Beyond Meat, Inc. (BYND) Q4 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Beyond Meat Fourth Quarter 2020 Earnings Conference Call. At this time, all participants’ lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advise that today’s conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. Lubi Kutua, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good afternoon and welcome. On today’s call are Ethan Brown, Founder, President and Chief Executive Officer; and Mark Nelson, Chief Financial Officer and Treasurer. By now, everyone should have access to our fourth quarter earnings press release and investor presentation filed today after market close. These documents are available on the Investor Relations section of Beyond Meat’s website at www.beyondmeat.com. Before we begin, please note that all the information presented on today’s call is unaudited and during the course of this call, management may make forward-looking statements within the meaning of the Federal Securities Laws. These statements are based on management’s current expectations and beliefs, and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Forward-looking statements in the earnings release that we issued today, along with the comments on this call are made only as of today and will not be updated as actual events unfold. Please refer to today’s press release, our annual report on Form 10-K for the fiscal year ended December 31, 2019, our subsequently filed quarterly reports on Form 10-Q and our annual report on Form 10-K for the year ended December 31, 2020, to be filed with the SEC and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please also note that on today’s call, management will refer to adjusted EBITDA, adjusted gross profit, adjusted gross margin and adjusted net income or loss, which are non-GAAP financial measures. While we believe these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Please refer to today’s press release or investor presentation for reconciliation of adjusted EBITDA, adjusted gross profit, adjusted gross margin and adjusted net income or loss to their most comparable GAAP metrics. And with that, I would now like to turn the call over to Ethan Brown, Chief Executive Officer of Beyond Meat.

