October 2011 Archives

Yum Brands is doing the right thing requesting permission to accept food stamps at its restaurants in Kentucky.

Our question is: why not in every state? The reported US unemployment rate is hovering at 9.1%, but we all know that combined with the underemployed and those not even looking any longer the unemployment rate is much closer to 15.7%.  It’s clear a large portion of America is going without. Unemployment numbers are disproportionately high for those under 24 and over 55 increasing anxiety while creating a climate of disorder in the workforce. 

Via our extensive review of chain restaurant sales, traffic and profitability conditions, its been clear since 2008 that a bifurcation of chain restaurant actual results and expectations is occurring: chains with certain geographic, consumer and site specific patterns have lost traffic, no matter what has been done with discounting.

Consequences of outdated programs

The NPD Group reports that” the number of annual restaurant visits by an average Millennial consumer (age 16 to 30) has dropped from 245 visits five years ago to 192 this year -- approximately one fewer visit each week. Additionally, a National Restaurant Association survey found that in July, restaurant performance dropped to its lowest level in almost a year, and restaurant owners predicted their worst overall performance expectations in 20 months.  Subsidized in part with food stamp programs Conveniences stores, Chain Drug Stores, grocery stores are increasing fresh food sales and garnering ready-2-eat market share.

Decisive steps required now:  Recession, stagnation or double dip, 45 million plus Americans are currently receiving assistance from the Food and Nutrition Service division of the U.S. Department of Agriculture, which oversees the food stamp program.  Like most legacy government programs its time to update this program ensuring participant parity and contemporized consumer relevance. The food police be dammed, allow QSR’s and any other Restaurant or deli’s too accept food stamps. This will require state by state action.

California, Oregon and Washington are three states that traditionally are most receptive to consumer equality legislation and early adopters. Our focus will begin with these three states and Florida.

Real People, Real Impacts, Real Solutions Required

Here are two examples of real people stories that come from our proprietary research conducted in August 2011 that demonstrate the problem:

• Aaron: 25 year old male recently left the Army now resides in Tucson, Arizona rents a room in a house for $450 per month, attends a local community college, works two jobs one at McDonalds four days a week from 5:30AM until 9:30 getting $7.85 per hour, accepts all additional shifts if offered.  Aaron, second job is at Bashes grocery store as a produce shelf stocker from 10AM to 4PM two to three days per week. (It was summer and hours are off – snowbirds have not yet arrived).   After rent, toothpaste, laundry soap, uniform shoes and without health insurance Aaron would not eat with out food stamps.

McDonalds offers him a meal at 50% off for employees but his cash is use for housing and simply the basics.  Here is what he says “A single person can not cook a burger as cheaply as I purchase McDonalds or Taco Bell.” Aaron is not looking for a hand out; he is looking at the system and asking for a hand up.

• Louise: 60 year old female with serious arthritis resides in Tacoma, Washington with one autistic son at home. Works two jobs one as a hairdresser 100% commission she has had this job for 30 years and since the economy went south and her business declined.  She now works nights at a local casino as well in the restaurant at $9:75 per hour to supplement her income and health insurance. Her mortgage payment is $793.00, $121.00 utilities $157.00 $91.00 car insurance; $157 phone and internet cable another.  Louise works 6 days a week. She is gone from the house on four days week from 8:30 AM until 12:30AM. Works days 8 hour days Tuesday at the beauty shop and Sunday nights at the casino.  Monday is her only full day off.  Here is what she says:

“When the slump started business went down now at the shop it has dropped off about 45% and I simply could no long pay the bills.  My clients are still there but no longer can they afford a perm or color.  They come in now for a haircut, style and not as often as they did in the past”.  When you’re the sole provider you must do whatever it takes to get buy.” After paying her monthly lease for her shop chair we take home another $575.00 per month on average.  With a $25.00 co-pay on her health insurance any visit to the doctor is now simply to expensive but we both have to go”.  She applied for food stamps in order to eat.

Louise wants to know why she can’t but a rotisserie chicken from the deli once in a while simply to make her life on her one day off easier.  She continued “these are hard times and when you can’t be home to cook it would be very nice to buy a quick meal at Taco Bell or KFC.”  Louise is not gaming the system she works hard six days a week four of those days 16+ hours per day.  It’s August Louise on her one day off is talking to us with a small fan blowing around the mid-summer hot air.  She has no air conditioning.  When asked she said we can’t afford it.

