QSR players aim to drink in higher sales with new kinds of beverages

The lucrative beverage component of the quick-service restaurant business is taking a big leap forward as McDonald’s and other traditional segment players try to siphon off market share from leading coffeehouse chains by offering new varieties of teas, coffees and bottled drinks.

McDonald’s, now an espresso source like Starbucks, has ramped up its McCafe specialty coffee test following a 15-percent bump in its coffee sales since upgrading its regular and decaf brews last year.

Answering analysts’ questions at a recent conference in Las Vegas, Don Thompson, president of McDonald’s USA, said, “We expect to take some share out of the specialty coffee marketplace.” He declined to name specific competitors being targeted.

Meanwhile, segment leader Starbucks has downplayed speculation that McDonald’s and other traditional quick-service chains will have negative effects on the Seattle-based chain’s sales.
“We have not seen any impact from McDonald’s efforts to improve their brewed coffee and no impact from Dunkin’ Donuts’ efforts to introduce espresso beverages,” Starbucks chief executive James Donald told analysts at a subsequent conference in Las Vegas. “More educated customers are good for all the participants in the business.”

McDonald’s, which recently said it was considering the sale of smoothies, is testing several new beverages, including hot and iced coffees, espresso drinks, sweet iced tea and bottled soft drinks, at thousands of restaurants. Its caffè latte and cappuccino varieties, for example, are in test mode in all of the chain’s 531 restaurants in the state of Michigan, and in other regions.

Dunkin’ Donuts, which introduced a line of espresso drinks in 2003, is more aggressively promoting them than in the past. The espresso line now generates more than 5 percent of total sales in 2006, a chain spokesman said. That would amount to approximately $235 million.
Dunkin’ Donuts, Starbucks Coffee and McDonald’s all have been giving away coffee in special promotions to call more attention to their beverage lineups. McDonald’s offers free cups of its regular or decaf coffee every Monday. Starbucks gave away hot coffee for a full day recently, and Dunkin’ poured free 16-ounce cups of iced coffee in a one-day promotion.

McDonald’s test stores are working on speeding up service as they adapt to the specialty coffee platform, which uses an automated espresso machine that grinds the beans and brews the drink under pressure, steams either 2-percent-fat or skim milk, and adds optional flavor syrups. Thompson said he expects service times to decrease as test unit employees get used to preparing the drinks.

He emphasized that everything McDonald’s considers rolling out chainwide must fit customer demands for convenience and speed. Crew members’ mandatory offer to add cream or sugar to brewed coffee fits that convenience model, especially in the drive-thru.

Although coffee drinkers order that drink at various times throughout the day and night, coffee sales particularly benefit the breakfast daypart, which, Thompson noted, is McDonald’s most-profitable meal period. Two hand-held sandwich products the chain also is testing—a bigger breakfast burrito and a Southern-style chicken biscuit—also are aimed at strengthening breakfast.

“We think [the chicken biscuit] has the potential to make waves outside the South,” Thompson said. He did not further describe the product, and other McDonald’s spokesmen could not be reached for comment.

Not only has coffee contributed to McDonald’s strong breakfast daypart, but coffee in general has proved to offer especially good profit margins.

“You can’t get much better profit than by adding water to beans,” Thompson said. “It’s a great margin business and one that customers are asking for.”

Another product that offers an equal or even better profit margin is tea, which McDonald’s may capitalize on if it rolls out a sweet iced tea now being tested in some 4,000 restaurants. Thompson called both tea and coffee “an effective way to gain added customer visits.”
One of McDonald’s senior executives has registered to attend the World Tea Expo, the world’s largest tea trade event, this June in Atlanta, according to George Jage, the event’s president. If McDonald’s incorporates specialty teas into its permanent menu, it will have a major impact on tea sales in this country, he said.

“McDonald’s inclusion of flavored or specialty tea in its restaurant offerings will further move tea into the mainstream of Americans’ diet and consumption,” Jage predicted.
Variations on iced teas and coffees continue to make inroads in the quick-service segment.

