Beyond Meat given thumbs up by analyst despite Tim Hortons trimming offering
Brooke Davis recently grabbed lunch at McDonald’s for the first time in 17 years.
A vegetarian who usually cooks at home, she was lured by the “P.L.T.”—a plant, lettuce and tomato sandwich featuring Beyond Meat Inc.’s pea-based patties. The burger is currently available in 52 locations in southwest Ontario, Canada, a small trial that could prove decisive for McDonald’s Corp.’s global fake-meat strategy.
For Davis, playing guinea pig for big brands comes with the territory. Her hometown of London, which sits half way between Detroit and Toronto, is where Canadian coffee-and-donut chain Tim Hortons tried its new roast a few years ago. Furniture giant Ikea tested a “pick-up point” there. And McDonald’s, the world’s largest fast-food chain, last year choose it for one of two “green concept” restaurants that offer eco-friendly packaging.
“It’s the testing city,” Davis, 37, said while munching on a P.L.T. this month. “It’s fun for us because we’re getting things before other provinces.”
Read More: Beyond Meat Pulled from Tim Hortons
London, with a population of over half a million, has a diverse mix of blue- and white-collar jobs—employers range from insurers and universities to auto and food manufacturers—that’s valuable to marketers, says Kapil Lakhotia, president of the London Economic Development Corp., an agency that seeks to attract business investment.
“We’re always looking at unique ways to differentiate ourselves from some of the other regions,” Lakhotia said.
McDonald’s said it picked the Ontario locations “as a good representation of guests in Canada and around the globe.” The test will help it learn about preferences and expectations, as well as the impact on operations, the company’s Canadian unit wrote in an emailed answer to questions.
Two-thirds of Canadians live within 60 miles of the U.S.
And it’s not just Ontario. Thanks to friendly immigration policies, Canada has become much more diverse, especially in cities, with 20 per cent of the population now foreign born. About half that group came from Asia.
Canadians and Americans do, however, have their differences. Target Corp. learned this the hard way when it exited the country in 2015 after less than two years because stores didn’t live up to consumer expectations. Still, the neighbors share a language and living standards, with two-thirds of Canadians living within 100 kilometers (62 miles) of the border. And despite being home to fewer than 38 million people, Canada has densely populated pockets that make product trials more cost effective.
“You can take the greater Toronto area and advertise, and you have a significant portion of Canada all in this one area,” said Bruce Winder, co-founder & partner at the Retail Advisors Network in Toronto. “Companies want to test something and not break the piggy bank if it fails.”
Canada also carries fewer risks for the brand if the test is unsuccessful, leaving it untarnished in its main U.S. market. Yogawear maker Lululemon Athletica Inc., which is Vancouver-based but generates about 70 per cent of its sales in the U.S., piloted a loyalty program in the Canadian city of Edmonton and then rolled it out to a few American cities. Some experimenting is currently at play at Staples Canada Inc., which has overhauled a handful of office supply stores to add co-working space and free “how-to” classes.
Social media giants also joined the ranks. Canada was among the first countries to get the Facebook Inc.’s dating service in 2018, while Twitter Inc. first tested a feature letting users hide replies to their tweets there last year. Both offerings have since come to the U.S.
In the case of faux-meat, Canada has an extra appeal: consumers there have already had a chance to develop a palate for it.
Fast-food chain A&W started selling the Beyond Meat burger there in July 2018. Tim Hortons added Beyond Meat breakfast sandwiches and burgers last year— though it recently ended that experiment—and 7-Eleven Canada introduced Beyond Meat pizza to some Toronto locations in August. In November, KFC teamed up with Maple Leaf Foods Inc.’s Lightlife line to test plant-based fried chicken for one day in Mississauga, Ontario.
“McDonald’s is just another entrant,” said Avni Shah, an assistant professor of marketing at the University of Toronto Scarborough. “Why not test in a market where there’s an appetite for it, and see how it does. Then you would look to say ‘what kinds of markets are similar in the U.S.?’ ”
Canada also happens to be where most ingredients for such patties, including peas and lentils, are grown. And France’s Roquette Freres SA, which supplies Beyond Meat with pea protein, is a year away from opening the largest pea processing facility in the world in Manitoba.
As for Davis, she liked the P.L.T., which she said tasted a lot like the A&W burger and was better than the Tim Hortons plant-based option. So does getting this early taste of McDonald’s alt-meat future make her want to come back more often?
“It actually would, in all honesty,” she said.