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Studies show calorie postings affect consumer choices, not bottom line
February 16, 2010
Quick-service operators continue to watch the progress of menu labeling legislation, not only in the federal health care reform bill but on the dockets of several states. At least three states — Kentucky, Delaware and Wisconsin — are considering legislation to require the posting of calories on menus and menu boards. Five states already have passed such legislation, including California, Maine, Massachusetts, Oregon and the latest, New Jersey.
QSR chains, especially those following the better-for-you trend, might want to consider following Yum! Brands lead and move to posting calories on menu boards systemwide as a point of differentiation. While various studies have reported conflicting information about the lasting effect of such postings on consumer buying habits, two recent studies suggest operators can benefit from including the information on menu boards.
A recent Ohio State University study provides more evidence that consumers do pay attention to calorie counts of meals when they are provided conveniently.
The study collected data about choices consumers made among 12 entrees offered at a university dining center that operates much like a QSR. Researchers found that when nutrition information was provided at the point-of-purchase, sales of high-calorie entrees dramatically decreased, while sales of lower-calorie items substantially increased. After the nutrition information was removed, sales of the higher-calorie items gradually increased again.
Of significance to operators, sales did not decline during the study, said Gail Kaye, one of the study's authors. The revenue per entree sold remained consistent before, during and after the nutrition information was offered. This finding could help reduce qualms of restaurants hesitant to offer calorie information to consumers for fear that sales would decrease.
"The average decrease in calories in the entrees chosen was small, about 12 calories on the first day and increasing gradually through the two-week study period, but the decrease was immediate when nutrition information was available," said Kaye, a program director with Ohio State University Extension and the Department of Human Nutrition in the College of Education and Human Ecology. "Even more dramatic was the difference in the numbers of higher- and lower-calorie entrees sold before calorie counts were available."
Of the 12 entrees tracked, the six highest-calorie entrees all decreased in sales between the two weeks before nutrition information was available and the two weeks during the study when it was available, with the highest-calorie entree (839 calories) losing the most sales. The lowest-calorie entree, with 412 calories, increased in sales by 50 percent.
To conduct the study, researchers initially collected sales data on the 12 entrees for two weeks while offering only a description of each entree. During the next two weeks, posters with simplified nutrition labels for each of the 12 entrees were posted at the point of selection. After a 14-day period, the nutrition information was removed and descriptions of the entrees were again offered, this time on a sheet of paper in a floor stand, as was typical practice at the restaurant before the study began.
The study, "Improving Patrons' Meal Selections Through the Use of Point-of-Selection Nutrition Labels," was published in the November 2009 issue of the American Journal of Public Health.
Point of differentiation
In another study, Starbucks Corp. provided transaction data to researchers from the Stanford Graduate School of Business, which examined consumer behavior before and after calorie counts were posted. That study determined that when restaurants post calories on menu boards, it results in a reduction in calories per transaction and in increased sales of stores for those near competitors without such information.
The Starbucks data included stores in New York City, which enacted calorie posting requirements in 2008. The data showed that the calorie postings led to a 6 percent reduction in calories per transaction. According to the study, beverage choices at Starbucks are unaffected by calorie posting. However, the calorie posting did lead to consumers buying fewer food items and to switch to lower-calorie food items.
To facilitate the analysis, Starbucks also gave the researchers access to transaction data from Starbucks locations in Boston and Philadelphia — from January 2008 to February 2009. To control for seasonal changes in purchasing behavior, the authors compare the New York changes to observed behavior in Boston and Philadelphia (where there was no calorie posting) over the same time period.
The results of the study are described in the working paper "Calorie Posting in Chain Restaurants."The study's main findings include:
- Calorie postings at Starbucks led to a 6 percent reduction in calories per transaction, from 247 to 232 average calories per transaction.
- Almost all of the changes were related to food purchases. Average beverage calories per transaction did not change substantially, while average calories from food per transaction fell by 14 percent, of which 10 percent is due to people buying fewer items and 4 percent is due to people buying lower-calorie food items.
- For those consumers who averaged more than 250 calories per transaction, calories per transaction fell by 26 percent.
- The calorie reduction persisted for at least 10 months after calorie counts were first posted.
- Overall, Starbucks revenues were not affected by the calorie-posting requirement. However, for Starbucks stores located within 50 meters of a competitor, calorie postings led to an increase in Starbucks revenue.
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