Thank you, Lubi, and good afternoon, everyone. When we held our initial public offering a little less than two years ago, we articulated a vision for our business that was neither niche and focus and more limited in ambition. We outlined our goal of taking the core building blocks of meat, amino acids, lipids, trace minerals and vitamins and water, and organizing them in the familiar architecture of muscle for purposes of providing consumers with a century experience it would be with time indistinguishable from animal protein. We celebrated and noted the importance of our success with a mainstream consumer, whom as we are today, we are reaching the meat aisles at the nation’s supermarkets, among other venues. We wrote and spoke of a global brand that would be built on the pillars of taste, nutrition. And as we scaled and matured our manufacturing processes and supply chain, affordability based on the strong efficiency advantages of our production model. We argued that if we can match the taste of animal protein, provide a clear case for superior nutrition and someday offered at a lower price than animal protein. It would be a rare consumer who rejected the thesis and products. As we began 2020, we shot out of the gate, posting net revenues in Q1 that were 141% above those we saw the previous year. And then the COVID-19 pandemic hit. And like many businesses, we saw precipitous declines in our growth rates, driven largely by significant reductions in foodservice activities. We chose to keep investing in our business even as short-term challenges persisted, a choice we continue to make today if we remain focused on the long-term. We invested heavily in China. We built a sophisticated production facility on Jiaxing; and in the Netherlands, where we open two facilities. One is an independent operation and one owned and operated by our partners, Zandbergen. We grew our operations team and acquired a new production plant in Pennsylvania and we signed a long-term lease for brand-new corporate headquarters in Los Angeles, where we are building a state-of-the-art home for our growing research team and their laboratories, collectively referred to as the Manhattan Beach project. These investments and activities, particularly during this period of COVID-19 and revenue disruption, generated losses. They were, however, non-negotiable as we lay the foundation for forward growth. To this end, I’m pleased to share with you today two significant global partnerships, one with McDonald’s; and the other with Yum! Brands, the parent company of Kentucky Fried Chicken, Pizza Hut and Taco Bell. Both of which are prime examples of what we’ve been scaling and preparing for. I want to express our immense gratitude for these partnerships and the opportunity to be of service to these industry titans. Both deals truly begin and end with leadership at each organization, and I hope that all who share my optimism for the future and my belief in the positive and determining role that consumers and corporations can play in shaping it will join me in thanking Chris Kempczinski and David Gibbs, CEOs of McDonald’s and Yum! Brands, respectively, for their vision to offer expanded consumer choice on the menu. It is my strong belief that partnerships of this nature with partners of this caliber are required to accelerate a flywheel of availability and scale-driven cost reduction, a dominant theme in our bid for ubiquity among consumers here in U.S. and abroad. As with all of our existing and highly important strategic partners, we view our role as working on behalf of their franchisees, employees and shareholders to delight consumers in their venues. Even as we have invested, we will continue to aggressively do so across innovation, commercialization and manufacturing, and marketing to drive success across our partners in foodservice. Over the coming months, we intend to offer an inaugural Investor Day to provide greater details around our strategic initiatives, corresponding investments and global growth plans. While we recognize you undoubtedly have immediate questions, including with regard to the potential implications of our partnerships with McDonald’s and Yum! Brands, we are not prepared to elaborate at this time. I want to emphasize that due to the likely phasing of these notable partnerships, any activity is likely to skew towards the latter part of this year, and therefore, from a modeling perspective, the potential impact to Beyond Meat in 2021 is likely to be fairly modest. Let me now turn to our full-year and Q4 financial results. Despite tremendous disruption to our business from COVID-19, our 2020 net revenues for the year were up 37% relative to 2019. Ability to 1grow in 2020 was largely driven by strong retail performance, where net revenues were up 108% for the year, offsetting precipitous and sustained COVID-induced weakness and segments of importance to us within foodservice. Specifically, net revenues as a whole for foodservice, largely reflect employment activity across institutional buyers such as universities, hotels and stadiums, delays and strategic quick service restaurant trials and launches and reduce consumption at smaller chains and single-operated restaurants were down 31% from the prior year. Pullback in foodservice volume not only manifested in a lower top line, but gross margins as well reflecting lower fixed overhead absorption. And we, in fact, compounded this negative absorption effect as we pursued our strategy of increasing internal production capabilities and footprint independent of short-term conditions. Despite these trends, reduced volume on the one hand and increasing internal production capacity on the other, we were still able to complete the year with a 30.1% gross margin or 32.9% when adjusted for COVID specific expenses. This dynamic, continued weakness in foodservice, offset by exceedingly strong retail growth, defined our Q4 results and a composition of $102 million in net revenues for the period. Q4 retail channel sales were up a full 85% year-over-year, which helped mitigate the 54% year-over-year decline in foodservice. In U.S. retail, our recorded net revenues of $62 million for the quarter were up fully 76% year-over-year, representing a sequential acceleration in growth following the destocking behavior we experienced in Q3. In fact, underscoring the unusual consumer behavior we described a quarter ago, our U.S. retail business were up typical seasonal demand patterns by posting a sequential increase in dollar sales versus Q3 2020. Strength in our U.S. retail business was propelled by robust consumer takeaway in both measured and non-measured channels. According to SPINS IRI data, from U.S. multi-outlet, or MULO, and natural and specialty channel sales for the 12-week period ended December 27, 2020, we continue to hold the number one product position in our category and sales of Beyond Meat products were up 46% year-over-year, while the plant-based meat category itself was up 29%. This contributed to a 200 basis point year-over-year increase in market share for the Beyond Meat brand. Across MULO, during the 12-week period ended December 27, 2020, a 68% year-over-year increase in our points of distribution drove a 9% decline in our sales velocity, measured in dollars per total distribution points. Note that decreases in sales velocity are quite typical when total distribution points are expanding so significantly. In the fourth quarter, increases in total distribution points were primarily driven by incremental distribution gains at Walmart, as well as our introduction of new retail skews, Beyond Meatballs and Beyond Breakfast Sausage Links. Further, looking at what I consider to be a particularly useful set of metrics in measuring the underlying strength of a product, we continue to see great growth across household penetration, buyer rates, purchase frequency and repeat rates. According to SPINS IRI consumer panel data for the 52 weeks ended December 27, 2020, our U.S. household penetration increased to 5.3%, representing a 10-basis-point increase sequentially and nearly a 200-basis-point increase versus a year ago. Our buyer rates increased 12% sequentially and approximately 66% versus the prior year. Purchase frequency was up 9% sequentially and 39% versus the prior year. And finally, our repeat rate increased to 55.3% versus 51.9 in Q3 and 43.4 a year ago. That’s a lot of numbers said differently despite the challenging macro economic backdrop and highly variable consumer buying patterns, more U.S. households continue to buy our products, they’re buying them more frequently, and on average, they’re spending more per household on our products. Our latest buyer rate was particularly encouraging, given it represents the highest buyer rate in the category, despite Beyond Meat having significantly fewer skews in some of its primary competitors. In International retail we also saw a sequential acceleration of growth from Q3 to Q4. International retail net revenues increased 139% year-over-year, driven mainly by distribution gains in Canada, including the club stores where we had no presence in the prior year. Turning now to foodservice in greater detail, what some have called COVID-19 second wave late last year exerted greater pressure on our revenues than we anticipated for the fourth quarter. Though, we view these pandemic-related outcomes as transitory, it is nonetheless important unpack them. As noted, in foodservice, total net revenues declined 54% year-over-year, whereas sales to foodservice customers represented 59% of our revenue mix in Q4 2019, in the fourth quarter of 2020, foodservice sales fell to 26% of mix. From a geographic perspective, or U.S. and International foodservice sales declined 43% and 63%, respectively, versus the prior year. Domestically, we saw progressive deterioration of demand in foodservice as a quarter unfolded, likely due to the resurgence of COVID-19 infection rates seen late last year. Given our aforementioned exposure to channels that have been disproportionately impacted by COVID-19, including amusement parks, sports arenas, academic institutions, hotels, corporate catering services, and others. We expect recovery in our foodservice business may lag the broader foodservice sector. All of this said, as in retail, Beyond Meat remained the number one brand in terms of dollar sales across NPD track channels. This is worth repeating, I’ve outlined a deep and disruptive decline in foodservice activity due to COVID-19. Nevertheless, we remain the number one brand in terms of dollar sales across NPD tracks foodservice activity. As a reminder, NPD covers broad line distribution to U.S. foodservice outlets, but generally excludes major quick serve restaurant chains, which typically utilize direct delivery systems. Within quick serve restaurant chains in both our U.S. and International region’s overall sales remained well below pre-COVID levels. This downturn is consistent with an emphasis among quick serve restaurant partners on core menu items during this period of disruption, as well as being reflective of wait and see approach to COVID-19 infection trends with regard to further tests, trials and launches. We are beginning to see some nascent evidence of an emergence of near-term activity within the quick serve restaurant space, including the national and select trials of Beyond Meat products at Pizza U.S. and Pizza U.K., respectively. Additionally, subsequent to the quarter, we’ve also secured additional trials at Starbucks U.K. and Starbucks Middle East, and initiated tests with McDonald’s in Sweden and Denmark. However, as we’ve seen throughout the course of the pandemic, it is extremely difficult to predict trends. More generally, we stayed true to our focus on laying the foundation to future growth and added significant distribution. Beyond Meat is now available in approximately 62,000 global retail outlets and 60,000 global foodservice outlets, representing increases of 68% and 48%, respectively, versus the end of 2019. Our products are also now available in over 80 countries outside the U.S., up from 65 a year ago. Before turning to Mark for financial summary, I’d like to revisit and expand on the underlying pillars that will define our success. For those who follow our brand, our emphasis on the taste, health and long-term cost structure of our products should be familiar. We allocate substantial focus across the company to advancing this trinity, and as such, in each case, an update is appropriate. First and always first taste. As has been our commitment, we continue to intensely iterate the quality of our products toward our Northstar objective of being indistinguishable from animal protein. As disclosed during our Q3 call, this spring we’re launching the newest version of our iconic Beyond Burger platform. This latest Beyond Burger iteration delivers what we view to be strong enhancements in flavor, juiciness and nutrition. To provide consumers with choice in a fashion similar to the presentation of animal beef, we are offering the Beyond Burger 3.0 in two distinct cuts. In the first instance of cut, we are bringing to market our juiciest patty for our meatish burger experience to-date, even still contains 35% less saturated fat than 80/20beef. Not satisfied, believing that we can continue to advance nutrition of our platforms and the health of our consumers, we are also launching in the second instance of cut, a delicious patty that boasts even lower saturated fat of 55% less than 80/20beef. Both new burgers both the savory taste profile have lower overall fat and fewer calories than 80/20beef and have B vitamins and minerals comparable to the micronutrient profile of beef. Both burgers have undergone extensive consumer testing, with excellent results. The launch of the 3.0 platform will be accompanied by a robust marketing program that emphasizes great taste and health benefits. The latter being an important message given the presence of misinformation and misleading positioning around our process and ingredients. Finally, moving from taste to health to now cost. Over the last year, you’ve seen us make significant investments in operations capabilities and infrastructure. These investments were and are continuing to be made to prepare for the growth ahead. Yet they are equally important to our cost down initiative. As you will recall, we set a goal nearly two years ago to be able to under price animal protein in at least one product within five years. Among the many parts of our business touched by this objective, the development of fully-integrated production processes and facilities, as well as the development and use of local supply chains are critical steps. The former reduces labor and logistic costs, and the latter can favorably influence the cost of ingredients. In the U.S., we’ve moved with pace to scale up integrated production at our recently acquired production facility in Pennsylvania. You’ll see the same strategy work across the world and Jiaxing in China, where a new facility is designed with end-to-end capabilities. These investments should not suggest that we will internalize all production. But rather, you’re pursuing an optimized balance of internal and external resources depending on product and market. For example, we are working very closely with our partners to Zandbergen in the Netherlands and they’re wholly dedicated and brand new as of last year Beyond Meat facility. At the same time, we acquired our own facility in the Netherlands to be able to access local supply chains wherever feasible, as we form the core protein that we send to Zandbergen for downstream operations. And of course, this local supply chain access is a key advantage over our Jiaxing facility in China. Though these expansions have been disruptive and come with considerable CapEx, as well as sizeable operational costs as we transition to and scale these new facilities in lines, investments are the right moves at the right time in the context of our longer term growth strategy. Before closing, I’d like to briefly comment on our new joint venture with PepsiCo, The PLANeT Partnership. PepsiCo is a preeminent leader in the snacking and beverages space and we are humbled to join forces now. While we were not sharing specifics about the scope and timing of the new joint ventures first product launch at this time for competitive reasons, we are thrilled to combine our expertise in plant-based protein, with PepsiCo’s tremendous breadth of distribution, strengthen marketing, and other world class capabilities. Together, we are committed to providing an expanded portfolio of snack and beverage products designed to advance the health of consumers and the PLANeT alike. We look forward to sharing more with you about this exciting new venture as we get closer to The PLANeT Partnership first product launch. In summary, we start 2021 with considerable optimism. I want to re-emphasize that we will continue to make bold forward bets on future growth that you can expect us to see step up investment across innovation, commercialization and operations, marketing, international expansion and cost down initiatives. We believe this ambitious agenda precisely at this time is warranted by the size of the global opportunity and where we stand today relative to it. With that, I’ll turn it over to Mark who will provide a thorough update of our Q4 and 2020 financial results.

