Case 5 Teaching Note

Beyond Meat in 2022: What Can It Do to

Rejuvenate Revenue Growth and Stem
Mounting Losses?
OVERVIEW
Going into 2022, Beyond Meat, a producer and marketer of plant-based protein products
intended as a substitute for animal-based meat products, was experiencing something of a crisis.
Its once-rapid growth in unit sales and revenues had evaporated, and losses were unexpectedly
mounting. Beyond Meat’s 2021 revenues in the United States, its largest geographic market,
were below those in 2020. The COVID-19 pandemic had precipitated a significant falloff in
sales to restaurants and food service enterprises beginning in March 2020 and continuing into
2022 (although this was offset to some extent by the company’s entry into the markets of more
countries in 2020–2021). Beyond Meat had lost money every year from 2016 through 2021.
Although the company’s stock price soared after its initial public stock offering in May 2019 to
an all-time high of $238 in July 2019 (largely on inflated investor expectations regarding the
company’s prospects for sustained rapid growth and long-term profitability), the stock price fell
abruptly in the last half of 2019, then quickly evolved into a wild roller-coaster ride with five
peaks and valleys before reaching the fifth peak of $150 in mid-2021, at which point the stock
price trended steadily downward, to trade in the $54–$63 range the last week of January 2022.
Then in late February 2022, after Beyond Meat announced a larger-than-expected loss of $179
million for full-year 2021 and a downbeat forecast for 2022, the stock price dropped to the low
$40s.
While investor sentiment about Beyond Meat’s business prospects in early 2022 was bearish,
stockholders were hoping for highly favorable customer responses to new Beyond Meat products
making an appearance on the menus of three high-profile fast-food chains—KFC (formerly
Kentucky Fried Chicken), Pizza Hut, and McDonald’s. Such a response would not only trigger a
high level of repeat purchases of these menu items but could also stimulate consumers to buy
more Beyond Meat products for in-home consumption when shopping at supermarkets and
grocery stores—thereby putting the company back on track to grow its revenues more rapidly
and move toward sustained profitability.
 Beyond Meat’s New Menu Item at KFC. KFC had tested the response of earlier-
generation Beyond Meat’s plant-based chicken nuggets at multiple locations that met
with good (but not good enough) success to justify a national or international rollout.
However, on January 11, 2022, KFC began selling the latest reformulated Beyond
Chicken nugget menu item at all of its 4,000 locations in the United States. The plant-

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Section 6 Case Teaching Note for Case 05

based fried chicken nuggets were offered in six- and 12-piece orders, as well as part of a
combo meal. According to foodie publication [Link]: i . . . when Beyond Fried
Chicken is dunked into the signature KFC Sauce it is pretty indistinguishable from a
nugget that is made with actual chicken. The flavor is observed to be appropriately meaty
and seasoned well, although the texture is not a perfect match with real chicken. KFC is
making clear that Beyond Fried Chicken is not being made specifically for vegans and
vegetarians . . . For plant-based meat alternatives to have a real, meaningful future in the
world of fast food, chains like KFC have to figure out how to better mimic the texture of
the meats they’re seeking to replace.
 New Beyond Meat Menu Selections at Pizza Hut. On January 11, 2022, following a
successful market test in Toronto and Edmonton, Pizza Hut Canada launched Beyond
Italian Crumbles as a permanent menu item at its 450 Canadian locations. Pizza Hut
Canada believed the Crumbles delivered a meaty texture and savory taste that made them
an attractive substitute for Pizza Hut’s traditional Italian pork sausage ingredient for
customers wanting a plant-based meat ingredients in their pizzas. The Beyond Meat
menu selections at Pizza Hut included:
 The Great Beyond™: A specialty pizza crafted with savory Beyond Italian Sausage
Crumbles, paired perfectly with fresh veggie toppings that include sliced red onions
and tangy banana peppers, served up on any Pizza Hut crust.
 Beyond Italian Sausage™ Alfredo Loaded Flatbread: A crispy flatbread topped
with flavor-packed Beyond Italian Sausage Crumbles, roasted red pepper, creamy
alfredo sauce, and mozzarella cheese.
 Beyond Creamy Alfredo: A savory pasta Alfredo dish layered with Beyond Italian
Sausage Crumbles, onions, mushrooms, and mozzarella cheese that delivers a
creamy, delicious bite.
Beyond Italian Sausage Crumbles could also be added as a topping to any existing pizza
offerings of any size. Canada was the second market to permanently offer the Beyond Meat
Crumble menu items nationally. After a successful trial of Beyond Meat Pizzas in the United
Kingdom in the first half of 2021, Pizza Hut brought them back as a permanent menu option at
all Pizza Hut UK Delivery locations in July 2021.
 McDonald’s New McPlant Burger. Beyond Meat had worked with McDonald’s for
years to codevelop a meaty and tasty plant-based burger that McDonald’s management
believed was worthy of becoming a permanent menu offering and satisfying growing
customer desires for a tasty plant-based burger option. In 2021, McDonald’s concluded
that it, in cooperation with Beyond Meat, had come up with a plant-based burger patty
named McPlant that was made of ingredients like peas, rice, and potatoes, that would be
exclusive to McDonald’s, and that was ready for launch. ii The McPlant Burger included a
McPlant patty served on a sesame seed bun with tomato, lettuce, pickles, onions,
mayonnaise, ketchup, mustard, and a slice of American cheese—customers who preferred

