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Mcdonald Is Assessing Plant-based Opportunity

Posted: Oct 24, 2019



CHICAGO — McDonald’s Corp. executives are curious about the plant-based burger trend. A market test in Canada is shedding light on the long-term opportunity, said Stephen J. Easterbrook, president and chief executive officer.

“I guess what we were interested in is really how best to position this, get a sense of the, as they call them, the flexitarian customer; really what is their appetite for this?” Mr. Easterbrook said during an Oct. 22 earnings call. “… would it drive incremental visits? Is it an option just to switch out from time to time? We want to get the taste right; want to get the marketing right; want to get the operations right.”

The fast-food company initiated a 12-week test of the P.L.T. (Plant, Lettuce, Tomato) sandwich featuring a Beyond Meat patty in 28 restaurants in southwestern Ontario. The product was formulated to mimic the taste of conventional McDonald’s hamburgers.

“There’s a number of important factors that we're learning quickly, and we think Ontario is a great spot because it’ll give us a good read across North America, frankly, but also into the developed markets in Europe as well,” Mr. Easterbrook said. “So, we think the read across will be beneficial and help us speed up our intelligence on this.”

In the meantime, McDonald’s is benefiting from another major initiative — delivery. Management expects delivery to drive $4 billion, or roughly 4% of global systemwide sales, in 2019, which is up from $1 billion three years ago. Delivery is now offered at about 23,000 McDonald’s restaurants in more than 80 countries, Mr. Easterbrook said.

“Of note, our McDelivery global average check remains steady at 2x the average at restaurant check,” he said. “Year-over-year, we continue to see double-digit or higher McDelivery comp sales increases across many of our major markets.”

McDonald's Uber Eats deliveryDelivery is luring new and lapsed customers back to McDonald’s, accounting for a significant portion of the global sales lift, he added.

“We still have a lot of work ahead of us, but we’re moving forward with great speed, energy and excitement within McDonald’s,” he said. “We’re confident there’s plenty of road ahead for success with McDelivery.”

McDonald’s net income for the third quarter ended Sept. 30 totaled $1,607.9 million, equal to $2.11 per share on the common stock, down 2% from $1,637.3 million, or $2.10, in the year-ago period.

Revenues increased 1% $5,430.6 million from $5,369.4 million.

Global comparable sales grew 5.9%, driven by broad-based momentum across all operating segments. U.S. comparable sales increased 4.8%, despite an increased competitive environment, said Kevin M. Ozan, corporate executive vice-president and chief financial officer.

“While U.S. traffic was negative for the quarter and remains our biggest opportunity, we benefited again from a healthy average check increase, driven by both product mix changes and menu pricing,” Mr. Ozan said. “Our customers are showing us that our investment in fresh beef is paying off as we continue to grow burger share.”

By Monica Watrous 
October 23, 2019
Source: Foodbusinessnews.com


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