Beyond Meat posted a wider-than-expected quarterly loss and an 18% drop in revenue on Wednesday as its higher-priced plant-based meat products hit volumes.

WHY IT’S IMPORTANT

Demand for Beyond Meat’s products – including burger patty, sausages and ground beef – weakened as their customers such as McDonald’s and Yum Brands saw sluggish consumer demand owing to sticky inflation.

CONTEXT

While Beyond Meat increased its prices in the current quarter, the company’s volumes fell 16.1% as consumers kept a tight lid on spending. Despite price hikes, the company’s margins came under pressure from higher manufacturing and material costs. Its gross margin in the quarter rose 4.9%, compared with a 6.7% rise last year.

KEY QUOTE

“It remains an uphill battle for the plant-based industry, as consumers are still tightening their belts and are less likely to try new premium grocery brands,” said Blake Droesch, analyst from eMarketer.

MARKET REACTION

Shares of the company, which maintained its forecasts for annual revenue and gross margin, were down about 14% at $7.04 in trading after the bell.

BY THE NUMBERS

For the first quarter, the company posted revenue of $75.6 million, compared with analysts’ average estimate of $75.2 million, according to LSEG data. In its U.S. foodservice segment, the company’s revenue fell 16.2% to $12.3 million, compared to a decline of 5.3% to $14.7 million a year ago. On an adjusted basis, Beyond Meat reported a loss of 72 cents per share for the quarter that ended March 30, compared with analysts’ estimates of a loss of 67 cents per share.