailing duty orders on lightweight thermal paper from China by transshipping the merchandise through Taiwan. The period of investigation was from January 2022 through the pendency of the investigation. On February 5, 2024, CBP issued its Notice of Determination concluding that the manufacturing procedures performed by the manufacturer in Taiwan, which the Company imported certain thermal paper products from, did not constitute substantial transformation. As of December 31, 2023, the Company had a reserve of $2,738,000, representing the total estimated probable loss on all thermal paper imports under the investigation period minus payments already made. On March 19, 2024, the Company initiated an appeal process by submitting a request for an administrative review of the initial determination issued by CBP. On June 11, 2024, CBP completed the administrative review and upheld its initial conclusion. The Company is in the process of assessing further appeal options. The Company accrued interest of $81,000 and $246,000 during the three and nine months ended September 30, 2024, related to the estimated total probable loss, increasing the total reserve to $2,984,000 as of September 30, 2024. The amount of the final payments could differ materially from the Company's current estimate. Additionally, the 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.

Secondary Offering

Secondary Offering	9 Months Ended
	Sep. 30, 2024
Equity [Abstract]
Secondary Offering	Secondary Offering On September 12, 2023, certain selling stockholders completed a secondary public offering of shares of the Company's common stock. The Company did not receive any of the proceeds from the sale of these shares by the selling stockholders. The Company incurred offering transaction costs of $453,000, which were recognized in general and administrative expense in the condensed consolidated statement of income.

Subsequent Events

Subsequent Events	9 Months Ended
	Sep. 30, 2024
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events On November 5, 2024, the Company's Board of Directors declared a quarterly cash dividend of $0.40 per share on the Company's common stock, which will be paid on November 29, 2024 to shareholders of record at the close of business on November 20, 2024.

Pay vs Performance Disclosure

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net income	$ 9,094	$ 9,065	$ 24,360	$ 28,572

