Finding the Balance: Gauging the

Impact of Health & Wellness on

Global Consumer Foodservice

November 2009
 CFS – Health & Wellness © Euromonitor International

Introduction

Global Performance

Competitive Landscape

Case Studies

Global Prospects

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Introduction CFS – Health & Wellness © Euromonitor International

Definitions
All values expressed in this report are in US dollar terms, using a fixed exchange rate (2008).
All forecast data are expressed in constant value terms; inflationary effects are discounted. Conversely, all historical
data are expressed in current value terms; inflationary effects are taken into account.
• Organic Products: Products that are certified organic by an approved certification body, such as the Soil Association
in the UK. Organic production is based on a system of farming that maintains and replenishes soil fertility without the
use of toxic and persistent pesticides and fertilisers. Depending on the country, such products are called ‘organic’,
‘biological’ or ‘ecological
• Fortified/functional Products: Items to which health ingredients have been added. These functional foods and
beverages should have a specific physiological function and/or are enhanced with added ingredients not normally
found in the product, providing health benefits beyond their nutritional value.
• Better-for-You Products: The category includes packaged food and beverages products where the amount of a
substance considered to be less healthy (fat, sugar, salt, carbohydrates) has been actively reduced during
production. To qualify for inclusion in this category, the “less healthy” element of the food stuff needs to have been
actively removed or substituted during the processing. This should form part of the positioning/marketing of the
product. Products which are naturally fat/sugar/carbohydrate -free are not included.CB: Cafés/bars
• Naturally Healthy Products: These are products which are included on the basis of naturally containing a substance
that improves health and wellbeing beyond the product’s pure calorific value. These products are usually a healthier
alternative within a certain sector/subsector, eg wholemeal bread contains more fibre than white bread and can thus
be classified as healthier. Products included are: High fibre/wholegrain products (bread, biscuits, breakfast cereals
etc), soy-based dairy alternatives (soy-based yoghurt, soy milk etc), soy-based meat alternatives, select number of
other naturally healthy products (sour milk drinks, olive oil, olive oil spreads, honey).

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Introduction CFS – Health & Wellness © Euromonitor International

Objectives
• The aim of this report is to explore consumer concerns about health and wellness and its possible impact on global
consumer foodservice. Negatives and positives are explored - ways that consumer concerns about health can serve
as a check on growth, as well as possible avenues for expansion for operators able to successfully respond to
consumer behaviour.
• Perhaps the central idea of this briefing is the idea of health and wellness as an issue to be managed, rather than a
central, all-consuming component of growth. While health concerns are increasingly important to all consumers and
paramount to some, it often remains a peripheral concern when eating out - here, issues of convenience, speed,
quality and service often trump considerations of health, wellness, and nutrition, and will continue to do so for the vast
majority of consumers for the foreseeable future. The key for operators is to find the right balance, the right approach
for a specific concept and a specific menu that will find the proper combination of health and indulgence.
• The issue of positioning is key to the analysis in this report - sales can be equally impacted by consumer beliefs
regarding health and wellness as they can by the actual nutritional content of a restaurant’s products. Context
matters, too - as this report shows, indulgence is far more central to consumer demand in consumer foodservice than
in sectors such as packaged food, where everyday issues such as cost and nutritional content come to the fore.
• Thus, while consumer concerns about health and wellness are not solely market-driven, neither are they a clear-eyed
calculation of nutrient levels and calorie counts. Marketing matters, in some ways as much as products, in terms of
shaping consumer beliefs about a given brand - consumers will pay a premium for a product they sincerely believe is
healthy, even when the belief is shaped as much by product quality as it is by actual numbers.
• While this briefing is global in scope, the fact remains that health and wellness concerns drive demand primarily in
more developed markets - here, income and awareness levels are high, and there exists a critical mass of consumers
willing to pay a premium for products with a perceived health benefit.

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Introduction
The Impact of Health & Wellness, Category by Category
High Impact
Fast Food
100% Home Delivery/Takeaway,
Self-Service Cafeterias
Low Impact
Full-Service Restaurants
Cafés/bars, Street Stalls/Kiosks
CFS – Health & Wellness © Euromonitor International
With fast food meals an increasing constant for many consumers, health
concerns are expected to grow in importance as the average number of
meals continues to grow. Moreover, the growing emphasis on quality
among many fast food operators (and consumers) offers a real opening
for brands offering the right health/quality combination.
The continuing emergence of higher-quality, healthier fast food is expected to have
a knock-on effect on 100% HDTA and self-service cafeterias, given that both
categories compete for a similar consumer base seeking affordable meal
replacement. That said, the lack of any significant fast-casual equivalent reduces
the opportunities for both categories to profit from health-minded consumers.
While competition from fast food continues to grow, the importance of
FSR to national eating cultures in markets like China ensures demand
will remain steady, regardless of any significant growth in health
concerns. Likewise, the importance of indulgence to sales will further
blunt the impact of the health and wellness trend.
With the exception of specialist coffee shops, demand for cafés/bars is
rarely driven or affected by health concerns, while street stalls/kiosks
tend to specialise in indulgence-driven products, with a relatively low-
income consumer base for whom health concerns are an insignificant
driver of demand for still-infrequent foodservice visits.
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Introduction
Making the Health & Wellness Argument: Key Findings
Health & Wellness = Quality?
• One of the most powerful arguments for embracing
healthier menu offerings is the effect it can have on
consumer perceptions of quality. There is substantial
overlap in consumers’ minds between items which are
fresher, less processed and better-quality and those
which are better for you. The most effective health and
wellness-focused operators and products are those
which are tightly linked with an overall message of
quality, using health and wellness as part of a premium
positioning.
Finding the Bargains
• While the recession has certainly dented consumers’
willingness to pay a premium for anything, health and
wellness-focused items included, there is still room for
healthy-positioning in a discount-obsessed environment.
Portion-controlled items, like mini-hamburgers or
Spanish-style tapas, offer both indulgence and potential
savings, while allowing consumers to control exactly how
much they consume. This is an important point - if done
correctly, smaller items can appeal to both heath-
conscious and budget-minded groups.
CFS – Health & Wellness © Euromonitor International
Indulgence is Forever
• Despite real (and growing) concerns about their health,
there is little evidence that consumers are to any
significant degree willing (in the aggregate, at least) to
sacrifice the thrill and adventure of eating out in favour of
eating better. The craving for indulgence remains - while
a healthy offering can succeed, it must be balanced with
a selection of truly indulgent items, or by offering
something genuinely different, such as acai berry-
flavoured soda or tart low-calorie frozen yogurt.
Choice
• The key concept for every operator regarding health and
wellness is balance - in most markets, a 100% health
and wellness-focused concept will likely have only niche
appeal, while completely ignoring the issue can and will
drive certain consumers away. The key is finding the
proper mix - nearly every consumer wants a healthier
option at some point, and offering a range of products
lessens the chance of a “veto”, particularly when a group
of people are deciding on a choice of outlet.
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 CFS – Health & Wellness © Euromonitor International

