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Beyond Meat (BYND) has seen its stock price sizzle on the grill since yesterday when Reuters reported that the company's main rival, Impossible Foods, had stopped negotiations with McDonald's (MCD). Today, Reuters is reporting that MCD is expanding its Beyond Meat trial to 52 Canadian outlets. These plant-based meat companies have been engaged in something of a battle royale. Let's take a quick look at the current market dynamics and what this McDonald's news means:

• The two main areas where plant-based meat suppliers have been competing are the grocery store and restaurant verticals. On the grocery side, Beyond Meat has a strong position, but there have been recent concerns that Impossible is pushing more into the retail space, as have done a number of mainstream food companies like Tyson Foods (TSN), Perdue, and Hormel (HRL), each of which have announced meat alternatives.
• On the restaurant side, BYND and Impossible have been duking it out pretty evenly. You can find Beyond Meat options at Dunkin' for its breakfast sandwiches as well as at A&W (Canada's second largest burger chain), TGI Fridays, Pollo Tropical, and Del Taco. In addition, Carl's Jr. and Hardee's recently expanded their partnerships with Beyond Meat. Impossible has held its own with deals with Burger King, White Castle, Qdoba, Red Robin, Little Caesars, and Fatburger.
• While each company has won key deals, the crown jewel has always been McDonald's. Impossible's inability to ramp up production capacity to meet McDonald's needs seems to be the main impediment to the establishment of a partnership with the chain. That MCD is increasing its testing with BYND is a very positive step. A nationwide deal with MCD would be a huge win for BYND. It would not only be a boost to sales from MCD, but it also would significantly raise the profile of BYND's brand, which could lead to more deals and likely spur consumers to purchase more of its products at the grocery store.
• Another interesting wrinkle here is Wendy's (WEN), the last of the big burger chains to commit one way or another. Wendy's is taking a different route by developing a black bean burger in-house. The burger is going through final testing and could hit the menu in 2020 if testing is successful. We think this is a mistake. It would be smarter to let the companies that specialize in plant-based meat do what they do best. WEN has little experience here, and we have concerns that it will not go well. We would not be surprised to see WEN engage with BYND or Impossible at some point.

Bottom line, the plant-based meat battle is heating up. McDonald's will have to be a player in the plant-based meat space eventually because that's where the market is going, and consumers are demanding it. Impossible seems to have fumbled its opportunity, and now BYND is stepping up. If BYND can grab this account, it would be a huge win for the company and for its brand generally.