"We have a lot of work to do to ensure that both are profitable. So, today’s funding is about ensuring that we continue to work on those profitability initiatives, cost reduction, sustainability, health, [and] quality for both Just Egg and Good Meat. And at some point, where we want to get to [with] investment capital is purely about growth -- is purely about expanding to markets."
The year of efficiency: Capital challenges persist, but markets might be opening
VegInvest/Ahimsa Foundation, an organization designed to replace the use of animals in the food system, led this round of funding for an undisclosed amount of money, Tetrick said. Previously, VegInvest invested in Eat Just to support its Just Egg business, he noted.
“[VegInvest] were central in the early days of the company, investing before Just Egg was in tens of thousands of points of distribution. Their funding allowed for that and allowed us to ultimately have the impact that we've had today in selling the equivalent of 400 million eggs.”
Like many food and beverage startups this year, Eat Just has adjusted to the tighter funding market by trimming costs from its balance sheet while expanding distribution of Just Egg. While acknowledging the historical ebb and flow of capital markets, Tetrick says he sees signs of the capital crunch easing.
“You're beginning to see the public markets open up a bit, and typically private capital is more unlocked when the public markets are open. Because any investor when they're considering investing in a company, particularly a company of our sort, they're thinking about what the future IPO opportunity is. And if the public markets are not open, that has a tightening effect on private capital.”
In it for the long haul: Focusing on profitability
Hand-in-hand with raising money, Eat Just is focused on improving its profitability, and growing its Good Meat business following the recent FDA approval of its cultivated chicken, Tetrick said.
“[2023] for the company has meant making cultivated meat in the US real. [2023] is when we got FDA approval, and we got USDA approval, and we began selling commercially in the United States. [2023] has meant a much more intense focus on profitability for Just Egg and significant improvements in our cost of goods and our march towards building a healthy cash-flow, breakeven business for Just Egg.”
The company's overall business also is growing. Eat Just has seen a 173 percentage-point improvement in EBITDA in the first half of 2023 compared to the full year 2022 and an 80 percentage-point improvement in gross margin for the same period, the company shared.
The foodservice segment is one of the fastest growing aspects of the business, with sales growing 15% in the first quarter and 39% in the second quarter, with distribution through airlines like United and Alaska Air, colleges and universities, and other establishments.
While some investors and analysts have questioned the long-term growth potential of the plant-based and cultivated meat markets -- with some consumers skeptical of meat alternatives altogether -- Tetrick is optimistic about the long-term trajectory of the alternative protein space, noting that rethinking the food system will be long and hard.
“We're attempting to build a food system that is removing the idea of a slaughtered animal from it – and that’s infrastructure we’re removing from it, its mindset that we're removing from it, its consumer habits that we're removing from it; it’s billions of dollars,” Tetrick said. “If a company is just interested in the funding announcement, the company is just interested in an IPO celebration, [or] if a company is just interested in an award, they shouldn't be doing it. This is a long, worthy effort.”
[Editor's note: Interested in learning more about Eat Just and other players in cellular agriculture, precision fermentation and molecular farming are creating more sustainable proteins and how consumers' and investors' appetites for food-tech are evolving? Join FoodNavigator-USA this fall for our second virtual Futureproofing the Food System Summit. Learn more and register your interest in attending HERE.]
