Fast

Food

ince 1867 the fast food industry has evolved from a hot dog cart on Coney Island to a global industry comprised of local, regional, and national chains and franchises. The term “fast food” can be defined as, “food prepared in quantity by a standardized method that is dispensed quickly at inexpensive restaurants for eating there or elsewhere.” The top competitors in the industry based on 2006 sales can be seen in exhibit 1.

Kirsten Blanton

Ben Cheney

Yamini Natarajan

Ryan Roberts

Anish Shah

Matt Steichen

S

$0

$7,500,000

$15,000,000

$22,500,000

$30,000,000

McDon

ald’s

Burge

r King

Wendy

’s

Subw

ay

Taco

BellKF

C

Pizza

HutSo

nic

Domino

’sArb

y’s

Exhibit 1: Fast food competitors 2006 sales

The McModel: Ensuring the future of the fast food industry

Changing Landscape With a sales revenue of $ 223.6 billion in 2007 [2], the fast food industry has been experiencing steady growth. But the growth rate has seen a significant decline over the past couple of years, reflecting the maturity of the industry. This inevitable stagnation has been caused by several factors such as over saturation, slowing economy, anti-westernization, the rise of fast casual restaurants, and obesity. The various players in the category have been trying to combat the losses due to over saturation, anti-westernization, and the rise of fast casual restaurants by developing new products, pricing strategies, and cutting food and labor costs. But, obesity remains as the greatest threat to the long term future of the industry, as it continues to come under fire for offering high calorie food that lacks sustenance. The drastic

Source: [1] The QSR 50

Adults of Tomorrow The obesity epidemic is showing no signs of slowing in the future. Obesity rates among children have tripled over the past 30 years; in 2004, 18% of children were considered obese as opposed to 6% in 1980 [3]. It has also been noted that a child who is obese at age 13 has 90% odds of being obese in his or her mid-30s [4]. By 2015, it is projected that 75% of Americans will be overweight or obese [5]. Children are unable to make proper decisions regarding to their health, and the large amount of fast food advertising they consume skews their perception of nutrition [6].

As these children become adults they risk carrying negative dietary habits into their adult lives realizing health issues after it is too late. Obesity can have immediately detrimental affects on a child’s health, such as type 2 diabetes, hypertension, steatohepatitis, depression, and stigma. It is also probable that obese children will experience long-term effects that include arthritis, cancer, and heart disease [7]. According to Dr. David S. Ludwig, director of the obesity program at Children's Hospital Boston, “Obesity is such that this generation of children could be the first basically in the history of the United States to live less healthful and shorter lives than their parents” [8].

Fat America America is experiencing an obesity epidemic; rates have been consistently rising since the 1970ʼs. Today, 64% of American adults are overweight, and 31% are obese. Obesity is a major cause of preventable death, increasing the prevalence of diseases such as diabetes and heart disease. A major cause of obesity is due to an American lifestyle which revolves around sacrificing long term health and happiness for the short term attainment of personal, career, or scholastic goals.  By focusing time on societal measurements for success it becomes easy for the public to forgo healthier lifestyles, because gaining a healthy longer life is not an immediately  recognizable benefit. Maslow’s Hierarchy of needs shows that food falls into the lowest quadrant of the triangle.  By utilizing the services of a fast food restaurant, a consumer is able to save time and money, thus enabling them to attain higher quadrants such as achievement and respect with more ease.   It is important to note this insight because it frames the argument that the fast food industry is incapable of changing the American culture that revolves around success and

advancement. Rather, the industry has the ability to provide alternative lifestyle choices that are

0

5

10

15

20

NHANES II (1976-80) NHANES (1999-00) NHANES (2003-04)Age 6-11 years AGE 12-19 years

Prevalence of Overweight Among U.S. Children and Adolescents

Source: Gadola

rise in obesity has caught the attention of many lawmakers, parents, doctors, lawyers, and activists. This attention has caused fast food to become the main cause of obesity in the publicʼs eye, which has tarnished its image. This poses short-term and long-term risks to the industry. Successfully addressing the issue would affect the industry in areas besides sales and profits as well. The declining image of the entire fast food industry would receive a face lift by being the pioneer in the battle against the bulge.

