Restaurant Chains Serving More Lower-Calorie Choices Do Better Financially

  Restaurant Chains Serving More Lower-Calorie Choices Do Better Financially

PR Newswire

WASHINGTON, Feb. 7, 2013

Chains see improved sales, traffic and total servings when they serve more
lower-calorie items

WASHINGTON, Feb. 7, 2013 /PRNewswire-USNewswire/ -- Restaurant chains that
serve more lower-calorie foods and beverages have better business performance,
according to a study released today by Hudson Institute. Over five years,
chains that increased the amount of lower-calorie options they served had
better sales growth, larger increases in customer traffic, and stronger gains
in total food and beverage servings than chains whose servings of
lower-calorie options declined. The authors of the report believe it is the
first to determine the financial impact of lower-calorie foods and beverages
on the U.S. restaurant industry.

The report, Lower-Calorie Foods: It's Just Good Business, analyzed 21 of the
nation's largest restaurant chains, including quick-service chains such as
McDonald's, Wendy's, Burger King, and Taco Bell, and sit-down chains such as
Applebee's, Olive Garden, Chili's, and Outback Steakhouse. Together these 21
chains have $102 billion in annual U.S. sales and 49 percent of the revenue of
the top 100 restaurant chains.

"Consumers are hungry for restaurant meals that won't expand their waist
lines, and the chains that recognize this are doing better than those that
don't," said Hank Cardello, lead author of the report, Senior Fellow at Hudson
Institute, and Director of the Institute's Obesity Solutions Initiative.
Cardello is a former executive with Coca-Cola, General Mills, Anheuser-Busch,
and Cadbury-Schweppes.

The report found that, between 2006 and 2011, lower-calorie foods and
beverages were the growth engine for the restaurants studied. In 17 of the 21
restaurant chains evaluated, lower-calorie foods and beverages outperformed
those that were not lower-calorie. In addition, chains that increased their
servings of lower-calorie items saw positive returns as a result. These chains
generated:

  oa 5.5 percent increase in same-store sales, compared with a 5.5 percent
    decline among chains selling fewer lower-calorie servings;
  oa 10.9 percent growth in customer traffic, compared with a 14.7 percent
    decline; and
  oan 8.9 percent increase in total food and beverage servings, compared with
    a 16.3 percent decrease.

Cardello and his colleagues worked with the Nutrition Coordinating Center at
the University of Minnesota to develop the calorie criteria used to assess
menu items. A main course item such as a sandwich or entree was considered
lower-calorie if it had no more than 500 calories. Beverages with 50 or fewer
calories per eight ounces were considered lower-calorie. Side dishes,
appetizers, and desserts with 150 or fewer calories also were categorized this
way. Items that did not meet the criteria are referred to as traditional.

Lower-calorie servings of foods and beverages increased as a percentage of
total servings across all 21 chains. Over the five-year period, the chains
collectively saw an increase of roughly 472 million in total servings of
lower-calorie foods and beverages, compared with a decrease of about 1.3
billion servings among traditional items.

"This report shows that companies can serve both their interest in healthy
profits and their customers' interest in healthier eating," said James S.
Marks, MD, senior vice president and director of the Health Group at the
Robert Wood Johnson Foundation, which funded the report. "We need more
companies to make this shift, and now they have even more reasons to do so."

The report used companies' annual reports and data from market research firms
to assess same-store sales, total store sales, total food and beverage
servings, and customer traffic. It used those figures to assess overall
performance as it related to sales of lower-calorie items. Same-store sales is
a measurement that tracks the sales revenues of stores that have been open for
at least one year. Total servings refers to the number of times a specific
menu item was ordered.

This report follows one from 2011, also authored by Cardello, that examined
the business impact of selling better-for-you foods and beverages among
consumer packaged goods companies such as PepsiCo, General Mills, Nestle,
Kraft, Coca-Cola, and Campbell Soup. That report found that companies with
higher-than-average sales coming from better-for-you products showed superior
sales, operating profits, and company reputations.

"The bottom line is that it's good business to sell more lower-calorie and
better-for-you products," said Cardello. "This holds true for major food and
beverage companies and for restaurants."

About Hudson Institute
Hudson Institute is a nonpartisan policy research organization dedicated to
innovative research and analysis. The mission of its Obesity Solutions
Initiative (www.obesity-solutions.org) is to bring about practical,
market-oriented solutions to the world's overweight and obesity epidemic.
Founded in 1961, Hudson celebrates a more than half-century tradition of
forging new ideas to promote security, prosperity, and freedom. www.hudson.org

About the Robert Wood Johnson Foundation
The Robert Wood Johnson Foundation focuses on the pressing health and health
care issues facing our country. As the nation's largest philanthropy devoted
exclusively to health and health care, the Foundation works with a diverse
group of organizations and individuals to identify solutions and achieve
comprehensive, measurable, and timely change. In 2007, the Foundation
committed $500 million toward its goal of reversing the childhood obesity
epidemic by 2015. This is the largest commitment any foundation has made to
the issue. For 40 years the Foundation has brought experience, commitment, and
a rigorous, balanced approach to the problems that affect the health and
health care of those it serves. When it comes to helping Americans lead
healthier lives and get the care they need, the Foundation expects to make a
difference in your lifetime. Follow the Foundation on Twitter
(www.rwjf.org/twitter) or Facebook (www.rwjf.org/facebook).

For more information, contact:
Christine Clayton
media@rwjf.org
609-627-5937

James Bologna
jbologna@hudson.org
202-974-6456

SOURCE Hudson Institute

Website: http://www.hudson.org