ARE YOU PAYING MORE FOR HEALTHY FAST FOOD? By: Paula Kastanas

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1 ARE YOU PAYING MORE FOR HEALTHY FAST FOOD? By: Paula Kastanas I. INTRODUCTION Did you know that there are more than 300,000 fast food restaurants in the United States? This is due to the American lifestyle of always being on the go and under much stress. Americans enjoy eating at these restaurants because they are predictable, convenient and fast and therefore people like them. However, some of the restaurants serve food that is high in cholesterol, calories, fat, and sodium and Americans are beginning to worry and looking for a healthier substitute. The goal of this Consumer Economics project is to determine if Americans are paying more for healthy fast food and how much more. I decided to focus on lunchtime meals because this is usually when most people, like me, eat out most often because we are usually away from home. I thought this issue would be interesting to not only myself but to the rest of America because everyone obviously has to eat lunch but also more people are becoming more conscious about their weight and about the money they spend on lunch. I recently went to various restaurants on and off campus and I collected different price and nutritional information that I needed. II. DATA SECTION Who and which locations should I investigate? To decide which stores I would research I thought about the fastfood market and decided to focus on the University of Illinois since 95% of the people I surveyed on campus eat fast food at least once a week. I decided that since most people on campus like to walk or drive short distances for lunch I chose only restaurants on campus or a few miles off campus that would be convenient for everyone that I surveyed. Since

2 there are so many restaurants around I surveyed for the most popular restaurants in town and I came up with: McDonald s, Burger King, Panera bread, Schlotzsky s, Subway, and Pizza Hut. Conveniently, three of these six restaurants had a light and healthy menu (Subway, Schlotzsky s, and Panera Bread) and three did not (McDonald s, Burger King and Pizza Hut). What food should I choose to include? In order to keep this project fair and examine what everybody likes I asked the restaurants for their most popular lunch specials at the three regular fast food restaurants and compared them to the light and healthy part of the menu of the other three restaurants. Most of the restaurant s popular lunch items were their value meals. Opinion of buyers. I also chose to conduct a survey to about 50 adults in the Champaign- Urbana area around the lunchtime hour. I wanted to know what they thought of before they chose to go out and eat at a fast food restaurant. Some questions were: How often do you eat fast food in one week?, Where do you prefer to eat during lunch when you are on the run?, which restaurants do you consider to be healthy?, and what is most important to you when deciding on a fast-food restaurant?. To compare each restaurant to another I researched it's most popular meal, it s price and its fat content. The following are tables that list each restaurant s most popular meal, their fat content in s, their price, and their price : Subway * all meals from the light menu are served with the 6" sub, low fat chips and diet soda Sandwich Name Total fat in s Total Cost Veggie Delight 4.5 $3.88 $1.16 Turkey Breast 5.5 $4.39 $1.25 Turkey Breast and Ham 6.5 $4.74 $1.37 Ham Sandwich 6.5 $4.74 $1.37 Roast Beef Sandwich 6.5 $4.74 $1.37 Subway Club Sandwich 7 $4.96 $1.41 Roasted Chicken Breast 8 $4.79 $1.67

3 Schlotzsky's *all meals include sandwich and a bag of chips Sandwich Total fat in s Total Cost Chicken Breast Sandwich 12 $5.48 $0.46 Smoked Turkey Breast 9 $5.48 $0.61 The Vegetarian 19 $4.78 $0.25 Albacore Tuna 18 $5.58 $0.31 Dijon Chicken 8 $5.58 $0.70 Panera Bread *all meals include sandwich, pickle spear, and a bag of chips Total Fat in s Total Cost Smoked Turkey Breast 4 $4.95 $1.24 Chicken Salad 12 $4.95 $0.41 Tuna Salad 14 $4.95 $0.35 Smoked Ham and Cheese 18 $4.95 $0.28 Peanut Butter and Jelly 20 $2.95 $0.15 Pizza Hut *sonal pan value meal includes pan pizza, bread sticks and soda Total fat in s Total Cost Personal Pan Cheese Pizza 40 $3.99 $0.10 Personal pan with Italian Sausage 51 $4.59 $0.09 Ham and Swiss Sandwich 21 $3.99 $0.19 Steak and Cheese Sandwich 28 $3.99 $0.14

4 *all value meals include burger, fries and soft-drink McDonald's Total Fat in s for Medium Total Fat in s for Large Total Cost for Medium Total Cost for Large Big Mac $3.39 $3.79 $0.06 $ Cheeseburger $3.39 $3.79 $0.07 $0.07 Crispy Chicken Sandwich meal $3.99 $4.39 $0.08 $0.08 Quarter Pounder with Cheese $3.54 $3.94 $0.07 $0.07 Filet of Fish $2.99 $3.39 $0.06 $0.07 * all value meals include sandwich, fries and soft drink Burger King Total Fat in s for Medium Total Fat in s for Large Total Cost for Medium Total cost for Large Whop w/ cheese value $3.59 $3.99 $0.06 $0.06 Double Whop with Cheese $4.19 $4.59 $0.05 $0.05 Whop Junior $2.99 $3.39 $0.07 $0.06 Double Cheeseburger $3.59 $3.99 $0.07 $0.06 Chicken Sandwich $3.99 $4.39 $0.07 $0.07

