Do You Still Want Fries With That Shake?

Lately it seems not a day goes by when some burger joint isn't coming up with a new take on an old favorite, the lowly french fry. Sonic  (NASDAQ: SONC  ) is the latest restaurant to rejigger its potato side dish, rolling out a new natural-cut, skin-on fry made from russet potatoes. 

Considering Burger King Worldwide (NYSE: BKW  ) recently unveiled a new lower-calorie, crinkle-cut "Satisfries" fry, Yum! Brands (NYSE: YUM  ) designed a specially formulated container for fries to fit in most car cup holders, and Wendy's (NASDAQ: WEN  ) reformulated its fry offering a few years ago, there seems to be a lot of attention being paid to this deep-fried snack.

As well there should be. A recent Bloomberg news report highlighted data from NPD Group that showed more than 8.7 billion orders of fries were taken in the past year by fast-food restaurants, some 6 billion of which were made in burger joints. With Pacific Consulting Group saying profit margins can reach some 75%, the french fry is a high-profit center for these chains that likely aren't subject to the same pricing volatility as seen with beef or even tomatoes at times.

Yet fries, in all their greasy greatness, are running up against a growing health-conciousness trend. Chipotle Mexican Grill is riding it higher and witnessing same-store sales rise 6% and earnings come in 17% higher, while Yum! is giving customers the option of healthier fare with its "KFC eleven" restaurant concept that offers rice bowls, salads, and grilled chicken instead of fried chicken in a bucket. 

The Hudson Institute found that between 2006 and 2011, sales of french fries actually fell 2% while lower-calorie food options rose by a like amount, and account for more than 37% of total servings.

Now, french fries aren't disappearing from the dollar menu anytime soon -- not as long as the market researchers at Mintel are finding the number of potato-based side dishes growing almost 12% between 2007 and 2012 -- though they might not be quite as you remember them. It's probably one reason Burger King is trying to straddle both sides of the fence with its Satisfries.

It's too early to tell whether they'll be a hit -- there have been plenty of epic fails when fast-food restaurants try to go too healthy -- and McDonald's  (NYSE: MCD  ) fries are still the most popular. Still, with BK's fries sporting 30% fewer calories and 40% less fat than a similar serving of McDonald's fries, Mickey D's is countering with an initiative to offer customers a choice of a side salad, fruit, or vegetable instead of just fries. Wendy's own change-up was one that sported "healthier" sea salt instead of the usual table variety.

I remain unconvinced that this trend toward healthier fast food, at least where burger joints are concerned, is sustainable. I've noted in the past that people who go to McDonald's or Burger King aren't going because they want a Whole Foods experience, but are looking for an injection of greasy taste.

Maybe an option such as McDonald's offers is a better bet than a wholesale swap out like Burger King is trying, yet as Sonic's effort underscores, the french fry remains king and is worth making an effort to keep your customers coming back for more.

Better than french fries
Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2715777, ~/Articles/ArticleHandler.aspx, 10/24/2014 7:32:27 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement