R&D % of Revenue: Public DTC 2026 — The Absence Is the Story

The headline number for this benchmark is small: 5 brands. Of the 20 publicly-traded DTC and CPG brands we screened, only 5 separately disclose R&D as a line on the income statement. Across those 5, the median is 1.87% of revenue, with a range from 0.13% to 8.43%. The mean is 2.75% — pulled up by Beyond Meat at 8.43%, the only food-science company in the set.

What I want every founder reading this to take away: the absence is the story. Most public DTC and CPG brands do not disclose R&D separately because, under US GAAP, what they're spending money on doesn't qualify as research and development. Sample iteration, packaging tweaks, formulation revisions with a contract manufacturer, and product line extensions are operating costs, not research. They get embedded in cost of goods sold or aggregated into general and administrative expense, and the income statement reads "$0 R&D" even though the brand is investing in product development every quarter.

This benchmark is a primary-source cut: every R&D figure below is pulled from the latest 10-K filings on SEC EDGAR. The sample is small because the underlying disclosure is rare; that rarity is itself the most useful data point. We use this benchmark with the brands my team at Eightx works with to push back on a specific founder mistake — the assumption that an investor or acquirer will give them credit for product-development investment that's not visible on the financials. They won't. If you want the credit, you have to make the spend visible, and that's a structural decision, not a footnote.

R&D as % of revenue is research and development expense divided by revenue, expressed as a percentage. Under US GAAP (ASC 730), R&D includes scientific research and development of new products or processes that involve technological uncertainty. Sample production, packaging design, and product line extensions generally don't qualify. The result is that most consumer brands, even those that genuinely invest in product development, report zero or trivial R&D.

The 2026 Public-Brand Disclosure Table (n=5)

Latest annual R&D as percent of revenue from the 5 public DTC and CPG brands in our screening set that separately disclose it, sorted high to low:

Ticker	Company	Category	FY	R&D % Revenue	Revenue (USD)
BYND	Beyond Meat	Food CPG (plant-based)	2025	8.43%	$275M
HNST	Honest Co	Personal care DTC	2025	1.98%	$371M
SKIN	Beauty Health	Beauty CPG (devices)	2025	1.87%	$301M
YETI	Yeti	Outdoor DTC	2026	1.35%	$1.87B
CELH	Celsius Holdings	Beverage CPG	2023	0.13%	$1.32B

Aggregated benchmark (n=5 disclosers, screening set n=20):

Statistic	R&D % of Revenue
Median	1.87%
Mean	2.75%
25th percentile	1.35%
75th percentile	1.98%
Highest (Beyond Meat FY25)	8.43%
Lowest (Celsius Holdings FY23)	0.13%
Disclosure rate (5 of 20)	25%

Sample-size honesty. Five observations is a small sample, and we're not going to pretend otherwise. The percentile figures (p25 1.35%, p75 1.98%) are mathematically correct for this set but should not be read as a population distribution — they're the literal 25th and 75th percentiles of five data points. The more reliable reads from this dataset are the median, the disclosure rate, and the qualitative shape: one outlier high (Beyond Meat), three brands clustered at 1% to 2%, and one outlier low (Celsius). If you want a wider-N benchmark, you'd have to broaden the screen well beyond DTC into pharma, biotech, and tech — categories where R&D disclosure is structural, and where the comparison stops being useful for a consumer brand operator.

Why Don't Most DTC Brands Disclose R&D?

The 15 brands we screened that don't break out R&D — Olaplex, e.l.f. Beauty, Revolve, Lululemon, Warby Parker, Vital Farms, Funko, FIGS, Stitch Fix, Bark, Allbirds, Oddity Tech, On Holding, Birkenstock, Oatly — are not all alike. Some have meaningful product development; some don't. What unites them is the accounting treatment, not the underlying activity. Three reasons R&D doesn't show up:

1. The GAAP definition is narrow. ASC 730 reserves R&D for "planned search or critical investigation aimed at discovery of new knowledge" and "translation of research findings into a plan or design for a new product or process." A new SKU developed with an existing contract manufacturer using known materials and standard packaging doesn't meet that bar. Auditors push back hard on overstating R&D because misclassification is a known restatement risk. The conservative path is to expense product development inside COGS or G&A — which is exactly what most DTC brands do.

