Even as Beyond Meat Inc. gains new deals to develop meatless menu items, enthusiasm is fading at some of the company’s earliest restaurant backers, raising questions about the staying power of plant-based meat.

Almost three years after Del Taco Restaurants Inc. became one of the first major chains to sell Beyond’s plant-based protein products in hundreds of stores, the company is now testing its removal at three of its four Florida stores. TGI Friday’s Inc., an early adopter of the Beyond Burger, plans to keep selling it but said sales are flat and it’s less enthusiastic about adding more of the company’s fare to its menu. Inspire Brands Inc.’s Dunkin’ stopped selling Beyond’s sausage sandwich at most of its 9,000 U.S. locations last year after almost two years, with only several hundred keeping it available.

At the same time, McDonald’s Corp. is expanding its test of the McPlant, a plant-based burger made by Beyond. And KFC is running a national limited-time offer of Beyond Fried Chicken. Vegetarian main dishes had been notoriously lacking at those restaurants, whereas there are still other, non-Beyond meatless options at Del Taco, Friday’s, and Dunkin’ for those who want them.

“I don’t think it’s becoming a big percentage of the mix anytime soon,” said Michael Halen, a restaurant analyst at Bloomberg Intelligence.

Restaurants cycle through menu options all the time, but Beyond and its competitors are striving to show investors they can become regular staples for mainstream diners. As the first major publicly traded plant-based meat company, with a stock that fell 48% in 2021, the pressure on Beyond is palpable. The recent moves by some of its restaurant partners show how difficult it is to take plant-based meats from niche to mainstream.

“With more than 62,000 foodservice points of distribution globally, we are thrilled with our significant success to date, including at some of the largest restaurant chains in the world,” a company spokesperson said in an emailed statement, adding that the food maker continues to test and introduce new items with restaurants.

Pre-Covid Boom

Before Covid hit, plant-based meats were quickly piling up on menus. Shipments from distributors to foodservice locations in dollars rose 46% in 2019, according to research from NPD Group Inc. Sales plummeted 15% in 2020 amid pandemic closures and some restaurants shrinking their options. Some of those dollars came back last year, but shipments were still down 1% compared with 2019.

Investors will be closely watching Beyond’s earnings report, expected at the end of this month, after a disappointing sales projection last quarter sent the stock down 13%. Just three of the 22 Wall Street analysts covering Beyond recommend buying shares, according to data compiled by Bloomberg. Fourteen have hold ratings on the stock and five call it a “sell.”

“It’s still a very, very narrow niche, and the chains are challenged to keep low-volume items on the menu in this supply-constrained Covid environment,” said Bob Goldin, a partner at food-company consultant Pentallect Inc. “What I sense is there’s just a lot of tactical withdrawals” of companies exiting the plant-based space, he said.

Del Taco began selling Beyond’s seasoned plant-based crumbles nationwide in 2019, at almost 600 restaurants. Del Taco said it was the first national Mexican-themed fast-food chain to sell plant-based protein options.

Now, three out of four Del Taco stores in Florida no longer sell Beyond’s version of ground beef. The move is part of a broader reduced-menu trial to make ordering faster and more accurate, the company said, and the item is still available in other restaurants across the country.

At TGI Friday’s, sales of the Beyond Burger, added nationally in January 2018, are stagnant, according to Chief Executive Officer Ray Blanchette. “It’s not growing, not for us,” he said in an interview, though the company said it does not plan to remove it. “It’s not part of our menu strategy today in areas that we kind of want to lean in.”

The company had looked into adding appetizers and chili made with Beyond’s products before the pandemic, but Covid-19 complicated the trial and the items didn’t perform that well. “It just wasn’t for our guests,” Blanchette said.

Limited Appeal

While vegan and vegetarian patrons will continue to order these kinds of items, they don’t hold much appeal outside of that, said Joseph Szala, managing director of Vigor, a restaurant consultancy. Restaurants are balancing that against their menu-reduction strategies. “Smaller menus mean quicker and more accurate ordering, preparing, delivering,” he said, all of which add up to happier customers.

In June, after Dunkin’ removed Beyond’s sausage from the vast majority of its 9,000 locations, it said the two companies would continue working together. No further menu additions have been announced to date. Dunkin’ didn’t respond to a request for comment.

“Just because a restaurant is discontinuing it, it doesn’t just mean that it’s a fad,” said Morningstar analyst Rebecca Scheuneman. “Plant-based meats really appeal to certain demographics — specifically younger demographics. Our younger generations are really concerned about the environment and the impact that the meat industry is having on the environment.”

Scheuneman said she thinks Beyond shares are “really undervalued” and its products are “still in the early stages” of adoption.

Even with its recent slump, Beyond’s stock is still up more than 140% since its initial public offering in May 2019. McDonald’s shares have gained 35% over that time and the Russell 1000 Index is up about 54%.

Other chains are just starting to test the waters with meat alternatives. Last month, Chipotle Mexican Grill Inc. introduced its own plant-based chorizo across the U.S. Shake Shack Inc. tested a veggie patty in limited markets in 2020. Torchy’s Tacos, a chain with over 100 locations, has announced the addition of a vegan taco made with Beyond Beef, and Beyond has also been working on plant-based proteins with Taco Bell, which like KFC is owned by Yum! Brands Inc.

“You will see more chains jump on the bandwagon with plant-based,” said Pentallect’s Goldin. “But that doesn’t mean they’ll stay on the bandwagon.” – Source: Bloomberg L.P.