Capturing the Label-Conscious Consumer

When Panera released its No No List—comprising more than 150 ingredients that will be removed from the chain’s breads and menu items in 2016—diners cheered. 

As consumers seek transparency in menus and shorter, more recognizable ingredient lists, more fast food and fast-casual chains are following in Panera’s footsteps. They’re cleaning up their menus to capture these consumers—diners willing to shell out more for food labeled “organic,” “free of genetically modified organisms (GMOs),” “all-natural” and more. 

“There’s been a steady increase in consumer demand for clean labeling,” says Lu Ann Williams, director of innovation at Innova Market Insights. And with that demand comes dollars: 87 percent of consumers who buy food labeled “natural” say they’re willing to pay more if that item’s free of GMOs, pesticides and artificial ingredients and colors. And a 2016 analysis by the U.S. Department of Agriculture found that shoppers ponied up 30 percent more for bread labeled “organic”—a higher price premium than what they spent on apples, carrots or spinach.  

But consumers have also expressed confusion over what specific labels mean, Williams says. More than half of those who seek out “natural” food labels mistakenly believe this unregulated claim means their multigrain loaf or blueberry muffin is made without genetically modified ingredients, hormones or artificial ingredients. 

So how can quick-service and fast-casual restaurant execs whet the appetite (and open the wallets) of these label-conscious consumers without adding to the confusion? Try these tactics.

1. Toot One Horn, Not the Whole Brass Band
Cram too many labels onto the menu board or marketing materials, and you risk overwhelming consumers, says Brittany Duff, Ph.D., an advertising professor at the University of Illinois, who has studied how consumers respond organic labels. “Having too many cues does overwhelm them, and research shows that when our attention gets overloaded, we’re more likely to do the automatic thing.” So while one call-out for a premium muffin “made with cage-free eggs” may entice label-conscious diners, five more similar claims are more likely to steer them toward their default $1 bagel instead. This may explain why more foodservice chains are using “clean” as an umbrella label, rather than slapping dozens of labels on their items. For example, in January, Caribou Coffee jumped on the clean label bandwagon, announcing that all of its food and drink items will be free of artificial ingredients by the end of this year. Caribou explained the move aligns with the chain’s commitment to superior taste, emphasizing the value of what it called “real” ingredients.

2. Kill the Clutter
Duff’s research also showed that consumers often consider sparse, minimal designs to be more appealing than busy, complicated ones. Foodservice providers launching new GMO-free products with a marketing campaign, for example, may want to take the opportunity to rethink packaging and menu design, too. “Tans, browns and greens all suggested healthier products to consumers,” Duff says. Meanwhile, products with packaging featuring mascots or characters were perceived as unhealthy.

3. Know Your Brand
A 2016 study in the research journal Food Quality and Preference measured consumer reactions to what it labeled “virtue”—or healthy—food items, such as strawberries, and “vice”—or indulgent—ones, like cookies, that both carried an organic label. Researchers then told consumers the items in both groups were sold at either Wal-Mart, which has a low-cost image, or Target, which while known for its low prices is also associated with trend-focused style and design. 

“Context definitely does matter,” says Brenna Ellison, Ph.D., lead author of the study and an agricultural economist. While both organic healthy and indulgent products got a great reaction at Target, consumers only found the healthy option—produce—favorable when aligned with Wal-Mart. “People don’t expect an organic label on a vice food like a cookie, and they don’t expect an organic label at a low-cost store, so having both of those together was too far afield of consumer expectations,” says Ellison. 

If a fast casual knows how much of a health halo its brand has, it’ll know whether it’s worth marketing both the sourdough bread in its sandwiches and its sour cherry tarts as all-natural. A company that’s already positioned itself among consumers as sustainable, like Panera, will likely see labels like “all-natural” perform well across its menu because of its established image, Ellison says. However, a chain like McDonald’s likely wouldn’t see the same results, as all-natural isn’t consistent with its low-cost brand image. Her research suggests that organic would be a stronger draw when applied to salads than $1 apple pie, for instance. 

4. Pair the Label With Your Diner
Overhauling a supply chain to chase a particular label can be a complicated and costly affair. Salad dressings proved the most harrowing for Panera because of the high number of additives and flavorings, as well as the many layers of suppliers and sub-suppliers. Before kicking off such an endeavor, consider whether the label will resonate with the restaurant’s consumers enough to make major changes worthwhile. “Organic is the most visible label because it’s been around for quite some time, but other labels and claims are gaining traction,” says Ellison. “It’s hard to say which ones consumers value most because it varies between people and by lifestyle and the types of food.” 

For example, when her team compared consumers’ preferences among seven different labels across milk, eggs, chicken and beef, researchers found “no growth hormones” topped the list of label concerns. In addition, “humanely raised” ranked much higher for milk and eggs than either of the meats. “We’re not sure if that’s a quality concern about the food being produced or an ethical concern about the animal’s long-term treatment, but there’s a definite difference,” Ellison says. Pursuing the right label for your diners and your menu may mean the difference between a high return on the investment and merely so-so results. To see the best results from labeling initiatives, QSRs and fast casuals can conduct surveys of customers in their loyalty programs as well as lead focus groups to determine how their target demographics react to different claims made about the brand’s food, and ultimately revise their menus the most effectively.