2. The cost is genuinely embedded in product cost. At a brand like Olaplex, the formulation work happens inside the contract manufacturer's lab, with the manufacturer absorbing meaningful cost as part of winning a long-term supply agreement. The brand pays for development through unit economics — slightly higher COGS, slightly more inventory written off in trial runs — not through a separate R&D line. The same dynamic plays out at apparel brands (pattern-making and sample yardage live inside production costs), at beauty brands (pilot batches and stability testing inside contract-manufacturer fees), and at food brands (recipe iteration inside copacker costs).

3. Disclosure invites questions you'd rather not answer. Once R&D is on the income statement as a separate line, every analyst will ask: how much new revenue did the R&D produce? What's the ROI on R&D dollars? How does R&D ROI trend over time? For most consumer brands, the answer is messy — some R&D fails, some R&D produces extensions that pay back over multiple years, and the linkage between specific R&D dollars and specific product wins is not clean. CFOs at consumer brands prefer to keep the conversation at the gross-margin and product-launch-cadence level, where the story is more controllable.

I've sat in finance meetings at three different consumer brands where the founder asked, "should we start reporting R&D separately?" In every case, the audit committee's answer was the same: only if you have a science-driven story for investors and can defend the dollar amount as genuinely meeting GAAP. Otherwise, you create a metric that gets compared to pharma and tech and used against you. The default for consumer brands is — and should be — embedded.

The Disclosers: What Their R&D Investment Signals

The 5 brands that do disclose R&D break into two groups, and the distinction matters more than the median. Beyond Meat is in a category by itself; the other four are in the "real but ordinary" range that's typical of any CPG brand with internal product-development infrastructure.

Beyond Meat (BYND): 8.43% — the food-science outlier

Beyond Meat reported $23M of R&D on $275M of FY25 revenue. The work is genuinely scientific: protein extraction and texturisation, fat-replication chemistry, shelf-life and freeze-thaw stability, and ongoing reformulation for clean-label and sodium-reduction targets. This is the kind of R&D that meets the GAAP definition without auditor pushback. The 8.43% number is also inflated by the denominator: Beyond Meat's revenue declined materially from peak, and the dollar-denominated R&D budget is more typical of a $500M-revenue food company than the percentage suggests.

Honest Co (HNST): 1.98% — the personal-care formulator

Honest Co reported roughly $7M of R&D on $371M of FY25 revenue. The work covers formulation development for clean-ingredient personal care across diapers, wipes, baby skincare, and adult beauty — categories where regulatory disclosure (CPSC, FDA cosmetic regulations) drives at least some genuine research activity. The 1.98% is right at the median and is a reasonable benchmark for a personal-care brand with internal product-development capability.

Beauty Health (SKIN): 1.87% — the device manufacturer

Beauty Health sells the HydraFacial device to professional aestheticians along with consumable serums. R&D at 1.87% reflects device engineering work (hardware genuinely qualifies for R&D treatment), serum formulation, and the regulatory testing required to operate in the medical-device-adjacent skincare space. The percentage is in line with mid-cap medical-device peers, not consumer-brand peers, and that's the right comparison for this company.

Yeti (YETI): 1.35% — the engineered-product outdoor brand

Yeti reported roughly $25M of R&D on $1.87B of FY26 revenue. The work is engineering-heavy: vacuum insulation performance, drinkware seal design, hard-cooler durability testing, and material science for categories where Yeti competes on functional performance, not just brand. The R&D ties directly to features customers can feel and competitors can't easily replicate.

Celsius Holdings (CELH): 0.13% — the formulation-light beverage

Celsius reported roughly $1.7M of R&D on $1.32B of FY23 revenue. The number is low because the underlying work is mostly flavour development and limited reformulation rather than novel ingredient research. Celsius's competitive moat is brand and distribution (the PepsiCo partnership) rather than product science, and the R&D line reflects that — technically separately reported, but functionally trivial.

Across these five, the rank order maps neatly onto how much technological uncertainty actually exists in the underlying product. Beyond Meat (real food science, high R&D), Beauty Health (real device engineering, moderate R&D), Honest Co and Yeti (genuine but incremental product development, modest R&D), Celsius (mostly flavour work, trivial R&D). The percentage tracks the activity, not the marketing claim about innovation.

