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The Honolulu Advertiser

Posted on: Thursday, July 29, 2004

Low-carb translating into lower costs at restaurants

By Julie Tamak
Los Angeles Times

There's at least one clear beneficiary of the low-carb craze, with its bun-free burgers and thinner-crust pizzas: restaurants that have figured out that people will pay the same for less.

The lettuce-wrapped Low Carb Six Dollar Burger, for example, is the hottest-selling sandwich in the Carl's Jr. premium-burger lineup. It costs $3.99, the same as the Original Six Dollar Burger with the bun, which sports 55 more grams of carbohydrates than its counterpart.

Likewise, Round Table Pizza customers who order the Concord, Calif.-based chain's new "skinny" pizza, rolled thinner to provide 30 percent fewer carbs than the original crust, receive no price break.

"Restaurants are making money on low-carb items," said Dean Haskell, an analyst with JMP Securities, who used a low-carb diet last year to drop 20 pounds. "You're offering products the consumer wants and you're also charging the same price and you're not including the bun."

In fact, sales of the low-carb burger have been credited with helping CKE Restaurants Inc. of Carpinteria, Calif., operator of the Carl's Jr. and Hardee's fast-food chains, report a fiscal first-quarter profit in June, reversing a year-earlier loss.

Brad Haley, executive vice president for marketing for Carl's Jr. and Hardee's, acknowledges that it's slightly cheaper to tuck a burger in lettuce than a bun. But he suggests that the real plus of low-carb offerings — including a Carl's Jr. egg-based breakfast bowl with 5 grams of carbs (and 73 grams of fat) — was in bolstering the company's bottom line by drawing diners into stores.

"We were clearly bringing in new customers who had not been going to our restaurants before and who maybe hadn't been eating fast food at all," Haley said.

The benefits have spurred a growing number of chains to cook up their own carb-conscious concoctions or expand existing offerings, many following the precepts of the popular Atkins diet, which limits the intake of bread, pasta and other foods high in carbohydrates.

T.G.I. Friday's, for example, recently added seven reduced-carb options to its Atkins-approved menu, including two varieties of wines. Cheesecake Factory Inc. of Calabasas Hills, Calif., says the lower-carb remake of its original cheesecake became one of the chain's most requested desserts at the outlets where it was first offered.

McDonald's Corp. and Jack in the Box Inc. of San Diego are among chains that allow diners to cut out carbs by ordering sandwiches without the bun.

In many ways, restaurants are merely giving people what they want. At Round Table, for example, employees noticed customers scraping the toppings off pizzas, leaving part or all of the crust behind. And a diner removing a bun from a burger at a Carl's Jr. store caught the attention of CKE Chief Executive Andrew F. Puzder, paving the way for his company's lettuce-wrapped sandwiches.

Low-carb items appeal to what most industry observers consider to be a small portion of total diners. Just how much they have helped sales is difficult to gauge, industry observers say. Two of the chains that have most aggressively courted low-carb dieters — Subway sandwich shops and T.G.I. Friday's — are privately held and don't report revenues and earnings.