Can Plant-Based Food Franchises Out-compete McDonald’s?
On a recent stroll in sunny Wayzata, Minnesota, I was looking forward to trying a new drink at Starbucks when I noticed the store was closed and under construction. A new restaurant was coming to town, and so naturally, I looked it up. Apparently, a 100% plant-based burger chain will claim the former Starbucks’ space, and the owner’s ultimate goal is to franchise this venture nationwide. It’s called Stalk & Spade, and it asserts itself as "America's first plant-based franchise”. Then it got me thinking... is it possible that plant-based chains can outcompete traditional fast-food in revenue? I’m not one for maybes, but if I had to place my bets, I would say yes for the US market specifically, and no for European markets.
The Plant-Based Market is Already Booming
We already know that plant-based food options have taken over the menus of Chick-fil-A, Burger King, Carl's Jr., and many more chains by storm. The plant-based beef market is set to grow at a CAGR of 22.7% between now and the end of the decade, a new study by Future Market Insights (FMI) has found: “Leading market players are focusing on launching novel tastes and textures to woo consumers. With COVID-19 tightening its noose worldwide, more companies are likely to focus on ensuring a better nutrient profile, as consumers gradually move away from meat consumption. This will bode well for the overall market.”
Younger Consumers Are Driving "Flexible Veganism"
The markets are also well aware of the Millenial and Gen Z preoccupation with plant-based foods. In the U.S. alone, Gen Z controls $143 billion in purchasing power, translating to 40% of all sales. You also may as well label them the “Vegan Generation”. 35% of Gen Z-ers want to become vegan-free in 2021 (meaning now), 65% find plant-based foods appealing and 75% say they are cutting down on meat consumption. At the same time, a new survey found that Gen Z'ers want to eat more plant-based meals without committing to veganism. So, it seems like my generation doesn’t actually want to fully commit to being full-time vegans, but they want the option and flexibility to switch between fake meat and real meat with ease.
Given their demand for alternative proteins and their skyrocketing market power, my generation definitely has a lot of say in the way the plant-based market will go. Additionally, a report called Climate Change and the American Diet found that 90% of those surveyed said they’re willing to eat more fruits and vegetables, and roughly half said they’re willing to eat more plant-based meat and dairy alternatives.
Plant-based Franchises Look Promising in the US...
All of the above information applies to the U.S. market. U.S consumers seem to be more open to altering their diets because of the outspoken diet culture we have in this country. The flexibility of the American diet can also be a testament to the fact that we don’t truly have a “history of cuisine” or cuisine culture. Because of U.S. consumers’ willingness to try new foods and incorporate them into their diets, I believe that some lucky plant-based food franchise out there may be successful enough to out-compete your regular burger chain. The same cannot be said of Europe, in my opinion.
...But in Europe, Protectionism Makes The Opposite True
Europe, unlike America, has a deep-rooted history with cuisine and food traditions. For example, the French are incredibly protective of their cheeses, and the Italians, of their Balsamic Vinegar. This protectionist mentality can stunt the maturation and growth of the plant-based market in Europe, making it far more difficult for plant-based food franchises to appear at all.
Not long ago, I read an article called: “Vegan ‘dairy’ products face EU ban from using milk cartons and yoghurt pots – and UK could be next.” In summary, back in 2017 the European Court of Justice ruled that vegan food producers were prohibited from using terms like “oat milk” and “soya yoghurt” on packaging. However, the newly proposed Amendment 171 would ban vegan producers from “including claims or denominations such as “dairy”, “creamy”, “yoghurt-style dessert” or “does not contain milk” altogether. They would also be unable to use packaging designs that call to mind dairy products, such as yoghurt pots or milk cartons. Even simply showing climate impact by comparing the carbon footprint of their products with dairy equivalents could become illegal.” If the court enables this motion to go into effect, there is no reason why succeeding amendments could not also bar vegan producers from using words like “vegan steak” or “vegan burger”.
However, European food producers may be panicking for no reason, as “The plant milk market alone accounted for US$12 billion (£9 billion) in global sales in 2019 and is set to grow by 11% per year between 2020 and 2026 to reach US$21 billion. But this is tiny compared to the dairy industry – which is expected to grow from US$718 billion in 2019 to slightly over US$1 trillion in 2024.” Regardless, the point that I’m trying to make is that it will be far less likely that plant-based franchises will out-compete fast food chains in Europe, as a result of protectionism.
Covid Has Made People Much More Health Conscious
Lastly, it’s important to point out the implications of Covid for the plant-based food industry. The virus has clearly appeared to have made people much more health conscious than previously. “U.S. retail sales of plant-based foods have considerably outpaced total food sales during the pandemic, demonstrating that more consumers are turning to plant-based foods amid the crisis. Moreover, plant-based meat sales are showing strong growth while growth of animal meat sales is declining. Retail plant-based food sales, like other retail food sales, experienced a significant spike in mid-March during peak panic buying. During this time, plant-based foods were up a whopping 90% when compared to last years’ sales. Throughout the four weeks following peak panic buying, total plant-based foods sales grew at 27%, which is 35% faster than total retail food.”
With rapid demand for plant-based food on the rise (accelerated by Covid) combined with consumers’ willingness to augment their diets, and Gen Z’s vegan preferences and increasing purchasing power, there is a chance that plant-based food franchises can out-compete your local McDonalds. In Europe, we can’t say the same… yet. At least there will always be Foie Gras.