Beyond Meat’s faux chicken has investors drooling

Dennys

05/01/2022 17:04

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
    NEW YORK, Jan 5 (Reuters Breakingviews) - Beyond Meat
 BYND.O  has given investors a reason to cheer early in the
year. The $4 billion plant-based meat company on Wednesday
announced Yum Brands'  YUM.N  KFC will offer Beyond Fried
Chicken in the United States https://www.prnewswire.com/news-releases/kfc-and-beyond-meat-debut-much-anticipated-beyond-fried-chicken-nationwide-beginning-january-10-301454308.html.
 The partnership, which follows two years of testing and
pandemic-related delays, sent Beyond Meat shares up 5% in early
morning trading.
    The $200 million added to the company’s market
capitalization looks optimistic. A bucket of KFC’s plant-based
chicken will start at $7. Assume Beyond Meat earns a dollar of
that in revenue and apply the company’s gross profit margin of
roughly 30%. KFC would have to sell more than 650 million
orders, or about two for each American, for Beyond Meat to earn
a gross profit equivalent to the increase in its market value.
    However, the deal has other tasty benefits. Adding KFC to
existing outlets such as Starbucks  SBUX.O  and Denny’s  DENN.O 
increases Beyond Meat’s brand recognition in grocery stores,
helping it compete with Impossible Foods https://www.breakingviews.com/considered-view/impossible-foods-may-outdo-beyond-meats-recipe
 urn:newsml:reuters.com:*:nL4N2M70IX and larger players https://www.breakingviews.com/considered-view/big-meat-will-channel-vw-tesla-in-alt-protein-war
 like Kellogg’s  K.N  MorningStar Farms  urn:newsml:reuters.com:*:nL4N2ST16L. 
Investors will be hungry for more wins. (By Amanda Gomez)
    
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 (Editing by Peter Thal Larsen and Sharon Lam)
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