The move follows successful collaborations with both companies (KFC has tested Beyond Fried Chicken in several US cities, while Pizza Hut launched the Beyond Italian Sausage Pizza and the Great Beyond Pizza nationwide last year).
Going forward, Beyond Meat will be the preferred supplier of the plant-based patty in McDonald’s new McPlant burger (currently being tested in Sweden and Denmark with more markets to follow later this year), and will work with the fast food giant on plant-based chicken, pork and egg menu items.
It will also co-develop ‘craveable and innovative plant-based protein menu items’ for Pizza Hut, KGC, and Taco Bell, said CEO Ethan Brown, who told analysts Thursday that, "It is my strong belief that partnerships of this nature, with partners of this caliber, are required to accelerate our flywheel of availability and scale driven cost reduction, a dominant theme in our bid for ubiquity among consumers here in the US and abroad."
At this stage, Beyond Meat is not providing further details of the collaborations, which are "enormous," he said, adding: "Any activity is likely to skew towards the latter part of this year, so the potential impact in 2021 is likely to be fairly modest."
He didn't go into specifics on the 'PLANeT partnership' with PepsiCo, but said the partners would provide an "expanded portfolio of snack and beverage products designed to advance the health of consumers and the planet alike."
“Entering into this strategic agreement is an important step on our journey to bring delicious, high quality, plant-based menu items to our customers.”
Francesca DeBiase, EVP and chief supply chain officer, McDonald’s
“Given the consumer response during recent tests with Beyond Meat, we’re excited about the long-term potential plant-based protein menu items have to attract more customers to our brands, especially younger consumers.”
Chris Turner, CFO, Yum! Brands
“McDonald’s and Yum Brands have doubled down on plant-based meat and have demonstrated the long-term potential they see in the category. This is the clearest sign yet that the future of meat will be plant-based.
"When these restaurant chains move, the entire food industry takes notice."
Bruce Friedrich, executive director, The Good Food Institute
'Significantly reduced demand in the foodservice channel'
Beyond Meat posted a modest 3.5% increase in net revenues to $101.9m in the fourth quarter, with solid growth in retail (from around 62,000 stores) dented by double-digit declines in foodservice (from around 60,000 outlets).
In the full year (ended Dec 31, 2020), it posted a 36.6% rise in net revenues to $406.8m, and a $52.8m net loss.
Despite the challenging macroeconomic backdrop, said Brown, who said Beyond Meat was experiencing "tremendous success" in the club channel, "We continue to see great growth across household penetration [now at 5.3%], buyer rates, purchase frequency and repeat rates [now at 55%]."
Due to COVID-19, however, Beyond Meat "continues to experience significantly reduced demand in its foodservice channel as decreased foot traffic, streamlined menu offerings and restrictions on foodservice locations’ operating capacity have resulted in closures or meaningfully curtailed operations of many of its foodservice customers.
“At the same time, the surge in demand from retail customers that characterized the early stages of the pandemic as consumers abruptly shifted towards more at-home consumption has moderated.”
Beyond Burger(s) 3.0: 'When people grab a plant-based burger, they are making an assumption in their mind that this is going to be healthier, and we need to be true to that'
In the spring, Beyond Meat is replacing its flagship burger with two new variations: a “juicier and meatier” burger featuring 35% less saturated fat than 80/20 beef burgers, and its “most nutritious patty yet,” featuring 55% less saturated fat. Both will contain added B vitamins, said Brown.
"When people grab a plant-based burger, they are making an assumption in their mind that this is going to be healthier, and we need to be true to that."
The company has also made improvements to the process that improve the sensory experience, he said: "There's a more animalic umami taste, and ... the second area is .... finding ways to distribute fat within the product."
Both burgers have undergone "extensive consumer testing with excellent results," said Brown, who said the launches will be accompanied by a "robust marketing program that emphasizes great taste and heath benefits."
Bernstein: 'Launch of 3.0 platform this spring will enable the company to market improved health benefits'
Analysts at Bernstein said "US retail [up 73.6% in Q4] came through stronger than the growth we saw in US Nielsen data and -1.1% below estimates, likely due to stronger sales in non-measured natural channels and shipments to new outlets like CVS. But US foodservice was weaker than expected."
Commenting on the deals with Yum! Brands and McDonald's, they said: "In reality, neither of these partnerships are really new news, although the announcements do represent a more formal relationship than the company was able to announce last quarter. We also imagine that the pricing negotiations with these new partners may leave profits on these contracts somewhat constrained relative to existing foodservice relationships."
They added: "On a more positive note, the launch of the 3.0 platform this spring will clearly enable the company to market some improved health benefits."
