Beyond Meat “Beyond Burger” patties made from vegetable substitutes for meat products are on a shelf for sale in New York City.
Angela Weiss | AFP | Getty Images
Beyond meat Wednesday reported a bigger-than-expected loss for its third quarter as demand for its meat substitutes fell.
CEO Ethan Brown called the results “disappointing” in the press release. Cash-strapped shoppers are skipping Beyond’s hamburger, sausage and chicken alternatives and buying cheaper protein instead, according to Brown.
Shares of the company were effectively flat in after-hours trading. The stock closed down 9% on Wednesday.
Here’s what the company reported compared to what Wall Street expected, based on a Refinitiv analyst survey:
- Loss per share: $1.60 vs. $1.14 expected
- Revenue: $82.5 million vs $98.1 million forecast
Net sales fell 22.5% to $82.5 million in the third quarter.
Beyond has tried to revive demand for its meatless burgers and sausages by offering discounts at restaurants and grocery stores. However, lowering sticker prices was not enough. The company said total books sold fell 12.8% and net revenue per book fell 11.2%.
The company’s U.S. restaurant business was the only division to report sales growth, rather than a decline, for the quarter. Beyond sold 5.6% more of its meat alternatives to restaurants, corporate cafeterias and stadiums. The company said books sold increased by 32.2%, meaning the growth likely came from offering attractive discounts.
U.S. grocery sales fell 11.8% in the quarter, entirely due to lower demand.
Outside the United States, its sales declines were even steeper, in part due to unfavorable exchange rates. International grocery sales fell 53%, while restaurant revenue fell 42%. International markets accounted for around 35% of sales a year ago. In the third quarter, they accounted for only a quarter of Beyond’s total revenue.
The company reported a net loss of $101.7 million, or $1.60 per share, higher than its net loss of $54.8 million, or 87 cents per share, a year earlier.
As Wall Street turns pessimistic about the company’s growth prospects, Beyond is trying to become cash flow positive by the second half of 2023. In October, Beyond announced that it would cut 19% of its workforce, or about 200 employees. Just two months earlier, the company had announced that it would lay off 4% of its workers.
“These are tough times economically across the country and around the world, so we’re going to be scaling our organization to get through it,” Brown said.
He told analysts on the conference call that the company would not launch another product like Beyond Jerky, which was part of a joint venture with PepsiCo. Meatless jerky was expensive and inefficient to produce and launch. It took two quarters to break even. Going forward, Beyond will only launch cash flow positive products.
Brown said the company is also focusing on a smaller set of dining and grocery opportunities to reduce operating expenses.
“We have a number of [fast-food] the partners. We’ve reduced our focus somewhat to a handful,” Brown said.
Beyond also faced turbulence within its C-suite. Chief Operating Officer Doug Ramsey has left the company after being arrested for allegedly biting off another man’s nose in a parking lot. The company also eliminated the chief growth officer role and saw its chief financial officer, Phil Hardin, leave for another position elsewhere.
For 2022, Beyond expects annual sales of between $400 million and $425 million, reiterating the lower forecast released in October.
Correction: This story has been updated to reflect that Beyond Meat lowered its October sales forecast.