Offering lower-calorie options may mean more revenues for fast food restaurants.
A recent study from the Hudson Institute, a nonpartisan policy research organization, looked at the relationship between menu items and revenues of 21 fast food chains and quick-service restaurants including McDonald’s, Wendy’s, Burger King, and Taco Bell, as well as sit-down spots such as Applebee’s, Olive Garden, Chili’s, and Outback Steakhouse.
Lower calorie food was defined as a sandwich or entrée containing less than 500 calories; side dishes, appetizers and desserts with less than 150 calories, and beverages with fewer than 50 calories per 8 oz. Over a period of five years, chains that expanded their lower-calorie options had better sales growth, greater increases in customer traffic, and stronger gains in total food and beverage servings than chains who cut back on lower-calorie fare.
The researchers used the companies’ annual reports and data from market research firms to assess same-store sales, total store sales, total food and beverage servings (number of times a specific menu item was ordered), and customer traffic. Using the data, they analyzed the businesses’ overall performance related to sales of lower-calorie items.
The findings were pretty surprising — and, from a health perspective, potentially encouraging. Among all the chains, the lower-calorie items were driving growth for both food and drinks. For a group of restaurants that pulls in $102 billion in annual U.S. sales, that’s saying something. Chains that increased their servings of lower-calorie food experienced 10.9% growth in customer traffic compared to a 14.7% decline among chains that didn’t. Overall, they served 472 billion lower-calorie foods and beverages over the five year period, and 13 billion fewer servings of traditional items such as French fries.
To get a better idea of how real the shift toward lower-calorie items is, the researchers took a closer look at the largest chains that have more than $3 billion in sales, in which French fries make up 20% of their total food servings. Among this group, the percentage of French fry servings fell by one percentage point. “You may look at that and think, what’s the big deal? It’s just one percentage point, but when you realize that these five chains sell over 5 billion servings of French fries per year, to come down 1%, that’s a loss of 50 million servings,” says Hank Cardello, lead author of the report.
Perhaps due to their continued reputation as purveyors of unhealthy food, however, from 2006 to 2011, the industry overall experienced a 832 million drop in total servings. But there are hints that people are heeding messages for healthier eating, since sales of lower-calorie offerings rose during the same time period while the higher-calorie food items fell by 1.3 billion servings. “That to me is the ‘ah ha!’ moment, where you say, ‘Okay, I get it. If I’m not [bringing] in these lower-calorie items, I’d be worse off than I am right now.'”
“This is clear evidence that restaurants need to be more aggressive in carrying more low-calorie options. I don’t necessarily mean calling everything healthy or low-cal, it’s just shifting attention toward the lower-calorie diet brands,” says Cardello. “I expect to see more and more of those because that’s what the consumer is starting to demand, and those who lag on that and rely on their more traditional items will clearly see buy-in declines to their chains. It is just not good business to be doing that.”
According to the researchers, these findings may provide a practical, bottom-line reason for the restaurant industry to take lower-calorie, healthy food options seriously. The moral strategy of shaming the restaurants into changing their menus for the good of public health was never effective, nor sufficient. But if healthier fare can bring in more dollars, perhaps both consumers and the industry can benefit. “Bring the business into it and persuade them to act in their own enlightened self-interest,” says Cardello.