US alt-meat major Beyond Meat appears to have turned the corner on a series of unfortunate financials, including a 30.5% net revenue drop last year.
However, the business's Q3 results this year hint it has arrested a downward trajectory, with year on year net revenues up 7.6% to $81m – driven mostly by price hikes.
Gross profit was up to, with the a gross margin of 17.7% in contrast to a $7.3m loss for the same period last year.
Foodservice declines hit Beyond Meat volumes
While the business is seeing value gains, volumes have not yet turned the corner with foodservice leading the lag through a 22.1% drop in units.
The drop, according to Beyond Meat, was caused by a decline in chicken and burger product sales to large quick service restaurants.
Volumes did, however, go up 6 %for international retail, with net revenues also rising 17% to $16.6m driven in part by a 10.5% price uptick.
Operating efficiencies put in place also contributed to a more positive revenue balance sheet, with costs down $17.2m for the period to $45.2m.
“We returned to growth, continued our gross margin expansion and reduced operating expenses to their lowest level in four years as we drive the business towards cash flow and profitability objectives,” said Ethan Brown, Beyond Meat’s CEO, during an investment call.
What's driving Beyond Meat's revenue increase?
In response to the downturn in international foodservice, Brown suggested that “a couple of things are going on there. One is we're seeing in a particular economy that's undergoing its own challenges, we are substantially down in that restaurant in that economy. And so that's one thing that's driving it.
“The second is more of an inventory loading timing issue where due to some promotions that were being run by the customer in the second quarter, they took on a lot of inventory. And so we're still seeing sell-through of that inventory. And so that created more of a downturn. Those would be the major drivers for that particular customer.”
According to Brown, the company’s success is due to the new iteration of Beyond Meat, Beyond IV. The product, he said, had ‘a more premium set of ingredients’, and thus costs more. This, he suggested, led to a significant increase in revenue and a comparatively small decrease volume.
He assured investors that the company had not become ‘a niche brand going after affluent customers,’ however. “Over time, you'll see us retire that version, be able to offer more competitive pricing on it and introduce the next version.”
