Beyond Meat on Monday reported second-quarter earnings and the sales numbers were eye-popping even to those of us who came in fully prepared for some steep declines.
Revenues at the company declined 30.5%. But U.S. foodservice sales were $12.8 million, down 45.4%. While things were moderately better on the international foodservice front (up 0.9%), the results were nevertheless indicative of a trend that is on the wrong end of a curve.
To put that $12.8 million into perspective: It’s about the same as a half-dozen average Chick-fil-A restaurants do in about three months.
The data certainly makes it difficult to argue that the plant-based meat trend that was all the rage just a few years ago is anything but a fad. Yet more likely, the companies made a mistake pushing the products into quick-service restaurants as aggressively as they did, before the broad consumer public was ready for them.
To be sure, one company does not a business sector make. It’s possible that Beyond is simply losing out to rivals in the plant-based meat war. Impossible Foods in January hit back at Bloomberg, for instance, following a critical story in that publication about the state of plant-based meat. The company argued that it hit record sales every year since it launched on menus, including last year.
And there are still numerous companies investing in plant-based meat alternatives, as anybody who’s ever wandered through the halls of the National Restaurant Show can attest.
It’s not as if brands haven’t been testing plant-based meat items. Taco Bell, for instance, announced a test of a Vegan Crunchwrap in June. And Burger King isn’t exactly ditching its Impossible Whopper.
But it’s difficult to ignore numbers like those that Beyond Meat just reported. And there are plenty of signs of a slowing market for plant-based meat alternatives.
Foodservice companies sold 60 million pounds worth of plant-based proteins in 2022, according to the Plant-Based State of the Industry Report by the Good Foods Institute, a group that advocates for more sales of plant-based items. That was up 3% from 2021, a slowdown of the 20% growth the year before. Yet even that number was below that of 2019.
Retail sales of plant-based meat declined 1% last year. Unit sales fell 8%, by the way.
Restaurants were a key element in the growth plans for companies like Beyond Meat and Impossible Foods, which had hoped that convincing fast-food restaurants to put the products on their menus would help consumers develop a taste for them. They’d then pick some up at the grocery store to make at home.
The companies inked deals with several major chains, starting with White Castle and then Burger King. Numerous other chains looked to either test or introduce plant-based products on their menus, including KFC, Dunkin’, Starbucks and others. Even McDonald’s got into the act with the McPlant. If these companies could add products with plant-based meats to their menus, they would usher in a new era of acceptance that would help the products surge in popularity. Many of these efforts have gone by the wayside. The McPlant never made it to a national introduction.
One of the arguments for strong growth in the plant-based meat market was the popularity of alternative milks, such as almond milk or oat milk. Those arguments were flawed almost from the get-go, because at least part of the popularity of those milks is due to lactose intolerance.
The meats were also targeted at so-called “flexitarians” who eat meat but would like to eat something else for either health or for the environment. But flexitarians are simply not the most loyal users of plant-based meat products. That’s because they still choose to eat meat.
Many have argued that the problem with that generation of plant-based meat products was their highly processed nature. The next generation will be less processed. Chick-fil-A’s cauliflower sandwich may be an example of that. But we also don’t think fast-food customers are all that concerned about how processed their food really is. And yes, we’ve seen the same consumer surveys you do. But nobody is filling out a consumer survey when they’re in a hurry, kids are hungry, they’re running to their next appointment and McDonald’s is the easiest option.
Plant-based meat makers would be smart to try a different route, rather than try and convince fast-food chains to adopt their product. Instead, price their products aggressively at the supermarket. Get customers to try it on price. That might have generated some goodwill during the past two years when inflation hammered everyone.
Or perhaps practice more patience. Keep the products for the higher-end consumer. Make the public think it’s special and build from there.
But, at this point, plant-based meat simply hasn’t resonated well enough to warrant large-scale inclusion on fast-food menus. While the fast-food public was curious about plant-based meat, it wasn’t ready to embrace it full-time.