For Beyond Meat and QSR Brands, Asking “What if?” Will Prevent “What Now?”
The supply chain disruptions of 2020 resulted in a highly challenging year for the quick-service restaurant (QSR) industry. Wendy’s, for instance, ran out of menu items containing beef in almost one-fifth of its restaurants. As a result of the beef shortage, Wendy’s, along with McDonald’s and Burger King, resorted to importing beef during the earlier months of the pandemic.
Additionally, some companies cut down their number of menu offerings. One of these was Taco Bell, who removed a fairly robust handful of items to streamline their operations, including their potato options. This caused quite a kerfuffle as vegetarians and vegans had long relied on Taco Bell’s potato items. But in an interesting move recently, Taco Bell announced that not only were they bringing potatoes back, they were also teaming up with plant-based protein supplier Beyond Meat to create an entirely new product. And they are not alone: Beyond Meat recently just announced a new partnership with McDonald’s as well.
With major disruptions in the meat supply chain raising costs for restaurants and supermarkets, Beyond Meat has aggressively pursued new partnerships with QSR companies. But while the plant-based protein company has asserted that its supply chain is ready for the high volumes of the QSR industry, the company has struggled with shortages in the past. And while plant-based protein products are a logical alternative in the face of lingering uncertainties for the meat sector, they are not without supply chain risks either.
Such risks are important to consider when bringing a new product to market, and while this may seem like common wisdom, the QSR industry has its share of failures to heed that wisdom. Popeyes, for instance, ran out of their new chicken sandwich just a few short weeks after launch in 2019. The reason? Demand exceeded expectations. It took months of addressing supply chain issues before Popeyes was able to bring the sandwich back. To both Taco Bell and Beyond Meat’s credit, they seem to be aware of the supply chain risks inherent to bringing a new product to market.
For Taco Bell, their announcement of bringing back their potato items at the same time they announced their forthcoming Beyond Meat product may have partly been a way to manage some of those risks. This way, they won’t need to rely on either potatoes or Beyond Meat to solely carry the weight for their vegetarian and vegan customers. Should something happen to either their plant-based protein or potato supply chains, vegetarians and vegans would have alternative choices. Likewise, if meat supplies were to run low again it could be an opportunity for Taco Bell’s meat lovers to try their Beyond Meat item, particularly given how Beyond Meat has shaken up the plant-based protein market by actively targeting meat consumers to try their products.
Beyond Meat, for its part, is beefing up its production capacity. The agricultural and food production company Cargill has invested $75 million into Puris which, in turn, is the biggest pea protein producer in North American and is the supplier for Beyond Meat. Cargill’s investment allows Puris to more than double their level of production at their Dawson, Minnesota-based plant, thus allowing Beyond Meat to meet the increased level of demand as they embark on these new partnerships with Taco Bell and other QSR brands.
Clearly, Beyond Meat and their partners are planning for a high growth scenario. Supply chain scenario planning is a hot topic and a useful tool in times of expansion and contraction. Building probable future scenarios fosters more resilient supply chain execution. Discussing implementation strategies and risks helps to improve alignment and promote faster decision-making in light of future uncertainties. All this planning across the end-to-end supply chain will help suppliers and logistics service providers to be prepared for what could be a new source of high volume and potentially high demand products across many retail outlets.
The ultimate takeaways from the news about Beyond Meat’s new partnerships with QSR companies such as Taco Bell and McDonald’s would be to scale the scope of a new product launch to production capacity, and to gain enough confidence, through scenario planning and due diligence, of production capacity to go with the scope of launch that’s been determined for a new product. This is what both Taco Bell and Beyond Meat seem to be doing and what McDonald’s, in light of their just-announced partnership with Beyond Meat, will almost surely do as well. By doing the work of asking “What if?” now, these companies will reduce the risk of having to ask “What now?” later.
Mary Long is a professor in the University of Tennessee Master’s of Science in Supply Chain Management online program.