- Plant-based front-runner Beyond Meat has cut its annual revenue for the second time this year. The company now expects a revenue of $330 to $340 million instead of its prior range of $360 to $380 million.
- The El Segundo, California-based company also announced job cuts of about 19% of its workforce as well as a review of its global operations as part of a cost-reduction plan.
- Demand for plant-based products have been declining as consumers continue to cut back on spending and have voiced a yearning for simpler ingredients.
The changing landscape of consumer demand has led companies like Beyond to rethink their strategy.
The declining demand of plant-based products and negative free cash flow has led analysts at investment bank TD Cowen to lower its guidance as well.
“While we appreciate the urgency to reduce costs and restructure,” analysts said the business conditions “present an existential risk to the business model.”
The company projected about $9.5 million to $10.5 million in cash operating savings for 2024, due to the lay offs which affected about 65 employees, or about 19% of the global non-production workforce.
Between competition from Tyson Foods’ plant-based products and privately owned Impossible Foods as well as shoppers looking to curtail spending, Beyond Meat is in a tough spot.
Last quarter, the Beyond Burger maker’s revenue slid by almost a third, and last year CEO Ethan Brown announced layoffs of around 200 employees to “drive more sustainable growth.”
Now, Beyond Meat is expecting sales to be down by 9% to $75 million versus a previous consensus of $87 million for its third-quarter results.
“Even as we implement measures to address those headwinds that are within our sphere of influence, we intend to pursue a further, sizable reduction of operating expenses to improve our cost structure,” said Brown in a statement.
The measures include a reduction in headcount, a review of pricing strategy, a reduction in working capital, and a focus on channels and geographies that are exhibiting revenue growth like China and specifically in the U.S., countering misinformation about its products.
The segment overall has been dealing with uncertainty around the health benefits of plant-based meat.
Recent reports have shown signs of consumers wanting whole ingredients in food, instead of some of the additives used in products from Beyond Meat and Impossible Foods to better mimic animal protein.
The company will report full financial results for the third quarter ended Sept. 30 on Nov. 8.