McDonald’s McPlant burger is more popular than initially expected, according to Piper Sandler analyst Michael Lavery.
In December, participating locations sold roughly 70 of the plant-based burgers it created with Beyond Meat per outlet every day in the chain’s initial small test of the menu item.
The fast-food giant began testing the McPlant burger in November in eight restaurants to get a sense of how it would affect its operations. On Feb. 14, the chain will expand the test to about 600 restaurants in the San Francisco Bay and Dallas-Fort Worth areas to learn more about consumer demand.
Lavery wrote in a note to clients on Tuesday that test locations were selling about three times more McPlant burgers than he initially forecast. For comparison, an average McDonald’s restaurant typically sells about 110 Big Macs per day.
Even with such a small sample size, Lavery said that early interest and willingness to try the product may be greater than expected, which would be a win for Beyond. He initially estimated a $75 million to $100 million boost in Beyond’s U.S. revenue due to the McPlant.
“While we believe test stores likely received a lift from exclusivity (drawing some sales from nearby stores that did not offer it), and that sustainable, repeat sales will settle in at a much lower rate; initial McPlant sales could prove to be closer to 8% to 10% of burger sales, or $170 million to $215 million (annualized),” he wrote.
For Beyond Meat, a nationwide launch of the McPlant burger would be a massive opportunity to impress consumers with its meat substitutes, in addition to the revenue lift just from sales to McDonald’s. Wall Street analysts have grown bearish on the stock, saying the company is struggling with competition and falling U.S. grocery sales.
Beyond’s stock rose nearly 3% in premarket trading on Wednesday, while shares of McDonald’s were up just 1%. Shares of Beyond have fallen 66% over the last 12 months, dragging its market value down to $3.99 billion. McDonald’s stock, on the other hand, climbed 17% in the same time, bringing its market value to $195 billion.