Surprising Ways America's Appetite is Changing

Americans are filling their stomachs in alarming new ways. The implications are terrifying (as if we didn’t already have enough keeping us awake at night) from a social perspective and, from the point of view of a restaurant company, equally alarming.

The restaurant industry is looking for culprits to blame for its stagnant performance. Some point to political factors and others to macroeconomics and a shrinking middle class. The decline of malls, rise of online ordering, delivery, food trucks, meal kits, home meal replacement options and other such attractive options certainly are at play. The more mobile consumer, millions who have given up those long city commutes to work from home, and changing demographics are also diverting billions from some mature foodservice categories to new ones.

But, what may surprise you more is how much the American diet, self-medication and prescription pill reliance — and the associated psychological, biological, and behavioral factors — are changing. What it could mean for not only the restaurant business, but for society, is truly cringe-worthy.

HERE’S OUR CHILLING HYPOTHESIS:

America’s changing appetite is not only the cause of increased visits to the emergency room, it’s partially what’s to blame for decreased visits to certain foodservice industry categories, and is dulling sensibilities of compassion and empathy – bedrocks of hospitality.

LET’S CONSIDER THE FACTS:

Restaurants are wondering what happened to their customers. The below stats offer some explanation, culminating in about 67 million Americans making significant changes to their diets in the last 3 - 5 years.

• 19.3 million Americans are now vegetarian or vegan (about 10 million more people than just 2009); 3.1 million people across the US now adhere to a gluten-free diet
• 29 million Americans are diagnosed with Type II Diabetes (with an overall 33% increase in cases in the last decade)
• Fish are literally suffocating on the everyday chemicals humans use to fight pain daily (those found in Prozac, Advil, Benadryl, Lipitor, and a slew of other drugs), which are winding up in both the wastewater and the tissues of juvenile fish in Washington's Puget Sound
• 45 million Americans go on a diet every year, with dieters making 4 - 5 attempts to change their eating habits annually; some 76.1 million Americans are using diet pills and appetite suppressants on a regular basis
• Bariatric surgeries (including gastric bypass, stomach bands, and others) have increased 25% since 2011, with nearly 200,000 surgeries performed each year in the US (restricting meal sizes to half a cup of food at a time – effectively eliminating restaurant visits); as food companies are looking for share of stomach – this is just one of the many ways that not only is the share changing, but the size itself is shrinking
• 2 million Americans are battling substance abuse with prescription pain relievers, with more than 9 billion opioid pills (which are appetite suppressants) prescribed in the US each year – and on the brink of becoming a national crisis
• 294 million Americans (91% of the population) snack multiple times per day, reducing restaurant meal occasions by tens of millions
• Over 10% of teens over the age of 12 are on an antidepressant, and an estimated three million teens has had at least one major depressive episode
• Approximately 234 million Americans drink coffee each day, and the amount of caffeine in a standard cup of coffee has more than tripled since the 1950s

But what do pain and diet pill consumption have to do with restaurant profits? How do coffee consumption, teenage anxiety, and spikes in depression correlate to things that should factor into restaurant chain CEO plans and priorities? Hang in there, we’ll tie it all together.

THE PERVERSION OF THE MODERN AMERICAN FOOD SYSTEM IS PUTTING A DEADLY STRAIN ON SOCIETY

At least part of the obesity epidemic (with the CDC estimating that 70.7% of Americans are overweight, and of those, 37.9% are obese) is attributed to the rise in processed foods. More than half of all calories in the US (60%) come from “ultra-processed” foods, which can contribute to cheaper prices, improved consistency, and reduced waste for restaurants, but also – sadly – obesity and heart disease for consumers.

Adults and children alike are drinking their way to obesity with sugary drinks, while the nation spends $190 billion each year treating obesity-related health conditions. For example, a 20-ounce soda (the average medium size at a QSR chain) contains an average of 16 teaspoons of sugar. This liquid candy kills the appetite, and 64 ounces of soda, averaging 700 calories, replaces a typical whole meal of solid food.

In the end, there’s a price to pay for cheap food. While consumers are saving time and money in the short-term, many end up paying it back — and more — with the US being the only country in the world spending more on reactive health care than preventative treatments.

Americans spend the lowest percentage of their take-home pay on food than more than any other country in the world. Americans want cheap, want fast — and it’s nearly killing them. But it’s not just an American problem. The US is exporting so many of its QSR brands that other parts of the world are experiencing the same results.

In Kuwait, for instance, obesity rates mirror those of the US (and have increased in correlation with the opening of nearly every major QSR chain in the region). Throughout the Middle East, the prevalence of obesity increased by 37% between 1980 and 2015, with one in five adults now obese in the region (Qatar and Kuwait have the highest prevalence among adults and children).

