Beyond Meat on Wednesday reported a wider-than-expected loss for its third quarter as demand for its meat substitutes tumbled.
CEO Ethan Brown called the results “disappointing” in the press release. Cash-strapped shoppers are skipping Beyond’s burger, sausage and chicken substitutes and instead buying cheaper proteins, according to Brown.
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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 with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
- Loss per share: $1.60 vs. $1.14 expected
- Revenue: $82.5 million vs. $98.1 million expected
Net sales dropped 22.5% to $82.5 million in the third quarter.
Beyond has tried to revive demand for its meatless burgers and sausages by offering restaurants and grocery customers discounts. However, lower sticker prices weren’t enough. The company said total pounds sold fell 12.8%, and net revenue per pound shrank 11.2%.
The company’s U.S. food service business was the only division to report sales growth, rather than declines, for the quarter. Beyond sold 5.6% more of its meat alternatives to restaurants, corporate cafeterias and stadiums. The company said pounds sold climbed 32.2%, meaning the growth likely came from offering attractive discounts.
U.S. grocery sales fell 11.8% in the quarter, driven entirely by shrinking demand.
Outside the U.S., its sales declines were even more stark, in part due to unfavorable foreign exchange rates. International grocery sales cratered 53%, while food service revenue dropped 42%. International markets accounted for roughly 35% of sales a year ago. In the third quarter, they only made up a quarter of Beyond’s total revenue.
The company reported a third-quarter net loss of $101.7 million, or $1.60 per share, wider than its net loss of $54.8 million, or 87 cents per share, a year earlier.
As Wall Street grows pessimistic about the company’s growth prospects, Beyond has been trying to become cash-flow positive by the second half of 2023. In October, Beyond announced it would cut 19% of its workforce, or roughly 200 employees. Just two months earlier, the company said it would lay off 4% of its workers.
“This is a difficult period economically across the country and across the world, so we are going to rightsize our organization to get through it,” Brown said.
He told analysts on the conference call that the company won’t launch another product like Beyond Jerky, which was part of a joint venture with PepsiCo. The 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 more narrow set of food service and grocery opportunities to reduce operating expenses.
“We have a number of [fast-food] partners. We’ve narrowed our focus somewhat to a handful,” Brown said.
Beyond also faced turmoil inside its C-suite. Chief Operating Officer Doug Ramsey left the company after being arrested for allegedly biting another man’s nose in a parking garage. The company also eliminated the role of chief growth officer and saw its chief financial officer, Phil Hardin, depart for another job elsewhere.
For 2022, Beyond expects full-year sales between $400 million to $425 million, reiterating the lower forecast it released in October.
Correction: This story was updated to reflect that Beyond Meat lowered its sales forecast in October.