Thank you, Ethan, and good afternoon, everyone. Undoubtedly, 2020 was a challenging year for Beyond Meat due to the pandemic as it was for many other companies and indeed the global community. I am nonetheless extremely proud of the intense focus and commitment to our long-term vision that the team displayed throughout the year. We continue to lay vital building blocks for our future growth by proceeding with investments in additional production capacity, research and development efforts, marketing capabilities, international expansion, and our corporate infrastructure. While these decisions certainly impact our profitability and margins in the near-term, they represent clear indications of our commitment to continuing to lead the accelerating global plant-based meat movement, without which we believe the two new exciting partnerships we announced today would not have been possible. We are truly humbled to partner with such iconic brands, as McDonald’s and Yum! Brands. But our work in continuing to build out our organization for future success is not done. We will continue to invest substantially in our business, maintaining our overarching long-term mindset and we remain convinced that this approach will ultimately unlock the greatest long-term value for our shareholders. Our ambition is to build Beyond Meat into a global plant-based protein company, similar in scale to the largest animal protein companies today and not withstanding near-term headwinds precipitated by the pandemic, our optimism about achieving that goal is undiminished. Now turning specifically to our fourth quarter financial results, we achieve net revenues of $101.9 million, an increase of 3.5% compared to the fourth quarter of 2019. Growth in net revenues in the fourth quarter was driven by a 7% increase in volume sold, partially offset by lower net price per pound. The latter was driven roughly equally by our strategic investment and promotional activity, and product mix, as we sold a greater proportion of large pack items in retail, which carry a lower net price per unit volume. Overall, net price per pound was $5.59 in the fourth quarter of 2020, compared to $5.79 in Q4 2019. Looking at our distribution channels, retail net revenues increased 85% year-over-year, while foodservice net revenues decreased 54% versus the fourth quarter of 2019. In retail, our volume of products sold increased 85% year-over-year, driven by growth in the number of distribution points, higher sales velocity at existing outlets and contribution from new products. In aggregate across U.S. and International retail, net revenue per pound was approximately flat year-over-year. In foodservice, net revenues declined 54% year-over-year, as we continued to experience generally weak demand due to the impact of COVID-19. However, on a sequential basis, sales to foodservice customers increased 10% in the third quarter of 2020, continuing a steady albeit moderate recovery from the second quarter 2020 trough. As a reminder, excluding our sales to large QSR customers, our foodservice business has broad exposure to certain market segments that have been disproportionately affected by the COVID-19 pandemic. These include among others, amusement parks, academic institutions, hospitality, corporate catering services, movie theaters, sporting arenas, and bars and pubs. As such, we continue to expect recovery in our foodservice business to generally lag the broader foodservice sector. Sales to International customers across retail and foodservice channels represented 24% of our net revenues during the quarter, compared to 37% in the fourth quarter of 2019. Gross profit during the quarter was $25.4 million or 24.9% of net revenues, compared to $33.5 million or 34% of net revenues in the fourth quarter of 2019. Included in cost of goods sold during the quarter was $3.7 million of expenses attributed to COVID-19. Specifically, inventory write-offs and charges associated with foodservice products, determined to be unsalable. Although, we did expect continued pressure in our foodservice business as we entered the fourth quarter, overall demand was even weaker than anticipated, likely driven by the COVID-19 second wave experienced here in the U.S. and elsewhere around the globe. Excluding these write-offs and charges, adjusted gross profit was $29.1 million or 28.5% of net revenues, compared to adjusted gross profit of $33.5 million or 34% in the fourth quarter of 2019. The 550-basis-point decrease in adjusted gross margin versus Q4 2019 was primarily driven by lower fixed cost absorption, which accounted for approximately 400 basis points of the decline. To provide more clarity on this effect, embedded in the fully burden cost of our finished goods inventory in Q3 2020, was a particularly high fixed cost per pound rate, given the fact that we significantly curtailed production volumes in Q3 to burn off inventory. Subsequently, as we sold off inventory on hand in the fourth quarter of 2020, we recognize the previously capitalized higher cost inventory in our cost of goods sold. With our production levels picking back up in Q4 2020, thereby driving sequentially better fixed cost absorption, we expect to see less of an impact of the phenomenon I just described. The remainder of the year over year delta in adjusted gross margin was primarily driven by pricing mix, partially offset by improvements in certain variable overhead costs. Operating expenses totaled $49.9 million or 49% of net revenues in the fourth quarter of 2020, as compared to $34.4 million or 34.9% of net revenues in the year ago period. The year-over-year increase in operating expenses primarily reflects increased headcount to support long-term growth, investments in our international expansion efforts, specifically in Europe and China, higher production trial costs, investments in IT infrastructure, and continued investments in marketing and research and development. Net loss in the fourth quarter of 2020 was $25.1 million or $0.40 per common share, as compared to net loss of $0.5 million or $0.01 per common share in the fourth quarter of 2019. Adjusted net loss which excludes $3.7 million in costs attributed to COVID-19, namely inventory write-offs and reserve charges discussed previously, was a loss of $21.4 million or 34 cents per common share during the fourth quarter of 2020. Adjusted EBITDA was a loss of $9.5 million or negative 9.3% of net revenues in the fourth quarter of 2020, compared to adjusted EBITDA of $9.5 million or 9.7% of net revenue in Q4 2019. Turning to our balance sheet and cash flow highlights. Our cash and cash equivalent balance was $159.1 million and total debt outstanding was $25 million as of December 31, 2020. Of note, we were out of compliance with our maximum leverage ratio covenant on our revolving credit facility at December 31st. But we have subsequently paid down our outstanding borrowings to zero. We routinely work with our banks on capital structure and potential financing alternatives however, and do not consider this to be a material business risk. For the 12 months ended December 31, 2020, net cash used in operating activities was $40 million, compared to $47 million for the earlier period. Capital expenditures totaled 57.7 million for the 12 months ended December 31, 2020, compared to $23.8 million for the prior year period. The increase in capital expenditures was primarily driven by continued investments in production equipment and facilities related to our domestic and international capacity expansion initiatives, including in the EU and China. Separately for the 12 months ended December 31, 2020, cash flows used in investing activities also included $15.5 million of payments for asset acquisitions, specifically related to the purchase of a former co-manufacturing facility in Pennsylvania. Finally, with respect to our outlook for 2021, given the ongoing fluctuation in consumer demand levels across both our foodservice and retail businesses, as a result of COVID-19, we believe it is not appropriate to provide guidance at this time, as variability remains abnormally high. However, qualitatively, I’ll remind you that, generally we expect the recovery in our foodservice business to lag that of the broader foodservice sector. Additionally, keep in mind that we saw a tremendous spike in demand in Q2 2020 in our retail business due to consumer panic buying. We do not expect a similar phenomenon to occur in Q2 2021, which will affect year-over-year comparisons in the second quarter. And finally, as both Ethan and I alluded to earlier, we are proceeding with an aggressive investment agenda in 2021, with the goal of accelerating our path to mainstream consumer adoption and also to solidify our leading market positions in our most critical strategic regions. As such, we expect operating expense leverage to be negligible in 2021, with anticipated spending levels steadily building throughout the year. With that, I’ll now turn the call back over to the operator to open it up for your questions.