DIETS HAVE CHANGED – SNACKS, MAGIC PILLS & FEEL-GOOD DRINKS REPLACING MEAT & POTATOES

With processed foods being faster, more convenient, and cheaper than whole foods, these trends are unlikely to change overnight (in the US and around the globe). Even in the healthiest foods, biodiversity has decreased significantly. Just as the planet is experiencing species extinction in animals and wildlife, the same is happening to crops. From 1903 to 1983, farmers went from 500 lettuce varietals to 36 (the numbers are similar for radishes, peas, and beets). Tomatoes lost roughly 80% of their seed diversity over the same period.

Snacking is now so prevalent, it’s cannibalizing traditional, sit-down meals. Between 2004 and 2016, among the top 50 U.S. QSR operators, the share of companies in the snack segment nearly doubled, with the Snack segment (including Starbucks, Dunkin’, and Dairy Queen) growing by $5.1b (the equivalent to the sales of 6,329 average US restaurants). Simply put, more meal occasions are being stolen by snacks – meaning fewer restaurant visits.

And among the top 10 most-prescribed drugs in the country, all come with warning labels that read “may affect appetite.” In addition to drugs, stimulants like coffee and energy drinks have become necessary “get me through the day” supplements. Studies indicate 60% of Americans are reaching for quick-fix prescription drugs and alcohol to relieve depression, anxiety, and stress from being over-worked. Essentially, a mentality of “the ends justify the means.”

The everyday chemicals that humans ingest to relieve pain, fight depression and diabetes, or treat infection are winding up in the tissue of fish in Washington's Puget Sound. America is consuming so many chemicals, even just the waste is ending up in our food supply.

And instead of dieting or exercising their way to health, Americans spend more on dieting and weight loss products (more than $60 billion per year). To put that in perspective, it’s nearly double the global box office industry.

Nowadays, a typical visit to a doctor can include both uppers AND downers. More than 9 billion opioids are prescribed every year. Not only can opioid use cause blood sugar levels to be very unstable, but the various side effects (most of which suppress or decrease the user’s appetite) make it difficult to maintain a healthy diet and lifestyle.

And could the country’s addiction to pain pills be partially responsible for dulling our sensibilities toward empathy and compassion? Is it possible that, in the same way pesticides are killing off the bees that pollinate our crops, that these rampantly abundant substances are killing off the butterfly effect of goodwill and sympathetic response?

A HIGHER CONSUMPTION OF STIMULANTS: CAFFEINE, DIET PILLS, & ENERGY DRINKS

In recent years, we’ve seen a higher consumption of stimulants, caffeine, diet pills, and energy drink than of kale, carrots, and nutritional good sense. The American lifestyle changes are impacting not only appetites, but arguably even contributing to anxiety, aggression, stress and autoimmune disease.

Sloshing around in the bellies of tens of millions of Americans is a dangerous cocktail increasingly composed of opioids, pain killers, diet pills, antacids and allergy-suppressants, high-octane stimulants, anxiety medications, antidepressants, and other mood-modifying substances that inarguably shift consumer dining behavior in fundamental ways (not factored into the tired old SWOT analysis most companies still ceremoniously masquerade come corporate planning-season each year).

Ever higher doses of coffee, energy drinks, caffeine-laced candy, refined sugars, and other even more dangerous stimulants are coursing through the veins of all too many Americans daily; and the cravings are steadily driving the consumption and consequences to deadly new heights. Caffeine, cortisol, and competitive instincts are combining – keeping us in a constant state of anxiety, and sustaining a sense of primordial fight-or-flight agitation and worry.

In many instances, social habits have given rise to a new trend: substituting full, sit-down meals with coffee, nutritional/energy drinks, and sugary snacks. It doesn’t matter that a latte can cost more than a full meal, busy people are increasingly opting for convenience.

An estimated 80% of Americans (18 and over) consume coffee each day. However, back in the 1950s, a standard cup of coffee contained anywhere from 70 - 100 milligrams of caffeine. Today, a 16-ounce cup of Starbucks coffee (that’d be a “Grande” in Starbucks’ lingo) contains 330 milligrams of caffeine – equivalent to more than six cans of soda.

You just can’t get that kind of punch out of bacon and eggs (unless you buy the new kind – there are now even caffeinated waffles and over-the-counter “crackheads” caffeine pills for that extra morning pick-me-up).

