Breakingviews: Beyond Meat serves up double helping of ineptitude

A company like Beyond Meat needs two ingredients: a product that sells, and the ability to manage investors’ expectations. The $9 billion beefless burger maker’s third-quarter earnings showed that it has enough of the former and precious little of the latter.

Beyond Meat’s shares dropped by 29% in after-market trading on Monday, as it served up a loss where analysts expected a profit. The worst of it is that Beyond Meat itself seems to have been blindsided by a sharp slowdown in its sales through retailers. Back in August, the company was trumpeting “an enviable combination of consumer trends.” On Monday, founder and Chief Executive Ethan Brown said that what the company had actually experienced was “a clear and prodigious pattern of consumer panic buying.”

That was just part of a double helping of ineptitude. Beyond Meat’s shares had fallen earlier in the day as McDonald’s announced its own meatless burger, the “McPlant.” While Beyond Meat says it is collaborating with the fast-food colossus on its new offering, it won’t say exactly what that means. So investors are unable to tell whether the McPlant is an opportunity or a threat. One frustrated analyst on Monday’s earnings call accused Brown of “spooking people” with a lack of substantial information.

If all that mattered were the product, Brown would have a much simpler life. Beyond Meat’s retail sales are still growing roughly 40% a year, after all. More than half of its customers are repeat buyers. And even the slump in restaurant-related sales should improve as Covid-19 eventually recedes, since in better times, Beyond Meat’s growth in sales was fuelled by business from sports arenas, cinemas, casinos and the like.

Beyond Meat’s gaffes therefore say more about why it might be better off if its quarterly mishaps took place away from public view. It traded before Monday’s slump at 14 times estimated revenue – double Facebook’s multiple. But confidence in the growth of a young, one-product company is easy to puncture – say, by a new source of competition, or unforeseen sales wobble. If Beyond Meat were just another division in a giant consumer-goods conglomerate like Unilever or Nestlé, such upsets would barely matter at all. That can’t be lost on the company’s hapless founder.

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