Introduction

Global Performance

Competitive Landscape

Case Studies

Global Prospects

7
Global Performance CFS – Health & Wellness © Euromonitor International

Demographic Evolution Drives Shifting Consumer Attitudes

Developed market
consumers continue to age

Functional/fortified
products lead the way

• Consumers in developed (and some emerging) markets are, on average, getting older,
creating a massive new cohort of consumers for which health concerns are front and
centre.
• More broadly, consumers’ demands in many developed markets have followed a two-
pronged path - on the one hand, there is strong demand for fortified/functional products
that do something, offering real health benefits; on the other, there is equally strong
demand for fresher, more natural, more local products.
• This section will explore these trends further, illustrating high-growth regions and markets High-income consumers
in health and wellness products, as well as possible implications for CFS operators. demand freshness

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The Great Balancing Act

• There is no bigger minefield for foodservice operators than the issue of health and wellness. Consumers the world
over are undeniably concerned about their health - obesity rates are on the rise, with talk of an “obesity epidemic”
increasingly common through news outlets, from policymakers, and among consumers.
• Moreover, many of the world’s largest consumer foodservice markets are home to consumers who are, on average,
becoming older, with median ages on the rise in North America, Western Europe, and even China, where the one-
child policy gave China a demographic profile considerably older than other markets at comparable levels of
economic development.
• In addition, consumers eat out more than ever before - in many urban areas, it is not hard to find those who eat out
every single day, whether it is to grab coffee and a pastry in the morning, a sandwich at lunch, or a lavish meal at
dinner time. For these consumers, consumer foodservice is emphatically not an occasional indulgence - it is a daily
necessity, with all the health considerations that come with a product consumed on a daily basis.
• For foodservice operators, the push for healthier items is not just coming from consumers; it has increasingly become
a policy issue, with more legislation aimed at curbing fast food advertising, improving menu labelling and reducing the
amount of unhealthy ingredients appearing every day. Even in emerging markets, foodservice marketing tactics
(particularly fast food marketing tactics) came under increasing scrutiny, with health concerns becoming an issue in
many markets far sooner, at a much lower level of development, than was the case in years past.
• Complicating matters, however, is the undeniable fact that consumers are still looking for indulgence, and still willing
to put health concerns aside to enjoy a good-quality meal. Even as some consumers demand healthier options, still
others have responded enthusiastically to bigger, more indulgent burgers, larger portions and premium, yet not
necessarily healthy, ingredients.
• The aim of this report is to help operators navigate a complex, multifaceted, yet undoubtedly relevant trend. Above
all, consumers increasingly demand choice - healthier options alongside more convenience, more indulgence and
better quality. While operators must be mindful of health concerns, most consumers remain resolutely unwilling to
compromise on issues such as flavour, speed and service quality - with this report, examples of successful health
and wellness-focused strategies will be examined, while markets where consumer health concerns run highest will be
spotlighted. Competition from niche operators, which have far more freedom to explore explicitly healthy positioning
than the largest global operators, will likewise be a key focus.
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Global Performance CFS – Health & Wellness © Euromonitor International

Organics, Fortified/Functional Products Gain Ground

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Western Europe Sees Brisk Expansion

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Global Performance CFS – Health & Wellness © Euromonitor International

Strong Correlation Between H&W Spending, Income

• The steady expansion in health and wellness spending seen in North America and Western Europe relative to the
rest of the world is partly explained by looking at per-capita incomes - as the chart above illustrates, per-capita
spending on health and wellness-related products is closely correlated with per-capita income, far more so than, say,
total foodservice spending, which is more heavily influenced by cultural factors.
• Indeed, per-capita income more strongly impacts health and wellness spending than do measures such as obesity or
median age, though both of these serve as demand drivers, as well. At the far right of the graph is high-income
Norway, which also boasts the world’s highest rate of per-capita spending on health and wellness products.
• As it currently stands, health and wellness products are something of a luxury, often costing more and appealing
primarily to highly educated, relatively well-off consumers, particularly older members of this group. For foodservice
operators, a health and wellness-focused message will appeal primarily to these consumers, who remain
disproportionately located in developed markets, but are increasingly visible in emerging markets, as well.
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Fruits and Vegetables Benefit From Rising Demand

• Taking a broader look at global consumption, consumer concerns about health and wellness drive demand for more
than just organic or better-for-you packaged goods. Consumption of fruits and vegetables are set to outgrow all other
foodstuffs in absolute terms over the next five years - while much of this is coming from emerging markets, as rising
disposable incomes allow more people to enjoy adequate levels of nutrition, there is also significant demand from
developed markets, as consumers continue to demand greater quantities of fresh food.
• Likewise, fish and chicken are set to lead animal products in consumption growth, well ahead of both pork and beef.
While religious concerns in markets like India and the Middle East drive this growth to some degree, there is
considerable demand in both North America and Western Europe, where both chicken and fish are increasingly seen
as healthier alternatives to beef, a fact illustrated by a wave of chicken-related new products from fast food operators
such as McDonald’s.
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Global Performance CFS – Health & Wellness © Euromonitor International

H&W Demand’s Impact on Fast Food Still Limited

• Interestingly, a steady upsurge in chicken and fish consumption has done little to boost global sales of fish and chicken
fast food, with sales of fish fast food actually declining in 2008. It would appear context is all-important to consumers
looking for healthier options through foodservice. While chicken and fish are seen as perfectly healthy, the fried chicken
and fried fish that form the bulk of the menu through chicken and fish fast food outlets emphatically are not - while
consumers are looking for alternatives to beef, they are quite happy to find them through a wide range of outlets and
categories.
• Likewise, branding matters - in Western Europe and North America, the leading chicken and fish fast food operators (as
well as thousands of independents) are neither fashionable nor seen as particularly healthy or innovative, and have
struggled to grow sales for some time. Making a successful health and wellness presentation in consumer foodservice
goes far beyond labels - more than anything, experience is what counts, with consumers frequently conflating health and
quality in equal measure, while also seeking occasional indulgence.

