What's Happening with Food Service and Plant Based Meat?
We're hearing a lot of commentary about the rise of plant based meat analogues in food service - particularly in quick service restaurants. It is clearly growing and we're seeing increased adoption with restaurants announcing new offerings. While it is difficult to know exactly what is happening in terms of growth, there are some signs that provide some insight into the market dynamics at play.
McDonalds Canada just announced an expansion of their "experiment" with Beyond Meat burgers. It isn't clear whether this limited expansion is simply to gather more data or if Beyond Meat is not in a position to provide the volume they would need for a full launch. There was an announcement recently that the Impossible Burger company stopped negotiating with McDonalds as they were not in a position to provide the volume of product that McDonalds would require.
McDonalds was late to the game in announcing a plant based option. They had originally said they were a beef company. I expect that they got some push back from individual stores when they felt some softening in sales. Burger King saw an increase in same store sales with the launch of the Impossible Whopper. The sales increase was likely driven in part by experimenting with the product so those would be new customers. There would be experimenters who might have gone to another restaurant in the absence of an urge to try the plant based burger so market leaders like McDonalds would have felt that in their stores.
It is also worth noting that sales of traditional whoppers also went up at Burger King. My guess is that many consumers chose to go and try the plant based burger and compare it to the normal one. This would be reflected in higher sales but is likely a bubble as people then chose one or the other - or go back to where they normally shopped.
The increase in traditional burgers could also reflect the effect of a group choosing a restaurant to provide a plant based option for one or more members of the group. This is a significant factor in motivating restaurants to launch a plant based option in order to attract the groups that need one. Another reason that McDonalds was slow could be that they needed to ensure they could get the volume they needed if the experiment was successful. Companies with lower share and fewer restaurants may be more able to access new products as they require less volume and that is easier as a new entrant ramps up production. It remains to be seen whether McDonalds takes on Beyond Meat for all of its stores. I would guess that they will but reviews have not been unanimously positive. It remains to be seen if this is a novelty burger that comes and goes (which happens with many campaign products) or becomes a menu staple.
There have been some signs that the market may require some caution. Tim Hortons launched some Beyond Meat products and pulled back in some markets. This is a signal that sales were disappointing and there was no value in the offering. A&W invested heavily in the launch of their Beyond Meat burgers and saw some success. Their current advertising is focusing on beef based burgers so it is clear that beef is still an important part of their portfolio.
I expect we will continue to see plant based burgers grow in quick service and that they will stay a staple on the menu. I do think, however, that beef will continue to be the foundation of revenues for these burger-based quick service restaurants. It will be interesting to follow.
Recommended citation format:
von Massow, M. "What's Happening with Food Service and Plant Based Meat?". Food Focus Guelph (71), Department of Food, Agricultural and Resource Economics, University of Guelph, January 9th, 2020.