Dive Brief:
- Beyond Meat is eliminating 200 positions — about 19% of its workforce. President and CEO Ethan Brown said in a press release the layoffs are an effort to drive more sustainable growth for the company and “reflects an appropriate right-sizing of our organization” in the current economy.
- The company also cut its revenue outlooks, both for the third quarter and full year. It now expects Q3 net revenues of $82 million — down 23% from the prior year period — and full-year 2022 revenues in the range of $400 million to $425 million — lower than its previous expectation of $470 million to $520 million.
- The plant-based meat sector as a whole has had a bumpy year, but Beyond Meat seems to have experienced more strife than its competitors. It laid off about 4% of its workforce in August, and has consistently missed revenue targets and cut its annual projections.
Dive Insight:
While Beyond Meat has been working hard to innovate, releasing new products and touting others that could positively impact the sector, the current financial realities of the plant-based meat business always seem to get in the way.
During the last year, Beyond Meat has posted slow or stagnant growth while failing to reach its revenue goals. It’s also posted enormous losses because of large investments in new product lines. The challenges in the plant-based sector aren’t limited to Beyond Meat, but the company — a leader in the space and the only publicly traded firm that just makes plant-based meat — seems to be showcasing the hardship of the segment as a whole.
Considering the problems Beyond Meat has faced, it’s not surprising it’s making another round of cuts. The job losses, first reported by Bloomberg, span all levels of the company. The position of global chief growth officer and president of North America was eliminated, and the former chief operating officer — who had been suspended for a month after being arrested on assault charges — presumably lost his job as a part of the reduction.
The cuts are expected to save Beyond Meat a total of $39 million, according to a filing with the Securities and Exchange Commission. It will have a one-time cost of $4 million, the company said.
In a press release, Brown tried to sound a positive note about the company’s future, and said the business is aiming to be cash flow positive in the second half of 2023.
“While we believe the current headwinds facing our business and category—including record inflation—are transient, our mission, brand, and long-term opportunity endure,” he said in the release.
Whether these conditions actually are transient is yet to be seen, though it’s notable that Brown has said repeatedly he sees things getting better on the horizon.
In the press release announcing the layoffs and outlook cut, Brown said the company’s recent poor performance is because of increased competition in refrigerated plant-based meat, inflation leading consumers to “trade down” from more expensive plant-based products, and decisions made by distributors and customers to change inventory levels and postpone or cancel promotions.
Cowen analysts Brian Holland and Jacob Henry said in a Friday morning note that there could be more challenges ahead for Beyond Meat.
“We don’t view today’s actions as an inflection and anticipate more pain before the business can stabilze, if ever,” the note said.
Sales in the plant-based meat segment have not been promising. According to IRI statistics reported by The Food Institute, sales in refrigerated plant-based meat were down 10.4% during the 52 weeks ending Sept. 18 compared to a year earlier. Volume sales were down 11.1% during the same time period.
Deloitte found 47% of U.S. consumers say they sometimes buy plant-based meat, which is 3% lower than those who sometimes bought it a year before. Consumers also were less likely to view plant-based meat as healthier or more sustainable and were less willing to pay a premium for it.
Beyond Meat is just the latest plant-based meat company to cut staff to reflect the current economic climate. Last week, Impossible Foods cut its workforce by about 6%. In August, Maple Leaf Foods reduced its plant-based division by about 25%. And late last month, JBS USA closed Planterra, its plant-based meat division, terminating the jobs of all 121 employees on its operations side and manufacturing plant.
