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Ethan Brown, CEO, Beyond Meat
Ethan Brown: 'We are preparing to implement pricing changes to support gross margin expansion.' Image credit: Beyond Meat

Beyond Meat may ‘need to tap the financial markets in 2024′ to stay afloat, says analyst as firm posts $70.5m net loss in Q3

November 8, 2023

Net revenues at beleaguered plant-based meat company Beyond Meat slid again in the third quarter of 2023, declining 8.7% year-over-year and 26% vs the previous quarter, while management reduced full year forecasts for the second time this year.

While Beyond Meat achieved positive free cash flow in the third quarter, it does not expect to sustain it in the fourth quarter, with analysts at TD Cowen predicting that the firm, now in ‘survival mode,’ will “need to tap the financial markets in 2024 to maintain operations.”

According to CEO Ethan Brown: “We anticipated a modest return to growth in the third quarter of 2023 that did not occur. Though we are encouraged by pockets of growth, particularly in the EU where we saw double digit gains in net revenues on a year-over-year basis, we are disappointed by our overall results as we continue to experience worsening sector-specific and broader consumer headwinds.”

As outlined last week, the plan is to:

  • Cut non-production staff by 19% (65 employees, or 8% of global workforce) in Q4
  • Review pricing to support gross margin expansion, exit certain product lines
  • Manage inventory to reduce working capital, further optimize manufacturing footprint
  • Focus on channels/geographies exhibiting revenue growth; review/restructure China operation
  • Counter ‘misinformation’ about plant-based meat in the US market

“We see ‘going concern’ risk for Beyond given deteriorating trends in their US meat alternatives business and negative cash flow.” TD Cowen

“$233m in cash on the balance sheet doesn’t go very far when you are losing $70m per quarter and with $1.1bn in debt maturing in Dec 2026 and a paltry $450m in market cap (and falling fast), it’s hard to see how they could even access the capital markets. They might… I say this with skepticism… be able to refinance that mountain of debt to eager high yield investors, but that will cost them north of 20% further accelerating the inevitable decline. Which is why Beyond is one of, if not the most, shorted stock in the market with close to 40% of the float shorted. The market has already done the math on where the company is headed. As they say don’t fight the tape. If they are going to avoid liquidation they need to find a strategic buyer to take them out. But with the numbers above would you make that acquisition?” Brian Ruszcyk, cofounder and CEO, Earth First Food Ventures 


Beyond Meat Q3, 2023 by the numbers:

    • Net revenue: Down 8.7% year over year (YoY) to $75.3 million, and down 26% vs Q2
    • Gross margins: Still in negative territory at -9.6%.
    • Net loss: $70.5 million
    • US retail revenues: Down 33.9% YoY to $30.5 million
    • US foodservice revenues: Down 21.6% YoY to $12.5 million
    • International retail: Up 38.8% YoY to $14.2 million
    • International foodservice:  Up 78.7% YoY to $18.1 million
    • Full year 2023 outlook: $330-340 million, down around 20% vs 2022 (in Q2, it had predicted $360-380 million; in Q1 in predicted $375-415 million)
    • Balance sheet: As of September 30, 2023, Beyond Meat’s cash and cash equivalents balance was $233 million and total outstanding debt was $1.1 billion. Read more HERE.

“[In the US] we’re going to go back to pricing our products in a way that gives us a margin that can sustain our business.” Ethan Brown, CEO, Beyond Meat


Ethan Brown: US retail is the problem

Speaking on the earnings call with analysts Wednesday afternoon, Brown noted that international sales were up in foodservice and retail, and while sales in US foodservice were down, this reflected a lap with a limited time offer in Q3, 2022 that skewed the figures.

“If you separate that out, US foodservice was also up pretty substantially. So it really gets down to US retail [where sales plummeted 33.9% YoY to $30.5 million]. That’s the main issue.”

He added: “If you look at… what’s happening with the McPlant platform for example, in the EU, it continues to get good traction, to the point where if you look at Austria, Germany, Ireland, Netherlands, UK, Malta, Portugal, and Slovenia, Switzerland, all of those markets are operating and doing well for us. In the EU…both from a climate and health perspective, the products are viewed correctly and given credit for their positive impacts.”

In the US, however the category is facing a “well-orchestrated campaign” from vested interests in animal agriculture presenting plant-based meats as “fake, processed, and full of chemicals,” he claimed.

“In our view, the health perception of the category is the most immediate and important variable to address in order to restore growth. We must squarely and forcefully counter the broad misinformation that swirls around our category before we can more effectively use pricing as a tool to bring new users and the mainstream consumer into our category.”

Lower prices ‘just didn’t have an impact’

As for pricing, discounting has not delivered the hoped-for upticks in volume in the US, he acknowledged.

“The headwinds the category is facing, whether it’s misinformation or misunderstanding about the value proposition or whether it’s just incredible pressure the retail consumer is under and the very established pattern of trading down among high-cost proteins… In that environment, it [reducing price] just didn’t have an impact. And so, we’re going to go back to pricing our products in a way that gives us a margin that can sustain our business.”

Asked whether Beyond Meat is “considering a full-on exit” or just a paring down of operations in China, where CFO Lubi Kutua referenced “the discontinuation of distribution at a certain large chain customer,” Brown said: “On China, I think it’s just taking a look at what is our strategy for the next two, three years there and how how big or small do we need to be?”

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