Beyond Meat, the El Segundo, California-based maker of plant-based meat products, is aiming to turn the company around by lowering operating costs; achieving price parity with beef and other animal proteins; and using marketing efforts to promote the health benefits of its products to consumers.
The company reported first quarter revenues fell 15.7% to $92.2 million from the year-earlier period.
In the company’s first-quarter earnings call Wednesday, Lubi Kutua, the company’s chief financial officer, attributed falling revenue to inflationary pressures pushing consumers to buy lower-priced animal protein. The company, however, expects to see improvement and be cash flow positive by the second half of 2023.
Executives acknowledged the company has challenges ahead of it. “There is still much work to do as our absolute top-line results and category trends continue to reflect demand weakness amid broader macroeconomic headwinds,” Kutua, who became CFO in October, said on the call.
Beyond Meat reported it reduced its net loss to $59 million during the first quarter, compared with $100.5 million in the year-earlier period. Net cash used in operating activities was $42.2 million for the quarter compared with $165.2 million one year ago, while capital expenditures were $5.3 million compared with $21.5 million a year ago.
The year-over-year operating expense reduction was primarily driven by lower marketing expenses, lower production trial expenses and decreased outbound freight costs, Kutua said.
The company cut 200 jobs last year as part of an effort to address economic headwinds. To shore up capital, Beyond Meat seeks to raise up to $200 million in an equity offering, according to a prospectus supplement filed with the U.S. Securities and Exchange Commission Wednesday.
The plant-based meat market faces an uphill battle amid softening consumer adoption. Deloitte reported in September that plant-based meat saw “no growth in its U.S. consumer base, deteriorating perceptions among those who buy it.”
The Deloitte survey of more than 2,000 consumers in 2022 found no yearly growth in customers who purchased plant-based meat, with 47% saying they sometimes buy it, down 3% from 2021.
Deloitte attributed the lack of growth to inflation and skepticism about the health benefits of the products by consumers, pressures that underscored investment bank William Blair’s analysis.
“As category demand has fallen well short of plan, the company finds itself in the position of having to pivot to cash and capital preservation by rationalizing the product and customer portfolio and streamlining the organization and operating infrastructure,” analysts from William Blair wrote in a report Thursday. The company seeks to move toward a sustainable and self-funding operating model, a path likely to be measured in quarters or years as opposed to months, noted William Blair.
Amid industry pressures, the company is “well positioned to keep a large share of the alt-meat pie,” despite a murky road to profitability, wrote J.P. Morgan analyst Ken Goldman. A bright spot in the company’s earnings report was international food-service sales, which nearly doubled compared with one year ago.
The company this summer plans to roll out a marketing campaign to persuade consumers of the “great taste and health benefits” of Beyond Meat products and the sustainable process, chief executive Ethan Brown said.
“There remains confusion around what we make our plant-based products from and how we make them,” he said.
“Setting the record straight is a key part of getting consumers back to the category,” Brown said. “We are working with our largest retail partners to implement a ground game strategy that features digital marketing, in-store activation and promotional campaigns to re-engage the consumer around the important themes of taste and health.”