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Section 6 Case Teaching Note for Case 05

burgers with 100 percent plant-based ingredients could ask to hold the mayonnaise and
American cheese, or any other ingredient. In early 2021, after market trials in 250 European
locations where new items were frequently offered for limited times to learn customer
responses, McDonald’s introduced the McPlant burger in locations throughout Sweden,
Denmark, the Netherlands, Austria, Ireland, and Great Britain. In November 2021,
McDonald’s tested the McPlant Burger in eight locations in the United States, mainly to
better understand how offering a burger with a plant-based patty impacted the kitchens in its
restaurants in the United States. Because of the success of the trial, beginning in February
2022, McDonalds put the McPlant burger on its menu in 600 additional locations in the San
Francisco Bay and Dallas-Fort Worth [Link] In July 2022, McDonald’s began a limited
time test run of the McPlant burger at 270 locations in Victoria, Australia.
These three “potential” sales growth stimulants for Beyond Meat were the latest in a series of
launches of Beyond Meat products in high-profile quick-service food enterprises. In late January
2020, Denny's Corp. announced it would give away free Beyond Meat Burgers, dressed with
sliced tomatoes, lettuce, onions, pickles, All-American sauce, and American cheese on a multi-
grain bun, with the purchase of any beverage on January 30 from 11 a.m. to 10 p.m. while
supplies lasted. The promotion, following on the heels of a highly successful market test of the
Beyond Burger in Denny’s restaurants in Los Angeles, served to launch the Beyond Burger
menu item nationwide at all 1,700-plus Denny's locations in the United States and Canada.
Denny’s announcement triggered a rush on the part of investors to purchase Beyond Meat shares,
driving the stock price up 8 percent.
In February 2020, Starbucks added a Beyond Sausage sandwich to its breakfast menu at all of its
store locations in Canada. In April 2020, Starbucks debuted a new menu in its 4,200 stores in
China that included Beyond Meat’s plant-based beef products in three menu selections: Beyond
Beef Pesto Pasta, Beyond Beef Classic Lasagna, and a Beyond Beef Sour and Spicy Wrap. In
September 2020, Starbucks added additional Beyond Meat products (along with several plant-
based products by its chief competitor, Impossible Foods) to its menus at store locations in Hong
Kong, Taiwan, Singapore, Thailand, and New Zealand. The new menu items in Taiwan included
a Beyond Crumbles Bolognese penne, a Beyond Sausage sandwich, and a Beyond Meatball
sandwich. In January 2021, Starbucks began selling two new Beyond Meat sandwiches at its
Middle East store locations in the United Arab Emirates and Kuwait. In October 2021, Panda
Express, the largest family-owned and operated Asian dining enterprise in the United States,
announced that its collaborative partnership with Beyond Meat would introduce “Beyond the
Original Orange Chicken™” to menus in 70 locations in 10 states, signaling that the Panda
Express chain would likely initiate a national rollout if the Beyond Chicken item proved
sufficiently popular with customers—Panda Express had 2,200 locations in 12 countries. In early
2022, Panda Express began testing two Beyond Beef menu items at its Innovation Kitchen
location in Pasadena, California. On February 14, 2022, A&W Canada began a five-week test of
a Jalapeno Lime Beyond Meat® burger at all its 1,000-plus locations across Canada; the burger
featured a 7-grain bun, tomato, lettuce, red onion, Beyond Burger® patty and a spicy, tangy
Jalapeno lime aioli.

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Section 6 Case Teaching Note for Case 05

In July 2022, McDonald’s ended its 622-unit test of the McPlant burger in the United States due
to lackluster customer orders for the plant-based burger; investor expectations of a nationwide
rollout of the McPlant burger in the United States later in 2022 vanished. In the first week of
September 2022, Beyond Meat’s stock price was trading in the $21–$23 per share range, down
from the low $40s in February 2022.

Copyright © 2022 by Arthur A. Thompson. All rights reserved.

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Section 6 Case Teaching Note for Case 05