Thank you. [Operator Instructions] Our first question comes from Alexia Howard with Bernstein. Your line is open.

Thank you. Good evening, everyone.

Hi, Alexia.

Hi, there. How you doing?

Good. Good. Thank you for the remarks there. I think the question that I really want to ask is about the pricing dynamics. Since the end of the fourth quarter, we’ve obviously seen your major competitor reduced pricing another 15% in our host in on the foodservice side of the business and then earlier this month, they announced a 20% reduction on the retail side of the business. I know you can’t point to exactly what that’s going to do going forward. But how are you reacting to that in terms of your own pricing reaction to those competitive dynamics and how do you think that will play out from here? Thank you, and I’ll pass it on.

Sure. Thank you. And I think the short answer is, we’re not reacting. In the sense that, if you look at our price structure today, we’re still even with those reductions, very competitive both on the ground beef side of things and on the burger. And our focus is not on that particular competitor or others in regard to our cost reduction efforts, it’s really on this three-year goal that we set now. We said it two years ago for five-year goals or two years in, to be able to underprice animal protein in at least one category. And we’re focusing very much on beef around our business and believe that we can get there. We had some issues this year around some absorption with respect to lower throughput driven by COVID. But overall, we’re making really good progress toward that goal and that will be our focus on pricing. We’re not going to get to the pricing that that we need for wide-scale availability by compressing margin. We’re going to get there by very thorough walk through our supply chain, our production processes, our logistics and that’s an effort this multi-year and is being carried out now. We do use pricing to drive trial and we tend to offer deeper discounts less frequently. And because we have such a strong repeat rate, one that is I think now 55.3%, which is up from 43% a year ago. That’s a really smart investment. It gives us the opportunity to access more and more consumers. So whether we do a deep discount on our burger, or a BOGO, you get to see very high return in terms of consumers that are willing to put our products in their baskets. I think, the other piece is, if you look at our cost structure, we have stayed away from ingredients that are particularly high priced, due to genetic modification or more complex supply chains. This gives us the ability to continue to reduce costs in a way that maybe others can’t. And so I feel quite good about where we are in pricing and very focused on the animal protein market versus the competitor that you mentioned.

Super helpful. Thanks so much, and I’ll pass it on.

Thanks.

Thanks for the question.

Thank you. Our next question comes from Bryan Spillane with Bank of America. Your line is open.

Hey. Good afternoon, everyone.

Hi, Bryan.

Just a question on, as we’re modeling and trying to build models for 2021, can you give us a sense of where you stand now in the retail -- in the U.S. retail channel and International in terms of just pipeline fill? I know, you had added some new customers, but just, are we at a position now where we’re basically shipping the consumption there or will there be more, maybe some more pipeline fill with either new products or new customers? And then secondly, just some more color on foodservice and just -- at what point or what will be the triggers, I guess, to start seeing some of that business normalizes, it’s still under pressure?

Yes. So, I think, on -- It’s a good question. On the pipeline issue, we’re continuing to see the dynamics that we’ve seen earlier in the year. Where if you look at U.S. retail, it’s up Q4 2020 to Q4 2019, about 76%, a full 40 points of that is driven by the club business. And so we’re having tremendous success in the club business and that is leading to some divergence in the overall data set versus what our shipments are. But that’s a very good thing obviously for the business. And if you look - even if you take that into account that we have this very large growth going on in club and then you look at our conventional and other stores that are measured by SPINS and the MULO data, we’re still seeing really good results. If you take our -- the Beyond Burger, for example, it’s up 13.5% for 12-week period on 12/27. That includes both the Cookout Classic and the two pack. And velocity in that data set has also remained strong. We’re about 3 times out of the category and roughly 3 times out of the largest incumbent in the category. So a lot of growth occurring for us in retail, and frankly, covered for what was a very, very tough year for us in foodservice. So we’ve got a lot of room still to grow in retail, if you look at some of the new products that we put out, whether it was the Meatballs, for example, we’ve gotten good ACV there, we are about 22%, practice sauces links about 11%. So we’ve got a lot of room to grow and distribution there. And then, of course, as we come into the New Year, we’ve announced late last year that we’d be introducing the Beyond Burger 3.0, which is fantastic product line, which I’ll hopefully speak about later today. That gives us a whole new bit of momentum as we head into the balance of the year.

Thank you.

Thank you. Our next question comes from Robert Moskow with Credit Suisse. Your line is open.

Hi, Rob.

Hi. How are you doing? Thanks for the question.

Good. Sure.

When I look at the range of estimates for 2021 sales, I mean if anything from $520 million in sales to $720 million. And I guess these are just different perspective as to how fast can the foodservice business come back. And then to what extent do these partnerships yield like significant sales for your business in the near-term? So if I look at your own internal range of outcomes, is it fair to say that’s the way to think about the range and since you’ve already said, hey, these partnerships aren’t going to yield big numbers in the near-term in 2021. Within that range, should we be closer to the low-end at least while foodservice aside from those partnerships is trying to gain traction?

