Earnings Call Transcript - BYND Q2 2025

Operator, Operator

Thank you, everyone, and welcome to the Beyond Meat, Inc., 2025 Second Quarter Conference Call. Please note today's call will be recorded. It is now my pleasure to turn today's conference over to Paul Sheppard, Vice President of FP&A and Investor Relations.

Paul Sheppard, Vice President of FP&A and Investor Relations

Thank you. Hello, everyone, and thank you for your participation in today's call. Joining me are Ethan Brown, Founder, President and Chief Executive Officer; and Lubi Kutua, Chief Financial Officer and Treasurer. By now, everyone should have access to our second quarter 2025 earnings press release filed today after market close. This document is available in the Investor Relations section of Beyond Meat's website at www.beyondmeat.com. Before we begin, please note that all the information presented today is unaudited and that 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 our earnings release, along with the comments on this call, are made only as of today and will not be updated as actual events unfold. We refer you to today's press release, our quarterly report on Form 10-Q for the quarter ended June 28, 2025, to be filed with the SEC and our annual report on Form 10-K for the fiscal year ended December 31, 2024, along with 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 today. Please also note that on today's call, management may reference adjusted EBITDA, adjusted loss from operations and adjusted net loss, which are non-GAAP financial measures. While we believe these non-GAAP financial measures provide useful information for investors, any reference to 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 for a reconciliation of these non-GAAP financial measures to their most comparable GAAP measures. And with that, I would now like to turn the call over to Ethan Brown.

