- Plant-based versions of fast-food classics flooded menus in 2019, as partnerships with Beyond Meat and Impossible Foods produced offerings such as KFC's Beyond Fried Chicken and Burger King's Impossible Whopper.
- Beyond Meat sees fast-food partnerships as a major part of its future, executives told Business Insider.
- "It's not a one-size-fits-all," said Beyond Meat's chief growth officer, Chuck Muth. Each chain that enters a partnership with Beyond Meat has its own team at the plant-based "meat" company, and CEO Ethan Brown signs off on each new menu item.
- Fast-food partnerships help put plant-based "meat" in front of a massive amount of potential customers, helping change people's perception of meat-free products and build Beyond's sales.
- "It's not that interesting to me that really rich people eat super healthy food. It's not moving the needle," CEO Ethan Brown told Business Insider on the day that Dunkin' debuted its Beyond Sausage Sandwich.
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On August 27, a KFC in Atlanta, Georgia, descended into chaos as lines of cars and people stretched around the location, which had been painted green for the day.
The reason for the chaos? For a single day, at this single location, KFC was serving Beyond Fried Chicken.
The Beyond Fried Chicken - made in partnership with Beyond Meat - sold out in five hours. According to a KFC representative, the location had been stocked with the plant-based equivalent of the amount of popcorn chicken that could normally last the chain a week.
KFC and Beyond Meat executives told Business Insider that the massive response was overwhelming and surprising, especially since it came just three months after KFC President Kevin Hochman mentioned, offhand, that he had been casually meeting with plant-based "meat" makers.
However, it was just one of countless partnerships that Beyond Meat announced in 2020. Restaurant industry reporters found their inboxes flooded with announcements from Beyond and rival Impossible Foods, with new partnerships being penned on what felt like a weekly - if not daily - basis. And, increasingly, chains had their own take on plant-based foods, created with the help of Impossible or Beyond.
In addition to Beyond Fried Chicken, 2019 saw the arrival of Burger King's Impossible Whopper, Del Taco's Beyond Taco, and Carl's Jr.'s Beyond Famous Star, as well as the Beyond BBQ Cheeseburger. McDonald's tested Beyond's P.L.T. in Canada, and Little Caesars tested the Impossible Supreme Pizza.
"It's been a gradual momentum build," Beyond Meat's chief growth officer, Chuck Muth, told Business Insider in an interview in November.
Each new test and menu launch was met with a flurry of articles and, in Beyond's early post-IPO days, a bump in its stock price. But, the long-term impact of the new menu items is far greater than a proportion of people swapping out a hamburger for a meat-free version of the same menu item.
Quick-service restaurant (QSR) industry partnerships are set to be a major part of Beyond Meat's growth plan moving forward, Muth says. And, fast-food executives and industry analysts believe their future is also full of plant-based "meat."
Why fast food loves Beyond Meat
When a massive trend hits, from CBD to chicken sandwiches, fast-food industry executives quickly realize that they're going to have to have an answer ready. In 2019, that trend was plant-based "meat," with Amanda Norris, executive director of Chick-fil-A's menu, telling Business Insider earlier this year that she anticipates every chain is soon going to have a "point of view" on the topic.
This "point of view" could be amping up vegetarian options, which is the road that Chick-fil-A has chosen so far, as have chains such as Taco Bell and Panera. But, for many other chains, developing a point of view means taking a meeting with Beyond Meat, Impossible Foods, and other companies entering the plant-based "meat" business.
Muth says that just a few years ago, Beyond went into these meetings hoping that grocery store sales could help convince fast-food chains to partner with the plant-based "meat" maker.
While Impossible Foods started out with deals with fine-dining chefs such as David Chang, Beyond Meat first appeared in grocery stores such as Whole Foods and Target. When Muth joined in 2017 after a career at Honest Tea and Coca-Cola, he said one of his missions was to ensure that Beyond products were sold in the meat aisles, not alongside vegetarian or vegan offerings.
Muth said early partnerships with chains such as A&W in Canada and TGI Fridays required executives, many of whom believed in Beyond's pro-environment message, to trust that Beyond's grocery sales would translate into success at restaurants. Now, Beyond Meat can show figures from public companies' earnings reports, like with Del Taco, which sold two million plant-based Beyond Meat tacos in less than two months.
Analysts are increasingly predicting that plant-based "meat" will be a long-term necessity for most chains, as opposed to a short-term sales bump.
