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The Future of Fast Food, Part 2

Fast-food chains are adding healthy menu items to please customers and fatten up bottom lines.

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Recently, Schlotzsky's began testing a lighter side selections menu, featuring 13 items with nine grams of fat or less. "It strengthens our offering in this category, and it gets the message out to customers that we have these light and tasteful products," says John Wooley, president and CEO of the sandwich chain, which plans to roll out versions of the new menu systemwide over the next two years.

Schlotzsky's is only one in a growing number of fast-food chains adding healthy menu items. Companies like McDonald's, which revamped its salad line, are seeking lighter products as they face competition from sandwich chains like Schlotzky's and Subway, and healthier-feeling fast-casual brands like Panera Bread and Baja Fresh.

"For many of these companies, same-store sales have been stagnant or declining, and they have come to rely on costly discounting to drive traffic. At the same time, there has been rapid growth among restaurants such as Panera Bread that offer healthier, fresher, more sophisticated products," says Diane Beecher, president and CEO of The Brand Consultancy, a Washington DC-based strategic branding firm. "The traditional quick-service companies want to drive up same-store sales by offering some of the same healthier products these fast-growth chains are offering."

Fast-food operators aren't just responding to pressure from competing brands; there's also an increased customer demand for healthier products. "The original sandwich--three meats and three cheeses--has a wonderful taste and people love it," says Schlotzsky's Wooley. "But we began to see in consumer focus groups that there was a concern. People would say, 'I love Schlotzsky's, but I can't eat it that often because it's so fattening,' so we knew we needed to address that."

El Pollo Loco has seen the benefits of an increased interest in health, with its menu of flame-broiled, citrus marinated chicken and fresh salsas. "There is a long-term focus on healthier, more nutritious eating that's driven by demographics," says president and CEO Stephen Carley. "The baby boomers are hitting the age where they're seeing their doctors every year, and their doctor is saying, 'Knock off the burgers, fries and pizza.'"

While there is certainly consumer demand for healthy menu items, there is also debate over whether or not companies making these concessions see any real benefit. "They're seeing a little bit of benefit, but the sales and profitability aren't going off the chart," says Tom Feltenstein, chairman and CEO of Tom Feltenstein's Neighborhood Marketing Institute, a West Palm Beach, Florida, firm that helps companies target marketing efforts to their specific communities. "I don't believe in the years to come that it's going to make any perceptible difference in terms of growing anyone's business in the food-service industry."

Wooley of Scholtzsky's disagrees. "All the hamburger chains have chicken breast sandwiches, and they've found that's a good way to make money, because people will generally pay a higher price for something healthy. So you really want to have some of those items on your menu, because it can grow your margin," he says. "With our vegetarian sandwich, we've replaced the meat with some vegetables that have a much lower cost, and we're charging the same price for it. And now a lot of people want you to take the cheese off. Cut the meat, cut the cheese, charge the same price. That's good business."

Even if companies aren't seeing extraordinary returns on these healthy menu additions, whatever results they are getting make the changes worthwhile. "While the new products do not and probably will never outsell the traditional products, [healthy items] are driving changes in perceptions of the brands and incremental visits," says Beecher.

A month since testing began on Schlotzsky's lighter menu, the initial results are in: Test stores have seen their numbers increase. "We're already attracting new customers, and maybe we're getting an old customer back that we lost," Wooley says. "Either way, we're seeing increased traffic."

Click here to read "The Future of Fast Food, Part 1."

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