iconic restaurant partnerships may not be as strong as expected, some analysts say.
Beyond meat (symbol:
) has forged several headline-grabbing partnerships in recent years with the aim of expanding its restaurant presence, particularly with fast food giants
) and parent company KFC
These partnerships have gained ground in recent months. McDonald’s announced it was expanding a pilot of the McPlant, its plant-based burger, to 600 stores in the United States in January. That same month, KFC said its plant-based fried chicken product, Beyond Fried Chicken, would be available in multiple locations across the United States.
Initial response to the launches has been generally positive. In January, Piper Sandler analyst Michael Lavery said he expected strong demand for the McPlant, given the product’s enthusiastic reception in a small-scale trial at eight restaurants around the world. Texas, Iowa, Louisiana and California.
But weeks after the product’s launch, that tune could change, analysts warned. A team of BTIG analysts, led by Peter Saleh, conducted channel audits at various franchises participating in the McPlant rollout and found that “franchisee sentiment on sales performance was disappointing”.
According to BTIG’s analysis, restaurants in San Francisco and the Dallas/Forth Worth area were selling about 20 McPlant sandwiches a day, while rural areas of East Texas were selling about three to five sandwiches a day. Those numbers were lower than the roughly 70 daily sandwich shops sold in the small-scale trial, and lower than the 40 to 60 sandwiches franchisees had expected, Saleh said.
“Their assessment was that they did not see enough evidence to support a national rollout in the near future and that declining sales volumes were slowing service times as the product was made to order,” he said. writing.
Even if the McPlant doesn’t roll out nationwide this year, Saleh doesn’t think it will affect Beyond Meat’s stock that much.
“I don’t think McDonald’s was expected to roll out McPlant this year,” he said, adding that the rollout was not factored into the current price. Additionally, restaurant sales in the United States account for less than 20% of Beyond Meat’s revenue, nearly 70% of which came from international and domestic retail sales last year.
Saleh thinks McDonald’s could continue to test and offer McPlant in higher-income urban markets that may be more receptive to plant-based meat offerings. The two companies could continue to refine the product and the marketing messages behind it, he added. Some of the biggest complaints from franchisees include that the price was too high or that the McPlant patty looked “perfectly round” and crafted, Saleh said.
The analyst conducted similar tests for KFC Beyond Chicken a few weeks after its launch and found mixed results, with the product accounting for around 3.2% of sales in its second week. Some markets, like Atlanta, were performing twice the national average, he added.
Representatives from Beyond Meat, McDonald’s and Yum! The brands did not immediately respond to requests for comment.
Beyond Meat shares fell about 2% on Thursday. The stock rose on Wednesday after the company announced it was launching Beyond Meat Jerky, the first product from its joint venture with PepsiCo. The stock has lost 25% this year.
Write to Sabrina Escobar at [email protected]