A business case for lower-calorie foods

Articles
May 16, 2013

A business case for lower-calorie foods

The Hudson Institute think tank shows impressive performance gains at eateries that add lower-calorie choices.

When New Yorkers speak of the Hudson Miracle, they refer to US Airways Captain C.B. “Sully” Sullenberger’s safe landing in the icy river after bird strikes took out both engines shortly after takeoff from LaGuardia Airport in January 2009.  He saved all 155 on board.

Is another Hudson Miracle in the making?

The Hudson Institute went deep building the business case for lower-calorie, better-for-you foods and beverages.  It aimed to quantitatively show the sales, financial, shareholder and reputational benefits that come from selling more of these items.  How many lives could this persuasive case (figures below) help save per year?

The Lempert Report believes this analysis could already be an influence on the lighter-menu trend at many fast feeders and casual chains today.

One indisputable fact helped drive the Institute’s urgency:  “In 1990, no state had an obesity rate above 15%.  Today, 39 states claim adult obesity rates over 25%, and not one has a rate lower than 20%,” it said.

The Institute determined that restaurants achieve superior performance when they grow sales of lower-calorie foods and beverages.  They studied servings and traffic data from NPD Group/Crest and sales trends data from Nation’s Restaurant News about 21 national chains between 2006 and 2011.  They determined that quick-serve and sit-down eateries improve same-store sales, traffic and servings overall.

Comparing the chains’ 2011 statistics with 2006:

  • Lower-calorie items were the key growth engine for foods and beverages. Lower-calorie food servings in the study group grew by 252.4 million, while traditional servings fell by 1.1 billion. Lower-calorie beverage servings rose 220.0 million, while traditional servings fell 201.9 million.
  • Overall traffic in the 21 restaurants was up 1.8% five years later.  Yet chains that grew lower-calorie food servings grew traffic by 10.9%, while those that decreased lower-calorie servings were 14.7% lighter in traffic.
  • Overall food servings were down 2.3% five years later.  Yet chains that grew lower-calorie food servings had 8.9% more servings, while those that decreased lower-calorie food servings had 16.3% fewer servings.
  • Same-store sales were down 0.8% overall five years later. Yet chains that increased lower-calorie servings grew same-store sales by 5.5%, while chains that decreased lower-calorie servings suffered declines of 5.5% in same-store sales.

Among the restaurants studied: Applebee’s, Burger King, Denny’s, Wendy’s, Olive Garden, McDonald’s, Chick-fil-A, Sonic and Red Lobster.