Fast-Food Chains Buck The Healthy Trend
Fast-Food chains are increasingly bucking the health trend and are making healthy profits by catering to appetities for beefed-up menus at bargain prices.
CKE Restaurants have introduced bigger burgers with flare at their Carl's Jr. and Hardee's restaurants. Remember the monster-sized one pound Double Six Dollar Burger 1,400-calorie burger? Likewise McDonald's has temporarily introduced a 1,227 calorie burger during the World Cup soccer games that is 40% larger than a Big Mac.
BusinessWeek explains the heavy eating trend as Americans quest of value for money, health be damned.
"''Value is a big lure,' says Brian Wansink, professor of food marketing at Cornell University in Ithaca, N.Y. 'Compared to a basic burger, if you get something really huge for just 45 cents, more is worth trading up to, especially for young men who like to leave a restaurant feeling really full.'"
But according to Motley Fool, there are franchise chains out there that can really take advantage of the "obesity industry".
According to government surveys, the average American adult man between 20 and 74 years old weighs in at 191 pounds, while his female counterpart weighs an average of 164. These are both up about 24 pounds over the past 40 years. This is a trend with implications that go beyond health -- it affects companies, consumers, and investors.
For example: The increase in the overweight population boosts businesses such as Weight Watchers and NutriSystem. A recent Washington Post article noted: "William L. Weis, a management professor at Seattle University, says revenue from the 'obesity industries' will likely top $315 billion this year, and perhaps far more. That includes $133.7 billion for fast-food restaurants, $124.7 billion for medical treatments related to obesity, and $1.8 billion just for diet books -- all told, nearly 3% of the overall U.S. economy."
The fattening of America also suggests that more and more people have been eating out, very often at "quick-serve" restaurants such as McDonald's and Burger King. Beyond that, it's worth noting that many such restaurant chains have been tweaking their menu offerings in order to cater to nutrition-conscious and dieting consumers. Witness, for example, all the salads now available in fast-food places, the Veggie Burger you'll find at Burger King, and Wendy's chili.
...Is this trend here to stay? That remains to be seen. There are certainly factors that will keep fueling it, such as our increasingly busy lives that welcome fast foods and processed, prepared meals that tend to be high in calories. Maybe one day we'll be marveling at how thin the average American is. But in the meantime, companies such as "Goliath Casket" (you can guess what it makes) have reason to be bullish about the future.
But not all businesses involved in the fattening of America are good bets. One just needs to look at Krispy Kreme. They were not so fortunate in riding out the low-carb trend. However, this has less to do with diet trends and more to do with mismanagement and deceptions by the donut franchise chain. Motley Fool observes this about the once darling of Wall Street:
Krispy Kreme's developments quickly changed as the initial hype and excitement turned out to be a mirage: buzz-building new store openings, unethical and self-dealing repurchases of its own franchisees at inflated prices, and a crippling debt load. Soon thereafter, sales began to plummet and an avalanche of problems fell on the company, followed by the need to close stores, bankrupt and furious franchisees, shareholder lawsuits, and Securities and Exchange Commission investigations.
It's no surprise that Krispy Kreme did not release first-quarter earnings. It's hard to trust any fiscal 2007 results when fiscal 2006 numbers are missing.
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Photo by Gooskimo
