McDonald's Is Adding Calorie Counts to Menus, a Good Business Move

By Brian Fung

Not to be too cynical, but they're not doing it out of the goodness of their hearts.

mcdonaldssalad-615.jpgMolly Riley/Reuters

Today McDonald's announced a major overhaul of its menu billboards to include calorie counts by every item. By as early as Monday, diners will know exactly how much energy they're getting from an Egg McMuffin or a Big Mac.

The broader restaurant industry has long opposed the idea of posting calorie counts -- even as the Supreme Court made it the law of the land when it upheld the Affordable Care Act. As a result, many observers of Big Food are now applauding the fast-food chain for meeting a deadline that hasn't even been unveiled by the government yet.

Beyond the obvious PR boost, McDonald's may be onto something else that other, more reticent vendors haven't caught onto. According to a nationally representative phone survey of 663 Americans conducted in 2009, 51 percent of respondents said that calorie postings would make them more likely to eat at a given chain. Twenty-nine percent said that their habits wouldn't change either way.

Consider that for a moment. Eighty percent of Americans would be enticed by calorie postings or, at least, not driven away. Just by putting calorie information on the board, fast-food restaurants can actually increase dinership. From McDonalds' standpoint, being transparent about calories isn't a concession or a setback. It's a good business decision.

We actually have access to data illustrating how posting calories can make companies more competitive relative to their peers. In a study of Starbucks and Dunkin Donuts outlets in New York, Boston, and Philadelphia, researchers observed that New York-based Starbucks franchises that were within 100 meters of a Dunkin Donuts saw daily revenues increase by 3 percent on average after calorie posting went into effect. (Of the three cities examined, only in New York do both Starbucks and Dunkin Donuts post calorie counts on the menu.) Even though calorie postings reduced the amount of money New Yorkers spent on each Starbucks transaction -- the menu change led to a boom in low-calorie purchases, which tend to be less pricey -- Starbucks also saw more customers come in, many of whom were abandoning nearby Dunkin Donuts locations for the healthier options at Starbucks.

Unless McDonalds' menu offerings are substantially less healthy than those of its fast-food rivals, across the board, it's hard to see how calorie posting could hurt the company. If it were the case that McDonald's is the Dunkin Donuts in the Dunkin/Starbucks analogy, then adopting the calorie-counting before everyone else also gives the chain some lead time to fix the problematic items on its menu. My hat's off to you, Ronald.

This article available online at:

http://www.theatlantic.com/health/archive/2012/09/mcdonalds-is-adding-calorie-counts-to-menus-a-good-business-move/262339/