Menu Mandate: Low Cal Becomes Fast Food Industry Imperative

Shrivel-size me.

An aging population, concerned about longevity, is finally, in its twilight years getting serious about diet and the impact on weight and health.

The implications for business are significant. There has always been a market for healthier fare but the popular perception is that the fast food restaurant business continues to thrive on generous portions of cardiac- calamitous servings. Wrong.

It turns out, as the following article explains, that an analysis of recent restaurant sales growth over a five year period, shows the key success determinant has been offerings of lower calorie food and beverages.  Demographics are destiny and for the current generations of consumers, the less is more message is resonating.

That even the McDonald's of the world are posting calorie content information speaks to the importance of the trend data. The impact may be hard to discern as other research has determined that many fast food industry salad offerings have more calories than some burgers, but when it comes to weight and health, perception has always been reality. When it comes to the bottom line, the research demonstrates that lower calorie sales are going up and higher calorie sales are going down. Business will budget accordingly. JL

Julie Jargon reports in the Wall Street Journal:

People are placing fewer orders for french fries and sugary drinks at restaurants, giving a boost to establishments that sell more low-calorie items.
An analysis of 21 fast-food and sit-down restaurant chains between 2006 and 2011 found that lower-calorie food and beverages fueled the chains' growth
The study was funded by the Robert Wood Johnson Foundation and conducted by the Hudson Institute, a policy-research organization.

Panera posts calorie information on menus nationwide and says a fifth of its customers order lower-calorie items. Above, a New York Panera.

The study found that restaurants that increased lower-calorie servings experienced an average 5.5% increase in same-store sales. That compared with a 5.5% decrease among chains selling fewer lower-calorie servings.
"The bottom line is, if restaurants don't get more aggressive behind these low-calorie products, they're leaving sales on the table," said Henry Cardello, director of the Hudson Institute's Obesity Solutions Initiative and lead author of the report. "It's a business imperative."
The findings might make restaurant chains feel better about efforts around the U.S. to get them to post calorie information.
The Hudson study found that the number of lower-calorie food and beverage servings sold increased 2.5% to 18.7 billion, while the number of higher-calorie servings sold fell 4.2% to 31.2 billion. The analysis examined restaurant servings and traffic from market-research firm NPD Group Inc. and publicly available sales data from the restaurant chains.
Lower-calorie servings were defined as sandwiches and entrees containing 500 or fewer calories, beverages with 50 or fewer calories per eight ounces and side dishes, appetizers and desserts with 150 or fewer calories.

Diners have been part of the American way of life for more than a century. But these restaurants are losing their popularity. MarketWatch's Christopher Noble discusses five things that your diner probably isn't telling you. (Photo: AP)

Federal regulations requiring operators of restaurants with 20 or more outlets to post calorie counts are expected to take effect early next year. Some chains, including McDonald's Corp. MCD -0.23%and Panera Bread Co., PNRA -0.28%already post calorie information on menu boards nationwide.
Several chains have created sections on their menus featuring smaller portions and low-calorie offerings, such as Fit Fare at Denny's Corp. DENN 0.00%restaurants and Au Bon Portions at ABP Corp.'s Au Bon Pain chain.
Early studies on how posting calorie information affects consumer behavior have proved mixed. Some have found that providing calorie information has steered consumers toward healthier options, while others have found no noticeable shift.
After Panera posted calorie counts on its menu boards in 2010, the company noticed that 20% of customers began ordering lower-calorie items.
Chili's Grill & Bar, a unit of Brinker International Inc., EAT +1.47%said sales of items containing less than 675 calories increased after it featured two new items on that Lighter Choices lineup on menu inserts in December.
McDonald's declined to comment on the Hudson study, but when the company in September said it would begin posting calorie information nationwide, Jan Fields, then-president of McDonald's USA, said the company hadn't noticed a change in behavior in the cities that already required posted calorie counts.
Mr. Cardello, a former food-and-beverage industry executive, said he was surprised to find that fast-food chains sold a slightly higher percentage of lower-calorie food servings than sit-down restaurants did.
Margo Wootan, the director of nutrition policy at the Center for Science in the Public Interest, said the report was consistent with what she has seen in restaurants. "Americans are more interested than ever in healthy eating," she said.
But she warned that consumers still aren't as good about watching their calories when they dine out as when they eat at home, in part because large serving sizes at restaurants lead to overconsumption. Her nonprofit advocacy group wasn't involved in the Hudson study.
Ms. Wootan said several studies have linked frequent restaurant visits with higher obesity rates. One showed that women who eat out more than five times a week consume about 290 more calories on average each day than women who eat out less often.
"My biggest concern is that oftentimes, there are only a few healthy options at restaurants amid a much larger array of unhealthy choices," she said.