Ethan Brown, CEO

Thank you, Paul, and good afternoon, everyone. We are disappointed with our second quarter results, which reflect ongoing softness in the plant-based meat category, particularly in the U.S. retail channel and certain international foodservice segments. Before diving into details on the quarter, this level of disruption to a recovery requires broader commentary. Though we saw a return to top line growth in the back half of 2024, the first two quarters of this year indicate the need for a fundamental reset for our brand and category. To stabilize our business, with a goal to achieve EBITDA positive operations within the second half of 2026 and to realize our much longer-term objective of reshaping global protein markets in support of a healthier and more sustainable future, we are taking significant and immediate actions. Many of these, which I enumerate below, you will recognize as an acceleration of existing priorities. One, we are welcoming John Boken of AlixPartners as interim Chief Transformation Officer to lead and support our enterprise-wide transformation activities with a focus on operating expense reduction, gross margin expansion and broader operational efficiency. Two, we are intensifying expense reduction globally to fit our operating base into the existing near-term opportunity. These measures include a reduction in force that we performed today. Before proceeding, I want to thank each of the impacted teammates and acknowledge their tremendous contributions to our company, mission and consumers. It is truly with a heavy heart that we made these reductions, and my deep appreciation and respect for these teammates and friends extends far beyond any comments I can make today. Three, we are deepening each of our gross margin expansion activities, including continuing to optimize our portfolio by exiting certain product lines and reconfiguring others, making additional investments in our facilities around core production lines and select others where we see opportunities to significantly reduce costs, working within our supply chain to reduce raw ingredient prices and logistics costs, and further fitting our production operations to current demand levels so as to realize gross margin recovery even under lower volumes. Four, we are actively pursuing expanded distribution of our core products and expect to bring on new U.S. retail distribution, including in the balance of this year. Five, going forward, we intend to increasingly use Beyond as the primary brand and an empire. We have been formerly using a shortened market in certain instances for some time now and believe it provides for reduced emphasis on facsimile, a now complicated frame that overshadows the real high-quality protein offerings we provide to consumers and a widening of our aperture beyond animal protein replicates, so that we have the freedom to, as and when appropriate to do so, meet broader consumer protein needs. Our limited test offering of Beyond Ground on our social channels last week represents an early foray beyond beef, pork and poultry replication and has been met with considerable enthusiasm, albeit with a very narrow consumer set. In the coming months, we will provide additional details on our increased use of the brand mark Beyond, which we implemented on a rolling basis. Sixth, we are continuing to intently focus on strengthening our balance sheet to address our 2027 convertible note maturity. With this high-level context and a clear and comprehensive action plan in place, including a specially appointed interim Chief Transformation Officer, deeper operating expense reduction, increased focus on gross margin expansion across our core product lines, the implementation of new U.S. retail distribution for core product lines, the kickoff of a rolling brand repositioning and continued heightened focus on strengthening our balance sheet, I'll now turn to select details from our second quarter of 2025. Net revenue for the quarter came in at $75 million, well below our expectations and down 20% versus the year-ago period, a far cry from the recovery and renewed year-over-year growth we experienced in the second half of last year. The U.S. retail channel represented a large share of the shortfall relative to expectations. I believe at least several factors are afoot. One, broadly, we remain a higher-priced product than the animal protein equivalent, a feature that is particularly detrimental in a prolonged environment of tepid consumer spending. Two, it is clear that the negative narrative surrounding our category and brand is sufficiently ingrained to outlast initial efforts to dispel this information. Three, animal meats are in the true cyclical fashion of consumer trends, having a moment that currently leaves less room for our products and brand. With this macro context setting the stage, more specifically, we saw delays in anticipated new distribution and major promotions at certain large retailers throughout Q2 2025. Further and related, we continue to experience the impact of dislocations arising from the move of our and other plant-based meat products at many retailers from refrigerated to the frozen aisle, negatively affecting our U.S. retail performance this quarter. Certain delays in new U.S. retail distribution meant that these aforementioned gaps played a larger role in our Q2 performance than anticipated. It is important to note that in stores where we have been able to maintain a consistent consolidated brand presence, we tend to see more encouraging velocity. This point is an important one to consider as we contemplate broader stabilization across U.S. retail. Recall that this has been an enormously disruptive period for our category and brand across U.S. grocery with instability being the consistent theme for quite some time from multiple entrants flooding the market only to be delisted to a general shrinking of shelf space to a disruptive relocation of the category from refrigerated to frozen aisle in certain large retailers. As we seek to rebuild our presence across this critically important channel, we are prioritizing consolidated offerings at high-impact chains so we might drive results that are similar to some of our higher-performing current retailers. Turning now to international foodservice. We lapped significant promotional activity in the year-ago period and saw some pauses and discontinuation of our burger products in certain markets. These changes impact the level and mix of product