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 CFS – Health & Wellness © Euromonitor International

Introduction

Global Performance

Competitive Landscape

Case Studies

Global Prospects

15
Competitive Landscape CFS – Health & Wellness © Euromonitor International

Finding the Growth Formula

Northern Europe fertile

ground for
health-focused products

Beverages offer real

opportunity

• This section explores the intersection of spending on packaged food health

and wellness products and spending on consumer foodservice, with a focus
on a number of high-spend H&W markets.
• Also discussed are the opportunities available for foodservice operators in
both H&W beverages and foods, with an exploration of the different challenges Finding the right mix
and advantages offered by each category.
• Finally, the role of legislation is explained, with examples of current and
potential regulations and their implications for foodservice operators, as well
as the potential impact on consumer demand.
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Ten Markets to Watch

The Healthy 10 • Of particular interest to foodservice operators is the list on
the left - these are the markets with the largest gap
Market H&W-CFS Index Ratio between per-capita health and wellness spending and
Rank consumer foodservice spending. Leading the pack is
Germany, a market among the world leaders in health and
1 Germany 3.4 wellness spending yet ranking quite low (relative to per
capita income) in per capita foodservice spending.
2 Russia 3.1 • In these markets, a more explicitly health and wellness-
focused foodservice message could find a strong
3 Norway 2.9 reception - certainly in markets like Germany, Sweden and
the Netherlands, healthier-positioned foodservice
4 Sweden 2.4 concepts and menu items have done quite well, as
evidenced by the success of chains such as Exki in the
5 Finland 2.4 Netherlands, Max in Sweden and the mass popularity of
Bionade soft drinks in Germany.
6 Denmark 2.3 • At the same time, operators should not oversimplify
matters - a strong ratio of H&W spending to foodservice
7 Belgium 2.0 spending does not automatically imply H&W-positioned
foodservice will be popular -certainly in the case of Russia
8 Netherlands 2.0 and Poland, the number is to a degree the result of the
strikingly low rate of foodservice penetration in both
9 Poland 1.8 markets. Still, the list can serve as a guide to markets
where H&W awareness is high, while foodservice remains
10 United Kingdom 1.7 relatively undeveloped.

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H&W Spending Increasingly Relevant

The Healthy 10, by 2008 Consumer Foodservice • Looking further, it is clear than in all of the 10 markets
Sales listed, spending on health and wellness products can
Rank Market CFS Sales (US$ H&W Sales approach total spending on consumer foodservice - in
mn) (US$ mn) Germany, for instance, H&W spending is 75% of that
1 United Kingdom 84,967.8 33,175.5 on CFS, while in Russia, Norway and Finland it is well
over 50%.
2 Germany 40,775.1 30,901.8 • What this means for foodservice operators is that there
are a number of major markets where foodservice
3 Russia 15,278.5 10,162.0 spending remains relatively low in per capita terms, yet
where consumers are well-acquainted with H&W
4 Netherlands 13,781.4 6,192.1 products, perhaps indicating a reluctance to embrace
consumer foodservice brands which continue to be
5 Poland 11,800.0 4,575.1 seen as unhealthy.
• Obviously this is not the whole story - certainly cultural
6 Belgium 10,028.1 4,651.3
factors play a role, with eating out in Germany and
7 Sweden 9,133.2 5,094.4 Scandinavia simply not the fixture of social and cultural
life to the degree it is in say, Spain or China. Yet it is
8 Denmark 5,900.4 2,948.3 undoubtedly part of the story, and offers a potential
insight into growing sales among consumers in
9 Norway 5,843.4 3,763.1 markets which, in the aggregate, account for hundreds
of billions of dollars in foodservice spending.
10 Finland 5,195.7 2,748.8 • Several of the case studies included in this report
analyse strategies from these very markets, illustrating
successful foodservice chains among consumers for
whom health is a priority, yet where traditional
concerns about time and convenience still create real
demand for eating on the go.
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Impact of Health and Wellness Clear in Beverages

• A look at global sales figures reveals the impact of health and wellness-focused categories on overall soft drinks
growth - in terms of absolute growth over the 2003-2008 period, bottled water is the runaway leader, far ahead of
carbonates, while in terms of percentage growth RTD tea and functional drinks are among the growth leaders, with all
three categories accounting for the vast majority of health and wellness beverage sales.
• Carbonates, a traditional staple of fast food operators the world over, is set to lag behind in percentage growth -
particularly in developed markets, demand continues to shift from standard carbonates toward waters, juices, teas
and functional beverages, all of which offer something more, whether increased energy, exotic flavours, or reduced
sugar.
• As the next slide will show, this trend is by no means confined to the off-trade channel - through foodservice outlets
as well, consumers increasingly demand a wide variety of healthier, more interesting, better-quality drinks. Given the
fact that soft drinks are often among the highest-margin items on any foodservice outlet’s menu, it is crucial for
operators to get the mix right, offering consumers the selection of beverages they increasingly demand.
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Bottled Water Spurs On-trade Growth

• Looking deeper, the growth story is even more stark in the on-trade channel, particularly over the forecast period in the
developed markets of Western Europe and North America. RTD tea and bottled water are projected to be the only categories
to record any growth in North America, while in Western Europe bottled water and functional drinks are expected to account
for the vast majority of new sales.
• In other words, there is real growth to be had in the on-trade channel in these markets, but it is emphatically not through a
standard selection of carbonated soft drinks. Reversing a common theme, in beverages the off-trade channel in many markets
has actually leapt ahead of the on-trade in terms of innovation - developed-market consumers can now find a vast array of soft
drinks at even the smallest convenience store, far outstripping the average fast food chain in terms of both breadth and
variety. To prevent erosion of high-margin sales, it is imperative for restaurant operators to look more critically at their
beverage offerings.
• Moreover, soft drinks are the single easiest way for foodservice operators to increase their health and wellness-focused
offerings - requiring no reformulation of existing products or techniques, healthier, higher-quality soft drinks are readily
available, particularly in packaged form, allowing every operator to create a genuinely unique, compelling beverage selection.