How Should R&D Show Up in a Fundraise Narrative?

For founders raising venture capital, R&D is a different conversation. Investors care about R&D when the brand is selling them on innovation as the moat — new ingredients, proprietary formulations, AI-driven personalization, novel category creation. In those cases, the absence of disclosed R&D is a flag, not a feature, and founders need to think carefully about how to make the spend visible.

Three structural choices to make if you're building a brand where innovation is part of the pitch:

Isolate R&D as a separate cost center internally, even if it's not on the GAAP income statement. Most brands at $10M to $50M can't justify the audit and disclosure friction of full GAAP R&D treatment, but you can run an internal management-reporting line that shows product-development spend as a separate row. Investors will accept the management view in a diligence pack as long as you explain why it doesn't appear on the audited financials. The conversation we have repeatedly with portfolio brands is: pick the categorisation now, before you raise, because trying to pull the line out retroactively in diligence creates more questions than it answers.

If you have legitimate science-driven work, get the GAAP treatment right from the start. Brands that are doing genuine R&D — clean-ingredient formulations with novel chemistry, hardware engineering, AI/ML-driven personalization — should set up the books to capture R&D as a separate line under ASC 730 from day one. Auditors will work with you on the treatment if the activity is clearly there. Trying to retrofit R&D classification three years in is much harder than starting clean.

Consider the R&D tax credit as a forcing function for documentation. The federal R&D tax credit (and several state versions) require detailed documentation of qualifying activities, time spent by qualified employees, and supplies consumed. The documentation discipline required to claim the credit naturally produces the records you'd want for fundraise diligence on R&D. We've worked with brands where the tax credit alone justified setting up R&D tracking; the diligence narrative was a free byproduct.

The brands that get R&D right in fundraise diligence are the ones who decided early that innovation was a structural part of the story, not a marketing line. They built the books to show it, they ran the tax credit to document it, and they could answer "what did the last $5M of R&D produce?" in the diligence call without scrambling. The brands that get caught flat-footed are the ones who claimed innovation in the deck and couldn't show it on the income statement — that gap is what investors will notice, and not in a good way.

What Does R&D Look Like at Private $5M-$50M DTC Brands?

At the private brands my team works with, R&D is functionally zero on the income statement and somewhere between 1% and 4% of revenue if you trace the dollars through cost of goods sold and unallocated overhead. The decomposition usually breaks down like this:

Where the dollars actually go	Typical % of revenue	Where it shows up on the P&L
Sample production runs (pre-launch)	0.3–1.0%	COGS or inventory write-off
Formulation iteration with contract manufacturer	0.2–0.8%	COGS (embedded in CM fees)
Packaging design and revisions	0.2–0.6%	COGS or marketing
Salary share of head of product / product team	0.5–1.5%	G&A or operations payroll
Stability testing, regulatory testing, lab fees	0.1–0.4%	COGS or G&A (varies)
Total product-development spend (traced)	1.3–4.3%	None of it on a discrete R&D line

The pattern that matters: the dollars exist, the activity exists, and the brand is investing in product development at a rate that's broadly comparable to the public-company disclosers above. The difference is purely accounting — private brands at this scale almost never set up separate R&D tracking, and the activity gets distributed across categories that nobody reads as innovation investment. A founder who tells me "we don't really do R&D" is almost always wrong about their own books; what they mean is that their accountant hasn't bothered to isolate it.

For founders running this exercise on their own books, the practical path is a quarterly trace exercise: pick three or four product launches from the last twelve months, ask the head of product or head of operations to estimate the actual cost (samples, formulation, design, internal time, regulatory), and compare the number to revenue from those launches. The ratio you get is your effective R&D intensity, even if the income statement says zero. Most founders are surprised by the answer in both directions — sometimes the spend is much higher than expected (a flag), sometimes it's much lower than expected (a different kind of flag, suggesting that product development has stalled).

Three Limitations Before You Use This Benchmark

1. The sample is small and not random. Five observations is thin. The 5 disclosers are not a representative sample of public DTC; they're the brands with enough product-development infrastructure to justify the disclosure. The other 15 are not equivalent to "0% R&D" — they're equivalent to "R&D embedded elsewhere." The more durable insight from this dataset is the disclosure rate of 25%, not the percentile distribution of five points.

