Burger King parent Restaurant Brands International Inc. plans to launch its meatless “Impossible Whopper” nationwide later this year, the fast-food company’s Chief Executive Jose Cil said on the company’s first-quarter earnings call.
Cil said the company QSR, -1.44% is “encouraged” by the feedback from the test, which is taking place in St. Louis, and will first expand the Impossible Whopper to additional test markets this summer before going national.
Though made without meat, Cil said the Impossible Whopper fits into the “flame-grilling” positioning that Burger King has carved out in the burger sector.
“[W]e’re not seeing guests swap the original Whopper for the Impossible Whopper,” he said on the Monday call, according to a FactSet transcript. “We’re seeing that it’s attracting new guests.”
The move would be in keeping with dining trends. One third of all Americans and 37% of millennials plan to eat more plant-based products over the next year, according to Mintel data.
Brands are also launching and expanding to meet the new demand. Earlier this month, Lightlife Foods announced a new burger that the company said would be a challenger to Impossible Foods and Beyond Meat BYND, +0.00% The Lightlife Burger is made with pea protein and is free of GMOs, soy, gluten and artificial flavors.
“About a quarter of the U.S. population, many of whom aren’t vegan or vegetarian, say that they eat and drink plant-based beverages and foods as well as animal protein on a regular basis,” NPD Group wrote in a January report. “Among the reasons why plant-based proteins have mainstreamed is that consumers, in addition to adding protein to their diets, perceive them as being ‘better-for-you’ options.”
Restaurant Brands stock has taken a 3.7% tumble in Monday trading after reporting first-quarter profit that missed expectations. While sales and comparable sales at Burger King and Popeye’s grew, Tim Horton’s reported a 0.6% comparable sales decline.
Cil attributed the decline to the weather and a weak response to the 33-year-old Roll Up the Rim promotion, which offered customers prizes including prepaid debit cards.
“I hate using weather as an excuse,” Cil said on the call. “But given the nature of our high traffic and frequency business in Canada and the severity of the weather impact we experienced in the first quarter, we felt it necessary to disclose in order to provide a more accurate picture of our underlying sales performance.”
The brand started to see a decline with the promotion late last year.
“[I]t’s become clear to us that it needs a modern and fresh approach to engage our guests in a strong way going forward,” Cil said.
Bernstein analysts call the Tim Horton’s miss “disappointing after last quarter’s healthy momentum (albeit partly from weather).” Still analysts are upbeat, with an outperform stock rating on Restaurant Brands and a $77 target price.
“We think attractive valuation – combined with plenty of dry financial powder – will support the stock and give bulls (like ourselves) reason to stay constructive against a backdrop of a new CEO still working through opportunities to effect change.”
This was Cil’s first quarter as CEO.
Restaurant Brands shares have rallied nearly 23% for 2019 so far while the S&P 500 index SPX, +0.11% is up 17.5% for the period.