U.S. shoppers are giving plant-based burgers a pass.
Plant-based meat company Beyond Meat said Thursday that its sales dropped in the fourth quarter due to weak U.S. retail demand. It was the third quarter in a row that the company's U.S. retail sales saw double-digit declines.
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El Segundo, California-based Beyond Meat said its net revenue fell 1.2% to $100.7 million in the October-December period. That was shy of Wall Street’s forecast of $101 million, according to analysts polled by FactSet.
Beyond Meat said restaurant sales are showing promise as its products roll out to more locations. Panda Express began selling Beyond Meat orange chicken at 70 U.S. locations in October, for example. Beyond Meat's U.S. food service sales rose 35% for the fourth quarter and 26% for the full year.
But the company said that couldn't make up for a 19.5% decline in sales at U.S. groceries and other retailers in the fourth quarter. For the full year, U.S. retail sales were down 8% compared to 2020.
Beyond Meat President and CEO Ethan Brown said the coronavirus pandemic is partly to blame for the disruption in retail sales. Consumers have been focused less on health and more on comfort foods, he said. And COVID regulations have prevented the company from offering in-store samples, which are a crucial to winning new customers.
Brown said the company plans “robust” sampling to return to retail stores this year. An upcoming plant-based snack __ co-developed with PepsiCo __ will also spur sales, he said.
“You’ll see us get back in the retail game in a big way in 2022,” he said.
Beyond Meat said it expects net revenue of $560 million to $620 million this year, an increase of 21% to 33% over 2021. Full-year net revenue rose 14% to $464.7 million in 2021.
Beyond Meat is also hopeful that its growing partnerships with fast food companies will also win over more consumers. KFC debuted Beyond Meat chicken in the U.S. last month for a limited time, while McDonald's is testing the McPlant — which it co-developed with Beyond Meat — in multiple markets. Pizza Hut in Canada recently added Beyond Meat's sausage crumbles to its menu.
Still, the company's weak sales and heavy spending to scale up production for its fast food ventures was a concern for investors. Beyond Meat shares fell 11% in after-hours trading.
Beyond Meat reported a net loss of $80.4 million for the quarter. The loss, of $1.27 per share, was also far larger than the 70-cent loss Wall Street was expecting.
In a research note Thursday, J.P. Morgan analyst Ken Goldman noted that Beyond Meat rival Maple Leaf Foods also reported a “pronounced slowdown” in plant-based meat sales Thursday. Maple Leaf Foods, which is based in Canada and also sells meat, said it was reevaluating its investments in plant-based meat and expects slower growth for the category.
“It’s unclear to us if this issue can be fixed in the near-term," Goldman wrote.