Restaurants really don't want to sell fake meat - and Beyond Meat is suffering

By Bill Peters

Beyond Meat's stock fell further Wednesday after it offered a weak forecast, and as it prepares to move further into a crowded protein-drink market

Shares of Beyond Meat have fallen nearly 56% over the past 12 months.

Consumers and restaurants continue to avoid meat alternatives, and Beyond Meat's outlook suggests things could get tougher from here, as the company tries to expand into new but increasingly competitive areas like protein beverages.

Shares of Beyond Meat (BYND) - which is rebranding to Beyond The Plant Protein Co. - sank more than 15% after hours Wednesday, after the company's second-quarter sales forecast came up short of Wall Street's expectations.

The drop in Beyond Meat's stock price follows an extended stretch of weaker demand for its products, as consumers dealing with higher living costs have steered clear of more expensive plant-based meat alternatives. However, the nutrition-focused "functional" food-and-drink space that it is entering in a bid to revive its fortunes has also attracted the interest of household names like PepsiCo (PEP).

Beyond Meat on Wednesday called out lower demand from quick-service restaurants abroad and "weak category demand and reduced points of distribution in the U.S. retail and food-service channels." Part of the company's expansion in years past depended on placing its items in grocery-store meat sections and striking deals with restaurant chains to land plant-based items on their menus.

Management also said Beyond Meat expects second-quarter sales of around $60 million to $65 million, below analyst estimates for $67 million. They cited an "elevated level of uncertainty and volatility within [the company's] operating environment."

That outlook followed a 15.3% drop in sales to $58.2 million during the first quarter - a figure that nonetheless edged past Wall Street's low expectations for $58 million. Beyond Meat reported a 6-cent per-share loss, much narrower than a year ago and not as bad as the 14-cent loss analysts expected.

The company said it held cash and cash equivalents of $205.8 million, with a total outstanding carrying value of debt, net of discounts, of $411.6 million.

Following an overexpansion after going public in 2019, Beyond Meat has cut costs, consolidated warehouses and production, exited less profitable product lines and is shuttering its business in China. Meanwhile, it is still rolling out new products, trying to stand out in the supermarket frozen aisle, and has stepped up efforts to clean up its finances and regulatory disclosures.

Beyond Meat last month said it had partnered with distributor Big Geyser to launch its new Beyond Immerse sparkling drink, which contains protein and fiber, in New York this summer. Snacks and drinks with those substances have become more popular thanks to social media, GLP-1 use and an ongoing consumer tilt toward wellness.

During Beyond Meat's earnings call Wednesday, CEO Ethan Brown said the company had the scientific know-how and resources to expand into drinks and plant-based nutrition overall.

"We believe that we are strongly positioned to compete and win based on what is now nearly two decades of work on the functionality, characteristics, cost and presentation of plant-based inputs," he said.

"It's possible that we've innovated with plants under more scrutiny than any other company ever," he added.

Still, that expansion will arrive as food-industry giants like PepsiCo, Kraft Heinz (KHC) and Hershey (HSY) try to jump on the trend. Meanwhile, BellRing Brands (BRBR), the maker of Premier Protein drinks and PowerBar snacks, said Tuesday that higher costs and competitive price cuts had weighed on its quarterly results and forecast amid an influx of new, smaller rivals.

The environment overall, BellRing CEO Darcy Davenport said, "reflects an increasingly value-focused consumer with greater reliance on promotions, low-price brands and value-priced pack sizes."

Shares of Beyond Meat have fallen 55.6% over the 12 months through Wednesday's close.

-Bill Peters

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05-06-26 1902ET