volume, which in turn has implications for net revenue per pound and gross margin. We expect these and related impacts to continue to exert pressure in terms of year-over-year performance on our international foodservice channel for foreseeable quarters. Moving down the income statement. As one would expect, a 20% reduction in top line revenue exerts negative pressure on gross margin given the reduced volumes flowing through our facilities and the impact it has on fixed cost absorption and COGS. This outcome was certainly the case in the second quarter of 2025 and was further exacerbated by the aforementioned and broader unfavorable product mix as we saw a higher percentage of sales from certain lower-margin products. These factors, coupled with higher trade spend compared to the same year-ago period and an accelerated depreciation charge equal to approximately 2.2 percentage points resulting from the suspension and substantial cessation of our China operations in the quarter obscured what is otherwise solid improvement on apples-to-apples production costs, a reflection of the vigorous nature of our ongoing manufacturing cost reduction initiatives. Overall, reflecting these factors, gross margin came in at 11.5% in the quarter, down from 14.7% a year ago. Operating expenses were $47.4 million in the second quarter of 2025, compared to $47.6 million in the year-ago period. Though this registers as only a slight improvement, it's important to note that OpEx this quarter included approximately $7.5 million in expenses that we consider nonrecurring or nonroutine. Excluding these expenses, one can see a meaningful reduction in operating expense, both on a year-over-year and sequential basis. As the aforementioned reduction-in-force suggests and our recent entry into two separate agreements related to our campus headquarters building that reduce or offset a percentage of our future rent obligations, we are attacking this priority with vigor. Over an appropriate period of time, operating expenses should be squarely viewed in the category of controlling the controllables, and we are confident in our ability to continue to drive down routine enterprise-wide expenses to better fit the current revenue opportunity. This disappointing quarter is now thankfully in the rearview mirror. And as you might have gathered, we're using it to deepen and intensify our transformation efforts towards sustainable EBITDA positive operations within the second half of 2026. Stepping back again to a broader view, I will close with commentary on where we're headed. First and foremost, as has been the theme throughout my comments today, our second quarter of 2025 requires a deeper and more fundamental reset for our company. We are seeing the thoroughness of this reset across the action items I've emphasized, the appointment and empowerment of a transformation industry veteran for purposes of accelerating our enterprise-wide operating efficiency, including and specifically operating expense reduction and gross margin expansion through a strategic push to build back core product distribution at certain high-impact U.S. retailers and our increased use of Beyond as a primary mark so as to open the brand's aperture over time to protein opportunities that fall outside of the pork and poultry replication. The necessity of this reset does not, however, reduce or diminish our conviction or enthusiasm for the future that awaits. I want to be exceptionally clear on this point. We believe the factors that encumber our success today are transient. Just as we recognize that we are a higher-priced item in a period of economic uncertainty and stress, we know that on a material basis, our cost structure will change as we achieve scale. We are, in fact, already in one limited but important instance, producing and supplying product at a cost and price that is roughly equal to the corresponding animal protein equivalent. As we get to much higher volumes across our core products, the efficiency of our system will prevail. And all other things being equal, we should be able to underprice animal protein in many offerings. And just as we acknowledge that our products are on the wrong side of a cultural moment, we know that the extreme nature of the current renaissance around animal protein will, as consumer trends do, moderate. This moderation may occur solely with time, new information or new trends or may be spurred on by a set of related factors, including pricing pressure, droughts and genetic disease outbreaks. Similarly, even as we continue to do what we can to counter misinformation around our products, including in the short nine-minute film Planting Change available on YouTube, we believe that over time, facts do have a way of overcoming fiction. Consumers do, in fact, bristle at being misled at the expense of their own health, and our products will have the opportunity to be more fairly evaluated for what they are. Looking immediately forward, we will continue to celebrate our brand and our products for the great tasting, healthful and sustainable addition they can make to the diet of consumers throughout our markets. As the recently released and award-winning Beyond Chicken Pieces indicate with 21 grams of protein, no cholesterol and less than 1 gram of saturated fat sourced from avocado oil, along with only 150 calories, we provide the consumer with strong macronutrients and ratios using simple and clean ingredients, and we keep getting better at doing so. For example, our recently released Beyond Steak Filet product available only at select restaurants and steakhouses provides 28 grams of protein, no cholesterol and only 1 gram of saturated fat, also from avocado oil, all with only 230 calories. And finally, our recently teased Beyond Ground original, which does not seek to replicate beef, pork or poultry, is made with only four ingredients: water, faba bean protein, potato protein and psyllium husk and provides 27 grams of protein with no cholesterol, no saturated fat, no added oil and only 140 calories. Is, in my view, just the beginning. Our brand, our company, our expertise, our capability and our ethos are hardwired to deliver clean, great tasting, healthful protein made with simple, clean, limited ingredients, all within highly compelling macronutrient ratios. We took it on the chin in the second quarter of 2025, but remain undeterred and truly excited about our future, the future of protein. And with that, I'll now turn the call over to Lubi.