SUGGESTIONS FOR USING THE CASE

This case has all the ingredients for generating considerable student interest and provoking a
lively, interesting class discussion with divergent opinions among class members. The case
presents students with the challenge of assessing the long-term growth prospects of the makers of
plant-based meat substitutes and, in particular, Beyond Meat’s prospects for long-term growth
and profitability. Students who review the company’s financial statements will also note that
there are number of serious issues that must be addressed to achieve profitability and ensure
financial viability of the company.
The Beyond Meat case is probably best assigned after you have covered Chapters 1–7, but it can
be successfully used after students have read just Chapters 3–5. It is definitely a good case for
drilling students in the tools of analysis covered in Chapters 3 and 4. The material in Chapters 5
and 6 is pertinent to student identification and assessment of Beyond Meat’s strategy and
competitive approaches. And, with Beyond Meat’s ambitions to grow its international presence,
the material in Chapter 7 regarding competing in foreign markets comes into play as well.
The Beyond Meat case provides an opportunity for class members to evaluate industry and
competitive conditions in the animal meat and plant-based meat substitute industry segments,
think strategically about Beyond Meat’s resources and capabilities versus those of its main rivals,
crunch some numbers in the financial exhibits, and make action recommendations regarding
Beyond Meat’s future competitive strategy and courses of action to compete successfully, both
domestically and internationally, against the makers of animal meats and plant-based meat
substitutes.
There is enough material in this case and enough opportunities to drill students in applying the
concepts and analytical tools in Chapters 3 and 4 to fill two class periods should you opt to
devote this much class time to covering the case thoroughly.
The Connect-Based Exercise for the Beyond Meat Case. We developed an exercise for Under
Armour for inclusion in the publisher’s Connect Management web-based assignment and
assessment platform because:
The case ties tightly to many of the topics covered in Chapters 3 through 7.
 One of the purposes of the case exercises is to drill students in applying the concepts and
analytical tools discussed in the chapters to the circumstances posed in the cases.
What to Tell Students in Preparing the Beyond Meat Case for Class. To give students
guidance in what to do and think about in preparing the Beyond Meat case for class discussion,
we strongly recommend two things:

1. Have class members complete the Connect-based exercise for the Beyond Meat case
in the event you have adopted the Connect software for your course.
OR

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Section 6 Case Teaching Note for Case 05

2. Provide class members with assignment questions and insist that they prepare good
notes/answers to these questions before coming to class. Our recommended assignment
questions for the Beyond Meat case are presented in the next section of this TN and tell
students which assignment questions you want them to concentrate on in preparing the
case. Asking them to prepare answers to all of the assignment questions is likely to
require more time than they will spend.
To facilitate your use of assignment questions and making them available to students, we
have posted a file of the Assignment Questions contained in this teaching note in the
instructor resources section of the Connect Library. (You should be aware that there is a set
of assignment questions posted in the Connect Library for each of the cases included in the 8th
edition.) In all instances, these assignment questions correspond to the assignment questions
in the teaching note for the case.
In our experience, it is quite difficult to have an insightful and constructive class discussion of an
assigned case unless students have conscientiously made use of pertinent core concepts and
analytical tools in preparing substantive answers to a set of well-conceived study questions
before they come to class. In our classes, we expect students to bring their notes to the study
questions to use/refer to in responding to the questions that we pose. Moreover, students often
find that a set of study questions is useful in helping them prepare oral team presentations and
written case assignments—in addition to whatever directive question(s) you supply for these
assignments. Hence, we urge that you provide students with assignment questions—either those
we have provided or a set of your own questions—for all those aspects of a case that you believe
are worthy of student analysis or that you plan to cover during your class discussion of the case.
Utilizing the Guide to Case Analysis. If this is your first assigned case, you may find it
beneficial to have class members read the Guide to Case Analysis that is posted in instructor
resources section of the Connect library. The content of this Guide is particularly helpful to
students if your course is their first experience with cases and they are unsure about the
mechanics of how to prepare a case for class discussion, oral presentation, or written analysis.
Suggested Assignment Questions for an Oral Team Presentation or Written Case Analysis.
We definitely recommend use of the Beyond Meat case for written assignments and oral team
presentations. Our suggested assignment questions are as follows:
 Beyond Meat CEO Ethan Brown has employed you as a consultant to assess the
company’s overall situation and recommend a set of actions to improve the company’s
future prospects. Please prepare a report to Mr. Brown that includes (1) an evaluation of
the strength of each of the five competitive forces facing Beyond Meat, (2) an assessment
of Beyond Meat’s strengths, weaknesses, opportunities and threats as of 2022, (3) an
evaluation of Beyond Meat’s financial performance as shown in case Exhibit 3, and (4) a
set of action recommendations that Beyond Meat should pursue to capitalize on its
opportunities and improve its financial performance. Your report should be five to six
pages, plus it should include an assortment of charts, tables, and exhibits to support your
analysis and recommendations.

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Section 6 Case Teaching Note for Case 05

 Prepare a brief report to Beyond Meat CEO Ethan Brown outlining the three to four top
priority issues that Beyond Meat management needs to address and the actions you think
Ethan Brown should initiate to address these issues. Your report should contain detailed
and convincing reasons in support of each one of your recommendations. It is imperative
that the support offered for each of your recommendation be based on (a) conclusions
drawn from application of the concepts and analytical tools discussed in Chapters 3 and 4
and (b) the content of Chapters 5–7 regarding strategic moves that may be suitable for
Beyond Meat to achieve profitability and compete successfully against its rivals in the
years just ahead.