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Food vs Beverages
One of the key issues for any foodservice operator looking to focus on health and wellness is the intersection between
food and beverages. While consumers can respond to a health and wellness message for both product categories,
each carries with it a very different set of issues in terms of logistics and consumer appeal.
• Beverages represent what is potentially the easier path - they serve as a kind of “bolt-on” approach to health and
wellness, with any operator able to purchase a selection of healthier beverages off the shelf, whether RTD teas, bottled
water, or functional beverages. While some operators take this a step further, offering an array of beverages prepared
on-site (such as fresh orange juice, ginger ale made with real ginger, freshly-brewed iced teas, and so on), it is quite
possible to create a genuinely distinguished beverage selection with off-the-shelf products, particularly with packaged
beverages - many fast casual chains have done just this, offering an array of healthier options and unusual premium
sodas quite different from the standard fountain selection found through many national/global chains.
• Food is unquestionably the more difficult sector, with rewards more uncertain - while RTD teas, for instance, can
be positioned as healthy alternatives to colas without being perceived as less indulgent, it has thus far proven very
difficult to sell consumers on the idea of, say, a healthy hamburger. Consumers continue to draw a clear line between
health and indulgence, often preferring to mix and match between healthy/indulgent items, rather than looking to more
healthy variants of existing items. While exceptions do exist - frozen yogurt, to some degree, does straddle the line
effectively - even these tend to be alternatives to existing products, rather than reformulations.
• In both cases, logistics will be a key issue - for the very largest chains, there are very real constraints on sourcing; a
product which is readily available for placement in 20 outlets may not exist in nearly the quantities necessary to roll it
out across 2,000, or 20,000. This is true for both beverages and food products, though food brings with it the additional
step of preparation - for a global fast food chain, any new menu item must be integrated not just into existing supplier
networks, but also into existing preparation guidelines in a way that does not disrupt speed or accuracy of ordering.
• Thus, health and wellness becomes a potential boon for smaller operators, who are in some respects better-
positioned than the global giants to drastically alter their menu selections, or supply chains. To use one example, US
chain Chipotle Mexican Grill has steadily constructed a natural/organic supply chain in the US as part of its general
healthier/better-quality positioning - yet even for Chipotle the process took years, and continues to evolve, illustrating
the difficulties inherent for even a mid-sized chain, operating in just one high-income market.

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“Natural” Supply Chains?

• Particularly in fast casual dining, a number of chains have invested heavily in sourcing more organic products, more
“natural” products (a term whose exact definition remains nebulous) and a greater portion of animal products sourced
from “cruelty-free” environments, using fewer chemicals, free-range pastures and so on.
• In the US, one of the most public proponents of this strategy has been Chipotle Mexican Grill, which regularly
publishes new advances to its supply chain - the company promotes all of its pork and chicken and around half of the
beef used in its restaurants as “naturally raised”, free of antibiotics, hormones, or excessive confinement, while 30%
of Chipotle’s beans come from organic sources and all of its dairy products are certified growth-hormone free.
• While this strategy has helped to fuel Chipotle’s growth in the US, where it now operates more than 800 outlets, it
must be noted that the health and wellness component of Chipotle’s branding goes hand-in-hand with its positioning
as a higher-quality alternative to standard fast food. Particularly in more developed markets, this is the key to a
successful health and wellness strategy: while consumers do look for healthier options, in consumer foodservice the
real demand remains for high-quality, premium items. While consumers may be quite familiar with the potential health
benefits of organic products, they also tend to associate them with better-tasting food - tellingly, in its description of its
farming and sourcing methods, Chipotle’s website notes that naturally-raised meat simply tastes better than meat
raised using standard industrial methods.
• Put another way, the operators best-positioned to grow sales with healthier items are those who can tie them to an
overall message of quality - fast casual operators are increasingly in the driver’s seat in this regard, not least because
of the costs involved with moving to a completely different method of sourcing. Chipotle, for one, is able to charge
higher prices because consumers perceive its products as premium, yet also must charge a premium given the
higher costs of many of its inputs - costs aside, the company has made several changes to its supply chain over
several years because of a lack of suppliers able to produce in the volumes the company requires.
• Thus, while there is real demand for more organic, more natural products and sourcing, it remains unfeasible for
many of the largest chains - there simply is not enough organic/natural farming capacity in the world for a company
like McDonald’s or YUM! Brands to adopt Chipotle’s methods, while mass-market brands may be hard-pressed to
realise the advantages in branding that can come from an organic/natural supply chain. That said, this remains a
profitable niche for smaller, more nimble fast casual chains, with the premium branding necessary to attract organic
consumers, and the size (or lack of it) to make large-scale natural/organic sourcing possible.

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Legislation
While branding considerations continue to be the primary driver behind operators’ response to health and wellness
concerns, the pace of legislation continues to increase in many markets, with a number of regulations likely to increase
all operators’ focus on health and wellness over the forecast period:

Calorie Posting Advertising Bans

• Particularly in the US, far and away the world’s largest
fast food market, efforts to require chains to post calorie
counts on menu boards are gaining steam -New York
City already has such a law, while talk continues of
national legislation. While calorie counts are made at
many chains today, placing calories front and centre at
the point-of-sale could have a strong impact on
consumer choices.
• The push to limit foodservice advertising to children,
particularly fast food advertising, continues unabated, with
full-on bans already in place in markets such as Sweden.
With many chains, above all McDonald’s, already seeking
to position themselves as family-friendly in growing
markets such as India, it is worth noting that they will
likely find a far more hostile regulatory environment in the
coming years compared to that found in say, the US, in
the 1960s and 1970s.

Fast Food Taxation Fast Food Bans

• While still largely hypothetical, discussion has
increased, particularly in the US, regarding taxation of
items such as soft drinks and fast food, both as a means
of limiting consumption and raising funds. Such
measures could have a significant impact on sales,
particularly among price-sensitive consumers, while
potentially offering a competitive advantage to higher-
priced, higher-quality chains with a less price-sensitive
consumer base.
• Least likely are outright bans on fast food products -while
proposals do appear from time to time among regional
and municipal governments to, say, ban fast food
products within a certain range of school grounds, none of
these proposals have been enacted into law, and none
are expected to in the foreseeable future - that said, that
such measures have been considered at all illustrates the
degree to which child obesity and overall health and
wellness became concerns for policymakers.

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Introduction

Global Performance

Competitive Landscape

Case Studies

Global Prospects

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Foodservice Health & Wellness: Six Case Studies

Short-term fads vs.

long-term impact

The importance of
focus

• In this section, six case studies are used to explore the impact of health and wellness
issues on consumer demand.
• The short-term, fad-based nature of many H&W trends is discussed, with the
increasing importance of a truly focused message, particularly as competition for The health/quality
H&W-focused consumers increases. nexus
• Of particular importance, as well, is the continuing intersection of health and quality,
which have increasingly become one and the same in the minds of many
consumers.