2. R&D timing can be lumpy. A brand launching a major new platform might run R&D at 4% in the launch year and 1% in the steady-state year. Beauty Health's 1.87% in FY25 likely understates the multi-year average because it's at a relatively flat investment year between device generations. Multi-year averages tell a more reliable story than any single year for any of these brands.

3. R&D and capitalised software are sometimes confused. Some brands capitalise software development under ASC 350-40 rather than expensing it as R&D under ASC 730. The capitalised piece sits on the balance sheet, not the income statement, which means cross-brand comparisons can be off by a meaningful margin if one brand expenses software and another capitalises it. For tech-adjacent DTC brands building proprietary platforms, check the accounting policy footnote before comparing.

How R&D Connects to Operating Margin and Innovation Math

R&D is one of the cleaner read-throughs from the income statement to the underlying business model. The 5 brands above have very different operating-margin profiles, and the R&D number is part of the explanation but not the whole explanation. Beyond Meat at 8.43% R&D and deeply negative operating margin is a brand that hasn't yet earned the right to spend at that rate — the science is real, the unit economics are still upside down. Yeti at 1.35% R&D and 19.9%+ operating margin is a brand whose modest R&D investment compounds into product features that customers pay premium prices for. Same line on the income statement, completely different financial story.

For the operating-margin context: see our 2026 public DTC operating margin benchmark for how the income-statement profile sets the room for R&D investment. For the SG&A side, where most of the embedded product-development cost actually sits, see our SG&A as % of revenue 2026 benchmark. And for the capital-intensity question — whether the brand is reinvesting in PP&E rather than research — see our 2026 CapEx intensity benchmark. R&D, SG&A, and CapEx are the three lines where reinvestment shows up; reading them together tells you which version of the business model the brand is actually building.

Frequently Asked Questions

What is the average R&D as percent of revenue for public DTC brands in 2026?

Median R&D intensity across the 5 public DTC and CPG brands that separately disclose it in 2026 is 1.87% of revenue, with a range from 0.13% (Celsius Holdings) to 8.43% (Beyond Meat). The more important data point is that only 5 of 20 brands in our public DTC screening set disclose R&D as a separate line at all. The other 15 brands either embed product development inside cost of goods sold or aggregate it into general and administrative expense, which means the typical public DTC brand effectively reports zero R&D — not because they don't innovate, but because the spend doesn't qualify for separate disclosure under US GAAP.

Why don't most DTC brands disclose R&D separately?

Three reasons. First, US GAAP only requires R&D disclosure when the company is performing scientific research or developing technology — sample iteration, packaging tweaks, and product line extensions don't qualify. Second, most DTC brands run product development as a function of operations rather than a research function: a designer or a head of product builds the next SKU using contract manufacturers and existing materials, and that cost lands inside COGS. Third, separate R&D disclosure invites questions from investors and analysts about return on R&D spend, which most DTC brands prefer to avoid because the answer is messy. The result is a category-wide convention where R&D is functionally invisible on the income statement.

Why does Beyond Meat report R&D at 8.43% of revenue?

Beyond Meat is genuinely a food-science company, not a marketing-led DTC brand. Their plant-based meat formulations involve protein chemistry, texture engineering, and shelf-life science that meets the GAAP definition of research and development. They report R&D separately because it materially exists, and the 8.43% number reflects roughly $23M of R&D on $275M of FY25 revenue. That ratio is high partly because revenue declined in 2025 — the dollar-denominated R&D budget at Beyond Meat is much closer to a typical CPG R&D budget than the percentage suggests. As Beyond rebuilds revenue scale through 2026, the percentage will compress even if absolute spend stays flat.

What does R&D look like at private $5M to $50M DTC brands?

At most private DTC brands $5M to $50M, R&D is functionally zero on the income statement and 1% to 4% of revenue if you trace it through cost of goods sold. The dollars go to sample production, packaging revisions, formulation iterations with the contract manufacturer, and the salary share of whoever runs product development. None of that meets the GAAP definition of research and development, so it sits inside COGS or unallocated overhead. The brands that do isolate R&D internally — usually those raising venture capital and trying to tell an innovation story — typically run 2% to 5%, with food, beverage, and beauty brands trending higher because formulation work is more involved than apparel or accessories.

