Beyond Meat Rises as Details of McDonald's Pact Finally Emerge

Beyond Meat Inc. investors who’d waited more than three months for specifics on the faux-meat maker’s supply relationship with McDonald’s Corp. finally got their answers. And while they mainly cheered, driving the stock higher, Beyond Meat still has some competition supplying McDonald’s markets around the world.

McDonald’s -- which had previously only said it “co-created” its new plant-based burger with Beyond Meat, leaving Wall Street unsure if the alternative meat-maker would also produce the chain’s burgers -- clarified late Thursday that Beyond will be the preferred global supplier for the McPlant patty as part of a three-year deal.

Beyond Meat shares rose 2.5% at 9:55 a.m. in New York. The stock had gained 15% this year through Thursday’s close.

Beyond Meat Rises as Details of McDonald's Pact Finally Emerge

Still, the phrase “preferred supplier” didn’t leave everyone so optimistic. When asked to clarify the term, McDonald’s said that restaurants in some of its markets are already working with other suppliers on plant-based menu items, and the chain will let that continue at their discretion.

McDonald’s also confirmed in response to inquiries by Bloomberg News that the Beyond Meat deal only applies to restaurants in the U.S. and its so-called international operated markets segment, representing countries like Australia, Canada and the U.K. If locations in these markets decide to test or introduce the new McPlant burger, they’ll source the patty through Beyond Meat, McDonald’s said.

Beyond Meat Rises as Details of McDonald's Pact Finally Emerge

Restaurants in what it calls its developmental licensee markets, which are operated by third parties under the McDonald’s brand name in places like China and Latin America, will be “encouraged to choose Beyond Meat” but are not actually bound by the terms of the deal, McDonald’s confirmed.

According to Piper Sandler analyst Michael Lavery, while the agreement with McDonald’s formalizes Beyond Meat’s status as the fast-food company’s preferred supplier, “we do not believe the relationship between the two companies has meaningfully changed.”

Related: Beyond Meat Rises After Fast-Food Pacts Offset 4Q Sales Miss

But Beyond Meat Chief Executive Officer Ethan Brown said the agreement has changed their relationship meaningfully.

“There is a very much more robust structure that we’re in now,” he said on the company’s Thursday evening earnings call. Being named a preferred supplier is “very different from being referred to as a participating in a test in Canada or some of the Nordic countries.”

As part of the expanded relationship, Beyond Meat and McDonald’s will also explore developing other plant-based menu items, including alternative chicken. Separately, Beyond and Yum! Brands Inc. announced their own strategic tie-up on Thursday

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