Beyond Meat burger and focus on ingredients helps boost A&W results

Yahoo Finance Canada
A&W introduced the Beyond Meat burger to its menu last summer. (CNW Group/A&W Food Services of Canada Inc.)
A&W introduced the Beyond Meat burger to its menu last summer. (CNW Group/A&W Food Services of Canada Inc.)

A shift toward natural ingredients and plant-based proteins are driving growth for one of Canada’s most well-known burger chains.

During a conference call with analysts on Wednesday afternoon, A&W Canada CEO Susan Senecal pointed to several new menu changes that she said have proven popular with the chain’s customers. Among them was the elimination of artificial cheese in November, as well as the introduction of the plant-based Beyond Meat burger last summer.

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“I would say that innovation is the biggest driver of our business,” Senecal said on the conference call following the release of fourth-quarter results.

“Suddenly, people are attracted by one or the other of the changes and that all adds up to more guests in our restaurants.”

The burger chain’s profit for the three month period ending December 31 was $9.8 million, up from $8.1 million the same time last year. Net income for full 2018 year increased 11 per cent when compared to 2017, from $28.2 million to $31.6 million. Sales for the quarter from restaurants in the royalty pool came in at $440 million, up from $373 million a year earlier.

Same-store sales, a key indicator for the retail industry, grew nearly 10 per cent in 2018.

Senecal said the growth, which was achieved across the country, was due to the company’s strategy to focus on innovation and quality ingredients. Bringing the Beyond Meat burger to the chain’s menu was part of that process, she said.

“Anecdotally, we heard that some guests who hadn’t been to A&W for a while were attracted by the idea of the Beyond Meat burger, and as well as some of our regular guests who just decided that they wanted to try it… so they came and gave it one more visit,” she said.

“It’s the accumulation of the changes that we’ve made. And of course, at the same time, guest experience has been hugely important.”

The burger chain has also seen growth in a new way of serving its customers, this time through third-party delivery services such as Uber Eats. While Senecal said it was too early to provide data regarding sales through delivery services, she said “it is certainly starting to be a factor.” About half of A&W restaurants – those located in larger cities where such services are available – have a third party delivery service available to them.

“Depending on how fast third party delivery rolls out to other parts of the country, there could be many more restaurants that are able to join,” she said.

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