A&W A&W Food Services of Canada Inc. ("A&W"), Canada's second-largest hamburger fast- food chain, is aiming to meet the growing demand for plant-based protein. In July 2019, A&W became the first national burger chain to offer California-based Beyond Meat's burger on its menu. As consumers try healthier food options, A&W is trying to stand out and be the leader in plant-based, fast-food burgers. A&W's strategy is to attract the vegan, the vegetarian, and the healthy consumer back to the fast-food chain. After more than 60 years of focusing on beef, A&W has achieved success in offering a product made from peas, mung beans and beets. Instead of calling the patties a "veggie" burger, the chain has called it a "plant-based" burger to appeal to everyone who may want a healthier option. This labelling is also more inclusive to the overall population. What happened once the plant-based burger was offered? These Beyond Meat burgers sold out in just a few weeks. "It became even more popular than we had expected," A&W CEO Susan Senecal said in a telephone interview from Vancouver. "Plant-based protein has gained in popularity and it really is something people are very interested in."1 A&W is seeing growing opportunities by diversifying into non-meat products. Certainly, many consumers have already turned away from meat over concerns of environmental impact, animal welfare and healthier living. "Tyson Foods Inc., the largest U.S. meat producer, in 2016 acquired 5 per cent of Beyond Meat, which has also gotten the backing of billionaire investor Bill Gates. Maple Leaf Foods Inc., Canada's largest packaged meat company, is now stocking shelves with plant- based imitators after acquiring vegetarian producer Lightlife Foods."2 The reason for copying? Profits are up! "The A&W Revenue Royalties Income Fund, which invests the securities of A&W Food Services, is up 7.3 per cent this year and hit a 15-month high in August."3A&W has already provided customers with greater information on their food and ingredients in an effort to be transparent about the quality of food it offers. For example, the company now offers beef raised without any added hormones or steroids as well as chicken raised without antibiotics. This is something McDonalds, Burger King, Wendy's and other burger chains do not do. The goal-more natural foods. After A&W began the raised-without antibiotics-messaging, both customer traffic and burger sales jumped by double digits, according to Carter. It helped achieve every restaurateur's biggest goal: to attract first-time customers. "It really gave people a reason to go to A&W," he says. Customer satisfaction metrics like freshness perception and food taste also spiked. "Now A&W is perceived to have [some of] of the highest food quality within the quick-service restaurant segment."4 To reach millennials, sustainability and quality are key. In a recent report, Nielsen found that millennials were 13% more willing than other consumers to pay a premium for products from an environmentally friendly company and 12% more likely to buy a product that was fresh, natural, or organic. As A&W studied how to attract millennial eaters, food quality stood out. "What they're looking for is food that, in their words, feels more natural," Senecal says she learned.5 Recently, Canada's Food Guide also got updated and now recommends a plant-based diet. While competitors like McDonalds and Burger King stick to their traditional approach, A&W is leading change and bringing in a younger, urban clientele for healthier choices. Case Question(s) 1. What business-level strategy would you recommend and why? Explain with examples. 2. Conduct a VRIO analysis of the company. 3. Conduct an industry analysis of Michael Porter's Five Forces Model.