Burger King, Dunkin’ Donuts and Sonic America’s Drive-In recently broadened their iced beverage lines, and Chick-fil-A introduced sweetened iced tea a few years ago. Burger King introduced BK Joe on the Rocks, an iced coffee, in January; Dunkin debuted a specialty iced tea line last summer; and Sonic continues to add new twists to its flavored iced teas.
Frozen blended coffee drinks continue to gain popularity. Most specialty coffee chains are continuing to expand those lines, such as Coffee Beanery’s Frappalattes, which have gained 2 points in sales in the past year to account for 7.8 percent of sales.

Although few traditional quick-service chains have so far emulated those fast-casual players that augment their fountain soft drinks with bottled versions, McDonald’s is looking at that possibility as a way of offering more choices.

“Customers are looking for convenience. Sometimes that means resealable containers,” Thompson said.

The challenge is to ensure that the restaurants maintain their higher profit margin from fountain drinks if bottled ones also become available, he said.

A Sandelman & Associates consumer survey of quick-service restaurant patrons disclosed that soft-drink purchases dropped to 47 percent of visits in 2006 from 52 percent in 2005, said Bob Sandelman, president of the industry research firm. Coffee purchases gained 1.1 percent in the same period, up to 3.5 percent of visits, compared with 2.4 percent a year earlier. Tea and water purchases also increased slightly.

However, Sandelman said he does not see espresso drinks becoming a major part of business at traditional quick-service restaurants.

Whole Grains Council targets consumers through restaurants

The Whole Grains Council (WGC) and Oldways, Boston, recently announced a grassroots consumer campaign to encourage Americans to ask for whole grains everywhere they eat. The Whole Grains Council says the goal of the campaign is to convince America’s restaurants and foodservice operations to offer at least one whole grain choice on their menus.The program launches this month to coincided with National Nutrition Month. Events are being held around the country with participating foodservice operations handing out “Just Ask for Whole Grains” buttons and information.

“If consumers ‘Just Ask’,” said WGC Chairman Jeff Dahlberg, “they will either be pleasantly surprised to get what they want or will, at the least, succeed in reminding food sellers to consider adding whole grain choices. This is all about choice.”

WGC also is promoting the “Just Ask” campaign on its Web site, www.wholegrainscouncil.org, where consumers can report their whole grain “finds,” print out whole grain report cards to leave behind at restaurants and enter themselves and their favorite eatery for monthly prize drawings.

Transforming Baking Fat

In bakery products, one of the main requirements is a fat that has some structure and solidity. Trans fatty acids offer that, plus extended shelf life and flavor stability.

Trans fats were good to bakery products, says Bob Wainwright, director of technical service, Cargill Inc., Minneapolis. Trans fatty acid contents can be tailored to meet very specific functionalities and sensory requirements. Because trans is so well suited for bakery, it is often very challenging to identify a non-trans fat alternative that delivers equivalent finished product sensory attributes.
FDA allows products with less than 0.5 grams of trans per serving to list 0 grams per serving, providing leeway when selecting and blending fats.

Back to butter

Butter is the gold standard for flavor and functionality in many applications. Free of trans fatty acids, according to the FDA definition, and semisolid at ambient temperature, its greatest drawback is price, followed by its saturated-fatty-acid and cholesterol contents. But butter, alone or in combination with another fat, is an option for a trans fat-free claim.

Cultured butters lower moisture produces flakier pastries and fluffier cakes, says Marilyn Wilkinson, national product communications, Wisconsin Milk Marketing Board, Madison, WI. European-style has higher butterfat content than standard butter, producing a more flavorful butter that is beneficial for baking and can be used at higher temperatures, without burning, to produce a lighter, flakier pastry.
Bakers solidify formulas

Butters semisolid nature at ambient temperature suits it to baked products. Semisolid shortening products, or plastic fats, when beaten, can hold air bubbles in their malleable masses, act as a spacer, as in a pie crust, and facilitate leavening, as in puff pastry. Plastic fats contribute to baked goods structure by coating and shortening gluten strands. The fat retards gluten development, thus contributing to tenderization.

