Beyond Meat is collaborating with McDonald’s for a plant-based burger trial. Here’s why the deal was expected.

  • Beyond Meat has struck a deal with McDonald’s to trial a plant-based burger at 28 of the fast-food giant’s restaurants in Ontario, Canada.
  • The deal isn’t surprising given McDonald’s has shown interest before, its former CEO sits on Beyond Meat’s board, and rival Burger King has launched a rival offering nationwide.
  • Jefferies said the pair were “well positioned” for a partnership that “makes sense for both parties.”
  • 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.
  • Watch Beyond Meat trade live.

Beyond Meat has struck a deal with McDonald’s to trial a plant-based burger. The collaboration isn’t a surprise.

McDonald’s will test the P.L.T. (Plant. Lettuce. Tomato.), which features a Beyond Meat patty, in 28 restaurants in Ontario, Canada, starting on September 30. Analysts at Jefferies predicted the tie-up in an initiation note in May, saying the pair were “well positioned” for a partnership that “makes sense for both parties.”

Jefferies argued a tie-up 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 investment 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 in premarket trading on Thursday, indicating shares would surge by about $23 to $161 at the open.

While a deal may have seemed inevitable, McDonald’s downplayed the chances of one. “It’s so early days,” CEO Stephen Easterbook 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.

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