10,000 Locations by Year-End: Meati Appoints New CEO, Lays Off 13% Staff in Bid for Profitability

US mycelium meat maker Meati has appointed a new CEO and cut 13% of its workforce in a right-sizing move aimed at reaching profitability.

Meati has switched up its C-suite by making Phil Graves its new CEO. The former Patagonia executive, who joined the alternative meat startup just two weeks ago as CFO, takes over from Meati co-founder Tyler Huggins, who will move into the role of chief innovation officer. It follows ex-COO and president Scott Tassani’s exit earlier this month.

Amid restructuring in the wider food industry, the Colorado-based company has also let go of 13% of its workforce, marking the business’s third round of job cuts in nine months. The decision to right-size has been made with an eye towards accelerating the company’s path to profitability. The details of any severance packages are unclear, but Meati said it doesn’t expect any supply chain disruptions due to the layoffs.

Graves argued that although such changes are challenging, they’re essential for aligning resources with profitability objectives. “These changes allow us to better serve our customers and pave the way for long-term, sustainable growth,” said the new Meati CEO.

Meati layoffs come after a challenging year for plant-based meat

In June last year, Meati laid off 17 employees (about 5% of its workforce), followed by another round of cutbacks in September that saw 30 staffers (10% of the total at the time) lose their jobs. This was accompanied by a reshuffle that meant the elimination of 60 positions, as well as the shuttering of its pilot plant.

Striking a similar tone to Graves now, a Meati representative told Green Queen at the time: “These job cuts, while incredibly difficult, are a necessary part of ensuring we achieve a sustainable business model. Despite creating incredible products and an excellent commercial start in the market, we must be nimble and focus on near-term profitability.”

They added: “Meati is a young, disruptive company navigating uncharted territory – bringing a novel food to the forefront of a highly competitive industry in a challenging economic climate. Each of these factors requires us to regularly evaluate every aspect of our operations.”

Meati is not the only plant-based meat company to have cut its workforce over the last year, which has been incredibly challenging for the industry in terms of both funding and sales. Beyond Meat, one of the sector’s leading companies, laid off 19% of its global non-production workforce (about 65 employees) last year in an effort to reduce operating expenses and improve its cost structure, after reducing its annual sales forecast. A few months prior, rival company Impossible Foods let go of 20% of its staff.

Circana data crunched by 210 Analytics reveals that retail sales of meat analogues dipped by 11.1% to $1.05B in the 52 weeks ending January 28, 2024, while volume was down by 16.5%. In comparison, sales of fresh meat declined only by 0.5%, with volumes decreasing by 1.5% in the same period.

Investment has also slowed down in the plant-based protein space, as part of a wider funding hurdle for food tech. In the first half of 2023, plant-based companies attracted just $124M in investment – while data for the second half is yet to be updated, it still represents an alarming drop from the $1.2B injected in the sector for the full year of 2022.

Meati – which has raised over $275M in total investment – said its latest cutbacks follow precedents set by other leading companies “navigating transformative market shifts”. Last month, over 6,650 layoffs were publicly announced in the food sector, which is the highest number of monthly cutbacks in the sector since November 2012 (which were a result of factory closures), according to data from Challenger, Grey & Christmas Inc.

Meati continues to grow, targeting 10,000 retailers by year-end

Graves’ move from CFO to CEO leaves the company without a dedicated chief financial or commercial executive, but a spokesperson for Meati told AFN that the departure of Tassani, who joined TreeHouse Foods after two years at Meati, wasn’t sudden: “He took another role that was offered to him that he couldn’t pass up. Scott left before Phil was brought in as CFO, and that hiring process had been ongoing.”

The reshuffle sees Huggins, who founded Meati alongside CSO Justin Whiteley in 2017, move to a product-focused position. He will oversee the launch of a new foodservice Chef Cut product and drive the business’s sustainability initiatives. “I am incredibly proud of what we have achieved to date, and I am confident that in Phil we have found the right individual to lead the company to our next exciting chapter,” said Huggins.

Despite the layoffs last September, though, Meati added nearly 100 positions to amp up production capacity for its mycelium-based chicken and beef alternatives, which have been produced in a ‘mega ranch’ facility in Thornton, Colorado since January 2023. This will ultimately be capable of manufacturing 40 million lbs of meat analogues annually to rival the output of animal farms, which will help the company achieve its goal of $1B sales, which was previously earmarked for 2025, but may now be pushed back.

“Our future is bright. This category-defining product is already in 3,600 stores nationwide after just one year of production, showcasing its boundless potential,” revealed Graves. Its products are available in Whole Foods Market, Meijer, Cub Foods and Sprouts Farmers Markets, among other retailers, while it launched a D2C marketplace in September alongside a subscription service for new product trials. By the end of this year, it aims to enter 10,000 retail doors.

The company added chicken nuggets, jerky SKUs, and more flavours to its roster ahead of Christmas, all powered by its patented MushroomRoot ingredient, its commercial name for the Neurospora crassa strain of mycelium. An AI-led study has shown that this ingredient, whose whole-food nutritional density could address “prevalent nutritional deficiencies” and enhance “cardiovascular health”, also boasts certain “exceedingly rare/non-existent” compounds in food that present “pointed” health benefits.

It’s a leading company in the red-hot mycelium protein space, which has seen a bunch of innovations and developments in the last year, including Esencia Foods‘ whole-cut seafood analogues, Better Nature‘s soybean mycelium chicken, Libre Foods‘ whole-cut chicken breast, and Bolder Foods‘ cheese alternatives. Plus, investors have shown heightened interest in the sector, with MyForest Foods bagging a $15M Series A extension in June and Infinite Roots securing $58M in Series B funding last month.

It speaks to the potential of mycelium, with a study authored by Meati employees revealing that the fungi can take on different desired tasting notes through biochemistry and flavour chemistry, while being high in protein with all essential amino acids and micronutrients. It has been shown to lower LDL cholesterol too, with the potential to reduce food waste by valorising the sidestream and be produced in a cost-effective manner.

The study argued that mycelium could resolve global hunger and food insecurity if scaled effectively with enough investment and consumer education: “Once achieved, mycelium will certainly be appealing as an environmentally friendly, nutrient-dense protein source that can aid in the reduction of global hunger.”