Source: Maslow’s Hierarchy [21]

The Industry Must Make A Change In order to ensure a successful future, the industry will take action where they can have the most impact, the fight against obesity. The fast food industry needs to be an architect for the “Health Revolution” for two primary reasons - sustenance of the industry and the preservation of the health of the customers. Julian Mellentin, international functional food consultant said, "Health is the future of food, for now and forevermore. Any company that doesn't have some kind of health strategy will find itself left further and further behind" [9]. All changes must be actionable while maintaining the core of what fast food means to its consumer base. The pillars of time, price, taste, and convenience are symbolic not only of that which fostered its growth for over half a century. When looking to make changes for the long-term benefit of the industry, these four pillars will not be removed. America has grown to support the mantra that faster is better, an aspect of fast food that is as fundamental as the burgers and fries. It is for this reason that the pillars of fast food are here to stay, and will remain a prominent staple in both society and the fast food industry.

The industryʼs image is tarnished, lawsuits are piling up, and growth is slowing.

McModel Implementing positive change for tomorrow is a multistep process that will take several years of continuous development. The McModel would provide a structured approach to track the fast food industry as it moves into the future. With this we can anticipate how individual restaurants would be brought into the funnel of change. The Transtheoretical Model [10], which predicts the outcome of a personʼs behavior change with regard to their health, is the inspiration for the McModel. The intent of the model is to provide actionable steps for the industry to follow to reinvigorate their product life cycle and preserve their future in American culture. Understanding that this will take several years to fully implement and individually adopt, it will be the vehicle used to push the industry towards a healthier future. As figure __ shows, the model is comprised of five steps: observation, commitment, groundwork, performance, and

There are four pillars of fast food that are fundamental to the industry.

Time: Due to today’s fast-paced society, consumers want

their food quickly.

Convenience: The Fast food industry has made itself the

most convenient option, building a restaurant on nearly

every corner.

Price: The value of the American dollar is declining, oil

prices are at an all-time high, the value fast food presents

through lower prices, when compared to other restaurants,

is important to the consumer.

Taste: As is inherent in all food consumption, consumers

want their food to taste good.

Performance

Groundwork

Observation

Commitment

Sustainment

Performance

Groundwork

Commitment

Sustainment

Observation

The Model demonstrates how the industry will funnel through each stage, but also shows the adoption of the model by individual restaurants. The model also shows that individual restaurants join the ribbon at different points after careful consideration. As time progresses, they evolve through the steps of the McModel.

McModel PromiseEach stage of the model serves a specific purpose that demonstrates how fast food companies will guide their entities towards one single promise: convert the fast food industry from one that promotes food that lacks sustenance to an industry that promotes a healthy lifestyle to its customers from the menu and beyond. By following the model, fast food companies will promote functionality internally to its employees and externally to its customers through physical, emotional, and social initiatives.Stage 1: Observation: 2002-2010Gain background knowledge of industry problem The observation stage is where the problem facing the industry is recognized. Fearful of negative repercussions, the industry has failed in the past to make permanent directional moves. The fast food industry has already begun to react to consumer demands for healthier fast food. Over the past few years, several fast food companies have introduced healthier menu options, such as premium salads and sandwiches. Some companies have also begun promoting a healthy lifestyle that stretches beyond their doors. McDonaldʼs introduced the Go Active! Adult Happy Meal in 2004, which comes with a pedometer, encouraging walking as a supplement to a healthy lifestyle. There has also been a technological movement towards healthier versions of well established favorites. In 2006, KFC introduced trans fat free chicken, mashed potatoes, and corn on the cob [11]. Other companies have begun to jump on the bandwagon also. Wendyʼs, Burger King, and McDonaldʼs have all taken steps towards implementing the use of trans fat free oils in their restaurants. Even though these healthy initiatives are costing the industry millions of dollars, companies are

beginning to see the benefits. After McDonaldʼs launch of their premium salads in 2002, the company saw an increase in profits of 13% in the third quarter of 2003 [12]. According to a written statement from McDonaldʼs CEO Jim Cantalupo, increased sales and income were due to customersʼ positive responses to the innovations made to the McDonaldʼs menu [12]. This positive public response is proof that healthy innovations present a sustainable future for the industry. Converting the industry from what it is today into a healthier industry in the future will cost a lot of time and money, but the benefits to the long-term bottom line make it a salivating proposition. The industry is already well on its way to achieving the McModel promise, but each company is in a different place on the model. The observation stage has already been passed by several of the industryʼs top competitors, with initiatives like those in the side bar. But some companies have yet to start the model at all. Therefore, the different companies in the industry will progress through the model at different times, but the industry as a whole will shift with the first wave of players.