Should investors pay attention to R&D spend at DTC brands?

Mostly no, with two exceptions. The first exception is brands raising venture capital with a science-driven story — Oddity Tech, Beyond Meat, brands using AI for personalization, brands developing genuinely new ingredients or formulations. There, R&D investment is the moat, and the absence of disclosed R&D should be a flag. The second exception is brands competing in regulated categories where formulation work is genuinely scientific — supplements, skincare with active ingredients, functional food. Outside those two cases, R&D as a separate line is mostly a vanity metric. The real proxy for innovation investment in DTC is product launch cadence and gross margin trajectory on new launches, not the R&D line on the income statement.

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R&D as % of revenue is the rare benchmark where the headline number is less interesting than the population it's drawn from. Five brands disclose; fifteen don't; the typical DTC operator running product development quarterly has a real spend that the income statement is structurally designed not to show. That's not a problem to fix in most cases. It becomes a problem only when you're raising capital on an innovation story or selling the business to a strategic that wants to underwrite future product velocity — and in both of those cases, the work is to make the embedded spend visible through management reporting and tax-credit documentation, not to retrofit a GAAP R&D line that the activity doesn't support.

If you're not sure whether your product-development spend is appropriate for the stage you're at, or whether the way it's currently classified is going to hold up in fundraise diligence, that's the conversation we have in the first 60 days of a Growth Economics Audit. Most of the brands we work with discover that their actual product-development investment is meaningfully different from what their books suggest — sometimes higher, sometimes lower — and the decision about how to categorise and disclose it is a structural one worth making deliberately.

Further Reading

• Operating Margin Public DTC 2026 — the income-statement profile that determines how much room a brand has to fund R&D, marketing, or CapEx without external capital.
• SG&A as % of Revenue 2026 — the operating-spend benchmark; most of the embedded product-development cost at non-disclosers sits inside this line.
• CapEx Intensity Public DTC 2026 — the capital-reinvestment benchmark; together with R&D and SG&A, this is the third lens on where the cash actually goes.
• Average DTC Gross Margin 2026 — the upstream constraint that determines whether a brand can afford to fund product development at meaningful levels.
• Ecommerce Unit Economics: The Complete Founder's Framework — how unit-level math feeds into the operating-margin profile that R&D investment runs through.

Sources & Methodology

Source: 10-K filings from SEC EDGAR (data.sec.gov). Every R&D figure in this post is taken from the underlying 10-K income statement and is verifiable in five minutes by anyone who wants to check.

Inclusion & Exclusion

Included disclosers (n = 5): Beyond Meat (FY25), Honest Co (FY25), Beauty Health (FY25), Yeti (FY26), Celsius Holdings (FY23 — the most recent fiscal year with a separately disclosed R&D line in our screening window).

Screened but did not disclose R&D as a separate line (n = 15): Olaplex, e.l.f. Beauty, Revolve, Lululemon, Warby Parker, Vital Farms, Funko, FIGS, Stitch Fix, Bark, Allbirds, Oddity Tech, On Holding, Birkenstock, Oatly. Each of these brands either embeds product development in cost of goods sold, aggregates it into selling, general, and administrative expense, or (for foreign-domiciled IFRS filers) uses a different reporting standard that doesn't isolate R&D in the same way US GAAP does.

Methodology Note

R&D as % of revenue is calculated as "Research and development" expense from the income statement (under operating expenses) divided by total revenue, both for the same fiscal year. Comparing a private-company internal product-development spend to these numbers requires a cleanup pass: most private brands embed product development in COGS, packaging design in marketing, and product-team payroll in G&A. To get a comparable internal R&D ratio, trace those dollars back out and compute the total — the answer is almost always meaningfully above the income-statement-reported number, and frequently in the 1% to 4% range for brands that are actively iterating product.

The disclosure-rate analysis (5 of 20) reflects the public DTC and CPG brands in our standard screening set; broadening to a wider universe of consumer companies would mechanically change the rate, but the qualitative pattern — that consumer-brand R&D is rarely separately disclosed — would persist.