What happened

Shares of plant-based meat company Beyond Meat (BYND -1.54%) were up 4% as of 2:20 p.m. ET on Thursday, despite a Bloomberg report that called its partnership with Yum! Brands (YUM -0.86%) into question. It would appear investors don't think it's important. However, if the company's partnership with Yum! is truly in jeopardy, it would likely be a bigger deal than people think. 

So what

Yum! Brands operates restaurant chains like KFC, Taco Bell, and Pizza Hut. And Beyond Meat has been working with these three chains specifically to create co-branded menu items since February 2021. 

When Beyond Meat announced its partnership with Yum!, it was said to be an expansion of its partnership with KFC for Beyond Fried Chicken. However, as Bloomberg reported today, now 17 months later, Yum! has yet to add a Beyond Meat item to the permanent menu. 

The Bloomberg report specifically questioned Beyond Meat's progress regarding a plant-based pepperoni for Pizza Hut and plant-based carne asada for Taco Bell.

Now what

Yum! Brands and Beyond Meat haven't said anything to lead investors to believe that this partnership is failing. However, the criticism regarding Beyond Meat's progress here is fair. And it's important to consider the implications if Yum was to move on from Beyond Meat.

Beyond Meat co-creates menu items with restaurant companies for two reasons. One, it helps it gain brand-name recognition. Second, it gives it a steady customer so that it can build up its manufacturing capacity. Yum! is the largest restaurant company in the world, so losing it would be a big blow for Beyond Meat's progress on both items.

In 2021, 24% of Beyond Meat's U.S. revenue came from food-service partners like Yum!. Therefore, this is a big part of the business and investors should pay attention.

Investors should also remember that restaurant brands have been slow to experiment with menus very much over the last couple of years due to ongoing operational challenges from the coronavirus pandemic. Therefore, it could simply be the wrong time for Yum! to add permanent Beyond Meat items to the menu.