So, can you repeat the range you were just referencing?

It’s like $530 million to $730 million in sales.

Yeah. So I want to stay away from giving direct guidance on that. And here’s the thing. I’m not trying to be difficult, but just the sheer complexity of running the business during COVID and not knowing exactly when the economy is going to resume more normal behavior. Just I think sets us up for a lot of difficulties giving any level precision even at that level. So let me talk more generally about the foodservice partnerships you referenced and particularly how I see that relative to what’s happened in retail. So if you look at retail, we’re up 108% for the year. So great outcome there, right? I mean, it’s something that most brands would be extremely excited about and we are. We did that during this period of really, really tough times in foodservice. I think we saw a total as mentioned 54% reduction. So we’re starting to see a little bit stabilization in foodservice, which is a really good and you see this kind of a nascent activity that’s been occurring, whether in Pizza Hut, example I referenced, the LTO here in the U.S. or the launch in the U.K, look at Starbucks in the U.K., in the Middle East, and of course, McDonald’s test that we participated in Sweden and Denmark. And you hear these announcements, right? So, these things are happening for a reason. They’re happening because it kind of wait and see approach that we’ve seen for the last year, which is completely sound that do the same thing if I was on the other side in terms of our customers. They’re starting to do some planning and we’re involved in that planning. And so, I view that the ability to sustain the business at the rate that we have with the really strong performance in retail. And then start to layer back in these foodservice accounts, that’s something that should be exciting to people if they really look at our business, right? And so whether it’s the production facility and putting in Jiaxing in China or in the Netherlands. Those are all for a reason. They’re not just because we want to start putting factories around the world. There are strategic reasons we’re putting those things in place and they relate to growth that we expect in the future. I think we’re downplaying the 2021 impact of these two deals was announced because these deals are enormous, right? They are the biggest deals you could possibly put together in food in our sector and we don’t want people to get ahead themselves. This really needs to be driven by our customers, if we are supplier to them. We are there to serve them, and the goal they want to accomplish and so for us to come out and speak in a robust way about what this could do for near-term revenue. I think would be a mistake. So I know it’s going to give you a lot of help on your model, but I hope we get your perspective on the business that the retail side really carried us. You see foodservice starting with all and that’s why we have so much optimism here at Beyond Meat about where we’re headed in 2021.

Okay. Well, enormous is a good starting point. So that’s how you…

Just don’t quantify that.

Yeah. But maybe one micro follow up, your retail sales in U.S. are up 76% year-over-year. And you said that that’s -- there’s reasons why that’s tracking ahead of measured retail consumption. So do you think that that 76% is an accurate read on consumption rates or you mentioned distribution gains in fourth quarter, was it helped by distribution gains that therefore mean that regular assumptions a little lower than that?

No. I think, I mean, I always look at these four metrics that I care a lot about. So I think they do speak to the underlying strength of the brand and the product. And so, the things that I would look at to try to answer that question around household penetration for example that strips out some of the noise. We’re getting in a 5.3% there, so 200 point -- basis point, buyer rate increasing 66% since last year. That’s a phenomenal numbers. The purchase frequency, up 39% and then of course repeat rate, which I mentioned earlier. Those things were all traveling in the right direction. And so when you see that plus 76% in the U.S., then you layer on top of that 139% International. Our retail business is very strong and getting stronger.

Okay. All right. Thank you.

Thank you. Our next question comes from Adam Samuelson with Goldman Sachs. Your line is open.

Yes. Thanks. Good evening, everyone.

Hi, there.

Hi, Adam.

Hi. So, Ethan, maybe I want to come back to the McDonald’s and Yum! Partnerships, which is this evening and want to maybe a clarification point, because the verbiage in the two leases was a little bit different. But can you help explain talk about being a preferred supplier to McDonald, don’t have a similar kind of contract with Yum!, just any -- how should we think of the exclusivity or kind of how you participate in the plant platform with them, is that expense?

Yeah. So I think, first and foremost, we’re obviously extremely excited to be working with those partners of such high caliber, really excited about what both are doing and plant platform big as it is an excellent foray into the space that we’re in. I think that Yum! is obviously been aggressive as well in all the right ways. And so the use of the word prefer there is intentional on the McDonald’s side. There is ins and outs into how we relate across the global chain. But the -- what we tried to express in that release, I think, that is pretty descriptive in the sense that it will be the preferred global supplier for McDonald’s plant-based burger patty. There are some products that already in the market throughout the chain that would be held aside and so outside of this agreement. But we also are working with them in a collaborative sense looking at these other areas of poultry, pork and egg. So, think about it as a collaborative relationship to really put the best products on the market in the plant-based space with McDonald’s. Moving over to Yum!, very similar in the sense that there are some ins and outs about how each brand participates. But overall I think about us as a preferred supplier in that regard. So we’ve got some great work. We’ve done with Pizza Hut obviously. We’ve done some really good things with KFC. You heard earlier this year about Taco Bell. These are partners we are going to be deeply innovating with and bringing the very best of our innovation. We have this brand new campus that we’re building. The work we’re doing with these and other city partners is very, very takes you even the design of that facility and the Yum! And McDonald’s have a special place there in. And so it’s -- if you think about in that word preferred is very choiceful word and if you look at how McDonald’s is dealt with other key and important suppliers over the years, as well as Yum!. I think you’d be in a bit better understanding of what the relations looks like. But the main thing is it’s going to be frustrating to answer some of these questions today, we’re more to listen to the answers. We just don’t want to get ahead up where they want to take public information on these deals. So the reason that the press release is read the way they do. The reason I can give a bit more information now is that we really do want to be a supplier in this regard and not leave the discussion.

Okay. That’s really helpful color. And if I could just follow-up, going back to Mark made some comments on cost leverage and kind of thinking how things are progressing forward. I really was trying to -- you talked about the goal of under pricing are being competitive with beef at least in one product over time. And I’m just trying to think about, you guys have targeted kind of the mid ‘30s gross margin. A lot of meat companies, beef companies lot of gross margins in the 15% to 20% range. And so how do you think about the unit cost target necessary to hit that goal and how far away do you think you are from actually hitting that on a kind of durable basis as opposed to any kind of brief intervals where beef prices spike?