Lubi Kutua, CFO

Thank you, Ethan, and good afternoon, everyone. I'll begin by reviewing our financial results for the quarter in greater detail before providing some brief comments on our outlook. Overall, net revenues decreased 19.6% to $75 million in the second quarter of 2025, compared to $93.2 million in the year-ago period. The year-over-year decline in net revenues was primarily driven by an 18.9% decrease in volume of products sold and a 0.9% decrease in net revenue per pound. Volume of products sold continued to be negatively impacted by weak category demand and was further affected by reduced points of distribution in the U.S. retail channel as well as lower sales of burger products to certain quick service restaurant customers in the international foodservice channel. The slight decrease in net revenue per pound was primarily driven by higher trade discounts and changes in product sales mix, partially offset by favorable changes in foreign currency exchange rates and the benefit from pricing actions initiated in the year-ago period. Breaking this down by channel, U.S. retail channel net revenues decreased 26.7% to $32.9 million in the second quarter of 2025, compared to $44.9 million in the year-ago period. The year-over-year decrease was primarily driven by a 24.2% decrease in volume of products sold and a 3.2% decrease in net revenue per pound. Weak category demand, particularly in the refrigerated segment, continued to weigh on our U.S. retail volumes, which were further impacted by reduced points of distribution compared to the year-ago period. Although we expect to regain some of this lost distribution in the balance of the year, we anticipate that operating conditions in our U.S. retail business will nonetheless remain challenging in the near term. The year-over-year decrease in U.S. retail net revenue per pound was primarily driven by higher trade discounts, partially offset by changes in product sales mix and the benefit from pricing actions implemented in 2024. U.S. retail channel net revenues also included approximately $100,000 of ingredient sales in the quarter, compared to approximately $800,000 in the year-ago period. Moving on to U.S. foodservice. Net revenues increased 6.8% to $11.1 million in the second quarter of 2025, compared to $10.4 million in the year-ago period. The year-over-year increase in net revenues was primarily driven by a 4.4% increase in net revenue per pound and a 2.3% increase in volume of products sold, mainly reflecting higher sales of our ground beef and dinner sausage products broadly. Net revenue per pound primarily benefited from last year's pricing actions and changes in product sales mix, partially offset by higher trade discounts. Now turning to international. International retail channel net revenues decreased 9.8% to $15.9 million in the second quarter of 2025, compared to $17.6 million in the year-ago period. The decrease in net revenues was primarily driven by a 13.1% decrease in volume of products sold, partially offset by a 3.9% increase in net revenue per pound. The decrease in volume of products sold was primarily driven by reduced sales of our burger, dinner sausage and ground beef products in Canada, as well as lower sales of our burger products in the EU. Net revenue per pound in international retail primarily benefited from favorable changes in FX and changes in product sales mix. In international foodservice, net revenues in the second quarter of 2025 decreased 25.8% to $15.1 million compared to $20.4 million in the year-ago period. The decrease in net revenues was driven by a 21.6% decrease in volume of products sold, mainly attributable to lower sales of burger products to certain QSR customers and a 5.3% decrease in net revenue per pound, primarily driven by changes in product sales mix and partially offset by lower trade discounts and favorable changes in FX. Moving further down the P&L. Gross profit in the second quarter of 2025 was $8.6 million or gross margin of 11.5%, compared to gross profit of $13.7 million or gross margin of 14.7% in the year-ago period. Gross profit and gross margin in the second quarter of 2025 were negatively impacted by the effect of reduced fixed cost absorption given the year-over-year decline in volume and, to a lesser extent, a slight reduction in overall net revenue per pound. Additionally, gross profit and gross margin in Q2 included $1.7 million in expenses related to the suspension of our operational activities in China, which have substantially ceased at this point. After taking into account certain transitory factors and the impact of softer volumes, we are encouraged by the direction of travel of our underlying manufacturing costs even as we recognize that there's still significant work to be done to achieve our longer-term objectives. Total operating expenses, including R&D, came in at $47.4 million in the second quarter of 2025, compared to $47.6 million in the year-ago period. This slight year-over-year improvement was achieved even as we incurred certain large nonroutine expenses in Q2, including $4.5 million in expenses related to retention initiatives, $2.5 million in incremental legal expenses associated with arbitration proceedings arising from a contractual dispute with a former co-manufacturer, and approximately $500,000 in expenses related to the partial lease termination of a portion of our headquarters building in California. Excluding these items, the year-over-year decrease in operating expenses was primarily driven by reduced marketing and selling expenses. Below the line, total other income net was $5.7 million in the second quarter of 2025, compared to total other expense net of $0.6 million in the year-ago period. The year-over-year increase in total other income net was primarily attributable to net realized and unrealized foreign currency transaction gains. All in, net loss for the second quarter of 2025 was $33.2 million or a loss of $0.43 per common share, compared to net loss of $34.5 million or net loss per common share of $0.53 in the year-ago period. Adjusted EBITDA was a loss of $26 million or minus 34.7% of net revenues in the second quarter of 2025, compared to adjusted EBITDA loss of $23 million or minus 24.7% of net revenues in the year-ago period. With respect to balance sheet and cash flow highlights, our cash and cash equivalents balance, including restricted cash, was $117.3 million and total outstanding debt was approximately $1.2 billion as of June 28, 2025. Net cash used in operating activities was $59.4 million in the six months ended June 28, 2025, compared to $47.8 million in the year-ago period, while CapEx totaled $6.4 million in the six months ended June 28, 2025, compared to $2.5 million in the year-ago period. Net cash provided by financing activities was $33.6 million in the six months ended June 28, 2025, compared to net cash used of $1 million in the year-ago period. Net cash provided by financing activities in the six months ended June 28, 2025, included an initial draw in the amount of $40 million from the Delayed Draw Term Loan facility with Unprocessed Foods, LLC, partially offset by related debt issuance costs. With regard to cash usage during the quarter, it is worth noting that our total cash used in Q2 was negatively affected by certain nonroutine payments, including an amount related to the previously disclosed consumer class action settlement, legal and financial adviser costs as we seek to strengthen our balance sheet and nonroutine retention costs to incentivize continuity across key functional areas. Net of these special items, our underlying cash consumption for the quarter was encouragingly lower than in recent quarters, but still a figure we are aggressively working to lower. Although we continue to have no near-term debt maturities in line with our strategic priorities for the year, we continue to focus on strengthening our balance sheet, including evaluating potential transactions to address our existing convertible notes prior to maturity in 2027. I'll now touch briefly on our outlook. We continue to experience an elevated level of volatility and uncertainty in our operating environment, making it extremely difficult to forecast beyond the very short time horizon. As such, we are continuing to provide only limited guidance around our near-term net revenue expectations. Specifically, in the third quarter of 2025, we expect net revenues to be in the range of $68 million to $73 million, reflecting, among other things, persistent softness of demand within the plant-based meat category and the anticipated impact from recent distribution losses at certain QSR customers. And with that, I'll turn the call over to the operator to open it up for your questions. Thank you.

