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.…

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…

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…

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…

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.