McDonald’s has been standing on the sidelines of the meatless hamburger wars, but joined the fray this month with the test of a plant-based burger in several southwestern Ontario communities.
Rival Burger King rolled out a meatless whopper in August, while Tim Hortons, also part of the Restaurant Brands International (TSX: QSR) family, abandoned its BeyondMeat burger in September just three months after introducing it.
The McDonald’s sandwich was developed at its global headquarters in Chicago, with the Canadian operation responsible for the 12-week test. Southwestern Ontario was picked because the demographics are a stand in for “every town” North America.
The dilemma for fast food chains is whether meatless burgers are a fad or a trend. On the one hand they appeal to healthier lifestyles and food choices. But there is better vegetarian fare elsewhere and some vegetarians won’t eat the meat-free burgers because they are cooked on the same grill as chicken and beef. (Burger King customers can request that their Impossible Whopper is cooked separately.)
The meat eaters, on the other hand, might be doing more healthy eating, but you go to McDonald’s for a burger and fries, not a salad and a meatless patty.
McDonald’s (NYSE:MCD) is calling the product a PLT — plant, lettuce and tomato, which comes with pickles, onions, cheese, mustard, ketchup and a mayo-style sauce. It will cost a little more than a Quarter Pounder at $6.49 plus tax.
McDonalds decision to wait so long indicates its uncertainty. It has experience with meatless options in India which include a Veg Maharaja Big Mac and a Salsa Bean burger. But these products address core values in a country with a high proportion of vegetarians and strictures against eating beef.
McDonald’s caution is a sign of its business savvy. While keen to adapt to new food trends, it is taking the time to get it right. As Tim Hortons discovered, the companies and products first out of the gate aren’t necessarily the ones that stay the course.
In the meantime, the number one fast food chain has raised its dividend again. Starting with the December payment, McDonald’s will increase its quarterly dividend by 7.8%. Investors will receive $1.25 a share for an annual yield of 2.38% at current prices.
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