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Beyond Meat announces 3-year partnership with McDonald's
Deals with iconic burger chain, Yum! Brands come with a side of a large net loss in fiscal 2020.
4 Min Read
Beyond Meat will supply McDonald's restaurants with plant-based patties for the McPlant, as well as plant-based chicken, pork and egg products for the next three years, the California company announced Thursday.
In addition, Beyond Meat will provide KFC, Pizza Hut and Taco Bell—all owned by Yum! Brands—with plant-based proteins "for the next several years," according to the announcement.
Beyond Meat CEO Ethan Brown tried to stay calm during the afternoon's earnings call, but when analysts began asking questions, his fervor broke free.
"We're downplaying the 2021 impact of these two deals we announced because these deals are enormous. They are the biggest deals you could possibly put together in food, in our sector," Brown said.
In a released statement, McDonald's Executive Vice President and Chief Supply Chain Officer Francesca DeBiase said, "Our new McPlant platform is all about giving customers more choices when they visit McDonald's. We're excited to work with Beyond Meat to drive innovation in this space, and entering into this strategic agreement is an important step on our journey to bring delicious, high quality, plant-based menu items to our customers."
In November, McDonald's announced it was going to offer a plant-based burger but did not mention a partnership with Beyond Meat. That same day, Beyond Meat hosted its Q3 earnings call, although the fast-food giant used Beyond Meat's product to create and test the P.L.T. in Canada in 2019.
During Beyond Meat's call, Brown said his company was working closely with McDonald's "on a number of matters," and said he would not accept a restaurant using Beyond Meat products without that brand name being on the menu.
The McPlant is being tested around the globe, and McDonald's will work with Beyond Meat to co-develop other plant-based foods.
The Yum! Brands announcement didn't come out of the blue, as Brown reported in June that the restaurant company was selling Beyond Beef products in Asia. In November, Pizza Hut began offering the Beyond Italian Sausage pizza and the Great Beyond Pizza. KFC also tested Beyond Fried Chicken in Nashville, Tennessee, and Charlotte, North Carolina in January 2020.
"Today's announcement builds on our strong relationship with Beyond Meat and, 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, Yum! Brands CFO, said in a released statement.
During the earnings call, Brown said the agreements likely won't have much effect on Beyond Meat's FY2021 results, as products will be rolled out over time.
Beyond Meat still hurting as second surge shut down foodservice
Despite the negative effects of the COVID-19 pandemic—specifically, the restrictions on restaurants and the closings of schools and sports arenas—Beyond Meat saw its net revenue increase 36.6% in fiscal year 2020 compared with fiscal year 2019. However, the company lost money for the year:
Net revenues were $406.8 million, an increase of 36.6% year-over-year.
Gross profit was $122.3 million, or gross margin of 30.1% of net revenues; Adjusted gross profit was $133.7 million, or adjusted gross margin of 32.9% of net revenues, reflecting exclusion of expenses attributable to COVID-19.
Net loss was $52.8 million, or $0.85 per common share.
Adjusted net loss was $37.1 million, or $0.60 per common share, reflecting exclusion of expenses attributable to COVID-19.
Adjusted EBITDA was $11.8 million, or 2.9% of net revenues.
"Our ability to grow in 2020 was largely driven by strong retail performance," Brown said during the earnings call.
Net revenue from U.S. retail grew 104.1% compared with fiscal year 2019, to $264.1 million, while U.S. food service revenue fell 13.7% to $60.8 million. Internationally, retail increased 136.4% to $36.5 million. Food service dropped 45.1% to $45.4 million.
For the 52 weeks ending Dec. 27, 2020, Beyond Meat had a 220 basis point increase in market share, according to SPINS/IRI, he said.
"Despite the challenging macro-economic backdrop and highly variable consumer buying patterns, more U.S. households continue to buy our products; they're buying them more frequently; and, on average, they're spending more per household on our products," Brown said after detailing household penetration, frequency and repeat sales data.
In the fourth quarter, category sales increased 29% while Beyond Meat's sales rose 46%.
The company's fourth-quarter results included an increase in net revenue but an overall net loss:
Net revenues were $101.9 million, an increase of 3.5% year over year.
Gross profit was $25.4 million, or gross margin of 24.9% of net revenues.
Adjusted gross profit was $29.1 million, or Adjusted gross margin of 28.5% of net revenues, reflecting exclusion of expenses attributable to COVID-19.
Net loss was $25.1 million, or $0.40 per common share.
Adjusted net loss was $21.4 million, or $0.34 per common share, reflecting exclusion of expenses attributable to COVID-19.
Adjusted EBITDA was a loss of $9.5 million, or 9.3% of net revenues.
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