Interface: Harry Balzer

Harry Balzer on the evolution of Americans' eating habits

By Allison Perlik, Senior Editor -- Restaurants & Institutions, 4/1/2003

What Harry Balzer knows about Americans’ eating habits wouldn’t take up a single, 300-page volume—it fills 17 of them.

Such is the scope of the dining-related data that Balzer, vice president of The NPD Group’s Food Consulting Services in Rosemont, Ill., has gathered over 20 years as author of NPDFoodworld’s Annual Report on Eating Patterns in America. Balzer’s work positions him as something of an industry guru, a responsibility he relishes.

“That’s the beauty of research, its purpose: to provide people with information about what’s going on so they can take advantage of it,” says Balzer, who graduated with a business and marketing degree from Duquesne University in his hometown of Pittsburgh in 1973. “The opportunity is to tell the right people at the right time so they can make decisions that help grow their business.”

While he is careful to point out that consumer behavior changes more slowly than most people think, Balzer’s knowledge of trends past and present affords him rare insight into foodservice’s future. From the vantage point of NPD’s recently released 17th Annual Report on Eating Patterns in America (EPA), he sees several developments unfolding in 2003 and beyond.

Much of the industry’s prospective growth, he says, will tie into a continuing decline in meals prepared at home, as Americans increasingly perceive cooking as recreational activity rather than a necessity.

“We’re still groping to figure out who’s going to take care of our food needs,” Balzer says. “That’s why, even though the restaurant industry is having some difficulty right now, long-term prospects are bright, because Mom does not want to cook.”

The home-cooked meal experience likely will be replaced by emerging segments such as fast casual. Although NPD recently noted a cooling off of fast casual’s sales-growth rate, Balzer expects the niche between QSRs and casual dining to continue expanding before experiencing a brand shakeout.

He says concepts such as Richmond Heights, Mo.-based Panera Bread and Denver-based Chipotle still are in trial phases with consumers, who are attracted to fast casual’s variety and fresh food options. However, because the segment’s heaviest users comprise the less-well-off 18-to-34-year-old demographic rather than financially secure baby boomers, Balzer believes its higher price points may prove an obstacle to fast casual gaining a long-term grip on Americans’ everyday eating habits.

Fast-casual concepts will have to respond to this price challenge as well as competition from quick-service outlets, which rule the takeout arena, a position they will look to defend. Casual-dining outlets and supermarkets, both venturing into the take-home prepared-foods market, also will battle for market share. Balzer questions their potential for success in building takeout sales, though.

“Fast food doesn’t only give me fast, it gives me lower cost,” he says, citing EPA data that shows QSRs still account for 86% of meals taken home from restaurants. “One thing I’ve learned watching people eat for 20 years is that if 86% of people are doing this today, you know the percentage is not going to change a lot next year.”

Besides the shift toward meals prepared away from home, another theme that will dominate industry discussion in coming years is Americans’ health. A mainstay in EPA reports, health issues have ranged from earlier concerns about sodium, caffeine and cholesterol to today’s focus on obesity.

In determining its role in such issues, the industry faces a disparity in what consumers say they want and how they behave. Balzer notes that while more Americans express interest in losing weight and improving their health, EPA responses show that their actions—planning nutritious meals and being conscious of calorie intake—are trending downward.

Nevertheless, he believes foodservice is in a great position to attract this market by appealing to what he views as Americans’ true desire to eat more healthfully. He points to Milford, Conn.-based Subway as an example of how a restaurant can capitalize on growing health consciousness.

“Subway came as close as a national marketer has to saying, ‘America, lose weight with me,’” he says. “It surprises me that nobody else will step up and do that.”

Other areas Balzer sees having potential for growth are traditionally popular products that have been on the decline in recent years. He offers vegetables and hamburgers as possible opportunities.

“Give me big and give me declining, and I’ll tell you that somebody is looking at that market because everybody else is moving away from it,” Balzer says, noting that the development of some fast-casual concepts was in part an attempt to revive the popularity of the sandwich, long a top choice at lunch.

Two elements of the most recent EPA report did surprise Balzer: restaurant operations immediately post-September 11, 2001, and their performance in the second half of 2002.

The industry experienced one of its strongest quarters ever after 9/11, with eating out—mostly at neighborhood restaurants—rising 6%, Balzer says. He sees two factors contributing to this spike: In the first week, restaurants provided an alternative to cooking; after that they were places to congregate with friends and family.

The industry held strong through the first half of 2002, even amid economic uncertainty. Around mid-July, however, weekly sales began to soften, falling to 1% growth by late October. The softness makes Balzer uneasy about consumers’ discretionary spending habits.

“One percent is the growth of the population each year, so you should be able to achieve that because there are 1% more bellies,” he says. “It’s not good for the restaurant industry, but it’s not good for the economy [as a whole] either.”

Still, Balzer believes that consumers are unlikely to break the habit of dining out. This holds true especially considering the growing movement of consumers away from cooking and toward meals prepared outside the home.

Although restaurant business is growing, Balzer says that in recent years this trend has led to a misconception. Consumers are buying more meals at restaurants, he says, but EPA reports show that this growth has come more from the take-home market, not sit-down traffic.

“Most people consume most of their food in their houses,” he says. “They’re going to restaurants but coming home with that food.”

Married with two grown children, Balzer now finds his own family joining the shift away from home meal preparation. Since his son’s departure for college, “there’s less cooking going on in our house,” he says. “We’re behaving like our mothers and fathers did when they reached this empty-nest stage. The difference is the [foodservice] options we have that they didn’t.”

After 25 years in the business, Balzer has yet to quench his thirst for information, nor has he lost sight of the value of his efforts.

“The way we eat is difficult to research,” he says. “I can’t just ask how you ate yesterday because you’ll tell me what you think I want to hear. Will you tell me about the cheesecake you finished? No, you’ll say you had salad.

“What we follow is what people really do, information that nobody else has about how we eat.”