While the chicken wars flocked to new heights this year, another burger alternative is quietly growing its share: plant-based proteins. Not confined to a drive-thru sandwich, the category encompasses a wide range of grocery and restaurant options, including nut and seed milks (oat milk, anyone?) and sausages, eggs, pork, chicken and seafood made from plants.
In the latest episode of “Revenue Stream,” RMS’ ongoing web series designed for restaurant operators, franchisors and franchisees, an expert panel discusses the future of plant-based foods in the restaurant industry. Alicia Kelso, senior food and drink contributor for Forbes, hosts the panel discussion with four industry experts: Jennifer Bartashus, Bloomberg Senior Equity Research Analyst, Consumer Staples & Retail; Sara Bittorf, TGI Fridays Chief Experience Officer; Dora Furman, Revenue Management Solutions Vice President; and Andrew Reid, Rival Technologies Founder and CEO.
During this episode, the panelists shared their expert opinions and guidance about how brands can take advantage of the growing demand for plant-based foods, the potential impact on the bottom line and the demographics of the customers most likely to bite.
To catch the complete conversation, you can view the full episode.
Meanwhile, the key takeaways include:
1. The pandemic is affecting the plant-based food category
Pre-pandemic, many people were trying plant-based alternatives in restaurants. Dine-in limitations have flipped the trend to grocery stores, and CPG brands responded in-kind, with a wide range of new products to meet the demand. It’s this variety, says Bartashus, that will help restaurants as they start to recover. “More people have had exposure during the pandemic to plant-based alternatives, and we believe they’ll be more eager to try them away from home at restaurants.”
2. The plant-based alternatives trend is generational
Millennials and Gen Z are the driving force behind the plant-based movement, says Reid. “Taste and texture are important to them, but what’s really driving their choice is sustainability,” he says. The RMS survey about plant-based meat alternatives affirms this: 48% of respondents said the main motivation for consuming plant-based meats was to help preserve the environment. Of those respondents, millennials and Gen Z make up the majority (55%).
3. Trial of plant-based based foods is up; frequency is down
This is where it gets interesting, says Furman. “We know from our survey of 800 US consumers that nearly 30% of respondents tried plant-based meat alternatives for the first time since the pandemic started. Yet we’ve now seen a downward shift in frequency of eating plant-based meats, from multiple times a week to once a week or even once a month.”
Credit the pandemic. During stressful times such as the past year, foods that impart a feeling of comfort are popular. So far, that doesn’t extend to plant-based items — at least not yet. “With customers dining out less because of the pandemic, when they decide to eat at TGI Fridays,” says Bittorf, “the decision to indulge comes with it. If you want nachos, you want the whole experience, not the version with plant-based meat.”
4. However, preference for plant-based products is up
RMS launched its first survey on plant-based meats in January 2020, pre-pandemic, then surveyed again in August. During that time, the number of consumers that stated they would switch to a restaurant brand offering plant-based products increased from 23% to 30%. “We also saw the number of respondents that had NEVER tried plant-based meats decline from 45% in January to 39% in August. Both statistics are significant,” says Furman.
RMS stresses to brands the importance of having at least one plant-based item on their menu. For some people, this availability does play a role in choosing your restaurant — or shifting away. Furman says, “In our survey, 2 in 5 family households and 1 in 4 single households responded they would switch to another restaurant brand if it offered plant-based meats.”
5. Innovation (and price) are key to powering plant-based growth
Just as it has them seeking comfort in certain foods, the pandemic has consumers less willing to try new things, especially with fewer outings to restaurants. For now, consumers are drawn to the familiar, says Bittorf, but that will change. We don’t know when — whether that will happen in 2021 or not is still up in the air. In the meantime, innovation remains important. People will continue to look for new things. That’s just the nature of today’s consumer.
Bartashus cites recent joint ventures as an example, such as the one with PepsiCo and Beyond Meats. That the two companies are working together to produce snacks and beverages made from plant-based proteins shows the potential for brands to take plant-based alternatives into different categories.
The downside lies in budgets. “It’s important for restaurants to balance innovation with bang for your buck (staff and resources), but preparing and planning to incorporate plant-based alternatives in your restaurant will be important as restaurants recover,” says Furman.
Price is also key. Though price points are slowly coming down, it may not be fast enough for consumers. “During our research,” Furman says, “we found that 54% of consumers believe plant-based meats are too expensive. Yet 40% of respondents said they would be willing to try plant-based meats if they were more affordable.”
Volume will help, but there is still a big percentage difference between the replacement product and the actual protein. She added that RMS data show that having price parity for meat alternatives (within 10-15% of the original protein) increases sales.
6. Younger generations will make the most impact on the plant-based segment
A recent report from HealthCare Insider found that restaurants’ recovery may be in the hands of younger consumers, who are likely to be the first to return to restaurants. Younger generations are also more likely to try new and plant-based products, which could impact plant-based sales. According to Reid, one table could have four different eating habits, ranging from vegan to vegetarian and non-vegetarian. Restaurants must pay attention to that.
All four panelists noted it will be interesting to see how something that is new and interesting transforms into something more sustainable post-pandemic. Targeting youth and niche markets will make the difference. Brands can do that, Reid advises, by connecting messaging with the things that matter to younger generations, such as sustainability. Furman adds that for Gen Z, it’s especially critical that a brand has a strong media platform.
7. Plant-based products are just one piece of the restaurant industry’s recovery
In April and May 2020, plant-based alternatives got unexpected attention as COVID caused some meat plants to shut down. With demand outstripping supply, protein-based foods became scarcer and more expensive, giving plant-based alternatives more appeal.
Whether this trend will stick around remains to be seen, says Bartashus. At the very least, it could mean less awareness-building is needed; consumers have the product on their radar and may have already tried it out.
The rising tide will likely raise all ships, says Bittorf. “Our demographic won’t be the drivers,” she says of TGI Fridays diners, “but we think our customer will still appreciate having the choice. We want to make sure that if someone is looking to indulge in a different way, that they have that option. Our goal is to make it less risky for people to try our plant-based options by offering, for example, a flight of burgers.”
The placement of plant-based products in retail and grocery is also changing. Long segregated in a corner of the supermarket, products now share retail space with the proteins they replace, which could be an assist to the category in restaurants.
Plant-based alternatives might be just 2-3% of your sales, says Furman, “but at RMS, we advise that if there’s a demand, and you can make a profit, then why not include it in your menu?”