Vegetable-oil shortenings tend to stay more solid at room temperature and often cream better than butter because they contain mono- and diglyceride emulsifiers. Shortening is thus better-distributed than butter and more efficient at coating flour, minimizing gluten development.

Liquid fats do not contribute the same functionality. Oil coats flour particles, producing smooth dough, easy mixing, reduced mixing times and some mixing tolerance. It also prevents some gluten development, but not as effectively as plastic fats. Oil does not aerate when creamed with sugar, so it lacks air-holding properties.
In general, oils rich in polyunsaturates are poor replacements for hydrogenated fats in baking, as they are liquid at use temperatures and prone to oxidation. However, new oils, such as low-linolenic soybean, high- and mid-oleic sunflower, and high-oleic canola, have �varying degrees of stability against oxidation, says Wainwright. Not all liquids are so high in polys that they are high-risk ingredients, oxidatively speaking.

Completely hydrogenating oil saturates all double bonds to single bonds, so there can be no trans fatty acids. However, consumers have become leery of the term hydrogenated.

Oil options

Lard and beef tallow were also bakers favorites in certain applications, due to their structure and saturates. Partially hydrogenated vegetable shortenings became de rigueur replacements in the United States.

However, European bakers who opt not to use animal fats almost always choose palm or coconut oil. While palm contains no trans fatty acids, around half of the fatty acids are saturated, as compared to conventional soy (15%), sunflower (12%) or canola (7%). Because palm and coconut have enough solids, they generally do not require hydrogenation for stability or for functions such as creaming and crystal structure. Most bakers conducting reformulations turn to tropical oils, but the saturate content keeps them from being the ideal solution. Advanced breeding technologies produce canola, soybean and sunflower seeds with low-linolenic fatty-acid contents and/or high oleic levels. Linolenic, an omega-3, is highly unsaturated and very unstable, whereas oleic, a monounsaturated omega-9, is much more stable.
Indianapolis-based Dow Agro- Sciences LLC developed canola and sunflower with a unique combination of high-oleic (less than 70%) and low-linolenic (less than 3%) fatty acids. Omega-9 oils can deliver a zero trans fat and significantly reduced saturated-fat content, says Roger Daniels, director�new business development, Bunge North America, Bradley, IL.

Reduced-trans shortenings can be blended with other fats in such a way to keep trans at zero and saturates low, thanks to the 0.5-gram rounding-down rule. Our patented RighT technology hydrogenates oil using a specific catalyst under heat and pressure, says Daniels. This reduces trans by 80% and keeps saturates low.

Solidifying sans trans

One process for solidifying vegetable oils is interesterification, which shifts fatty acids within the oil molecules, improving melting properties and functionality.

Interesterification provides a means of conferring a desired melting profile to a blend of an oil and a fat, without the use of partial hydrogenation says Daniels.
Interesterification enables a fully saturated fat to interchange with a nonhydrogenated unsaturated oil to give a mix of triglycerides that have a final melting profile tailored to specific applications. It is also possible to interesterify nonhydrogenated fats together to give the desired melting profile.

Unilever R&D, Vlaardingen, London, and Wageningen University, the Netherlands, have identified a new way of structuring oils without adding saturated or trans fatty acids. They start with sunflower oil and add lecithin and sorbitan tristearate (STS), both commonly used as emulsifiers and crystal-habit modifiers.
Mimma Pernetti, researcher, Unilever, says: The thermo-reversibility and shear-sensitivity of the resulting gel may allow several bakery applications.

Making the switch

Ultimately, it depends on which line on the Nutrition Facts needs to be low or zero: saturated or trans fat. Theres a very broad spectrum of options available, Wainwright says. And the options are expanding.

