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Low carb eating: Here to stay?

Is low-carb eating really here to stay? Plenty of restaurants seem to think so. But while some call it a jackpot, others say it's a joker.It's lunchtime in downtown Fort Worth, and over at the 7th Street Grill, Sandy Potter's customers are working on their diets.

You wouldn't guess it at first glance. These waistline-watchers are chowing down on a 6-oz. steak, plus a 1/2-lb. beef patty. Another special ups the ante with two 1/2-lb. beef patties, while another serves a single patty with cheese and four deviled eggs. Says Potter, "It's guaranteed to fill you up."

Those are a few of her low-carbohydrate Atkins Diet specials. She added them, on a whim, after her husband dropped 20 lb. on the Atkins regime. Since April, the diet plates have grown to a third of her lunch traffic.

At a Blimpie in Indianapolis, manager Heather Johnston points customers to her picture on the wall. It shows her a year younger and 80 lb. heavier. She talks up the low-carb plan that shrank her jean size from 16 to 9.

Then she talks about Blimpie's Carb-Counter Menu. Rolled out in October, it lists four sandwiches on low-carb breads.

It also offers two salads, low-carb chips and brownies, and a cranberry-grapefruit fountain beverage.

"We've been overwhelmed," says Blimpie CEO Jeff Endervelt —a low-carb convert himself—who adds the new menu is fattening store sales 10%-15%. "We've gotten 700 e-mails asking, 'When are you coming to our part of the country?' "

These days, it's hard to turn on the TV or go to the grocery without running into America's latest cuisine craze: low-carb diets. Surveys say anywhere from 10-30 million Americans are trying to shed the bread and pile on the protein with diets like Atkins, South Beach, or Protein Power. LowCarbiz magazine calculates the average disciple spends $85 a month on specialized products, for a total market of $15 billion in 2003 and an estimated $25-$30 billion this year.

And it shows no signs of letting up. Despite the possibility that the recent Mad Cow incident could cause some low-carb adherents to curtail their beef intake, low-carb gurus are already planning contingencies. The Atkins web site notes that dieters can still nosh on chicken, pork, or seafood in lieu of beef.

One thing is certain: Whatever the desired proteins, restaurants have been tripping over themselves to offer customers low- and no-carb options. In just the final two months of 2003, T.G.I. Friday's launched a nine-item menu approved by Atkins Nutritionals, the food-manufacturing arm of the late Dr. Robert Atkins' weight-loss empire. Ruby Tuesday added 30 carb-conscious dishes, and CEO Sandy Beall has challenged his managers and corporate staffers to drop a total of 30,000 lb. in one year.

Following the lead of California chain In-N-Out Burger, Hardee's and Carl's Jr. started selling a 1/3-lb. burger wrapped in a lettuce leaf instead of a bun. Smoothie King whipped out a low-carb smoothie, while Tex-Mex chain Don Pablo's stirred up a low-carb margarita with sugar substitutes. And after blaming the diet furor for slow third-quarter sales, Panera Bread announced plans for three reduced-carb breads and two bagels.

While they won't release figures, it's clear that some of these chains are spending generously on development and marketing of the new products. Friday's will launch a second wave of Atkins items later this year, which, unlike the first, will not be simple variations of items already on the menu.

But as so much of the restaurant industry marches to the low-carb beat, some are questioning the intelligence of the strategy, and the prudence of spending all the time and money on something that, like many diets before it, could fade into oblivion. Low-carb items also raise a host of operational questions, from ease of execution to possible de-emphasis of high-margin (but not low-carb) items like french fries.

So far, however, all the companies interviewed for this story insisted that the low-carb items are selling well. Blimpie reports that its stores saw sales increases of 10%-15% when they added the Carb Counter menu. And chains also maintain that they're attracting new customers because of the offerings.

But some have already sounded notes of wariness. Even as he bowed to the no-carb trend, Panera CEO Ron Shaich warned last November that it could be as short-lived as the oat bran rage of the early '90s. "I'm sure somewhere in the Panera system there's still a few bags of oat bran flour sitting around," he said. "You've got to be very careful that you don't create huge problems for yourself operationally by trying to respond to all the niche desires."

Panera did not respond to calls for this story. But Shaich is not the only operator who wonders how heavily to bet on the latest craze.

"It's such a hot button that you can't ignore it," says Harry Balzer, VP of consumer-research firm NPD Group. "But be careful about building a plant to make low-carb products. Like they've done with previous better-for-you products, Americans will try them, and they will probably not stay on them forever."

Balzer notes carbohydrates are merely the latest in a long line of dining demons. Americans' concerns about sugar peaked in 1984, according to NPD surveys. In 1985, they worried most about caffeine, followed by salt in 1986, cholesterol in 1990, and fat in 1994.

"Americans can only hold one health idea in their heads at a time," says restaurant consultant and economist Malcolm Knapp. "Before weight, it was fat. If you ate red meat, you were going to die, because it had so much fat. Now it's going to save your life, because you're going to lose weight."

The risky thing about investing in a food fad is that the bottom can fall out suddenly. Reduced-fat products peaked in 1999, reports NPD, when the average American ate them 380 times. By 2003, the number of meal occasions was down to 262—fewer than a decade before.

But low-carb is not your typical food craze, argues Mike Archer, COO of T.G.I. Friday's. "The Atkins diet has been around more than 20 years," he says. "If it's a fad, it's one of the longest-running fads I've ever seen. One thing that makes this work, if you talk to people who are doing it, is that it's easy to follow."

What he means is that, unlike other eating fads, the low-carb craze could have greater staying power if only because it doesn't feel much like a diet. It's not hard to follow an eating plan that not only allows, but requires, heaping portions of meat and fat. "It's not, as most healthy eating is, a sacrifice," says Randall Hiatt, president of restaurant consulting firm Fessel International. "You can have a good steak, bacon, and eggs. You're not eating egg substitutes."

Even critics admit low-carb diets leave you feeling full while you peel off pounds. "Protein sits in your stomach a long time," says nutritional consultant Suzanne Dixon of Atlanta. "It's slow to digest and send signals to your brain that you're hungry again. I'm not a huge fan, but it works."

It works, she adds, because cutting carbohydrates like sugar, starch and refined grains cuts out a lot of calories. "If you settle into eating 1,200 to 1,400 calories a day, you could eat that much in Snickers bars and still lose weight."

The problem is, a lot of low-carb restaurant fare is not low in calories. This could mean that while customers might initially embrace low-carb restaurant offerings, they could abandon them just as quickly if they fail to lose weight on them.

"A lot of restaurants think that all you have to do is offer meat," says Matt Wiant, chief marketing officer for Atkins Nutritionals. Bonnie Liebman, director of nutrition for consumer watchdog group the Center for Science in the Public Interest, cites a Ruby Tuesday steak fajita that weighs in at 1,120 calories and a spring chicken salad that packs 1,165. "That's quite hefty if you're trying to lose weight," she says.

"There is a danger to the low-carb industry that dieters will go on a low-carb diet, not lose weight, and abandon the diets," confirms Dean Rotherbart, editor of LowCarbiz. "In the end, it's the calories, stupid."

KFC has already learned the danger of careless marketing to the diet crowd. In October, it ran ads promoting fried chicken as a low-carb food for weight loss. A month later, it stopped the ads, after a firestorm of critics called them misleading. KFC did not return phone calls for this story. "The KFC thing teaches operators to offer it subtly and don't offer health claims," says Ron Paul, president of foodservice consulting firm Technomic.

Other observers say that no matter how long the low-carb craze is alive, many restaurant chains have run a risk by rushing in and thrusting low-carb items onto their menus, often without local testing to gauge their operational or market viability. Friday's Archer concedes: "We've skipped a step we would normally do, and went straight to market with it."

"In our normal menu rollouts, we test the menu before we roll it out to the system," adds Rick Johnson, Sr. VP of Ruby Tuesday. "We had enough confidence in this and the desire that it be available to the whole system."

Indeed, say others, when it comes to low-carb items, speed is the most important factor. "We were targeting to have the products in the stores prior to New Year's resolutions," says Brad Haley, executive VP of marketing for Hardee's and Carl's Jr. "That's a traditional time for people to consider weight-reduction programs."

The risks of these accelerated rollouts are ameliorated by some factors. It helps, for example, that many of the "new" entries are in actuality not all that new: creating a low-carb dish sometimes only means substituting a few ingredients on an otherwise fully tested and proven item. Friday's, for example, serves its traditional Tuscan Spinach Dip with chopped veggies instead of chips.

At Ruby Tuesday, says Johnson, "We have a protein that's normally paired with rice or potatoes. Now, it's cauliflower or creamed spinach and a side of broccoli. It's the same seasoned tilapia, but by putting different side dishes with it, we make it a low-carb plate."

But the swaps are not always one-for-one. Substituting a slice of bread for a lettuce leaf might not make much difference in costs, but special low-carb breads or tortillas can cost more.

Operationally, the new menus should work, says market researcher Robert Sandelman of Sandelman & Associates. "They're easier to execute than other diet foods. It's really a pretty low-risk thing to do, and if it doesn't work, you take it off. I don't see any downside to it, except having to reprint menus."

Or except having to de-emphasize traditionally high-margin items such as french fries. Yet the chains say they're just giving consumers a choice, and will go on promoting high-carb foods as before. Statistically, french fry consumption has already been on a decline from a peak in 1995, when they were part of 27% of all lunch orders. Last year, they'd fallen to 22%.

Still, it all boils down to the longevity question—how long will consumers want low-carb items, and how much time does the trend have left?

NPD's Balzer says it could have as much as four years, and he doubts that fears of Mad Cow disease will scare off dieters—as long as the outbreak remains as limited as it was at presstime, which was the discovery of just one infected cow. He notes beef consumption was unchanged in Canada, after a single case was discovered there last summer.

Knapp gives the low-carb trend two years, based on past cycles. Then, he says, restaurants will move on to the next weight-loss craze.

"People are going to be heavy," he says, "and people are going to have to do something about it. At the moment, the easy manifestation is low-carb, but it could just as well take another form. Low-carb may run its course, but the weight issue is not going away."

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