I love meat. So much so that I’ve spent years perfecting my cooking techniques for all manner of tasty cuts. I have different and specialized ways to cook premium butcher’s cuts such as ribeye, filet mignon and New York Strip. And I have also developed methods to tenderize and add flavor tougher cuts like top round using long-cooking times.
Now, I realize that some people either can’t or don’t want to eat meat. And according to a recent Harris poll, 3.8% of U.S. adults eat either a vegetarian or completely vegan diet. Whether folks eat a meat-free diet for health reasons or issues of conscience – more power to them.
And for those looking for plant-based alternatives to meat, 2019 has been a very exciting year.
Plant-based meat alternatives from Impossible Foods and Beyond Meat have gone mainstream. Burger King has started serving the former nationwide, and McDonald’s Corp. (MCD) the latter. Chances are, you can find at least one of them in your grocery store, too.
Which is great, as far as I’m concerned. Both products allow those who don’t eat meat to experience something that is almost identical in taste to a good burger. And the science behind how these companies made such great-tasting food in somewhat different ways is intriguing – but that’s a story for another day.
Because this week, the inevitable happened. Instead of letting people enjoy the added option of a meat-free burger, some bonehead decided to sue Burger King about their Impossible Whopper. No good deed unpunished…
I’ll get into a few of the details of the absurd lawsuit below. But for now, there’s a bigger issue afoot. America’s abundance of frivolous lawsuits has given us the costliest legal system in the world.
It hurts the economy, innovation, the stock market, and you.
But there’s something you can do…
The Unsavory Truth about Civil Cases in America
America is without a doubt one of the most litigious societies in the world. The costs and compensation paid out by the U.S. tort system, which handles civil cases, was $429 billion in 2016.
That was 2.3% of our GDP that year. Or to put it differently, about $3,329 for every household in the country.
Now, the roadside billboards advertising lawyers to handle lawsuits make it seem like, despite the costs, all of this is to help the little guy.
That couldn’t be further from the truth. Only 57% of that $429 billion actually goes to plaintiff compensation. The rest covered the costs of litigation, running the courts, and insurance.
But get this, that 57% includes the money that will be paid to plaintiff lawyers. That fee is typically 33% for cases that don’t go to trial and 40% if it does. Fees can be lower for bigger cases, but let’s use 33% as the amount that goes to plaintiff lawyers as a good approximation.
This means that just a little more than 1/3 of the almost half a trillion dollars our tort system costs goes to victims. So much for looking out for the little guy. This ugly underbelly of our society only looks out for the country’s bloated legal machinery – the lawyers and companies who rake in the other 2/3 of all those payouts.
This would be funny if it wasn’t infuriating.
And it’s the same with this most recent frivolous lawsuit. I hope an enlightened judge throws the case out. But that probably won’t happen. Here’s a little background…
A man who bought an Impossible Whopper from Burger King made with the plant-based Impossible Burger is suing the burger chain. He claims that despite advertising the burger as meat-free, it was cooked on the same surface as beef patties.
This meant that his burger was covered in “meat by-products.”
On its website, Burger King advertises the sandwich as “100% Whopper. 0% Beef.” It does not say the sandwiches are vegan, and says it is made with the non-vegan mayonnaise option. (The plaintiff did order his burger without mayo).
A disclaimer under the description adds that “for guests looking for a meat-free option, a non-broiler method of preparation is available upon request.” It’s not clear what signage is available in stores.
So the man has filed a lawsuit to force Burger King to put this warning inside their stores, and to pay him compensatory damages. To the tune of $5 million.
This is ridiculous.
Yes, Burger King probably should more clearly tell customers about the option to have their meat-alternative patties grilled separately.
But suing the company for money is frankly wrong. No one was hurt here. No one was lying. The company did not claim to be serving a vegan burger.
The court system is there to protect us from wrongs, to settle real disputes. Instead, valuable time and money is wasted on frivolous lawsuits like this one, by people or companies looking to score some easy money.
It bogs down the courts so that real cases that matter take years and years before they are resolved. It pushes the media to cover bogus lawsuits instead of substantial news.
I don’t know if the judge assigned will allow the lawsuit. The plaintiff requested to have a jury trial – the most expensive kind of case.
But this simply does not belong in court.
At a cost of $429 billion, cases like these are a huge drain to the economy and a mark against doing business here in America.
The cost of litigation in America alone pushes up manufacturing costs here by 3.2%.
And just like it doesn’t help individuals, it also doesn’t do much for small businesses. These small companies pay 81% of the costs of the tort system, but receive only 22% of its revenue.
In other words, it’s our country’s bloated legal machinery that benefit in the end.
The rest of us are stuck paying their bill.
This can’t go on…
Look Past Frivolous Lawsuits for a Tasty Profit
If you’ve been on any sort of news outlet this week, you’ve likely seen coverage of this lawsuit.
Once again, we are distracted by a meaningless story with no purpose except pure entertainment value. Certainly no one thinks this is an important lawsuit for any other reason. But we can use this useless suit to turn our attention to doing something that really matters. Marking money on one of this year’s hottest IPOs…
This latest, and outright exasperating, lawsuit against Burger King presents an opportunity for you. Impossible Foods, the company behind the Impossible Burger (the plant-based burger used by Burger King), is not traded publicly yet.
But its main competitor, Beyond Meat Inc. (BYND), went public earlier this year. In fact, it’s one of the few successful IPOs in a year filled with IPO duds.
Its IPO price was $25 in May of this year. It soared as high as $239 in late July and has since come back to Earth a bit, trading at $77 as I write this.
Plant-based meat alternatives are a huge business, and an unfounded lawsuit like this might be entertaining, but it is not going to derail the momentum of this movement.
As I said on Varney & Co. last week, Beyond Meat’s future is very bright. By 2024, the worldwide sale of meat products is expected to be worth $1.2 trillion.
In their IPO filings, Beyond Meat anticipates that over that same time frame, plant-based meat alternatives will capture 13% of that market. That’s $156 billion.
And Beyond Meat has the first-mover advantage here, having spread further than Impossible Burger already. Look at buying the stock while it still trades in the $75-$78 range.
That way, at least something good can come out of the mess of lawsuits we’re stuck watching.
Great trading and God bless you,
D.R. Barton, Jr.