While the food police ride and air conditioned elevator to the upper floor of their office that is a comfortable 72 air conditioned degrees and after a simple 8 hour day and 40 hour week sit in an easy chair watching sports on TV in an air conditioned room.  What is it the food police want from her?

Transitions and the Imperative for change:

Over the past 20 years there has been a transition in home cooking where the vast majority of meals are not cooked from scratch but assembled meal components.  Components like rotisserie chicken, fresh vegetables, ribs, soups, take-N-bake pizza, casseroles, Chinese entrees, and kids meals from QSR’s bought from restaurants and or grocery prepared food /delis.

The U.S. Department of Agriculture has long understood that diet composition is not the issue for a homeless family facing starvation.  While subsidizing someone’s food consumption carries with it responsibility and intent for a healthy nutritious diet.  It’s important in an evolving society that programs adapt with the time and consumer need set.  In a world of increased societal tension with random outbreaks of violence it’s critically important to understand the new normal of family meal preparation and adjust programs to fit the need.

It’s time to let restaurants and all food retailers accept food stamps for ready-2-eat and heat-N-eat fresh prepared food. We ask for your collaboration for this ongoing initiative.

This has been a Guest Post by Foodservice Solutions Advocacy is a special vehicle driven communications and lobbying venture designed to work creative solutions quickly. Email: [email protected] 

Foodservice Solutions® has offices in California and Washington and is a foodservice consultancy specializing in outsourced vertical retail food sector strategy - marketing strategy and business development, identifying, quantifying and qualifying niche opportunity for global foodservice related activity since 1991.

Steven Johnson has been a restaurant franchisee and concept developer, is globally recognized for his blog “The Grocerant.” An industry expert in alternative channels of food distribution, he is Grocerant Guru at Foodservice Solutions® specializing in the “grocerant” niche in both fresh and prepared foods. 

John A. Gordon, an IAFD Key Partner, is a chain restaurant analyst and management consultant who specializes in niche restaurant sector research, analysis and special business intelligence projects. With a professional lifetime in restaurant operations, financial management and management consulting roles, he provides independent perspective and actionable analysis for investors and others regarding difficult and complex restaurant earnings and economics topics via his niche analysis and advisory firm. . He has a 40 year passion for and association in local, state and national politics and government and has hands on knowledge of the legislative process and how the advocacy game should be played.

Collaborate with us on Food Parity for America contact John Gordon or Steve Johnson:

Steven Johnson, Principal, Foodservice Solutions Food Advocacy 

Email:[email protected]

Voice: (253)-759-7869

One would think that providing more information to the consumer at point of purchase is always a good thing. But in a recent op-ed in The Hill, Domino's CEO, J. Patrick Doyle, expresses a very different point of view with regard to the new menu labeling law that is part of the Patient Protection and Affordable Care Act.

The law, which was supported by the National Restaurant Association and received bipartisan support in Congress, requires that food establishments with 20 or more locations provide calorie information on menus and menu boards.

Similar laws have been passed and implemented around the nation and our organization, the New York State Healthy Eating and Physical Activity Alliance (NYSHEPA), spearheaded successful campaigns to get these laws enacted in a number of New York State counties.

Since the concerns raised by Mr. Doyle are similar to concerns we heard in New York State (all of which turned out to be exaggerated), I appreciate this opportunity to address them.

Mr. Doyle's overarching concern appears to be ensuring that the federal menu labeling law leaves Domino's on a competitive field. For example, he expresses dismay that Domino's franchisees must go to the expense of posting a new in-store menu board with calorie information when, according to Doyle, 90 percent of their orders are placed by phone or online.

However, menu and menu board changes are hardly rare occurrences for chain restaurants. It's safe to say that both are changed on a fairly regular basis at most chains for a variety of reasons including but not limited to marketing purposes, to add or remove items, or to change prices.

We've learned that while sometimes the entire menu board must be replaced, many chains can remove and update "slats" that are slid in and out.

We've also learned that the majority of restaurants receive new menus and menu boards from their parent company as part of their yearly pre-paid advertising and promotion budget. In those cases, changes required by the federal menu labeling law will be covered at no additional cost.

