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Six months after the Los Angeles sessions for King of America, Costello returned to the studio with the Attractions to work on the songs for this album. Recording at Olympic Studios in London, several songs were re-workings from those earlier L.A. sessions, including "Blue Chair," "I Hope You're Happy Now," and "American Without Tears No. 2." An outtake from these sessions, a cover of the 1959 hit by Little Willie John "Leave My Kitten Alone," had also been an outtake for The Beatles during the sessions for Beatles for Sale. Blood & Chocolate was recorded in a single large room at high volume, with the band listening to each other on monitor speakers and playing at stage volume, an unusual practice in the studio for its time. Costello reported the band's relationship as having 'soured,' and after the album's completion and one more tour, Costello would not work again with the Attractions for another eight years until Brutal Youth.
As on his previous album, Costello uses three different names to credit himself: his given name of Declan MacManus; his stage name of Elvis Costello; and the nickname Napoleon Dynamite, his alter ego as master of ceremonies for the Attraction's spinning songbook tour. The name would later grace the 2004 motion picture.
The tracks "Tokyo Storm Warning," "I Want You," and "Blue Chair" were all released as singles. The "Blue Chair" single was not the recording from the album, but an earlier one made with T-Bone Burnett during the King of America sessions with the Confederates band. "Tokyo Storm Warning" peaked at #73 on the UK singles chart but missed the Billboard Hot 100. The other two singles did not chart in either nation. Except for a compilation released in the UK, Out of Our Idiot, this album would be the final release on his Demon/Columbia contract, Costello signing with Warner Brothers for his next LP, Spike.
The album uses Esperanto to list musician credits and LP sides. The line in Tokyo Storm Warning "Japanese God-Jesus robots telling teenage fortunes" refers to a real toy made by Bandai.
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