Yahoo Finance CEO of Burger King owner: 'We are all in' on plant-based foods
Restaurant Brands (QSR) CEO Jose Cil is still bullish on plant-based foods at Burger King despite some fears on Wall Street that consumer demand has begun to cool amid a flood of new entries into the red-hot space.
“I think it’s just the beginning. It’s a brand new category, it’s a category we are leading not just in the U.S. but globally,” Cil told Yahoo Finance fresh off the company’s fourth quarter earnings call Monday. “And we think there is a lot of work to do still in terms of raising awareness, what are the benefits of it and then being able to offer some different products as well as occasions so that the consumer could expand their knowledge of the product. We are all in.”
Wall Street’s worries on the momentum of plant-based menu items at Burger King — who took a leadership position in the space in 2019 by introducing the Impossible Whopper — are not without merit.
Burger King began offering a two for $6 deal for the plant-based Impossible Whopper several weeks ago. The ad caught several analyst sources by surprise, as the sandwich sold for close to $6 for most of 2019. In other words, it was a premium-priced menu item for Burger King as the chain sought to capitalize on consumer curiosity.
“We felt introducing it in the two for $6 gave us the opportunity to make it accessible to a broader group of consumers. That over time will help us build on plant-based as a core element of our business long-term,” Cil says of the new promotion.
Meanwhile, Burger King’s fourth quarter same-store sales rose 2.8%. Same-store sales for the chain rose 0.6% in the U.S. and 4.7% in the rest of the world. Burger King’s same-store sales increased 4.8% in the third quarter.
‘Proliferation of alternatives’
The slowing in Burger King’s sales growth comes as big-name rivals ranging from McDonald’s to Yum! Brands’ KFC brand have entered the market with plant-based chicken products. Dunkin’ Brands has taken its Beyond Sausage breakfast sandwich — done in partnership with Beyond Meat — nationally to thousands of restaurants.
“Given the proliferation of alternatives spreading across the competitive landscape, we view BK’s ability to lap the Impossible Whopper launch with more skepticism and expect the brand to post negative-to-flat SSS in 2H20 in the U.S.,” cautioned Wells Fargo analyst Jon Tower in a recent note to clients. “While BK U.S. likely leads national brands with plant-based protein sales due to the Impossible Whopper, we see low barriers to entry for the alt-protein menu category and expect other, large competitors to jump into this arena in 2020, likely pressuring BK’s market leading position, in our view.”
In spite of the worries, Wall Street was pleased with Restaurant Brands’ latest quarter.
Shares rose as much as 6% in early trading Monday as investors cheered an insane 34.4% same-store sales increase at the company’s Popeye’s. Thank you, new fried chicken sandwich. Adjusted operating profits rose nicely at Burger King and Popeyes in the quarter and remained flat at Tim Horton’s — the result was a win in light of the coffee chain’s 4.3% same-store sales decline.
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Watch The First Trade each day here at 9:00 a.m. ET or on Verizon FIOS channel 604. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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