Fast-food restaurants across the U.S. aren’t switching up menus as quickly as expected.
By Leslie Patton and Deena Shanker
ILLUSTRATION: SUJIN KIM FOR BLOOMBERG BUSINESSWEEK
For some of the fast-food restaurants that peddled plant-based versions of their menus to appeal to meat-conscious consumers, the novelty is already wearing off. It could spell trouble for the makers of the products, who’ve hyped the partnerships as a major step to mainstream popularity.
The biggest restaurant chains are backing off—or at least slowing down—faux-meat plans after the Covid‑19 pandemic and lockdowns upended dining and eating. Instead of trying new things, Americans have been eating at home or seeking familiar, comforting foods when they do venture out. Orders of plant-based burgers and sandwiches at fast-food restaurants were unchanged for the year ended in June, while beef burger orders climbed 12% over the same period, according to market researcher NPD Group Inc. “I don’t think that plant-based meat is at the top of the list for many restaurant operators right now,” says BTIG LLC analyst Peter Saleh. “It’s more about, let’s just sell the core menu items, and let’s do it the best we can.”
Inspire Brands Inc.’s Dunkin’ has taken Beyond Meat Inc.’s breakfast sausage out of thousands of locations. Yum! Brands Inc.’s KFC, which ran trials of Beyond Meat’s chicken nuggets, has yet to turn them into a regular menu item, and Burger King has notched down the marketing of its Impossible Whopper. At Little Caesars a trial of Impossible Foods Inc. sausage didn’t work out; it just wasn’t a popular enough topping to support an alternative. The pizza chain is giving faux pepperoni a shot, though only in large metro areas, including Miami, New York, and San Francisco.
Despite long-held investor expectations about national—and even international—fast-food tie-ups, it’s the smaller chains that show the most enthusiasm. Faux chicken is selling better than expected at fast-casual companies such as Epic Burger, says the chain’s chief executive officer, David Grossman. Epic, which gets its plant-based chicken from Beyond Meat, has seven locations in and around Chicago.
Beyond’s shares jumped this February when McDonald’s Corp., with more than 39,000 restaurants, shared details of Beyond being its preferred supplier for the McPlant patty. So far that product has been tested only in a few smaller markets, though it’s slated for a nationwide rollout across the U.K. and Ireland in 2022. UBS Group AG analysts Erika Jackson and Andrew Olsen said the announcement, along with other big name partnerships, signaled that plant-based meat “is not a fad”—but still cut their sales estimates for Beyond for fiscal 2021 and 2022. They’d been modeling sales based on a large national fast-food rollout for the second half of 2021 but are now expecting that to happen at least a year later. A representative for Beyond says the company is very proud of the partnerships it has with some of the world’s largest restaurant brands.
Burger King, with about 18,000 owned or franchised locations, could’ve been a key launchpad for Impossible burgers. The chain, owned by Restaurant Brands International Inc., hyped the Impossible Whopper with an ad blitz and the claim of 100% Whopper, 0% beef. When management cut back on marketing spending last year, customer awareness plummeted, according to Bloomberg Intelligence analyst Michael Halen, based on data from Cognovi Labs, which analyzes social media outlets including Twitter. Discussions about Burger King’s plant-based meats tumbled 67% from 2019 through 2020, the data show, outpacing a drop of about a third across the industry. Carrols Restaurant Group Inc., the biggest Burger King franchisee in the U.S., said late last year that sales of the Impossible Whopper had fallen by about half since its introduction in August 2019. Carrols and Burger King declined to comment on current sales.
The Impossible Whopper is “doing well,” says Dennis Woodside, president of Impossible Foods, saying there hasn’t been a marketing pullback and noting that it’s still sold on the buy-one-get-one-free platform. “Our operators are very happy with repeat rate and attraction of new customers to the product,” he says, though he declined to share specifics.
Sales of meat substitutes overall at U.S. restaurants fell more than 23% last year, according to Euromonitor International data. Volumes have rebounded this year but are expected to be only 4.4% above the 2019 level.
One place that restaurant tests and marketing are helping is in grocery store sales, with faux meat continuing to make its way into more home cooking. “A plant-based product can be viewed as something a little bit uncertain,” says Jennifer Bartashus of Bloomberg Intelligence. “The trial at restaurants gives people confidence in the taste and their ability that they can prepare the items themselves.”
Restaurants are still trying to figure out what customers want, and some are doing it without the big faux-meat brands. In August, Chipotle Mexican Grill Inc. began selling vegetarian chorizo that’s made in-house with pea protein, shunning both Impossible and Beyond. The fast-casual chain says lots of meat alternatives out there aren’t healthy enough for Chipotle. “They’re too processed for us,” Chief Marketing Officer Chris Brandt said in an interview at the time, “and they contain a lot of ingredients we would never have in our restaurants.”
Dunkin’ franchisee Rob Branca, who owns 90 stores in Massachusetts, upstate New York, and Ohio, says the Beyond sausage didn’t sell as he’d hoped. “I’m no expert, but I don’t know who the customer is” for the plant-based meats, Branca says. At BurgerFi International Inc., CEO Julio Ramirez says he’s figured it out: When a group of diners with varying tastes is choosing a restaurant, the availability of a vegetarian option can be the deciding factor. “One person says, ‘I don’t want to have a beef burger,’ that’s going to limit where you’re going to go,” he says.
Alyssa Smolen, a 22-year-old vegetarian, isn’t convinced that meat alternatives are healthier than other proteins such as tofu. Smolen, from New Jersey, doesn’t frequent fast-food chains, though she did try—and was underwhelmed by—the Dunkin’ Beyond sausage earlier this year. When she does feel like having a faux burger or sausages, she buys them at her local ShopRite supermarket and cooks at home. She’s also pretty agnostic on the brand, paying more attention to nutritional facts and price. “At the end of the day, it’s a processed food. It depends on your mindset as to what you define as healthy,” she says.
BOTTOM LINE – Faux-meat makers need restaurants on board to help scale up their revenue. Early trials aren’t yet translating into widespread adoption.
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