An alarming 57% of children nine years and under consume caffeine. In the US alone, 31% of 12 - 17 year olds report regularly consuming energy drinks. So far, adverse health effects from energy drinks (with more than 20,000 emergency room visits attributed to them each year) have not seemed to dissuade consumers from guzzling the neon-hued beverages in an attempt to stay energized.

The combination of these drinks, sugars, and other stimulants suggests a good night’s sleep (unless drug induced) is becoming a thing of the past.

LEADING TO A RELIANCE ON SLEEP AIDS & ANTI-DEPRESSANTS

With the sheer prevalence of caffeine in our lives, it’s no wonder that no one can get to sleep. Americans are having sleepless nights, fidgeting with phones and the nagging FOMO, buying time until their brains surrender to over-the-counter sleep-aids, knowing we’re soon to be jolted back in the mornings – skipping breakfast and craving stimulants needed to re-enter the cage fight that was put on pause the day before.

Increasingly, Americans are turning to pills to help gear-grind from “go” to “stop.” The global sleep-aids market has an estimated value of $68.5 billion (and is expected to grow at a CAGR of 6% from 2014 – 2020). Its value is the equivalent of 2.16x the total market capitalization of all US publicly traded casual dining companies (as of June, 2017).

Even if they help one get to sleep, sleep aids often leave users feeling groggy, who then turn to more sugar, coffee and energy drinks to get through the day. Of course, that only causes more anxiety and making it difficult to sleep the next night, and the cycle continues.

IT’S HITTING THE MOST IMPRESSIONABLE CONSUMERS – THE YOUNG, THE OLD, & THE POOR – THE HARDEST

America is home to the most over-diagnosed, over-medicated people on the planet, with other major countries catching up fast. Antidepressants and antipsychotic medication prescription dollars are well into the double-digit billions each year, with stimulants and sleeping pills close behind – all having side effects affecting appetite and food consumption, such as chronic fatigue, nausea, vomiting and constipation. And these figures do not reflect the billions of dollars spent in over-the-counter medications to treat symptoms related to stress-induced and digestive conditions such as acid reflux.

Children and adolescents are becoming increasingly affected by depression. And it’s no wonder, considering more than 80% of them regularly use cell phones, a common medium for cyber-bullying. Twenty-five percent of teenagers report that they have experienced repeated bullying on their cell phone, or via the Internet.

It is estimated over 10% of teens over the age of 12 are on an antidepressant. Children as young as preschool aged are being diagnosed with ADHD, and of those 75% are treated by pediatricians and psychiatrists with Adderall and Ritalin – appetite suppressing drugs of choice. In 2015, an estimated three million adolescents (aged 12 -17) in the US had at least one major depressive episode.

College students and young professionals aren’t immune from depression and anxiety, either, pulling out all the stops for a competitive edge, and joining the drug-using ranks as a result — because academic and work performance take a priority over sleep and proper nutrition.

The statistics on childhood cancer and diabetes are also reaching new highs. In the past 20 years, childhood cancer has increased 40% (and 30% of all cancer is associated with poor diet and nutrition). And today’s children are expected to be the first generation in centuries to have a shorter life expectancy than their parents.

THE OPIOID EPIDEMIC IS GIVING RISE TO A NEW PHENOMENON: A LOSS OF EMPATHY

Low doses of opioids suppress pain — but they also suppress the emotional response to pain. In fact, studies have shown that continued use of prescriptions for controlled substances can reduce empathy in rats. Rats injected with the opioid Midazolam were found to not free their trapped cage mates, but would open the trap door when it contained chocolate chips (suggesting the rats could still open the door, but were less inclined to do so when on the drug).

A separate study suggested acetaminophen (the pain reliever found in over the counter drugs like Tylenol) could also reduce empathy. Each week, approximately 23% of adults (52 million consumers) use an acetaminophen-containing drug. In other words, people are cramming their mouths so full of pills, they’re becoming more irritable and dampening their compassion as an effect. That’s a toxic combination for an industry built on hospitality and empathy.

SOME HAVE STARTED TO TAKE POSITIVE ACTION

Approximately 15% of US adults have used diet pills, and 20% of girls have used them by the time they’re 19. Their use amongst females of high-school age has almost doubled from 7.5% to 14.2% in recent years, according to Project EAT (Eating Among Teens).

We’re often called in to help companies understand what’s affecting the industry — not just now, but in the future. Still, it’s staggering how dismissive chains are of implications like those above when, compiled, add up to millions of appetites shifted. Just look at one segment of the diet industry, for instance: in the same span of time that saw restaurant traffic decrease, Weight Watchers stock multiplied more than four times over. And that’s not taking in to account Jenny Craig, Nutrisystem, Beachbody and other late night infomercial diets.

