Talk about burying the lede. If you only read headlines, you might think that Beyond Meat's (BYND -1.98%) Friday press release announcing that the plant-based "meat" producer is shooting to be cash flow positive by the second half of 2023 was a piece of good news. It was anything but.

Aggressive cost cutting

Beyond Meat is reducing its workforce by around 19% as it aims to weather a brutal combination of headwinds. Demand for plant-based meat has weakened, with consumers moving away from the category amid sky-high inflation. Competition is eating away at Beyond Meat's market share, a threat that should not be a surprise. And retailers and distributers have been reducing inventory levels and cancelling promotions, further hurting Beyond Meat's sales.

The company will take approximately $4 million in charges related to the layoffs, but it expects the move to reduce cash operating expenses by $27 million and non-cash expenses by $12 million over the next twelve months. Given the state of the business, Beyond Meat has little choice but to greatly reduce its spending.

On top of cutting its workforce, Beyond Meat also revised its full-year revenue outlook. The company now expects to generate between $400 million and $425 million in revenue this year, down from a previous range of $470 million to $520 million. Based on this new guidance, revenue will slump between 9% and 14% from 2021.

Beyond Meat's operating expenses totaled $181 million through the first six months of 2022, so cutting costs is a necessity. A deeper problem that has no good solution is the company's gross margin. It was negative in the first six months of the year as Beyond Meat turned to liquidation channels to unload some inventory. The company was sitting on $255 million of inventory at the end of the second quarter, which is a lot given its new revenue guidance. More write downs seem inevitable.

In the press release announcing this news, CEO Ethan Brown said that the company believes the current headwinds are transient. Some of them might be; inflation will eventually calm down, for example. But the problem of competition isn't going away, and it's hard to say whether demand for plant-based meat will rebound during better economic times. It's possible that plant-based meat was a fad all along.

A race against time

"Time is the friend of the wonderful company, the enemy of the mediocre," says Warren Buffett. Beyond Meat certainly falls into the latter category.

The company burned through roughly $275 million in cash during the first six months of 2022, and just $455 million of cash remained on the balance sheet at the end of Q2. Book value is now negative, a capital raise would be costly, and there's already over $1.1 billion of convertible debt on the balance sheet.

Inventory isn't going to be a great source of cash since the company has been turning to liquidation channels. The goal of becoming cash flow positive seems to rest on the assumption that the demand environment will improve by the end of 2023. It might, but that's far from a guarantee. And even if it does, there's far more competition than there was a few years ago.

Beyond Meat is going into survival mode. I'm not convinced it will make it to the other side intact.