Steps Towards A Healthier Future:

♦ Introduction of premium salads by major players in the industry

♦ McDonaldʼs Go Active! Happy Meals for adults & healthier changes in their Kidʼs Happy Meal

♦ Phasing off Supersized meals by McDonaldʼs

♦ Movement towards introducing trans fat free oil

♦ Innovation Center for healthier food options by Jack in the Box in 2004

♦ Subway promoting healthy menu

Stage 2: Commitment: 2010-2013Gain internal support for change In order to make significant changes in the health of the industry and the consumers, fast food companies will start making business decisions with the end promise in mind. Full commitment is mandated at this stage. First, pros and cons are weighed in the nutritional change that is proposed, and then the promise is made. Because external products cannot be offered yet, this stage is comprised largely of internal initiatives.

Educational Employee Motivation Program The employees are the link between the company and the customer. If the employees are not educated and excited about the new initiatives, they will not be invested, which is vital to success. Education of employees on the new health improvements is as difficult as it is important. The fast food industry has a yearly turnover rate of 123% [13], making education of employees costly and wasteful. Therefore, a retention program that provides a valuable benefit for the employees is necessary to make the education cost efficient. This educational employee motivation program encourages employees to live healthier lifestyles through benefits that are tied to healthier choices. In order to earn benefits, employees must earn points with a Health Tag, which can be completed in several different ways. Employees will earn points for taking monthly online health training courses, exercising at gyms regularly, and eating healthy food. The point value they earn for each activity will be added to their balance, which is accumulated by swiping the Health Tag, and is dependent on the length of their tenure with the company. This program allows employees to learn about the advantages of a healthier lifestyle as well as how to live one. This internal motivation and education will increase not only their understanding about the new healthy initiatives released by the company, but it will also increase employee morale and ultimately employee retention.

Stage 3: Groundwork: 2013-2018Get consistent messaging implemented Confidence has been gained from the initial changes and positive results. After the internal initiatives have been set in motion, companies will begin to lay the groundwork for external changes. This is the stage where internal planning is made, and heavy research and development is utilized to set up the long-term future. External changes are meant to initiate the commitment to a healthier future. These include changes in portion sizes, education of children, and marketing.

Portion Sizes Caloric intake can be reduced by decreasing the portion size. America has become the land of over-consumption, causing a direct parallel to the rise in obesity. Providing large portions contributes to obesity by tempting consumers to eat more than they would otherwise. McDonaldʼs discontinued its Supersize campaign and Wendyʼs stopped the use of the terms Biggie and Great Biggie, but it seems that they simply renamed the sizes as opposed to reducing the portions.

The concept of small, medium, and large fountain beverages has been a successful constant in the food industry for years. It gives the consumers the ability to choose how much they want to consume based on their perceived value of each size. This is the same system that will be implemented for food. Producing three sizes of every menu item may seem like an unfeasible task, but in todayʼs age of streamlined mass production it is feasible to implement this with many of the menu options.

Children’s Education Another initiative necessary to spark change is the education of children in nutritional matters. Todayʼs obese children are tomorrowʼs obese adults; the habits someone forms as a child are likely to be the same habits they practice their whole life. A Princeton University study found 52% of obese children, ages three to six end up being obese when they reach the age of 25, as opposed to 12% of normal weight three to six year olds [14].

Kid’s Meals Kidʼs meals are a main driver for children wanting to visit a fast food restaurant. The excitement of getting a toy of their favorite cartoon or movie character is often worth more to them than the food it comes with. This excitement presents a unique opportunity to fast food companies: educate children through kidʼs meal toys. Future kidʼs meal toys will still feature their favorite characters, but the toys will be more than just an action figure or Hot Wheels car, they will be an educational toy as well. When children are presented a learning opportunity by a character they like and trust they are more open to the lesson being taught.

