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  • One important group isn't eager for McDonald's to join the fake meat fray

    Restaurant owners' silence on fake meat raises questions about their enthusiasm for yet another headquarters initiative requiring costly operational adjustments with an uncertain payoff.

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    As the broader fast-food business buzzes over plant-based meat substitutes, crickets are chirping in one corner of the industry.

    McDonald's franchisees haven't joined the chorus of questioners wondering when—or if—the biggest burger chain will embrace the fake meat movement. That's noteworthy, considering their willingness to publicly pressure company management on other matters affecting their bottom lines, such as food-delivery fees or McDonald's failure to develop a chicken sandwich on par with wildly popular offerings from rival chains.

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    Franchisee silence on fake meat raises questions about their enthusiasm for yet another headquarters initiative requiring costly operational adjustments with an uncertain payoff. Since 2015, McDonald's has frog-marched franchisees into serving breakfast all day, pouring money into renovations and new technology, and switching to fresh meat from frozen. But customer traffic to their restaurants keeps falling.

    79彩票注册网址There's no sign that franchisees think meat substitutes will reverse the decline. The same can't be said of chicken. The National Owners Association, an independent group representing 90 percent of McDonald's franchisees, called for a new chicken sandwich several times during 2019.

    "What are operators interested in? Chicken by far. Which one would be more successful? Chicken by far," says Jim Lewis, a recently retired New York McDonald's franchisee. "McDonald's will probably test plant-based somewhere, but there isn't a huge demand for it."

    Lack of support may reflect concern that meat substitutes lack mass-market appeal. Surveys indicate vegans and vegetarians represent less than 10 percent of the U.S. population, suggesting a fake meat burger might do well in a few neighborhoods but fall flat elsewhere. For example, Lewis says vegetable burgers went over well in his Manhattan restaurants during a test two decades ago

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    Bloomberg

    With fake meat, McDonald’s franchisees are wary of another headquarters initiative requiring costly operational adjustments with an uncertain payoff.

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    "(Fake meat) smells like a specialized product," says John Gordon, principal at Pacific Management Consulting Group, a restaurant advisory service. "I don't see it as a massive countrywide solution (for McDonald's)."

    79彩票注册网址Chicken, by contrast, cuts across demographic categories. Competitors such as Chick-fil-A and Popeyes are capitalizing on that demand with high-end chicken sandwiches that have lured customers away from McDonald's stores, particularly in the Southeastern U.S.

    "The far greater issue and problem is McDonald's lack of a chicken sandwich," Gordon says.

    New CEO Chris Kempczinski is responding to franchisees' clamor for chicken79彩票注册网址. In Houston and Nashville, McDonald's is currently testing two separate chicken sandwiches in hopes of creating a worthy challenger.

    At the same time, McDonald's is weighing the costs and benefits of a nationwide 2020 U.S. rollout of a fake-meat menu item. The company is testing plant-based meat at restaurants in Canada and Germany.

    Some wonder if McDonald's has waited too long to catch either wave. From 2013 through 2018, Chick-fil-A's U.S. sales doubled to $10 billion, while McDonald's rose 7 percent to $38.5 billion during the same period. Popeyes and Burger King have seen double-digit sales gains since introducing chicken and fake meat sandwiches, respectively. But recent data shows sales of both sandwiches stabilizing, an ominous sign for McDonald's ambitions in either category.

    79彩票注册网址"You aren't going to see the same type of numbers from Popeyes or from Burger King. You are the follower in this case," says Morningstar analyst R.J. Hottovy. "They missed the two biggest menu trends in 2019 in chicken sandwich and plant-based."

    79彩票注册网址While a fake-meat offering at McDonald's might generate headlines, it also would bring complexity and cost. Suppliers likely would struggle to provide fake meat to McDonald's vast network of 14,000 U.S. stores. Restaurant owners, meanwhile, would need to properly store uncooked meat substitutes, and cook them on separate griddles to prevent any mingling of juices with traditional beef patties. Burger King has been sued for cooking real and fake meat on the same grill.

    Hottovy expects the new chicken sandwiches, which he believes are a credible competitor to Chick-fil-A and Popeyes, will roll out nationally this summer.

    He is more skeptical that a plant-based burger will be available throughout the U.S. this year, especially with Burger King experiencing shortages despite having less than half the stores of McDonald's.

    Whether McDonald's can use its size and marketing budget to catch up in both chicken and fake meat is unknown, but franchisees have made their first priority clear.

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