Low-carb craze stirs up quick-service feeding frenzy

Nation's Restaurant News, Feb 16, 2004 by Amy Garber

As low-carbohydrate offerings explode across the restaurant industry, some quick-service operators are struggling to decide whether they should reshape menus that often are filled with such high-carb food as bread, potatoes and pizza dough.

Competitive pressures loom large as bunless burgers proliferate from chains like Burger King and Hardee's amid a growing number of other low-carb sandwiches from such players as Subway and Blimpie Subs & Salads. Smaller regional operators, including D'Angelo Sandwich Shops and Donatos Pizzeria, have joined the craze by creating reduced-carb versions of everything from specialty pizzas to wraps.

And upbeat sales reports from Hardee's and sister chain Carl's Jr.--both now promoting lettuce-wrapped, no-bun burgers--suggest that cutting carbs could be fattening bottom lines. Meanwhile, a growing number of chains are reengineering salads by deleting croutons and adjusting dressing recipes to lure carb-cutting customers.

"This is as hot as anything has been for a long time," says marketing consultant Raymond L. Coen of the Pacific Palisades, Calif.-based Coen Co.

Though the jury is still out on whether those kinds of products can boost the quick-service sector's sales and traffic, "there is a penalty to be paid for not offering [reduced-carbohydrate foods]," according to Coen.

Some industry observers describe the cutting of carbohydrates as a passing fad and warn operators not to jump on the bandwagon. But others see the phenomenon as a new way of eating that could be around for years to come.

"No one really knows if this is a fad or a trend," says Gus Valen, chief executive officer of the Valen Group, a strategy consulting firm in Cincinnati. "It is hard to predict how big or small low carb will be."

In December the Valen Group conducted a study that found 59 million Americans--or 28.2 percent of U.S. adults--were controlling their carbohydrate intake to some degree, with nearly a third of those people, or about 17 million, following a strict low-carb diet, such as Atkins. The firm says it surveyed 1,182 people for the report.

"This is an emerging market, and emerging markets are those like the Wild West," Valen says. He advises foodservice operators to evaluate their "health-and-wellness strategy" because "obesity is not going to go away as both a threat to indulgent companies and as an opportunity for indulgent companies. Low carb is a great opportunity for companies that have not yet gotten involved in health and wellness."

Consumers' priorities are shifting, another industry observer asserts.

"We are seeing people place more importance on the availability of healthful, nutritious food, but it is still not as important as [restaurant] cleanliness and order accuracy," says Bob Sandelman, president of Sandelman & Associates in Villa Park, Calif., a research firm that tracks consumer trends for the foodservice industry.

Nonetheless, experts disagree on the extent to which Americans are cutting carbohydrates.

The NPD Group says about 3.6 percent of the population is on a low-carb diet, which is up from 1 percent in February.

"About 10 million Americans are hard-core, regimented low-carb dieters who faithfully avoid pasta," says Harry Balzer, vice president of NPD Group, the Port Washington, N.Y.-based market research firm. "But there are 270 million who are not. The 10 million speak loudly because that's a big number, but the real money is in the 270 million, not the 10 million."

He adds: "In the past 20 years, we've watched fads come and go. We've tracked people's concerns about low-sugar, low-caffeine, low-salt, low-cholesterol and low-fat [diets]. People are focusing on health at the moment, but getting someone to change their behavior forever is a very hard thing to do."

As the quick-service industry struggles to get its arms around this specialty diet--which was pioneered by Atkins Nutritionals--questions regarding what constitutes a "low-carb" food persist. The U.S. government has no formal definition as it does for such label claims as low fat or low sodium. That means companies promoting items as "low carb" are doing so at their own risk, according to Valen.

Notably, the Atkins diet does not count all carbohydrates in the same way but instead focuses on a term dubbed "net carbs," which means "the carbohydrates that can be digested and processed by the body as dietary carbohydrate and therefore directly impact blood sugar," according to the company's Web site. It goes on to say that "the figure for net carbs represents the total grams of carbohydrate minus grams of fiber, glycerine and sugar alcohols. Net carbs are the only carbs that you need to count when you do Atkins."

While the food industry is hopeful that the government will define "low carbohydrate" later this year, Valen advises restaurateurs in the meantime to disclose fully all nutritional information when they feature "low-carb" or "reduced-carb" products.

"It is prudent to get with a legal counselor and come up with a strategy that works for you," he recommends. "But the biggest issue is to give full information on how you are defining carbs, which can get tricky."