Beyond Meat turned a profit last quarter, but that may be a bad thing
My plant-based brings all the boys to the yard... And they're like, "it's better than pork." Beyond Meat can teach you, but it has to charge (a lot). Beyond Meat, known for its patties made of pea-protein, saw sales rise 141% last quarter. It even turned a $1.8M profit. Not huge, but significantly better than the $6.6M loss it took last year. Beyond's facing a coronavirus see-saw situation:
- The Up: WFH and the closure of restaurants has caused supermarkets sales to rise as people cook more meals at home. Plus, national corona-caused meat shortages position Beyond to gain new customers.
- The Down: Restaurants are closed, meaning Beyond is no longer supplying plant-based meat to all those sit-in diners — Beyond's sales dropped at the end of March as eateries shuttered.
Too pricey for that frozen aisle life... Restaurant sales made up just 42% of Beyond’s total sales last quarter, down from 59% the previous quarter. Corona-conomy poses a perfect opportunity for Beyond to beef up its grocery game — but...
- Beyond may be too expensive for big grocery growth: Beyond Burgers are sold as 2-patty packs for around $5.99 — that's $12/pound, compared to $5/pound for real ground beef at Whole Foods (and you can buy beef in bulk, unlike Beyond). That's why...
- Beyond is now planning to offer discounts and value packs to some US retailers — it's hoping that offering lower prices and larger packages will allow it to capitalize on corona-conomy hoarding needs.
We think Beyond is too young to be chasing profits... It should focus on growth instead. Beyond's profit was mainly because its plant-based meat enjoys a high price tag. But it's still lagging cheaper meat-substitutes from MorningStar and Conagra in terms of market share. The value packs and discounts are a step in the right direction — they'll cut into profit in the short-term, but set Beyond up for increased growth.