McDonald’s Partners with Beyond Meat

Chris Dios - September 27, 2019

Plant-based meat mania is coming to McDonald’s.

The fast-food titan announced Thursday that it would begin testing Beyond Meat (BYNDpatties in a sampling of its restaurants in Canada. McDonald’s will test the ‘P.L.T’ – the plant, lettuce, and tomato – for 12 weeks in 28 restaurants in Southern Ontario starting this Monday.

The 12-week test launch will give Mcdonald’s a better idea of market demand and the sandwich’s impact on restaurant operations, according to a quote from McDonald’s Vice President of Global Menu Strategy, Ann Wahlgren, in today’s Wall Street Journal.

Late to The Party

Several McDonald’s rivals have already launched their own plant-based meat products, and they’re proving that there is a solid demand for these types of products. Many restaurants have reported strong sales for their plant-based offerings, so it’s no wonder McDonald’s wants to get in on the action too.

Burger King, a subsidiary of Restaurant Brands (NYSE: QSR), began offering testing its Impossible Whopper burger in St. Louis last April. The promotion proved to be successful enough that Burger King decided to launch the product nationwide. As of August, the Impossible Whopper is available at almost every Burger King.

Dunkin’ (NASDAQ: DNKN)is also getting in the ring. The company began offering a plant-based option, made with Beyond Meat sausage, in its Manhatten locations last July. Dunkin’ plans to roll out the sandwich nationally if the Manhatten launch gets a strong response. After seeing how plant-based meats are performing for other companies, it’s highly likely that we’ll see the Dunkin’ Beyond Sausage Breakfast Sandwich rolled out nationwide soon enough.

Tim Horton’s

Canadian fast-food chain Tim Horton’s (NYSE: THI) also made headlines a few months ago when the company announced it would begin offering Beyond Meat sausages in its restaurants. The plant-based sausages received such a strong response that Tim Horton’s now offers the product at 4,000 of their restaurants. Horton’s even expanded their offerings, they now sell three sandwichs that use Beyond Meat sausage as the main ingredient.

However, the story takes a turn here. Horton’s announced they were cutting back their plant-based offerings this week. The reason: demand was much higher for real beef. It’s a possible warning that maybe the market is a little too bullish on the demand for these types of products.

McDonald’s played things more patiently. It didn’t rush into the hysteria like some of its other competitors. In fact, it was watching closely to see how plant-based patties were performing for its competitors before making the jump. McDonald’s executive admitted that, before adding Beyond-anything to the menu, they wanted to see whether the trend would last. Perhaps more importantly, they also wanted to see if other restaurants could maintain supplies of Beyond products.

Beyond Bulls Rejoice

Beyond shareholders gave the McDonald’s deal a warm reception, BYND rallied 12% on Thursday on the news to close at $154.34.

Already the best-performing IPO of the year, BYND remains one of the hottest stocks on Wall Street. The market is currently valuing Beyond Meat at $9.2 billion; a lofty price tag that values the company at over 56 times price per sales. Frankly, that’s a ridiculous number that is hard to justify by any reasonable standards.

However, the bulls are sold. They say Beyond will grow into its valuation over time. The math behind that claim is fuzzy but not impossible. If Beyond Meat can become a mainstream product, there are huge amounts of uncaptured market share waiting for them. There’s no doubt that Beyond is the leader in this category, so it could be in the best place to win if plant-based meats become more than a fad.

Beyond Bears Grumble

Bulls say this stock is some kind of unstoppable growth story.  However, bears say the valuation is unsustainable and borderline ridiculous. The fact that Tim Horton’s is dialing back its plant-based offerings is a possible signal that demand is not as strong as projected. Many experts challenge the demand outlook for these products. The burgers taste good in comparison to most vegan offerings, but they still have a long way to go before they can beat beef. While there is certainly strong demand for these products, the question remains whether plant-based meats can make the leap from a niche product to mainstream staple.

More on Plant-Based Meat

Be sure to check out our article on food stocks for even more analysis and insight on meat-alternative stocks. Find the article here: 

Chris Dios is an American writer and entrepreneur based in the Greater NYC area.

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