At first glance, plant-based meat substitute maker Beyond Meat (NASDAQ:BYND) and alcoholic beverage titan Anheuser-Busch InBev (NYSE:BUD) don't have much in common other than being consumer discretionary stocks. However, both have strong ties to the restaurant industry, a sector racked by major coronavirus-related changes and shutdowns during the past year.

How the COVID-19 pandemic -- and the effects of its likely retreat as more people get vaccinated in the coming months -- affects consumers' eating, drinking, and restaurant dining habits will have a direct near-future impact on both companies. The question is, under these conditions, which one is the better choice for your portfolio today?

The healthy-eating maverick with big plans

Despite predictions of doom from some analysts believing its business to be merely a fad, Beyond Meat rebounded from COVID-19 quickly and has, overall, climbed slowly from $126 per share on May 1 to the current approximate $140 price. The plant-based meat market passed the $20 billion mark last December and is expected to reach over $23 billion by 2024, according to Euromonitor research as reported by CNBC.

Beyond Burger patties in trays during the manufacturing process

Image source: Beyond Meat.

Beyond is operating in a fast-growing sector, but can it make the most of the opportunity? In the short term, if COVID-19 causes another meat shortage, the company could see people buying its products to make up for a shortfall in traditional burgers and sausages. In the longer term, Beyond has two avenues of market penetration, through grocery and via restaurant sales.

On the restaurant front, Beyond Meat appears to be working on an unspecified new menu item for Taco Bell, a subsidiary of Yum! Brands. While Beyond's ability to land a significant ongoing contract with fast-food giant McDonald's remains unknown, Oppenheimer stock analysts viewed the possibility as much more likely after meeting virtually with Beyond executives in December. According to the firm's research note, the analysts involved "look quite favorably upon the potential for the company to grow with three of the industry's leading players [McDonald's, Starbucks, and Yum! Brands]," suggesting that Starbucks may have additional plans beyond its Chinese and Canadian Beyond Meat offerings.

In the retail channel, Beyond Meat reported a 39% rise year over year for the third quarter, though foodservice sales were still down 41%. As of late September, Beyond had more than double the retail penetration of its rival Impossible Foods, with Beyond products in 26,000 American stores compared with Impossible's 11,000. Preliminary performance figures from the fourth quarter also look positive for Beyond Meat, with Nielsen reporting a 40.4% jump in sales year over year for the four weeks between Nov. 12 and Dec. 12, 2020.

Critically important for Beyond Meat's success is continued innovation, offering customers plant-based substitutes as close to the "real thing" as possible in flavor, texture, nutrition, and utility. Consumers are no longer satisfied with swapping a burger patty for a tasteless soy imitation, but look for substitutes capable of actually replacing meat and dairy products in recipes. Impossible Foods' quest for plant-based milk that can be frothed and won't curdle in hot beverages, and for "crackable" imitation eggs usable like real eggs, highlight the trend.

Positively for investors, Beyond's strategy appears to be aimed squarely at rapidly widening and improving its product line. The company just leased a 300,000-square-foot headquarters building specifically to house an R&D team to be increased 200% to 300% above its current numbers. The quality behind the ongoing success of today's plant-based meat makers begins in the laboratory. Since Beyond Meat is focused strongly on this part of the business, Beyond Tuna, Beyond Eggs, Beyond Milk, and many similar products are probably in the pipeline to drive future sales and profitability.

The long-established "vice" company with a dividend

Where Beyond Meat appeals to the healthier eating trend, Anheuser-Busch InBev operates more in the market of guilty pleasures that may be unhealthy but will likely exist as long as humans do. While the beer market has been troubled in recent years, Anheuser-Busch has already rebounded solidly from its early 2020 COVID-19 lows, even before restaurant and bar traffic return to normal. Its Q3 figures show revenue per hectoliter rising 2.3% and overall revenue growing 4% year over year, with volume up 1.9% compared with 2019 (2.6% for beer only). While profits and earnings per share (EPS) were down, the company's global brands gained 8.1% outside the USA.

Beer bottling on a conveyer under a machine.

Image source: Getty Images.

While the cost of sales jumped 9.6% in Q3, this was due largely to shifting from foodservice to direct-to-consumer and grocery sales. The gradual reduction of COVID-19 by vaccination (and possibly natural decline) should allow costs to sink to normal levels again, and possibly improve if the company takes the initiative in streamlining its supply chain. Without these temporary costs masking gains in the area, Anheuser-Busch's international gains will likely come to the fore as a driver of growth moving forward. Revenue rose by 4.8% and volume by 3.6% in the vast Chinese market during Q3, and combined with the company's e-commerce and digital push and its strategy of looking for profitable acquisitions, it appears to be well-positioned for growth once the pandemic's grip relaxes.

One advantage Anheuser-Busch has over Beyond Meat is it pays a dividend on its shares, though this is currently suspended because of the pandemic. A decision regarding the company's 2020 dividend will be announced along with Anheuser-Busch's full-year results on Feb. 25, according to its latest earnings call

Which stock is a better buy?

Weighing a longtime powerhouse versus a daring upstart tapping into a wildly popular new market, it's easy to say both Anheuser-Busch and Beyond Meat are good stocks to own right now. Both are at a share value plateau but show indicators pointing to future growth, providing an opportunity to "buy in" before the stock price climbs.

Anheuser-Busch InBev may be the "safer" play with its long history and dividend. However, Beyond Meat, though riskier, also has much greater expansion possibilities. Among the factors favoring its future rise, Fools may want to consider:

  • Plant-based meat demand that's still growing at a sizzling pace;

  • Huge market "white space" (restaurant and grocery chains not yet carrying Beyond);

  • Continued successful competition with the much larger meat market;

  • And the many products still to develop (plant-based meat, dairy, and egg substitutes).

Considering the breadth and scope of Beyond's future growth potential, the plucky plant-based underdog currently looks like the better buy.