Yeah. I mean, I think, yeah, we do feel good about that three-year horizon and we’re just a very, probably not the right word, we’re different animal in some regards, right, in the sense that we have to take a fundamentally different production model, right? And so I don’t know the comparing our margin to theirs makes a ton of sense in that in the sense that we are -- there is no animal in our process. We were pretty close today if you -- and look at our revenue versus Tysons, for example. So and as a proxy for the level of volume that goes through their facilities. We strongly believe that we can get to this cost structure with our margins largely intact. There will be variation, right? We’ll have lower margins in certain categories and in others in certain product lines and others. But as we try to unpack this, if you look -- if you start really way back in the supply chain, and say, what proteins are we using, the balance of supply chain flavor system fat and things of that nature. All of that is very early in terms of the quantities we’re using, the sophistication of the supply chain, the competitive elements in the supply chain and then you go to our production process, I’ve talked about there is a lot in the past. We’ve built this will speed to get to market and it’s really important to be first in the market and we’ve always wanted to do that and by the way today we still are the number one selling product in retail and foodservice and NPD data we’re also the number one selling product in terms of dollar sales. So now we’re going to take it and make it much more efficient, and so we’re going to bring a lot of cost out of our production model. You’re starting to see us do that whether it’s in the facility, we just purchased in Pennsylvania where we’re putting in an integrated process, so we can go end-to-end there. In Jiaxing we built a facility there that’s designed to go end-to-end. We’re looking forward to future expansions in the coming period. So it’s a combination of those steps, right? Let’s keep developing a supply chain. Let’s keep the increasing efficiency of our production systems, let’s keep driving on logistics, packaging, et cetera. I don’t think it’s really going to come from sacrificing margin.

Okay. I really appreciate that color. I’ll pass it on. Thank you.

Yeah.

Thank you. Our next question comes from Ken Goldman with JPMorgan. Your line is open.

Hi. Thank you so much. I wanted to add …

Hi, Ken.

…Ethan, I know -- hi. I know that you’re understandably reluctant to provide a whole lot of color of the year, just given some of the variances that may happen down the road. But you are almost two-thirds done with the first quarter. Is there anything we should be thinking about any color you can provide in terms of how the quarter is going, any ranges you can give. Again, I know it’s hard to do down the road, but I would hope you have some visibility into the near-term a little bit there.

Yeah. I mean, I -- Ken, I definitely appreciate the question. And it’s -- so I feel good about where we are. I think the one thing that I’ll continue to caution folks on is, we’re investing right now. And all the investment you saw us do last year and in the fourth quarter that resulted in numbers that maybe you didn’t like on the EPS side, et cetera. They for reason and the announcement we made today, right, are a lot of that reason, right? We’re commercializing a lot. We’re building new facilities. We’re adding operational staff. There is a lot of cost that goes into growing the business today has a certain amount of revenue, but it’s being grown and established for tomorrow’s revenue, right? And we’re not doing those in hope and pray, we’re doing this as we put together some of the most powerful partners in the world, whether it’s the Pepsi deal we announced, whether it’s Yum!, whether it’s McDonald’s. So I would be foolish, like, I really need to cut my investments right now, right? That would make no sense whatsoever. And so I wouldn’t expect us and I don’t -- I certainly don’t think about. I don’t think about your EPS targets and things like that. What I think about is, how do I position this business for long-term success and I think we’re doing that. I think these partnerships are a great example of that. And so for the year, I would get away from thinking about us as on the type of EPS modeling, you guys have done recently. In terms of where we are in sales, I mean, if you look at the economy, you look at some of the things that are happening. You do see a certain following that’s going on, but we saw something very early in the fourth quarter then all of a sudden when infection rates spiked and people went back into kind of stay-at-home orders. We saw less of an uptick. So provided that is stalling could kind of continues to occur in the economy. I think you can expect some good things from us. But if we have to go back into any kind of stay-at-home orders or things of that nature that decline we saw in foodservice were probably on a year basis down 31%, on a quarter basis down 43% here in the U.S. We got to be cautious about giving guidance in that kind of environment.

Understood. Just a quick follow-up and thank you for that. Ethan, you were asked last quarter, if you were okay, if Beyond brand does not show up on QSR menus, you responded by saying no you were not okay with that? Has that changed at all or is that still your take on it?

Yeah. No. Thanks for the question. I think that both partners that we just talked about are going to use the brand and really interesting ways, and I got to let them speak about how they want more to do that. So let’s wait and see how it gets rolled out. But I’m excited about the plans that we’ve discussed and the creative ways that we’re going to work together to put Beyond on the table.

Thank you.

Yeah.

Thank you. Our next question comes from Ben Theurer with Barclays. Your line is open.

Hey. Good evening, Ethan, Mark. Thanks for taking my question.

Yeah.

Hi, Ben.

I wanted to ask you if you could elaborate a little bit on the strategy around your direct-to-consumer business, which you’ve rolled out a few months back. I mean just thinking about learning about consumers getting feedback consumption habits what’s working, what’s not working. That should be the easiest way to get direct feedback from consumers? But it’s been very quiet about the whole direct-to-consumer things? So if you could elaborate a little bit on where does this stand, how relevant is it or not and what are the plans to potentially roll the direct-to-consumer business out not only in the U.S., but also have that maybe in some of the international markets where you have a relevant sales portion? Thank you.

Yeah. No problem. Thank you. Yeah. So we do think about that model in global markets. But to be fair to kind of where we are relative to other activities, think about Yum! or McDonald’s or Pepsi relative to a small D2C program internally. It doesn’t get a lot of my focus to cost. It’s an interesting program. It allows us to potentially trial things with new consumers and get new products to them rather. But I wouldn’t say that I’m here trying to pump the D2C program. They’re just as a relative priority. It’s a good thing to have. It gives us access to consumers for new products and allows us to those that want to buy bulk, we can do that. But the real rub here is around these partnership we just set up around the crazy retail numbers that I’ve just shared around the growth in retail. So that’s really my focus.

Okay. And then following up you had a couple of announcements in China and I think you used to talk a lot about the success in China. Could you give us an update where you stand within the Chinese business, particularly on the foodservice side on what you’ve been doing with Yum! there, the Starbucks deal and so on? If we could get an update on that, I mean there were some commentary from Starbucks back at their Investor Day, but getting some more insights on your side that would be much appreciated and then I’ll leave it here? Thank you.

Yeah. So we spend a lot of time on China and the facility, as we mentioned that we’ve done some partial runs there I think with beef product and it’s going to be having our end-to-end runs beginning this quarter. And staffing up quite a bit there, including bring some research and development folks over to China. So Starbucks going very well over there. I can’t show my hand on the other strategic partners working on over there or things of that nature in terms of launches. But it’s a big, big focus for us. We’re investing a lot of money there, if you look at our overall CapEx spend and things like that. You can -- you’ll be able to see that that is an important region of the world for us. So, yeah, I think, Starbucks going well. But the big thing, the big breakthrough there is, there are these dishes and signature dishes in those communities and cultures that will lend themselves really well to Beyond and so we’ve kind of come in with a western style product. And now the thing to do and what we’re working on Yum! putting research over there. Research and development over there and putting is putting some of Amazon staffing up there is making sure that we’re developing plant based meats that really suit that culture. And so, even for the person, we’ve hired as you know came out of Yum! China, very effective women, doing a great job for us over there. We’re trying to build a local team there that will grow a really sizable business for us.