Insider Trading Arrangements

Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles as promulgated in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all the information and footnotes required by US GAAP for complete financial statements. The financial information as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 is unaudited; however, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for any other interim period or for the year ending December 31, 2024. The condensed consolidated balance sheet at December 31, 2023 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by US GAAP for complete financial statements. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2023, as included in the Company's Annual Report on Form 10-K filed on March 15, 2024.
Principles of Consolidation	Principles of Consolidation:
Estimates and Assumptions	Estimates and Assumptions: Management uses estimates and assumptions in preparing financial statements in accordance with US 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 condensed consolidated financial statements.
Reporting Segments	Reporting Segments: The Company manages and evaluates its operations in one reportable segment. This segment consists of manufacturing and distribution of a broad portfolio of single-use products that are used to serve food and beverages and are available in plastic, paper, bagasse, biopolymer-based, and other compostable forms. It also consists of the distribution of certain specialty food and beverage products, such as syrup, boba, and coffee drinks, as well as restaurant and warehouse supplies. The Company’s long-lived assets are all located in the United States, and its revenues are almost entirely generated in the United States.
Variable Interest Entities	Variable Interest Entities: The Company has a variable interest in Global Wells located in Rockwall, Texas. In 2017, Lollicup along with three other unrelated parties formed Global Wells, of which Lollicup received a 13.5% ownership interest and a 25% voting interest. On February 29, 2024, Global Wells and one of its members (the "Selling Member") entered into a membership interest redemption agreement, under which the Selling Member sold and Global Wells purchased and redeemed all of the Selling Member's 10.8% ownership interest in Global Wells for a total cash consideration of $3,208,000, net of tax withholding. Subsequent to the redemption, the ownership interests and voting power of the remaining members of Global Wells were adjusted proportionally, with Lollicup's ownership interest increasing to 15.1% and voting interest increasing to 33.3%. On February 16, 2024, Global Wells made an advance cash payment of $2,325,000 to the Selling Member, with the remaining balance expected to be paid before December 31, 2024. The purpose of Global Wells is to own, construct, and manage warehouses and manufacturing facilities. Global Wells’ operating agreement may require its members to make additional contributions upon the unanimous decision of the members or when 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 (the “Texas Lease”). In 2020, the Company entered into another operating lease with Global Wells (the “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, the ability to receive significant benefits, and 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 both 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; rather they represent claims against the specific assets of Global Wells. See Note 8 — Long-Term Debt for a description of the two term loans that Global Wells had with financial institutions as of September 30, 2024.
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 condensed consolidated financial statements separate from the Company’s stockholders’ equity. The amount of net income attributable to noncontrolling interests is disclosed in the condensed 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 condensed consolidated statements of stockholders’ equity.
Revenue Recognition	Revenue Recognition: National and regional chains revenue: National and regional chains revenue is derived from chain restaurants and businesses 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. • Distributors revenue: Distributors revenues are derived from national and regional distributors across the U.S. that purchase the Company’s products for resale and distribution to other businesses such as restaurants, supermarkets, offices, and schools. 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. • Online revenue: Online revenue is derived from the Company's online storefront on www.lollicupstore.com, and other e-commerce platforms including Amazon, Walmart, and eBay with customers largely consisting of small businesses such as small restaurants, coffee houses, bubble tea cafes, pizza parlors, and frozen yogurt 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. For online sales on third-party e-commerce platforms, the Company is the principal in the three-party arrangement and control of the products remains with the Company at all times until transferring to the end customer or upon return from the end customer. Online platform fees are recognized as selling expenses. • Retail revenue: Retail revenue is derived primarily from regional and local restaurants, coffee houses, bubble tea cafes, pizza parlors, 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. For all of the Company's revenue streams, shipping terms generally indicate when the title and risk of loss have passed, which is generally when products are delivered to customers. During the nine months ended September 30, 2024, the Company's revenue and cost of goods sold were understated by approximately $700,000 and $400,000, respectively, for products that had been shipped and recorded as revenue and costs of goods sold in 2023 and not delivered until 2024. In the prior periods, the Company had assessed the impact of the lag between shipping and delivery to the previously-issued quarterly and annual financial statements, and concluded that the impact on its overall financial statements, including net sales, cost of goods sold, accounts receivable, inventories and customer deposits was immaterial. The Company’s contract liabilities consist primarily of rebates, sales incentives, consideration payable to customers for cooperative advertising, and customer deposits. As of September 30, 2024 and December 31, 2023, the rebates, sales incentives and cooperative advertising were not significant to the financial statements. Customer deposits are included in current liabilities in the condensed consolidated balance sheets. During the three months ended September 30, 2024 and 2023, the Company recognized revenue of $8,000 and $16,000, respectively, related to customer deposits received as of the beginning of each respective period. During the nine months ended September 30, 2024 and 2023, the Company recognized revenue of $786,000 and $1,074,000, respectively, related to customer deposits received as of the beginning of each respective period. Out of Period Adjustment: As previously disclosed in the Company's 2023 Form 10-K, during the quarter ended December 31, 2023, the Company also recorded certain misclassification adjustments for the full year 2023 amounts within the consolidated statement of income with no impact on net income. Those misclassification adjustments were: (i) adjusting online sales third-party platform fees from net sales to selling expenses, (ii) production expenses primarily related to machinery repair and maintenance from general and administrative expenses to cost of goods sold, and (iii) payroll and employee-related costs for the Company's sales team within operating expenses from general and administrative expenses to selling expenses. These misclassification adjustments in the quarter ended December 31, 2023 had no effect on totals for assets and liabilities, shareholders' equity, cash flows or net income for either the quarter ended December 31, 2023 or any of the previously reported quarters in 2023. For the three months ended September 30, 2024, the properly classified amounts related to the online sales platform fees, production expenses, and payroll and employee-related costs for the sales team were $3,047,000, $655,000 and $730,000, respectively. For the nine months ended September 30, 2024, the properly classified amounts related to the online sales platform fees, production expenses, and payroll and employee-related costs for the sales team were $7,971,000, $1,938,000 and $2,177,000, respectively.
Fair Value Measurements	Fair Value Measurements: The Company has financial instruments classified within the fair value hierarchy, which consist of the following: • At September 30, 2024, the Company had money market accounts and investments in publicly-traded equity securities classified as Level 1 and certificates of deposit classified as Level 2 within the fair value hierarchy. At December 31, 2023, the Company had money market accounts and certificates of deposit classified as Level 1 and Level 2, respectively, within the fair value hierarchy. The short-term investments comprise of certificates of deposits with an original maturity of longer than 90 days and are reported at their carrying value as current assets on the condensed consolidated balance sheets. The carrying value of these short-term investments approximates fair value as they were purchased near or on September 30, 2024. 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 expenses, other payables and borrowings under promissory notes and Line of Credit (as defined below), are reported at their carrying value. Certain long-lived non-financial assets and liabilities may be required to be measured at fair value on a nonrecurring basis in certain circumstances, including when there is evidence of impairment. These non-financial assets and liabilities may include assets acquired in a business combination or long-lived assets that are determined to be impaired. During the nine months ended September 30, 2024, the Company recorded an impairment against its operating ROU assets of $1,993,000. See Note 11 — Leases for further information about this impairment charge. With the exception of the ROU impairment, the Company did not have any non-financial assets or liabilities that had been measured at fair value subsequent to initial recognition as of September 30, 2024 or December 31, 2023.
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 has 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 March 2023, the FASB issued updated ASU 2023-01 Lease (Topic 842) : Common Control Arrangements . The new guidance amends ASC 842 to require all lessees, including public business entities, to amortize leasehold improvements associated with common control leases over their useful life to the common control group. The Company adopted this new standard on January 1, 2024, by prospectively amortizing all new leasehold improvements recognized on or after the adoption date. The adoption of this new standard did not have a material impact on the Company's financial statements. In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The new guidance requires enhanced disclosure of significant expenses that are regularly reported to the chief operating decision maker and the nature of segment expense information used to manage operations. The new guidance is effective for all public companies for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company will adopt the new standard in annual reporting period beginning after December 15, 2023. The application of this new guidance is not expected to have a material impact on the Company’s consolidated balance sheets, statements of income or cash flows, as the guidance pertains to disclosures only. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) : Improvements to Income Tax Disclosures . The new guidance requires disaggregated information about the effective tax rate reconciliation and additional information on taxes paid that meet a quantitative threshold. The new guidance is effective for public companies for annual reporting periods beginning after December 15, 2024, and for non-public companies for annual reporting periods beginning after December 15, 2025, with early adoption permitted for both. The Company will adopt the new standard in annual reporting period beginning after December 15, 2025, and is currently evaluating the impacts of the new guidance on its disclosures within the consolidated financial statements.

