Salt & Straw has filed a breach of contract lawsuit against fellow Portland ice cream maker Ruby Jewel, accusing it of plotting to halt production of the wildly popular Tacolate ice cream taco without notice, despite a manufacturing agreement that runs through February 2028. The 27-page complaint, filed in Multnomah County Circuit Court, lands just as Ruby Jewel has told Salt & Straw it intends to stop making the treat, along with its own ice cream sandwiches, effective Tuesday, October 6, with plans to lay off its manufacturing workforce on October 8.
A Sold-Out Taco Bell Treat Hits a Supply Wall
The dispute centers on the Tacolate, the ice cream taco Salt & Straw co-created with Taco Bell that became available at Taco Bell locations nationwide in September and sold out within a week, according to the lawsuit as reported by The Oregonian/OregonLive. The frozen treat, also sold online, at Salt & Straw scoop shops, New Seasons Market, and Elephants Delicatessen, is manufactured entirely at Ruby Jewel's facility on Northeast Marx Street in Portland. Ruby Jewel CEO Eric Koppelman said in a late-September email that the company decided to shut down operations because Salt & Straw had reduced its ice cream taco demand forecast by more than 60%, according to exhibits attached to the complaint detailed by KGW. Salt & Straw disputes that this justifies walking away, arguing the agreement does not allow Ruby Jewel to cease production simply because demand has decreased.
The manufacturing relationship dates to February 2025, when Salt & Straw entered a co-packing agreement under which Ruby Jewel agreed to produce Tacolates for three years. Ruby Jewel told Salt & Straw earlier this month that it was cutting that term short, announcing it would halt production of both the Tacolate and its own ice cream sandwiches effective Tuesday, October 6, and lay off all manufacturing employees on October 8, per the lawsuit. Koppelman did not immediately respond to a request for comment about the shutdown, the size of the affected workforce, or the layoffs, the newspaper reported.
Stranded Equipment and a Rejected Buyout
Salt & Straw says it has invested more than $2 million in custom equipment housed at Ruby Jewel's plant for Tacolate production — machinery that Salt & Straw co-founder Tyler Malek pursued after years of producing small batches by hand, according to reporting from OPB. The company says it has also paid Ruby Jewel more than $1.9 million under the co-manufacturing agreement. With Ruby Jewel reportedly pursuing a more asset-light business model, the company offered to sell its entire manufacturing division to Salt & Straw for $5 million, an offer Salt & Straw declined in September.
Salt & Straw instead negotiated to take over Ruby Jewel's lease and purchase its equipment at fair market value, but Ruby Jewel withdrew from that deal on September 28, according to the lawsuit. Ruby Jewel, which is owned by Village Family Capital, has pursued a more asset-light business model, the station's report notes. Now Salt & Straw is asking the court to force Ruby Jewel to perform through the agreement's February 24, 2028 expiration, or at minimum to keep producing Tacolates long enough for Salt & Straw to transition to another qualified manufacturer.
Two Portland Ice Cream Brands, Two Very Different Paths
The clash pits two homegrown Portland brands against each other at very different points in their corporate journeys. Salt & Straw was founded in 2011 by Kim Malek and Tyler Malek as a single Northeast Portland ice cream cart before growing into a national chain with scoop shops in seven states and more than $100 million in annual sales, a figure confirmed by Reuters reporting cited in Willamette Week. The company made its first entry into grocery store freezer aisles in May and, as Reuters also reported, explored a potential sale valued at over $200 million in June after retaining investment bank Piper Sandler to find a buyer.
Ruby Jewel's story began differently. Founder Lisa Herlinger started the company as a farmers market booth in 2004, hand-crafting ice cream cookie sandwiches with local Oregon ingredients before expanding into grocery aisles in 2016, according to a historical profile in Dairy Foods. The Tacolate itself was born out of a void left by Klondike's Choco Taco, the original ice cream taco invented in 1983 by Alan Drazen for Jack & Jill Ice Cream in Philadelphia, which Klondike discontinued in July 2022, citing an “unprecedented spike in demand across our portfolio,” as OPB reported.
What Happens to the Plant and Its Workers
The 12,431 N.E. Marx Street facility is Ruby Jewel's primary manufacturing hub, and its complete closure under the planned shutdown would threaten the roughly three dozen employees who work there. Under Oregon contract law, Salt & Straw's complaint seeks a specific performance order from the Multnomah County Circuit Court compelling Ruby Jewel to honor the co-manufacturing timeline through the contract's expiration, a legal mechanism outlined in the KGW report. Whether the court grants that relief, or whether Salt & Straw is left to scramble for a new co-packer capable of running the mechanically complex waffle-taco line, remains to be seen as the case proceeds.