A Cowen report published in October found that Beyond and Impossible Burgers have a 79% retrial rate among omnivore respondents. Cowen also found that people are willing to pay more for plant-based burgers. The majority of people surveyed, including the majority of people in households making less than $60,000 a year, strongly agreed or somewhat agreed that Beyond's plant-based burgers were worth a premium price.
The report adds: "Further supporting the pricing power is virtually all concepts discussed plant-based products attracting new and lapsed users to the brand, which skew more affluent and younger."
Plant-based "meat" has also gained a certain cultural cachet that many fast-food brands would spend millions of dollars to get in 2019. Lingerie brand Yandy only deemed a few foods sufficiently sexy to transform into skimpy Halloween costumes this year. The Beyond Burger made the cut, joining the meme-able ranks of Sexy White Claw and Sexy Popeyes Chicken Sandwich.
Beyond's mission to be the faux meat maker of choice
If plant-based products become part of doing business, Beyond Meat's job is to convince chains that it is the best partner to work with as the industry evolves.
A major piece of the puzzle in these partnerships is the creation of the perfect collaboration: a new menu item that combines fast-food sensibility with plant-based startup buzziness. While originally chains simply served the Beyond Burger (or, the Impossible Burger), the new normal is the creation of a new, original item highlighting the plant-based "meat" maker's identity.
"These large QSRs want something that is unique and special that also reflects their culinary direction," Muth said.
"That's where our capabilities come in," Muth added. "We have the capabilities here of customizing items that work. And that's part of the entrepreneur scrappiness. It's not a one-size-fits-all."
Today, every restaurant partner has its own corresponding team at Beyond Meat. Chains guide the conversation but work closely with Beyond, including the company's leadership. According to Muth, every new menu item needs Beyond CEO Ethan Brown's seal of approval. Brown is involved even in seemingly smaller-scale partnerships, with a KFC source saying that leadership was impressed by how hands-on the CEO was in what was, at that point, just a one-day test of Beyond Fried Chicken.
Despite Brown's involvement, speed is crucial. Muth says creating a new burger for Carl's Jr. took about four months. According to a KFC source, Beyond was able to go from presenting a potential menu item to creating the Beyond Fried Chicken Version 1.0, which was served in Atlanta, in just four weeks.
Beyond Meat has built out its development lab to include a space adjusted to replicate the kitchen of all of its partners. Since Carl's Jr. charbroils its burgers, for example, Beyond Meat is now equipped with charbroilers to properly develop plant-based versions.
These new plant-based products are based on the tastes and preferences of different customers. But, they also give Beyond fans a reason to visit a specific chain and avoid Beyond burnout.
"To not be commoditized as a brand, you have to have uniqueness with each restaurant," Muth said. "If you can buy the same Beyond Burger at every one of the restaurants, how is that special for that restaurant?"
Essentially, this is the promise that Beyond make to fast-food chains: We'll make you whatever you want. We'll get it done fast, and it will be far cooler than anything else on the menu. Traditional suppliers cannot compete in terms of speed or brand value, according to one executive who worked with Beyond on a fast-food menu test.
Impossible Foods offers a similar bargain. Cowen identified Burger King as the best positioned chain on plant-based "meat," with the national rollout of the Impossible Whopper happening in August. Impossible's burgers earn the edge in reviews among taste testers - including those at Business Insider - who value the "real" bloody burger texture, which comes thanks to the use of the ingredient heme.
According to one executive whose chain partnered with Beyond instead of Impossible, Beyond offers a few advantages. Since Beyond's products do not use heme, the executive said, companies that partner with Beyond can say that their foods do not contain genetically modified ingredients. Beyond also currently offers a wider range of products, from meatballs on Subway sandwiches to Beyond Fried Chicken.
"We always let the customer guide the conversation," Muth said, noting that Beyond is building capabilities to create new types of products.
"We don't like saying no," Muth said. "I can't remember if we've ever said no."
Why Beyond Meat loves fast food
Beyond Meat's and Impossible Foods' fast-food takeover can be seen, cynically, as an incredible money-making opportunity or, idealistically, as a democratizing of plant-based "meat."
Impossible started high-brow, with fine-dining partnerships, and has essentially trickled down into low-brow culture through menu items like the Impossible Whopper.
Beyond, meanwhile, started from the bottom of the food chain, with fast-food chains as its bread-and-butter as it entered the restaurant space. CEO Brown has been insistent that this is by design.