Summary of Significant Accoun_3

Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Schedule of Net Sales Disaggregated by Customer Type	For the three and nine months ended September 30, 2024 and 2023, net sales disaggregated by customer type consist of the amounts shown below. Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (in thousands) National and regional chains $ 23,312 $ 23,407 $ 68,834 $ 68,602 Distributors 63,071 61,037 177,995 178,274 Online 18,950 14,271 53,375 43,419 Retail 7,438 6,813 20,780 19,774 $ 112,771 $ 105,528 $ 320,984 $ 310,069
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 September 30, 2024 for the assets measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 9,463 $ 21,920 $ — Short-term investments — 21,531 — Publicly-traded equity securities 35 — — Fair value, September 30, 2024 $ 9,498 $ 43,451 $ — The following table summarize the Company’s fair value measurements by level at December 31, 2023 for the assets measured at fair value on a recurring basis: Level 1 Level 2 Level 3 (in thousands) Cash equivalents $ 5,956 $ 10,000 $ — Short-term investments — 26,343 — Fair value, December 31, 2023 $ 5,956 $ 36,343 $ —
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 (the "2026 Term Loan" and "2027 Term Loan," respectively): September 30, 2024 Carrying Amount Estimated Fair Value (in thousands) 2026 Term Loan $ 21,037 $ 20,074 2027 Term Loan 27,693 27,712 $ 48,730 $ 47,786 December 31, 2023 Carrying Amount Estimated Fair Value (in thousands) 2026 Term Loan $ 21,490 $ 19,999 2027 Term Loan 28,028 27,810 $ 49,518 $ 47,809

Inventories (Tables)

Inventories (Tables)	9 Months Ended
	Sep. 30, 2024
Inventory Disclosure [Abstract]
Schedule of Inventories	Inventories consist of the following: September 30, 2024 December 31, 2023 (in thousands) Raw materials $ 6,596 $ 9,116 Semi-finished goods 1,551 1,343 Finished goods 63,491 61,419 Subtotal 71,638 71,878 Less: inventory reserve (720) (350) Total inventories $ 70,918 $ 71,528

Property and Equipment (Tables)

Property and Equipment (Tables)	9 Months Ended
	Sep. 30, 2024
Property, Plant and Equipment [Abstract]
Schedule of Property and Equipment, Net	September 30, 2024 December 31, 2023 (in thousands) Machinery and equipment $ 67,722 $ 67,321 Leasehold improvements 19,193 19,085 Vehicles 8,233 7,038 Furniture and fixtures 1,015 1,015 Building 38,779 38,503 Land 11,907 11,907 Computer hardware and software 93 93 Construction in progress 316 — 147,258 144,962 Less: accumulated depreciation and amortization (57,126) (49,736) Total property and equipment, net $ 90,132 $ 95,226

Goodwill (Tables)

Goodwill (Tables)	9 Months Ended
	Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Goodwill	The following table summarizes the activity in the Company's goodwill from December 31, 2023 to September 30, 2024: (in thousands) Balance at December 31, 2023 $ 3,510 Goodwill acquired — Balance at September 30, 2024 $ 3,510

Accrued Expenses (Tables)

Accrued Expenses (Tables)	9 Months Ended
	Sep. 30, 2024
Payables and Accruals [Abstract]
Schedule of Accrued Expense Liabilities	The following table summarizes information related to accrued expense liabilities: September 30, 2024 December 31, 2023 (in thousands) Accrued miscellaneous expenses $ 3,288 $ 1,271 Accrued payroll 988 1,685 Accrued ocean freight and other import costs 4,025 3,513 Accrued sale and use taxes 1,041 1,006 Accrued professional services fees 612 845 Accrued vacation and sick pay 936 619 Accrued property tax 834 552 Accrued shipping expenses 697 525 Accrued sales discount expense 257 487 Accrued interest expense 73 73 Total accrued expenses $ 12,751 $ 10,576