In 2001, at the request of a customer, we moved from baking their oyster crackers with partially hydrogenated soybean oil to trans-fat-free palm oil, says Keith Dunn, vice president and general manager, Westminster Cracker Company, Inc., Rutland, VT. The reformulation was perfected in about a month, with no changes to other ingredients, baking times or equipment. In fact, the fat per serving actually went down. At the time, the economics would not allow us to mainstream the new formula into general distribution and remain price competitive; however, in 2004, the availability and price of trans-fat-free oils allowed us to convert all Westminster crackers to trans-fat-free status. The company is currently using high-oleic canola oil in all of its crackers.

While some changes come easier than others, Wainwright concludes: There is no magic bullet. Rather, bakers should be prepared to reformulate in terms of order of ingredient addition, mix protocols, processing temperatures and other variables. Fats and oils are often major ingredients in many bakery products, and any change to such a key ingredient of necessity demands changes elsewhere to recover finished-product attributes.

Halo of Health

Once reserved only for the granola-loving crowd, whole-grain sweet goods captivate consumers with healthier choices.


Fifteen years ago, a consumer’s desire to find products made with whole grains placed them in the tree-hugging, granola-loving category. Today, the tide has changed, and health and wellness are buzzwords heard in every area of food manufacturing. Some attribute it to the baby boomers looking to remain healthy and continue active lifestyles, while others credit the increased awareness of whole grains to media outlets or the increasing incidence of food allergies and celiac disease. Whatever the cause, consumers and food service outlets are exploring whole-grain sweet goods options including brownies, coffee cake and muffins to name a few.

MARKETING GRAINS. Despite the prevalence of whole-grain options, there still exists consumer confusion about what constitutes a whole grain and how to consume 48 g every day. In response, the Whole Grains Council (WGC), Boston, MA, introduced the Whole Grain Stamp in 2005.

The stamp was enhanced in June 2006 to list the whole-grain content in grams. To qualify for the stamp, products must contain 8 g (one-half serving) or 16 g (one serving) of whole grains. According to WGC, 76% of products currently using the stamp contain one serving or more of whole grain.

Because of the expense involved with changing product packaging and marketing, many bakeries have adopted a wait-and-see attitude in terms of displaying the WGC stamps on their whole-grain products pending a ruling from the Food and Drug Administration and US Department of Agriculture.

In February, WGC, the Wheat Foods Council, Parker, CO, and the American Dietetic Association teamed up to produce a 2-page brochure called "Whole Grains Made Easy." The educational brochure, which appeared the Journal of the American Dietetic Association, was distributed to more than 65,000 dieticians. Designed to be distributed to dieticians and medical professionals to clients, the brochure highlights new studies showing that whole grains contain antioxidants, lower triglycerides, improve insulin control, assist in weight management and slow the buildup of arterial plaque.

MULTIPLE BENEFITS. While food service and retail whole-grain offerings are numerous, media efforts from USDA, WGC, ADA and WFC continue to increase awareness of the heart disease-, diabetes- and cancer-fighting qualities of whole grain. These campaigns along with public service announcements serve to educate consumers and frequently increase the demand for new product offerings.

"The Whole Grains Council is an excellent tool to raise national awareness and gather the power of whole-grain manufacturers under one umbrella, providing a mouthpiece to the media for all whole-grain producers," said Dennis Gilliam, executive vice-president of sales and marketing, Bob’s Red Mill, Portland, OR.

Bob’s Red Mill has been in the business of producing whole grains for 29 years. Recently, the company took stock of its packaging catchphrase "whole-grain food for every meal of the day" and noticed a lack in dessert offerings. In response, the company created four whole-grain cake mixes. The made-with-organic-ingredients cakes are available in Chocolate, Lemon Poppy Seed, Gingerbread and Spice Apple varieties. "People are most vulnerable when they are craving a snack and will settle on whatever is most convenient," said Mr. Gilliam. "I think people are becoming more health savvy, and it’s important to have a whole-grain and trans-fat-free sweet goods option." In addition to receiving consumer requests, Bob’s Red Mill also visits nutrition-based blogs and chat rooms to find out what consumers are looking for in whole-grain and gluten-free products.

