We are in the face of an unprecedented global public health crisis. A new study published in the Lancet predicts the majority of the world’s adult population will be overweight or obese by 2050. Not only is this straining our healthcare systems, it’s also draining our economies.
By 2035, obesity alone is projected to cost the global economy £3.35tn – that’s equivalent to 3% of global GDP, or the total cost of the Covid-19 pandemic in 2020. But what’s driving this challenge?
Poor diets, driven in large by our food environments, play a huge role in this. The decisions we make about what we consume are heavily influenced by what’s available, accessible, affordable, and advertised. What surrounds us shapes us, whether it be what’s on supermarket shelves, billboards along our commute, or menus at restaurants.
Unfortunately, our surroundings are steering us in the wrong direction. Fast food chains, restaurants and coffee shops dominate our high streets. Chains such as McDonald’s, KFC, Domino’s and Burger King are rapidly expanding into almost every corner of the world. Many of these businesses operate as franchises, allowing them to maintain impressive global reach and brand recognition.
The out-of-home sector offers cheap, convenient and readily available food at all hours. For the time-strapped majority, these businesses are becoming an essential part of everyday lives. In the US, one in three adults eat fast food on any given day, while in Europe, footfall in the sector is surging. Clearly, the industry’s favourite narrative that ‘eating out is an occasional treat’ no longer stands.
The business case for healthier menus
Many out-of-home businesses rely heavily on sales of unhealthy food. Research shows up to 78% of the UK sector’s bestselling dishes classify as ‘less healthy’, according to internationally accepted nutrition metrics. This leaves many of the sector’s biggest players, and their shareholders, most exposed to rapidly evolving policy shifts on this issue.
Labour’s national food strategy and the UK’s ongoing Food Data Transparency Partnership are key signals of increasing pressure. Health and nutrition is front and centre of the US policy stage, too, as Robert F Kennedy Jr embarks on his quest to take on Big Food. Policymakers across the world are cracking down on obesity-related healthcare costs. The out-of-home giants are sitting in the regulatory firing line.
At the same time, consumer demand for healthier products is seeing a noticeable shift. American brands Cava, Sweetgreen and Chipotle, known by consumers for their fresh, health-focused menus, saw double-digit revenue growth in 2024.
Meanwhile, several of the world’s biggest fast food brands saw declining sales and under-performing stock prices. The rise of GLP-1 weight-loss medications is expected to lead to a further reduction in demand of fast food.
The transparency problem
In this fast-evolving landscape, it’s essential for investors to assess how companies in which they invest are mitigating risk and capitalising on health and nutrition opportunities. Yet current standards in the out-of-home sector make this near impossible, with health-related disclosures generally opaque and inconsistent. In this respect, the sector lies near the bottom of the food industry when it comes to transparency.
A handful of out-of-home brands, such as Greggs and KFC, have taken initial steps to report on the proportion of healthier products on their menus, and have committed to improving this number.
However, these reports are consistently based on the number of healthy options offered, not sold. Simply adding a salad here and a fruit bag there isn’t enough – these products must be embedded in business strategies so they actually reach and benefit consumers.
On the other hand, Unilever has adopted comprehensive reporting on health. The manufacturer now annually discloses the proportion of its global and regional sales derived from healthier products according to six different internationally recognised nutrition standards. This level of transparency provides stakeholders with the insights they need to assess risk and progress over time.
Investor incentive
As regulatory pressure increases and consumer demand shifts, continuing to bet on unhealthy diets exposes companies and their shareholders to material risks. ShareAction’s latest briefing makes it clear there is more investors can and must do to call for meaningful change and transparency in the sector.
By taking action now, companies and their shareholders can not only safeguard long-term value, but contribute to a food system that looks after people’s health.
Georgie Cowell is a senior research officer at ShareAction
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