Play Places Childrenʼs play places, which are located in many fast food restaurants, provide an opportunity for establishing a hands-on education about nutrition, exercise, and the benefits of being active. In order for this to be most effective, the typical playground set up will change. Items such as slides and ball pits may remain, but will not be the main feature. Instead monkey bars, steps, and other fixtures that promote physical activity will become the staples of the play places. Along side each piece of equipment will be kid friendly games and exercises that promote physical well-being.

Advertising For years children have been the target of mass advertising campaigns that

have ingrained a desire for fast food into their minds. Ray Kroc, founder of McDonaldʼs, understood from the beginning that one of his most valuable targets was children. “A child who loves our TV commercials and brings her grandparents to a McDonaldʼs gives us two more customers” [15]. Some fast food companies have started to regulate their marketing initiatives targeted towards children. It seems, however, that many of these marketers are self-regulating themselves merely for their own best interests. Harvey Hoffenberg, an online marketer who has worked with Taco Bell and Burger King, stated, “Youʼve got to find the right balance when youʼre talking to kids or else [you are] going to get slapped with some unfavorable public relations” [16]. The advertising initiatives in the future will fall in line with the kids meal and play place experience to create the maximum affect on children. Fast food companies will communicate a message of health and well-being through traditional mediums such as TV, but also heavily through the internet. Due to the inability to deliver any tangible

Stage 4: Performance: 2018-2025See positive customer reaction throughout industry The industry will begin to make larger internal and external business decisions in this phase which follow the original promise. Product changes are implemented at this stage. Even though many companies have begun to initiate the change with healthier options, this more comprehensive transformation is no longer a split between healthy versus unhealthy food offerings. It is no longer acceptable for a restaurant to sell a Double Quarter Pounder® with Cheese that has 740 calories [17]; even the signature items will be transformed into healthier options. The food at fast food establishments will all be brought to an acceptable level of nutrition value. This can be achieved through several different approaches.

Ingredients The ingredients used in fast food are a large part of what makes it unhealthy. The future looks into minimizing the ingredients that are high in calories and high in fat in order to make offerings healthier as a whole. The pillar of taste provides a notable challenge; many of the unhealthy ingredients contribute heavily to the taste that people have grown to love and is one of the main reasons people purchase fast food. But, as technology progresses, scientists will find ways to replace the unhealthy ingredients with healthier alternatives that keep taste consistent.

Seasonal Offerings In the food industry, fast food is not generally viewed as the freshest option available, and in many cases it is not. Seasonal offerings will allow the industry to increase the freshness of some of their menu items. By introducing seasonal items companies can showcase high quality taste and appearance while promoting locally grown ingredients. It demonstrates the support of local businesses as well as a reduction of the industryʼs carbon footprint. Customer loyalty is encouraged with development and promotion of new and revolving seasonal menu selections. Seasonal offerings will not apply to the whole menu, rather a customer can purchase specific fruits or vegetables when they are in season, such as clementines in the winter and oranges in the summer.

benefit online, fast food companies must create experiences that draw users to the site. Therefore, the fast food companies will create virtual environments that entertain kids, teach themabout nutrition and exercise, and reward them for their learning. The advertising must be appealing and compelling to customers to make purchases. Additional marketing efforts will not only show the tasty value of eating in a fast food establishment, but they will also educate consumers that menu items can provide a balanced meal when eaten in moderation and supported by an active lifestyle.

Stage 5: Sustainment: 2025-?Full actualization of promise The final level of the McModel ensures that past and future changes align and can sustain themselves for future growth. To maximize the future, the food must undergo one more transformation. It will move from healthy to functional. Food offered at fast food restaurants will fulfill a physiological need; they will provide a specific health benefit beyond that of basic nutrition. Through research and development the industry will develop and incorporate functional foods that contain biological components that will optimize physical and mental well being and reduce the risk of disease. The balancing of the food will allow people to eat fast food meals and gain a balanced diet from every menu item. The final stage to launch the fast food industry on a new track includes full menu changes, product changes, and product subsidization.

Vitamin Burgers One way to achieve this transformation is vitamin burgers. Studies have shown that only 40% of Americans have taken vitamins in the past month, leaving 60% without that added health benefit [18]. By offering fast food items that contain the daily value of various vitamins and minerals, the food will be providing a specific health benefit that surpasses basic nutrition, making it a functional food. Physiological changes in fast food will promote a more balanced lifestyle and will provide benefits beyond meeting basic nutritional needs. Foods from salads to the staples of fast food, such as the fries and the burgers, will include ingredients that provide extra benefits.