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Smaller Portions All the Rage in the US

• One of the broader-based trends in US Big Players, Smaller Portions
consumer foodservice over the last 1-2 years
has been the emergence of smaller portion menu
items, whether mini-sized burgers, chicken Operator Product
“snack wraps”, or increasingly ubiquitous
Spanish-style tapas menus.
Burger King “Burger Shots” – mini-hamburgers
• To be sure, the trend has several drivers - many
designed to appeal to groups, those
operators are looking to grow sales during slower seeking a quick snack.
periods, such as late afternoon or late evening,
when fewer consumers are looking for a full meal
but many could be tempted by a quick snack.
Likewise, small sample-sized portions allow for
more daring presentations, with even relatively McDonald's “Snack Wraps” – smaller-sized fried- or
conservative diners willing to try a small bite of grilled-chicken sandwiches wrapped in a
often quite-exotic menu items. flour tortilla.
• Not to be ignored, however, is a desire for
portion control, not unlike the “100-calorie pack”
wave which took hold in US packaged food
several years before. Indeed, smaller portions Quizno’s “Sammies” – smaller-sized flatbread
allow restaurant operators to make a credible versions of the company’s toasted subs,
reduced-calorie appeal without imperiling the with premium toppings.
indulgent positioning many still depend upon.
• Going forward, this could prove a powerful
“stealth health and wellness” strategy, allowing
operators to reach out to calorie-focused
consumers without alienating those motivated
primarily by indulgence.
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Promising More With Less

• Different Things to Different People: The beauty of offering a selection of downsized menu options is the freedom
it allows in positioning - while such products can be marketed to the health-conscious as a lower-calorie indulgence,
they can also be promoted as a late afternoon snack for consumers on the go. With many consumers still somewhat
resistant to solely health-focused messages, smaller menu items offer a way forward, lowering calories while
retaining a sense of indulgence.
• Fewer Calories, Lower Prices: Equally important during a downturn is the way smaller menu items can let operators
hit lower price points without necessarily hurting profits. As noted, health and wellness items, owing to higher costs,
are often positioned as premium options, a potentially profitable path that is nonetheless not applicable to every chain
- by contrast, a selection of smaller items allows an operator to credibly appeal to calorie-conscious consumers at a
reasonable price point.
• Keep It Indulgent: Reinforcing the first point, smaller menu items can make the claim to limit calories while being no
less indulgent in terms of flavour or ingredients than larger menu items. For many consumers, this is key - any desire
to follow a more healthy lifestyle is generally accompanied by a love of the indulgence that comes from eating out.
While packaged food manufacturers can, on occasions, carve out a niche with healthy products that make severe
compromises on taste, this really is not an option for most foodservice operators, particularly in fast food, where
impulse, convenience sales continue to drive growth.
• A Profit Centre? One of the most important aspects of the “100-calorie portion” trend for packaged food
manufacturers was the freedom it offered to charge higher unit prices, while still hitting a lower price point. By offering
customers something genuinely different, along with real portion control, there is a real possibility that operators can
actually move smaller-sized menu items at a higher margin than large products. Indeed, there are obvious limits to
this strategy - prices are being slashed on all items, large and small, and the backlash from consumers for a chain
perceived to be overcharging can be severe.

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Sweden’s Max Pushes the Healthy Burger

• Proudly referring to itself as “Sweden’s most
popular burger chain” despite coming in a
distant second to McDonald’s in sales terms,
Max has nonetheless carved out a strong niche
for itself through a relentless focus on health,
quality, and, above all, “Swedishness”.
• Indeed, the chain’s strong focus on the healthy
aspects of its products, as well as its respect
for the environment, are central components of
its claim to being a distinct, and distinctly
Swedish, alternative to standard fast food as
typified by McDonald’s. Max’s marketing
materials loudly promote the amount of fat
removed from its products (listed in tonnes; in
2007 the company claims to have removed 169
tonnes of fat from its products).
• In terms of sales growth, Max has consistently
ranked ahead of McDonald’s, indicating its
message has resonated among Swedish
consumers - what has proven most effective
about Max’s healthy messaging is its
connection to a broader message about
quality; by successfully positioning itself as
healthier, the chain has been able to make a
case for itself as a higher quality, more
premium burger experience as well.

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Lessons From Max

• Know Your Customer: Max’s approach is relentlessly focused on the Swedish consumer, from the heavy dose of
patriotism in its marketing strategy to its strong focus on environmental and health issues. While health and wellness
is an increasingly global concern, there is no question that its importance varies from consumer to consumer and
market to market - in a wealthy, health-focused market like Sweden, an appeal to health and wellness can be
effective as a mass strategy.
• Health and Wellness = Quality: While consumers do care about the health impact of the products they consume, for
many healthy products are just as importantly viewed as high-quality products. It is this kind of dual branding which
has proven effective in the case of Max - while the chain heavily promotes its fat-lowering achievements, these are
always closely tied to an overall message of quality, in terms of suppliers, ingredients, menu items and so on. While
consumers genuinely want healthier options, there is little evidence of a mass willingness to sacrifice taste and
convenience for healthier eating.
• Options, Always: Over the past six years, Max has steadily expanded its Delifresh menu, offering a range of
healthier-positioned products marked with a keyhole logo. Items on the menu include lower-carb products, more
salads, bottled waters, fresh sandwiches and so on, while all of the chain’s hamburgers can be made with rye buns in
place of the standard white bun. What the Delifresh menu offers is space for health-focused consumers to stop into
Max’s, while still offering the indulgent choices the brand is based upon - after all, many of the consumers looking for
healthier products on a given visit are the very same looking for more indulgent products on the next.
• The Health and Wellness/Sustainability Nexus: Particularly in more developed markets, the consumers who are
most concerned with issues of health and wellness are equally concerned with issues of sustainability and
environmental responsibility - tellingly, Max makes both issues centerpieces of its marketing campaign, listing both
the fat removed from its menu every year as well as the carbon footprint of many of its meals. Particularly for smaller,
more niche operators looking to distinguish themselves, a health and wellness focus will prove far more effective if
part of a broader sustainability message.

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Sunset Boulevard and Exki: Better Living Through Sandwiches

• Both thriving bakery fast food chains, Belgium’s Exki and Denmark’s Sunset Boulevard have both enjoyed an impressive run of
growth over the review period, with consumers warming to messages combining freshness, quality and health in equal measure. The
fact that both are bakery fast food chains is no accident - the format, and particularly sandwich-focused chains, are well-positioned to
offer a health-focused message, given a heavy emphasis on fresh vegetables and breads, often with a minimum of processing.
• The two chains’ success neatly illustrates the potential for fast casual chains to profit from an emphasis on health and wellness - the
link between healthy and high-quality remains a strong one for many consumers, with the premium focus of many fast casual chains
making them ideal candidates for this type of approach.
• Not surprisingly, both Belgium and Denmark are among the world leaders in per-capita spending on organic and other health and
wellness-related packaged foods and beverages. This is not a coincidence - by and large health and wellness products have made
their first inroads into packaged foods, then filtering out into foodservice, as quality and supplies continue to expand and evolve.

