August 1, 2022
Shares of Beyond Meat—the Los Angeles-based producer of plant-based meat substitutes—fell 6% in morning trading on Thursday, July 28, after J.P. Morgan revealed that McDonald’s had ended its U.S. test of the McPlant burger, which uses Beyond’s meatless patties, reports CNBC.
The fast-food giant confirmed to CNBC on Thursday that the McPlant test had concluded as planned. Neither McDonald’s nor Beyond Meat has announced any plans for additional testing or a nationwide launch.
Indeed, Beyond’s stock has fallen 53% this year—dragging its market value down to $2.06 billion. Wall Street has become skeptical about the company’s long-term growth opportunities as grocery sales lag.
Moreover, buzzy partnerships with restaurant giants like Pizza Hut owner Yum Brands and McDonald’s haven’t progressed to many permanent nationwide menu offerings yet.
McDonald’s first tested the meat-free burger in eight restaurants in the United States in November to try to get an idea of how the menu item would impact its kitchens. In mid-February, it rolled the McPlant out to roughly 600 locations to learn more about consumer demand for the menu item.
Analyst research reported lackluster demand for the Beyond burger. BTIG analyst Peter Saleh wrote in a June note that franchisees told him that McPlant sales were disappointing, coming in at or below the low end of projections.
J.P. Morgan analyst Ken Goldman wrote in his note on Thursday that some McDonald’s restaurant employees told him that the burger didn’t sell well enough, potentially putting a nationwide launch in jeopardy.
“Consensus contemplates 21% growth for BYND’s total top line this year, followed by another 25% next year. These rates will not be easy to hit, in our view, without [McDonald’s] in the United States,” Goldman wrote.
McDonald’s and Beyond announced a three-year partnership in early 2021. The burger chain already has started selling McPlant burgers in some international markets, including Sweden, Denmark, Austria, the Netherlands and the United Kingdom.
In May, Beyond Meat CEO Ethan Brown said that the McPlant is selling well in the U.K. and Austria.
Beyond is expected to report its second-quarter earnings after the bell on August 4.
Research contact: @CNBC