Okay. Perfect. Thank you very much, Ethan.

Thank you. Our next question comes from Rupesh Parikh with Oppenheimer. Your line is open.

Good afternoon. This is actually Erica Eiler on to Rupesh. Thanks for taking our questions. So I was actually wanted to touch on liquidity. Just curious how you’re addressing the cash balance here and your cash burn if you could just provide us with any updated thoughts here on liquidity. That would be great?

Yeah. Sure, Erica. We had very solid cash balance at the end of the quarter. We were $159 million in cash balance with the $25 million draw on the revolver. We’ve since actually paid that down and we continuously evaluate our liquidity position had -- despite very solid investment in 2020, managed inventory very well. We did have pretty solid capital expenditure $57.7 million. But -- we just -- we keep an eye on that and we’re always evaluating what our optimal liquidity level should be. So don’t really have anything additional to say on that, but I think we stand in very solid liquidity position.

Okay. Great. Thank you.

Sure.

Thank you. Our next question comes from Michael Lavery with Piper Sandler. Your line is open.

Thank you. Good afternoon.

Good afternoon.

One follow-up, I want to ask a related question on that, when you just talk about the spending and investments, you want to make and I believe I heard you right, you said, you also expect some of that to build over the course of the year. And so just on a margin basis relative to say 4Q, should we expect something like that to be a similar run rates, should it improve or will this spending as it builds maybe even drive margins a little bit lower before they start to turn better again?

I think, well, first a discussion around gross margins. I mean we kind of bridged what we thought going from a non-GAAP 28.5% gross margin in the quarter to say fourth quarter last year. Roughly 550 basis points was understandable about what happened almost 400 basis points driven by that lower absorption into third quarter inventory and having that rollout and be expensed as we consume that inventory in Q4. On the remainder of that delta really being price and mix kind of embedded in there. So, we still are driving, I think, to the margin targets that Ethan talked about earlier. As we move into 2021, in the comments that were prepared, we talked about seeing probably not as much operating leverage as we will be reinvesting in marketing and R&D and as we grow, continue to spend in CapEx. So outside of really providing guidance beyond that, that would be probably the way to think about the spending in the growth in the business for 2021.

No. That’s helpful. And I recognize sequentially, some of the apples and oranges comparisons on the gross margin piece versus the spending. But just maybe if there is any more color you could add, when you talk about the spending building over the year. I assume that’s more R&D and marketing and you’re not referring to CapEx. I guess maybe, could you just confirm that? And then, as -- I guess, I’m trying to get a sense of magnitude as you get the benefit from lapping the absorption headwind. Is it a similar magnitude of spending increase or something perhaps less?

Right. So I’ll answer that because Mark is our trusted CFO does not like to talk about spending. So, yeah, the type of spending see from us this year is kind of as you alluded to. We’ll continue to invest in innovation, particularly in service to our partners, including the ones we mentioned today, making sure that we’re really winning for them in their stores and with their franchisees. Second, it will be around marketing. We have such a compelling story to tell around health now and around in the world positive benefits what we’re doing and we’re in great locations to do that, whether here in the U.S. or in the EU or in China. And so there’s just whole first mover advantage that we’ve enjoyed and we want to continue to exploit by continue to invest in our brand message. There is some CapEx for this year as well and there’s also operational. We have to keep improving and quickening the pace at which we commercialized products. We can make great products in the lab. We can get into the market in a timely basis. That’s not going to help us. So we continue to make investments in our ability to commercialize and commercialize more quickly. So I think if I had to put in those buckets would be around innovation, marketing continue to strengthen our operations and then there is some CapEx around expansion.

Okay. That’s really helpful color. Thanks. Could I just slide in a real quick follow-up, on McDonald’s, I know in November when McDonald’s announced the McPlant. You seemed like you were pretty limited in what you were comfortable talking about. Can you just give a sense versus -- then versus now is the biggest difference your ability to be more just to communicate it more or has the agreement changed since then?

Yeah. So I mean, I think, there is a very much more robust structure that we’re in now and we’ve worked with both of these companies for a very long time and it’s been a pleasure to work with them. I got some standing folks there and this is a formalization of that in a more organized structure. And so, when you think about being named a preferred supplier in both of these environments and the sheer number of products on a menu and volume across the world, it’s very different from being referred to as a participating in a test in Canada or some of the Nordic countries. So it is very different and kind in my view.

Okay. Great. Thank you very much.

Yeah.

Thank you. Our next question comes from Jon Andersen with William Blair. Your line is open.

Hey. Good afternoon, everybody. Just one quick one, on 3.0 -- Beyond Burger 3.0, Ethan could you talk a little bit about what there is some soil aspects of that experience you’ve seen the most improvement 3.0 versus 2.0 and what the rollout plan is there for that both by channel and geography? Thanks.

Yeah. Sure. So I think on sensory, we spent a lot of time, effort and money on this particular point. Not obviously developing, we spend a huge amount on that, but on making sure that we’ve gotten something that’s a consumer is going to be really happy with. And so, we do something called CLT testing, which is central location testing and that brings together large cross-section of consumers. We skew that very heavily toward folks that are both that are consuming both animal protein and plant protein or put more clearly carnivores -- carnivore. And that gives us a tremendous amount of data about how much better performing is this product. And in the most recent test we’ve done prior to getting ready to launch this product. The results were excellent. And so I’m very excited about it. And if I had to -- think about where the sensory experience really has improved in my view. It is in two areas, one is continuing to deliver more than animalic mommy taste and just had an improvement there that I think it’s really savory. And that has to do with a better understanding, every year, every quarter, every month, we seem to be getting better at varying rates sort of fits and starts, but at understanding what molecules the meat are really driving, that sensory experience then finding molecules in plants, they can do the same and then working to scale those up with flavor partners. And then I think the second area is getting fat to work better and do more work per gram of fat. Getting the most we can out of the fat that we put in the product is really important to us because we really do feel strongly that this product is not just about the environment, right, as important as that is. We don’t want to be cynical and few people something, it’s not going to be good for their health. Because when people were out at plant-based burger, they’re making assumption in their mind that this is going to be healthier for them and we need to be true to that it’s absolutely critical to me. And so, finding ways to distribute fat within the product and if I could show you these images that we work with. I used to talk a lot where you can literally put our products under similar imaging equipment that you would if you injured your knee for example and had an MRI. As we can see exactly where the fat and protein distributes along with water and to better we can get at mimicking the distribution of that fat. With how it’s distributed in animal muscle the better you’ll have an experience in term of juiciness when you bite into the product. And so, we’ve gotten better at that this year and that’s, I think the second most noticable improvement in the product. Then of course the platform itself, I think, is interesting. We see the 80/20, 90/10 cuts in beef and I really want to provide that to the consumer. So if someone wants to have a Burger that has 35% less saturated fat than 80/20 we’ve got that. If they need to, for whatever reason dietary or just lifestyle one of the thing is 55% less so dramatically less than, then they can have Beyond 55 product. So, I think those are the areas where we’re particularly excited about. In terms of distribution, we pretty typical will hit a region first and then go nationwide and I don’t want to steal the thunder on those states.