Concord, ON-based fgf brands began to focus on whole-grain products two years ago after receiving increasing consumer requests. The company, which produces an all-natural 2.5-oz muffin made with whole grains, recently created a 5-fruit, whole-grain banana muffin for North American Starbucks stores. "We believe that a consumer who is eating a whole-grain, healthier product would also be interested in portion control," said Ojus Ajmera, vice-president of sales and marketing, fgf brands. "Our goal was to take the eating qualities of products people enjoy everyday and add whole-grain attributes to those products."

Ed Wagner, creator and president of Grateful Ed’s Roasted Buckwheat Buttermilk Pancake mix, attributes the growth in the popularity of whole-grain foods to increased health awareness and a sophisticated consumer with changing tastes. Mr. Wagner found the WGC and its stamps to be an excellent vehicle to educate buyers and consumers as well as a way to direct them to other whole-grain products featured on the WGC Web site. Citing the trend for consumers to be more educated about the foods they purchase and where they come from, Mr. Wagner said, "I see myself as a local ambassador for whole grains and nutrition." Because of demand for a wheat-free product, the Chagrin Falls, OH-based company will debut a gluten-free product in the spring.

CHALLENGING BELIEFS. Despite the onslaught of education and proliferation of whole-grain products, the mention of whole grains can still elicit a raised eyebrow or taste comparisons to cardboard, but for consumers challenged by food allergies or celiac disease, whole-grain alternatives can literally make a difference between life and death.

"The challenge is the belief still held by many people that a more nutritious whole-grain cookie or coffee cake will be heavy and have an unpleasant consistency," said Jill Robbins, president of Gak’s Snacks, Windham, NH. In response to her child’s own food allergies, Ms. Robbins created a variety of allergen-free sweet goods including a 100% whole-grain coffee cake that is organic, vegan and kosher.

The trans-fat-free coffee cake, available in apple and cranberry varieties, contains 24 g of whole grain per serving and was created as a safe food option for people with food allergies and other special dietary needs. "Food is typically associated with social times, and people with food allergies can feel left out when food they are allergic to is served," said Ms. Robbins. "I wanted to make a delicious option that could be mutually enjoyed by people with food allergies as well as those without food allergies."

In the future, Gak’s Snacks plans to create sweet goods made with corn, quinoa and amaranth flour instead of barley or oat flour to make its products more accessible to a wider range of people. These new products would cater to individuals with celiac disease who cannot tolerate traces of wheat found in oats.

As defined by The Mayo Clinic, celiac diseased is a digestive condition triggered by consumption of the protein gluten found in bread, pasta, cookies, pizza crust and other foods containing wheat, barley or rye. For celiac sufferers, an immune reaction occurs in the small intestine when gluten is consumed, resulting in damage to the surface of the small intestine and an inability to absorb certain nutrients from food.

An FDA proposal, detailed in the Jan. 23 issue of the Federal Register, would allow companies to voluntarily flag food without the specific wheat protein as "gluten free." A final decision will be published August 2008. The University of Maryland School of Medicine Center for Celiac Research estimates one in 133 people is considered to be gluten intolerant, and more than 1.5 million Americans are estimated to suffer from celiac disease.
According to Mr. Gilliam, "The whole-grain message has been internalized by a high number of shoppers, and it’s become fixed in people’s minds through the media as a way to fight disease and control weight."

HEALTH DISGUISED. We’ve all heard the saying that an apple a day keeps the doctor away, but comparing an apple to a muffin is not nearly as common. Since 2000, New York, NY-based Vitalicious has produced whole-wheat, better-for-you sweet goods. The company promotes the link between health and eating well, including a comparison of the company’s 2-oz muffin and muffin tops to an apple. According to the company, the VitaTop muffin tops and 2-oz muffin products contain less sugar and as much fiber as a medium-sized apple with the added benefit of whole grains and berries. "We don’t want anyone to replace eating apples but instead want to showcase that by picking products with healthy ingredients, people can enjoy baked products without consuming empty calories," said Aryeh Hecht, president and owner, Vitalicious. "Every calorie must have a purpose, and eating is simultaneously about nutrition for the body as well as pleasure." Believing that calorie balance is as important as exercise, the company also includes the minutes of exercise needed to "burn off" one 2-oz muffin or muffin top on the packaging of the better-for-you treats.