ASSIGNMENT QUESTIONS
3. Are plant-based meat substitute products just a passing fad? How likely is it that an
attractively large percentage of the world’s consumers will switch away from eating animal
meats to mostly or wholly eating plant-based meat substitutes instead of animal meat?
4. What is your assessment of the strength of the competitive forces Beyond Meat faces? Do a
five-forces analysis to support your answer.
5. What are the key success factors for Beyond Meat and the other makers of plant-based meat
substitutes?
6. Does the outlook for the plant-based meat substitute industry segment present Beyond Meat
with sufficiently attractive opportunities for competitive success and long-term profitability?
Why or why not?
7. What does a SWOT analysis reveal about the overall attractiveness of Beyond Meat’s
situation in 2022?
8. What are the key elements of Beyond Meat’s strategy?
9. Which one of the five generic competitive strategies discussed in Chapter 5 most closely
approximates the competitive approach that Beyond Meat is employing?
10. What is your assessment of Beyond Meat’s financial performance, as shown in Exhibits 1–3?
What finance-related strengths and weaknesses do you see?
11. What are the key issues confronting Beyond Meat’s top management team in 2022?
12. What recommendations would you make to Ethan Brown regarding the company’s strategy
and actions that should be taken to achieve profitability and strengthen the company’s efforts
to compete successfully against its rivals?

TEACHING OUTLINE AND ANALYSIS

1. Are plant-based meat substitute products just a passing fad? How likely is it that an
attractively large percentage of the world’s consumers will switch away from eating
animal meats to mostly or wholly eating plant-based meat substitutes?
The value of asking this question first is to gauge the size of the divide between class

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Section 6 Case Teaching Note for Case 05

members as to how well the general population will likely take to eating plant-based
substitutes on a regular basis and their stance on purchasing a plant-based meat product to
see what it tastes like?
Alternatively, you could open the discussion by asking:
 How many of you have eaten one or more brands of plant-based meat substitutes? Which
brand or brands? How many of you have eaten a dish that containing one or more brands
of plant-based meat substitutes?
 What did you think—were you favorably or unfavorably impressed?
 Would you try a different brand and, if so, which one? How about a different product of
the same brand?
You could then follow up with one or more of the following questions:
 Are plant-based meat substitute products just a passing fad?
 How likely is it that an attractively large percentage of the world’s consumers will switch
away from eating animal meats to mostly or wholly eating plant-based meat substitutes
instead of animal meat?
 Do you believe an attractively large number of consumers are likely to purchase plant-
based meat products because of the nutritional characteristics of some brands?
 Based on the nutritional data in case Exhibits 3 and 4, what is your assessment of how the
plant-based brands compare against the animal meat brands? How significant are the
differences? What do you see as the nutritional benefits of consuming plant-based meat
products as opposed to animal meat products?
 Do you believe an attractively large number of consumers are likely to purchase plant-
based meat products because of the more positive environmental impacts they have as
compared to the allegedly negative impacts of animal meats?
 Are the positive environmental impacts of consuming plant-based meat substitutes as
opposed to animal meats likely to cause a meaningful percentage of consumers to
purchase plant-based meat products as opposed to animal meat products?
Consider winding up this phase of the class discussion by polling the class on the following
question:
 How would you rate the importance of the following three factors—taste, nutritional
benefits, environmental benefits—on a scale of 1 to 3 in influencing consumers to
purchase plant-based meat products, where 1 is most important and 3 is least important?
2. What is your assessment of the strength of the competitive forces Beyond Meat faces?
Do a five-forces analysis to support your answer.

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Section 6 Case Teaching Note for Case 05

 Rivalry among the producers and distributors of plant-based meat products—a

strong competitive force currently that almost certainly will intensify in the years ahead

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Section 6 Case Teaching Note for Case 05

In assessing this competitive force, students should be directed to refer to and utilize the
presentations in Table 3.2, Figure 3.4, and the associated discussion on rivalry in Chapter 3.
Students should conclude that rivalry among Beyond Meat, Impossible Foods, Pure Foods,
Kroger’s Emerge brand, and other makers of plant-based is already strong and will grow
stronger. All competitors are scrambling to attract the patronage of individuals/households
that are attracted to eating (or at least trying out) plant-based meat substitutes. Rivalry is
centered on such factors as
 Taste
 Individual health and nutritional benefits, plus planet-based environmental and
agricultural sustainability benefits
 Price (as compared to both rival brands and traditional animal meats)
 Breadth of distribution and geographic coverage—number of food retailers stocking
each brand and the capability of various food distributors to convince restaurants and
other food service enterprises to put plant-based meat dishes on their menu offerings.
 Advertising and promotion expenditures
 Marketing capabilities—especially as concerns getting restaurant chains (McDonalds,
Burger King, A&W, and others) to run trial promotions for menu selections featuring
plant-based burgers and chicken products
 Power of brand name and reputation
Most streaming competitors pursue some version of a differentiation strategy to try to set
themselves apart on the basis of one or more competitive factors—typically taste, price,
breadth of product selection, and brand recognition and reputation.
Several factors were working to intensify rivalry among industry participants:
 Most of the plant-based producers (but especially Beyond Meat and Impossible
Foods) are periodically launching new/improved product versions with better taste,
flavors, texture, and additional product selections. To accomplish this, they are
allocating substantial funding to R&D, which put more competitive pressure on rivals
to follow suit or else risk falling behind.
 Most producers and food distributors are striving hard to increase their product
availability in retail groceries and in restaurants and other types of food service
outlets. Beyond Meat and Impossible Foods are aggressively pushing to expand their
distribution reach both domestically and internationally. A large number of fresh,
ongoing strategic initiatives on the part of various rivals heightens rivalry.
Low switching costs on the part of buyers—it is easy for people to switch their purchases
from one plant-based brand to another. Low or negligible switching costs among the

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Section 6 Case Teaching Note for Case 05

consumers of plant-based meat brands heightens rivalry.