Not only is the American appetite changing, so is the lifestyle. While some are filling their stomachs with empty calories, others are going in an altogether different direction, moving toward the consumption of foods that make us feel or perform a certain way. Westin capitalized on this trend with its “Super Foods” program, and Sheraton did with its “Color Your Plate” program.

THE RISE OF SPECIAL DIETS ARE REDIRECTING MILLIONS OF MEAL OCCASIONS FROM RESTAURANTS

In 2009, less than 3% of the US population was vegan or vegetarian. Today, estimates show that about 6% of US adults (or about 19.3 million people) follow a vegetarian diet, and approximately one million of those vegetarians follow a vegan diet (consuming no animal products at all). And it’s not specific to the US – according to recent figures from the Vegan Society, the number of vegans in the UK has risen 350% over the past ten years, with 42% aged between 15 and 34.

The growth in people making the dietary switch means 7.4 million more vegan/vegetarian diets, which accounts for a total of 14.1 billion meals each year. If restaurants are not featuring vegan or vegetarian offerings, this could be an average of approximately 39 meals per day they would not be serving this growing population – particularly from mature CDR chains, known to be struggling.

SO, WHAT’S THE SOLUTION?

For the consumer, many of these stats – while scary – don’t come as a surprise. We’ve all read much of this information in headlines and have watched the food documentaries on Netflix.

What’s likely more surprising, though, is how little of this has resonated with chain restaurant executives who are struggling to gain an understanding of what’s happening to their customer base, and looking for reasons to explain sagging sales.

The fact is that nearly 70 million Americans have dramatically altered their diets in the last 3 - 5 years, redistributing billions of dollars in foodservice revenue and hundreds of millions of meal occasions in ways that are not to the benefit of lunch service for your typical casual dining restaurant chain.

The empty dining rooms and confusion are the canary in the coal mine of understanding evolving consumer dining behaviors, offering decidedly clear evidence that the age of disruption is here.

Here are a few key takeaways:

1)    TRULY UNDERSTANDING THE CONSUMER

Industry leaders – chain restaurant leaders, in particular – need a more complete view of the consumer trends that are affecting their customers and performance. There’s a lot more at play that’s not being talked about in corporate planning meetings.

There’s a strong attempt to point fingers to just a couple culprits (including the shrinking middle class, rise of fast casual, or some other common scapegoat), when what’s really happening is much more dynamic, multifaceted, and nuanced.

The consumer profile has changed dramatically in far less than a decade. And it’s less about demographics, far more about psychographics and the surprising ways America’s appetite has changed in recent years.

2)    CORPORATE SOCIAL RESPONSIBILITY

This societal epidemic points to an opportunity around corporate social responsibility. Increasingly, companies are realizing long-term performance is measured in more than profits alone. It’s also in providing a compelling vision of the future and how one’s company helps make the world a better place; and consumers are rewarding them for it.

There is a clear indication that a more pronounced sense of purpose and intentional and conscientious approach to corporate social responsibility – and making investments therein – yielding all sorts of perhaps unintuitive results (including increased customer loyalty, traffic, market capitalization, attracting/retaining the best people, and many other such ripple effects of going beyond profits alone and making a positive impact the lives of the people and communities those companies serve).

In other words, if some of the aforementioned stats make you wince or cringe, and you’re in a position to do something about it, there’s both an obligation and opportunity for you and your company.

3)    WE CAN ALL USE AN EXTRA HELPING OF EMPATHY & COMPASSION

The bedrock of hospitality, and the hospitality industry, is empathy; and realizing that service is above us, not beneath us. America is not just the world’s largest economy, it’s the world’s largest service economy. And the industry serves in multiple capacities, speaking to a different kind of trouble for America’s economy.

Part of the problem is the dismissiveness around the notion of empathy. It’s not something that can be quantified in shareholder reports and earnings calls. Therefore, it’s pushed aside as the sentiment of tree-hugging vegetarians, but newsflash: there’s now almost 20 million of them.

America’s appetite is unquestionably changing in surprising ways. But what might surprise us all the most is the consequence of all of these trends converging; not just for the restaurant industry, but for society – ours, and those that are importing the American food system as it is today. 

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ABOUT AARON ALLEN & ASSOCIATES Aaron Allen & Associates is a global restaurant industry consultancy specializing in brand strategy, turnarounds, and value enhancement for leading hospitality companies and prestigious private equity firms. Aaron, a third-generation restaurateur, has personally led more than 2,000 senior-level strategy engagements across 70 countries and 6 continents. Collectively, our clients around the globe generate over $100 billion annually and span more than 100 countries.