Daily Value Meals In order to push the benefits provided by the functional food, companies will re-bundle the value meals that are so popular today. Instead of consisting of a burger, french fries, and a soda they will include a multi-vitamin burger, water, and fiber fries. Each combination represents approximately one third of someoneʼs daily value, so if someone eats three Daily Value Meals in one day, they will fulfill their daily value requirements.

Simple Nutritional Labeling The added benefits of the Daily Value Meals will not be realized by the consumers without a simple nutritional labeling system. One example of success with this system is Hannaford, a grocery store chain in the state of Maine, which introduced a program in 2004 called Guiding Stars. The program rates all food in a given store on a 100-calorie system. Based on the foods measurement of vitamins, minerals, dietary fiber, whole grains, fat, trans fat, cholesterol, sodium, and sugars the product is awarded no stars, one star (good), two stars (better), and three stars (best). A trend to help consumers decipher and understand nutritional coding is already forming. This trend will find its way into the fast food industry via simple nutritional labeling on menu boards and product packaging that allow consumers to understand the benefits each item offers.

Government Subsidies Research has shown that healthy alternatives are not necessarily cheaper alternatives, however. Nancy Childs, professor of food marketing at Saint Josephʼs University in Philadelphia, points out, “When you have a $4 salad and $1 Whopper, youʼre not making food accessible to people of particular socioeconomic circumstances.” In order for the transformation from unhealthy food to functional food to be successful, government subsidies for healthier food, such as fruits and vegetables, will be necessary. Many of Americaʼs fast food restaurants are located in obesogenic areas, which are generally found in lower income areas where healthy food is less of an option. Obesogenic areas are characterized by unplanned urbanization, a high prevalence of fast food restaurants, and fewer options for healthy foods [19]. In order to remain consistent with the pillars, the price of the new functional foods must remain relatively low. Government subsidies for local produce and other healthy foods would allow the fast food industry to make a larger dent in the war on obesity.

Good

BetterBest

Reinvigorate the Fast Food Industry By 2025 the fast food industry will have transformed from a food provider that preys on its consumers to one that serves a specific health benefit while maintaining timelines, low price, taste, and connivence. With the introduction of functional foods infused with ingredients that combat disease, an additional pillar will be added to the support of the fast food industry: functional. Consumers will come to appreciate the added benefit of foods that provide added benefit to their lives. Once the full actualization of the McModel is reached all business efforts will uphold the promise to promote a healthy lifestyle from the menu through all aspects that the brand touches, and in doing so the customersʼ life expectancy will increase providing greater customer lifetime value. As consumers become healthier, critics will be silenced, decreasing the need to sink the millions of dollars into lobbying against the government to ease off regulation. Providing products that support a lifestyle beyond food consumption will increase the industryʼs image and cause the consumer to rely on the fast food brands as more of a daily option as opposed to once or twice a week; thus generating greater profits. The industry is taking the health initiatives beyond its menus and into the lives of its employees and customers by promoting and acknowledging the importance of good health. The internal initiatives employed in the industry will convert the employees into advocates of healthy lifestyles, which will be vital in the positive evolution of the industry in the future. Consumer oriented initiatives will ensure a healthier future for the industry; the new direction will spark a new life cycle curve, ensuring future growth and sales. As McDonald's founder Ray Kroc once put it, "Look after the customer, and the business will take care of itself” [20].

[1] “QSR 50, The.” QSR Magazine. 2007. <http://www.qsrmagazine.com/reports/qsr50/2007/charts/qsr50-1.phtml>.

[2] “Technomic tracks slowdown for chains.” QSR Magazine. 29 February, 2008. <http:// www.qsrmagazine.com/articles/news/story.phtml?id=6258>.

[3] Gadola, Emily, Levi, Jeffrey, and Segal, Laura. “F as in fat: how obesity policies are failing in America.” Trust for Americaʼs Health. 2007. <http://healthyamericans.org/reports/obesity2007/Obesity2007Report.pdf>.

