Analysis: Restaurants fight calorie "sticker shock"

LOS ANGELES Thu Nov 18, 2010 5:27pm EST

LOS ANGELES (Reuters) - U.S. restaurant chains, including some accused of peddling "food porn" to ever more obese Americans, are slimming down their menus before new rules force them to expose astronomical calorie counts to diners.

The U.S. healthcare law passed in March will require many restaurant chains to clearly post calorie counts on menus as early as next year. Most large operators already put nutritional information on websites or in brochures, but diners often aren't aware because they have to seek it out.

"Chains are getting ready for sticker shock," said Eric Giandelone, director of foodservice research for market research firm Mintel.

Offering lower-calorie fare provides diners with the options they demand -- even if those same customers ultimately settle on a more indulgent choice, Giandelone said.

Early research from New York City, a pioneer with its 2008 law that put calorie counts on menus, showed diners there made modest changes to what they ordered. The jury is still out with regard to the law's long-term effects on behavior.

Chefs in P.F. Chang's China Bistro Inc's PFCB.O test kitchen are working on a healthy food project called Bistro 500, while other chains have made more headway.

Yum Brands Inc's (YUM.N) Kentucky Fried Chicken added grilled chicken to its menu in 2009.

Sandwich seller Subway gives diners calorie information down to the level of individual ingredients so they can count every one. DineEquity Inc's (DIN.N) Applebee's and IHOP chains sprinkle lower-calorie offerings throughout their menus.

But few are as well-positioned as Darden Restaurants Inc's (DRI.N) Seasons 52 chain, where every menu item weighs in at 475 calories or less.

The Center for Science in the Public Interest dubbed the 1,030-calorie, deep-fried Lasagna Fritta appetizer at Darden's Olive Garden restaurant "food porn" due to its high calorie, fat and sodium counts. The consumer-focused group, which encourages healthy eating, also gave P.F. Chang's an "Xtreme Eating Award" this year for its 1,820-calorie Double Pan-Fried Noodles Combo.

Those are just some of the many menu items that could shock diners when the new disclosure rules kick in.

Customers at Darden's 7-year-old Seasons 52 are in for a more pleasant surprise.

The dishes at Seasons 52 are ample but not huge, loaded with vegetables and subtly seasoned -- a departure from the U.S. restaurant industry's dependence on the unhealthy but tasty trifecta of sugar, salt and fat.

The chain's food is "craveable, indulgent and healthy," said Darren Tristano, executive vice president of consulting firm Technomic.

"The healthy mantra doesn't come first. It's seasonal, inspired by the farmers' market, fresh and, oh by the way, it happens to be good for you," said Seasons 52 Executive Chef Clifford Pleau.

SKINNY NICHE

Applebee's for years has offered Weight Watchers-endorsed menu items. It recently added a 100-calorie "Skinny Margarita" and a variety of entrees with fewer than 550 calories.

Its sibling IHOP, which has been criticized for its 1,476-calorie Stuffed French Toast Combo, offers "Simple & Fit" dishes that are all under 600 calories.

DineEquity Chief Executive Julia Stewart said reduced-calorie items account for a small portion of overall sales but knock out the "veto vote" that would send customers elsewhere.

While demand for healthier fare is on the rise, Darden CEO Clarence Otis said it is not a mass-market opportunity.

"It's a bigger niche with the new generation, but it's still going to be a niche," Otis said.

He also predicted that menu disclosure rules would not fix the obesity problem. After all, he said, American waistlines expanded even though food sellers for decades have been listing calorie, sodium and fat content on their packaging.

"My personal view is that it's less about content and more about amount," said Otis. That said, Darden is unlikely to reduce portion sizes across the board at its restaurants, which also include Red Lobster and Capital Grille.

"We can't be the ones who say we're going to unilaterally reduce portions when it's not what (diners) are asking for. People will stop coming to us and go get the portion that they want," Otis said.

Still, some restaurants have found a way to make smaller servings attractive. T.G.I. Friday's introduced smaller and lower cost "Right Portion, Right Price" menu options as a recession special and later made them a permanent fixture.

Cutting portions is a cheap and easy way to lower calorie counts while also boosting profits, said Mintel's Giandelone.

"If the portion size is 50 percent less, chances are the price is not half. It's probably 30 percent less," he said.

Many restaurant operators are nervous about the menu disclosure rules, but a handful have embraced it.

Panera Bread Co (PNRA.O) in March put calories on its menus and saw customers gravitate toward its "You Pick Two" soup, salad, sandwich option that put diners in control of calories.

Subway has successfully used calorie disclosures -- and a spokesman named Jared, who lost hundreds of pounds eating its sandwiches -- to set itself apart from formidable rivals like McDonald's Corp (MCD.N) and Burger King BKCBK.UL.

The chain also tells diners how many calories are in the cheeses, sauces and other items that can be added to its sandwiches, so they are in control.

"The legend that consumers will only eat things that are bad for them is so ingrained. There are lots of good things that you enjoy eating that don't have to be high in fat or calories," said Subway Chief Marketing Officer Tony Pace.

"We think the industry's been asleep at the switch for some time," Pace said. "Selling fat is the easy way out. I think (restaurants) can do more."

(Reporting by Lisa Baertlein; Editing by Michele Gershberg, Phil Berlowitz, Gary Hill)

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