Another day, another sign Wall Street’s enthusiasm for Beyond Meat Inc. has grown a little beyond reason.
The plant-based burger maker’s stock has surged 590% since its May initial public offering, as investors salivate over the growth prospects of the tiny El Segundo company that is at the leading edge of some important dining trends. On Tuesday, a more troubled food-business disruptor got to bask in Beyond Meat’s glow: Blue Apron Holdings Inc. announced it would soon add recipes to its meal-kit boxes that feature the meatless burger. Investors sent shares of the meal-kit company up more than 35% on the news.
To be clear, I think it’s a fine idea for Blue Apron and Beyond Meat to join forces. For Beyond Meat, this could encourage trial of its products by new diners who might go on to buy them at the grocery store. And Blue Apron should always be looking for ways to get more variety on its menus if it wants to keep subscribers from getting bored with its offerings.
But let’s be honest: A burger isn’t going to solve Blue Apron’s existential problems. Namely, it isn’t going to change the fact that a subscription model doesn’t fit many consumers’ lifestyles. And it isn’t going to change the fact that some find cooking a hassle, particularly at a time when grocers’ prepared-food offerings and third-party delivery services are giving them compelling alternatives.
What Blue Apron really needs is to figure out how to get its best customers to spend more money with it — which its new chief executive, Linda Kozlowski, has said is a key priority. For example, it is experimenting with on-demand delivery, an option that would make it easier for customers to buy its products without planning their meal schedules far in advance.
These kinds of initiatives have a far better chance of moving the needle than some recipes featuring Beyond Meat. And that’s important, because whatever is on the menu, the path for Blue Apron to revenue growth isn’t getting any easier. The competitive set is evolving, with Amazon.com Inc., for example, beginning to add its meal kits to Whole Foods Market stores and making it easy to buy them a la carte instead of via subscription.
In other words, Blue Apron teaming with Beyond Meat shouldn’t be thought of as analogous to, for example, Burger King adding the plant-based Impossible Whopper to its menu nationwide, because — unlike Blue Apron — Burger King isn’t contending with massive structural challenges to its business model.
Just seeing the words “Beyond Meat” in a press release seems to get investors irrationally excited. They should be more clear-eyed about what difference its products can really make in Blue Apron’s fight for survival.