Beyond Meat Is Being Sued Again—This Time by Its Own Investors

Let's sink our teeth into the juicy details.

Beyond Meat is having a rough year. Not only are sales down 15.7 percent over last year, but the Los Angeles-based producer of plant-based meat substitutes has just been slapped with a lawsuit—the third since 2022, this time from its own investors.

The class action lawsuit, filed on May 11 by the Retail Wholesale Department Store Union Local 338 Retirement Fund, states that investors were misled by claims made by the company and specific executives. It says that “false and misleading” statements were made to “deceive the market,” and that this resulted in company stock prices becoming artificially inflated. The result was significant economic losses for investors, including the Retirement Fund, which had purchased shares in the company to fund the retirements of workers in New York and New Jersey. (The lawsuit does not say how large the fund’s stake is in the company, nor whether it still owns those shares.)

The contentious statements relate to Beyond Meat’s testing of its plant-based products with various fast food restaurants, including Mcdonald's, Starbucks, Pizza Hut, and Taco Bell. The company assured investors that it was capable of manufacturing its plant-based meat substitute at commercial scale, but most of the large-scale partnerships with these restaurants never moved past the trial stage.

Beyond Meat blamed this failure to progress on changes to consumer behavior brought on by the COVID-19 pandemic, but quarterly earnings reports told a more nuanced story—one in which revenue outlooks were drastically cut by up to $34 million (or 25 percent), driven by plummeting sales, increased production costs, and unsold inventory. CEO Ethan Brown also pointed a finger at market competition and inflation as reasons for losses.

Other factors continued to affect share prices negatively, including bad press around the relaunch of Beyond Chicken, a failed product test for plant-based carne asada at Taco Bell, employee layoffs, and the loss of three executives, not to mention two additional lawsuits over false advertising and fraudulent labeling. This brings us to the latest lawsuit, which applies to any investors who held shares in the company between May 5, 2020, when the share price was $100.50, and Oct. 12, 2022, when it had dropped to $14.11. It is calling for a trial by jury.

The whole situation is shocking for a company that was the darling of the stock market when it went public in May 2019, the first-ever plant-based meat company to do so. As Food Dive explains, “In just a few months, the company surged to a share price more than nine times higher than its IPO price.” It went up and down throughout 2020 before starting its downward trend in mid-2021, coinciding with a decrease in the retail consumption of plant-based meat.

There are lots of opinions on why this decrease is happening across the plant-based meat industry as a whole, not just for Beyond Meat. The novelty factor has worn off for many shoppers, who may have defaulted back to their old habits of buying beans and tofu (if vegetarian) or meat (if not). Unless a customer is truly wowed by a novel product, they likely won’t buy it again—and there were common complaints about Beyond Meat’s ground beef substitute smelling weird and unappealing when cooked, and not living up to the standards of its main rival Impossible Foods.

The latest lawsuit does not bode well for Beyond Meat. It remains to be seen how the company will cope with this latest lawsuit and whether or not it will manage to rebuild consumer trust after so much bad publicity.