Beyond Meat plans to lay off 6% of its workforce and suspend operations in China to reduce operational expenses, says the loss-making firm, which posted its second consecutive quarter of year-over-year (YoY) growth following two years of declining sales.
The company, which posted a 4% YoY rise in net sales to $76.7 million in the fourth quarter driven by price increases and lower trade discounts, will cut 44 employees in North America and the EU, eliminate certain open positions, and make unspecified “changes to the executive leadership team.”
It will also suspend operational activities in China by the end of the second quarter, reducing its workforce there by approximately 20 employees, CEO Ethan Brown told analysts Wednesday afternoon.
“We aim to improve gross margin to approximately 20% with the longer-term goal of ultimately exceeding a gross margin of 30%,” added Brown.
“2024 was a pivotal year for Beyond Meat. We returned to year-over-year net revenue growth in the second half, meaningfully expanded gross margin compared to the prior year, sharply reduced operating expenses, and delivered a significant year-over-year improvement in adjusted EBITDA.”
Q4 2024 by the numbers:
- Net revenue: +4% year over year (YoY) to $76.7 million, volumes -2.1%
- Net loss: $44.9 million
- Margins: Gross profit was $10 million with a gross profit margin of 13.1%
- US retail revenue: +5.7% YoY to $33.9 million; volumes -4.5%
- US foodservice revenue: -2.1% YoY to $10.5 million; volumes -11%
- International retail revenue: +1.7% YoY to $13.1 million; volumes -10.4%
- International foodservice revenue: +9.2% YoY to $19.3 million; volumes +8.9%
- Full year 2024 outlook: Net revenues of $320-330 million
- Balance sheet: As of Sept 28, 2024, Beyond Meat’s cash and cash equivalents balance was $134.9 million and total outstanding debt was $1.1 billion.
- FY 2024 revenues: $326.5 million, down 4.9% year-over-year
According to a Nov 2024 SEC filing, Beyond Meat’s Chinese subsidiary Beyond Jiaxing Food Co struck a deal with the Administrative Committee of the Jiaxing Economic & Technological Development Zone in late 2020 to lease a facility in the zone for at least two years. The deal was amended in December 2022 to extend the term for an additional five years. “As of September 28, 2024, the company had invested $22 million as the registered capital of Beyond Jiaxing Food Co and advanced $20 million to Beyond Jiaxing Food Co,” said the firm.
Distribution wins in France
In international markets, Brown said he felt bullish about France, with Beyond Steak launching at selected retailers and Beyond’s plant-based nuggets launching at 1,500+ McDonald’s outlets.
Other areas of recent expansion in Europe include the introduction of Smash burgers at Tesco in the UK and a Beyond plant burger at Wendy’s in Georgia [the country], he said.
Large brand blocks in the US
In the US, Beyond Meat continues to work with retailers on merchandising, said Brown. “Our goal is to go back to large brand blocks. I’m increasingly agnostic about whether they’re in fresh or frozen, but what I do want to see is the consumer be able to easily identify in the store where they can buy our products.”
The firm is also intent on combating consumer perceptions of alt meat as highly processed, said Brown, who has railed against attempts to “weaponize” the word “processed” to “undermine plant-based meat and preserve the status quo.”
He added: “If you look at the beef prices today, they’re starting to rise. What’s that about? In part, that’s about drought, right? And that’s not something that a government or industry can solve. If you look at the avian livestock industry… that’s [avian flu] not something that’s easily containable. All these things are going to worsen with a warming climate…
“At some point, serious people need to step forward and deal with these problems, and we’re there to help.”
Will Beyond Meat consider adding cultivated fat to its products?
Asked by one analyst if Beyond Meat would consider adding cultivated fat to its products, Brown said he would “look at everything,” but added that, “I think the trend is actually in the opposite direction. It’s how simple can we make these products?”
He added: “What will bring the consumer back is a fundamental understanding that this is a very simple and clean product that tastes great and is really good for you.”
Regenerative beef a ‘non-starter’
As for regenerative agriculture, he added: “All of this posturing around, you know, ‘We’re going to do regenerative agriculture…’
“Any serious scientists around regenerative beef will tell you that’s just a non-starter. Sure, you can have some beef out on the pasture, but you have to have far, far less, right? So that’s not going to provide a global protein solution.”
The manufacturing network: ‘We had to go reverse all that’
Gross margins will continue to improve, said Brown, who has been reducing headcount and inventory and exiting co-manufacturing contracts over the past 18 months.
“Three or four years ago we were scrambling to build out this network, and then we had to go reverse all that… The team took a very fragmented production network with over 13 different sites, copackers, and consolidated that into our own internal manufacturing and then one other copacker. That took an enormous amount of effort… and we’re not completely done.
“We’re making some incremental investments in our facilities to increase automation. We’re doing another RFP for materials and ingredients.”
$1.1bn debt
The firm, which posted a net loss of $44.9 million in the quarter, had a cash and cash equivalents balance of $145.6 million as of Dec 31, 2024, and a total outstanding debt of $1.1 billion thanks to a $1 billion+ offering of convertible notes made in March 2021 (when sales at the firm peaked) that will mature in early 2027.
According to Brown: “In 2025 we will continue to evaluate options to further improve liquidity and optimize our capital structure. We have no secured debt, and our unsecured indenture provides us with significant flexibility to pursue a range of potential transactions.”
CFO Lubi Kutua added: “We deployed our at the market (ATM) program in the fourth quarter of 2024 which generated net proceeds of approximately $46.7 million through the sale of approximately 9.75 million new shares of common stock.
“We are currently implementing a broad set of initiatives which are intended to position the company for sustained EBITDA positive operations on a run rate basis by the end of 2026.”
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Author Elaine Watson
