Beyond Meat, the US leader in alternative meat, appears to be turning a corner after a series of poor financial results, including a 30.5% drop in net sales last year.
The company has stopped its downward trend, as shown by the third quarter result of this year. Year-on-year, net sales increased by 7.6% to 81 million dollars, mainly due to price increases.
Gross profit for the period was $7.3 million, compared to a loss of $7.3 million the previous year.
Restaurant decline hits Beyond Meat volumes
The biggest laggard is catering, with a drop of 22.1 % units.
According to Beyond Meat, the decline was driven by lower sales of chicken and burger products to large quick-service restaurants.
International retail sales volume increased $6 billion and net sales increased $17 billion to $16.6 million, largely due to a $10.5 billion price increase.
Implemented operational efficiencies also helped improve the revenue balance, with costs falling from $45.2 million to $17.2 million over the same period.
Ethan Brown said: "Our company is on track to achieve profitability and cash flow targets. We have returned to growth and increased our gross margins. Our operating costs are at their lowest level in four years."
Why is Beyond Meat experiencing revenue growth?
Brown responded to the decline in the restaurant industry internationally by saying that there are "a number of things going on." In a certain economy, which is facing its own problems, the restaurant industry in that economy has declined significantly. That's one factor.
The second issue is more of a timing issue with inventory. Because of the promotions our client ran in the second quarter, they acquired a large amount of inventory. We continue to sell off that inventory. That has created a bigger slowdown. “These are the main drivers that are driving this particular customer.”
Brown said the company's success is due to Beyond Meat Beyond IV, a new version. He said the product was more expensive because it contained "a higher-quality set of ingredients." He suggested that led to an increase in revenue with a relatively small decline in volume.
Investors were assured that his company was not a "niche brand" aimed at wealthy customers. Over time, we will retire this version and be able to offer more competitive prices, and then launch the new version.
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