How Much Are Food-Allergic Diners Worth?

Main Category: Allergy
Also Included In: Nutrition / Diet
Article Date: 06 Jan 2011 - 1:00 PDT


For the past year, AllergyEats founder Paul Antico has encouraged restaurants to better accommodate food allergic and intolerant diners because it's the right thing to do. Now, the financial expert is demonstrating another benefit to catering to the food allergy community: it can significantly increase restaurants' profits.

Antico, a former stock fund manager with 17 years at Fidelity Investments, leveraged his financial analysis background to determine how much economic power the food allergy and Celiac disease community can influence.

"Millions of Americans - or roughly 5% of the general population - have known food allergies or gluten intolerance, and restaurateurs should recognize the tremendous spending power of this community," Antico explained.

Assuming that 20% of the food allergic population will never feel comfortable dining out, while another 20% will try to eat anywhere, that still leaves 9 million food allergic diners that can be won over by allergy-friendly restaurants. Yet this number dramatically underestimates the true economic value of serving the food-allergic population, given that most diners eat out with other people.

"A key factor for restaurants is the 'veto vote.' If one person in a party has food allergies, the entire group will likely go to a restaurant that can accommodate that one individual. The food allergic diner will 'veto' restaurants that won't cater to his or her specific needs," Antico explained.

"I've made a conservative assumption that the average party dining out includes only three people, two of whom do not have food allergies. This estimate is especially conservative given the greater prevalence of food allergies in children, who often eat out with a party of four or more. Therefore, the "winnable" food allergic diner community - 3% of the total US population - actually translates into a 9% or greater potential increase in business for an allergy-friendly restaurant," Antico continued.

As an example, the casual dining chain Chili's averages roughly $3 million in sales per restaurant annually. On each sales dollar, Chili's earns about 15c in profit. Since restaurants have considerable fixed overhead (rent, staff salaries, etc.), it's reasonable to assume that every additional sales dollar generates 25c (or more) in profit.

Therefore, a 9% increase in sales at a typical Chili's would equate to approximately $270,000 per year. That translates into an additional $50,000 or more in annual profits for an "allergy-friendly" Chili's versus a similar but "allergy-unfriendly" restaurant. Even if a restaurant is already at or near capacity during weekend prime times, by becoming more allergy-friendly, they can still increase their profits by tens of thousands of dollars annually.

Savvy restaurateurs understand the financial benefits of providing an allergy-friendly environment. Many restaurant owners are wisely taking extra precautions to accommodate food allergic and intolerant guests, having their employees trained in allergy safety, creating gluten-free menu options, providing ingredient lists, and seeking industry certifications.

"As the father of food allergic children, I avoid restaurants that won't accommodate my sons' special dietary requirements. I'd rather take my family of seven to an allergy-friendly establishment instead. Others within the food-allergy community feel similarly," Antico explained. "The feedback is clear - if a restaurant doesn't have food allergy protocols in place, these dining parties will take their business elsewhere."

"From a purely business perspective, it's in restaurants' best interests to accommodate the food allergy population, as it can lead to significantly higher profits," Antico continued. "The objective, peer-based feedback on AllergyEats makes it easier for the food allergy community to find allergy-friendly restaurants and avoid those that don't measure up."

Source:
AllergyEat

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