Beyond Meat (BYND) has more reasons in wanting to close a big deal with restaurant behemoth McDonald’s (MCD) than simply seeing its brand name plastered all over thousands of drive-thrus and indoor digital menu boards.
A tie-up between the two could simply be very financially rewarding to Beyond Meat.
“We estimate Beyond Meat could earn up to ~$300 million plus in annual sales from a U.S. McDonald's partnership. We apply a 50/50 probability that a U.S. McDonald's partnership would be single sourced vs. dual sourced in our model forecasts,” wrote UBS analyst Erika Jackson in a note Tuesday.
For perspective, analysts as measured by Yahoo Finance expect Beyond Meat’s 2020 sales to hit $477.8 million this year and then rise to $748 million in 2021. So the addition of McDonald’s as a major partner could be huge for Beyond Meat’s financials and probably, its stock price.
To that end, let the cranking on sell-side financial models begin.
The Golden Arches said Monday it has developed a plant-based patty it will dub the McPlant. A McDonald’s spokesperson tells Yahoo Finance the McPlant will be put to test in 2021 on a market-by-market basis.
“As we have worked to better understand customer demand, some markets around the world have tested plant-based products. Informed by those learnings, we have created a delicious burger that will be the first menu option in a plant-based platform we are calling McPlant. McPlant is crafted exclusively for McDonald’s, by McDonald’s,” said McDonald’s International President Ian Borden in a statement.
“Beyond Meat and McDonalds co-created the plant-based patty which will be available as part of their McPlant platform,” a Beyond Meat spokesperson told Yahoo Finance via email.
Beyond Meat shares have long reflected the expectation of a nationwide rollout with McDonald’s. Getting into McDonald’s has been a long-term goal of Beyond Meat founder Ethan Brown, per Yahoo Finance’s interviews with him this past year.
In September 2019, McDonald’s debuted Beyond’s P.L.T. burger in southwestern Ontario. That test ended in April with McDonald’s saying it would continue to evaluate its options on the plant-based burger front.
Despite some concern in the market of McDonald’s leading with its name on the burger (or possibly using another supplier) rather than Beyond Meat’s, Brown says the relationship between the two companies is solid.
“Our relationship with McDonald's is good. It's really strong.” Brown told analysts on an earnings call Monday evening. “And I think that folks just have to continue to be patient. But I feel, as I said in the past, good about that relationship and good about what we're contributing to the McPlant platform.”
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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