"It's not that interesting to me that really rich people eat super healthy food. It's not moving the needle," Brown told Business Insider on the day that Dunkin' debuted its Beyond Sausage Sandwich.
"Democratizing" plant-based "meat," to borrow a phrase from Dunkin' CEO David Hoffmann, also creates an incredible opportunity for Beyond. When plant-based "meat" is readily available at chains that they trust, closely mimicking the flavor of menu items they already love, people are more likely convinced to try the menu item at least once.
Muth and Brown often emphasize that they want plant-based proteins to thrive, no matter who is making them. The competition adds a sense of urgency and, crucially, helps force plant-based "meat" further into the mainstream. Impossible Foods CEO Pat Brown (no relation to Beyond's CEO) has voiced similar sentiments about the positives around more companies producing high-quality plant-based "meat."
"On the one hand I feel like it's great," Pat Brown told Busines Insider in September. "It's a great sign about the demand. On the other side, I feel like - and it may sound ironic to say this - I wish they would make better products, basically."
"Every time someone uses one of those products and it sucks, it's a setback" for Impossible Foods and plant-based meat alternatives more generally, Brown added.
Conversely, every time someone eats a plant-based faux meat product, it helps build demand for Beyond and Impossible. According to Cowen, "several concepts cited that as Beyond and Impossible offerings are adopted by competitors, the concept sees a halo benefit from growing awareness of plant-based offerings."
In May, Barclays estimated that the market for alternative meat could reach roughly $140 billion over the next 10 years, up from $14 billion. When Dunkin' launched its Beyond Sausage Breakfast Sandwich, Beyond's Brown said that it has been fascinating to see "a brand morph into a movement."
"That's not what we're doing, that's what the world is doing," Brown said.
The future of fast food
With a symbiotic relationship between Beyond Meat and fast food, chains are set for a significantly more plant-based future. Citing NPD Group data, Cowen said in its October report that plant-based burgers currently represent 3% to 4% of all fast-food orders. Beef burger sales are somewhat stagnant, with the NPD Group finding that traditional burger sales were flat for the year ending in May 2019, with 6.4 billion beef burgers sold. In the same period, sales of plant-based burgers grew 10% to 228 million, according to NPD.
"Longer term, when plant-based proteins will presumably be permeated throughout the industry, we expect plant-based to be a cost of doing business," the Cowen report reads.
According to Barclays' report, 12% of people who had tried either the Impossible or the Beyond Burger said that their primary reason for trying the burger was social responsibility.
With climate change becoming more of a direct threat, the motivation to do more will also grow.
Scientists and analysts alike are anticipating climate change to have a major impact on the future. In November, more than 11,250 scientists from 153 countries co-signed a warning in the journal BioScience stating "clearly and unequivocally that planet Earth is facing a climate emergency." The same month, Federal Reserve official Kevin Stiroh declared that climate change and related events directly cost the US more than $500 billion over the past five years.
Beyond Meat is also working to become increasingly relevant, both in terms of individuals and fast-food partners. Muth says the company's priorities are improving on nutrition, price, and taste. If Beyond's last earnings call is any indication, nutrition, in particular, will be front and center as Beyond moves into 2020, especially following attacks from the meat industry.
For fast food, price might prove to be just as appealing. With Wells Fargo's Jon Tower calling protein inflation a matter of "when, not if (i.e., late 2020 or early 2021, in our view)" in a December note, plant-based proteins could provide a way to keep prices steady. Beyond has pledged to match beef in price in the next five years, meaning that striking a deal with Beyond now could pay off down the line.
"Should beef inflation meaningfully accelerate, we would not be surprised to see a greater number of restaurants embrace plant-based proteins," Cowen's Charles wrote in a note in December.
As plant-based "meat" becomes more mainstream, both from Beyond's work and global necessity, plant-based startups are becoming the fast food of vegetarianism - mainstream and, by design, intended to appeal to as many people as possible.
Beyond Meat's Brown has never wanted to be principled and niche; he wants the company to be everywhere. Today, there is no better way to be everywhere than to be aligned with the thousands of fast-food chains across the country. Roughly a third of American adults eat fast food on any given day, according to a 2018 survey by the National Center for Health Statistics. By grilling plant-based burgers alongside Big Macs, the burgers may no longer, technically, be vegan - but they do reach the largest possible customer base.
"I think that we're providing people with the opportunity to continue to do what they love: to eat meat," Brown told Business Insider in July. "But, it releases them from some of the inner anxiety they may have about it, or the inner questions they may have about it."