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What Starbucks Calorie Counts Mean for the Company -- and Your Waistline

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Yesterday, Starbucks (NASDAQ: SBUX  ) announced that starting next week, it will provide calorie counts on all of its menu boards in its U.S. stores. The move follows earlier menu updates by McDonald's (NYSE: MCD  ) and others, as companies try to get out in front of any new legislation. Since 2010, when health care legislation came into effect, the FDA has been working on a law requiring businesses to display calorie information. That effort seems to have stalled out due to strong lobbying and sharp differences between the sides in the debate.

Even with the newly displayed calorie information, studies suggest that consumers are still going to be eating and drinking more than they should. All in all, it's a good move for Starbucks with all sorts of positive spin, but ultimately it's not going to make much of a difference on the streets of America.

Wait -- how many calories?
Let's throw a few tidbits out there. A Grande Caffe Mocha has 260 calories, a Grande Vanilla Bean Creme Frappuccino with whipped cream has 380, a Grande coffee -- five.

The restaurant lobby is pushing for exemptions and flexibility, arguing that the costs associated with labeling are prohibitive, and that some kinds of food don't lend themselves to easy calorie counts. Pizza chains have been especially vocal, claiming that there are upward of 34 million different combinations of toppings and crust that can make up a pizza.

The business impact of calorie labeling has been looked at for years, and so far the impacts seem to be minimal. A study from 2009 showed that the number of calories purchased in a meal remained relatively flat once labeling came to New York City. A more recent study showed that, even when we have access to the information regarding our calorie intake, we're still bad at figuring it all out.

The British Medical Journal published a study this year of 3,400 Americans in New England who were given access to calorie information before ordering through wall posters, information on napkins, or other standard presentations. Afterward, two-thirds fell short in their estimation of calories consumed, with a full 25% of the participants missing by 500 calories or more.

The impact on the bottom line
If the studies done so far are indicative of real consumer behavior, then Starbucks just scored a nice little win. The company got some good press, and it shouldn't see any sort of change in consumer behavior based on the labeling. In addition, it can now say that it's competing with McDonald's by giving customers more information about how they buy their coffees.

While the move won't make a big impact on the bottom line, it's indicative of a strong marketing and public relations campaign being pushed by Starbucks, and it may hint at future moves. By introducing calorie counts now, the company will be in a better position when it introduces more food items, which customers will want to see the nutritional information for. The early menu change should get people used to the new layout, which will help the bottom line.

Should you supersize your holding in McDonald's?
McDonald's turned in a dismal year in 2012, underperforming the broader market by 25%. Looking ahead, can the Golden Arches reclaim its throne atop the restaurant industry, or will this unsettling trend continue? Our top analyst weighs in on McDonald's future in a recent premium report on the company. Click here now to find out whether a buying opportunity has emerged for this global juggernaut.

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DocumentId: 2498320, ~/Articles/ArticleHandler.aspx, 9/24/2016 11:59:48 PM

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Related Tickers

9/23/2016 4:00 PM
SBUX $54.43 Up +0.04 +0.07%
Starbucks CAPS Rating: ****
MCD $117.17 Down -0.19 -0.16%
McDonald's CAPS Rating: ***