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         Should Beyond Meat Worry That Chipotle Rejects Its Faux Burger?

         'Beyond Meat' should look beyond meat



Should Beyond Meat Worry That Chipotle Rejects Its Faux Burger?


Rich Duprey, The Motley Fool

via Yahoo Finance - August 7, 2019


Chipotle Mexican Grill (NYSE: CMG) would seemingly be a natural partner for Beyond Meat's (NASDAQ: BYND) plant-based meat substitute. With abiding principles of serving "food with integrity," the Mexican food restaurant ought to have been first in line among restaurants signing up for the meat alternative that causes no harm to cows.


Yet despite the chain being an early advocate for using only humanely raised cattle for its beef, Chipotle rejected Beyond's faux meat option because it is too processed. CEO Brian Niccol told Bloomberg, "We have spoken to those folks, and unfortunately it wouldn't fit in our 'food with integrity' principles because of the processing, as I understand it, that it takes to make a plant taste like a burger."


While Niccol left the door open to revisiting the opportunity if the issue of over-processing could be sorted out, the rejection is something that should worry Beyond Meat investors as it could end up being the first of many restaurants to turn it down, and could even make those that signed on rethink their decision.


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'Beyond Meat' should look beyond meat


By: Sylvain Charlebois, Opinion, Winnipeg Free Press



Beyond Meat lost almost US$10 million in its second quarter, but it beat expectations on revenues. Regardless, Beyond Meat is now worth US$14 billion and is Wall Streetís best-performing initial public offering so far this year. But it does face challenges.


Beyond Meatís stock price has increased by more than 800 per cent and mixed results released last week didnít shock markets as the stock price quickly rebounded.


So no need to panic if youíre a Beyond Meat shareholder ó at least not yet. The company now expects revenues to exceed US$240 million and to be profitable by year-end.


Priced into Beyond Meatís evaluation are its partnerships with several key players in the food space. Beyond Meat is in more than 35,000 retail outlets around the world and has proven that protein-based manufacturing can be scaled up.


The company last week announced plans to sell more than three million additional shares, which is likely why the stock price dropped more than 10 per cent early in the week. But capacity will be an issue, given how much product is out there.


The company is now 11 years old and has gone through a few expansion periods, but nothing like this.


Dunkiní Donuts recently committed to carrying the companyís products across the United States. By going with Dunkiní, democratizing a plant-based diet is clearly on Beyond Meatís radar.


However, in many stores and restaurants, the product is often more expensive than beef. Most consumers will try the product purely based on curiosity, but this wonít last.


Still considered a premium product, Beyond Meat is now showing signs that it wants to market to the masses. Itís an interesting move on the companyís part, and an important one. Beyond Meat is not only masterful at marketing, but it clearly appreciates the power of distribution and the pull effect. Thatís why the company is worth so much.


In Canada, A&W Restaurants, which acted as Beyond Meatís ambassador last year, set the tone for what was to come.


Unlike other major food trends that weíve seen, this time the food service sector was the catalyst and got grocers on the vegetable protein bandwagon. Most grocers in Canada now carry the product.


And with Tim Hortons making its Beyond Meat move, the brand awareness can only grow. The Tim Hortons strategy is about being inclusive and not leaving anyone behind. Any group with a vegan, a vegetarian or a flexitarian is welcome at Tim Hortons.


The coffee chain, known for coffee, doughnuts and muffins, wants a bigger part of the fast food business. But Tim Hortons also knows that its rival, McDonaldís Restaurants, needs to stay put for a while and not venture into plant-based territory. McDonaldís has been Canada Beefís chief cheerleader for decades and a key partner in the Canadian Roundtable for Sustainable Beef since 2016. The roundtable is intended to counter the overpowering plant-based narrative. So itís awkward times for McDonaldís.


But itís not all rosy for Beyond Meat. The company has become a lightning rod, caught in the middle of a very polarizing debate. The brand is almost isolated from the plant-based movement. Both Arbyís and Chipotle Mexican Grill have issued statements saying they donít intend to carry Beyond Meat products any time soon. Some smaller, regional chains in Canada have done the same.


These companies are essentially catering to their meat-loving customer base. Arbyís went as far as to launch its first "megetable," which it called a "marrot," a carrot made entirely out of animal proteins. Such a move seems ridiculous but is in fact significant, since it points to a much broader issue for Beyond Meat.


Beyond Meatís fixation on replicating the taste and texture of current natural products like beef has become the companyís greatest weakness. For obvious reasons, it wanted its products right next to natural meat products at the meat counter. The market is constantly comparing natural and plant-based versions.


Beyond Meat was caught at its own game recently when it suggested that its product is healthier than beef. That was a strategic no-no, even if some evidence suggests this is the case. Beef is a natural product and remains the most densely packed source of proteins with fewer calories. Itís a fact, and the product is known and enjoyed by many people...