Long-Term Debt (Tables)

Long-Term Debt (Tables)	9 Months Ended
	Sep. 30, 2024
Debt Disclosure [Abstract]
Schedule of Long-Term Debt	Long-term debt consists of the following: September 30, 2024 December 31, 2023 (in thousands) The 2026 Term Loan, 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. $ 21,084 $ 21,555 The 2027 Term Loan, 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, which the Company exercised in March 2023. Interest accrues at a fixed rate of 4.375% per annum. Prior to August 1, 2023, principal and interest payments of $104,000 are due monthly. Beginning August 1, 2023, monthly principal and interest payments increased to $144,000 for the remainder of the loan term, 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. $ 27,802 $ 28,166 Long-term debt 48,886 49,721 Less: unamortized loan fees (156) (203) Less: current portion (1,165) (1,122) Long-term debt, net of current portion $ 47,565 $ 48,396
Schedule of Future Maturities	At September 30, 2024, future maturities are: (in thousands) 2024 (remainder) $ 287 2025 1,179 2026 20,798 2027 26,622 $ 48,886

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2024
Share-Based Payment Arrangement [Abstract]
Schedule of Stock Option Activity	A summary of the Company’s stock option activity under the Plan for the nine months ended September 30, 2024 is as follows: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contract Life (In Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2023 386,473 $ 18.58 7.8 $ 2,424 Exercised (24,073) $ 18.33 Forfeited (33,333) $ 18.86 Outstanding at September 30, 2024 329,067 $ 18.57 7.1 $ 2,410 Vested and expected to vest at September 30, 2024 329,067 $ 18.57 7.1 $ 2,410 Exercisable at September 30, 2024 209,067 $ 18.58 7.1 $ 1,528
Schedule of Unvested Restricted Stock Unit Activity	A summary of the Company’s unvested restricted stock units activity under the Plan for the nine months ended September 30, 2024 is as follows: Number of Shares Outstanding Weighted Average Grant Date Fair Value Unvested at December 31, 2023 5,346 $ 16.71 Granted 97,004 29.31 Vested (31,550) 27.54 Unvested at September 30, 2024 70,800 $ 29.14

Earnings Per Share (Tables)

Earnings Per Share (Tables)	9 Months Ended
	Sep. 30, 2024
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 period by the weighted average number of common shares outstanding during the period. Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 9,094 $ 9,065 $ 24,360 $ 28,572 Weighted average number of common shares in issue 20,018 19,891 19,994 19,888 Basic earnings per share $ 0.45 $ 0.46 $ 1.22 $ 1.44 The following table summarizes the calculation of diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (in thousands, except per share data) Net income attributable to Karat Packaging Inc. $ 9,094 $ 9,065 $ 24,360 $ 28,572 Weighted average number of common shares in issue 20,018 19,891 19,994 19,888 Dilutive shares Stock options and restricted stock units 116 104 114 75 Adjusted weighted average number of common shares 20,134 19,995 20,108 19,963 Diluted earnings per share $ 0.45 $ 0.45 $ 1.21 $ 1.43

Leases (Tables)

Leases (Tables)	9 Months Ended
	Sep. 30, 2024
Leases [Abstract]
Schedule of Lease Cost	The Company recognized the following lease costs in the accompanying condensed consolidated statement of income: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (in thousands) (in thousands) Operating lease expense $ 2,752 $ 1,606 $ 6,694 $ 4,454 Short-term lease expense 370 106 795 143 Variable lease expense 357 260 1,125 750 Total lease expense $ 3,479 $ 1,972 $ 8,614 $ 5,347
Schedule of Supplemental Information Related to Operating Leases	The following table presents supplemental information related to operating leases: September 30, 2024 December 31, 2023 Weighted average remaining lease term 4.55 years 4.51 years Weighted average discount rate 7.0 % 6.2 % Nine Months Ended September 30, 2024 2023 (in thousands) Cash paid for amounts included in measurement of lease obligations: Operating cash flows from operating leases $ 5,721 $ 4,129
Schedule of Future Lease Payments Under Operating Leases	As of September 30, 2024, future lease payments under operating leases were as follows: (in thousands) 2024 (remainder) $ 2,825 2025 11,550 2026 11,909 2027 10,827 2028 9,617 Thereafter 6,216 Total future lease payments 52,944 Less: imputed interest (7,725) Total lease liability balance $ 45,219

Nature of Operations (Details)

Nature of Operations (Details)	9 Months Ended
	Sep. 30, 2024 distribution_center
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Distribution centers operated by entity	7

