Beyond Meat plans ‘steep cost cuts’ as U.S. demand remains weak

Dive Brief:

• Beyond Meat will make “steep cost cuts” to its business in 2024 by reducing its operating expenses, increasing prices for some products and “right-sizing” its production footprint, CEO Ethan Brown told investors in an earnings call Tuesday. 
• Beyond Meat’s priorities are an effort to offset a drop in prices it previously put in place to make its products more appealing for cash-strapped consumers. The company reported revenue of $73.7 million for the fourth quarter ending Dec. 31 — a decrease of 7.8% from the same period last year. 
• The quarter was the seventh consecutive that the company reported negative sales as it continues to fight challenges within the plant-based sector, including price, skepticism over whether the products are nutritious, questions about the ingredients used to make the offerings, and dissatisfaction over their taste. 

Dive Insight:

After struggling for much of the past two years, Beyond Meat is taking additional steps to improve the company’s finances and spur demand for its plant-based products. Last week, it unveiled its fourth generation of the Beyond Burger and Beyond beef patty, which CEO Ethan Brown said would “deliver superior health benefits and taste.” 

During the company’s earnings call Tuesday, Beyond Meat CEO Brown said the company plans to raise prices for the new burgers due to costlier ingredients, such as its decision to switch from canola to avocado oil. 

A TD Cowen analyst said Beyond Meat’s latest quarter and outlook for 2024 “demonstrated good progress in the effort to transition to a sustainable model.”

Still, the research note said that despite efforts by the plant-based meat company to reduce operating costs, contract its production network, and implement price increases to support margin expansion, it has “concerns about BYND’s ability to pivot to growth and positive cash flow.”

In recent months, plant-based consumers have been pushing for cleaner ingredient decks in their products. Experts in the space have said early pioneers need to return to their roots in messaging that focuses on the product’s health benefits and positive impact on the environment. Beyond Meat is doing just that with its latest burger iteration, which the company called the “most significant renovation to date.” 

Beyond Meat is continuing to see healthy demand in its European market, specifically at food service locations. “We served our strategic customers in this important market for plant-based meats, including continued traction at McDonald’s across countries such as Austria, Germany, Ireland,” among others, Brown said. 

In 2024, the company will continue to exit certain markets and discontinue some product lines. Brown told analysts that Beyond Meat is planning to end production of the plant-based beef jerky it developed with PepsiCo to “allow focus and resources to be put against the latest product platform renovation.”

Last November, the company was in survival mode, with a “going concern” risk as a possibility, according to analysts. While job cuts and exiting certain markets have helped, the company’s future largely “hinges on whether it can stabilize its sales decline,” analysts said in their recent note.