[4] Camas, Joanne. “For kids’ food, think super healthy — not super size.” Epicurious.com. <http://today.msnbc.msn.com/id/24160630/>.

[5] Hitti, Miranda. “U.S. obesity set to boom.” WebMD. 13 July, 2007. <http://www.webmd.com/diet/news/20070713/us-obesity-set-to-boom>.

[6] “Explosion of child obesity predicted to reverse U.S. life expectancy.” Science Blog. 16 March, 2005. <http://www.scienceblog.com/cms/node/7256>.

[7] Koplan, Jeffrey P., Kraak, Vivica A., and Liverman, Catharyn T. Preventing Childhood Obesity: Health in the Balance. Washington, D.C.: The National Academies Press, 2005.

[8] Belluck, Pam. “Children’s life expectancy being cut short by obesity.” The New York Times. 17 March, 2005. < http://query.nytimes.com/gst/fullpage.html? res=9F01E3D7133CF934A25750C0A9639C8B63&sec=health&spon=&pagewanted=2>.

[9] Howell, Debbie. "Next wave in food packs vitamins and minerals". DSN Retailing Today. April 10, 2006. FindArticles.com. 27 Apr. 2008. <http://findarticles.com/p/articles/mi_m0FNP/ is_7_45/ai_n16124753>.

[10] Stang, Jamie and Story, Mary. “Nutrition education and counseling.” University of Minnesota. <http://www.epi.umn.edu/let/pubs/img/adol_ch5.pdf>.

[11] “Zero grams trans fat.” KFC.com. <http://www.kfc.com/nutrition/zerotransfat.asp>

[12] Ladika, Tomislav. “Healthy menu items contribute to profit rise for McDonald's.” The Michigan Daily. 23 October, 2003.

Works Cited

[13] Cooper, Evan. “Turn, turn, turn. employee turnover.” MoreBusiness.com. 18 September, 2000. <http://www.morebusiness.com/running_your_business/management/ d968034020.brc>.[21] “Maslow’s Hierarchy.” ChangingMinds.org. <http://changingminds.org/explanations/needs/maslow.htm>.

[14] Anderson, Patricia M. And Butcher, Kristin F. “Childhood obesity: trends and potential causes.” The Future of Children. 16.1 (Spring 2006): 19(27). General OneFile. Gale. Virginia Commonwealth University. 20 April, 2008. <http://find.galegroup.com.proxy.library.vcu.edu/itx/infomark.do?&contentSet=IAC- Documents&type=retrieve&tabID=T002&prodId=ITOF&docId=A143581647&source= gale&srcprod=ITOF&userGroupName=viva_vcu&version=1.0>.

[15] Schlosser, Eric. “Fast-food nation: the true cost of Americaʼs diet.” Rolling Stone Magazine 3 September, 1998: Issue 794. <http://www.mcspotlight.org/media/press/rollingstone1.html>.

[16] Minnick, Fred. “Marketing to children.” QSR Magazine 20 March, 2008. <http://www.qsrmagazine.com/articles/exclusives/0707/children-1.phtml>.

[17] “McDonald's USA nutrition facts for popular menu items.” McDonald’s Nutrition Facts. Jan 2007. <http://www.mcdonalds.com/app_controller.nutrition.index1.html>.

[18] “Forty percent of americans take vitamins.” Matria Healthcare. <http://www.cancerpage.com/news/article.asp?id=533>.

[19] Pinzon-Perez, Helda. "A review of obesity and its relationship with the built environment: implications for health educators.(Clinical report)." International Electronic Journal of Health Education.  (June 21, 2007): NA. Academic OneFile. Gale. Virginia Commonwealth University. 19 Apr. 2008  <http://find.galegroup.com/itx/infomark.do?&contentSet=IAC-

Documents&type=retrieve&tabID=T002&prodId=AONE&docId=A166565171&source=gale&userGroupName=viva_vcu&version=1.0>.

[20] Sullum, Jacob. “Spurlock's splurge: does a McDonald's binge prove fast food is ‘unreasonably dangerous’?” 7 May, 2004. Reason Online. <http://www.reason.com/news/show/35709.html>.

[21] “Maslow’s Hierarchy.” ChangingMinds.org. <http://changingminds.org/explanations/needs/maslow.htm>.