BYND Beyond Meat Inc

By Jacob Bunge 

Beyond Meat Inc. said it struck deals to supply plant-based meat imitations to McDonald's, KFC and Pizza Hut, a victory in the company's effort to take meat alternatives into the American dining mainstream.

Under separate agreements announced Thursday, California-based Beyond said it would be the preferred supplier for a new plant-based burger from McDonald's Corp., while helping develop new plant-based menu items for Yum Brands Inc. chains KFC, Pizza Hut and Taco Bell.

The deals boost Beyond's prospects as more restaurants resume in-person dining, after Covid-19 forced shutdowns and restrictions on eating out over the past year. The pandemic's blow to the food-service industry hurt Beyond's business, which had been heavily propelled by restaurants in recent years, and prompted the company to focus more on supermarket sales.

Beyond reported Thursday a $25.1 million loss for 2020's fourth quarter, as restaurant orders remained sluggish.

"They are the biggest deals you could possibly put together in food," said Ethan Brown, Beyond Meat's chief executive and founder, of the new agreements with McDonald's and Yum.

Beyond, founded in 2009, processes yellow pea protein, canola oil, potato starch and other ingredients to produce patties and sausages meant to mimic the taste, appearance and feel of traditional meat. Along with competitor Impossible Foods Inc., the companies have pitched their high-tech faux meats as an animal- and environment-friendly option for consumers that have been more open to "flexitarian" diets.

Fast-food chains like Burger King, White Castle and Carl's Jr. have credited meat-free burger patties for bringing in new diners, boosting overall checks and building buzz. Before the pandemic, the rapid rollout of plant-based burgers at times had generated shortages, prompting producers to invest in new manufacturing plants.

For plant-based food makers like Beyond and Impossible, teaming up with burger chains has represented a way to take meat-free products beyond a health-food niche, to be sold in familiar forms at thousands of restaurant locations across the country.

Beyond's three-year global strategic agreement with McDonald's includes working with the burger giant on potential chicken, pork and egg alternatives. McDonald's announced its McPlant products in November, saying that the chain envisioned a line of plant-based menu offerings, following an earlier test of Beyond-made patties.

Yum's partnership with Beyond will focus on creating new menu items that expand on the companies' earlier introductions, which included Beyond-made fried chicken tested by KFC in 2019, and Beyond-made toppings launched in 2020 at Pizza Hut. Mr. Brown said that Beyond wasn't likely to generate many sales from the new ventures until the end of 2021.

McDonald's Chief Supply Chain Officer Francesca DeBiase said partnering with Beyond was an important step in the company's long-term strategy to develop plant-based menu items. Chris Turner, Yum's chief financial officer, said his company's tests with Beyond-developed entrees had good potential to draw younger consumers to Yum's chains.

Beyond's sales for 2020's fourth quarter increased 3.5% to $102 million, despite its U.S. food service sales dropping 43% from the same quarter a year ago. The company's quarterly loss came in bigger than analysts projected and grew from the third quarter of 2019, when Beyond reported a $19 million loss.

Mr. Brown said that the late-2020 surge in Covid-19 infections added more pressure to Beyond's restaurant sales, and that prospects now look better as coronavirus cases ease.

Write to Jacob Bunge at jacob.bunge@wsj.com

(END) Dow Jones Newswires

February 25, 2021 18:52 ET (23:52 GMT)

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