Why is Beyond Meat foodservice underperforming retail summary
- Beyond Meat foodservice volumes fell over 30% US and abroad
- Retail declines were milder with slight international growth recorded
- Dining out prioritises indulgence taste and price over sustainability
- Foodservice loses impact quickly when large restaurant accounts reduce or delist
- Retail offers consumers control while restaurant owners demand margins and simplicity
Beyond Meat’s recent Q1 results showed a sharp divergence between foodservice and retail.
In foodservice, sales declines were severe, with volumes falling by more than 30% both in the US and internationally.
Meanwhile, in retail, volumes fell less severely and, internationally, some very modest growth was seen.
What accounts for the difference between these two categories? Why is foodservice doing so much worse than retail?
People want indulgence when eating out
Trends are often driven, first and foremost, by consumers themselves.
It may be as simple as the fact that people want to treat themselves when eating out of home, suggests Clive Black, director of investment banking group Shore Capital.
Foodservice as a category is already under a lot of pressure, as household budgets remain squeezed.
“When folks go out they tend to want a treat and the real thing is consistently fending off alternative challenges, where affordability has been an issue; many chains remain very much focused upon meat.”
Furthermore, in retail, consumers have more control, says Nandini Roy Choudhury, principal consultant for food and beverage at consumer analytics company Future Market Insights. They can compare prices and wait for promotions, test out products at home, and treat plant-based meat as an occasional purchase.
Meanwhile, in foodservice, plant-based products are competing directly against animal proteins on the same menu, which are often cheaper and more familiar.
In a foodservice situation, “taste, price and indulgence often matter more than sustainability or health positioning.”
”When folks go out they tend to want a treat and the real thing is consistently fending off alternative challenges"
Clive Black, director of Shore Capital
Because foodservice is indulgence-led, the way the consumer interacts with it is different.
In foodservice, “if a plant-based burger or chicken item is priced at a premium but does not strongly outperform on taste, satiety, familiarity or perceived health benefit, repeat ordering becomes difficult. In retail, the same consumer may still buy plant-based products for home use, meal planning, dietary flexibility, or promotional value.”
Foodservice products more exposed to volume losses
It isn’t just consumer preferences that create difficulties for plant-based meat in foodservice.
When sold in foodservice, products are more exposed to immediate volume losses when a café or restaurant decides to buy less of the product or simply remove it from the menu, says Future Market Insights’ Choudhury.
For Beyond Meat specifically, the decline in foodservice seems to be linked not only to weaker demand but to fewer points of distribution, with fewer burger or chicken products sold to quick-service restaurants.
“This matters because foodservice volumes are highly concentrated. Losing traction with a few large accounts can have a sharper impact than a broad but slower decline across retail stores.”
Retail often works better for plant-based than foodservice
Success in foodservice is a challenge for the whole plant-based sector, says Choudhury.
Foodservice is a “tougher commercial test” for plant-based meat than retail, she says, as it must work for both the operator and the diner.
To be desirable for the operator, it should deliver velocity, margin, low waste and operational simplicity. If a product has low turnover, it occupies space in the freezer or chiller that could be used for other products, complicates inventory and can create wastage risk.
On top of this, restaurants are currently under pressure to simplify menus and protect margins.
Retail distribution, meanwhile, can even be an advantage for plant-based brands. Those with stronger retail distribution, according to Choudhury, are more likely to thrive than brands heavily dependent on quick-service restaurant placements.
While Beyond Meat continues to struggle in both retail and foodservice, the latter remains the greater challenge, due to consumer focus on indulgence and the complications it poses for restaurant operators themselves.
Beyond Meat has been contacted for comment.