 Threat of new entry in the production of plant-based meat substitutes—a moderately
strong to very strong competitive force
In assessing this competitive force, students should be directed to refer to and utilize the
presentation in Figure 3.5 and the related text discussion.
Going forward, it is likely that a number of animal protein suppliers like Tyson Foods, JBS,
WH Group subsidiaries, and Hormel will opt to introduce their own brand of plant-based
meat substitutes, especially if combined sales of the current plant-based meat brands continue
to grow rapidly and win more widespread acceptance among consumers.
Barriers to entry, while not trivial can certainly be hurdled by most of the major animal
protein suppliers. These suppliers have the resources and the distribution muscle to gain
access to the shelves of retail grocers and to attract the patronage of many restaurants (who
are longstanding buyers of animal meats), both in the United States and internationally.
Class members cannot fail to understand that the major suppliers of animal meats have the
resources, capabilities, reputation, and name recognition it takes to compete successfully
alongside Beyond Meat, Impossible Foods, and the other plant-based meat brands.
 Competition from substitutes (namely animal meats)—a very strong competitive
force.
In assessing this competitive force, students should be directed to refer to and utilize the
presentation in Figure 3.6 and the related text discussion.
Clearly, there are many readily available animal meat substitutes that sell at prices
acceptable to the vast majority of consumers. Moreover, and most importantly, these
animal meat products have a widespread following among consumers across the world—
consumer loyalty to animal meats is likely to remain strong for years to come. A very large
fraction of the consumers will not be easily persuaded to give up eating animal meat products
altogether, although some number may well begin eating plant-based meat substitutes several
meals weekly, and some fraction (likely small for some time to come) will slowly/maybe
rapidly switch over to plant-based meat substitutes for a rising fraction of their meals.
All things considered, class members should conclude that the animal protein substitutes for
plant-based meat products are a strong, if not fierce, competitive force, given that
 Acceptable substitutes for plant-based meat products are readily available and
typically (for the time being at least) lower priced.
 Buyer costs to switch to plant-based meats are comparatively/relatively “high.”
 Individuals and households are familiar with and relatively comfortable with eating
animal meats—many consumers will exhibit a strong preference for animal meats and
has a strong attachment to including them is some fairly high fraction of their meals.

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Section 6 Case Teaching Note for Case 05

It will take some time for plant-based meats to win a 30 percent or higher market
share away from animal meats.
But while competition from substitutes is definitely strong, it is not so strong as to undermine
the attractiveness of being a company that produces and distributes plant-based meat
substitutes. Very likely, plant-based meat substitutes will capture a rising market share over
time—how fast and how big this share will get is yet to be determined.
 The bargaining power and leverage of suppliers—a weak to moderate competitive
force, depending on what plant-based raw materials are being supplied
In assessing this competitive force, students should be directed to refer to and utilize
presentation in Figure 3.7 and the related text discussion.
Class members should recognize that the pricing power of the suppliers of raw materials used
to make plant-based meat substitutes depends on how fast supplies of these materials can be
expanded as the market for plant-based meat products grows. The forces of supply and
demand will rule here. Mushrooming demand for plant-based meat substitutes could result in
temporary shortages of certain raw materials. But these shortages are likely to be short-lived
and may can be mitigated by shifting to other types of plant proteins. So far there is little
evidence in the case that raw materials shortages have had a big impact on the prices of raw
materials used by the producers of plant-based meats. Moreover, there is little evidence that
the plant-based meat producers have encountered much problem with securing co-
manufacturers to make their products for them (until they can build their own manufacturing
capabilities).
For the most part, the supplies of packaging and flavorings are commodities that are readily
available from multiple suppliers at the going market prices.
 The bargaining power and leverage of retail grocers and food service distributors
—a weak to moderate competitive force
In assessing this competitive force, students should be directed to refer to and utilize the
presentation in Figure 3.8 and the related text discussion.
Large retail grocery chains undoubtedly have some power to bargain for a lower price or
other favorable terms in return for granting shelf space to the producers of plant-based meat
products. On the other hand, this power is mitigated to some extent by the need of food
retailers to keep shoppers for these products happy by having such products available in their
stores. The more that consumer demand grows for plant-based meat substitutes, the more
necessary it is for supermarkets and grocery stores to stock them for their customers. The
case does not make mention of supermarkets who are unwilling to stock at least some brands
of plant-based meat products and gauge consumer demand for them—those that sell well will
remain on their shelves and the slow-sellers will gradually disappear from their
shelves/display cases. The popularity and frequency with which consumers purchase various
plant-based brands and product versions will determine the space they command on grocery

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Section 6 Case Teaching Note for Case 05

shelves and in meat display cases.

