Plant-based burger maker Beyond Meat Inc. delivered first-quarter revenue that missed Wall Street’s expectations, underscoring the urgency facing the company as investors grow impatient for signs of improvement. 

Revenue of US$109.5 million in the quarter ended April 2 was below the average estimate of analysts compiled by Bloomberg. While US sales outpaced expectations, international sales missed. The company maintained its sales guidance in its release late Wednesday.

Beyond Meat was once a darling of Wall Street, but its initial sales boom has worn off and competition has intensified. The El Segundo, California-based company’s earlier stream of new fast-food partnerships has also dramatically slowed.

Chief Executive Officer Ethan Brown said that the measures being taken include “a sizable, though temporary, reduction in gross margin” on “cost-intensive measures to support important strategic launches.” Nonetheless, the company is laying “a robust foundation for our long-term growth,” Brown said in the statement.

Amid a volatile morning that included multiple trading halts for Beyond Meat shares, some investors were focusing on that optimism. The stock was up 9.9 per cent to US$28.77 in New York trading at 11:15 a.m.

Foodservice sales fell in the US, which Beyond Meat attributed to the loss of a single customer. Dunkin’ stopped selling Beyond Meat’s breakfast sausage at most of its more than 9,000 US locations last year. The company still has high-profile partnerships with Yum! Brands Inc. and McDonald’s Corp. -- but has yet to land a permanent menu item with either chain. 

US retail sales were up 6.9 per cent thanks to the new jerky product that came out of Beyond Meat’s PepsiCo Inc. partnership, but sales of other products slipped. The jerky product, however, also reduced the company’s margins because it requires a “complex and high-cost manufacturing process.” Those costs will moderate in the second half of 2022, Beyond Meat said.

What Bloomberg Intelligence Says

“Beyond Meat may need to show more flexibility in its focus on investing for long-term growth and provide a clearer vision of its path to profitability. That could help assuage some short-term sales and margin volatility. US foodservice sales contraction of 4.5 per cent vs. last year may fuel skepticism about the success of key partnerships.”

--Jennifer Bartashus, consumer-staples analyst

As the plant-based category has become increasingly crowded, consumers aren’t embracing it with the same level of enthusiasm they did a few years ago. Many no longer see the products as healthy, citing concerns over how processed they are. Others are turning away after trying one product they don’t like.

Gross margin was 0.2 per cent of revenue -- well below analysts’ average estimate of about 13 per cent. The company reported lower costs for ingredients, but that was offset by higher expenses for manufacturing, logistics and marketing.