McDonald’s test of a plant-based burger in Canada doesn’t appear to be setting the world on fire, at least according to figures from one analyst.
An analyst for UBS said its channel checks estimate the burger giant is selling about 20 to 30 of its “P.L.T.,” or Plant, Lettuce and Tomato, per store, per day.
That’s not much. Burger King sells about twice as many Impossible Whoppers per store, per day. Its test in St. Louis helped traffic in the market skyrocket about 20%.
That said, some McDonald’s restaurants are selling a lot more of the P.L.T., which is made with Beyond Meat. Some stores in urban and university areas are apparently selling 100 a day, according to Reuters.
The widely varied results speak to the complexities involving McDonald’s plant-based burger test, and whether such a test could lead to a nationwide introduction of a similar burger in the U.S. There is some debate as to whether the chain should even have one, and results like that probably will not help matters.
The Chicago-based burger giant somewhat unexpectedly announced a limited test of a plant-based burger at 28 locations in Canada in September. The location was notable for its proximity to the U.S., making it easier for the chain to pay close attention to it. Also unique was the lack of the Beyond Meat brand name on the product.
The data from UBS comes from the analyst’s channel checks, not the company. The analyst suggested that McDonald’s could ultimately sell about 250 million of the plant-based burgers in the U.S. but could get its supply from multiple sources, rather than just Beyond Meat.
That the test product does not have the Beyond name, in fact, is an indication that the company is keeping its options open in terms of potential suppliers and could use more than one. Most chains have used the name of either Beyond or Impossible Foods with the menu item.
Plant-based meat items have become increasingly popular at restaurants across the country. But they have a relatively mixed result so far at major chains. While Burger King has enjoyed stable success with its Impossible Whopper, Del Taco’s Beyond Taco has faded since its initial introduction.
What’s more, Del Taco has struggled with declining traffic this year despite the Beyond product. In other words, it either traded existing customers for plant-based consumers or its existing customers just switched menu items.
That’s a huge issue for a company like McDonald’s. As it is, the company has struggled with falling traffic for all but one year since 2012. The company and many of its operators are increasingly concerned about those declines.
The company’s menu is already large and complex and could be a reason for that falling traffic, as speed has suffered until more recently. Adding another menu item that might not actually generate higher traffic would be a significant issue.
To have the same impact on McDonald’s that the Impossible Whopper is having on Burger King, McDonald’s would likely have to sell about 70 to 80 a day. That said, the company would likely sign onto a plant-based promotion that sold just 30 a day but mostly from new customers and new occasions. It can probably make money off of that, especially if it actually generates traffic.
Still, McDonald’s has a lot on its plate heading into 2020. It faces intense new breakfast competition early in the year, when Wendy’s is expected to introduce the daypart at its restaurants. The morning has been a problem for McDonald’s the past two years as more competitors have grown bolder in their marketing in a bid to win some business from the fast-food giant.
Adding yet another competitor will only make matters that much more complex. McDonald’s expects to market that daypart heavily early next year.
Then there is the matter of its chicken sandwich, currently being tested in Houston and Knoxville, Tenn. McDonald’s has been working for more than three years to develop a better chicken sandwich to rival Chick-fil-A and now has Popeyes Louisiana Kitchen’s incredible chicken sandwich success to contend with. McDonald’s traditionally sells a lot of chicken and has likely lost some of that business this year.
“I think it’s fair to assume with everything going on in the quarter with chicken, that we did go a little bit the opposite way on chicken,” CFO Kevin Ozan said in October, according to a transcript on financial site Sentieo.
If McDonald’s has to devote its marketing attention to breakfast and chicken sandwiches, both of which are bigger, more traditional markets for the chain, why would it divert marketing resources toward plant-based meat?
The numbers from UBS are hardly an argument in favor of a broad national introduction in the near future.
Then again, the P.L.T. has been a success in urban areas. And Burger King’s results from the Impossible Whopper are apparently proving that fast-food customers will buy a meatless option with the right marketing and the right price.
In Europe, meatless burgers are increasingly popular—McDonald’s has its own vegetarian options there, and now Taco Bell, a plant-based holdout in the U.S., has its own meatless taco. If the U.S. is expected to follow, perhaps McDonald’s should jump on board sooner.
The younger consumers apparently buying the burgers are “aspirational customers,” restaurant consultant John Gordon told me.
“Other than an introductory period, we’re not going to see 10% hit rates across the board beyond an initial puff,” he said. “Then it’s going to moderate to a slower, steady rate going forward.”
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