Is The Health Food Craze Impacting Food & Restaurant Stocks?

In the modern food era, growth and profitability for businesses in the food and restaurant industries have become increasingly tied to the development of a health-focused brand image. Organic, natural, artificial-free, and nutrient-dense ingredients are big draws for consumers, becoming more of a selling point over pantry and kitchen items that are high in sugar, salt, and fat.

Now, some of the biggest food companies are switching things up. You’ve probably noticed the change, too. In grocery store aisles, products are “thin,” “light,” and come in 100-calories packs; even packaging is more appealing—think neutral colors with pops of pastels or shades of green, fruit and veggie designs, and a simple font choice—giving the impression that what you are buying is good for you.

Snack food maker Mondelez International, Inc. (NASDAQ:MDLZ) recently introduced Oreo Thins, with the tag line “Crisp. Thin. Delicate.” It’s much more appealing to health conscious customers than the Oreo Double Stuf cookie. Even beverage giants Coca Cola Co. (NYSE:KO) and PepsiCo Inc. (NYSE:PEP) are getting into the game with popular miniature-size cans of their favorited sodas.

Restaurants Taking Healthy Steps

Many restaurants have been making significant changes to their menus and ingredient choices for some time now.

Fast-food icon McDonald’s Corp. (NYSE:MCD) recently announced it is testing new sizes for its Big Mac burger, including a smaller “Mac Jr.”; the company ditched its “supersized” menu options back in 2004. Favorite pizza maker and deliverer Domino’s Pizza (NYSE:DPZ) just added a gluten-free option to its menu, appealing to customers who are more aware of what they eat.

Bakery and café Panera Bread Co. (NASDAQ:PNRA) is known for its menu that offers a wide variety of fresh choices like salads, soups, and paninis. While the restaurant does offer some less-than-healthy choices, most menu items are a welcome break from burgers or fried chicken sandwiches.

Coffee chain Starbucks Corp. (NASDAQ:SBUX) is bringing back mini versions of its popular Frappuccino, which it debuted last summer; it’s a way to give consumers the option to enjoy the sugary treat without worrying about calories. The Mini has 120 calories and 24 grams of sugar, less than the 180 calories and 36 grams of sugar in a Tall.

Health is the Mission

Other restaurants have found success by creating a company mission emphasizing healthy and fresh ingredients. Fast-casual burger chain Shake Shack Inc. (NYSE:SHAK) wants to Stand For Something Good, a motto that the company tries to live by through using fresh ingredients for their burgers and other menu items as well as sustainably designing each Shak location. And for all its latest controversies, Chipotle Mexican Grill (NYSE:CMG) has prided itself on also using fresh ingredients and responsibly raising the bar through their vision “Food With Integrity.”

Menus can be tweaked in order to highlight healthy and better-for-you options. In a report by The Atlantic, Cornell University professor of food marketing Brian Wansink offers some tips on revamping a menu: placing healthy items at the four corners of and at the tops and bottoms of columns in the menu; use graphics, color highlights, and creative fonts; don’t label the healthy items as “healthy”; give healthy foods more attractive names; and use whole dollar figures (i.e. $14) rather than decimals ($14.00) to make items seem cheaper.

What is the Impact?

Consumers, especially young ones, are turning away from highly processed foods in favor of fresher, simpler, organic, and more personalized options at both restaurants and the grocery store. While some food companies may not see immediate financial impact, encouraging a healthy lifestyle is always a good idea, and is a way to ensure future and long-term growth in revenue, profit, and foot traffic.

It’s also important to remember that when consumers are craving a juicy cheeseburger, fries, and a milkshake, they may choose to indulge rather than order a kale salad. But having that salad as an option is what will help restaurants and big food companies stay relevant in the eyes of consumers.