- Beyond Meat and McDonald's are testing a plant-based burger at 28 of the fast-food giant's restaurants in Ontario, Canada.
- The collaboration "makes sense for both parties" given rising consumer demand for plant-based options and Beyond Meat's "strong capacity and production capabilities," Jefferies said in a research note.
- The trial isn't surprising given McDonald's has shown interest in plant-based protein before, its former CEO sits on Beyond Meat's board, and rival Burger King has launched a rival offering nationwide.
- However, McDonald's CEO questioned this year whether plant-based meat was "worth embracing" at scale, given the risk of it being a fad and the added complexity for its kitchens.
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Beyond Meat and McDonald's are testing a plant-based burger. The collaboration isn't a surprise.
McDonald's will trial the P.L.T. (Plant. Lettuce. Tomato.), which features a Beyond Meat patty, in 28 restaurants in Ontario, Canada, starting on September 30. The pilot provides the "first confirmation" that McDonald's is testing Beyond Meat products, Jefferies said in a research note. It "makes sense for both parties" given the rising interest in plant-based options and Beyond Meat's "strong capacity and production capabilities," which would be necessary for a nationwide rollout, the investment bank added.
The test could also pave the way for a full-blown partnership — Jefferies said the pair were "well positioned" for a deal in an initiation note in May. It argued one was likely for several reasons:
- McDonald's launched a vegan burger in Germany earlier this year.
- It expressed "significant interest" in plant-based protein and said it was paying "close attention" to the trend in comments earlier this year.
- Donald Thompson, McDonald's former CEO and COO, sits on Beyond Meat's board.
- Rival Impossible Foods has struggled to meet demand, meaning it might struggle to satisfy McDonald's supply needs.
- Burger King launched Impossible Whoppers nationwide, piling pressure on McDonald's to match its archrival.
Jefferies estimated Beyond Meat could generate an extra $ 48 million in sales if it captured just 1% of McDonald's annual US beef sales, and $285 million if it snagged a 6% share.
The bank also predicted a partnership could add more than $25 to Beyond Meat's stock price of about $80 at the time. The startup's shares soared $16 to $154 in early trading on Thursday.
While a deal might seem inevitable, McDonald's has downplayed the chances of one. "It's so early days," CEO Stephen Easterbrook said at a conference in May. "We're not putting ourselves under pressure to be any sort of first mover. I think getting it right is better than rushing it out."
McDonald's wasn't certain the plant-based meat trend was "worth embracing" at scale, given the risk of it being a fad rather than a sustained trend, and the added complexity for its kitchens, Easterbrook added.
With the launch of the P.L.T., McDonald's seems to have decided plant-based meat is worth a try.