Finance

Del Taco trumpeted the ‘unique appeal’ of Beyond Meat products in May — but sales are under pressure

Del Taco Beyond MeatHollis Johnson/Business Insider

  • Del Taco seems to be selling fewer tacos and burritos containing Beyond Meat’s plant-based beef, months after trumpeting the product’s “unique appeal” and the “incredible future opportunity” it presented.
  • The fake meat has made up about 4% of the Mexican-American fast-food chain’s sales this quarter, down from 6% in the three months to 10 September, CEO John Cappasola said on the group’s third-quarter earnings call.
  • However, Cappasola expressed confidence in Beyond’s product due to its novelty, price point, and growing demand for plant-based protein.
  • Watch Del Taco and Beyond Meat trade live on Markets Insider.

Del Taco seems to be selling fewer tacos and burritos containing Beyond Meat‘s plant-based beef, months after trumpeting its “unique appeal” and the “incredible future opportunity” it presented.

The fake meat has made up about 4% of the Mexican-American fast-food chain sales this quarter, down from north of 6% in the three months to 10 September, CEO John Cappasola said on the group’s third-quarter earnings call. Given the chain’s comparable sales only rose 1% last quarter, its sales of Beyond products are almost certainly down.

The apparent decline is striking given Cappasola touted “increases in both check and traffic” after Del Taco added Beyond offerings to its menu in April. Their “unique appeal” was “bringing in many new or lapsed users and appealing to regular Del Taco guests,” he said at the time. He also predicted Beyond would drive sales and bolster Del Taco’s brand position, and highlighted an “incredible future opportunity to expand this protein across our menu.”

Cappasola blamed the surprise slowdown on reduced advertizing for Beyond.

“It’s gone from a primary message down to a secondary message and it’s got some diminished merchandizing,” he said on the call.

Read more: Beyond Meat insiders will finally be able to cash in their shares next week. Here’s why that could spur vicious selling and dent the stock’s 340% post-IPO surge.

Cappasola described the 4% sales mix as “really healthy” given the reduced promotional support. He also remained bullish that Beyond’s beef-like product can drive sales as consumers grow more comfortable with plant-based protein and demand alternatives to meat. Their novelty and price point are also pluses in his view.

“It is a nice differentiator for us in the Mexican [limited service restaurant] space,” Cappasola said. “Don’t forget it’s also priced at a premium, so delivers a higher check average.”

Del Taco’s stock dropped 7% on Tuesday after the company posted a net loss of $7.7 million — a sharp swing from the $5.9 million in net income it earned over the same period last year. Meanwhile, Beyond Meat’s shares are under pressure as investors fear mounting competition in the plant-based protein segment.

Markets Insider has reached out to Del Taco to confirm whether Beyond sales are down, and will update the story if we hear back.

Now read: One Wall Street firm just slashed Beyond Meat’s price target by nearly 25% (BYND)

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