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Lessons From Sunset Boulevard and Exki

• Quality Sells Health and Wellness, And Vice-Versa: Coming back to a point made time and time again in this
briefing, the operators which are best-positioned to profit from a health and wellness-focused message are those
which are already convincingly positioning themselves as high quality. Both Exki and Sunset Boulevard have followed
this template well, marrying a health-focused message with images of high-quality, super-fresh food. On some level
this is simply a matter of trust - consumers are far more likely to respond favourably to a chain marketing its products
as healthy (and moreover, healthier than those of its competitors) if they have already accepted the idea that the
chain puts great effort into sourcing the freshest, best-quality items.
• Sell A Credible Product: While virtually every operator would like to sell a product considered both fantastically
indulgent and completely healthy, there are limits - certainly consumers (and operators, for that matter) have yet to
take the idea of a healthy burger and fries very seriously, and indeed some products have been embraced precisely
because they are super-indulgent, with no concessions to health concerns. Certain products are simply better-
positioned to be sold with a health-focused message, and sandwiches are near the top of the list, combining fresh
bread with a range of fresh ingredients - even low-cost Subway has profited from selling sandwiches as a healthy
alternative to fast food, and both Exki and Sunset Boulevard do the same, while ratcheting up the message of high
quality.
• Fresh, Fresh, Fresh: This is perhaps the single defining quality of both Exki and Sunset Boulevard, and one most
likely to appeal to health-conscious consumers. Similarly to the relationship between healthy products and high-
quality products, there is an increasing perception among consumers that fresh, seasonal, local products are not just
better-quality, but healthier, more natural, less processed and so on. This is partly why the earlier discussion of local-
natural supply chains is so important - among health-focused consumers, operators which can credibly claim to offer
fresher, more seasonal food have a built-in marketing advantage.

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Rise of Pinkberry a Cautionary Tale

• Frozen yogurt is trendy once again in the US,
following the titanic, years-long collapse of
the category following the end of the previous
frozen yogurt boom in the 1990s. Much of
this newfound popularity is the result of
Pinkberry, a chain founded in Los Angeles
which combines tart frozen yogurt with
upscale décor and a variety of toppings to
create something of a cult following, one
which has pushed the chain to more than 60
outlets in just four years.
• As before, much of Pinkberry’s appeal comes
from its perception as a reasonably healthy
indulgence, better for you than ice cream,
while adding the upscale presentation US
urban consumers increasingly demand.
• Echoing the previous boom, Pinkberry’s
success has spawned hordes of imitators,
along with Red Mango, the Korean chain
often felt to be the inspiration for Pinkberry’s
tart-yogurt concept. With few barriers to
entry, it remains to be seen whether
Pinkberry or any of its competitors will have
any staying power - so far its rise closely
tracks the previous frozen yogurt boom,
which was similarly fuelled by health and
wellness concerns yet quickly flamed out.

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Lessons From Pinkberry

• Beware the Fad: In several respects, Pinkberry has hit the jackpot, tapping into a consumer trend at just the right
time, with just the right combination of product, outlet design and marketing. Yet fads are fleeting by definition,
particularly for a product as easily duplicated as frozen yogurt - already, Pinkberry clones (“Redberry”, “Cactus Berry”,
“Berry Freeze”, etc.) can be found in many major US urban areas, often in advance of actual Pinkberry outlets. It
seems inevitable that as the exclusivity and uniqueness of Pinkberry’s product drops, so too will sales. This is
especially true for health and wellness products - consumers, particularly US consumers, continue to demand the
semi-mythical “healthy indulgence”, and will respond positively to any product which fits the bill, yet remain highly
fickle and quite willing to move on once the initial novelty has passed.
• Make It New: Looking to avoid any association with the previous, ill-fated frozen yogurt boom, Pinkberry offers a
product significantly different from most other frozen yogurts sold in the US. This is a large part of its appeal -certainly
it is positioned as a healthy alternative, but also as a genuinely new take on frozen dessert. This is instructive for any
operator looking to pursue a more health-focused positioning - while consumers are undoubtedly looking for healthy
choices, there is less evidence they are looking for better-for-you versions of existing foodservice products,
particularly if there is any compromise on flavour or quality compared to the original.
• The Dangers of Specialisation: Successful though it has been, Pinkberry remains tied to one product and one
product only - while there is value in this kind of strict identification with one product, there is also danger, particularly
when demand is, as of yet, primarily fad-driven. This is especially true - and especially common -among more health
and wellness-focused chains, with total identification with one product (and, specifically, one aspect of that product)
often leaving operators ill-prepared when tastes suddenly shift, or leading to compromises in other areas, such as
speed of service or product quality.

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H&W Concerns Plague South Korean Burger Operators

• Lest operators think concerns about potential fallout
from consumer fears about health and wellness are
overblown, one need only to look at South Korea,
where the burger fast food category has weathered a
massive, brutal shakeout in the early part of the
decade, one fuelled in part by a perception that
hamburgers are both unhealthy and low-quality.
• With consumer spending already in a nosedive due
to the collapse of the Korean economy following the
Asian financial crisis, burger chains were
simultaneously hit by the “wellness boom”, as it was
called at the time, with many consumers moving
away from hamburgers and other items perceived as
unhealthy - already seen as a foreign import, burger
chains were particularly hard-hit, losing sales to
more traditional outlets.
• Compounding the problem, a price war broke out as
chains struggled to maintain traffic, which backfired
by reducing profits and weakening any claim to
quality burger chains might have - overall, burger
fast food fared far worse than fast food overall and
consumer foodservice in general. Sales only
returned as the health and wellness craze (akin to
the low-carb craze in the US) began to die down,
while burger chains eventually moved away from
discounting towards a more quality-based message.

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Lessons From South Korea

• Fads Matter: While fast food chains are in some respect insulated from health concerns - consumers care a great
deal about convenience and indulgence, even if they also care about their health - the example of South Korea
shows they are far from immune. Burger fast food was to some degree blindsided by a major shift in public
perceptions, with operators finding themselves on the wrong side of a major consumer trend. While health and
wellness is perhaps not among the 2-3 most important issues facing operators, it cannot be ignored.
• Quality Matters: Once the slide in sales was upon them, burger fast food chains compounded the problem by
slashing prices, which only led to further consumer concerns that products sold through burger chains were in some
way unhealthy/low-quality. The intersection between quality and health is difficult to overstate - increasingly
consumers believe, or want to believe, that high-quality foods are in some way better for them, with the converse
being equally true. Foods seen as unhealthy are often seen as low-quality, while any dip in quality perceptions can
drastically affect perceptions of a product’s health profile.
• Know Your Market: Equally important is the way consumers are often willing to conflate “familiar” with “healthy”.
While hamburgers already face something of an uphill climb among health-conscious consumers, in South Korea
they faced the added hurdle of being a relatively recent foreign import, with few close counterparts in native Korean
cuisine. In the world of health and wellness products, cultural context is important - while American consumers may
be willing to overlook some of the shortcomings of the hamburger given its status as deeply familiar comfort food, this
is emphatically not the case elsewhere. Likewise, there is real value in couching a health and wellness message in
terms of the familiar. In many markets, one of the first places health-conscious consumers look is to traditional
cuisine, often seen as simpler, more authentic and better for you than modern, often-imported concepts.