Operator, Operator

We'll take our first question from Ben Theurer with Barclays.

Benjamin M. Theurer, Analyst

Just two questions I have for you, gentlemen. So number one, you talked about getting somewhat adjusted EBITDA positive in the back half of next year, if I understood this correctly. So if I just look at somewhat the run rate operating expense that you're having right now, a little over, call it, $40 million, I just assume you get this down to a run rate more like in the low 30s, so that would still be an annualized somewhere in like the 120s. So that's kind of like your gross profit starting point a little less on D&A adjusted. But in order to get there, it really feels like we need higher top line, right? And I mean, you've given obviously outlook for the third quarter to be somewhat slightly down sequentially versus the second quarter if we just assume low 70s versus the $75 million. So the question really is, aside from trying to get the gross margin back up to the 20s, close to 30s, you also need the revenues to be maybe closer to like $350, $400 on an annualized basis, which just with, call it, $70-ish million each quarter doesn't work out. So what can you do to really scale up the top line while at the same time, taking all this hit and trying to serve a cut on the SG&A side? So the balance of here, that's what I would like to understand. What are the measures you're going to take to get one up and the other one down?

Ethan Brown, CEO

Thank you for the question. I will focus on U.S. retail since that's where we are encountering many challenges as well as opportunities to make significant improvements. I've addressed this in my prepared remarks, but the main reason we are facing difficulties is due to overall category softness. However, our products meet a growing consumer demand for high levels of protein, particularly with the right balance of saturated fat, cholesterol, and calories. We excel in providing these products. Taste matters too, and reviews for items like Beyond Chicken and Beyond Steak show that consumers respond positively, indicating strong taste satisfaction. Despite this, we are contending with broader issues like misinformation about our products that have taken root and the high price of our offerings, which affects consumers financially. For instance, our ground beef sells for around $9.99 per pound, compared to traditional beef at about $7.99, which creates a pricing gap that matters to cost-conscious shoppers. While we face challenges with misinformation and pricing, I believe these issues will change over time as more credible sources acknowledge the health benefits of our products, and as we adjust our pricing strategy in response to current market conditions. We are working on streamlining our production to align with existing demand, which should help us offer more competitive pricing while protecting our margins. In our value range, we’ve introduced new products like a six-count burger that should help address these challenges. We need to focus on foundational elements at the ground level, and I believe these can lead to growth. In U.S. retail, we’ve witnessed a decline in product variety in the fresh section of supermarkets due to various issues, and our products have been moved from fresh to frozen in a disorganized manner. We are now stabilizing in the frozen section, building brand blocks that result in improved sales velocity where they exist. Our retail team is actively working to establish these brand blocks in key retailers, and we plan to announce new distribution initiatives this year, making it easier for consumers to find our products. It’s vital to build back our distribution and focus on core items, as this will help us stabilize our top line. While we chip away at macro challenges and work on street-level issues, we expect these efforts to offer a degree of stabilization. Additionally, we are expanding our brand to include products that provide nutritional benefits beyond just replicating animal proteins. A recent product we introduced, Beyond Ground, contains 27 grams of protein and aligns with nutritional trends that consumers desire. The initial response indicates we can attract consumers seeking wholesome nutritional profiles. We anticipate these strategies will lead to substantial top line growth.

