Past Meat says delta fears, labor woes immediate fewer restaurant orders

Ethan Brown, founder, president and CEO of Beyond Meat

Adam Jeffery | CNBC

The Covid delta variant and labor challenges are resulting in fewer orders of Beyond Meat products from restaurants.

CEO Ethan Brown told analysts on Thursday that independent restaurant operators stocked up on Beyond’s meat alternatives in the quarter ended July 3, helping U.S. food service revenue surge 269% from a year ago. However, the emergence of the delta variant as the dominant form of Covid in the United States has led some of them to lose their confidence, resulting in more conservative orders.

Brown also said that a shortage of willing workers led at least one food service launch to be delayed until early next year.

“So those two effects, the impact of labor and then the continued bit of cloudiness about the Delta variant, I think, is creating a little bit of a drag on food service at the moment,” Brown said. “And so for us, I think the main characteristic of the third quarter, and our guidance is, is simply lack of visibility.”

For the third quarter, Beyond is forecasting revenue of $120 million to $140 million, falling short of Wall Street’s estimates of $153.3 million.

While many restaurant companies say so far they haven’t seen a material impact to their sales stemming from the delta variant, some localities are beginning to impose restrictions. New York City, for example, will require proof of vaccination for some indoor activities, like eating inside, which could hurt restaurant sales.

The disappointing outlook, combined with a wider-than-expected loss during the second quarter, sent shares of Beyond down more than 5% in extended trading.