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Introduction

Global Performance

Competitive Landscape

Case Studies

Global Prospects

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Global Prospects CFS – Health & Wellness © Euromonitor International

The Way Forward

Demographics remain
inexorable

Developed-market
consumers demand
organics

• While demographic shifts and rising obesity rates will ensure a steady supply of
health-conscious consumers, health issues will remain just one part of the demand
equation.
• Convenience and indulgence are still key, as evidenced by continued strong growth in
Options, options, options
fast food.
• The key word going forward for chains is “options” - consumers increasingly demand a
wide range of high-quality choices, both healthy and indulgent. Finding the right mix is
the key to profitability.

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A Growing Cohort of Health-focused Consumers

• Every single major foodservice market is projected to see its median age rise between now and 2014. While for some emerging
markets such as India and Mexico the median age remains relatively low, for other markets it is very high indeed - both Japan
and Italy, for example, are expected to see the median age of their populations surpass 45. In the case of Japan, by 2013 more
than 40% of the population will be 55 years of age or older.
• For foodservice operators, older consumers represent a new challenge, particularly for fast food chains which have long worked
to perfect the art of marketing to children and young people. While older consumers certainly do eat out, and often boast higher
disposable incomes than their younger counterparts, they tend to place far more emphasis on health issues, while still
demanding the occasional indulgence.
• Put another way, consumer concerns about health and wellness are unlikely to go away - indeed, they are expected to intensify
as the proportion of older consumers continues to grow. While every operator will approach the trend in their own way, ignoring it
is in most cases simply not an option.

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Soaring Obesity Rates to Keep Global Demand Strong

• As the chart illustrates, obesity rates are set to continue rising across the globe to 2013. In addition to adding to the ranks of
health-conscious consumers, it is likely to spur tighter regulation of CFS operators.
• Already, state, local and national governments have started mandating improved menu labelling, while cracking down on
unhealthy ingredients such as trans-fats, while stepping up regulation of CFS advertising, particularly as it pertains to young
children, a trend which is set to intensify over the forecast period.
• Likewise, obesity is set to become a worldwide problem – while cost will remain a concern, demand for healthy products (from
both consumers and governments alike) is expected to grow in the developing world as incomes rise and dietary habits become
more westernised.
• Finally, organic items are expected to grow in importance as prices fall, forcing many chains to rethink their distribution and
sourcing arrangements.

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Solid Growth Awaits

• Though both are growing from a very small base, organic and food intolerance products are expected to lead growth going
forward, with sales through both categories expected to expand by 34% or more over the forecast period. In terms of absolute
growth, fortified/functional products are projected to lead the way, as more producers look to add something extra to their
products, both as a means of providing added benefits as well as to further differentiate their products.
• The connection to foodservice is indirect, but still significant. The growth in retail sales of health and wellness products illustrates
growing demand for healthy products and, more broadly, growing awareness of health issues. While the indulgent, “special
occasion” nature of many foodservice purchases can blunt the impact of these forces to some degree, there remains a growing
cohort of consumers for whom health concerns are a growing driver of their eating habits. This is particularly true in developed
markets where rates of eating-out are high - particularly for older consumers, the fact that meals on the go account for an ever-
larger portion of total eating means it will increasingly be subject to the same concerns (price and health issues, among others)
driving purchases of staple packaged goods.

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Global Prospects CFS – Health & Wellness © Euromonitor International

New Markets Come to the Fore

• While North America, Western Europe and Asia/Pacific (primarily Japan) will continue to drive absolute sales, demand is growing fast in
Latin America, where the growing middle-class population in markets such as Brazil has spurred adoption of health and wellness
products.
• Thus, while any global health and wellness product strategy will remain by necessity focused on more developed markets, there is real
demand among emerging market consumers, as well, potentially allowing enterprising operators to differentiate themselves through a
healthier offer. This is particularly true in the case of beverages, which as in other markets are not subject to the same supply chain
issues as a more food-focused strategy.

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Developed Markets Look to Beverages

• Beverages are projected to lead health and wellness growth in four out of seven regions (including three of the four regions with the
largest sales) over the forecast period, as consumers continue to demand more bottled water, functional beverages, RTD teas and
better-for-you carbonates.
• For many foodservice operators, it is in beverages where many of the most compelling health and wellness opportunities lie - as
most operators do not produce their own beverages, introducing a more health-focused selection is simply a matter of finding the
right product mix, with a properly chosen selection of compelling, often-packaged beverages serving as an effective complement to
the standard fountain beverage selection.
• As previously mentioned, much of the growth in health and wellness beverages is expected to come from a combination of bottled
waters, functional beverages and RTD Teas. With products in these categories still primarily found in packaged versions, a major
evolution is underway in consumer foodservice, with increasing demand for healthy beverage options fuelling innovation.

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H&W Concerns Important, Yet Secondary

• While health and wellness concerns are expected to remain an important demand driver going forward, particularly in
more developed markets, it is crucial to note that they remain very much a secondary consideration in most markets.
Taking a look at projected global consumer foodservice growth in the chart, it is clear that demand from Asian consumers
(particularly Chinese consumers) and a more general demand for convenience remain the primary global growth drivers,
with Asian full-service restaurants, Asian fast food and burger fast food projected to combine for the bulk of global sales
growth.
• The picture is somewhat different in more developed markets, as the charts on the next slide will show, but even in North
America, Western Europe and Japan, convenience rules, with fast food leading the way in projected growth, while within
fast food burger and fast casual chains are expected to remain growth standouts. In these markets, while a health and
wellness-focused approach can work, it must always, always be tied to a broader message of convenience and quality –
increasingly, consumers seek a high-quality experience in the shortest possible time, and will embrace healthier-
positioned chains only if the focus on health and wellness serves to reinforce these two issues.

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Traditional Category Leaders Still Hold Sway

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Higher-income Consumers Look to Burgers, Fast Casual

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The Impact of Health & Wellness, Category by Category

High Impact
Organic, Naturally Healthy
Both naturally-healthy products and organics are expected to play a key
role in foodservice product strategy, providing a true differentiating factor
for those chains able to integrate such products into their supply chain—
going forward, the conflation of “natural,” “organic,” and “high-quality” in
the minds of consumers is expected to intensify.