5 BK Big Fish value $3.89 $3.99 $0.07 $0.06 The following table is a breakdown of each restaurant, their maximum price, minimum price and their average price. *Subway *Schlotzsky's Pizza Hut McDonald's Burger King *Panera Bread Maximum $4.96 $5.58 $4.59 $4.39 $4.59 $4.95 Minimum $3.88 $4.78 $3.99 $2.99 $2.99 $2.95 Average $4.61 $5.38 $4.14 $3.66 $3.88 $4.55 *stores with a light and lean menu Results from Survey The people who were part of my survey were randomly chosen individuals and were told nothing about my concerns, findings or expectations. The results of my survey are as follows: How often do you eat fast food in one week? 5%- said Never, 50% said 1-3 times a week, 40% said 4-6 times a week, and 5% said more than 7. Where do you prefer to eat when you are on the run? (They could have chosen more than one). 35% said Wendy s, 65% chose McDonald s, 50% chose Subway, 30% chose Panera Bread, 55% chose Burger King, 60% chose Schlotzsky s, and 35% chose Pizza Hut. What is the most important to you when deciding on a fast food restaurant? 1. Healthy menu Location 4. Quality 5. Service

6 III. DISCUSION After looking over my data I concluded that eating healthy was a bit more expensive than eating the regular fattening fast food way. The conclusions that I got were fairly accurate to what I expected. In every situation that I examined, people ended up paying a little more money for less fat. The biggest difference in price was about a $1.72. I also, concluded that of the six restaurants I researched, Schlotzsky s has the highest average price and McDonald s had the cheapest average price. However, I do want to point out that Schlotzsky s is not more expensive and McDonalds is not always the cheapest in every case. Furthermore, it seemed that in every situation, the three restaurants with the light menu had the higher prices over any of the regular fast food restaurants, indicating that people do pay more for less fat. These results correspond with the results I also got from my survey. After surveying 50 people I determined that when people are searching for a restaurant to eat at they rated a healthy menu as being a number one determinant and price as being number two. This, in addition indicates to me that most consumers want healthy food before they even begin to consider price. The price differences could have been the result of many things. First of all, on average light food has been said to taste not up to par with the regular version of the food. Furthermore, since the three restaurants advertise themselves for being more health conscious and tasting great than other restaurants, Americans are willing to pay the extra few bucks for better health and food that also tastes great. Let us face it, light mayonnaise does not compare to mayonnaise with all the fat so when Subway advertises to make all sandwiches taste good people will buy it no matter what. This is to due to the fact that people want to fulfill their craving and stay healthy at the same time. When a restaurant advertises a product tasting great and being low in fat people are willing to pay enough for it. Second, food that is light and lean is newer and could be the reason for being a bit more expensive. When something comes out into the market it is a bit more expensive to produce because people are not used to the product and have not yet come up with technology to produce it. Therefore, when people start demanding a light menu competitors will want to come up with this menu to keep up with business because otherwise they will lose a lot of money. Therefore, them joining the market will drive the prices down of Subway so that their company will succeed, also. For example, Subway is mitted to charge a higher price for their sandwiches because not all restaurants carry a light menu but when McDonald s comes up with a healthier menu, it will drive Subway s

7 prices down because it has joined the market, this is called competition. Without this competition people will pay more for their food because nobody else carries the same products. Another reason that some restaurants charge higher price for their menu is because food is a heterogenous product because it varies every time you eat it. Therefore, there is a factor of preference of restaurant. It is not like buying a CD because a CD is the exact same CD everywhere you buy it. Therefore, if people know that a restaurant is cooking its meals in day old fat, they will choose another restaurant to eat because they do not want to eat food that could eventually harm their health. Therefore, people start to not care about the price and location of the restaurant but more about just eating healthier food. Finally, restaurants with a light menu charge higher prices because the average consumer is not fully informed. Restaurants can charge a higher price for slightly healthier items because the consumer has no clue. This is called asymmetric information, when a consumer is presented with an issue but not with all the facts. For example, the consumer assumes that when the menu mentions, light that everything about that the sandwich is healthy. However, they do not realize that maybe the no-fat mayo contains a chemical that is harmful to your health. Furthermore, since the consumer is trying to pick the healthy item, they end up paying more money for something they think is healthier but may not be. IV. CONCLUSION Since America has become more self-conscious about their health, they are willing to pay the extra couple of bucks for better health and food that supposedly tastes great. In my results I concluded that between the six restaurants I examined the average price for the light and items were more expensive but not by a drastic number. This meaning to me that Americans do and will pay the extra dollars if it means thinking that they ate somewhat of a healthy meal that day. However, after looking at may data and my results I asked myself is this all relevant to every restaurant in America? Well, this depends on a lot. In the process of doing my eximent, I realized that I should have gathered more information from more restaurants. I chose the six restaurants that people from the University of Illinois eat at most. However, this data may not be relevant to the rest of America. Some people prefer other restaurants and some people enjoy eating other things than just sandwiches. I also realized in the process that comparing different foods is pretty difficult. Comparing a pizza to a deli sandwich is a bit different and

8 not easily comparable. Furthermore, it would have been more relevant to compare Jimmy John s to Subway. In retrospect, my eximent worked out well and supported my hypothesis that, on average, healthy is a bit more expensive.