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(Bloomberg) -- Plant-based meat maker Beyond Meat Inc. eliminated about 40 positions as part of a broader cost-cutting plan, Chief Executive Officer Ethan Brown told employees in an internal memo.
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“While difficult, this decision is one piece of our larger strategy to reduce operating expenses and support sustainable growth,” Brown said in the memo viewed by Bloomberg.
Workers from the operations team in multiple locations were affected, according to people familiar with the matter. The company, which reported having about 1,100 employees at the end of last year, is scheduled to report earnings on Thursday afternoon.
The stock slipped 0.2% in early trading at 7:19 a.m. in New York.
Once a Wall Street darling, Beyond Meat has struggled to turn partnerships with some of the world’s biggest restaurant companies, such as McDonald’s Corp. and Yum! Brands Inc., into profitable endeavors. And while the company is a pioneer in the development of plant-based products that imitate meat’s feel and taste, its efforts to ramp up production and create new products have been marred by setbacks. Competition has also intensified.
Even as the company announces new products, it is still figuring out the best ways to make them, sometimes at great expense. On its May earnings call, Chief Financial Officer Phil Hardin described the initial production process for its faux jerky, launched with PepsiCo Inc., as both “expensive and inefficient.”
Wall Street has turned pessimistic: The company’s shares have fallen almost 50% so far in 2022. They declined a similar amount in 2021.
David Trainer, chief executive officer of investment research firm New Constructs, flagged concerns about the company’s cash on hand in a recent research note and in a phone interview.
“Beyond Meat has failed to generate any positive free cash flow since going public in 2019,” Trainer wrote in a note dated Aug. 2. He said the $548 million in cash the company had at the end of the first quarter is only enough to sustain its current level of spending through 10 months after the period ended on April 2.
“Raising additional capital to fund further cash burn would likely come at a high cost and be bad news for existing and new shareholders,” Trainer wrote.
In an interview, Trainer said layoffs could help to preserve Beyond Meat’s cash, but “the proof is yet to be seen until we can see how much they can slow the burn.”
(Updates with shares in fourth paragraph.)
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