Benjamin M. Theurer, Analyst

And then my second question really, you've kind of managed to sustain the cash balance compared to March. So I was just wondering, I mean, obviously, we're still seeing negative cash, and there was a little bit of offsetting things on the financing side. So just, Lubi, maybe you can help us bridge a little bit from the level where we're at right now, give or take, a little over $100 million, of course a little bit maybe in restricted cash. How should we think about the cash and the working capital needs and everything that you're going to have to outlay for some of these measures you're taking into the second half? And how comfortable are you with the cash that you have also in light of the maturity in two years' time, give or take?

Ethan Brown, CEO

Yes. So very quickly before Lubi jumps in. One of the things that I think is really important to note on the cash consumption this quarter is roughly half of it, probably about $19 million, is kind of cleaning up certain issues, whether it was the class action settlement or dealing with some of the structural issues we're trying to address on the balance sheet, right? So you have a lot of exogenous expense going on that's not related to the core business. So while it feels like a big number, the actual number we're trying to chop away at is much, much lower, and Lubi can talk about that.

Lubi Kutua, CFO

Okay. Ethan made a great point. In the second quarter of this year, we drew $40 million from the Delayed Term Loan facility. Excluding that, it seems our cash consumption has increased sequentially. However, as Ethan highlighted, this quarter includes significant expenses such as the class action settlement that we had accrued for in 2024. Additionally, we've incurred financial and legal adviser fees related to our balance sheet strengthening efforts, among other costs. To address your main concern, we are very focused on reducing our cash burn rate. You previously mentioned the need to achieve EBITDA positivity, which indeed requires revenue growth. We must stabilize and eventually grow our top line. Furthermore, our current investments in manufacturing are aimed at enhancing our gross margin and aggressively reducing operating expenses. Today, we announced a partnership with AlixPartners and the addition of John Boken, reflecting our urgent commitment to quickly drive down costs in the business.

Operator, Operator

We'll take our next question from Alexia Howard with Bernstein.

Alexia Jane Burland Howard, Analyst

Just a couple of questions from me. First of all, the international foodservice channels and the decline in the QSR chains, it seems as though that was an area of strength up until recently. Can you describe what's changed there and how that could be turned around once again?

Ethan Brown, CEO

Sure, sure. So I think it continues to be obviously a very important part of our business. We were lapping some promotional activity in the year-ago period. So I think it's somewhat exaggerated because of that, but yes, there is a softening going on. And I think we look at it by market, and some markets are experiencing some macroeconomic conditions that are just making it difficult for our customers and the customers by being in the restaurants we're serving in those regions. Others, there are shifting animal protein prices dropping in certain areas, so they're putting things on the menu that allow them to have higher margin. So it's not one particular issue. But we continue to believe in those partnerships and continue to be active in our relationships with them. But this particular quarter, and I think for the next few quarters, I think you will see some softness in that area.

Alexia Jane Burland Howard, Analyst

And then just as a follow-up, I guess the question that I'm wrestling with in terms of turning the top line around is how do you get a second bite at the cherry from people that have lapsed? Because obviously, there was a time a few years ago where many people were trying the product and they tried it again and again and again. Eventually, they just dropped off, and these are the flexitarian meat eaters. Now I think you mentioned in your prepared remarks, it's a much smaller group of consumers. Is there an issue? Or how can you go about getting those folks back?

Ethan Brown, CEO

Yes, that's a great question. I want to refer back to the previous question by saying we're actively working to grow our revenue. I'm confident we will achieve that in the long run. My focus is on the next decade; our priority is to align our operational capacity with current demand levels. We need to stabilize our revenue and ensure our operating base matches that. Once we accomplish this, we can navigate through this period. It’s not the right time for plant-based meat at the moment. Cultural shifts can affect consumer interest, and we find ourselves on the downside of a trend. Therefore, instead of spending heavily to force growth, our focus should be on stabilizing the business, aligning operating expenses, and improving margins to reach our target audience effectively. However, there are still steps we can take that are low-risk but can contribute to revenue growth. We will continue to highlight the strengths of our products, which cater to the strong consumer trends around protein and fiber. Despite the challenges like misinformation and higher prices affecting us, we will address these issues through earned and social media, with some paid efforts as well. We're also looking at value packs for consumers to tackle pricing concerns. It's essential to leverage our brand and technology to meet consumer needs in various ways. The Beyond Ground product has received positive responses and media interest as it emphasizes our products' attributes rather than comparing them to animal protein. With features like 27 grams of protein and high fiber content, we're aligning with what consumers want today, which should help with our revenue challenges.

