by Avery Yale Kamila
July 2003
Fresh ingredients and gourmet preparation distinguish a growing group of restaurant chains
Here’s a quick test. What comes to mind when you hear the
words "fast food"? If you’re like most, visions of soggy burgers, greasy fries and
sugary soft drinks dance through your head. In other words, a brand manager’s nightmare.
Sales are sluggish at both McDonald’s and Burger King, and everywhere you look, it seems,
fast food joints are trying to shed their fat-filled image.
Last month, Burger King’s vice president of consumer insight was quoted saying,
"People always used to talk thin and eat fat. Now people are starting to eat thinner."
His observation, published in a Nation’s Restaurant News article, underpins much of the
change afoot in the world of fast food.
Today Burger King sells veggie burgers, and McDonald’s and Wendy’s spend big bucks to promote their
new salads. These icons of the fast food industry are reacting to the growing consumer
understanding of nutrition’s role in health. The booming natural foods retail segment
beckons, while the threat of class action obesity lawsuits looms (despite the recent ruling
in favor of McDonald’s). In addition, the industry continues to suffer from Eric Schlosser’s unflattering
portrayal in the popular Fast Food Nation.
Saying the "H" word
In the world beyond the traditional burger joints, the trend toward healthful food
is even more pronounced. Yet most chains are loath to label themselves "healthy,"
instead preferring to talk about fresh, natural ingredients.
"It would be wrong to position us as a health food restaurant," says Gene Cameron, the vice
president of marketing for Baja Fresh Mexican Grill, a wholly owned subsidiary of Wendy’s. "We
offer a unique array of stimulating and satisfying flavors."
"We don‘t promote a healthy menu," echoes Kevin Ament, a spokesperson for Panera Bread and
St. Louis Bread Company. "It is about high quality food. Something that will sustain customers
throughout the day."
"There is a stigma in many consumers’ minds about healthy," explains Ron Paul, president of
Technomic, a leading food service research company. "It is far better to say fresh than to say
healthy. You want to be known as having healthy items, but you don‘t want to merchandize your
brand on the basis of healthy."
The exception to this rule is Subway. In 2000 Subway debuted an ad campaign that
featured Jared Foogle, a man who lost 245 pounds eating Subway’s low-fat sandwiches.
Subway’s subsequent phenomenal growth--they recently surpassed McDonald’s as the number
one restaurant chain based on locations in the U.S. and Canada--has inspired traditional
fast food joints to beef up on healthful menu items.
"Subway’s success has astounded many of the industry participants," says Paul. "The success
of the Jared program was a wake-up call to the industry."
Yet even Subway is careful not to pigeonhole their brand as a health food restaurant.
"We appeal to a lot of different taste buds," says
Les Winograd, a Subway spokesperson. "We’re
known for appealing to someone who wants a healthy alternative."
The Natural Marketing Institute conducts an annual survey of U.S. adults that, among
other questions, inquires about consumers’ fast food experiences. "The U.S. general
population finds it challenging to eat healthy when they eat out," says Gwynne Rogers,
a strategic market analyst for the Natural Marketing Institute. She says that 91 percent
of the population eats at fast food restaurants and roughly 50 percent of the population
tries to eat healthy when they eat outside of the home.
"Forty-four percent of the population say they’d like more healthful versions of fast food,"
she adds. "There is a trend that as consumers age, they are more conscious of the food they eat."
Upscale food in a hurry
In the food service segment referred to as fast casual, restaurants are capitalizing on this
consumer desire for nutritious food. The fast casual concept is defined by a more
sophisticated decor and a higher price point than their quick service cousins. Natural and
specialty foods appeal to the segment’s educated, affluent target audience.
A recent entrant into the growing field of fast casual is O’Naturals. From the start,
the restaurant chain was envisioned as a way to merge natural and organic with fast food.
"We spent 500 hours with our target market in Portland, Boston and New York City," says Mac McCabe,
the president and co-founder of O’Naturals. "We found that the natural foods customer is a heavy
fast food user. They are constantly making a decision contradictory to the food they cook at home.
We also found that fast food frequency increases with income."
O’Natural’s is the brainchild of Gary Hirshberg, the president of Stonyfield Farms.
He joined with McCabe and Pam Solo, of the Institute for Civil Society, to found the
restaurant that bears the slogan: fast food, naturally. The fledgling chain has three
locations: two in Maine and one in Massachusetts. Another is scheduled to open in New
Hampshire in late summer, and an additional Massachusetts location is planned for the
first quarter of 2004. According to McCabe, the privately held company has had no
trouble raising capital, and the business currently maintains a waiting list of
interested investors.
O’Natural’s is one of the few chain restaurants committed to buying organics whenever feasible.
McCabe estimates that 30 percent of their ingredients are certified organic. Le Pain Quotidien, a
chain with locations in Los Angeles, New York City, France and Switzerland, is also incorporating
organic ingredients into their menu. Panera Bread and St. Louis Bread Company report that they
are "actively developing" menu items that include organic ingredients, but will not divulge
further details.
Chipolte Mexican Grill, which is majority owned by McDonald’s, has a program called Food With
Integrity that seeks to improve the way their produce is grown and their meat is raised. One
result of the program is that Chipolte serves free-range pork from the Niman Ranch co-operative.
With each location that Chipolte opens, a new family farm is recruited by Niman to supply that
restaurant’s pork.
"We try to educate our customers about the importance of food source and quality," explains
Chris Arnold, Chipolte’s director of hoopla, hype and ballyhoo (a title reflective of Chipolte’s
cutting-edge, urban brand). "When we began using Niman Ranch, we raised the price of our
carnitas one dollar and saw a substantial increase in sales."
Education about food quality is also in evidence at the Panera Bread and St. Louis Bread
Company chains. Ament states, "We like to consider ourselves a specialty food restaurant,
where bread serves as a foundation for all meals. The concept of artisan bread is
something we educate customers about."
Au Bon Pain, which is actively rolling out new menu items and a new store design, is responding
to customer desire for health information by installing nutrition kiosks in their restaurants. At
present, the kiosks have been installed in 97 of the company’s 230 locations. "We want to provide
healthy alternatives and give people the ability to make informative choices," explains Donna
Alsheimer, Au Bon Pain’s hospitality manager.
As natural and gourmet food shoppers gravitate to more healthful sources of fast food, they bring
with them their willingness to pay more for higher quality fare. Customers at quick service
chains, like McDonald’s and Wendy’s, pay an average of $4.50 per meal. At O’Naturals
the average is $8, at Baja Fresh $7.50, at Panera $5.00 to $7.00, at Chipolte $5.00 to $6.00 and at Au Bon Pain $5.20.
"Our customers are people who have a higher level of taste sophistication," says Baja Fresh’s
Cameron. This translates into chips that are never more than four hours old and ingredients that
are neither canned nor frozen. "We are maniacal about freshness," Cameron continues.
"Nutritional values degrade as food gets older. All of our produce has date and time stamps."
Panera Bread and St. Louis Bread Company, where the breads are baked fresh each day (from dough
that is never frozen and contains no chemicals or preservatives), is rapidly
expanding and plans to add close to 100 locations by year end. "The palette of American diners
is changing. People are tying new things," says
Ament. "We are part of the whole rejection of fast foods in favor of fresher more hand-crafted foods."
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