Last Updated on June 18, 2025 by
I hate to say it, but Beyond Meat is beyond cooked.
What started as Silicon Valley’s next big thing is now an absolute dumpster fire.
After raising money from Bill Gates, going public for >$4bn, and even partnering with Kim K., Beyond Meat is now the laughing stock of the NASDAQ.
The business has lost 96% of its equity value since IPO, is burning ~$20-$30m in cash every quarter, and has over $1bn in debt due in 2027.
So what happened?
How were investors once convinced that this was the next big thing?
Let’s break it down.
Why Beyond Meat’s IPO Was Doomed From Day One
Beyond Meat is a product of the ZIRP era.
In the words of Daring Foods CEO Ross Mackay, a competitor in the plant-based meat space, “Capital was free almost for a long time and now it’s very, very expensive”.
Having raised $72m in financing from investors like Kleiner Perkins, Bill Gates, and Tyson Foods, the sky was the limit for Beyond Meat. Or so they thought.
In 2019, the business IPO’d at a 40x revenue multiple, where most CPG businesses trade on a 1x-2x revenue multiple.
Straight away, this multiple is ridiculous. For context, the Facebook IPO was priced at a 28x trailing revenue multiple.
The assumption baked into any revenue multiple is that the business will ‘grow into’ the multiple over time. For a select handful of hyper-growth technology companies, this turns out to be true. In fact, Beyond Meat’s growth post-IPO was strong, with revenue jumping 180% in 2018.
But the problem is that Beyond Meat is not a technology company. It is a food manufacturing business. The multiple should reflect this. If you look at Beyond Meat versus other food manufacturing companies in 2018, the difference is stark. Yes, it was growing at 170% year-over-year (YoY), but it had lower gross margins.
Not only was the multiple incredibly high, but the business was losing money. At IPO, Beyond Meat had experienced losses in every year of its operation from 2011 up to the IPO, losing $25m in 2016, $30m in 2017 and $29m in 2018.
The mistake in the thinking is that margins would magically improve. Yes, it is true for many venture-backed software companies that at some point in the future, as the company starts to benefit from operating leverage, they can often become wildly profitable.
But software companies that reach profitability often have incredibly high (70-80%+) gross margins. These strong unit economics are what enable the company to pull the profitability lever when it stops spending heavily on growth.
There is almost nothing that you can do to fix your basic unit economics. Charge more, and your growth will slow down, or customers will stop buying. If your unit economics are terrible today, they will probably be terrible in the future. Bad unit economics stem from not providing enough value.
But there are bad gross margins. And there is Beyond Meat. How did gross margins tank 30% from 2021 – 2022?
The business got hit with some tailwinds that created a downward spiral.
COVID-driven inflationary pressures increased input costs in the production process, and also drove up distribution costs massively.
Simultaneously, increased price sensitivity among consumers made the higher-cost option of alternative meat less appealing relative to traditional beef. This caused sales volume to plummet.
Do people care about the amount? Definitely. But not enough to pay 50-80% premiums on regular products when their grocery bill is skyrocketing.
Lower sales volume forced the business to operate production lines below full capacity, increasing the cost per unit. Declining sales in supermarkets also forced Beyond Meat to discount its product.
On top of this, the business also decided to introduce a lower-margin Beef Jerky product into their product mix (terrible decision).
I mean, come on — meat-free jerky!?
Market Headwinds: How Health Concerns and Diet Trends Crushed Beyond Meat
Like many businesses, it’s incredibly hard to make money if the market is struggling. And unfortunately for Beyond Meat, the alternative meat market took a turn for the worse.
The US plant-based meat market peaked in size in 2020 and has been declining ever since. Whilst there were high hopes of growing beyond the 4-6% of vegetarians, the reality was very different.
So what happened?
Whilst the company was focused on pushing a narrative of sustainability, customers had a much bigger concern.
Are the products even healthy?
After all, in the process of trying to get the food to feel closer to beef, you have to do lots of modifications to the core product.
The CEO of the Company, Ethan Brown, claimed that this narrative was driven by traditional meat companies trying to undermine the company.
“The central issue impeding our return to sustained growth is perception, or more accurately, misperception.”
The burger patties are high in protein, but the caveat is that they contain seed oils, and are also very high in saturated fat.
