Dec 14, 2022 - Economy & Business

Taco Bell CEO: We got "mixed reviews" for plant-based meat alternatives

Illustration of a taco full of hundred dollar bills.

Illustration: Aïda Amer/Axios

Taco Bell's temporary plant-based meat products have gotten “mixed reviews,” and customers shouldn't count on a national rollout anytime soon, CEO Mark King tells Axios.

Why it matters: The plant-based meat industry has encountered a series of setbacks in 2022, undermined by inflation, underwhelming restaurant test results and troubles at industry innovator Beyond Meat.

  • “This has been the toughest year for the plant-based meat industry since its inception really,” CFRA Research analyst Arun Sundaram tells Axios. “It’s not just a Beyond Meat problem. It’s an entire category problem.”

The big picture: Taco Bell, one of the largest fast-food chains in the world with more than 7,000 U.S. locations, is known for its willingness to test out a wide variety of new products.

  • Any moves it makes in the plant-based space could be particularly influential, and it's tried a variety of plant-based meat alternatives in various places.

They include: The Crispy Melt Taco, a proprietary blend of soy and pea protein tested in Birmingham, Alabama, in August.

  • The Beyond Carne Asada Steak, based on wheat gluten and faba bean protein, developed in cooperation with Beyond Meat and tested in Dayton, Ohio, in August.
  • The Naked Chalupa with Crispy Plant-Based Shell, a proprietary blend of pea protein tested in Irvine, California, in June 2021.

What they’re saying: “We’re very committed” to exploring more plant-based items, King says, but “I do think it would work better if it was in areas that are much more open and interested in” them.

  • In short, they seem to work best as regional products.
  • CFRA's Sundaram says they are more popular in urban and suburban markets than in rural areas.

Be smart: Part of the challenge, King said, is that regional items can’t be included in Taco Bell’s national advertising: “The question, is how do you market it?”

Catch up fast: Taco Bell’s fast-food counterpart McDonald’s had high hopes for its McPlant burger, but it underperformed in tests and it’s not likely to roll out on a national basis.

  • And Beyond Meat recently flagged what it called "ongoing softness in the plant-based meat category.” The company, which has suffered a stock decline of more than three-quarters in 2022, recently cut about 1 in 5 jobs amid declining revenue.

💭 Our thought bubble: It’s a particularly challenging time to be selling an imitation product that costs more than the real thing while inflation batters consumers.

  • “These items are priced at a premium, so people are trading back down to animal meat,” Sundaram says.

Yes, but: Prices for meat alternatives have been coming down, and analysts believe the long-term prospects are positive as innovation improves taste and lowers costs.

The other side: Fast-casual chains like Qdoba and Chipotle have already introduced plant-based meats.

  • Beyond Meat in October introduced Beyond Steak: "Early feedback on taste and texture has been very positive, so we’re confident this is a product consumers are going to be very impressed with,” a Beyond Meat spokesperson told Axios’ Jennifer A. Kingson.
  • And an Impossible Foods spokesperson told Kingson it’s projecting "hyper-growth, with over 60% year-over-year sales growth in retail alone."

The bottom line: Plant-based meat alternatives might still be the future. But they’ll have a hard time in the present until giants like Taco Bell and McDonald’s jump on board.

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