Fortified/Functional Particularly in beverages, demand is high and growing for a product

which offers something extra, such as energy or vitamins or antioxidants
—product development in this area is quite advanced among beverage
manufacturers, allowing foodservice operators to achieve credibility here
with relatively little extra investment.

Low Impact
Better for You Though there is a core of consumers seeking lower-salt, lower-fat
options, foodservice demand will continue to be driven by indulgence,
making reformulated products a tough sell. While some operators (such
as Max) are expected to promote their fat- and salt-reduction efforts, this
is projected to remain a minor trend.

Food intolerance Products
As they are in packaged food and beverages, food intolerance products
are expected to remain a very minor niche in consumer foodservice.
Though some operators are likely to carve out a niche serving the needs
of those with food allergies, the sector’s impact on the global market will
be minimal.
46
Global Prospects
Naturally Healthy/Organic Trends to Watch
Trends Cross Borders
• Many products classified as
“naturally healthy,” such as olive oil,
whole grains, and soy products, are
fixtures of local cuisines in many
markets.
• As the health benefits of these
products become more widely-
publicised, acceptance has grown in
other markets.
• For foodservice operators, this has
serious implications, creating real
demand for those who can credibly
claim to be sourcing high-end,
healthy-positioned ingredients.
• Already, it is common to see chains
in Mediterranean markets promoting
their use of olive oil, or chains in
Scandinavia boasting whole grains
—going forward, these products are
expected to complete the jump to
new, less-familiar markets.
• For the largest chains, size is a real
advantage—those with the broadest
geographical reach also have the
broadest range of products and
cultures from which to choose.
CFS – Health & Wellness
“Superfoods”
• Alongside the growth in demand for
traditional, naturally-healthy foods
has been the rise of “superfoods,”
often exotic fruits rich in vitamins,
nutrients, anti-oxidants, and so on,
such as the Brazilian acai fruit or the
Tibetan goji berry.
• Many of these products begin as
obscure supplements, slowly
establish themselves in packaged
foods, and only then begin to appear
in foodservice—the acai fruit is a
case in point, with acai smoothies,
yogurts, and other items now
commonplace in many foodservice
outlets.
• Going forward, this trend is set to
accelerate—given proven demand
for exotic “superfoods,” the conveyor
belt from supplement-to-
supermarket-to-restaurant is likely to
speed up, as more manufacturers
look to find the next breakthrough
berry.
© Euromonitor International
Trust/Quality/Value
• Demand for naturally healthy
products overlaps and complements
demand for organics—consumers
who seek high-quality olive oil or
whole grains tend to also seek
organic versions of these products.
• The foodservice operators most
likely to profit from demand for
products from either of these sectors
are those that move towards a
combination of naturally healthy and
organic products.
• To be sure, this is something of a
niche market—as noted, sourcing
any organic items is problematic for
the largest chains, sourcing products
which are both organic and naturally
healthy even more so—yet for the
niche players who can accomplish
this, the rewards are a high-income,
highly-loyal consumer base,
consumers who are often skeptical
of chained foodservice and will
support those operators who meet
their standards.
47
Global Prospects
Fortified/Functional and Better-for-You Trends to Watch
Portion Control Key
• While the importance of indulgence
to foodservice demand makes a
wave of packaged food-style product
reformulations unlikely (barring
legislation, such as a ban on trans
fats), there is real demand for
smaller portions, both from
consumers looking to limit calories
as well as those looking for a light
snack.
• This is one of the few H&W trends
with a real chance of being adopted
by both small operators and large
chains alike, as it requires no major
investments in new supply chains or
sourcing arrangements, while
providing an easy way of diversifying • All of these innovations concern
an outlet’s offerings.
CFS – Health & Wellness
More Energy, More Vitamins
Drive Beverages
• Beverages will continue to drive
innovation in functional/fortified
products, particularly in foodservice,
where they offer a “bolt-on” solution
for operators looking to differentiate
themselves and add a H&W
component to their branding.
• Over the last 2-3 years, the focus of
innovation has shifted from energy
and sports drinks, which provide
added nutrients and energy, to more
targeted innovations and
ingredients, such as anti-oxidants,
green tea extract, and even
probiotics, all of which claim to
address specific health needs.
foodservice primarily in the long-
term; going forward, H&W
innovations will continue to appear
at retail before slowly filtering into
foodservice, though the pace of
adoption is expected to accelerate.
© Euromonitor International
Targeted Formulations Serve a
Niche
• As noted in earlier sections, much of
the demand for H&W-oriented
foodservice products will be met by
smaller, niche operators, rather than
the largest global chains, for whom
logistical issues remain a concern.
• In both developed and emerging
foodservice markets, technologies
such as social networking have
turbocharged traditional word-of-
mouth, allowing operators serving a
particular niche to rapidly gain a
loyal following.
• In other words, we have entered a
period where a H&W-oriented
foodservice operator serving a
particular niche can rapidly gain a
viable consumer base—over time,
this is expected to lead to the
emergence of smaller operators
serving ever-more-targeted markets,
such as beauty-focused consumers
and so on.
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Changing Environment Makes Options Key for Chains

• While this report has presented a number of examples of operators which have carved out a successful niche with an
offer explicitly focused on health and wellness (one often linked with a broader message of quality), this is really not a
viable option for the world’s largest chains - issues of supply come into play (there is simply not enough organic
agriculture in the world for McDonald’s or Burger King to wholeheartedly embrace organics, for instance), as well as
the real risk of alienating core consumers. While Burger King could potentially attract more health-conscious
consumers with an overhaul of its menu, fans of indulgent, flame-broiled burgers would likely be less impressed, and
go elsewhere.
• That said, it is equally unwise for global operators to dismiss health concerns out of hand - the demographic changes
taking place in both developed and some emerging markets are undeniable, and the example of South Korea
illustrates the very real impact health concerns can have on sales. Fad or not, the “wellness boom” had a devastating
impact on burger sales in South Korea, with the category taking several years to recover from the blow.
• Thus, for the very largest global and regional chains, a middle path beckons. More than anything, consumers today
demand options - the very same consumer who eats a sensible salad on Monday may choose a juicy burger on
Friday. An improved focus on health and wellness at a major fast food chain may not attract many of the consumers
for whom health concerns are paramount, but it can potentially increase dining frequency among the much larger
mass of consumers for whom health concerns stand alongside convenience, quality, indulgence and a host of other
issues.
• Already, this approach took hold at a number of major chains; KFC’s roll-out of grilled chicken in the US has been
declared a success by company officials, who have long noted the potential for grilled chicken to increase dining
frequency. While the average consumer may balk at purchasing a bucket of chicken more than 1-2 times per month,
the presence of another, even slightly healthier option could push that number higher, a vital consideration for chains
looking to grow same-store sales in more-developed markets.

49

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