Operator, Operator

We'll take our next question from Robert Moskow with TD Cowen.

Robert Bain Moskow, Analyst

This is from the 10-K, so it's somewhat dated and has been available for a few months. I noticed the employee count is 754, which is lower than two years ago but significantly higher than in 2023 when you made your first restructuring announcement. Can you confirm if the net reduction you anticipated in the November 2023 workforce reduction was realized as expected? Additionally, was there an increase in employees in 2024 following that? I'm asking because there's a hope that you can reduce your cost base, which, although it may seem harsh, is necessary for the company to remain viable.

Ethan Brown, CEO

Look, it's a good question, and you might look at that and say, it's been a creep. These guys are making these cuts, but they're just adding back. That's not what's happening. What's happening is one is the change in composition of our workforce. So a lot of that is production-related. And as you recall, we went from 13 co-packers down to 1. And so we have expanded kind of the activities we're doing in our facilities. So that's what that looks like. It's not that our headquarters are chock-full of people; that's not the case.

Lubi Kutua, CFO

Yes. Additionally, I want to mention that over the past few years, we have invested in our international operations. The EU market was expanding, and we also had a business in China, which we are now shutting down. This contributes to some of the changes you're noticing during that time period.

Robert Bain Moskow, Analyst

International expanded in '24? Is that what you're saying?

Ethan Brown, CEO

No, I don't think we will look at the exact numbers. I believe he's referencing from '23 to today. However, the main issue you're identifying is this in-house.

Robert Bain Moskow, Analyst

Contract manufacturing, yes.

Ethan Brown, CEO

Basically if you think about all that activity has been brought in-house.

Robert Bain Moskow, Analyst

Okay. My follow-up, John Boken, can you give a little more detail about what he is going to focus on right out of the gate in order to improve efficiency? And it's a temporary position. So what are his goals coming in? And how long does he have to execute it?

Ethan Brown, CEO

We've really appreciated our collaboration with AlixPartners, specifically with John. This is an important next step in our partnership. I brought him on as Interim Manager to achieve two significant outcomes. First, we need to align our operational footprint with the current revenue landscape thoughtfully, ensuring that we make the necessary adjustments without disrupting our processes. John has extensive experience in this area. The second priority is to accelerate our margin improvement efforts. While we've made strides in reducing the cost of goods produced, that progress hasn't translated into expected margin gains due to various challenges. One major issue is that lower production volumes are leading to poor overhead absorption, which is masking our advancements. We need to adopt a more comprehensive approach to drive margin expansion, along with focusing on enhancing operational efficiency. My responsibility as CEO is to ensure our remarkable products and strong brand connect well with consumers, especially considering the upheaval we've faced. Looking ahead to 2024, major U.S. publications are recognizing us as a leading brand. It highlights the disconnect we are experiencing, and I need to address that connection between our products and the consumer. I believe John can provide a fresh, global perspective to help us achieve our restructuring goals and aim for EBITDA positivity in the latter half of next year. His role encompasses a broad scope, and while I can't specify the timeframe, we're pleased to have him onboard and are optimistic about our collaborative efforts. Additionally, I want to mention a recent Yahoo article about our whole-muscle steak, which boasts 28 grams of protein and just 1 gram of saturated fat. It's made from psyllium and faba beans, and it's receiving positive feedback, including a personal testimonial that I think you would enjoy.

Operator, Operator

And there are no further questions at this time. I'll now hand it back to Ethan Brown for any closing remarks.

Ethan Brown, CEO

Thank you. Look, it was a tough quarter. As I said, we took it on the chin. It wasn't what we wanted but I think the reaction is what matters. And if you look at the kind of transformation program work that I outlined, we're busy doing that. We've obviously known about these results and have been fast after it. And I think between the intensified cost reduction, the gross margin expansion initiatives, really focusing on expanding our core distribution, particularly in U.S. retail and then this opportunity to potentially live outside some of the confines we've been in recently around looking at things like Beyond Ground and the use of the Beyond Brand and protein occasions for consumers. I'm very optimistic about where we're headed. And we've got to get this balance sheet stuff worked out. We're working on that. So making some fundamental changes and kind of a reset for where we are as a category leader, I think it's going to be hopefully a productive several years here.

Operator, Operator

This does conclude the Beyond Meat, Inc. 2025 Second Quarter Conference Call. Thank you again for your participation, and you may now disconnect.