After a disappointing third quarter, plant-based meat company Beyond Meat is cutting 65 non-production jobs, representing 19 percent of its workforce. This decision comes as part of a broader corporate review, which also includes potential product line exits, pricing adjustments, manufacturing shifts, and restructuring of its operations in China.
The company’s stock rose 20 percent in response to the news. Beyond Meat President and CEO Ethan Brown expressed his disappointment, stating that the company had expected to see a return to growth in the third quarter of 2023, but that this did not occur.
The decline in U.S. demand for plant-based meat products has been a significant factor in Beyond Meat’s struggles. According to market research firm Circana, sales of fresh plant-based meat alternatives, such as sausage and burgers, have dropped by 21.5 percent this year through October 8. Sales of frozen plant-based meat, including items like tenders and nuggets, have also seen a 6 percent decline.
One potential reason for this decline is the impact of high inflation on shoppers, causing them to turn to cheaper animal meats instead. Additionally, the reputation of plant-based meat as overly processed and unhealthy, fueled by ads released by rival food companies, has also affected sales.
To counter this negative perception, Beyond Meat recently launched a new advertising campaign in the U.S. However, the company still anticipates revenue of $75 million for the third quarter, which would be an 8.5 percent decrease compared to the same period last year. For the full year, Beyond Meat now expects net revenue to be in the range of $330 million to $340 million, which is 19 percent to 21 percent lower than the previous year and below analysts’ expectations of $365 million.
Beyond Meat has previously made layoffs, with around 240 job losses in the past year, citing high inflation and intensifying competition as the reasons. Despite these challenges, the company has seen more success in Europe, where its products are featured on McDonald’s menus. However, McDonald’s has not yet added Beyond Meat products to its permanent menu in the U.S., despite testing them in select locations.
The company’s third-quarter earnings report is due to be released on November 8. In the meantime, Beyond Meat will continue to evaluate its operations and make necessary changes to improve its performance.
In conclusion, Beyond Meat’s decision to cut jobs and review its operations reflects the challenges facing the plant-based meat industry. As the company navigates through this downturn, it will need to make strategic changes to adapt to changing consumer demands and increase its sales.