What Is Driving 6x Growth In Beyond Meat’s Restaurant & Foodservice Business?

by Trefis Team
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Beyond Meat (NASDAQ: BYND), one of the fastest growing food companies in the US, sells its plant-based meat offering through Retail as well and Restaurant & Food Service channels. The company’s sales through restaurant and food service outlets increased from $3.84 million in 2016 to $37.16 million in 2018, driven by increasing sales of The Beyond Burger and Beyond Sausage offerings. Sales from restaurant and food service outlets is expected to further grow 6x, from $37 million in 2018 to $225 million in 2020, led by healthy growth in the sale of fresh meat, and new partnerships and an expanding customer base.

Takeaway

  1. Beyond Meat’s restaurant and foodservice outlets (R&F) business, which makes revenue by selling plant-based meat products through their restaurant and food outlet partners, is expected to contribute $133 million to Beyond Meat’s 2019 revenues, making up 48% of the company’s $277 million in revenues for 2019.
  2. The R&F segment contribution is only slightly lower than the retail business, which includes the sale of plant-based meat products through tie-ups with retail partners.
  3. Beyond Meat’s R&F business is set to provide $129 million, that is 49% of $261 million, in total revenue that the company is expected to add between 2016 to 2019.
  4. This R&F revenue growth has been key to Beyond Meat’s price appreciation since its IPO in early 2019, further helped by improving margins, and strong expansion in the company’s valuation multiple. We discuss Beyond Meat’s valuation analysis in full, separately.
  5. In our interactive dashboard Beyond Meat Revenues: How Does Beyond Meat Make Money? we discuss Beyond Meat’s business model, followed by sections that review past performance and 2020 expectations for the company’s revenue drivers, and competitive comparisons with Tyson Foods and Kellogg.

Understanding Beyond Meat’s Business – Restaurant & Food Service Outlets

  • Beyond Meat sells meat produced directly from plants, an innovation that enables consumers to experience the taste, texture, and other sensory attributes of popular animal-based meat products, while enjoying the nutritional benefits of eating plant-based meat products, through 12,000 restaurant and foodservice outlets in the U.S. and Canada, in addition to its international presence.
  • Beyond Meat has established other partnerships with selected restaurant and foodservice chains, including BurgerFi, Bareburger, Carl’s Jr., Del Taco, TGI Fridays, and A&W Canada, and plans to continue to aggressively expand its network of restaurant and foodservice partners.
  • As a result of its recent partnership with Carl’s Jr., The Beyond Burger is currently being sold at more than 1,100 Carl’s Jr. locations nationwide.
  • The company faces intense competition in the $1.4 trillion global meat industry, from conventional animal-protein companies, such as Cargill, Hormel, JBS, Tyson, and WH Group (including its Smithfield division), and also plant-based protein brands, such as Boca Foods, Field Roast Grain Meat Co., Gardein, Impossible Foods, Lightlife, Morningstar Farms, and Tofurky.

Restaurant & Food Service Outlets – Revenue Performance

  • Sales from the division have increased 9.7x in the last two years from $3.84 million in 2016 to $37.16 million in 2018.
  • Over the next two years, division revenue is projected to grow by 6x to $225 million by 2020. This is likely to be higher than the projected growth of 5.2x in total revenues over the next two years.
  • Higher revenues are likely to be driven by 424% projected growth in volume sales, led by a sharp increase in sale of fresh meat, along with >15% rise in average price per unit sold.
  • The company has also tied-up with Dunkin’ Donuts recently, and started serving the Dunkin’ Beyond Sandwich in October 2019 which has been a huge success.
  • Additionally, McDonald’s is also conducting a 12-week test for Beyond Meat’s product. If the test results are positive, it could be a further boost for Beyond Meat’s revenues.
  • Restaurant & Foodservice outlets’ revenue contributed 42% of total revenue in 2018. This share is expected to go up to 50% by 2020, as R&F segment volumes catch-up to that of the retail chains segment.

 

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