Please ensure Javascript is enabled for purposes of website accessibility

Can Grocery Store Sales Save Beyond Meat From the Coronavirus?

By Rich Smith - Updated May 7, 2020 at 6:08PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One key segment of Beyond Meat's business grew 4,944% in the first quarter.

Investors were not optimistic about Beyond Meat's (BYND 0.08%) chances heading into earnings day. One oft-repeated question: With the coronavirus pandemic shutting down so many restaurants, schools, and other foodservice providers, how would Beyond Meat fare, given that 51% of its sales come from selling plant-based meats to such establishments?

Answer: Actually, quite well.

Hamburger

Is it a hamburger, or is it Beyond Meat? Image source: Getty Images.

Reporting Q1 2020 earnings on Tuesday, Beyond Meat boasted of a 141% year-over-year increase in revenue to $97.1 million. It also reported $0.03 per diluted share in honest-to-goodness net income -- the company's second profitable quarter ever

The key to the company's success, of course, was sales growth, and growing sales to retail customers through grocery stores in particular. Although foodservice sales grew 156% in the U.S., retail sales grew even faster.

In its report, Beyond Meat highlighted a marked slowdown in foodservice sales "in the latter half of March ... as a result of the ongoing COVID-19 health crisis." The slowdown was so great that, for this one single quarter at least, the balance of sales of the company's fake meat products flipped from 51% foodservice, 49% retail, to 58% favoring retail versus 42% for foodservice.

The difference in growth rates was especially pronounced internationally, where sales of Beyond Meat's plant-based products exploded 4,944% higher in Q1, while sales through foodservice channels grew only 57%.

The longer this coronavirus crisis drags out, the more pronounced investors can expect this disparity to become. With restaurants still mostly closed, Beyond Meat will need to emphasize grocery store sales more than ever. Fortunately, in its earnings report, management noted that it's been selling its product for a "lower net price per pound" lately. 

If there's one thing consumers like, it's a bargain. Putting Beyond Meat products on sale in the grocery aisle could be key to keeping this company's growth engine going.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Beyond Meat, Inc. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Beyond Meat Stock Quote
Beyond Meat
BYND
$36.69 (0.08%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.