Thank you.

Thank you. We have a question from Rob Dickerson with Jefferies. Your line is open.

Great. Thanks so much. So Ethan just kind of broader -- had two broader questions, one is, you made the comment in the prepared remarks that looking at transition from that niche market right, mainstream stature and bold strategic actions. And then, you kind of mentioned in the one announcement today, right, just the potential to work with another partner in pork and chicken egg, egg, sorry. So I -- kind of the first question is that you might -- if you’re willing to kind of work with that partner, right, in those areas over time and obviously you’re looking to leverage your overall infrastructure that you’re building. I would assume that you’re also doing that same internal testing, but potentially just extend the Beyond Meat brand, right? And I’d ask right because in so many brands, I’d start off with a name and the coffee and what have you, Beyond Meat, but I’m just curious as you think forward over the next few years? Obviously, the primary focus would be 2.0, 3.0 over the patty like kind of the obvious block and tackling where you can take the business. But how do you think about those other areas of protein and maybe kind of just where you are with that process, then I have a follow-up?

Yeah. That’s great question. So I think probably because of where I came out of is in my previous work where the company I was with Proton Exchange Membrane fuel cells and we always thought about that as an asset and so where can we leverage that asset, right? We mark [ph], automotive, industrial power, home power things like that, right? And here our asset is an understanding of proteins and fats and minerals vitamins from non-animal sources. And then how to, get them to mimic the structure and then improve upon the nutritional value of animal protein. If you begin to think just the word of say, but when you think about the world in terms of its shared constituent parts, you can understand why this is maybe it’s complex and hard to do, but why it is achievable. The world is comprised of or it is composed of much of the same material, right? And its presents in plants in one way and presents in animals in another, but its shared material. And so, we’re just taking it from plants and we’re organizing it against that structure of muscle or meat and we’ve gotten better at that every year in that asset of understanding protein, understanding fat, apply itself very well to beef, apply itself well to chicken or the poultry and then of course the pork. But as you begin to look at the biological composition of things like egg and other areas, you realize, okay? This is slightly different organization of the puzzle. But it’s the same puzzle with the same pieces. And so, that’s really what led us into these areas. And so, people say can you do all those things, right? And the reality is we’re working on a single asset and applying it across all platforms. And so as time goes on are there other adjacencies, for sure, but we got to make sure that we deliver in the adjacent we’re in and that we’ve discussed today and we will get into that. But the brand has the ability to extend in that way. And we have over 150 scientists and engineers now working on this and very bright people. And I think encouraging them to think in adjacencies and to experiment is the best way to keep them on their toes and interested and engaged. So, we have a percent of their focus is always on these either further out or slightly to a left or right that helps us overall.

Okay. Fair enough. And then just a follow-up question, look I think every day I see another some piece of news about another very impressive newly funded startup, right, be it in Asia or the U.S. what have you? It’s focused on different area of alternative protein and then there is you, right? The largest if you said you have the 100, 200 scientists right working for you that are all very smart? There just seems to be this ongoing push in the space and all justifiably sell, right, given where the demand can be and what the product can be? But I’m just curious if you have any thoughts on the potential for this space over time To essentially need consolidation, right, like, is it realistic to have, let’s say if you enter eggs or even just where we are now an alternative beef? Is it realistic to have 18 players in a retail market and you can already see how challenging it’s been for you to just chip away day-by-day, get into -- get new distributor -- to get new distributions, excuse me? So I am just curious, do you think over time this is an industry that will just tap to kind of naturally consolidate, but you could actually be one of the larger players to help that consolidation? That’s it.

Yeah. Good question and I think that’s happening now. I think a year or two ago, we answered a ton of questions about competitive threats and here we are a year into a pandemic, a year into a very heavily funded competitor coming into our space and what’s the result. We’re the number one brand in retail. We’re number one brand in foodservice measured through NPD data. So retail up 108% et cetera, et cetera. So there’s going to be competitors and they’re going to give the best shot and we appreciate that. And I always say the NDA would be very boring place with just one or two teams although way their training people now that might be ends up, but super teams. But we welcome the competition. It keeps us on our toes and it keeps us very focused. And I think from the investment community, I think, there’s a lot of people that are investing very late in the hope that they can get the next break and I think that we have established this position. We’re doing very, very far off research, as well as near-term where our fingers and a lot of different thoughts in terms of where we think the sector might go. So if I were investing money right now we are not be investing and et cetera of us. I think we’ve got a pretty good hold on this and we’re going to explode it.

Good to hear. Thanks so much.

Yeah.

Thank you. And that’s all the questions we have for today. I’d like to turn the call back over to Mr. Ethan Brown for any closing remarks.

Great. Thank you. So today was obviously a very exciting day for us and something that’s been long in the works and with two really outstanding partners with folks that are a visionary and are taking a risk with leaning forward and I think a very calculated one that’s going to bring great benefits to their shareholders and we really look forward to executing on their behalf. The long and storied history at each company and I study innovation quite a bit and really I’ve looked a lot at the original founders of both businesses and I wanted to end with quotes that I think it remains to kind of what we’re trying to do. One is from Ray Kroc, McDonald’s and the quote is the two most important requirements for major success are, first, being in the right place at the right time, and second, doing something about it. And so I think that does characterize how we think at Beyond Meat that we do believe that we’re blessed to be in this position at this time in history and we’re doing something about it. We’re investing a ton in a relative sense against the goals we have. We’re not paying attention to what that does in terms of near-term losses that we think would be silly. We’re looking ahead to the future and investing in the infrastructure and team that we need to have this be a major protein company globally. Second is from Colonel Sanders and I think this speaks more to our adherence to non-GMO products. And it’s harder to do that, right? But we think it’s the right way to do things. And so his quote here is, the easy way speedy, the hard way arduous and long, but as the clock ticks the easy way becomes harder and the hard way becomes easier. As a calendar of course the years it becomes increasingly evident that the easy way rests hazardly upon shifting sands, whereas the hard way builds solidly and this confidence it cannot be swept away. So we’ll keep making the hard choices about providing products to people that we feel super proud of, that are healthier for them, that help them improve their bodies and help them a contribution to the sustainability of our earth. And sometimes that leads to things in the near-term that are expensive or difficult, but over the long run we’re 100% sure it’s the right move and so we’ll keep doing that. So we appreciate being in partnership with these two companies that have such a story, history and bright future. Thanks very much.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect. Everyone have a great day.