Summary of Significant Accoun_4

Summary of Significant Accounting Policies - Narrative (Details)			3 Months Ended		9 Months Ended		12 Months Ended
	Feb. 29, 2024 USD ($)	Feb. 16, 2024 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) segment	Sep. 30, 2023 USD ($)	Dec. 31, 2017 USD ($)
Debt Instrument [Line Items]
Number of Reportable Segments | segment					1
Understatement of revenue			$ 112,771,000	$ 105,528,000	$ 320,984,000	$ 310,069,000
Cost of goods sold reclassifications - understated amount			69,274,000	66,584,000	196,478,000	191,120,000
Revenue recognized			8,000	16,000	786,000	1,074,000
Selling expenses			13,746,000	8,004,000	38,377,000	25,500,000
Reclassification out of general and administrative expense			(18,508,000)	$ (19,870,000)	(53,170,000)	(53,767,000)
Impairment of operating right-of-use asset					1,993,000	$ 0
2026 Term Loan
Debt Instrument [Line Items]
Face amount of loan			23,000,000		23,000,000
2027 Term Loan
Debt Instrument [Line Items]
Face amount of loan			28,700,000		28,700,000
Revision of Prior Period, Error Correction, Adjustment
Debt Instrument [Line Items]
Understatement of revenue					700,000
Cost of goods sold reclassifications - understated amount					400,000
Revision of Prior Period, Error Correction, Adjustment | Reclassification Of Platform Fees
Debt Instrument [Line Items]
Understatement of revenue			(3,047,000)		(7,971,000)
Selling expenses			3,047,000		7,971,000
Revision of Prior Period, Error Correction, Adjustment | Reclassification Of Production Expenses
Debt Instrument [Line Items]
Cost of goods sold reclassifications - understated amount			655,000		1,938,000
Reclassification out of general and administrative expense			655,000		1,938,000
Revision of Prior Period, Error Correction, Adjustment | Reclassification Of Employee-Related Costs
Debt Instrument [Line Items]
Selling expenses			730,000		2,177,000
Reclassification out of general and administrative expense			$ 730,000		$ 2,177,000
Global Wells
Debt Instrument [Line Items]
Ownership interest (as a percent)	15.10%
Voting interest (as a percent)	33.30%
Cash consideration	$ 3,208,000	$ 2,325,000
Global Wells | Selling Member
Debt Instrument [Line Items]
Ownership interest (as a percent)	10.80%
Global Wells
Debt Instrument [Line Items]
Ownership interest (as a percent)							13.50%
Voting interest (as a percent)							25%
Minimum bank account to make additional contributions from members							$ 50,000
Contributions to offset the amount that member cannot contribute (up to)							$ 25,000

Summary of Significant Accoun_5

Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Net sales	$ 112,771	$ 105,528	$ 320,984	$ 310,069
National and regional chains
Disaggregation of Revenue [Line Items]
Net sales	23,312	23,407	68,834	68,602
Distributors
Disaggregation of Revenue [Line Items]
Net sales	63,071	61,037	177,995	178,274
Online
Disaggregation of Revenue [Line Items]
Net sales	18,950	14,271	53,375	43,419
Retail
Disaggregation of Revenue [Line Items]
Net sales	$ 7,438	$ 6,813	$ 20,780	$ 19,774

Summary of Significant Accoun_6

Summary of Significant Accounting Policies - Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short-term investments	$ 21,531	$ 26,343
Recurring basis | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	9,463	5,956
Short-term investments	0	0
Publicly-traded equity securities	35
Fair value	9,498	5,956
Recurring basis | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	21,920	10,000
Short-term investments	21,531	26,343
Publicly-traded equity securities	0
Fair value	43,451	36,343
Recurring basis | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Short-term investments	0	0
Publicly-traded equity securities	0
Fair value	$ 0	$ 0

Summary of Significant Accoun_7

Summary of Significant Accounting Policies - Summary of Carrying Values and Estimated Fair Values of Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Carrying Amount	$ 48,886	$ 49,721
Carrying Amount
Debt Instrument [Line Items]
Carrying Amount	48,730	49,518
Estimated Fair Value
Debt Instrument [Line Items]
Estimated Fair Value	47,786	47,809
2026 Term Loan
Debt Instrument [Line Items]
Carrying Amount	21,084	21,555
2026 Term Loan | Carrying Amount
Debt Instrument [Line Items]
Carrying Amount	21,037	21,490
2026 Term Loan | Estimated Fair Value
Debt Instrument [Line Items]
Estimated Fair Value	20,074	19,999
2027 Term Loan
Debt Instrument [Line Items]
Carrying Amount	27,802	28,166
2027 Term Loan | Carrying Amount
Debt Instrument [Line Items]
Carrying Amount	27,693	28,028
2027 Term Loan | Estimated Fair Value
Debt Instrument [Line Items]
Estimated Fair Value	$ 27,712	$ 27,810