 The extent to which food service distributors will stock plant-based meat products
will ultimately depend on the number of restaurants that elect to put plant-based
dishes on their menus and the popularity of such dishes. The number of food service
enterprises that decide to serve plant-based meat dishes will ultimately govern the
decisions of food distributors to include plant-based meat products in their product
offerings.
Conclusions concerning the overall strength of competitive forces: Competitive pressures
in the market for plant-based meat substitutes have recently increased with the appearance of
more brands and more product varieties; these pressures could grow stronger in upcoming
years as new brands/producers enter and as existing rivals compete more aggressively—there
seems little likelihood of competition becoming weaker unless consumer interest in
buying/eating plant-based meat proteins begins to evaporate. Currently, we see rivalry as the
strongest of the five competitive forces, followed closely by the competitive pressures
between plant-based and animal-based meats and, somewhat further back, competition from
the threat of new entrants into the production of plant-based meat substitutes.
But while collective competitive pressures are strong and might intensify further, they do not
seem potent enough to prevent many of the producers of plant-based meat products—
especially Beyond Meat and Impossible Foods—from being profitable and competitively
successful in the years just ahead. In this sense, the industry environment is attractive and
merits aggressive investment for Beyond Meat and others.
Nonetheless, class members should recognize that the future is full of risk and uncertainty for
all the producers and distributors of plant-based meat substitutes. Future rates of growth in
consumer demand for plant-based meat products and the durability of this demand are most
assuredly uncertain. There is uncertainty regarding how many animal meat producers will
introduce their own plant-based products and the resources they will devote to marketing and
promoting them. There is uncertainty about whether plant-based meat producers can develop
a tasty and competitively successful chicken product and a steak product. There is
uncertainty about how efficiently producers can manufacture plant-based meat products and
price them more competitively against animal meats—currently plant-based products are
priced substantially above the comparable animal meat products, which presents a problem
for consumers with tight food budgets.
3. What are the key success factors for Beyond Meat and the other makers of plant-based
meat substitutes?
Students should identify most all of the following as key success factors in the plant-based
meat industry:
 The capability to create and produce products with such an appealing taste, texture, and
flavor that an attractively large number of individuals will switch some of their animal
meat consumption over to plant-based meat products.

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Section 6 Case Teaching Note for Case 05

 Good R&D and product development capabilities (in order to create and produce
products with such an appealing taste, texture, and flavor that an attractively large
number of individuals will switch some of their animal meat consumption over to plant-
based meat products). Strong R&D and product development capabilities are further
needed to generate a stream of ongoing product improvements (in flavor, taste, and
texture) and to introduce new plant-based meats products (like chicken, steak, roasts,
etc.).
 Adequate marketing capabilities
 National and international distribution capabilities
 The capability to produce plant-based meat products efficiently and cost-competitively
(so as to be able to sell profitably at prices competitive with animal meat products)
4. Does the outlook for the plant-based meat substitute industry segment present Beyond
Meat with sufficiently attractive opportunities for competitive success and long-term
profitability? Why or why not?
It should be apparent from the case that Beyond Meat definitely has an attractive opportunity
to be competitively successful and to grow its revenues and profits over the next several
years. The company has come a long way in a short period of time. It seems to have a bright
future.
But Beyond Meat still has quite a long way to go to establish a secure and long-lasting
industry position. Will consumer interest in plant-based meats prove durable or will it be a
fad that dies a fast or slow death? The failure of McDonald’s 622-unit test of the McPlant
burger in the United States in July 2022 due to lackluster customer orders for the plant-based
burger is a disturbing development regarding widespread consumer interest in plant-based
meat substitutes.
Students should question how fast demand for plant-based meat products will continue to
grow.
5. What does a SWOT analysis reveal about the overall attractiveness of Beyond Meat’s
situation in 2022?
Beyond Meat’s Resource Strengths and Competitive Assets
 Rapidly growing points of points of distributions in both retail grocery channels and
food service channels (restaurants and other types of food service enterprises)
 Proven R&D and product development capabilities in plant-based meat products (as
compared to most rivals other than Impossible Foods)
 A first-mover advantage over more recent entrants
 Rapidly growing geographic coverage, both domestically and internationally

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Section 6 Case Teaching Note for Case 05

