Why Chipotle hasn't joined forces with plant-based meat kings Impossible Foods and Beyond Meat

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Chipotle CEO Brian Niccol doesn’t yet see the need to go all-in on the plant-based meat craze. But he is rooting for the success of the upstart industry.

Niccol told Yahoo Finance fresh off releasing a red-hot second quarter on Tuesday that he has talked to the folks at plant-based meat leaders Impossible Foods and Beyond Meat (BYND). While he is excited about the industry’s growth potential, Niccol said each plant-based meat player essentially sells processed food. That is not in keeping with Chipotle’s historically strict food quality standards, which focuses on serving whole ingredients that are hand chopped and cooked.

Niccol, who is leading a very successful turnaround at Chipotle, said Chipotle will instead lean into its existing vegetarian “sofritas” offering on the menu. Chipotle’s sofritas are tofu.

Indeed, Chipotle’s processed fast-food competitors have sought to cash in on the robust consumer interest for Impossible Foods and Beyond Meat products.

Fast-food chains from Restaurant Brands (QSR) to White Castle to Red Robin have hopped into bed with Beyond Meat rival Impossible Foods for limited-time sandwich offerings. McDonald’s (MCD) is rumored to be eyeing an entry, too.

By all accounts, consumer response has been strong to these plant-based products that are often priced at a nice premium to normal menu items.

Meanwhile, the plant-based meat category alone is now worth more than $800 million, with sales up 10% in the past year, according to the Plant Based Foods Association. Refrigerated plant-based meat has seen sales surge 37% in the last year, versus 2% growth for the traditional meat market.

Does Chipotle even need plant-based meat?

The argument could certainly be made Chipotle doesn’t need to mess around with plant-based meat.

We are back, but we feel like we are only just getting started,” Niccol told Yahoo Finance.

The burrito and salad bowl chain pummeled Wall Street’s second quarter sales and earnings expectations today. Chipotle reported sales surged 13% from the prior year to $1.43 billion, aided by a 99% surge in online ordering as the company focuses on improvements to its digital ordering. Analysts expected $1.41 billion. Earnings came in at $3.99 a share versus estimates for $3.76 a share.

Chipotle’s stock popped as much as 4% in after-hours trading today.

Brian Sozzi is an editor-at-large and co-host of The First Trade at Yahoo Finance. Follow him on Twitter @BrianSozzi

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