Beyond Meat announced a US$97.1 million net loss, a $6.2 million gross profit loss and a 1.6% year-over year drop in net revenues during its August 4, 2022, quarterly financial review.
In the report, Ethan Brown, the company’s Chief Executive, stated the losses were attributed to the effects of inflation on the production of its plant-based meat, which hurt the company's efforts to make its products more affordable to consumers. Additionally, the company is laying off approximately 4% of its workforce, which should save approximately US$8 million and help keep its internal costs down.
During the review, Brown added that consumers are currently looking for lower priced options, as Beyond Meat’s burgers were priced around $8.35 a pound during the last quarter, while ground beef was approximately $4.90.
The McPlant
Days before the company’s financial review, McDonalds discontinued its 600-restaurant test of the McPlant burger, which was supplied by Beyond Meat, in the U.S. The burger chain is the largest to perform a pilot test with Beyond Meat to date and has no plan to re-launch the plant-based product.
According to an analyst with the global financial services firm BTIG, the sales performance of the McPlant was underwhelming and McDonalds did not have enough evidence to support a national rollout of the product.
The coincidence
It is interesting that Beyond Meat reported major financial losses immediately after the McPlant was removed from McDonald’s menu. However, McDonalds is not the only quick service restaurant to have unsuccessful plant-based options.
According to Reuters, Panda Express and Yum Brands Inc's KFC, Pizza Hut and Taco Bell have unsuccessfully tested products the U.S., while Dunkin Donuts, Hardee's and A&W have discontinued products after launching them.
A key factor that could have affected the McPlant’s sales could be that it was not considered vegetarian because it was cooked with the same equipment used for McDonald’s beef burgers.
I personally believe that a good portion of the McPlant’s failure is lifestyle-based. The consumer going to fast-food restaurants is probably not the same consumer who is looking for a plant-based option. Still, it seems like a good price-point is what usually wins most consumers over, and for now, that’s real meat.