If none of the above scenarios apply to Domino's franchisees then I can give them one assurance. Purchasing a new menu board will be a one-time expense - not an annual expense costing "thousands of dollars a year" as Mr. Doyle mistakenly states.

I'd like to note that in the New York State locales that have adopted menu labeling, we have heard no report of any franchisee being placed at a competitive disadvantage, seeing a drop in business growth, or suffering financial distress -- not even a Domino's franchisee.

Mr. Doyle also expresses concern with how the new law proposes to deal with customized or variable items like pizza. Just like the federal law, each New York State county or city menu labeling measure requires that the entire calorie count or calorie range of a pizza be posted on the menu and menu board.

The reasoning behind this is simple. If consumers purchase a whole pizza, they should be given the calorie count or calorie range for the entire pizza. When a pizza is cut into 4, 6 or 8 slices, consumers are smart enough to do the math.

Why are public health advocates insistent that per slice calorie counts for pizza not be used for a whole pie? Last year, I saw for myself what happens when a restaurant goes the per slice route. Dining with friends at a well-known chain restaurant in New York City, I noticed that the restaurant illegally posted the per slice calorie count of its personal pizzas. And sure enough, my dining companions marveled out loud, at the low calorie count for an entire personal pizza - until I broke the bad news.

This is exactly the kind of confusion or misrepresentation the law is trying to avoid. Mr. Doyle touts Domino's online tool the Cal O Meter as a superior and more accessible way for Domino's customers to learn calories than what the menu labeling law proposes.

While the Cal O Meter works nicely (except that it gives confusing per slice nutrition information for whole pizzas), it is time consuming to use and it would only appeal to a very determined and motivated consumer.

Research has shown that calorie labeling works only when the customer sees the information precisely at point of purchase. That's why the law is written as such.

Mr. Doyle asserts that in locales where Domino's has been required to post calorie labeling, they have seen no change in customer ordering behavior. I have not seen any formal data or study posted by Domino's on this topic so I can't comment on Mr. Doyle's claim.

I can however, point to a number of studies that show that calorie labeling works. The most recent NYC study found that one out of every six fast food customers surveyed said they used posted calorie information to make food buying decisions and these customers purchased 106 fewer calories than those who did not see or use the calorie information.

That's big news because eating an extra 100 calories a day can cause you to gain 10 pounds a year, whereas eating 100 calories less than usual may result in a loss of 10 pounds.

Other studies to review: Rudd Center for Food Policy and Obesity 2009, American Journal of Public Health 2007

Many health advocates believe that the true value of menu labeling may actually lie in product reformulation, which will impact all diners. Chains have already been reformulating high-fat and calorie-laden items and introducing lighter, healthier options in response to menu labeling requirements and consumer demand.

Some recently revealed calorie counts have been downright embarrassing and significant product reformulation to lower calories and fat has been noted at Starbucks, Denny's, Uno Chicago Grill, Le Pain Quotidien, Dunkin' Donuts, KFC, McDonalds (even the Happy Meal), Cosi and Romano's Macaroni Grill, which managed to squeeze a whopping 880 calories out of just one salad.

In a 2010 Washington Post article, it was reported that Austin Grill, California Pizza Kitchen, the Cheesecake Factory, Fuddruckers, Silver Diner and Sizzler, among others, are working with a consulting company to make their recipes healthier. The consulting company referenced has seen its business jump 80% in 2008 and 100% in 2009.

If restaurant chains hope to be part of the solution to our nation's deadly obesity epidemic then reformulation of unhealthy, high calorie fare is an important step forward.

The federal menu labeling law is just one of many critical interventions public health professionals and legislators are supporting to begin to put the brakes on America's deadly obesity epidemic, which is shortening our life spans and costing the nation $147 billion annually.

While I understand Mr. Doyle's focus on the financial well-being of his Domino's franchisees, I believe his concerns are overstated. As we've seen in New York, where menu labeling has been successfully implemented in numerous locales, the law has not put Domino's or any other chain at a competitive disadvantage.

Having calories listed clearly at point of purchase is a simple, cost-effective way to provide consumers with the information they need to make informed choices. Isn't that what America is all about?

This was a guest post by Nancy Huehnergarth, who is the Executive Director of NYSHEPA, an alliance dedicated to improving policy and practices that promote healthy eating and physical activity.