 Growing manufacturing capability, domestically and internationally

 A more widely recognized brand name in plant-based meat products than most other
plant-based rivals
 Beyond Meat’s products have appeal to consumers who are concerned about (1) the
health impact of red meat consumption and (2) the adverse environmental and
agricultural sustainability impacts of raising animal meat. From the standpoint of
numerous consumers, plant-based meat products have the aura of being nutritionally
and environmentally correct.
Beyond Meat’s Resource Weaknesses and Competitive Liabilities
 Limited financial resources, especially compared to leading producers of animal
meats, with which to fund R&D, new product development, investment in production
capacity in multiple countries/regions of the world, and marketing and promotional
efforts
 Relatively limited coverage of retail channels and food service channels as compared
to leading producers of animal meats
 Limited brand name recognition among consumers (Beyond Meat is still a relatively
new brand that many consumers know little or nothing about)
 Beyond Meat products have a relatively high-saturated fat content (as do the products
of other plant-based meat producers)—see case Exhibit 4.
 The failure of McDonald’s 622-unit test of the McPlant burger in the United States in
July 2022 may reflect a weakness in the appeal of the company’s products.
Beyond Meat’s Market Opportunities
 Increase distribution coverage, both domestically and internationally
 Secure more partnerships (product trials) with fast-food enterprises to help boost
consumer awareness and consumer trials of Beyond Meat products—thereby creating
a bigger path to retail sales growth in retail grocery channels
 Introduce a wider range of plant-based meat products (such as fried and grilled
chicken, pork chops, and beef steaks and roasts)
 Expand manufacturing capability to all regions of world, to help capture scale
economies, lower production/distribution costs, and ultimately lower selling prices to
levels comparable to (or ideally below) the prices of comparable animal meats
Beyond Meat’s External Threats
 Consumer interest in eating plant-based meat substitutes proves to be limited to a
narrower-than-expected segment of the population, thus resulting in slowing demand

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Section 6 Case Teaching Note for Case 05

growth and limited growth opportunities for Beyond Meat and other producers of
plant-based substitutes for animal meat
 Several large animal meat producers launch appealing-tasting plant-based meat
brands/products and support their introduction with well-financed and competitively
successful marketing and advertising campaigns, thus capturing much of the growth
in consumption of plant-based meat products for themselves
Conclusions: While Beyond Meat has definitely
6. What are the key elements of Beyond Meat’s strategy?
In our view, Beyond Meat’s strategy is underpinned by the following initiatives:
 Grow the distribution of Beyond Meat products as fast as the company is able, both
domestically and internationally. International expansion should initially be
concentrated in Europe and Asia
 Rapidly expand the company’s lineup of products (with a near-term focus on
chicken). This will require continuing to devote a high percentage of the company’s
resources to R&D and new product development.
 Convince fast-food enterprises to enter into partnerships to experiment with putting
Beyond Meat products on their menus as a means of stimulating consumer interest in
trying out plant-based burgers, sausages, and other products (chicken, steaks, etc.)
and thereby helping grow retail grocery sales of Beyond Meat products—success here
will entice consumers migrate a portion of their meat purchases away from animal
meat to plant-based meats.
 Continue to improve the taste and texture of the company’s existing products—
introduce improved and better-testing product versions as fast they can be developed.
7. Which one of the five generic competitive strategies discussed in Chapter 5 most closely
approximates the competitive approach that Beyond Meat is employing?
We think the best answer is a focused differentiation strategy if they prefer to define the
relevant industry segment narrowly as plant-based meat products. However, they can make
an argument for a broad differentiation strategy, if they opt to lump the plant-based and
animal-based segments together (because they are close substitutes).
In either case, it is clear that Beyond Meat is trying to differentiate its products from those of
rivals. But it will be difficult to achieve strong differentiation, because of the close similarity
in the ingredients, nutritional characteristics, and many of the products offered by rival plant-
based brands. The primary differentiating factor is taste/texture/cooked appearance—and
there are apparently meaningful taste/appearance/texture differences. Even so, the jury is
out on how much the taste/texture/appearance differences matter to consumers because the
taste preferences of consumers can differ substantially. Preliminary indications are that
Impossible Meat products and Beyond Meat products have the best taste/texture/appearance

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Section 6 Case Teaching Note for Case 05

characteristics, with some “experts” saying the edge goes to Impossible Meats.
8. What is your assessment of Beyond Meat’s financial performance, as shown in Exhibit
2? What finance-related strengths and weaknesses do you see?
You should push class members to use the financial ratios in the Appendix following Chapter
10 in performing calculations to determine what aspects of Beyond Meat’s financial
performance qualify are issues that need top management attention.
Students should cite many of the following:
 Beyond Meat’s rapid growth in revenues from approximately $88 million in 2018 to
$464.7 million in 2021. (As shown in case Exhibit 2 and in case Exhibit 3).
 However, students should note that the company’s revenue growth slowed
significantly beginning in Quarter 3 2020. In fact, revenues decreased from $101.9
million in Quarter 4 2020 to $100.7 million in Quarter 4 2021—see case Exhibit 3.
 Students who examine case Exhibit 1 will see that overall U.S. net revenues declined
from $324.9 million in 2020 to $319.8 million in 2021. The company’s growth in
total net revenues between 2020 and 2021 resulted from strong growth in
international retail and foodservice distribution channels.
 Students should also note that the company’s gross profit declined from $122.275
million in 2020 to $117.281 million in 2021. Its loss from operations skyrocketed
from $(49.345) million in 2020 to $(174.933) million in 2021. Similarly, students
should note its dramatic change of its net loss from $(52.572) million in 2020 to
$(182.105) million in 2021—see case Exhibit 3.
 Beyond Meat significantly boosted spending for research and development each year
between 2017 and 2021.
 Selling, general and administrative costs have grown from 29.1 percent of revenues in
2019 to 45.1 percent of revenues in 2021.
 Beyond Meat’s cash and cash equivalents at the end of 2021 were far higher than at
year-end 2020 due to the addition of $1.152 billion in debt in 2021. The strong cash
balance of $733 million helps provide liquidity, but the additional long-term liabilities
have increased its debt-to-assets ratio from 2.6 percent in 2020 to 83.6 percent in
2021. The company’s debt-to-equity ratio changed from 3.3 percent in 2020 to 870.0
percent in 2020. Students may suggest that the change in the company’s financial
structure from nearly no long-debt financing to long-term debt 8.7 times greater than
equity is likely to become problematic for the company.
 The company’s current ratio of 3.73 in 2020 was quite respectable, but the infusion of
debt financing improved its current ratio to 7.79 in 2021.
 Students should note that despite Beyond Meat’s strong liquidity in 2021, its cash and