Inventories - Schedule of Inven

Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Raw materials	$ 6,596	$ 9,116
Semi-finished goods	1,551	1,343
Finished goods	63,491	61,419
Subtotal	71,638	71,878
Less: inventory reserve	(720)	(350)
Total inventories	$ 70,918	$ 71,528

Inventories - Narrative (Detail

Inventories - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Inventory [Line Items]
Write-off of inventory	$ 694	$ 281	$ 1,145	$ 3,225
Cost of Sales
Inventory [Line Items]
Write off of raw materials				$ 1,700

Property and Equipment - Schedu

Property and Equipment - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	$ 147,258	$ 144,962
Less: accumulated depreciation and amortization	(57,126)	(49,736)
Total property and equipment, net	90,132	95,226
Machinery and equipment
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	67,722	67,321
Leasehold improvements
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	19,193	19,085
Vehicles
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	8,233	7,038
Furniture and fixtures
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	1,015	1,015
Building
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	38,779	38,503
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	93	93
Construction in progress
Property, Plant and Equipment, Net, by Type [Abstract]
Property and equipment, gross	$ 316	$ 0

Property and Equipment - Narrat

Property and Equipment - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
General and Administrative Expense
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 1,099	$ 1,167	$ 3,154	$ 3,439
Cost of Sales
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 1,585	$ 1,534	$ 4,806	$ 4,599

Goodwill - Schedule of Goodwill

Goodwill - Schedule of Goodwill (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Goodwill [Roll Forward]
Goodwill, beginning balance	$ 3,510
Goodwill acquired	0
Goodwill, ending balance	$ 3,510

Line of Credit (Details)

Line of Credit (Details) - USD ($)	Mar. 14, 2023	Sep. 30, 2024	Dec. 31, 2023	Jun. 20, 2023	Jun. 19, 2023	Feb. 23, 2018
SOFR
Line of Credit Facility [Line Items]
Interest rate	2.50%
Floor interest rate	1%
Line of credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 36,187,000				$ 40,000,000
Floor rate (as a percent)	3.25%
Long-term line of credit, noncurrent		0	$ 0
Line of credit | Prime Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate	0.25%
Standby letter of credit
Line of Credit Facility [Line Items]
Maximum borrowing capacity				$ 5,000,000	$ 2,000,000
Long-term line of credit, noncurrent		$ 3,813,000	$ 3,766,000

Accrued Expenses (Details)

Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Payables and Accruals [Abstract]
Accrued miscellaneous expenses	$ 3,288	$ 1,271
Accrued payroll	988	1,685
Accrued ocean freight and other import costs	4,025	3,513
Accrued sale and use taxes	1,041	1,006
Accrued professional services fees	612	845
Accrued vacation and sick pay	936	619
Accrued property tax	834	552
Accrued shipping expenses	697	525
Accrued sales discount expense	257	487
Accrued interest expense	73	73
Total accrued expenses	$ 12,751	$ 10,576

Long-Term Debt - Schedule of Lo

Long-Term Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands		7 Months Ended	9 Months Ended
	Aug. 01, 2023	Jul. 31, 2023	Sep. 30, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Carrying Amount			$ 48,886	$ 49,721
Less: unamortized loan fees			(156)	(203)
Less: current portion			(1,165)	(1,122)
Long-term debt, net of current portion			47,565	48,396
2026 Term Loan
Debt Instrument [Line Items]
Carrying Amount			21,084	21,555
Amount converted to term loan			16,115
Term loan, accordion feature			$ 6,885
Fixed interest rate (as a percent)			3.50%
Monthly principal and interest payments			$ 116
2027 Term Loan
Debt Instrument [Line Items]
Carrying Amount			27,802	$ 28,166
Amount converted to term loan			20,700
Term loan, accordion feature			$ 8,000
Fixed interest rate (as a percent)			4.375%
Monthly principal and interest payments	$ 144	$ 104

Long-Term Debt - Schedule of Fu

Long-Term Debt - Schedule of Future Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Future maturities:
2024	$ 287
2025	1,179
2026	20,798
2027	26,622
Long-term debt	$ 48,886	$ 49,721

