(Reuters) – Beyond Meat Inc reported better-than-expected quarterly results on Tuesday as it sold more of its plant-based meat products and cut costs on packaging and labor, sending its shares up 3% after the bell.
However, the vegetarian burger maker suspended its 2020 forecast as the COVID-19 pandemic hit demand for the company’s plant-based meat products at restaurants.
Closure of dine-in areas and restrictions on movement have severely dented sales at restaurants, including Beyond Meat’s restaurant partners McDonald’s Inc, Dunkin Brands Group Inc and Starbucks Corp and have forced them to rethink how to service customers through limited operations.
Beyond Meat Chief Executive Officer Ethan Brown told Reuters on Tuesday that food service sales in March were about 23% lower than what the company had expected, while sales at retail outlets were up 12%.
Sales at its U.S. food service channel rose 156% to $22.6 million in the first quarter, while sales grew 57% to $18.6 million in the international food service business. In contrast, it had posted a 312% growth in the overall restaurant and food service business in the previous quarter.
“Like most food businesses, we have felt the impact but by no means is it destabilizing the business,” Brown said. Packaged food makers, including Hershey Co, Kellogg Co and Mondelez International Inc, have all pointed to weakness in their food service channel in their recent earnings calls.
To combat the weakness in its food service business, Beyond Meat has been doubling down on its expansion in retail outlets, the most recent being its partnership with Amazon Fresh.
“We’re repurposing lines that were running for food service to retail … So this is not about just waiting this out, it’s about how do we reroute to get to the consumer,” Brown said.
Beyond Meat’s products are currently sold by grocers including Walmart Inc and Amazon.com Inc’s Whole Foods.
Overall, Beyond Meat’s quarterly net sales rose 141.4% to $97.1 million, the slowest growth in at least five quarters, but beat Wall Street estimate of $88.3 million, according to IBES Refinitiv data.
Net income was $1.8 million, or 3 cents per common share, in the three months ended March 28, compared with a net loss of $6.6 million, or 95 cents per common share, a year earlier.
Analysts on average were expecting it to post a loss of 7 cents per share.
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