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Section 6 Case Teaching Note for Case 05

cash equivalents will likely decrease rapidly given the company’s cash flows used in
operations of $307.370 million in 2021.
 The company had 109 days of inventory at the end of 2020, compared to 190 days at
the end of 2021. Both numbers may strike students as “too high.”
Students may conclude that Beyond Meat is nearing a financial crisis as U.S. revenue growth
has stalled, costs are increasing, an important product test rollout has failed, its debt has
increased significantly, and its cash burn rate is accelerating.
9. What are the key issues confronting Beyond Meat’s top management team in 2022?
Students ought to cite most of the following:
 What key customer satisfaction findings caused McDonald’s to abandon the test of
the McPlant burger?
 How to reduce the company’s cost structure and reduce its cash burn rate.
 How to accelerate the expansion of distribution in the retail grocery and food service
channels in Europe and in Asia
 How fast to invest in manufacturing capacity additions in Europe and Asia, and where
to locate them?
 What further actions to take to improve sales in the United States?
10. What recommendations would you make to Ethan Brown regarding the company’s
strategy and actions that should be taken to achieve profitability and strengthen the
company’s efforts to compete successfully against its rivals?
Students should note that while Beyond Meat has put together a potent strategy, its declining
sales in the United States, its increasing costs, the failure of the McPlant burger, and its
negative cash flows from operations require a major overhaul in strategy. But there is room
for further actions; these include:
 Continuing an all-out effort to grow sales in International Retail and Foodservice
distribution channels. The company has achieved strong growth outside the United
States between 2017 and 2021, and Europe and Asia may prove to be the company’s
most important markets.
 Moving forward with the establishment of manufacturing capacity in Europe and
Asia (necessary to keep shipping costs of Beyond Meat products to international
destinations to a tolerable minimum).
 Press forward in recruiting fast-food enterprises in Europe and Asia to test Beyond
Meat products in some of their menu selections. Where the tests are especially
successful, then partner with the fast-food establishments to keep these dishes on their
menus, and maybe expand the number of plant-based meat substitutes to other of their

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Section 6 Case Teaching Note for Case 05

dishes.
 Continue to introduce new products (such as chicken, meatballs, and breakfast
sausage) as fast as is feasible—capture first-mover advantages over rivals whenever
possible!!!
 Strive for good profitability in 2022 and beyond, but be wary of increasing prices to
do so. The company must focus on eliminating non-value-adding costs from its cost
structure to reduce its loss from operations. The company should also investigate why
cost of goods sold increased at a faster rate than revenues between 2020 and 2021.
Non-value-adding costs in manufacturing should also be eliminated to help achieve
profitability.
 Students should suggest that the company maintain its investments in R&D to
improve the appeal of its products and to introduce new meat substitutes.
 Growth in the company’s selling, general and administrative costs have far outpaced
growth in revenues and have increased from 29.1 percent of revenues in 2019 to 45.1
percent of revenues in 2021. The company came closest to operating at breakeven in
2019 when its net loss narrowed to approximately $12.5 million. Students should
suggest that the company’s chief managers return its selling, general, and
administrative expense rate to 29 to 30 percent.
 Continue to aggressively promote consumer awareness of the health, nutritional, and
environmental benefits of plant-based meat substitutes—the greater the awareness of
these benefits among consumers across the world, the better!!!

EPILOGUE
For the latest information on developments at Beyond Meat, please visit the Investor Relations
section at [Link] and check out the company’s recent press releases and
financial results.

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i
Amy McCarthy, “KFC’s Beyond Meat Nuggets Taste like Chicken, Eat Like Rubber’” posted at [Link], January
10, 2022 (accessed February 4, 2022).
ii
Jelisa Castrodale, “McDonald’s McPlant Burger Makes Its Debut Overseas.” posted at [Link],
September 9, 2021 (accessed January 26, 2022); see also Beyond Meat press release, February 25, 2021.
iii
Amelia Lucas, “McDonald’s expands test of McPlant burger created with Beyond Meat,” posted at [Link]
January 20, 2022 (accessed February 4. 2022).