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Restaurants Should Be Doing More to Fight Obesity--for Their Own Good

Hank Cardello

After years of staying under the radar, the U.S. restaurant industry is publicly acknowledging its fundamental responsibility in confronting the obesity epidemic, and the news has been encouraging—to a point. In October, Johns Hopkins’ Bloomberg School of Public Health went public with a study of 66 large restaurant chains finding that menu items introduced in 2013 contained on average 60 fewer calories than those launched in 2012. More recently, McDonald’s Corp. announced that it would offer clementines as a seasonal Happy Meal option. And new calorie labeling on menus, now mandated by the Food & Drug Administration starting in November 2015, will put restaurants on the same footing as packaged foods companies, whose nutritional labels have been required for two decades.

But hold your applause, or just keep it polite. Restaurants need to do much more, especially since they account for a quarter of the calories consumed in the U.S., according to the U.S. Department of Agriculture. Unlike their counterparts in the packaged food and beverage sector, big restaurant chains have yet to supply conclusive evidence that they’re catering to the American public’s intense interest in healthier, lower-calorie food. The missing ingredient: a measureable restaurant-industry-wide commitment to develop these foods and actively promote them as attractive options.

In the U.S., such a commitment has put packaged food and beverage companies far ahead of restaurants in the proportion of lower-calorie items they sell. According to studies conducted by the Hudson Institute for 16 of the largest food and beverage companies that are members of the Healthy Weight Commitment Foundation, such food now accounts for over half of their dollar sales, while only 35% of servings at restaurants qualify as lower-calorie. These results are a direct reflection of the pact made by HWCF members to put their product lines on a diet by taking calories out of them. Member companies vowed to cut 1.5 trillion calories from their products by 2015; by the end of 2012, they actually cut 6.4 trillion calories. This translates to a 78 calorie cut per person per day in the U.S.

The HWCF’s packaged food company members, which include PepsiCo, Coca-Cola, General Mills and Nestlé, have been more aggressive in reformulating and resizing their products for a very good reason: They now recognize that that’s where the money is. The HWCF study illustrates that for the five years ending December 31, 2012, 99% of their sales growth came from lower-calorie products.

While a number of restaurant chains have introduced innovative lower-calorie options, health activists complain that belly-busting dishes still command the prime real estate on most menus. A 2012 RAND Corp. study found that 96% of restaurant entrées exceeded USDA maximum thresholds for calories, sodium, sugar, and saturated fat, and that the average restaurant meal weighed in at 1,128 calories. That is well over half the recommended 2,000 calories per day. In the Johns Hopkins study, the restaurants’ average 60-calorie reduction was on new menu items only. That’s a start, but it’s a mere drop in a KFC-sized bucket.

Another area where restaurants lag their packaged goods peers is advertising to children. While 16 food and beverage companies have affirmed their commitments to follow strict standards for advertising to children, only two restaurant chains (McDonald’s and Burger King) have signed on for the Children’s Food and Beverage Advertising Initiative, a program launched in 2006 that requires companies to adopt guidelines on marketing to kids. Furthermore, a Rudd Center Fast Food FACTS study shows that more than 75% of items featured in the restaurant ads most often viewed by children and teens are considered to be unhealthy.

The restaurant industry has not adopted the two most critical ingredients for real change: a strategic commitment to healthier foods and a willingness to aggressively promote them. HWCF is making an impact because it demands that its member companies set concrete goals and quantifiable deliverables. But the restaurant industry has made no such firm commitments.

Restaurants will point to other obesity-reduction initiatives they have signed up for. About 42,000 restaurant locations participate in the National Restaurant Association’s “Kids LiveWell” initiative, a program designed to improve foods sold to children. That’s well-intended, but its bar for success is low. Companies are required to offer just one full children’s meal (entrée, side, and beverage) that is 600 calories or less and meets other nutritional criteria. And they are required to provide at least one other menu item that is 200 calories or less and meets the criteria. But they’re not being held to an overall calorie reduction goal, so they are highly unlikely to produce anything like a 6.4 trillion calorie reduction. It’s like establishing automobile fuel economy standards without any real mile-per-gallon targets. Fuel economy would not have improved nearly as much as it has without the CAFE standards.

You might view all this as so much nanny state overreach by the growing number of activists who have been railing against the food industry. However, investors in restaurant companies should be concerned as well. Restaurants that don’t embrace and promote healthier menus also cheat themselves. The same Hudson Institute study of 21 large restaurant chains found that over the five years ending December 31, 2011, those that increased their lower-calorie menu servings had greater gains in same-store sales, customer traffic, and total servings. Those that cut back on lower-calorie servings saw a 14.7% decline in customer traffic and a 16.3% decrease in total servings. In other words, the traditional higher-calorie items may be fattening up customers, but they’re not building sales.

So why aren’t most restaurant chains pursuing healthier menu options more aggressively? For one thing, drastic menu changes often require drastic operational changes, and mistakes can be costly. Memories of long-ago menu flops like McDonald’s McLean Deluxe and (more recently) Burger King’s Satisfries still torment them. And there is certainly the risk that changing too many familiar menu items could alienate loyal customers.

Such concerns are real. But in today’s health-conscious world, a tipping point has been reached, and the risks to restaurants of not changing are far greater than the risk of a flop. One reason: Millennials—that prized consumer demographic—want more healthy options. Chipotle has become their favorite brand, according to a Nielsen survey. Moreover, according to consumer segmentation data from the Natural Marketing Institute, more than 52% of consumers are actively looking to eat healthier.

For sure, restaurants don’t have to scrub their menus clean of higher-calorie fare. They just need to put more lower-calorie items on the menu and promote them far more aggressively than they do now. That is, they need to use sizzle to make that lower-calorie steak look irresistible. That means dedicating serious resources to this mission, rather than to their calorie-laden flagship products. Only an industry-wide commitment can drive this change.

Consumers’ embrace of healthier food cannot be stopped. For the sake of its investors as well as of its patrons, the restaurant industry needs to get back to the kitchen and cook up a strategy to ride the trend.

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