Beyond meat 3

Beyond Meat will axe 65 employees to save the business $9.5m-$10.5m in costs

Embattled vegan brand Beyond Meat is planning to axe 19% of its non-production employees in a move to drastically reduce costs and turn its ailing performance around.

The struggling US-based group also revealed sales growth did not recover as expected in the third quarter amid an ongoing slump in demand for plant-based meat alternatives.

It resulted in Beyond revising down its revenue expections for the year again and unveiling a five-point plan to fix the business.

A 19% reduction in the global non-production workforce (and 8% of the total staff) would see about 65 employees let go and save the business $9.5m-$10.5m (£7.8m-£8.6m) in costs and a further $1m-$2m in non-cash savings related to share-based rewards due to vest in 2024. However, the redundancies would lead to a one-off charge of $2m-$2.5m.

CEO Ethan Brown said the group would review its pricing strategy to support gross margin expansion, intensify the focus on channels and geographies showing growth, and also combat misinformation about the Beyond products and plant-based category in its US marketing.

“We anticipated a modest return to growth in the third quarter of 2023 that did not occur, reflecting further sector-specific and consumer headwinds,” Brown added.

“Even as we implement measures to address those headwinds that are within our sphere of influence, we intend to pursue a further, sizable reduction of operating expenses to improve our cost structure.”

Shares jumped 7.5% to $6.36 in pre-trading ahead of New York markets opening as investors reacted positively to the new plan.

Beyond revealed net revenues for the third quarter of 2023 were expected to be $75m (£61.6m), compared to $102.1m (£80.3m) in the previous three months. The 26.5% slump follows a 30.5% decline from Q1 to Q2.

The group blamed weaker-than-expected sales volumes in US retail and foodservice channels, and also unfavourable changes in product sales mix, which reflected weaker-than-expected sales of the core products range of burgers, beef and sausage relative to the non-core range.

Gross profit is expected to come in at a loss of $7m-$8m in the period, with the company to reveal the full third-quarter results on 8 November 2023.

As a result of the ongoing sales decline, Beyond downgraded revenue expectations to the range of $330m-$340m, which would represent a year-on-year fall of 21%-19%. In the second-quarter results, Beyond revised guidance down from $375m-$415m to $360m-$380m.

Shares in Beyond have collapsed over the past two years from heights of $234 following the 2019 IPO to just $6.33 today. It puts the company’s market cap at just $409.5m, significantly down on the $1.2bn IPO value and the $14bn top.