Available in AppleBerry, BlueBran, CranBran, MultiBran, Deep Chocolate, Banana Nut, Banana Fudge, Double Chocolate Dream and Fudgy Peanut Butter Chip varieties, the cholesterol-free, all-natural VitaTop muffin tops and 2-oz muffins contain 100 Cal, 4 to 5 g fiber and 15 vitamins and minerals. The company also offers a trans-fat-free, low-sugar, low-fat, 100-Cal Vitabrownie that contains 6 g of fiber and 4 g of protein. The larger 4-oz muffin doubles the fiber and calories of the 2-oz version. "All of our ingredients are carefully selected, because we want the taste to be the same as those remembered from childhood," he said. Created as a food promoting weight management, the company is receiving requests for VitaTop muffins from school campuses, where students are looking for healthier foods. In the future, the item will be available for vending. "Ultimately, we believe that the priority is whole-product nutrition, not just the inclusion of one healthy ingredient," said Mr. Hecht.

TASTY TIMETABLE. Whole-product nutrition that encompasses foods with fewer calories and whole grains is becoming increasingly important to US school districts and government-sponsored food service providers faced with pending timetables to provide healthier products to some of the nation’s most critical eaters.

Most schools have worked to meet the proposed whole-grain changes ahead of USDA mandating compliance. USDA, along with WGC, WFC and ADA, recommend consumption of 48 g of whole grains daily. "Although the guidelines exist and are important, the school districts don’t tout the whole-grain foods as healthy; taste is the primary consideration, otherwise, it goes in the trash," said Bob Lunde, national sales manager, Key Mix, Sykesville, MD.

Schools and vendors have replaced the outdated bread-equivalent concept with ounce equivalents, and many schools are aiming to provide students with 24 g of whole grain daily. The reality of matter is most students are currently eating only 4 to 10 g daily. This means schools, where taste is the major consideration for students’ acceptance of new foods, must work with bakers and vendors to find innovative ways to use, or disguise, whole grains. In working with school districts, Mr. Lunde uses ounce-equivalent information provided by WGC.
Key Mix responded to increasing requests from school districts for whole-grain items with sweet rolls, brownies, muffins, pound cakes and breakfast offerings such as waffles, pancakes and French toast. Key Mix’s products contain 8 to 16 g of whole grains per serving. The products are made with 100% hard white whole-wheat flour ground from the whole-wheat berry.

In addition to student taste preferences, many school districts also follow the 15:7:2 rule, which states a product may contain no more than 15 g sugar, 7 g of fat, 2 g of saturated fat and be low or free of trans fat. These restrictions require bakers to become more creative with flavors, including using a variety or chocolate, sugar and fruit for flavor combinations. Despite the need for nutritious baked foods and sweet goods, most schools increasingly receive outsourced, prepackaged and individually frozen servings, which mean schools are downsizing baking facilities to make room for more frozen storage.

"Schools are supplying more meals to students than ever before, especially economically disadvantaged students," said Mr. Lunde. "They are handing out backpacks filled with food for students to eat over the weekend with the stipulation that students bring back the emptied backpack Monday morning." Other schools offer market days, where students can prepurchase their favorite school-made foods for home consumption. "It comes out to everyone’s advantage, because parents can be assured that schools are giving the kids a healthy product, the kids like to eat the product and the orders can be done in advance and prepaid," said Mr. Lunde.

WHOLESOME ADVANTAGE. It remains to be seen just how far manufacturers will take whole-grain formulations, and the consumer can only benefit from the sky’s-the-limit creativity of small kitchens and large-scale corporate R&D facilities. Innovation typically answers consumer need, so watch for the whole-grain market to be shaped by savvy consumers and maybe a few formerly "picky" palates converted to the flavor profile of whole grains.