Stock-Based Compensation - Narr

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands			3 Months Ended		9 Months Ended
	May 07, 2024	Mar. 12, 2024	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Jan. 31, 2019
Stock-based Compensation
Shares reserved for issuance (in shares)			1,287,017		1,287,017		2,000,000
Stock-based compensation expense			$ 400	$ 250	$ 1,715	$ 743
Remaining stock-based compensation expense for unvested stock options			10		10
Remaining stock-based compensation expense for unvested restricted stock units			$ 1,317		$ 1,317
Restricted Stock Units (RSUs)
Stock-based Compensation
Cost not yet recognized, period for recognition (in years)					1 year 2 months 12 days
Granted (in shares)	6,000	91,000			97,004
Grant date fair value	$ 169	$ 2,674
Stock Options
Stock-based Compensation
Cost not yet recognized, period for recognition (in years)					3 months 18 days
Maximum
Stock-based Compensation
Award term (in years)					10 years
Maximum | Restricted Stock Units (RSUs)
Stock-based Compensation
Vesting period (in years)					3 years
Maximum | Stock Options
Stock-based Compensation
Vesting period (in years)					3 years
Minimum | Restricted Stock Units (RSUs)
Stock-based Compensation
Vesting period (in years)					2 years
Minimum | Stock Options
Stock-based Compensation
Vesting period (in years)					2 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%		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) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024 USD ($) $ / shares shares	Dec. 31, 2023 USD ($) $ / shares shares
Number of Options
Outstanding at beginning of period (in shares) | shares	386,473
Exercised (in shares) | shares	(24,073)
Forfeited (in shares) | shares	(33,333)
Outstanding at end of period (in shares) | shares	329,067	386,473
Number of options, vested and expected to vest (in shares) | shares	329,067
Number of options, exercisable (in shares) | shares	209,067
Weighted-Average Exercise Price
Outstanding at beginning of period (in dollars per share) | $ / shares	$ 18.58
Exercised (in dollars per share) | $ / shares	18.33
Forfeited (in dollars per share) | $ / shares	18.86
Outstanding at end of period (in dollars per share) | $ / shares	18.57	$ 18.58
Weighted average exercise price, vested and expected to vest (in dollars per share) | $ / shares	18.57
Weighted average exercise price, exercisable (in dollars per share) | $ / shares	$ 18.58
Stock Option Activity, Additional Disclosures
Weighted average remaining contract life, options outstanding	7 years 1 month 6 days	7 years 9 months 18 days
Weighted average remaining contract life, vested and expected to vest	7 years 1 month 6 days
Weighted average remaining contract life, exercisable	7 years 1 month 6 days
Aggregate intrinsic value, options outstanding | $	$ 2,410	$ 2,424
Aggregate intrinsic value, vested and expected to vest | $	2,410
Aggregate intrinsic value, exercisable | $	$ 1,528

Stock-Based Compensation - Sc_2

Stock-Based Compensation - Schedule of Unvested Restricted Stock Units (Details) - Restricted Stock Units (RSUs) - $ / shares			9 Months Ended
	May 07, 2024	Mar. 12, 2024	Sep. 30, 2024
Number of Shares Outstanding
Outstanding at beginning of period (in shares)			5,346
Granted (in shares)	6,000	91,000	97,004
Vested (in shares)			(31,550)
Outstanding at end of period (in shares)			70,800
Weighted Average Grant Date Fair Value
Outstanding at beginning of period (in dollars per share)			$ 16.71
Granted (in dollars per share)			29.31
Vested (in dollars per share)			27.54
Outstanding at end of period (in dollars per share)			$ 29.14

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Earnings Per Share Reconciliation [Abstract]
Net income attributable to Karat Packaging Inc.	$ 9,094	$ 9,065	$ 24,360	$ 28,572
Weighted average number of common shares in issue (in shares)	20,017,774	19,890,646	19,993,964	19,888,244
Basic earnings per share (in dollars per share)	$ 0.45	$ 0.46	$ 1.22	$ 1.44
Weighted Average Number of Shares Outstanding, Diluted [Abstract]
Net income attributable to Karat Packaging Inc.	$ 9,094	$ 9,065	$ 24,360	$ 28,572
Weighted average number of common shares in issue (in shares)	20,017,774	19,890,646	19,993,964	19,888,244
Dilutive shares
Stock options and restricted stock units (in shares)	116,000	104,000	114,000	75,000
Adjusted weighted average number of common shares (in shares)	20,133,813	19,994,648	20,107,801	19,962,999
Diluted earnings per share (in dollars per share)	$ 0.45	$ 0.45	$ 1.21	$ 1.43
Potentially dilutive shares excluded from diluted earnings per share calculation (in shares)	0	0	6,403	285,000

Leases - Schedule of Lease Cost

Leases - Schedule of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Leases [Abstract]
Operating lease expense	$ 2,752	$ 1,606	$ 6,694	$ 4,454
Short-term lease expense	370	106	795	143
Variable lease expense	357	260	1,125	750
Total lease expense	$ 3,479	$ 1,972	$ 8,614	$ 5,347

Leases - Narrative (Details)

