Vegan chain Neat Burger ups valuation despite slowing market

Vegan fast-food chain Neat Burger has boosted its valuation to $100mn in a new funding round aimed at fuelling a US expansion, despite waning appetite for plant-based food among consumers and investors.

The chain, which is backed by British racing driver Lewis Hamilton, raised $18mn from new investors including boutique bank LionTree and Real Madrid goalkeeper Thibaut Courtois, as part of a series B round led by B-Flexion, the family office of Swiss billionaire Ernesto Bertarelli.

Existing investors, including Hamilton and SoftBank’s Rajeev Misra, were also involved in the latest funding round, which increased the valuation of the business by 40 per cent compared with two years ago. Actor Leonardo DiCaprio, who invested in the series A round, did not participate this time.

Neat Burger, which has eight outlets in London and launched its first in New York last month, plans to use the money to open another US site and up to three more in London by 2025.

It is expanding despite signs of faltering demand for vegan food and mixed investor appetite for the sector. Since Beyond Meat, a US pioneer of meat alternatives, listed in 2019, its share price has fallen 95 per cent from its post-IPO peak to $10.

In the UK, sandwich chain Pret A Manger has closed or rebranded half of the outlets of its meat-free spin-off Veggie Pret, leaving just five nationwide. Vegan-only outlets tripled in number across the UK between 2018 and 2022, peaking at 169, but have since fallen slightly to 164, according to Local Data Company.

Zack Bishti, one of Neat Burger’s co-founders, admitted the company had slowed its expansion plans because of “multiple black swan events”, including soaring inflation and a consumer slowdown since Russia’s full-scale invasion of Ukraine. But he stressed he still believed Neat Burger could rival mainstream burger joints, such as Shake Shack and Five Guys. “We want to eat their lunch,” he said.

“When you had heavyweights like Beyond that had so much success early on and then you go through these macro headwinds, it’s not unreasonable to assume that it’s a bumpy road . . . but the numbers [of people reducing their meat consumption] are growing,” he added. Neat Burger also has a new partnership with members’ club Soho House to offer its vegan burgers in their UK venues.

But Mark Brumby, chief executive of restaurant advisory firm Langton Capital, said while meat substitute products and meat-free outlets were a “rising tide”, their growth would be held back by the economic slowdown and was more likely to be “a decades-long process rather than a storming of the barricades”.

Like-for-like sales in the first quarter at Neat Burger were up 19 per cent on the year before, but the chain does not reveal topline sales figures. It manufactures its own pea-based protein meat substitute and has had to cope with a 40 per cent year-on-year increase in utility bills and a 15 per cent year-on-year rise in the cost of food products.

Despite the economic headwinds, Neat Burger’s founders stress they are optimistic they can benefit from permanent changes to eating habits.

Tommaso Chiabra, a Neat Burger co-founder who was also an early investor in Beyond Meat, said: “We are just scratching the surface of the biggest food revolution we will ever witness.”