Looking at the ingredient list for the Beyond Burger, it doesn’t look horrendous, but it’s a far cry from being a true natural substitute.
In the background, there was a macro trend away from vegetarianism towards carnivore diets, with the rise of the Make America Healthy Again movement and influencers like The Liver King and Joe Rogan championing the movement.
In the words of The Atlantic, “Making America healthy again, it seems, starts with a double cheeseburger and fries.”
Struggles in QSR: Beyond Meat’s Fast Food Flop
But it gets worse.
What initially started as a great wedge for Beyond Meat in the Quick Service Restaurant (QSR) sector quickly fell apart.
Initially, the business had traction working with fast food chains like McDonald’s and TGI Fridays to offer plant-based meat options. McDonald’s actually launched the ‘McPlant’ burger in collaboration with Beyond Meat, which helped secure sales for the business — while helping to grow brand awareness.
But after trialling the McPlant in San Francisco and Dallas, McDonald’s shut down the program in the US.
The economics didn’t work. As the market started to turn, there was insufficient demand in the restaurants to warrant cooking plant-based burger patties. Because the burgers need to be cooked on a separate grill from traditional burgers, if they are ordered too infrequently, it disrupts the food line in these restaurants, creating huge inefficiency.
As a result, a slight decline in demand quickly spiralled.
The program was more successful in Europe, although failing to penetrate the US market was a big loss for the business.
Plant-Based Meat vs Plant-Based Milk
Interestingly, whilst plant-based meats have struggled, the story for plant-based milks has been very different.
Plant-based milks have reached ~14% penetration in the milk market globally, with 1/10 households purchasing, whereas plant-based meats have only reached 0.8% penetration.
If plant-based meats had been able to reach 5-10% of the global meat market, the story may have looked very different for businesses like Beyond Meat.
Part of this separation is likely the difference in taste. Plant-based milks actually taste pretty good, whereas plant-based meat is extremely mid.
But part of this is also cost dynamics. Plant-based milks were able to get much closer to cost parity than plant-based meats. Where the average plant-based meat premium is 43%, for plant-based milks, on average, this delta is only 11%.
Financial Mismanagement
Given how poorly the business seems to be doing financially, it got me curious. Who is the CFO of the company?
Not surprisingly, the business has churned through a number of CFO’s over the last few years. This has to be one of the worst signals for any business that the financials are being mismanaged.
Listening to the Founder Ethan Brown, this lack of focus on unit economics seems to come from the top.
In an interview with Monica Langley, Brown remarked that “(I) didn’t realise the extent to which Wall St is truly focused on the short term. When COVID hit, we got tested, because we could have retracted way back, and not expanded into China, not expanded into Europe, not going to keep investing in innovation at the same clip, we’re not going to build this beautiful campus.
I didn’t want to do that. I wanted to keep investing. Because this is not about next year. It’s not even about three years from now. It’s about 5, 10, 20 years from now…”
This is the danger of Silicon Valley dogma that can run companies into the ground. Yes, thinking long term is powerful. But you earn the right to think long term by staying in the game, and running a profitable company that can weather a storm.
Simply put, there is no long-term if you can’t survive the short-term.
What is the Business Worth Today?
Beyond Meat has $1bn in convertible notes that mature in March 2027, issued in 2021.
These notes give Beyond Meat the ability to pay back with a mix of cash or shares. At the time these notes were issued, Beyond Meat had a share price of $140. But today, Beyond Meat has a share price of $8, meaning that they will have to pay back nearly the entire component in cash.
I’m not sure which investment bank put together this debt package, but it shows how crazy the ZIRP antics were. The business had never produced positive free cash flow before this point, and it decided to effectively lever up with ~$1bn of quasi debt?
Today, the company’s current market cap is only $188m, with $100m in cash on the balance sheet.
The business is losing ~$20m – $30m in cash per quarter, but miraculously, they managed to secure another $100m financing facility in May this year from some sustainable agricultural non-profit investor, buying the business another year of operating expenses.
There were previously talks in 2024 about restructuring the company with debt holders, but it’s unclear where those discussions ended up
There is a possibility we will see a distressed lender like Oaktree or Ares come in and acquire the debt package from existing debt holders and wait for the business to default to restructure the business.
But honestly, there is no amount of money you could pay me to buy this business.