Leases - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Lessee, Lease, Description [Line Items]
Impairment of operating right-of-use asset			$ 1,993	$ 0
Expected rental income, remainder of the year	$ 185		185
Expected rental income in 2025	616		616
Global Wells | Minimum
Lessee, Lease, Description [Line Items]
Monthly lease payment			62
Global Wells | Maximum
Lessee, Lease, Description [Line Items]
Monthly lease payment			65
Operating Expense
Lessee, Lease, Description [Line Items]
Lease expense	2,843	$ 1,653	7,209	4,542
Cost of Sales
Lessee, Lease, Description [Line Items]
Lease expense	$ 636	$ 319	$ 1,405	$ 805

Leases - Schedule of Supplement

Leases - Schedule of Supplemental Information Related to Operating Leases (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Leases [Abstract]
Weighted average remaining lease term (in years)	4 years 6 months 18 days		4 years 6 months 3 days
Weighted average discount rate	7%		6.20%
Cash paid for amounts included in measurement of lease obligations:
Operating cash flows from operating leases	$ 5,721	$ 4,129

Leases - Schedule of Maturities

Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Leases [Abstract]
2024 (remainder)	$ 2,825
2025	11,550
2026	11,909
2027	10,827
2028	9,617
Thereafter	6,216
Total future lease payments	52,944
Less: imputed interest	(7,725)
Total lease liability balance	$ 45,219

Impairment Expense and (Gain)_2

Impairment Expense and (Gain) Loss, Net, on Disposal of Machinery and Equipment (Details) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 28, 2023 vendor	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)
Discontinued Operations and Disposal Groups [Abstract]
Number of unrelated vendors | vendor	2
Gain (loss) on disposition of machinery and equipment			$ 310		$ (1,612)
Impairment expense related to the unrecoverable cancelled deposits					523
Loss on disposal of fixed assets within normal course of business		$ (27)	$ 0	$ 505	$ 96

Related Party Transactions (Det

Related Party Transactions (Details) $ in Thousands	3 Months Ended				9 Months Ended		12 Months Ended
	Sep. 30, 2024 USD ($) shares	Sep. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Sep. 30, 2018 convertible_note	Sep. 30, 2024 USD ($) shares	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2023 USD ($) shares	Jun. 30, 2023 USD ($)	May 08, 2023 USD ($)	Apr. 06, 2022 USD ($)
Related Party Transaction [Line Items]
Deposits paid for joint venture investment					$ 0	$ 2,900
Deposits refunded from joint venture investment					$ 0	6,900
Common stock, shares outstanding (in shares) | shares	20,021,105				20,021,105			19,965,482
Number of exercised convertible notes | convertible_note				2
Lollicup Franchising, LLC | Bio Earth Technology
Related Party Transaction [Line Items]
Ownership percentage by parent											49%
Bio Earth Technology
Related Party Transaction [Line Items]
Deposits paid for joint venture investment			$ 2,900				$ 5,876
Deposits refunded from joint venture investment			$ 900				$ 1,876
Bio Earth Technology | Lollicup Franchising, LLC
Related Party Transaction [Line Items]
Committed capital to joint venture											$ 6,500
Keary Global
Related Party Transaction [Line Items]
Noncontrolling interest in joint ventures									$ 6,100	$ 6,100
Noncontrolling interest in joint ventures, gross										$ 6,000
Keary Global | Affiliated Entity
Related Party Transaction [Line Items]
Common stock, shares outstanding (in shares) | shares	250,004				250,004
Keary Global | Bio Earth Technology
Related Party Transaction [Line Items]
Ownership percentage by parent										5%
Keary Global and Keary International
Related Party Transaction [Line Items]
Purchases from related party	$ 7,473	$ 7,371			$ 30,920	$ 32,384
Keary Global and Keary International | Affiliated Entity
Related Party Transaction [Line Items]
Accounts payable	$ 3,963				$ 3,963			$ 5,306

Income Taxes (Details)

Income Taxes (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 2,597,000	$ 2,904,000	$ 7,413,000	$ 9,045,000
Effective tax rate	21.90%	24.10%	22.90%	23.80%
Deferred tax assets, valuation allowance	$ 0		$ 0
Uncertain tax positions	$ 0		$ 0		$ 0

Commitments and Contingencies (

Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2024	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Loss contingency	$ 2,984	$ 2,984	$ 2,738
Accrued interest	$ 81	$ 246

Secondary Offering (Details)

Secondary Offering (Details) $ in Thousands	Sep. 12, 2023 USD ($)
Equity [Abstract]
Offering transaction costs	$ 453

Subsequent Events (Details)

Subsequent Events (Details) - $ / shares		3 Months Ended
	Nov. 05, 2024	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023
Subsequent Event [Line Items]
Common stock, dividends declared (in dollars per share)		$ 0.50	$ 0.35	$ 0.30	$ 0.50	$ 0.35
Subsequent Event
Subsequent Event [Line Items]
Common stock, dividends declared (in dollars per share)	$ 0.40